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"1. The learned CIT(A) has erred in sustaining addition of Rs. 4,38,040/- by treating the same as unexplained investment or sales of 466 MT of rice bran extraction.

2. The learned CIT(A) has erred in not appreciating the assessee's explanation regarding loss caused in storage and transit of rice bran extraction from Bhatinda to Gujarat.

3. The learned CIT(A) has erred in sustaining addition of Rs. 52,957/- as unexplained investment, on 9800 litres of hexane. There is no justification for rejecting the assessee's explanation."

7. Coming to ground of appeal No. 3, it is seen that the assessee has shown the stock of hexane in its books of account at 23160 litres whereas as per the statement furnished to the bank as on 15th Oct., 1983 the closing stock of hexane was shown at 33040 litres. Thus, the assessee has shown the closing stock of hexane in its books less by 9880 litres. When required to explain about this discrepancy, the explanation given by the assessee was that hexane in the pipeline was not accounted for in the books of account and this was the method regularly employed by the assessee in earlier years also. However, it was conceded that the actual closing stock of hexane was 33040 litres as shown to the bank. Accordingly the AO made an addition of Rs. 52,957/-representing the value of 9880 litres of hexane @ Rs. 5.36/- per litre to the income of the assessee which has been upheld by the learned CIT(A).

18. Coming to the remaining contentions in the assessee's appeal and the addition of Rs. 52,957/-, my brother has dealt with in paras 7 and 7.1 of his proposed order. He has also stated that the variation between the closing stock as shown to the bank and as per books was on account of the assessee not accounting for hexane in the pipelines, as explained by Shri Mohan Lal, advocate. However, he has not appreciated that such position was in the earlier years also and since pipelines could contain particular quantity of hexane, it followed that 9880 litres of hexane had been in the pipelines unaccounted for as in the beginning of the year also and, therefore, the variation got neutralised automatically because adjustment had to be given. In such view of the matter, there was no case for making addition as understated closing stock and in any case in the year under appeal, which is deleted.

11. As regards the next addition of Rs. 52,957/- made in respect of alleged unexplained investment in relation to 9880 litres of hexane, being excess stock notified to the bank in the stock statement as compared to the stock as per books of accounts, the assessee explained before the learned Departmental authorities that variation between the closing stock shown to the bank and as per books of account was on account of the fact that some quantity of hexane remains in the pipelines, at the end of the year, which was not accounted for till the end of the relevant accounting year but was accounted for in the next year in consonance with such practice consistently adopted by the assessee for last several years. The addition so made in respect of closing stock on the basis of stock statement submitted to the bank by disbelieving such an explanation will require value of opening stock of next year to be increased by an equivalent amount which will result in reduction of assessable income of next year by an equal amount. Such an addition will not result in any gain to the Revenue. The learned Departmental authorities have not challenged the correctness of the assessee's explanation that according to the consistent method of accounting regularly employed by the assessee some hexane purchased by them will always remain in the pipeline at the end of the accounting year. The quantity of such stock in pipeline at the beginning of the accounting year has also not been taken into consideration. It may be relevant here to make a useful reference to the judgment of the Hon'ble Punjab & Haryana High Court in the case of CIT v. Punjab Rice and 'General Mills (2003) 264 ITR 582 (P&H) in which the Hon'ble High Court after taking into consideration various judgments arrived at the conclusion that on the facts and circumstances of the said case, the so-called discrepancy between the bank statement and the account books could not be made the basis for making the additions in the declared income of the assessee. The facts of the said case may not be exactly similar with the facts of the present case but the principles of law laid down by the Hon'ble High Court have to be kept in view while considering such an addition made on the basis of difference in the stock as per bank statement and the stock as per books. On a careful consideration of the entire relevant facts and also keeping in view the facts that the company has been ordered to be wound up, I am inclined to agree with the view taken by the learned JM of deleting the addition of Rs. 52,957/- also.