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CIT(A) unless the AO proved that the stock was physically verified, no addition can be upheld. Since the department failed to prove that any physical verification of the stock was carried out by the bank the addition was deleted by the CIT(A) as finally held in the concluding paragraph on page 13.

16.2. The ld. counsel, Mr. P.N.Arora, Advocate further stated that the stock statement filed by the assessee has been found to be unsigned (page 12 & 13 of the paper book for AY 2009-10 filed on 02.02.2015). As regards the Drawing Power Register on which heavy reliance has been placed by the Ld. DR, the copy of the same has been enclosed alongwith the paper book ( filed on 2.2.2015 for AY 2009-10 in which the photocopy is on page 12 and typed copy is on page 15 & 16 for period from Jan, 2007 to 31.12.2009.).

The stock is physically verified by the Bank Officer and stock audit is also conducted by an independent Auditor. I am submitting a photocopy of the said Audit Report dated 4.2.2010.

It is further pertinent to note that it has been made clear in the cross examination that the stock audit was done in respect of the stock statement submitted by the assessee to the bank as on 31.01.2010 which was declared at Rs.10,75,10,500/- whereas the stock declared to the bank on 20.3.2010 was Rs.10,82,22,030/-. Thus, It is clear that when the assessee was clearly caught on a wrong foot viz a viz stock audit taken by the auditorst on 4.2.2010 of the quantum Rs.10,75,10,500/-, it chose to not to raise any question on the auditors' stock audit on 4.2.2010 and had kept studied silence for obvious reason i.e. it knew that the stock statements submitted are real and it was deliberately question the same as regards the inspection by the bank in the futile hope that the bank may not be able to come forward with the hold record. The assessee did not choose to ask for the auditors' stock audit report on 04.02.2010 as it knew that it would be cornered with the said report. It is highly pertinent to note that stock statement submitted to the bank on 20.3.2010 was Rs.10,82,22,030/- i.e. just more by a meagre sum of Rs.7,11,530/- and that too when no increase in the credit limit had been sought by the assessee. All these facts clearly prove that the stock was physically checked by the bank manager on 15.3.2010 in respect of the stock statement submitted to the bank on 28.02.2010 and earlier also by the auditors' on 4.2.2010. It is further highly pertinent to mention here that in this year, it was never the case of the assessee that it had submitted inflated stock statements to the bank for securing higher credit limit. It needs to be appreciated that when the assessee had demanded cross examination of Sh. Kamlesh Gupta, the assessee did not turn up for cross examination and caused delay in cross examination and when on 5.3.2010, cross examination had taken place, it chose to demand further examination of the bank officer at the fag end of the year who had physically inspected the stock despite his claim that the credit limit had been sanctioned against collateral security and not against inflated stock. It needs to be appreciated that when in this year, the assessee had not contended that it had submitted inflated stock statement, there was relevance for his asking for cross-examination of the banking authorities. It is pertinent to mention here that when the assessee's claim for the AY 2010-11 was not that it had submitted inflated stock to secure higher limit, how could it ask for cross-examination of the bank manager who had inspected his record and how could be choose to ignore the audit statement. It is pertinent to mention here that Sh. Kamlesh Gupta's statement has great evidentiary value as what he had stated was as per the record of the bank and not his personal opinion. Second Issue: The other issue which the assessee has raked in this case is the that stock statement filed for the assessment year 2009-10 was unsigned. In this regard, it may be pointed out that the assessee has only claimed that the statement was unsigned. It has not disputed that the stock statement submitted on 31.3.2009 was not of the value of Rs.12,59,06,092/-. It is highly pertinent to take note of the fact that perusal of Annexure -1 ( DP Register) clearly shows that the bank manager had made inspection of the stock on 03.04.2009 i.e. just after three days of the submission of the statement as his dated signature are appearing on DP Register. The dated signature takes whole of the wind from the sails of the assessee that the stock was never physically checked by the bank. It only remains an allegation without corroboration and cannot be taken any cognizance of. Third Issue:The third issue which the assessee has contested in this case is using the information as given by Shri Tejinder Sharda, Sr.Branch Manager in the case of M/s.Munish Kumar Bansal, Contractors. In this regard, it may be mentioned that the assessee has relied upon the Tribunal's order in the case of M/s.Munish Kumar Bansal which is distinguishable decision as would be shown hereinafter but the statement of the Sr.Branch Manager touching the procedure adopted in the bank and also his statement that in all such cases where signatures are put by the Inspecting Manager, the said signature are in token of having inspected the stock. So such a statement cannot be trivialized as is being attempted by the assessee. Nonetheless, the only point which the assessee is contesting so studiously has been found to be false that it had furnished inflated stock statement to the bank with a view to securing higher credit limit. This claim of the assessee has been demolished with a sledge hammer and the sledge hammer is the DP Register which clearly shows that the assessee had been showing stock in the statements to the bank as was actually in its possession and not at the times when higher limits were required as claimed by the counsel. It is pertinent to mention here that the statement of Sh.Tejinder Sharda and statement of Sh. Kamlesh Gupta, both Chief Manager of the same very bank branch wherefrom the limit had been got sanctioned, converge on facts as regards inspection of the stock by the bank manager and his signing the DP register in token of having physically verified the stock and further countersigned by the Chief Manager at that time. The whole case of the assessee, therefore, stands demolished. Fourth Issue: The issue of assessee's relying upon the decision of the Bench in the case of M/s.Munish Kumar Bansal (ITA No.391/ASR/2012 dated 12.03.2013) in such a situation is clearly not applicable to the facts of the case as discussed above. Nonetheless, it may be mentioned that in the said case, the Tribunal had found that the asseseee had claimed that there was no difference in the bank stock statement and the stock shown to the department as on 31.3.2008 as the alleged difference in stock of a sum of Rs.1,69,17,000/-had already been cleared by the assessee by sales as on 31.3.2009 and it was in appreciation of this fact that the Tribunal had deleted the addition. In the case of the assessee, the AO has already considered this issue and taken the difference in the stock as reconciled to the extent of Rs.4,66,13,761/- and made addition of Rs.1,73,16,531/-only. The assesee did not contest this issue before the first appellate authority that the AO had erred in not taking the whole of difference as reconciled. Thus, clearly there is admission on the part of the assessee that difference of Rs.1,73,16,531/- could not be reconciled. IT IS HIGHLY PERTINENT TO POINT OUT THAT WHEN THE ASSESSEE CLAIMED THAT ITS STOCK WORTH Rs.5,42,81,001/- was to be reduced from the total stock statement submitted to the bank as the stock of this value had been consumed and payments received and which the AO accepted to the extent of Rs.4,66,13,761/-, then it becomes eminently clear that the assessee owns up the total stock at Rs.11,62,56,801/-

