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TMI Blog2015 (4) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... or the reason since the same was not produced before the Assessing Officer. At the outset, this is not the cogent reason as mentioned by the CIT(Appeals) that something has been not produced before the Assessing Officer that cannot be produced before the learned Commissioner of Income-tax (Appeals). Therefore, the CIT(Appeals) has not acted strictly in accordance with the provisions of rule 46A of the Income-tax Rules, 1962. Even if the reconciliation statement has not been accepted, can any statement on account of, i.e., balance-sheet or profit and loss can be read in part, the answer is "no" . Since any document or statement has to be read in toto in settled ratio. The assessee's explanation submitted before the learned Commissioner of Income-tax (Appeals) as an additional evidence which in fact is on record that the assessee has transferred ₹ 1,66,13,401 to sales account out of the stock as on March 31, 2009. The learned Commissioner of Income-tax (Appeals) without any reason has rejected the said explanation. Something must remain, i.e., either the closing stock at the close of the year and if it is not there then there has to be the sales as claimed by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x (Appeals), Bathinda has erred in taking into consideration the closing stock of the assessee at ₹ 1,69,17,000 as on March 30, 2009 as per the annual stock register of the bank without there being any stock statement of the assessee with the bank. 4. Notwithstanding the above said ground of appeal, the worthy Commissioner of Income-tax (Appeals) has erred in not considering the valid explanation of the assessee based on the basis of entries in the books of account and the major part of the stock which was lying as work in progress was booked as sales as on March 31, 2009 to the tune of ₹ 1,66,13,401 and by taking into consideration the work done to the tune of ₹ 14,46,401 as on March 31, 2009, the stock as on March 31, 2009 was exactly the same as per books of account and, as such, no addition was called for. 5. The Commissioner of Income-tax (Appeals) has erred in not admitting the additional evidence specially, when the Assessing Officer has already given the remand report on the basis of submissions made before him. 6. Notwithstanding the abovesaid ground of appeal, though there was no additional evidence which the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of appellate proceedings, learned counsel appearing on behalf of the assessee submitted the written submissions, which for the sake of convenience are reproduced as under : It is hereby submitted that the Assessing Officer has erred in law and on facts by not considering the stock statement as on March 31, 2009 available both with bank and the Assessing Officer. The Assessing Officer also ignored the fact that balance-sheet as on March 31, 2009 submitted to bank was same as submitted to Income-tax department. So there is no difference in stock as per records of bank and income- tax department. Hence the addition made by the Assessing Officer is wrong and is not in accordance with the facts. So the same may kindly be repealed. (ii) (a) The Assessing Officer in his remand report dated March 4, 2003 has stated that as per the bank record the closing stock of the appellant as on March 31, 2009 was ₹ 1,69,17,000 but as per books of the assessee the same was ₹ 17,50,000. Thus, the addition of ₹ 1,51,67,000 on account of presumption of undisclosed asset was rightly made because of the failure of the assessee to dislodge this a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e their letter dated August 2, 2011 that the stock as per stock state ment dated March 30/ 31, 2009 furnished by the assessee to the bank was amounting to ₹ 1,68,17,000. The Assessing Officer has repro duced the copies of the stock register on page 2 of the assessment order. (ii) Sh. Tejinder Sharda, senior branch manager of PNB, Bathinda stated in his statement recorded by the Assessing Officer on oath on November 22, 2011 that the party submit stock inventory statement at the end of the month and thereafter officials of bank physically verify this stock in possession of the party. But the authorised representative for the appellant has remained silent on this issue and has given no comments either during the course of assessment proceedings or during the course of appellate proceedings. (iii) The authorised representative for the appellant stated during the course of assessment proceedings that . . . the closing stock/work in progress as per audit report for the year ending March 31, 2009 and the stock statement submitted to the PNB, Bathinda as on date are same as per our record. It has also been stated by him during the course of appellate pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of assessment proceedings and the authorised representative for the assessee has not made any request for admitting the same as additional evidence under rule 46A. I am also not required to give any finding on this reconciliation chart in the absence of any request from the authorised representative for the assessee to admit the reconciliation chart as additional evidence and the reasons