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TMI Blog1995 (11) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... e of a manufacturing account. As per bank certificate received, it was found that the assessee was enjoying a cash credit facility of Rs. 10 lakhs with a margin of 30%. It was noted that cash credit loan of Rs. 11,84,921 had been taken on stocks valued as on 31st March, 1985 at Rs. 24,06,600. This was a case of hypothecation of stock in addition to certain property shown by way of collateral security. As per the trading account, the closing stock had been shown by the assessee as on 31st March, 1985 at Rs. 20,79,444. On this basis, the AO reached the conclusion that the assessee had undervalued the closing stock. Certain exercise was made to ascertain the value of the closing stock on the basis of the stock statement filed by the assessee b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. It was explained by Shri Gupta that the stock statement filed by the assessee showing the valuation as on 31st March, 1985 was not traceable in the bank records and the entries recorded in the drawing power register did contain certain cuttings and corrections. Those entries had been recorded in the register by the cash officer Shri N.K. Munjal. Shri Gupta, however, could not explain as to how originally the value of stock had been entered in the DP register by Shri Munjal at Rs. 24,06,600. The first appellate authority came to the conclusion that in the absence of the original stock statement, it could not be conclusively held that the value had been shown by the assessee at Rs. 24,06,600. Since the entry had been corrected in the DP re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ombay High Court in the case of Ramanlal Kachrulal Tejmal vs. CIT (1983) 32 CTR (Bom) 293 : (1984) 146 ITR 368 (Bom). That was a case where the stocks of raw-material had been shown at a much higher valuation than the valuation disclosed to the IT authorities. It was explained by the assessee that the excess stock belonged to a third person. No evidence was, however, produced to substantiate this explanation. It was held that in the absence of any evidence to support the story that the stock belonged to a third person, the excess stock as found in the overdraft account of the assessee must be held to belong to the assessee. Our attention is also drawn to the Tribunal's order dt. 4th Nov. 1993 in ITA No. 1062 of 1988 in the case of Loomba Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat by mistake the valuation of stock of some other customer had been recorded in the DP register against the name of the assessee firm. That mistake was subsequently discovered and a correction was made showing the value of stock as on 31st March, 1985 at Rs. 21,42,780. The assessee should not be penalised for a mistake committed by bank official. No effort was made to examine Shri Munjal. Our attention has been drawn to another order of the Tribunal dt. 29th Sept., 1995 in I.T.A. No. 932 of 1990 in the case of M.R. Beas Hosiery. That was also a case where some difference was found in the valuation of stock but it was held that addition could not be made on the basis of such difference. It is also contended that affidavit of Shri Varinder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of stock had been shown at Rs. 24,06,600 but that entry was scored off and a new entry showing the value at Rs. 21,42,780 had been entered. We do not know as to why and how this alteration was made in the bank register. It was for the AO to ascertain if there was any collusion between the assessee and the bank officials. Shri Munjal, the cash officer, could have been examined so as to ascertain as to why the alterations were made in the relevant entries. It was only suspicion on the basis of which a conclusion was drawn that the assessee did declare the value of the stock at Rs. 24,06,600. The affidavit of Shri Varinder Kumar Sood definitely goes unrebutted. It is also to be noted that it was a case of hypothecation and not that of ple ..... X X X X Extracts X X X X X X X X Extracts X X X X
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