Appellantincome Tax Officer, Ward 1, Bhilai v. Respondentssmt. Nirmala Lunia, Durg

HIGH COURT OF CHHATTISGARH AT BILASPUR D.B. HON'BLE SHRI DHIRENDRA MISHRA, &^HON'BLE SHRI R.N. CHANDRAKAR. JJ !NCOME TAX APPEAL N0. 07 of 2006 AppellantIncome Tax Officer, Ward 1, Bhilai. Versus RespondentsSmt. Nirmala Lunia, Durg, Prop. M/s N.P. Steels,S.M.-66, Padmanabhpur, Durg (CG) Present: Shri Rajeev Shrivastava, counsel for the appellant.Shri Moolchand Jain, counsel for the respondent. ORAL ORDER (Passed on 25th January, 2010) Per_Dhirendra Mishra, J This income tax appeal under Section 260A of-'the Income Tax Act,1961 (in short "the Act") preferred by the revenue against the order(Annexure[A/3)][ of][ the][ Income][ Tax][ Appellate][ Tribunal,][ Nagpur][ Bench,]Nagpur (in short "Tribunal") has been admitted on 20th March, 2006. The only question, which arises for adjudication of this appeal, is - 2. whether the leamed CIT(A) and the Tribunal were justified in deletingthe addition made by the Assessing Officer on the ground that theexcess stock, as returned to the bank, was corresponding to the salesnot declared to the bank in the form of sundry debtors, the assesseehas only availed extra credit facility,which did not relate to thediscrepancy in stock? 3. Briefly stated, facts of the case are that the Assessing Officer (in short"AO") found that the assessee was enjoying credit facility from DenaBank, Bhilai and a sum of Rs.45,38,171/- was outstanding on March,2000 against the bank. The assessee was required to file monthly stockstatement to Dena Bank.The AO obtained stock statement from thebank, compared the value of stock shown at the end of each month withthe stock statement submitted before the bank with those shown in hisbooks of accounts, both quantity-wise and value-wise. The AO foundthat right from April, 1999 to March, 2000, the stock shown to the bankwas 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 inflatedstock statement to the bank only to continue to avail the working capitalfacility and there is no difference in the actual stock and the book stockbecause the goods cannot be removed without entering to exciserecords, such as RG register. The bank has never verified the physicalstock 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. Atthe end of the year when the profit is .determined, there is no differencebetween the figure of the stock given to the bank and as per books ofaccount. The AO considered the submissions and observed that the stockreported to the bank was based on physical verification.He furtherobserved that the argument of the assessee that there wasnodiscrepancy in the excise records, is not a valid argument becauseeven excise authority sometimes find that excise records were notTheAO held that the stock statement submitted to the bankproper.should, therefore, be true because they were correct to third pace ofdecimal in terms of quantity. The AO held that the excess stockshownto the bank deserves to be added under Section 69B of the Act andthus, made addition of Rs.10,40,000/-. The assessee went up in appeal and CIT(A), after considering theexplanation of the assessee that in the bank statement, the assesseehad shown less value of sales and reported more stock; excess stockshown to the bank was attributable to lesssales shown to the bank andthus, source of excess stock shown to the bank was fully explained asavailable from the books, forwafded a copy of submission made by the^ssessee -to the AO for his comments as per order under Section250(4) of the Act. The AO submitted that the assessee had shown lesssales to the bank, as a result of which higher stock was shown to thebank. However, this fact was not submitted by the assessee before theAO at the time of assessment.• The assessee went up in appeal and CIT(A), after considering theexplanation of the assessee that in the bank statement, the assesseehad shown less value of sales and reported more stock; excess stockshown to the bank was attributable to lesssales shown to the bank andthus, source of excess stock shown to the bank was fully explained asavailable from the books, forwafded a copy of submission made by the^ssessee -to the AO for his comments as per order under Section250(4) of the Act. The AO submitted that the assessee had shown lesssales to the bank, as a result of which higher stock was shown to thebank. However, this fact was not submitted by the assessee before theAO at the time of assessment.