Full Judgment
The relief claimed by the revenue is that the order of the Commissioner (Appeals) may be reversed and that of the ITO be restored.
2. From the assessment order it is seen that the assessee was the proprietor of Ashok Industries for the assessment year nder review. The ITO pointed out that the original assessment was revised in the light of the direction of the appellate authorities. He pointed out that after completion of the original assessment dated 19-2-1975, it was detected that the assessee suppressed the stock of goods in the accounts to the extent of Rs. 5,04,127 and as the assessee has concealed his income which has escaped assesssment by reason of the failure of the assessee to disclose fully and truly all material facts necessary for the assessment, proceedings under Section 147(a) were initiated. Notice under Section 148 of the Act dated 2-10-1977 was served on the assessee on 7-3-1977, which was not complied with by the assessee. Subsequently, a notice under Section 142(1) of the Act was issued which was served on the assessee on 26-7-1980. The assessee filed a petition dated 18-8-1980 praying for adjournment on the ground that authorised advocate would go to Dibrugarh. on that day. The office of the present ITO is at Tinsukia. Time was allowed, accordingly, when the authorised advocate appeared before the ITO and submitted that the assessee would furnish the return within a few days and, accordingly, requested for short adjournment which was allowed. But there was no compliance on 29-9-1980. Again the ITO allowed the assessee to comply with the notice under Section 148 and notice under Section 142(1). But again the assessee did not comply with the same. The ITO, therefore, proceeded to make the assessment to the best of his judgment under Section 144.
3. Amongst other things, the ITO included in the reassessment income from business and income from other sources which he categorised as concealed income. He noted that as per details of accounts furnished by the assessee, it was seen that the assessee availed of credit facilities for over-draft on hypothecation, on pledging of the goods, stock, etc., with the State Bank of India, Tinsukia as mentioned below : (a) Loan against goods, fixed assets and fixed deposit certificates : 4. He also noted that total loan advanced by the bank was Rs. 6,68,828 and normally the bank advanced loan on this account to the extent of 70 per cent of the value of the securities offered and as such to obtain a loan of Rs. 6,68,828 the assessee had to offer securities of Rs. 9,95,000 (in round figure). But as per the balance sheet of the assessee as on 31-3-1972, the assessee could offer securities to the extent of Rs. 6,42,703 as detailed below : The ITO pointed out that whereas on an enquiry with the State Bank of India, it was found that the assessee to obtain the said loan disclosed his stock of goods amounting to Rs. 9,21,507 as on 31-3-1972.
Therefore, there was difference of Rs. 5,04,127 between the stock shown by the assessee in the balance sheet and the stock disclosed by the assessee to the bank. The ITO, therefore, pointed out that the assessee suppressed the stock in his accounts. He also observed that in furnishing the statement of his stock position as on 31-3-1972 before the State Bank of India, the assessee himself certified that the statement of stock was a true and correct statement of stores, etc.
5. In the circumstances, the ITO concluded that in the absence of any explanation by the assessee to the contrary, the difference of Rs. 5,04,127 was to be treated as undisclosed income for the year, which was added back.
6. The assessee took up the matter before the Commissioner (Appeals) and submitted his argument in writing. The facts and the background of the case were incorporated by the Commissioner (Appeals) in the impugned order. He pointed out that the assessee was carrying on the business of manufacture and sale of iron steel pipes, buckets, etc., and fabrication of steel structure in his factory which is located at Tinsukia and was registered as a small scale industry with the State Government authorities. It was pointed out that the raw materials required were controlled by the Government machinery and the requirements of the assessee were ascertained and the permit issued by the State authorities for obtaining raw materials, which was supplied by the Hindustan Steel Ltd., Assam Small Scale Industries Development Corpn., etc., which were all the Government agencies. It was pointed out that under the regulations, the assessee had to maintain day-to-day record of arrival and utilisation of raw materials and had also to submit the annual returns, value of the materials purchased, details of closing stock, etc., to the authorities concerned who scrutinised and checked the accounts. It was pointed out that those registers maintained were signed by the superintendent of industries for each arrival of raw materials. The contention of the assessee was that the original assessment was made after intensive investigation by the ITO in which several additions were made.
