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TMI Blog2007 (5) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... quisite inquiry about the true stock position and value of the assets. The learned Assessing Officer preferred to rely merely upon the fact that for such discrepancy addition was made in the earlier year; and on that basis alone is founded the addition for the year in question. It has been noted by the appellate authorities that such addition made for the earlier assessment year 1981-82 has not been countenanced in appeal; and the Tribunal has pointed out that under the similar facts and circumstances, reference application moved by the revenue for the assessment year 1981-82 was rejected. Irrespective of that, we are clearly of opinion that for the year in question, i.e., assessment year 1982-83, the Assessing Officer could not have made additions merely with reference to the variation in two valuations without coming to a conclusion that there was actual variance in the quantity of stock; and without finding as to when such discrepancy, if at all, occurred. The appellate authorities cannot be said to have erred in deleting such addition made without requisite inquiry and without essential finding about actual variation in the stock. We are satisfied with the correctness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of goods hypothecated and declared by assessee with it but reply of the bank was not received so far; and the case was getting time-barred and, therefore, he would adopt the value as per the record available with him with a right to take remedial action in case of substantial difference being found after getting information from the bank. Accordingly, the learned Assessing Officer proceeded to make addition to the tune of ₹ 3,23,500, i.e., the entire amount of difference between the value of assets as stated in the books and as stated to the bank. 3. In appeal before the Commissioner of Income-tax (Appeals) [ CIT(A) ], the assessee contended that no addition should have been made in relation to the value of assets because the value was shown on higher side to the banking authorities for the purpose of obtaining the loan and there was no discrepancy in the actual stock. The assessee referred to the decision of appellate authorities in its own case for the assessment year 1981-82. After considering the factual position and the order passed in relation to the assessee for the assessment year 1981-82, the learned CIT(A) found that in the absence of any material to the contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Assessing Officer makes out that the difference in the closing stock declared in the books of account and that declared to the bank was of the similar nature as that of the earlier year; and the learned Assessing Officer proceeded on the premise that because the contention of the assessee was not accepted for the earlier year, the same was required to be rejected for the present assessment year too. Then, the Assessing Officer pointed out that a communication was addressed to the Central Bank of India, Udaipur to know the exact value of the goods hypothecated and declared by the assessee; and as the reply of the bank was not received and the case was getting time-barred, the learned Assessing Officer adopted the valuation as per the record available with him and made addition to the tune of the difference between the two figures. The learned CIT(A) in appeal noted that in absence of any material to the contrary indicating any real discrepancy in the quantity of the stocks as reflected in the books of account vis a vis the quantity of stock pledged with the bank, the addition was not justified. The Tribunal again noted that it was not brought out by the Assessing Officer as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P.) Ltd. (supra), the admitted position was of the assessee having given inflated figures of stock position. The Court noted :- it is pertinent to observe that the difference was not only in the valuation of the stock but also in the items of the stocks hypothecated which on solemn declaration by the assessee was certain as checked and acted upon by the bank after due verification. If there was actual discrepancy in the stocks hypothecated to the bank and that shown in the accounts which the assessee failed to explain by any acceptable explanation or material, no exception can be taken to the addition made by the authorities and it was open to the Tribunal to come to such a conclusion that the assessee had stocks outside the account books. ... (p. 631) 14. In the case of Coimbatore Spg. Wvg. Co. Ltd. (supra) again, the quantity of pledged cotton stocks as stated to the bank and as stated in the books carried substantial variation and the assessee s explanation was not accepted. The Court said,- Once the Tribunal finds that there were excess stocks after rejecting the explanation of the assessee, the conclusion is inescapable that the excess stocks should have com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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