June 2008
Valuation of stock : Revenue to prove valuation incorrect : Cannot rely on statement by assessee to its bank
By K. B. Bhujle, Advocate
Reading Time 2 mins
New Page 1
28 Valuation of stock : Rejection of
valuation : Burden on Revenue to prove valuation incorrect : Revenue
cannot rely on statement by assessee to its bank : A.Y. 1991-92.
[CIT v. Acrow India Ltd., 298 ITR 447 (Bom.)]
For the A.Y. 1991-92, the Assessing Officer made an
addition of Rs.17,79,248 by revaluing the closing stock relying on the
statement given by the assessee to its bank. The Tribunal deleted the
addition.
The Bombay High Court dismissed the appeal filed by
the Revenue and held as under :
“(i) As far as this aspect is concerned, the
statement given by the respondent-assessee to the bank is sought to be
relied on by the Revenue. As far as that aspect is concerned, the
Tribunal has clearly held that the valuation of the stock declared to
the bank is in fact inflated and that the correct valuation of the stock
was not suppressed from the Revenue.
(ii) The Tribunal has relied on the judgment of the
Madras High Court in the case of CIT v. N. Swamy, (2000) 241 ITR
363. There the Division Bench has held that the burden of proof in such
a case is on the Revenue and the same could not be discharged by merely
referring to a statement of the assessee to a third party.
(iii) In our view, there is no reason to interfere
with the decision of the Tribunal, inasmuch as it has followed the
decision of the Division Bench of this Court and the Madras High Court.”