• CIT(A), considering the explanation of the assessee and reportunder Section 250(4) of the AO, held that there was no excess stock -%.availablewiththe assessee at any point of trrne and therefore, there isno case for addition, and accordingly, the additicti' "s was deleted. ^ 5.The revenue went up in appeal and the Tribunal affirmed the order ofCIT(A). 6. Shri Rajeev Shrivastava, learned counsel for the appellant/revenue,submits that the statement given to the bank by the assessee isadmissible as evidence as per Section 4 of theBankersBooksEvidence Act, 1891 and CIT(A) and the Tribunal were not justified inaccepting the explanation of the assessee contrary to the statementmade by him before the bank. 7. Shri M.C. Jain, learned counsel for the respondent/assessee, submitsthat from perusal of the orders of CIT(A) and the Tribunal,it ismanifestly clear that both the forums below after careful scrutiny of therecord, including the books of accounts and the bank statement, andfurther on the basis of remand report by the AO, have arrived at aconclusion that there was no excess stock available with the assesseeat any point of time. The aforesaid finding of CIT(A) and the Tribunal isa finding of fact and no question of law, much less any substantialquestion of law, arises for adjudication ofthis appeal. 8. Relying upon the decision of the Delhi High Court in the matter ofCommissioner of Income Tax Vs. Prem Singh & Co., reported in(1986) 51 CTR (Del) 275 : (1987) 163 ITR 434 (Del), it is argued thatwhere the stock indicated by the assessee's account books have beenaccepted by the Tribunal, this is a conclusion of fact from which noquestion of law arises. 9. We have heard learned counsel for the parties and perused the ordersof the AO, CIT(A) and impugned order passed by the Tribunal. 10. The undisputed facts, as detailed above, are that the AO made additionon the basis of difference in stock as appeared in the books of accountsand the monthly statement made by the assessee to the bank in CCaccount. CIT(A) considering the explanation of the assessee that theinflated stock was shown in the statement before the bank by reducingthe sales figure and there was no discrepancy in the stock if the salesfigure and balance of stock are considered in the bank statement aswell 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 formaking any addition and thus, deleted the aydiion.». In Prem Singh & Co. (supra), an identical question arose before theDelhi High Court, wherein the Tribunal deleted the addition made on thebasis of difference in the position of stock as disclosed by books ofaccounts and as shown in the account of stock hypothecated with thebank. After referring to the practice of filing inflated lists for the purposeof getting a loan and also referring to the fact that for the purpose of aloan, the stock would be valued at market price, whereas in the books itwould be valued at cost, it was held that no question of law arises asthe stock indicated by the assessee's account bookshave beenaccepted by the Tribunal and this is a conclusion of fact from which noquestion[of][ law][ arises.] In Prem Singh & Co. (supra), an identical question arose before theDelhi High Court, wherein the Tribunal deleted the addition made on thebasis of difference in the position of stock as disclosed by books ofaccounts and as shown in the account of stock hypothecated with thebank. After referring to the practice of filing inflated lists for the purposeof getting a loan and also referring to the fact that for the purpose of aloan, the stock would be valued at market price, whereas in the books itwould be valued at cost, it was held that no question of law arises asthe stock indicated by the assessee's account bookshave beenaccepted by the Tribunal and this is a conclusion of fact from which noquestion[of][ law][ arises.] In the instant case also, we are of the opinion that both the appellateforums, after considering the books of accounts of the assessee, heldthe explanation offered by the assessee as proper, and recorded afinding of fact that there was no excess stock available with theassessee. The finding, so recorded by both the forums below, does notgive rise to any question of law, much less any substantial question oflaw.The appeal is without any substance; the same deserves to bedismissed and is, accordingly, dismissed. No order as to costs.Sd/-Dhirendra MishraJudge SA'-R.N. ChandrakarJudge