TMI Blog2005 (1) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... it to the bank showed inflated figures ? 2. The matter relates to the assessment year 1979-80. 3. Briefly stated the facts giving rise to the present reference are as follows: The assessee-respondent has been carrying on the business in rerolling of M.S. Rods. It has taken overdraft facility from the State Bank of India, Bulandshahar. On 31-3-1979, i.e., on the last day of the accounting year an amount of ₹ 5,10,114 was outstanding under the overdraft facility. The said overdraft was stated to have been secured against the plants, machinery and building. The Income-tax Officer during the course of assessment proceedings found that the stock as per balance sheet was only ₹ 2,33,631 and the value of the fixed assets inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curity be furnished. The assessee filed a letter dated 15th of December, 1982 of the State Bank of India. A perusal of the said letter shows that the bank has taken the value of the stocks as represented by the assessee through the stock statement dated 19-2-1979. The assessee also produced copy of the stock statement which was given to the bank on 19-2-1979. It has been found by the Commissioner of Income-tax (Appeals) that the goods hypothecated to the State Bank of India were the properties of the assessee which were purchased by them against the full payment. The goods were valued according to the market rate and were fully insured. The Tribunal observed that wrong declaration of the stock to the bank could not warrant any addition. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held that Tribunal s decision was correct. 7. The Tribunal has also found that there was actually no verification of the stock made by any bank official. The learned standing counsel could not point out any contrary decision to show that a practice to inflate stocks hypothecated with the bank with a view to avail higher overdraft facilities, is not prevalent in business community. 8. In view of the fact that the explanation has been accepted by the Tribunal, we do not find any error in the order of the Tribunal. 9. In view of the above, we answer both the questions referred to us in affirmative, i.e., in favour of assessee and against the revenue. 10. However, there shall be no order as to costs. - - TaxTMI - TMITax - I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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