TMI Blog2004 (9) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on account of difference of stock found in the statement given to the bank and disclosed in the books of account. 3. The brief facts of the case are that the assessee at the relevant time was engaged in the business of designing and publication of books and diaries. It has availed cash credit facility from the bank and, therefore, hypothecated its stock as collateral security. On scrutiny of the stock statement furnished to the bank in comparison to the stocks disclosed in the closing stock, the AO found a deficit of stock in the closing stock. According to him, the assessee has disclosed excess stock in the bank statement whereas in the books of account, it has shown lesser stock. He particularly verified the finished goods wherein su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In showing its value, project expenditure incurred during the year might not have been considered. This is to be considered while valuing the closing stock for the purpose of finalisation of accounts. This might be one of the reasons for difference in value of work-in-process. (iv) Because of these reasons, value of closing stock shown in books of account is on higher side as compared to value of closing stock shown in bank statement. (v) While passing the assessment order for asst. yr. 1992-93, the learned AO had made an account of estimation of gross profit. While deciding the appeal No. CIT(A)-VIII/Cir.9(1)/171/1995-96 on 17th Oct., 2001, the said addition is deleted. Copy of the said order is filed in appeal for asst. yr. 1993-94." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ordinary course of its business. Thus, entries so made carry with them presumption of truth unless proved otherwise. If it came to the notice of AO that excess stock has been shown to the bank even in terms of quantity, then ipso facto addition should not be the result. A heavy burden would be upon the assessee to explain that books of account only depict the true state of affairs. If the assessee failed to discharge this burden, then obviously, AO would add the value of such stock. Let us see how the AO in this case has analysed the details. On going through both the assessment orders, it reveals that wherever the assessee has shown excess stock in the books, he presumed that the assessee was not having this stock with it and sold it ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the assessee. The AO noticed excess stock in the books in comparison to the stock statement furnished to the bank. He treated sale of such stock as undisclosed sale and added the GP in both the assessment years. The learned CIT(A) while deleting this addition in asst. yr. 1993-94 has observed as under: "8.3 The logic of the AO that the excess stock as per books is treated as undisclosed sales is nothing but absurd. Had there been lower stock, there could be some presumption of sales outside the books. Therefore, the question of estimating the GP on assumed sales does not arise. The addition made on this account is, therefore, deleted." 7.1 On going through the assessment order as well as the finding of the CIT(A), we do not see any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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