7. It was contended before the Commissioner (Appeals) that the assessee denied receipt of the said notice personally as the assessee had shifted to Ahmedabad. It was pointed out that the notice was received by Shri P. Khaitan who was the authorised advocate of the assessee. The assessee argued that since the notice under Section 148 was not received, there was no occasion to file the return. According to the assessee, initiation of proceedings under Section 147(0) was void ab initio and the ITO could not have any reason to believe that by omission or failure of the assessee to disclose fully and truly, all material facts necessary for assessment, the income chargeable to tax had escaped assessment. It was contended that the points noted in the reassessment order were already on the file of the ITO at the time of making the original assessment and that the ITO who made original assessment had made enquiries from the bank and called for explanation from the assessee for showing larger stock to the bank but the ITO did not make any addition as he was satisfied with the assessee's explanation. It was contended that there was no new fact which came to the knowledge of the ITO who initiated reassessment proceedings under Section 147(a). The assessee emphasised the claim that he had disclosed all the material facts necessary for the assessment in course of the original assessment proceedings and there was no omission or failure on the part of the assessee to enable the ITO to apply the provisions of Section 147(a). It was also argued that the ITO has not pointed out any omission or commission on the part of the assessee in disclosing the material facts, which would necessitate the ITO in taking action under Section 147(a). The assessee relied on the decision of the Hon'ble Supreme Court in the case of Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1. It was also contended that the ITO who made the original assessment made enquiries about the difference of the value of the stock mentioned earlier and considered the assessee's explanation and being satisfied with the explanation, no addition was made by the ITO on this score and, therefore, the successor ITO has changed his opinion only for reopening of the assessment as indicated above which cannot be sustained in law, relying on the decision of the Hon'ble Calcutta High Court in the case of Diamond Sugar Mills Ltd. v. ITO [1973] 89 ITR 171 and also in ITO v. Hongkong & Shanghai Banking Corpn.
[1978] 115 ITR 582.
8. The Commissioner (Appeals) considered the various arguments made before him and looked into the records. He found that the ITO has not brought on record any new fact or any omission or commission on the part of the assessee. He noted that the assessee furnished a list of the closing stock with the return, as on 31-3-1972 which was at Rs. 41,737. He pointed out that there was noting by the ITO on the stock list which showed closing stock position, vis-a-vis, the bank over-draft which was considered and examined by the ITO. He also pointed out that there were several notings in the balance sheet which indicated that the ITO examined the bank over-draft account also. The Commissioner (Appeals), however, pointed out that the records, however, did not appear to show as to what enquiries the then ITO made on this point and how he became satisfied in spite of large difference in the value of the closing stock as per accounts and bank over-draft. The Commissioner (Appeals) reproduced reasons recorded by the ITO for initiating action under Section 147(a).
9. The Commissioner (Appeals) pointed out that there was no indication as to what information and at what point of time and from which source the ITO obtained the alleged information as it appeared that the stock declared to the bank was higher in items, quantity and value than the stock shown as per books which were there even before the completion of the original assessment and it came to the surface of the records for the first time in the draft order dated 9-3-1976 under Section 144B of the Act for the assessment year 1973-74. The Commissioner (Appeals) also pointed out that the original assessment records did not give any indication of the nature or the enquiries made by the then ITO regarding the difference in the value of the stock. But there was sufficient indication from his notings and stock list and the balance sheet that the matter received the ITO's thoughtful consideration. The Commissioner (Appeals) observed as to how and why no addition was made on this score. He speculated that it was probably after discussion with the assessee the then ITO was satisfied with the explanation of the assessee and it was equally probable that he missed to consider this point through inadvertance. The Commissioner (Appeals) observed that the following facts emerged that the value of the closing stock as per accounts was much less than disclosed by the bank and this information was in the knowledge of the ITO in course of the original assessment proceedings and he applied his mind to this issue before completing the assessments and that no fresh information was received by the ITO from any external source after completion of the original assessment to the effect that the stock declared to the bank was more than what required as per book.
10. The Commissioner (Appeals) pointed out that another ITO holding charge over the case had a different opinion in course of the assessment proceedings before the subsequent assessment year 1973-74 for which proposed addition was made for that year under Section 144B, which the IAC concerned did not agree. The Commissioner (Appeals), therefore, inferred that two persons may have a difference of opinion on the same sets of facts but that cannot be a valid ground for initiation of action under Section 147(a). A change of opinion would not confer jurisdiction to the reopening of assessment under Section 147(a), the Commissioner (Appeals) observed that on this score alone the assessment was liable to be cancelled.
