Kaila Sweet Supplier vs Commissioner of Income Tax

This is an application u/s 256(2) of the income tax Act, 1961 (''the Act''). We have heard the learned counsels for the parties.

In the assessment year 1968-69 with which we are concerned, a sum of Rs. 1,79,044 was added to the income of the assessee on the ground that on 31-1-1988 the stock hypothecated with the bank was to the tune of Rs. 1,91,305 while in the account books the stock available was Rs. 12,260.31 only. The explanation given by the assessee that there was no such hypothecation of stock inasmuch as only a list of certain items was furnished on estimate basis for purposes of obtaining a higher over-draft limit, was rejected throughout including by the Tribunal. Consequently, the addition of Rs. 1,79,044 was upheld.

The contention put forward before this Court was that there was no material before the Tribunal on the basis of which the impugned addition could have been sustained.

Having considered the submission very carefully, in our opinion, it cannot be accepted. The Tribunal has dealt with in detail the entire case of the assessee. It has found that the story set up by the assessee was untenable inasmuch as the information furnished by the bank contains not only the items of stock but also their quantity. The burden lay on the assessee to prove that the apparent was not real which was not discharged in the instant case. The view which has found favour with the Tribunal is supported by more than one decision of this Court. Reference may be made to the decisions of this Court in Century Foams Pvt. Ltd. Vs. Commissioner of Income Tax, and in Swadeshi Cotton Mills Co. Ltd. Vs. Commissioner of Income Tax, , wherein it was held that addition on account of difference between the value of stocks declared to the bank and that which was found in account books could validly be brought to tax if the circumstances of the case warrant such an addition. On the material that was placed before the Tribunal and the findings of fact recorded by it, no exception can be taken to the decision of the Tribunal. We are not prepared to say that addition in question was not supported by any material on record. The order of the Tribunal is concluded by the findings of fact and does not give rise to any question of law. The application is rejected.