CIT, PATIALA vs. JASWINDER SINGH SODHI PATIALA

Revenue has preferred this appeal under Section 260A of the Income-tax Act, 1961 (for short 'the Act') against order dated 25.11.2008 passed by the Income-tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh's passed in ITA No. 755/Chd/2008 for the assessment year 2005-06 proposing to raise the following substantial questions of law :-

Whether on the facts and in the circumstances of the case the ITAT was legally correct in confirming the order of CIT(A) deleting the addition of Rs. 59,59,400/- made on a/c of difference in book debts and stock as appearing in the books -2- of accounts vis-a-vis the one furnished to the bank.

Whether on the facts and in the circumstances of the case, the ITAT was right in upholding the CIT(A)'s order, ignoring the fact that the said order was passed in violation of Rule 46A of the IT Rules.

Whether on the facts and in the circumstances of the case, the ITAT was right in law holding that revenue had failed to bring any contrary evidence on record to prove that the book debts and stock as per bank statement were false and untrue whereas it was assessee's burden to prove that these were reliable because it was the result of his own substandard morality.”

During the assessment, the Assessing Officer made additions to the income of the assessees relying upon the inventory of stocks filed with the bank by the assessee for raising loan and also the inventory of stocks in trade and book debts furnished to the bank, which were at variance with entries in books of accounts.

On appeal, the CIT(A) accepted the explanation of the assessee about the version recorded in books of accounts being correct. This view has been upheld by the Tribunal. It was held:- “Consequently, the authentication filed by the assessee cannot be disbelieved. The Assessing Officer is not justified to make the addition merely on the basis of casual figure submitted to the bank without any corroborative evidence. The cases relied upon, specifically from the Hon'ble Juri ictional High Court, have already been discussed in the impugned order at page No.

We have heard the learned counsel for the appellant.

Only contention pressed is that the assessee furnished written submissions with fresh evidence before the CIT(A) on which remand report was sought from the A.O. A.O. had no opportunity to examine and investigate documents relied upon by the assessee for the first time in the appeal.

We are unable to accept this contention. It cannot be disputed when that Appellate Authority, in its discretion, can allow additional evidence and seek comments of the Assessing Officer on an issue. The main question is whether an adverse inference could have been drawn against the assessee, on the statement furnished to the bank when such statement was duly explained on the basis of books of account. CIT(A) as well as the Tribunal have recorded a concurrent finding of fact on the said issue. No substantial question of law arises for consideration. 7