11. The Commissioner (Appeals) dealt with the point on merits also. On his detailed reasoning he found that on merit as well, the action of the ITO was not justified. He, therefore, allowed the appeal by the assessee. Hence, this appeal by the revenue.
12. It is submitted by the learned departmental representative that the Commissioner (Appeals) was not justified on the facts of the case to cancel the assessment as such and thereby deleting the above addition.
The learned departmental representative emphasises the findings, reasons, etc., given by the ITO in the assessment order. According to the revenue, the fact that the assesssee disclosed the value of the goods at Rs. 92,507 as on 31-2-1972 to the bank was obtained only from enquiry with the State Bank of India, as discussed in the assessment order. It is submitted that since there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment, the Commissioner (Appeals) on the facts of the case erred in cancelling the reassessment. It is submitted that there was no change of opinion as such and, therefore, the order of the Commissioner (Appeals) cannot be substained. It is urged, therefore, that his order may be reversed and that of the ITO may be restored.
13. The assessee's learned counsels, on the other hand, support the order of the Commissioner (Appeals) while emphasising the points noted by the Commissioner (Appeals) in the impugned order. It is also pointed out that for the subsequent assessment year, i.e., 1973-74 the similar addition was purported to be added in the draft order under Section 144B, to which the IAC concerned did not accord his approval on the reasons recorded by him. Copies of those papers relating to the subsequent assessment year are placed in our file. It is urged, therefore, that merely on the change of opinion or merely the existence of difference of opinion between the two persons, action under Section 147(a) would not lie and in the instant case, the Commissioner (Appeals) has done the right thing in cancelling the assessment. It is urged, therefore, that since there was no failure on the part of the assessee to disclose the material facts and since there was no escapement of income, action under Section 147(a) was properly cancelled by the Commissioner (Appeals) whose order may be sustained.
14. We have heard both the sides at length and have perused the orders of the authorities below for our consideration, along with other papers placed before us. The Commissioner (Appeals) has pointed out that there were notings by the then ITO who made the original assessment, on the stock list and balance sheet of the assessee which indicated that the ITO had examined the accounts and the bank over-draft account also. The Commissioner (Appeals), however, pointed out that the records did not appear to show that as to what enquiry was made by the then ITO on the point and how he became satisfied in spite of large difference in the value of the closing stock as per accounts and as per bank over-draft.
From this finding of the Commissioner (Appeals), it could be said that the then ITO did not form or had not formed any opinion on that score.
In such a situation, there was no question of an opinion being changed.
Changing of an opinion could be said to have been made when some opinion was formed earlier. In this connection it is pertinent to refer to the decision of the Hon'ble Supreme Court in the case of CIT v.T.S.PL. P. Chidambaram Chettiar [1971] 80 ITR 467 in which on the facts of that case, it was held that the fact that there was some vague information before the officer at the time of the original assessment, was by itself not sufficient to bring to tax the amount particularly in view of the fact that the assessee had denied it and that the fact that the officer could have made further enquiries, but did not do so, did not take the case out of Section 34(l)(a) of the Indian Income-tax Act, 1922 as the assessee had failed to place truly and fully all the material facts before the officer. The Hon'ble Supreme Court further observed that the remarks made by the officer in the order sheet did not amount to a decision taken by him on the basis of the facts found but had to be treated as casual observation. The Hon'ble Madras High Court in the case of K.P. Arthanariswamy Chettiar v. First ITO [1972] 84 ITR 51 on the facts of that case, had held that the disclosure to be made by the assessee should not only be full but also be true and it was not enough if it was true equally, it may not be full. Action under Section 147(a) in that the Madras High Court case was substained.
15. In respect of the contention that there was a change of opinion, the Hon'ble Delhi High Court in the case of Delhi Glass Works (P.) Ltd. v. C1T [1971] 81 ITR 95 on the facts of that case held that the ITO had not formed any definite opinion at the stage of the original assessment and as such there was no indication that there was a change of opinion.
Action under Section 34(l)(b) was sustained.
