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AVI POLYMERS LIMITED Versus THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1

2016 (7) TMI 965 - GUJARAT HIGH COURT

Difference in the amount declared in books of accounts and statement furnished to Bank - Addition on difference between the stock shown in the regular books of accounts of the appellant and that declared in the statement furnished to the Bank in respect of hypothecation facility availed of by it - Held that:- As only on account of inflated statements furnished to the banking authorities for the purpose of availing of larger credit facilities, no addition can be made if there appears to be a diff .....

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AVERI) 1. By way of present appeal, the assessee has challenged the order of the Income Tax Appellate Tribunal, Ahmedabad Bench B , Ahmedabad, (For short, the Tribunal ) in ITA No.4317/AHD/2003 dated 28.2.2006, whereby the Tribunal has reversed the order of the CIT (A) and confirmed the order of the Assessing Officer. 2. At the time of admitting this Appeal, following question of law was framed:- (i) Whether in the facts and circumstances of the case the Tribunal has substantially erred in law i .....

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fficer not on the basis of the difference in quantity and there was no finding as to actual existence of excess stock with the assessee. He further submitted that there is no material brought on record by the department to prove that the assessee had made undisclosed investment in purchasing of stock. He relied upon the following observations made by the CIT (Appeals):- 5. On a very careful consideration of the facts and circumstance of the case as narrated above and on the basis of various judi .....

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icial decisions on the subject matter, I hold that the addition made on account of discrepancy in stock shown to the bank and to the I.T. Authorities in the instant case to the tune of ₹ 44,29,335/- is not justified. It is seen in this case that the addition is not on the basis of difference in quantity. There is also no material brought on record to prove that the appellant has made undisclosed investment in purchasing of stock. In absence of any such finding, the addition cannot be susta .....

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ed order that, As regards the quantitative difference we find that the CIT (A) is not justified in deleting the same. It is a specifically stated figure in the bank statement. The Manager of the Bank was examined about the character of the company. The Accountant of the assessee-company was examined and he stated that the statement was examined by the bank and the Accountant could not explain the difference. The quantitative difference works out to ₹ 17,99,280 as is the peak of November, w .....

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y any material on record except the higher valuation shown to the bank. It is submitted that, in view of these findings, the view taken by the Tribunal and the Assessing Officer is required to be accepted by dismissing present appeal. 5. We have heard learned counsel for the parties. We have also gone through the impugned judgment and other material on record. We have also perused the judgment relied upon by the learned advocate for the appellant. While deciding Tax Appeal Nos.16 and 229 of 2001 .....

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been subjected to statutory audit under the Companies Act, 1956 and also tax audit under the Income tax Act. No errors were found at any stage in the report submitted by these auditors and for the past eight years, the assessee had been following continuously/ consistently the method of accounting, as provided under section 145 of the Act, valuing the closing stock and inventory, as provided under section 145 A of the Act. The assessee was also subjected to Excise and VAT and the books of accou .....

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