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TMI Blog1980 (10) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... on goods. According to him, sales were also not fully vouched. Thus, in the absence of the maintenance of the day-to-day stock register and the sales not being fully vouched, the ITO applied the proviso to s. 145(1) of the Act. He also observed that the closing stock was also not correctly valued and iron account showed shortages also. The ITO observed that during the year under consideration the assessee declared sales at Rs. 10,36,482 and gross profit of Rs. 44,394 thereby giving a rate of 4.25 Per cent, as against last year's rate of 7.3 Per cent. When asked to explain the same, it was contended by the assessee that in the last year in the second period because of death of one partner the gross profit went down, but the ITO observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t wrongly showed the goods under hypothecation to the Allahabad Bank. According to the assessee two loans were taken upon the same quantity of goods but ITO observed that the plea of the assessee cannot be accepted in view of the documentary evidence available on record and furnished by the assessee. The ITO also observed that under the provisions of the Indian Evidence Act no oral evidence could be admissible in the fact of the documentary evidence. Since the assessee himself certified to the bank that the goods were not subject to any claim, lien or charge of any sort to any other person and on the strength of the said declaration the advances were taken by the assessee, the ITO held that 194 M. Tons of new iron account (Rounds, Angles, C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the paper filed at page 3 of the paper-book that no doubt the assessee does not maintain the stock register. However, the quantitative tally can be had from the books of account maintained by the assessee. According to the learned CIT (A) every cash memo recalls the nature of goods sold, the quantity sold, the rate and the price realised, names and addresses of the customers were also given). In respect of the purchases also, similar quantitative details were noted in the purchase vouchers, besides being recorded in the ledger account. We may also observe that the CIT (A) personally examined half a dozen sales from the ledger account and that the purchases were not from the market but from the Hindustan Steel Ltd. and Tata Steel Co. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounting year under consideration. If that is the position, the ITO, in our view, was not justified in taking advantage of the same for making addition by applying the provisions of a wrong s. 69A of the Act and the CIT (A) rightly observed that if at all any section is to be applied, that is s. 69 and not s. 69A of the Act. Besides, the above two certificates, there is no evidence with the Revenue to in the to suggest that the goods referred iron certificate given to Allahabad Bank in the new iron account were different from the goods referred to in the certificate given to Bank of Baroda in respect of new iron account. The rate per metric ton given in both the accounts is Rs. 1,950 and the quantity is also 194 M. Tons. Thus, by any stre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en held as under: "1. On the date when the hypothecation deed was entered into, no possession of the goods was handed over to the creditor, nor was it in the contemplation of the party. It was only by a future overtakes on the part of the creditor that he could sequester the goods, if he so desired and that too by a process known to law. The only right that the creditor had under the hypothecation was at best to file a suit on the debt and after obtaining a decree proceed against the properties specified in the said deed in realisation of the decree. 2. As between a public debt payable to the State and a private debt payable to the citizen, former has priority. 3. The trial judge was wrong in holding that the creditor has a right, by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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