16. In the case before us, the ITO has noted the fact that the assessee received a loan of Rs. 6,68,828 being the maximum of 70 per cent of the value of the securities offered normally by the bank to the assessee and, therefore, to obtain the loan of Rs. 6,68,828, the assessee had to offer securities to the extent of Rs. 9,55,000 in round figure. The ITO pointed out that from the balance sheet as on 31-3-1972, the assessee could offer security on this account to the extent of Rs. 6,42,703 only. He pointed out that on enquiries from the State Bank of India, it was found that the assessee disclosed the stock amounting to Rs. 9,21,507 as on 31-3-1972 in order to obtain the said loan. There was a difference of Rs. 5,04,127 which was treated as undisclosed income of the assessee for the year, in the circumstances, particularly when the assessee failed to comply with the various terms of the notice under Sections 148 and 142(1). The assessment as indicated earlier was done under Section 144/147(a). As mentioned earlier, the then ITO who made the original assessment did not form any opinion although there were notings made in the accounts and the balance sheet filed by the assessee. In fact, the Commissioner (Appeals) observed that the records did not show as to what enquiries the ITO made on this point and how he became satisfied regarding the largeness of the value of the stock.
This amply indicated that the then ITO did not form any definite opinion. At best, his notings might be considered as casual notings as observed by the Hon'ble Supreme Court in the case of T.S.PL.P.Chidambaram Chettiar (supra). The Commissioner (Appeals) has pointed out that for the subsequent assessment year, i.e., 1973-74 the other ITO proposed to make a similar addition in the draft assessment order to which the IAC did not approve. The Commissioner (Appeals), therefore, inferred that two persons can have a difference of opinion on the same set of facts, which would not by itself empower the ITO to take action under Section 147(a). We are of the view that the Commissioner (Appeals) erred in making this inference which related to other assessment years which were not before him for consideration. As observed by the Hon'ble Calcutta High Court in Namdang Tea Co. Ltd. v.CIT [1982] 138 ITR 326 each year is independent and in taxation matters there is no estoppel and principle of res judicata would not apply. As far as the assessment year 1972-73 which is present before us, we do not find that there was a difference of opinion between the assessing officer and the IAC concerned. Besides, as indicated earlier, the ITO who completed the original assessment, had not formed any definite opinion on the point at issue and in such a situation when there was no such opinion formed earlier, there can be no question of changing of opinion. In fact, the Commissioner (Appeals) at latter part of paragraph 7 of his order observed that there was no indication in the assessment records as to the nature of enquiries made by the ITO who made the original assessment, regarding the difference in the value of the stock, but there was sufficient indication that the matter did receive the thoughtful consideration of the ITO. The Commissioner (Appeals) pointed out that how no addition was made on this score, was anybody's guess. The ITO in the present case has noted that on enquiry from the State Bank of India, it was found that the assessee in order to obtain the said loan disclosed the stock valued at Rs. 9,21,507 as on 31-3-1972 whereas the assessee could offer securities to the extent of Rs. 6,42,703, as per the balance sheet for the same period. On these facts available and after considering the various submissions made by both the sides before us, we are of the opinion that the action under Section 147(a) by the ITO was proper and valid and the Commissioner (Appeals) erred in cancelling the same. This part of the order of the Commissioner (Appeals) cannot be sustained.
17. As indicated earlier, the Commissioner (Appeals) dealing with the facts of the case on merit as well as on the reasons recorded by him deleted the addition.
18. The Commissioner (Appeals) noted that the assessee's business of Ashok Industries was registered as small scale industrial unit which obtained the entire raw materials from the Government agencies under the permits issued by the directorate of industries. He noted that the raw materials cannot be obtained from the open market as contended by the assessee who filed a certificate from the directorate of industries given to Ashok Tubes, a sister concern of the assessee having similar business. It was mentioned that the receipt and utilisation of materials obtained were strictly controlled by the Government agency periodically to check the registers from time to time and annual returns were submitted to the directorate which at no time found fault with the assessee in obtaining the raw materials or utilisation of stock in hand. It was noted that since the raw materials could not be obtained from the free market, possibility probably of the assessee having more stock supplied by the Government agencies, was negligible.
It was also contended that in any case the ITO has not found fault with the manufacturing account.
19. The Commissioner (Appeals) then observed that the question that arose for consideration was as to how the assessee had declared more stock to the bank. He observed that in some cases the department has seen traders have been adopting several devices to obtain more funds for business and one such method was to declare stocks sufficient to cover the over-draft limit even though they did not have such stock. It was also noted that so long as the loan was on hypothecation of the stock, banks also did not exercise effective control to check the correctness of the declaration made by the traders. The Commissioner (Appeals) noted that this practice was no doubt a sub-standard morality on the part of the traders, but the fact remained that this sub-standard normal practice has been in vogue for quite a long time and so far as the security of the bank was concerned, they take collateral security for the fixed assets as also the personal guarantee of the debtor. He also mentioned that till the transactions went on satisfactorily, the bank did not bother much about the direct security.
