9911796707
TMI Blog1975 (1) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... of Coimbatore, his wife and relatives, by virtue of the number of shares and the position they held had the absolute control over the affair of the assessee-company. Vijayakumar Cotton Press, whose role in this case, as it appears to us, had not received the attention it deserved, is also at the relevant time, and we are told thereafter also, the business concern of the minor son of G. Krishnan and therefore, necessarily managed by the said Krishnan. By about 1961 by transfer the control of the affairs of the assessee company had passed into the hands of the person who are now in charge of the affairs of the assessee-company. 4. The assessee had, on pledge of its stocks, taken loans from the Coimbatore branch of the India Overseas Bank. The statement from the bank showed that besides the loan raised on pledge of the stocks in the godown at Always the assessee had also raised a loan by pledge of 1,379 bales of Cambodia cotton lying in the Coimbatore godown of Vijayakumar Cotton Press. These 1,379 bales of cotton admittedly did not find a place in the accounts of the assessee. When the assessee was called upon by letter dt. 15th March, 1967 to explain the position, the assessee by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in rupees stock on date 1312 bales - 870 5,70,720 . - 67 bales 870 28,710 . . . . 5,99,430 1379 bales A comparison between the statement of accounts and the declaration will show the conflict between the figures in the two documents which are ordinarily vital documents as far as the loan is concerned. The following certificate is also appended to this declaration :— "We, hereby, certify that the above statement of stocks which are fully insured against fire is a true and correct statement under minimum market values held by us under pledge to the Indian Overseas Bank Limited, and that all the stocks are at any and all times under the sold lien to the Indian Overseas Bank Ltd., for any or all advances out-standing on our accounts and we also certify that all stocks in the godown are our own bona-fide property. We are aware that on the strength of the declaration the advance is made by the bank should the bank wish at any time to carry out a detailed weighment and/or valuation of the goods it is at liberty to do so at our expenses and we agree to accept the result of such weighment and/or valuation. I certify that I have verified the above stocks to-day at an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere produced. If any person connected with the control and management of the affairs of Vijayakumar Cotton Press had been examined with opportunity to the assessee to cross-examine the deponent and that deponent had denied the ownership of Vijayakumar Cotton Press over those materials in its custody, the position will be different. The fact that the assessee used to purchase Cambodia cotton from Coimbatore are and that it admittedly used to stock its goods some times in that godown, just like it stored 456 bales, will not by itself give any indication that what is seen pledged to the bank is also its goods. If this fact and circumstances is taken as a guidance, even the unaccounted Cambodia cotton if any of Vijayakumar Cotton Press lying in that godown will have to be considered as the goods of the assessee. 9. The fact of declaration to the bank and the advance of loan to the assessee on the strength of that declaration which is the principal material for the ITO to hold against assessee are of no consequence in this case. The two concerns were at the material time under the control of the same person. So under these circumstances it is not unusual, or at least the real possibil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only as a mere formality to comply with the procedure for grant of loans to enable the Bank to advance the loan, the repayment which it though is a fact sure and certain and beyond suspicion. So no weight can be attached to these documents. Nor can this case, in the peculiar facts and circumstances disclosed, be decided, on this material alone in the form of a declaration by the assessee that the goods belonged to it and the resultant advance of loan by the bank. 11. The fact that the assessee failed to prove that in the subsequent assessment year it purchased these goods from Vijayakumar Cotton Press also is of no consequence because what we have to find in this case is only whether the goods belonged to the assessee in the particular accounting year. On course if the assessee had positively established that it purchased these goods only in the next year the work of appreciation of evidence would have become more easy. The failure to prove that fact would not show that it belonged to the assessee in the particular accounting year itself. 12. So each fact by itself is not sufficient to establish the case of ownership of the assessee. Nor is the cumulative effect of all these fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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