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TMI Blog2024 (11) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... nt that might have given to a 3rd party unless there is any material to corroborate the statement given to a 3rd party. Admittedly, nothing was brought on record by the AO that any existence of corroborating value of closing stock given to the bank. We find the burden is on the AO to show that the assessee has undisclosed income and the said burden cannot be said to be discharged by merely referring to the statement given by the assessee to the 3rd party, which is not directly related to the assessment, making the sole foundation for finding merely the assessee has deliberately suppressed income. Thus, we hold the addition made by the Assessing Officer is not justified and the order of the ld. CIT(A) is justified in directing the Assessing officer to consider the value of closing stock of current year as opening stock of subsequent assessment year. Therefore, the Assessing Officer shall consider the value of stock as annexed to balance sheet. Thus, the ground raised by the Revenue fails and are dismissed. - Shri S.S. Viswanethra Ravi, Judicial Member And Shri Amitabh Shukla, Accountant Member For the Appellant : Ms. Gouthami Manivasagam, JCIT For the Respondent : Ms. Sandhyaarthi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 010-11 in ITA No. 2160/Mds/2011 dated 28.04.2013. In giving effect proceedings, the Assessing Officer added difference in closing stock between the return of income and statement submitted to the Bank. The relevant portion as reproduced herein below: 4. On receipt of the JCIT's direction as above, one more opportunity was offered to the assessee and the case was discussed with the AR. I have gone through the directions of the Range Head, ITMR, Case laws and Department's present stand on the matter in detail. No concrete proof could be produced by the assessee to substantiate its claim that the difference of the closing stock is only because of the rate difference. The stock submitted before the bank could not be exactly correlated to the stock as per books. The department has also taken a consistent view, considering which, the difference is added back as unexplained investment and is assessed u/s 69 of the Income Tax Act, 1961. Thus, the addition of Rs. 76,28,385/-, being the difference between the closing stock declared in the return of income and disclosed to the bank authorities for want of credit facility is confirmed as correct. Regarding the issue of treatment of add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 ITR 204, held that closing stock taken by the Assessing Officer for the previous accounting year shall be the opening stock for coming accounting year. The relevant part of the impugned order is reproduced herein below for ready reference: Facts on record and appellant's submission have been examined. It is seen that the appellant is consistently adopting two different valuations of closing stock, namely, first for the audited balance sheet and other for availing credit facilities in the bank for all the years starting from F.Y. 2008-09. This gives rise to the question as to which valuation is correct and which valuation is incorrect. In case, the value of closing stock is inflated before the bank then the banking system is compromised and in case the closing stock is deflated before the I.T. Authority than there is loss to the exchequer. This is a serious issue. The appellant has not submitted any document before the AO to explain that the difference in valuation of closing stock before bank was because of different rate/method adopted by bank authorities. Therefore, addition of Rs. 76,28,385/- being difference between closing stock declared in audited account/ROI and disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Assessing Officer. She referred to Form 8A invoking the provisions of section 158AB of the Act r.w. Rule 16 of the Income Tax Rules, 1962 and requested to block the present appeal for six months. 7. The ld. AR Ms. Sandhyaarthi, F.C.A., placing on record order of this Tribunal in assessee s own case for assessment year 2008-09 in ITA No. 2116/Chny/2018 dated 02.01.2020, argued that this Tribunal held that the income is to be assessed by the Revenue only on the basis of material which is required to be considered for the purpose of assessment, but, not ordinarily on the basis of statement, which the assessee may have given to a 3rd party unless there is any material to corroborate the statement of the assessee given to the 3rd party even if it be a bank. She argued that the Tribunal held the view of the Assessing Officer in making addition on account of difference between valuation of closing stock shown in the return of income and other being given to the bank for availing credit facilities. 8. Heard both the parties and perused the material available on record. We note that the Assessing Officer made addition on account of difference between the value of closing stock shown i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be assessed by the Income-tax Officer on the basis of the material which is required to be considered for the purpose of assessment and ordinarily not on the basis of the statement which the assessee may have given to a third party unless there is material to corroborate that statement of the assessee given to a third party, even if it be a bank. The mere fact that the assessee had made such a statement by itself cannot be treated as having resulted in an irrebuttable presumption against the assessee. The burden of showing that the assessee had undisclosed income is on the Revenue. That burden cannot be said to be discharged by merely referring to the statement given by the assessee to a third party in connection with a transaction which was not directly related to the assessment and making that the sole foundation for a finding that the assessee had deliberately suppressed his income. That the burden is on the Revenue to prove that the income sought to be taxed is within the taxing provisions and there was in fact income, are propositions which are well settled by the Supreme Court in the case of Parimisetti Seetharamamma v. CIT [1965] 57 ITR 532 which reiterates these propo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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