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TMI Blog2013 (12) TMI 1370X X X X Extracts X X X X X X X X Extracts X X X X ..... ft facility, and the stocks as per books of account. The Assessing Officer took the 'peaks' of each of the item, as per details given below as the basis, for making the addition. Item Date on which difference is noted Excess quantity (In M.T.) Value (Rs.) 1. Zinc 17.11.80 45.200, 6, 14, 720 2. Galvanised Tubes 31.12.80 50.411, 3,03,066 3. Black tubes 17.2.81 32.220, 1, 61, 100 4. The entire addition was deleted by the Commissioner of Income-tax (Appeals), Kanpur (C.I.T.(A)) vide order dated 14.3.85. On an appeal by the revenue, the Tribunal by its order dated 30.10.85 in I.T.A. No. 919 (Alld) of 1985, set aside the order of the C.I.T. (A) and remanded the issue. By an order dated 22.12.86 passed by the C.I.T. (A) in pursuance of the directions of the Tribunal, the entire addition of Rs. 10, 78, 886/- was found unsustainable and hence deleted. 5. In appeal by the revenue, the Tribunal by its order dated 6.11.1990 in I.T.A. No. 447 (Alld) of 1987, held that this was a fit case where provisions of Section 69-B could be applied for sustaining the addition of Rs. 10, 78, 886/- arising out of the discrepancy of stocks declared to the bank vis-a-vis the stocks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition deleted. 12. Both the revenue and the assessee sought references to the High Court. The reference made by the assessee was decided on 16.7.2012, by deciding the question of law in favour of assessee and against the revenue. 13. In the reference made by the revenue, the Tribunal has found that since its order dated 22.12.93, recalling the order dated 8.9.93 was stayed by the High Court, the question out of the Tribunal's order dated 28.4.95 does not arise. The Tribunal thereafter re-framed the question and referred it to the High Court as follows:- "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in limiting the addition made on account of difference in the value of stocks declared to the Bank and the value of stocks as per account books, to the highest amount of Rs. 6, 14, 720/- for zinc item only, ignoring the difference of rs. 4, 64, 166/- in the value of other two items of stocks?". 14. On the assessee's reference application the Tribunal has referred the following question for the opinion of the High Court as follows:- "Whether on a true and correct interpretation of the relevant provisions of law, the Tribunal was le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a pure finding of fact, and which could not be questioned in the reference. 17. In the second case, the High Court held that there was a discrepancy in the preceding year as well as the assessment year in question regarding the value of stock declared to the bank, which was found in excess of the value of the stock as disclosed in the assessee's books of account. There was a similar discrepancy in the immediately preceding year and thus the addition to income made as a consequence was upheld by the High Court. The addition on account of difference between the value of stock declared to the bank and the value of stock as per the assessee's stock book was assessable for the subsequent assessment year as well. 18. Shri R.S. Garg, learned counsel appearing for the assessee submits that the entire purchases and sales were verified. The findings of the CIT regarding the verification of purchase and sale and books of accounts were affirmed by the Tribunal. The statement given to the banks was mostly in round figures. The stock, as per the statement given to the bank, was less than the stock as per books on same dates. On some other dates it was found to be more. For example the stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of stocks made by the bank official, the practice of inflating the stock hypothecated with the bank with a view to avail higher overdraft facilities, and the acceptance of the explanation by the Tribunal did not call for any interference. The Allahabad High Court followed Swadeshi Cotton Mills Co. Ltd v. CIT (1980) 125 ITR 33 (All) (supra). In CIT vs. Das Industries (I.T. Ref. No. 32 of 1996) decided on 8.7.2005 it was held that where the explanation of the assessee that the stock figures were inflated to get more credit facility from bank, no addition could be made in respect of difference between the value of stocks shown in the books of accounts and the value disclosed to the bank, when the bank did not physically verified and certified the stock available with the assessee. 21. We find it difficult to accept the observations of the Tribunal. The assessee's income was to be assessed on the basis of the material, which was required to be considered for the assessment and not on the basis of the statements which the assessee may have given to third party. The burden of showing that the assessee had undisclosed income was on the revenue. That burden cannot be said to be disc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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