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Income Tax Appellate Tribunal, “SMC” BENCH : KOLKATA
Before: Hon’ble Sri N.V.Vasudevan, JM ]
ORDER This is an appeal by the assessee against the order dated 18.09.2013 of CIT(A)- XXXIII, Kolkata, relating to AY 2006-07.
The assessee has raised several grounds of appeal but the only point of dispute in the appeal is the addition of Rs.11,90,660/- made by the Assessing Officer on account of difference in the stock as per the stock register and the details of stock submitted by the Assessee to appellant to Contai Co-operative Bank ltd., Haria for the purpose of obtaining a loan. The Assessing officer has given the details of the difference in quantity and value of the stock as per stock register and the stock details given to the bank in the assessment order as follows :- Sl.No. Product Quantity as Quantity as Difference Rate (in Difference per Stock per your (in Rs.) of Value statement stock quantity) (in Rs.) submitted register to the bank furnished as on by you 20.06.05 before the I.T.Deptt. as on 20.06.05
2 Uttam Sahoo A.Yr.2006-07 1. Fine paddy 1500 19 Quintal 1481 660/Qnt 9,77,460/- Quintal Quintal 2. Fine rice 2000 1939 61 Quintal 1200/Qnt. 73,200/- Quintal Quintal 3. Super fine Rice 100 NIL 100 Quintal 1400/Qnt 1,40,000/- Quintal Total Quantitative stock difference(in Rs.) 11,90,660/- 2.1. The AO called upon the the Asssessee to explain the difference by issue of show cause notice on 12-12-2008. The Assessee took a stand that the details of closing stock submitted before the bank were only for the purpose of obtaining bank loan and the stock register presented the correct picture of the closing stock. The Assessing Officer did not accept the Assessee’s explanation and treated the difference in the stock as excess unexplained excess stock. He relied upon the following case laws :- i) Coimbatore Spinning and Weaving Co. Ltd. Vs. CIT (1974) 95 IT%R 375.(Mad) ii) Dhansiram Agarwala Vs. CIT 201 ITR 192. (Gau.) iii) CIT Vs. Ashoke Estate (P)Ltd. 141 ITR 785 (Kerala) iv) ACIR vs Vikas Agency 85 ITD 536 (ITAT Ahd.)
Before CIT(A) the assessee reiterated the submissions that the stock taking given to the bank ought not to have taken to the AO as true. The assessee pointed out that the business was started only on 01.04.2005 with an opening capital of Rs.24,501/-. Therefore the assessee could not have had the stock as per the stock statement given to the bank. CIT(A), however rejected the plea raised by the assessee observing as follows :- “6. I have considered the facts of the case and the written submissions given by the appellant. The appellant has stated that the Assessing Officer examined the books of accounts and did not find any defects. However, in the assessment order, the Assessing Officer has clearly mentioned that the appellant failed to produce the regular books of accounts in spite of grant of adequate opportunity. The appellant has also contended that the stock statement was submitted to the bank for obtaining loan of Rs. 20,00,000/- but the operations of the appellant's mill had not even started and the hypothecation statement given to the bank was bogus and imaginary. In support of this contention, the appellant has also tried to draw support from the figure of opening capital of Rs. 24,501/- only. The 2
3 Uttam Sahoo A.Yr.2006-07 appellant's contentions can not be accepted as the stock register reflected 19 quintals of fine paddy and 1939 quintals of fine rice respectively and, therefore, the contention that the operations had not even begun and there was no stock as per books also is not correct. In a situation where the appellant has maintained a stock register and submitted a stock statement to the bank which as at variance with the stock register, the onus is on the appellant to prove that the stock figures submitted to the bank were not correct. The admitted facts are that the appellant's business commenced on 01.04.2005, the loan of Rs. 20,00,000/- was sanctioned on 28.05.2005 and the stock statement was furnished to the bank on 20.06.2005. In the face of these facts, the appellant has not been able to establish that he would not have had any stock on 20.06.2005. It is not the case of the appellant that purchases cannot be made by the appellant without accounting for the same. It has also not been contended or proved by the appellant that the physical stock was not checked by the bank authorities. In fact, the appellant has submitted a copy of a statement of stock submitted to the bank on 20-06-2005 and the statement reveals that a Field Officer of Contai Co-operative Bank td. had certified at the end of the statement as under:- "I do hereby certify that the hypothecated goods mentioned on the reverse and above were checked by me on 20-06-2005 and were found in order." In view of the certificate of bank officer, it is for the appellant to establish that the stock statement given to the bank was false. The appellant has failed to discharge this onus. The appellant has also tried to distinguish its facts from the cases relied upon by the Assessing Officer but the facts of those cases as summarized in the assessment order cannot really be distinguished from the appellant's case. The quantity as well as value of stock declared by the appellant before the bank was higher and, therefore, the appellant's case is covered by the four cases cited by the Assessing Officer. Hence, the addition of Rs. 11,90,660/- made by the Assessing Officer on account of unexplained investment in excess stock on the basis of the stock statement submitted to the bank is held to be rightly made and is confirmed.”
Aggrieved by the order of CIT(A) assessee preferred the present appeal before the Tribunal.
The learned counsel for the asessee submitted before me that the AO proceeded to reject the books of accounts of the assessee by invoking the provision of section 145(3) of the Income Tax Act, 1961 (Act). It was his submission that there was contradiction in the order of AO in as much as AO has compared the quantity as per the stock statement given to the bank and the quantity stock statement furnished by the assessee before the Income tax department. According to him the AO invoked the 3
4 Uttam Sahoo A.Yr.2006-07 provisions of Sec.145(3) of the Act, as according to him, the book of accounts were not produced by the Assessee in the course of assessment proceedings. According to him therefore the claim that there was difference in value of stock as per the books of accounts and statement given to the bank, cannot be true. He pointed out that the proceedings before the AO were completed u/s.144 of the Act (Best Judgment Assessment) and therefore there was no proper opportunity of being heard to the Assessee. He therefore submitted that AO has not properly looked into the books of account of the assessee. He filed before us a copy of the stock register of rice and paddy for A.Y.2006-07, purchase and sale register for A.Y.2006-07. His prayer was that addition made by the AO and sustained by CIT(A) should be set aside and AO should be directed to examine the books of accounts of the assessee now produced before the Tribunal and come to a conclusion as to whether the stock statement maintained by the assessee is true or whether the stock statement given to the bank is true. The learned DR opposed the prayer of the learned counsel for the assessee.
We have considered the rival submissions. In my view as rightly pointed out by the learned counsel for the assessee, there is contradiction in the order of the AO in as much as he has proceeded to frame the assessment on the basis that books of account were not produced for his examination. The AO however refers to the stock statement maintained by the assessee. In this scenario it would be proper to accept the prayer of the learned counsel for the assessee. Accordingly the order of CIT(A) is set aside and the issue in question in this appeal is remanded to the AO for fresh consideration in the light of the documents now filed before the Tribunal. AO will afford opportunity to the assessee of being heard.
Order pronounced in the Court on 03.02.2016.