INCOME TAX OFFICER vs. SMT.NIRMALA LUNIA, DURG

Briefly stated, facts of the case are that the Assessing Officer (in short "AO") found that the assessee was enjoying credit facility from Dena Bank, Bhilai and a sum of Rs.45,38,171/- was outstanding on March, 2000 against the bank. The assessee was required to file monthly stock statement to Dena Bank. The AO obtained stock statement from the bank, compared the value of stock shown at the end of each month with the stock statement submitted before the bank with those shown in his books of accounts, both quantity-wise and value-wise. The AO found that right from April, 1999 to March, 2000, the stock shown to the bank was higher than what was shownin the books. The highest difference

was in the month ofJune, 1999 when the difference was Rs.10,40,000/. The AO, therefore, required the assessee to explgin the situation. The explanation of the assessee was that he submitted inflated stock statement to the bank only to continue to avail the working capital facility and there is no difference in the actual stock and the book stock because the goods cannot be removed without entering to excise records, such as RG register. The bank has never verified the physical stock for tallying the same with the books etc. In the month of March, 2000, there is very little difference, which is on account of valuation. At the end of the year when the profit is .determined, there is no difference between the figure of the stock given to the bank and as per books of account. The AO considered the submissions and observed that the stock reported to the bank was based on physical verification. He further observed that the argument of the assessee that there was no discrepancy in the excise records, is not a valid argument because even excise authority sometimes find that excise records were not proper. TheAO held that the stock statement submitted to the bank should, therefore, be true because they were correct to third pace of decimal in terms of quantity. The AO held that the excess stockshown to the bank deserves to be added under Section 69B of the Act and thus, made addition of Rs.10,40,000/-. The assessee went up in appeal and CIT(A), after considering the explanation of the assessee that in the bank statement, the assessee had shown less value of sales and reported more stock; excess stock shown to the bank was attributable to lesssales shown to the bank and thus, source of excess stock shown to the bank was fully explained as available from the books, forwafded a copy of submission made by the ^ssessee -to the AO for his comments as per order under Section 250(4) of the Act. The AO submitted that the assessee had shown less sales to the bank, as a result of which higher stock was shown to the bank. However, this fact was not submitted by the assessee before the AO at the time of assessment. • CIT(A), considering the explanation of the assessee and report under Section 250(4) of the AO, held that there was no excess stock

The revenue went up in appeal and the Tribunal affirmed the order of CIT(A).

Shri Rajeev Shrivastava, learned counsel for the appellant/revenue, submits that the statement given to the bank by the assessee is admissible as evidence as per Section 4 of the Bankers Books Evidence Act, 1891 and CIT(A) and the Tribunal were not justified in accepting the explanation of the assessee contrary to the statement made by him before the bank.

Shri M.C. Jain, learned counsel for the respondent/assessee, submits that from perusal of the orders of CIT(A) and the Tribunal, it is manifestly clear that both the forums below after careful scrutiny of the record, including the books of accounts and the bank statement, and further on the basis of remand report by the AO, have arrived at a conclusion that there was no excess stock available with the assessee at any point of time. The aforesaid finding of CIT(A) and the Tribunal is a finding of fact and no question of law, much less any substantial question of law, arises for adjudication ofthis appeal.

Relying upon the decision of the Delhi High Court in the matter of Commissioner of Income Tax Vs. Prem Singh & Co., reported in (1986) 51 CTR (Del) 275 : (1987) 163 ITR 434 (Del), it is argued that where the stock indicated by the assessee's account books have been accepted by the Tribunal, this is a conclusion of fact from which no question of law arises.

We have heard learned counsel for the parties and perused the orders of the AO, CIT(A) and impugned order passed by the Tribunal.

The undisputed facts, as detailed above, are that the AO made addition on the basis of difference in stock as appeared in the books of accounts and the monthly statement made by the assessee to the bank in CC account. CIT(A) considering the explanation of the assessee that the inflated stock was shown in the statement before the bank by reducing the sales figure and there was no discrepancy in the stock if the sales figure and balance of stock are considered in the bank statement as well as in the books of accounts, and further considering the report of 11 12. the AO under Seetion 250(4) of the Acf, heiy that there is no case for ». making any addition and thus, deleted the aydiion. In Prem Singh & Co. (supra), an identical question arose before the Delhi High Court, wherein the Tribunal deleted the addition made on the basis of difference in the position of stock as disclosed by books of accounts and as shown in the account of stock hypothecated with the bank. After referring to the practice of filing inflated lists for the purpose of getting a loan and also referring to the fact that for the purpose of a loan, the stock would be valued at market price, whereas in the books it would be valued at cost, it was held that no question of law arises as the stock indicated by the assessee's account books have been accepted by the Tribunal and this is a conclusion of fact from which no question of law arises. In the instant case also, we are of the opinion that both the appellate forums, after considering the books of accounts of the assessee, held the explanation offered by the assessee as proper, and recorded a finding of fact that there was no excess stock available with the assessee. The finding, so recorded by both the forums below, does not give rise to any question of law, much less any substantial question of law.