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Rajasthan High Court · body

2005 DIGILAW 2405 (RAJ)

CIT Ajmer v. A. K. Synthetics

2005-09-09

R.S.CHAUHAN

body2005
Judgment 1. These two appeals are of two sister concerns and founded on identical facts. However, the issues raised in the two appeals are alike apart from the additions made by the Assessing Officer which were deleted by the CIT (Appeals) as well as by the Tribunal. 2. Shorn of the figurative difference in the two cases, the common dispute is additions made on account of discrepancy found by the Assessing Officer between the statement of the stock register maintained by the assessees and the statements of stocks-in-trade of yarn, gery clothe and finished clothes submitted to the bank for the purposes of obtaining loan facilities from the bank. 3. On being asked to explain, the assessee stated that while the statements were produced before the bank, they were drawn in defective manner and by mistake in the stock position of the firm, the goods received by the firm for doing the job work and which otherwise did not form part of stock-in-trade was also included in the statement given to the bank for the purpose of obtaining loan on the basis of the stock position. 4. This explanation was not accepted by the Assessing Officer. However, when the matter was before the CIT (Appeals), he referred to the correspondence between the assessee and the bank, which fortified the assessees contention with the statements of stocks of yarn, grey cloth, finished textile as submitted to the bank had included not only the stocks of his own production activities, but also stocks of goods which he received from his customers for whom he was doing job work, which did not from part of the stock-in-trade. The bank has shown its displeasure for submitting such faulty statements, for obtaining loan facilities, with this background, the CIT appeals found the explanation furnished by the assessee for such apparent discrepancy in the stocks position in the register of the stocks maintained for its own activities and the statements submitted to the bank on 13.04.1991 and 31.05.1991 as plausible and acceptable. As the explanation submitted by the assessee for the discrepancy in the stock position at two levels were found satisfactory, the CIT appeals deleted the additions made on account of the said discrepancies by the Assessing Officer. 5. Such deletion was affirmed by the Tribunal. As the explanation submitted by the assessee for the discrepancy in the stock position at two levels were found satisfactory, the CIT appeals deleted the additions made on account of the said discrepancies by the Assessing Officer. 5. Such deletion was affirmed by the Tribunal. The CIT appeals has given detailed reason in Chandan Singh case and said reasons have been adopted by it without referring to the details in M/s. A.K. Syntheticscase. It would be apposite to refer the reasons that prevailed with the CIT Appeals and also with the Tribunal:-“I have carefully considered the facts of the case as well as the submission of the learned Counsel of the appellant. It was stated before the A.O. that the stock as declared to the bank as on 30.04.1991 and 31.05.1991 consisted of appellants own stock as well as stock of outside parties and this was done to present a favorable picture of the financial position of the appellant firm. The register in which yarn received from outside is recorded was also produced before her. However, in want of proper confirmation and explanation, she rejected this explanation. Before me the learned Counsel for the appellant has reiterated the explanation filed before the A.O. and has also filed copies of the correspondence entered between the bank and the appellant firm, photo stat copies of the yarn register in which yarn received from out sides parties is recorded alongwith challan number, confirmation letters from the out siders whose yarn was lying with the appellant as on 30.04.1991 and 31.05.1991 and also produced original challans in support of their contentions. I am not treating all these paper as additional evidence because all these are being filed to corroborate the fact already stated before the A.O. and to support the original book of record i.e., the yarn receipt register and, therefore, no opportunity separately is being given to the A.O. to comment on the documents and confirmation letters filed from the out side parties filed by the appellant. At the same time it may be stated here that what ever other papers were filed by the appellant during the course of earlier hearings were forwarded to the A.O. by my predecessor on 14.02.1995 and as such she has been provided an opportunity in respect of documents like correspondence between the bank and the appellant firm, revised statements, photo copies of register etc. Now from the material and evidence produced before me, it is obvious that the stock declared to the bank by the appellant firm as on 30.04.1991 and 31.05.1991 included the stock of out side parties also. Therefore if the combined total of the own stock of the appellant and the stock of the outside parties is taken there will be no discrepancy at all. This fact is not only evident from the evidence produced by the appellant it self but also from the letters of the bank authorities. The revised statement of stock filed by the appellant after the warning from the bank that stock of out side parties should not be included in the monthly statement of stock confirmed the quantity of stock recorded in the books of a/c. In view of these facts I would hold that as a matter of act there was no discrepancy between the stock as declared to the bank and as recorded in the books of a/c as on 30.04.1991 and 31.05.1991. The obvious difference was because of the fact that while the stock declared to the bank consisted of appellants own stock and the stock of out side parties for whom it is doing job work, while the stock recorded in the books of a/c was its own only and excluded the stock of out side parties. Thus, the difference found in the stock as declared to the bank and as declared in the books of a/c is fully and satisfactorily explained. Therefore, no adverse view can be taken on this ground. I would, therefore, hold that the addition of Rs. 24,91,060/-is without any basis and, therefore, deleted hereby. 6. Since, the additions made on account of its own activities was founded on a premise that the assessee has not explained satisfactorily difference between the stock register submitted to the bank and shown in the books of the account and that premise for making additions was not accepted by CIT (Appeals), other additions made as a result of said discrepancy were also deleted. 7. These findings have been affirmed by the Tribunal. 8. We are of the opinion that in the aforesaid circumstances, the acceptance of explanation for such discrepancy in the two statements was clearly in the realm of finding the facts which was founded on material which was before the two authorities on record. 7. These findings have been affirmed by the Tribunal. 8. We are of the opinion that in the aforesaid circumstances, the acceptance of explanation for such discrepancy in the two statements was clearly in the realm of finding the facts which was founded on material which was before the two authorities on record. The inference drawn from material on record which is plausible, does not give rise to any question of law much less substantial question of law. 9. These appeals fall and are hereby dismissed. No order as to costs.