The Commissioner (Appeals) pointed out that similar consideration came up in several cases as in the case of Coimbatore Spg. Wvg. Co. Ltd. v.CIT [1974] 95 ITR 375 (Mad.). He pointed out that in the present case the facts were that the books of account have been accepted and the stock as per books were corroborated by the statutory annual returns submitted to the industries department so far and utilisation of the materials had been under constant check by the industries department and no defect was found. He pointed out that except the statement furnished to the bank, there was nothing else to show that the assessee had high stock than those shown in annual return and in the books of account.
20. The Commissioner (Appeals) took into consideration also another decision of the Hon'ble Madras High Court in the case of CIT v.Rama-krishna Mills (Coimbatore) Ltd. [1974] 93 ITR 49, which was relied on by the assessee.
21. The Commissioner (Appeals) concluded that there was no evidence except sub-standard policy of the assessee in giving a wrong declaration to the bank to show that the appellant had stocks in excess of what he has shown in the accounts and in the periodical returns submitted to the directorate of industries. He also pointed out that in the original assessment the ITO had accepted the book version of the stock who also checked the purchase of the raw materials during the original proceedings and found no defect. He, therefore, considered that the decision made in the assessment was not justified on the facts or in law. He deleted the addition. Hence, this appeal by the revenue.
22. It is submitted by the learned departmental representative that the Commissioner (Appeals) on the facts of the case was not justified in deleting the above addition made by the ITO which on the facts of the case, should have sustained. It is urged that the assessee had admittedly made a statement before the bank that more stock than shown in the accounts, was in his possession and the assessee had not established as to how those additional stocks or materials were acquired or disposed of. The points made out by the ITO are emphasised by the learned departmental representative, urging that the order of the Commissioner (Appeals) on the facts of the case requires to be reversed and that of the ITO may be restored.
23. The assessee's learned counsels, on the other hand, support the order of the Commissioner (Appeals) while emphasising that the arrival and utilisation of the raw materials obtained under permit, had been on constant and strict check by the State industrial agencies and there was no defect or inaccuracy found by those authorities. It is reiterated before us that the assessee gave higher value of the stock to the bank only for the purpose of obtaining more financial assistance, on the basis of which the addition made by the ITO was not at all justified, particularly when the ITO did not find fault with the accounts of the assessee maintained for the year under consideration.
It is urgued at length that on the facts of the case and the materials noted by the Commissioner (Appeals) in the impugned order, the addition was rightly deleted by the Commissioner (Appeals) whose order requires to be sustained.
24. We have gone through the orders of the authorities below for our consideration and we have perused other papers placed in our file. As indicated earlier, the assessee's learned counsel relied on the decision of the AAC in giving a direction to the ITO under Section 144B(2) not to make similar addition for the subsequent years, on the same reasons made for the addition during the year under consideration.
