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2019 (8) TMI 292

..... ted for obtaining loans/CC limit - HELD THAT:- The assessee submitted that as on the closing of the financial year the closing stock was of ₹ 1,88,17,001/- which is also reported to the bank on the same date which is also certified by the bank (PB-11). It would, therefore, show that the stock statement tally with the stock statement submitted to the bank at the end of the financial year on 31.03.2014. The assessee, therefore, rightly contended that the stock statement submitted on 28.02.2014 prior to close of the financial year was on estimate basis and not on actual basis. The assessee also rightly contended that since assessee deals in controlled items like fertilizer and chemicals, therefore, it is subject to physical verification by Agriculture Department. No enquiries have been done by the AO from the concerned Agriculture Department with regard to discrepancy in the stock. It may also be noted here that in the preceding AY 2013-14 the similar addition was deleted by the Ld. CIT(A) following the judgment of the Hon’ble Punjab & Haryana High Court in the case of Sidhu Rice & General Mills [2004 (7) TMI 12 - PUNJAB AND HARYANA HIGH COURT] . Therefore,CIT(A) s .....

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..... of income on 29.11.2014 declaring total income at ₹ 5,71,950/-. The AO noted that there is an increase in the turnover as well as GP ratio as compared to the preceding assessment year. The AO called for information from Manager Punjab National Bank u/s 133(6) of the Act to furnish details regarding the stock/assets hypothecated by the assessee for obtaining loans/CC limit and to supply the bank statement submitted to the Bank. The stock statement revealed that on 28.02.2014 stock was declared at ₹ 2,23,86,350/- which is duly verified by the Bank. However, as per balance sheet as on 31.03.2014 the stock statement was at ₹ 1,88,17,001/-. The AO after calling explanation of the assessee and considering the GP rate made the addition of ₹ 25,66,790/- on account of unexplained investment in stock. 5. The assessee challenged the addition before Ld. CIT(A) and it was submitted that assessee was having bank facility from PNB, Narnaul and for getting higher credit, it is a common practice to furnish the stock statement to the bank by estimate and not the actual stock. The assessee did the same and furnished stock statement as on 28.02.2014 on estimate basis to the Ban .....

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..... ee and had been accepted by the department. It was in these circumstances that this court came to the conclusion that the findings recorded by the Tribunal were based on record and no addition could be made in such a case. 6. The assessee also submitted that the Hon ble Punjab & Haryana High Court in the case of CIT vs. Shri Bharat Bhushan Suri (HUF) has also followed the above judgment and allowed the appeal of assessee. Similarly, the Hon ble Madras High Court in the case of CIT vs. N. Swamy, 241 ITR 363 has observed as under: 4. We find it a little difficult to agree with those observations. The assessee s income is to be assessed by the Income tax Officer on the basis of the material which is 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. The 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 inc .....

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..... e explanation of the assessee that in view of the prevailing practice, the value of stock hypothecated to bank was inflated to avail of more overdraft facilities and deleting the addition on account of difference between stock shown to bank and the stock shown in the books of the assessee. He has also relied upon the judgment of Jammu & Kashmir High Court in the case of Ashok Kumar vs. Income Tax Officer, 201 CTR 178 in which it was held as under: Addition could not be made on the basis of difference between closing stock declared in the trading account and the stock shown in the statement submitted by the assessee to the bank as the stock position shown to the bank was on estimate basis and inflated value was shown to avail more credit from bank. He has, therefore, submitted that addition is wholly unjustified. 10. On the other hand, Ld. DR relied upon the orders of the authorities below and submitted that certificate of the bank (PB-11) is additional document which was not filed before the authorities below. 11. I have considered the rival submissions. It is not in dispute that assessee maintained books of accounts which are duly audited. The AO has not pointed out any specif .....

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..... supra). Therefore, Ld. CIT(A) should not have taken a contrary view in assessment year under appeal. The decisions relied upon by Ld. Counsel for assessee squarely applied to the facts and circumstances of the case. The issue is, therefore, covered by these decisions in favour of the assessee. It is well settled law that Revenue authorities are bound to follow the rule of consistency. In view of the above, I am of the view that the addition is wholly unjustified. I, accordingly, set aside the orders of authorities below and delete the entire addition. 12. Ground no. 1 of appeal of assessee is allowed. 13. On ground no. 2, assessee challenged the addition of ₹ 55,000/- on account of low household withdrawal. During the year, under consideration assessee had withdrawn a sum of ₹ 1,85,000/- towards household expenses. The family of the assessee consists of himself and wife only. Both the sons are earning separately and residing in Pune and Chandigarh. The family resides in own house for which no rent is to be paid. The family owns ancestral agricultural land of about 10 acres which belongs to HUF and income from agriculture was also use for household expenses. It was, ther .....

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