Loomba Manufacturing Syndicate Ludhiana Vs CIT (Punjab And Haryana High Court)
The appeal under Section 260A of the Income Tax Act, 1961 challenged the order dated 09.02.2009 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh. The appeal was admitted on 17.03.2010 to consider whether the addition made was sustainable in view of the Court’s earlier order dated 06.08.2004 and whether the impugned orders were liable to be set aside as relevant bank records had been weeded out and the issue regarding signing of stock statements by partners remained unanswered.
This was the second round of litigation. In the earlier proceedings, the High Court had held on 06.08.2004 that stock statements not signed by any partner nor filed by or on behalf of the firm with the bank could not be the sole basis of addition. The Court also observed that denial of opportunity to cross-examine the Bank Manager had prejudiced the assessee. Accordingly, the matter was remanded to the Tribunal with directions to grant opportunity to the assessee to prove that the stock statements were not signed by it and to allow cross-examination of the Bank Manager or his successor.
Pursuant to remand, the ITAT further remanded the matter to the Assessing Authority. During fresh proceedings, the Assessing Authority examined Mr. Anmol Sharma, Deputy Manager, State Bank of India, Civil Lines, Ludhiana. As the matter pertained to an old period and records older than ten years had been weeded out, he could not provide specific details of the account. However, he explained the bank’s procedure regarding overdraft facilities secured by hypothecation of stock. He stated that stock was kept under lock and key with the bank’s godown keeper, who prepared the stock statement. The statement was confirmed by the firm by signing it, and it was not entered into the bank’s records unless signed by a partner. The stock statement formed the basis of the assessee’s drawing power.
