TMI Blog2013 (10) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... eal under Section 260A of the Income Tax Act, 1961 { Act for short} by proposing the following substantial questions of law : Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs. 10,39,75,306/= made by the A.O under Section 69B of the Act on account of difference in quantity and value of the stock as shown in the books visavis as shown to the Bank and confirmed by the CIT [A] ? 2. Brief facts necessary for the purpose of adjudication are capsulized hereinafter 2.1 Assesseerespondent is engaged in the business of manufacturing MS Seamless pipes. For the A.Y 200910, the return of income was filed showing income of Rs. 72,41,714/=. Case of the assessee was selected for scrutiny and a notice under section 143 (2) of the Act was issued. 2.2 The Assessing Officer noted that the respondentassessee had shown secured loan of Rs. 13,78,76,163/=; which included cash credit facility from Canara Bank against hypothecation of stock of Rs. 11,03,22,151/=. It was further noticed that the closing stock, as per the books was shown at Rs. 6,86,41,931/= and a copy of the bank stock statement as on 31st March 2009 which was furnished by it to the Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , allowed partially the appeal of the assessee by a detailed reasonings. 2.5 CIT [A], as noted above, concurred with the findings of the Assessing Officer by a detailed reasonings. 2.6 However, the aggrieved assessee approached the Tribunal which had independently examined the entire issue holding in favour of the assessee and against the revenue, resultantly, this appeal by the Revenue, proposing the aforementioned questions of law. 3. Learned counsel Ms. Paurami Sheth appearing for the Revenue has vehemently submitted that the present Appeal deserves to be entertained in as much as here, it is not only the question of valuation of the stock shown on a higher side to the Bank, but, there is also a question of difference in the quantity of the stock shown in the books of account and the statement furnished to the banking authorities. She further urged that the decisions of this Court she is conscious of and yet in absence of any contention in respect of the quantity, the order of the Tribunal must be held to be perverse, and therefore, a close scrutiny is required of the question proposed before this Court. 4. Having thus heard learned counsel for the Revenue and on careful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Arrow Exmi (P) Limited [Supra], which is essentially depended upon by the Tribunal. In the said decision, there was a difference in the value of the closing stock, hypothecated and not pledged with Bank which were inflated in the statement given to the bank to avail higher credit facilities. The same was accepted by the Tribunal on the ground that the assessee s books of account and the accounting system have been found to be genuine and is supported by requisite vouchers, etc. The Court held, thus 5. The much emphasis given by learned counsel Mrs. Mauna Bhatt that the Tribunal has erred in making this observation that it was for the A.O to establish that the sale is not genuine and the observation that the A.O has failed to establish any unaccounted purchases outside the books of account to establish that the stock as per the books is incorrect, is contrary to the material on record when admittedly the statement before the bank is different than the books of account. However, this submission referring to this observation has to be considered in light of the entire discussion wherein the Tribunal has, referring to the CIT (A) order in detail has accepted the explanation giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or as on the date of valuation of stock; (d) The assessee has maintained stock register; (e) The assessee s books of account are not found to be defective or non-genuine by A.O; (f) The books of account maintained by the assessee are accepted by the Central Excise and/or Sales Tax Department. 8.1 On elaborating each guideline with reference to the facts on record, the Tribunal upheld the say of the assessee. 9. The entire emphasis of the Revenue is that the decisions of this Court only pertain to the value of the stock and not on the factum of difference in the quantity of the stock shown in the books of account and in the documents furnished to the banking authorities for the purpose of availing credit facilities/loan. However, this version is not acceptable in as much as the Tribunal has noted that there was no physical verification of the stock by the banking authorities as on 31st March 2009. Although much reliance was placed by the Assessing Officer and CIT [A] on the godown visit by the Bank Manager after closing of the year ie., on 25th April 2009, however, no physical verification and counting of the stock took place during such visit and even otherwise, the Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X
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