M/s.Bhalaria Constructions, Bathinda Assessment year 2009-10 Similar story is emanating in this case also. Here also, the assessee had submitted stock statement to the bank at Rs.1,28,69,000/- and Rs.1,23,50,00/- at different dates against limit of Rs.1 crore. The statements clearly suggest that the margin limit of 25% is invariably retained and the assessee submits stock statement of value as lying in his actual possession.

As regards the assessee's contention that the stock statement was not signed by the assessee, it is pertinent to mention here that the assessee has not denied the submission of the statement though unsigned inadvertently. It has not disputed the stock declared in this stock statement to the bank. The Bank manager had inspected the stock and put his signature on the backside of the stock statement on 30.09.2009 and when the bank manager checked the stock statement submitted by the assessee on 31.3.2009 after six months, he must have checked the stock with reference to the present position of the stock as on 30.09.2009. Therefore, it is wrong to say that the bank authorities are concerned with the stock hypothecated to the bank. Of particular importance is the statement of Shri Kamlesh Gupta who had informed that if any client fails to submit stock statement within ten days of the following month, penal interest is charged in such cases.

v) On page 6 of the counter comments, the ld. DR has stated that the value of the stock has been mentioned at stock statement dated 31.03.2009 at Rs.12,62,06092/- but the assessee never stated that the stock statement was inflated and it has only stated by the assessee that it is unsigned. But in this regard, the assessee has all along stated that the stock as per stock statement has been inflated to avail CC limit from the Bank. The physical verification of the stock has never been proved by the department. Hence, this counter comment of the Ld. DR is also factually wrong.