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2020 (9) TMI 406 - AT - Income TaxDisallowance u/s. 36(1)(iii) - Interest-free advances by the assessee-proprietor to his close relatives and to an associate concern - HELD THAT:- It is the statement of affairs, i.e., the balance-sheet, both as at the beginning and the end of the period under reference, i.e., f.y. 2008-09, that shall, in a large measure, clarify the various sources and application of funds, demonstrating the utilization of borrowed funds during the relevant year. This is precisely what the assessee was required to do. Why, in a case of variety of sources and application of funds, directed for specific purposes or otherwise, it is the fund flow (or cash flow) statement for the year that may, in addition, be required to throw light on the said utilization. Rather, as afore-noted, the assessee’s principal borrowings are secured loans (at least as on 31.3.2009), so that an adequate asset base comprising the security, would itself exhibit the utilization thereof for the stated purpose - matter, accordingly, i.e., in view of the foregoing, is remitted to the file of the AO to allow the assessee opportunity to present his case. Under-valuation of closing stock - HELD THAT:- There has been no examination of the facts. What, then, is the basis for the Revenue to contend that the assessee had incurred a cost higher than ₹ 300/- per sq. ft. for the Township project? We could understand where the Revenue had based its charge of under-valuation w.r.t. the assessee’s accounts, or found them unreliable, which is not so. The stated basis, as afore-noted, is wholly presumptuous. Thus, notwithstanding the fact that the assessee has not furnished the cost details, as it ought to have, we find no reason for remission. We have already observed that at no stage was the assessee called upon to prove his case. The onus to establish escapement of income is on the Revenue, which it has completely failed to, with there being no charge of the assessee being not cooperative, or having not, on asking, furnished the relevant details. It is a clear case of non-application of mind by the Revenue. It would therefore be unfair to call upon the assessee to, after lapse of a number of years, justify its case. The addition is without any basis, much less valid, as well as sans any factual finding, and deserves to be deleted. We direct so. Needless to add, the opening stock (for the following year) shall be the closing stock as reflected in the assessee’s final accounts for the current year, i.e., as on 31/3/2009.
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