9911796707
TMI Blog2000 (1) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 4,98,110 towards gross profit on account of difference in the closing stock ?" The factual position, as indicated in the statement of case, is as follows : The assessee is a partnership firm which, inter alia, carried on business in timber logs, teak poles, scantlings, fire wood, fish oil, etc. For the assessment year 1984-85 corresponding to the previous year ended on March 31, 1984, the Assessing Officer added a sum of Rs. 4,98,110 to the value of the closing stock and correspondingly to the profit by holding that there was undervaluation. Such conclusion was arrived at on the basis of certain books of account seized during a search conducted under section 132 of the Act at the business and residential premises of the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n more than what was reflected in the property mark register. Therefore, the fact that the entire quantity of timber was not entered in the property mark register was not an explanation for reducing the quantity still further, for the purpose of the trading account. Taking into account the value, as assessed by the assessee itself, valuation of suppressed stock was arrived at and accordingly, addition was made. In the first appeal before the Commissioner of Income-tax (Appeals), Calicut (in short "the CIT(A))", the assessee contended that the property mark register was maintained only for the purpose of obtaining transport permits from the forest department and it had no other significance and it could not be equated with the stock register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Tribunal has failed to appreciate the materials brought on record and its conclusions are based on surmises and hypotheses. The Revenue's stand was that the forest authorities had verified the stock position on April 9, 1984, and found that the stock as found in the seized register was available with the assessee. A comparison with other relevant records revealed that there was under statement of stock, and there was suppression. This basic factor was not considered by the Tribunal. Learned counsel for the assessee submitted that actually there was no physical verification of stock. He placed reliance on a document, i. e., a statement purported to have been made by a forest official. A factual finding has been recorded by the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a stock as on April 9, 1984, which was personally verified by the Government authorities. As per the assessee's own valuation of closing stock, the value of 5,000 teak poles amounted to Rs. 2,69,585 and hence the additional quantity of 121 poles could be valued at Rs. 65,240. Similarly, the additional quantity of 8190 erankoles could be valued at Rs. 2,047. The value of 490.138 cu.mt. of timber is taken by the assessee as Rs. 5,86,198.96. Hence, the additional quantity of timber of 360.224 cu. mts. should be worth Rs. 4,30,823. In these circumstances, the closing stock value has to be increased by Rs. 4,98,110 and correspondingly the profit." The Commissioner of Income-tax (Appeals) considered the matter by noticing as follows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Officer has correctly concluded that there was undervaluation of closing stock of timber to the extent of Rs. 4,98,110." The question that should have been adjudicated by the Tribunal is whether there was any variation in the physical stock. The forest authorities certified about the physical existence of the particular quantity of materials. On verification of the records produced by the assessee, the Revenue authorities found that there were discrepancies. This aspect has not been considered by the Tribunal in its proper perspective. On the contrary, it has taken into consideration, irrelevant materials, thereby giving rise to a question of law. In the background of what we have stated above, we answer the question, referred to fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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