because of which the same could not be filed before the Assessing Officer during the course of assessment proceedings. But these findings are being recorded only in view of the contentions of the authorised representative for the assessee in his written submissions filed on March 25, 2013 that this reconciliation chart was submitted in accordance with my directions during the course of hearing on March 22, 2013. It is matter of record that no such directions were given by me in the order sheet entry on March 22, 2013. Be that as it may, rule 46A of the Income-tax Act with regard to the admission of additional evidence provides as under : '46A(1). The appellant shall not be entitled to produce before the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals), a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessment proceedings or during the course of appellate proceedings. The appellant has also failed to bring any evidence on record in support of the contention raised in the appeal that the stock statement filed with the bank declaring stock of ₹ 1,69,17,000 was inflated to get the loan from the bank because the Assessing Officer has proved that the appellant possessed the stock amounting to ₹ 1,69,17,000 on March 31, 2009. 5. Learned counsel for the assessee, Mr. Sudhir Sehgal, argued and submitted that this is the case of contractor and the only ground of appeal is with regard to the addition of ₹ 1,51,67,000 on account of alleged stock statement as per Assessing Officer submitted to the bank to the tune of ₹ 169.17 lakhs as on March 31, 2009 and, whereas the stock as per regular books of account maintained by the assessee is to the tune of ₹ 17,50,000 as on March 31, 2009. He submitted that the Assessing Officer has relied upon the judgment of the hon'ble Punjab and Haryana High Court in the case of Devgon Rice and General Mills v. CIT as reported in [2003] 263 ITR 391 (P H) and interestingly the facts as mentioned by the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating and for allowing withdrawals and copy of that statement is at pages 43 to 44 of the paper book. The statement was never confronted to the assessee during the assessment proceedings and proof of physical verification was never asked for and neither submitted by the chief manager to the Assessing Officer. It appears that since the chief bank manager categorically mentioned the date as 30th March only and which never suited the Assessing Officer and therefore, the Assessing Officer thought not to confront the same to the assessee. (vi) There is a letter at page 46, dated November 21, 2011 and at page 47, the drawing power register copy is there which also mentions the date as on March 30, 2009 only and no stock statement is there as on March 31, 2009. (vii) Even in the remand report, which is placed at pages 23 to 24 though at page 23, the Assessing Officer has mentioned the brief facts of that while making the addition, but then at page 24, he has categorically stated that the stock of ₹ 169.17 lakhs as per bank as on March 30, 2009 and not on March 31, 2009. 5.1. Learned counsel for the assessee stated that from the above sequence of events, it is clearly establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in [2003] 263 ITR 391 (P H) is totally misleading in the sense that the closing in quantity and valuation had been given and the stock as per return was proved to be false and under such circumstances, the High Court had given the judgment. In the case of the assessee, there is no stock statement at all and as such the observation made by the Assessing Officer is totally uncalled for and unreliable and does not have any link or relation to the facts of the case and, thus, the addition is not liable to be made. Even, the various judgments cover the case of the assessee, as well. 5.3. Learned counsel for the assessee further stated that the finding of the Commissioner of Income-tax (Appeals) is again incorrect application of facts, which is borne out as under : (i) He has proceeded at page 2 paragraph 1(i) on the basis of incorrect facts of stock statement mentioning the date of stock declaration to the bank at ₹ 169.17 lakhs as on March 30/31, 2009, which is not correct at all. (ii) The Commissioner of Income-tax (Appeals) at page 3 paragraph 2 in column (a) has wrongly mentioned that the Assessing Officer in his remand report dated March 4, 2013 has mentioned about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the paper book and then how is the onus upon the assessee to disprove a fact which never existed. (viii) The assessee had stated that the stock as per books and the bank was the same as on March 31, 2009 and also stated that the same balance- sheet was filed by the assessee to the bank. In fact, the assessee wanted to stated that as per books as on March 31, 2009 is the same as per bank as well and as per trading account, there is no stock statement as on March 31, 2009, how the addition can be confirmed. The reply has been misread and total facts in the reply has to be read. Thus, whole confusion has been created by mentioning of two dates in the assessment order and then the Commissioner of Income-tax at page 6 of the order has mentioned the date as March 30/31, 2009, without any reason and which is misleading decision of the