Commissioner Of Income-Tax, Ahmedabad Iii v. Riddhi Steel And Tubes Pvt. Ltd., Reported In 40

O/TAXAP/146/2003 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 146 of 2003 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ?the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ?judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ?to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ A.C.I.T.....Appellant(s)Versus J.R. DYEING & PRINTING MILLS PVT. LTD.....Opponent(s) ================================================================ Appearance: MR SUDHIR M MEHTA, ADVOCATE for the Appellant(s) No. 1 MR RK PATEL, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERIandHONOURABLE MR.JUSTICE K.J.THAKER Date : 25/11/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1.By way of this appeal, the appellant has challenged the judgment and order dated 20.11.2002 passed by the Income Tax appellate Tribunal, Ahmedabad Bench ‘A’, Ahmedabad in ITA NO. 2985/Ahd/96. 2.While admitting the appeal, this Court has framed the following substantial questions of law: “(1).Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law and on facts inholding that the amount of rs.11,75,602/- cannot be added as undisclosed investment in the stock under Section 60 of the Income-tax Act on the ground that the statements submitted to the Bank were merely on estimate basis and the same cannot be taken as true at their face value ? (2) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law and on facts in coming to the conclusion that the onus is on the Assessing Officer to prove the difference in the statements submitted to the Bank and the account books submitted during the assessment proceedings, and not on the assessee to explain the said difference satisfactorily ?” 3.The facts of the present case are that the return of income was filed by the assessees on 31.12.1992 at a total income of Rs. Nil. The return was processed u/s. 143(1)(a) and the case was selected for scrutiny. In response to notice u/s. 143(2) the assessee has produced books of account. After considering the material on record, the assessment order came to be passed. Against the said order, an appeal before the CIT(A) has been preferred by the assessee which came to be partly allowed. Against the order of CIT(A), the Revenue has preferred an appeal before the ITAT, was partly allowed, against which, the present Tax Appeals by the Revenue before this Court. 4.Heard the learned advocates appearing for the parties and considered the submissions. The learned advocate Mr. Patel for the assessee has contended that now the issue is covered by the decision of this Court in the case of Commissioner of Income-Tax, Ahmedabad III v. Riddhi Steel And Tubes Pvt. Ltd., reported in 40 taxmann.com. 177, and more particularly, para-9.1 and 9.2, which reads as under: Again, the Court cannot be oblivious of the fact that the assessee had been subjected to statutory audit under the Companies Act, 1956 and also which, the present Tax Appeals by the Revenue before this Court. 4.Heard the learned advocates appearing for the parties and considered the submissions. The learned advocate Mr. Patel for the assessee has contended that now the issue is covered by the decision of this Court in the case of Commissioner of Income-Tax, Ahmedabad III v. Riddhi Steel And Tubes Pvt. Ltd., reported in 40 taxmann.com. 177, and more particularly, para-9.1 and 9.2, which reads as under: Again, the Court cannot be oblivious of the fact that the assessee had been subjected to statutory audit under the Companies Act, 1956 and also tax audit under the Income tax Act. No errors were found at any stage in the report submitted by these auditors and for the past eight years, the assessee hadbeenfollowingcontinuously/ consistently the method of accounting, as provided under section 145 of the Act, valuing the closing stock and inventory, as provided under section 145 A of the Act. The assessee was also subjected to Excise and VAT and the books of account were found genuine and no discrepancies were found even by the Excise Audit report for the period January 2009 to December 2009 which was carried out by the Excise Revenue Audit Team, wherein the Excise Department, after a detailed scrutiny of the books of account, stock register, excise records, accepted the books of account and other records maintained by the assessee to be true, correct; except finding few discrepancies in so far as inventory is concerned. O/TAXAP/146/2003 JUDGMENT 9.2It is a settled law, as rightly held by the Tribunal, that only on account of inflated statements furnished to the banking authorities for the purpose of availing of larger credit facilities, no addition can be made if there appears to be a difference between the stock shown in the books of account and the statement furnished to the banking authorities. If, for the purpose of fulfilling the margin requirements of the bank purely on inflated estimate basis, when the stock statement had reflected inflated value of the stock, in wake of otherwise satisfactory explanation, both for the purpose of value as well as quantity, we find no reason to interfere with the order of the Tribunal.” 5. The learned advocate appearing for the respondent is not in a position to dispute the same. In that view of the matter, we are of the opinion that the appeals deserve to be dismissed. The questions are answered in favour of the assessee and against the Revenue. This appeal is dismissed. (K.S.JHAVERI, J.) mandora O/TAXAP/146/2003 JUDGMENT (K.J.THAKER, J)