D.b. Income Tax Appeal v. M/S.a.k. Synthetics

D.B. INCOME TAX APPEAL NO. 06/2004.CIT AJMERVS.M/S.A.K. SYNTHETICS D.B. INCOME TAX APPEAL NO. 02/2004.CIT AJMERVS.M/S.CHANDAN SYNTHETICS DATE OF ORDER:09.09.2005. HON'BLE MR. RAJESH BALIA,J.HON'BLE MR. R.S. CHAUHAN, J. Mr. K.K. Bissa for the appellant. Mr. Anjay Kothari for the respondents. These two appeals are of two sister concernsand founded on identical facts. However, the issuesraised in the two appeals are alike apart from the additionsmade by the Assessing Officer which were deleted by theCIT (Appeals) as well as by the Tribunal. Sworn of the figurative difference in the twocases, the common dispute is additions made on accountof discrepancy found by the Assessing Officer in thestatement of the Stock Register maintained by theassessee and the statements of Stocks of yarn clothesTrade submitted to the Bank for the purposes of obtainingloan facilities from the Bank. On being asked to explain,the assessee stated that while the statements wereproduced before the Bank, they were drawn in defectivemanner and by mistake in the stock position of the firm. The goods received by the firm for doing the job clothingwhich otherwise was also included in the statement givento the Bank for the purpose of obtaining loan on the basisof the stock position, this explanation was not accepted bythe Assessing Officer. However, when the matter wasbefore the CIT (Appeals), he referred to thecorrespondence between the assessee and the Bank, whichfortified the assessee's contention with the Statements ofstocks yarn trade as submitted to the Bank had includednot only the stocks of his study activity, but also stocksgoods which he received from factory which is not a part ofthe Stock in trade. The bank has shown his disclosure forsubmitting such faulty explanation for obtaining loanfacilities and, therefore, the CIT (Appeals) found theexplanation furnished by the assessee for seemingdiscrepancy in the stocks position in the Register of theStocks maintained for study activities submitted to thebank but submitted on 30.4.91 and 31.5.91. As theexplanation submitted by the assessee for the discrepancyin the stock position at two levels, was accepted, the CITappeals deleted the additions made on account of whichthe discrepancies by the Assessing Officer and suchdeletion was affirmed by the Tribunal. The CIT (Appeals) has given detail reasons in Chandan Singh case and said reasons have been draftedwithout referring details in M/s. A.K. Synthetics case. Itwould be apposite to refer the reasoning that prevailedwith the CIT (Appeals) and also with the Tribunal: “I have carefully considered the facts of thecase as well as the submission of the learnedcounsel of the appellant. It was stated beforethe A.O. that the stock as declared to the bankas on 30.4.91 and 31.5.91 consisted ofappellant's own stock as well as stock ofoutside parties and this was done to present afavorable picture of the financial position of theappellant firm. The register in which yearnreceived from outside is recorded was alsoproduced before her. However, in want ofproper confirmation and explanation sherejected this explanation. Before me thelearned counsel for the appellant has reiteratedthe explanation filed before the A.O. and hasalso filed copies of the correspondence enteredbetween the bank and the appellant firm, photostat copies of the yarn register in which yarnreceived from out sides parties is recordedalong with challan number, confirmation lettersfrom the out siders whose yarn was lying withthe appellant as on30.4.91 and 31.5.91 andalso produced original challans in support oftheir contentions. I am not treating all thesepaper as additional evidence because all theseare being filed to corroborate the fact already stated before the A.O. and to support theoriginal book of record i.e. the yearn receiptregister and therefore no opportunityseparately is being given to the A.O. tocomment on the documents and confirmationletters filed from the out side parties filed bythe appellant. At the same time it may bestated here that what ever other papers werefiled by the appellant during the course ofearlier hearings were forwarded to the A.O. bymy predecessor on 14.2.95 and as such shehas been provided an opportunity in respect ofdocuments like correspondence between thebank and the appellant firm, revisedstatements,photo copies of register etc. etc. Now from the material and evidence producedbefore me it is obvious that the stock declaredto the bank by the appellant firm as on 30.4.91and 31.5.91 included the stock of out sideparties also. Therefore if the combined total ofthe own stock of the appellant and the stock ofthe outside parties is taken there will be nodiscrepancy at all. This fact is not only evidentfrom the evidence produced by the appellant itself but also from the letters of the bankauthorities. The revised statement of stockfiled by the appellant after the warning fromthe bank that stock of out side parties shouldnot be included in the monthly statement ofstock confirmed the quantity of stock recordedin the books of a/c. In view of these facts Iwould hold that as a matter off act there was no discrepancy between the stock as declaredto the bank and as recorded in the books of a/cas on 30.4.91 and 31.5.91. The obviousdifference was because of the fact that whilethe stock declared to the bank consisted ofappellant's own stock and the stock of out sideparties for whom it is doing job work, while thestock recorded in the books of a/c was its ownonly and excluded the stock of out side parties.Thus the difference found in the stock asdeclared to the bank and as declared in thebooks of a/c is fully and satisfactorilyexplained. Therefore, no adverse view can betaken on this ground. I would therefore holdthat the addition of Rs.24,91,060/- is withoutany basis and therefore deleted hereby. Since the additions made on account of thestudy activities was founded on premise that the assesseehas not explained satisfactory difference between the stockregister submitted to the bank and shown in the books ofthe account and that premise for making additions madewas not accepted by CIT (Appeals), other additions foundin discrepancies were also deleted. These findings havebeen affirmed by the Tribunal. We are of the opinion that this is clearly afinding of fact and founded on material which was availablewith the Tribunal and the appellate authority. The Anil/ interference to be drawn from material which is plausibledoes not give rise to any question of law much lesssubstantial question of law either on fact or on applicationof any law. The appeals fail and are hereby dismissed. No order as to costs. (R.S. CHAUHAN)J. (RAJESH BALIA)J.