As far as this aspect is concerned, we are of the opinion that the direction of the IAC to the ITO for the subsequent year would not have any material bearing on the issue for the year under consideration. For the year under consideration, i.e., 1972-73, the ITO has pointed out that there was a difference of the value of the stock of Rs. 5,04,127 which represented suppressed stock of the assessee as the assessee himself had certified to the bank that the statement of stock declared by him was true and correct. This Commissioner (Appeals), on the other hand, observed that the accounts maintained by the assessee including the stock position was under constant scrutiny of the industries department authorities who did not find any fault with the accounts of the assessee and in fact, the ITO did not find fault with the accounts of the assessee. In our opinion on that basis alone it cannot be said that no addition would be called for if there was justification in making the additions either on account of under-valuation of stock or unexplained cash credits, etc. Besides, the Commissioner (Appeals) has considered the sub-standard morality of the traders in general which practice according to him was in vogue for quite a long time. We do not find any material as to on what basis or fact, the Commissioner (Appeals) has given the above observation. We also do not find any material to support his conclusion that there was no evidence except the sub-standard policy of the assessee in giving a wrong declaration to the bank. The Commissioner (Appeals) has not given "any basis to indicate as to how the declaration to the bank was given wrongly. It was not the case of the assessee that the statement or declaration given to the bank was a wrong statement or it was given on rough estimate basis only. The assessee relied on the decision of the Hon'ble Madras High Court in the case of Ramakrishna Mills (Coimbatore) Ltd. (supra). In that Madras High Court case the addition made on the ground that there was discrepancy between the stock shown in the accounts and the declaration made to the bank for hypothecation, was deleted by the Tribunal on the ground that though the declaration made to the banks were only on rough estimates, the correct declarations have been made in the return submitted to the Textile Commissioner concerned and these tallied with the assessee's accounts. The Hon'ble High Court concluded that the Tribunal was justified in deleting the amount. But the ratio in this case was not approved by the Hon'ble Madras High Court in the case of Coimbatore Spg. & Wvg. Co. Ltd. (supra) in which the decision in the case of Ramkrishna Mills Coimbatore Ltd. (supra) was relied upon. In the latter decision, it was observed by the Hon'ble High Court that the decision in the case of Ramakrishna Mills (Coimbatore) Ltd. (supra) cannot be taken to be an authority for the proposition that the stock declaration made by the assessee to the banks should not be taken into consideration at all. In fact, it was observed that the Tribunal was not expected to take judicial notice of sub-standard morality on the part of the assessees so as to enable them to go back on their own sworn statement given to the banks and heavy burden lies on the assessees to prove that the books of account alone gave a correct picture and sworn statements given to the bank were motivated.
25. In the instant case before us, apart from assertion there was no material to show that the sworn statements regarding the valuation of the stock to the bank, were motivated and in fact, it has not been proved that the books of account alone gave a correct picture. That apart, it was observed by the Hon'ble High Court that the alleged practice of declaring larger stocks to banks, has neither been shown to exist nor recognised in commercial circle or by the Courts and even assuming that such practice exists, the Tribunal is not expected to take judicial notice of such substandard morality. In this connection it may be noted that the ratio of the decision in the case of Coimbatore Spg. & Wvg. Co. Ltd. (supra) as well as the decision in the case of V. Rajan v. CIT [1974] 96 ITR 64 (Mad.) was considered by the Tribunal, Calcutta Bench 'D' in the case of Soorajmull Nagarmull [IT Appeal No. 4387 (Cal.) of 1973-74 dated 30-3-1979] for the assessment year 1968-69. The facts of the Calcutta High Court case were that the ITO made addition of Rs. 2,27,121 for the suppression of the value of stock of oil as he found that the assessee had an over-draft with the Central Bank of India, Calcutta, in which the stock of oil was hypothecated. According to the confirmation of the bank, it was seen that the stock of oil stood at Rs. 17,76,700 as against the value of the stock shown in the accounts at Rs. 1,07,202, which discrepancy could not be reconciled by the assessee. The Tribunal in taht the Calcutta High Court case amongst other things noted that the assessee had not discharged his onus to prove the discrepancy between the stocks disclosed to the bank and the stocks shown in the trading account. On the facts of that case, the addition made was sustained by the Tribunal following the decision in the case of Coimbatore Spg. & Wvg. Co. Ltd. (supra). For the subsequent assessment years, that is, 1969-70 and 1970-71 similar issue came up before the Tribunal in the case of the same assessee, i.e., Soorajmull Nagarmull [IT Appeal Nos. 842 and 843 (Cal.) of 1981] in which one of us (Accountant Member) was a party. In its order dated 25-9-1985, the addition made on account of difference between the value of the stock shown in the account and the stock shown to the bank, was confirmed, after taking into account the earlier decisions of the Tribunal as discussed by us briefly above.
26. On the facts available in the present case before us, we find no material to treat that the declaration made by the assessee to the bank for obtaining higher financial assistance, by declaring more stock, was made on a rough estimated basis. As held by the Hon'ble Madras High Court in the case mentioned above, the Tribunal is not expected to take judicial notice of such sub-standard morality on the part of the assessees so as to enable them to go back on their own sworn statement given to the bank as to the stock held or hypothecated to the banks.
27. Having regard to the entirety of the facts and circumstances of the case and the discussion made by us above, we are of the opinion that on merits, the Commissioner (Appeals) was not justified and proper in deleting the addition made in the assessment as discussed by us in the preceding paragraphs. We have no hesitation to reverse the order of the Commissioner (Appeals) impugned before us. The order of the ITO is restored.