TMI Blog2002 (8) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... -------------------- Item Stock as Stock as Excess / Less per Audit submitted Report to Bank ------------------------------------------------------------------------- Tin 64.9 kg 250 kg + 185.1 kg Finished goods 87 kg 6180 kg + 6093 kg PVC Resin 17075 kg 9000 kg - 8075 kg Expoxy 59.6 kg 750 kg + 690.4 kg DOP 340.9 kg 800 kg + 459.1 kg Lubricants 136.6 kg 300 kg + 160.4 kg ------------------------------------------------------------------------- When asked for the explanation for the discrepancies, the assessee submitted the explanation vide his letter dated 26-8-1992 which reads as under: "As we have obtained cash credit to the extent of Rs. 5.00 lakhs. We have to insure the goods to the extent of Rs. 7.25 lakhs and for that purpose, we have taken the insurance to the same amount. In view of the above, we have to constantly keep the value of stock inflated to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, the Ld. DR referred to the findings of the CIT(A) as reproduced above and argued that even upholding the findings of the Assessing Officer that the assessee had excess stock outside the books of account which have been declared for the purpose of availing of overdraft facilities, the CIT(A) has taken a compassionate view to delete the decision on flimsy grounds. According to the Ld. DR, the solemn declaration filed by the assessee before the bank authorities for availing overdraft facilities as well as the Fire Insurance Policy from the Insurance agency clearly established that the assessee was in possession of excess stocks for which the addition has rightly been made by the Assessing Officer. The Ld. DR placed reliance on the decision of the Hon'ble Gauhati High Court in the case of Dhansiram Agarwalla v. CIT[1993] 201 ITR 192 and further reliance is placed on Century Foams (P.) Ltd. v. CIT [1994] 210 ITR 625 (All.). The Ld. DR also referred to the decision of the Tribunal in the case of Jyoti Industries [ITA No. 1413 of 1995] wherein under identical facts, the Tribunal has upheld the addition on account of excess stock reflected in the stock hypothecation statement. 6. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in the instant case, as reproduced hereinbefore, contains detailed particulars regarding the quantities and valuation of the various items of stock held by the assessee and declared to the bank. It is not a case where merely the valuation has been over-stated by the assessee. The catena of decisions of various High Courts placed by the learned departmental representative before us quite clearly spell out the principles which are to be followed in the cases involving stock discrepancies in the stock statement given before the bank authorities. The decision of Gauhati High Court in the case of Dhanisiram Agarwalla's cited by the learned departmental representative has briefly reviewed the case law on the subject and held that no such practice by businessmen of declaring larger stocks to the bank for the purpose of getting higher loans has been shown to exist or has been recognized in the commercial circles or by courts. Their lordships further observed that on the basis of any such practice the assessee cannot be allowed to go back on their own sworn statements given to the banks as to the stocks held and hypothecated by them to the banks. The Court held that a heavy bur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a finding of fact and no interference with the same is called for. The High Court has in fact referred to its earlier decision in the case of Coimbatore Spg. Wvg. Co. Ltd. wherein a similar observation is made to the effect that the Court is not entitled to examine the correctness of a finding of fact recorded by the Tribunal. The decision, therefore, does not render any assistance to the assessee's case. 9. The Ld. counsel has next cited the unreported decision of Gujarat High Court in the case of Dahyabhai Pitambardas Co. Full facts of the case could not be furnished by the Ld. counsel. An extract from the publication Gujarat High Court Digest on Direct cases by Shri K.H. Kazi, Advocate has been furnished which reads as under: "Unexplained investment: Addition under section 69 Income-tax Act, 1961 - According to ITO on examination of the Pledge Account of the assessee with the Bank, he had pledged more tins than the stock available with him on books Valuation of the excess stock was assessed by the ITO amounting to Rs. 40,972/- on the largest of - the three amounts being the difference in the stock pledged and the stock on books - Tribunal holding that the alleged incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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