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2023 (6) TMI 47 - HC - Income TaxAddition on account of discrepancy in stock - Whether the CIT(Appeals) was right in ignoring the remand report furnished by the AO? - Whether closing stock was duly established during the assessment proceedings? - HELD THAT:- As could be seen from the remand report nine copies of stock statement filed by the assessee as forwarded by the bank were enclosed. Copy of the said internal inspection report of the bank has been annexed in the paper book from which it is seen that the stock statement as on 31st October, 2004 valued at Rs.23.37 lacs was also noted in the said report. When we perused the order passed by the CIT(A) dated 15th October, 2007 we find that there is absolutely no reference to the remand report. Whether the assessee could be taxed based upon the inflated stock shown in the stock statement submitted to the bank? - This issue is no longer res integra and has been decided in the Commissioner of Income Tax vs. N. [1998 (9) TMI 27 - MADRAS HIGH COURT] as held that the assessee’s income is to be assessed by the income tax officer on the basis of the material which was 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. 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 the 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. Law on the subject having been well-settled, it is the burden upon the Assessing Officer to show that the assessee had undisclosed income and merely by referring to a bank statement the assessment could not have been completed. However, on facts, the assessee’s case, is better placed. We say so because that the CIT(A) had called for a remand report and the remand report clearly brings out all the facts and also encloses the inspection report submitted by the bank which reflects the correct details. CIT(A) and the learned Tribunal had committed an error in not accepting the case of the assessee. Decided in favour of assessee.
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