Commissioner of Income-tax (Appeals). As already stated that the statement of the chief manager was never confronted and it is settled law that no reliance can be placed on statement recorded at the back of the assessee and no opportunity of cross examination has been given and, as such, it is a settled law, that if the principles of natural justice have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at pages 38 to 41 is part and parcel of that same set of books of account and the contention as per page 28 of paper book that since the certain amount had been received for the work completed on March 31, 2009 and, therefore, it was merely a case of trans fer from the work in progress as on March 30, 2009 to the work done on 31st of March, 2009 and by adding small work done as on March 31, 2009, the balance stock of ₹ 17,50,000 was shown as the closing stock as per profit loss account at page 17 of the paper book. (b) Thus, when the total receipts as per page 17 tally with the total gross receipt at page 37, therefore, everything has been looked into and veri fied and, thus, it was no new evidence, at all and, therefore, the observation of the Commissioner of Income-tax on this aspect is not a correct finding. (c) The Commissioner of Income-tax's finding at page 7 in last paragraph is again incorrect, because he has again confused the fact by mentioning the stock statement/stock register together and without pro duction of stock statement given by the assessee to the bank and neither there was any statement of stock as on March 31, 2009 furnished by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been enclosed. In this regard, it is submitted that the documents as appearing at pages 26, 27, 28 and 29 constitute new evidence as the same were allegedly filed before the learned Commissioner of Income- tax (Appeals) but the learned Commissioner of Income-tax (Appeals) had taken no cognizance of the same for the reasons that he himself had never asked the assessee to furnish the same and further that the assessee had never moved an application for the admission of additional evidence by invoking the provisions of rule 46A of the Income-tax Rules, 1962. Since the learned Commissioner of Income-tax (Appeals) had taken no cognizance of these documents, these documents, therefore, constitute fresh evidence which can be filed before the hon'ble Bench only if the hon'ble Bench asks for the same as per the provisions of rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963. He further stated that without prejudice to the above, it is submitted that genesis of the addition made is like that the Assessing Officer had discovered that in the audited balance sheet, the assessee had shown the value of the closing stock at ₹ 17,50,000 but as per the stock statement submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) took no cognizance for appreciable reasons as discussed above. 6.2. It is further pertinent to mention here that the factum of stock declared to the bank on March 30/31, 2009 has been confirmed in his statement by the chief manager of the branch in the following irrefutable words as appearing at page 7 of the assessment order : The party submits stock inventory statement at the end of month and thereafter officials of bank physically verify this stock in possession of the party. After physical verification of stock, the drawing power is allowed to the party. One officer physically checks the stock and incumbent incharge officer, sign the drawing power register. The same procedure has been adopted by the bank in the present case. On the basis of valuation of inventory of stock after physical verification the drawing power of the party has been calculated and allowed at ₹ 100 lakhs as on March 30, 2009 on the basis of inventory. 6.2. The learned Departmental representative further submitted that in the first place the assessee has not brought on record that he had furnished to the bank any stock statement of the valuation of ₹ 17,50, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the learned Commissioner of Income-tax (Appeals). Therefore, the learned Commissioner of Income-tax (Appeals) has not acted strictly in accordance with the provisions of rule 46A of the Income-tax Rules, 1962. Even if the reconciliation statement has not been accepted, can any statement on account of, i.e., balance-sheet or profit and loss can be read in part, the answer is no . Since any document or statement has to be read in toto in settled ratio. The assessee's explanation submitted before the learned Commissioner of Income-tax (Appeals) as an additional evidence which in fact is on record that the assessee has transferred ₹ 1,66,13,401 to sales account out of the stock as on March 31, 2009. The learned Commissioner of Income-tax (Appeals) without any reason has rejected the said explanation. Something must remain, i.e., either the closing stock at the close of the year and if it is not there then there has to be the sales as claimed by the assessee. If the closing stock of ₹ 1,69,17,000 is accepted by the learned Commissioner of Income-tax (Appeals) then accordingly the sales to the extent of ₹ 1,66,13,401 has to be reduced which the learned Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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