TMI Blog1994 (1) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... he other essential matters on the record? 3. Whether, on the facts in the circumstances of the case, the decision of the Tribunal approving the addition for stock discrepancy in the case of CIT v. General Metal Works [1988] 172 ITR 173 (All)? 4. Whether the finding of the Tribunal that the Uchanti loan of 1,240 kgs. of R. C. Lates is an unexplained investment is contrary to the rules of natural justice, arbitrary and perverse? 5. Whether, on the facts and in the circumstances of the case, the. Tribunal was justified in sustaining the attraction of section 145(1) of the Income-tax Act, 1961, and consequently additions on this basis ?" We have heard learned counsel for the parties. We may state at the outset that learned counsel for the applicant-assessee did not address any argument in so far as questions Nos. 4 and 5 are concerned and, therefore, it is not necessary for us to advert to those questions. Learned counsel, however, argued that the Income-tax Appellate Tribunal misdirected itself in not making a reference to this court in so far as the other three questions are concerned. To appreciate the contentions addressed to this court on behalf of the assessee, it is ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the aforesaid addition to the Commissioner of Income-tax (Appeals), Meerut, and thereafter to the Income-tax Appellate Tribunal, were dismissed and brought no relief to the assessee. The assessee having failed to get a reference from the Income-tax Appellate Tribunal has come up to this court through this application for a direction to the Tribunal to refer the questions set out earlier. The sum and substance of the questions which are sought to be referred is that the Income-tax Appellate Tribunal sustained the addition in question by rejecting the evidence on record without sufficient grounds and failed to take into consideration the material placed on the record, particularly the bank certificate dated December 18, 1984, and the reliance placed by the Income-tax Appellate Tribunal on the bank statement as on March 31, 1984, was misconceived as it had not been signed by the assessee. The order of the Tribunal is thus vitiated by misdirection in law. Learned counsel urged that once it is accepted that the stock statement submitted to the bank was inflated in order to get more overdraft facility then in that event the impugned addition could not be sustained by the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrect and actually nobody had signed on behalf of the company on the stock statement submitted to the bank. The Tribunal repelled these submissions and observed that it is not understandable how a certificate from the bank was obtained at that stage when an opportunity was available to the assessee earlier and it could have filed the certificate then. The Tribunal remarked that it was not open to the assessee to have resiled from its earlier stand and to urge that the stock statements filed before the bank had not been signed by anyone on its behalf when the same advocate who was arguing the case before it had given an explanation before the Commissioner of Income-tax (Appeals) regarding physical verification of the stocks hypothecated by the director coupled with the reply that such stocks shown in the statement were inflated in order to obtain higher overdraft. The Tribunal has referred the reply of the assessee and recorded a finding that the assessee had not disputed the submission of stock statements to the bank where the difference appeared and secondly, with regard to the word "checked" written on the statement, the explanation was that the word "checked" cannot be equated w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion filed before the bank and the quantity of the hypothecated stock, the Tribunal remarked that the assessee was not permitted to shift its stand that it had taken before the income-tax authorities and it entirely agrees with the finding given by the Commissioner of Income-tax (Appeals) for making the addition on account of undisclosed stock of Rs. 38,747. The case of the assessee that there was some commercial practice in the trade to inflate the stock position to procure easy and higher loan facility, was not accepted as factually proved or of which judicial notice could be taken. Learned counsel for the assessee is not right when he argues that it is accepted by the Revenue that the stock position before the bank was inflated in order to get higher bank overdraft. It cannot be denied that the burden was squarely upon the assessee to show that the apparent tenor was not real as contained in the stock statement filed before the bank which the assessee failed to discharge. It is pertinent to observe that the difference was not only in the valuation of the stocks but also in the items of the stocks hypothecated which on solemn declaration by the assessee was certain as "checked" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich were noticed on May 31, 1980, and August 31, 1980. The explanation furnished, it appears, was only with regard to the posi tion which was at the end of the previous year with reference to the stock hypothecated with the bank and that disclosed in the books of account as on March 31, 1981. Reliance placed on behalf of the assessee on a Division Bench decision of this court in CIT v. General Metal Works [1988] 172 ITR 173, is misplaced. That authority is clearly distinguishable on the facts. In that case, the discrepancy in the stock hypothecated with the bank and that shown in the account books was explained to the satisfaction of the Income-tax Appellate Tribunal which is the final fact-finding authority. The Revenue moved an application to this court for a reference under section 256(2) of the Act. The application was rejected by this court and it was held that the findings recorded by the Income-tax Appellate Tribunal were pure findings of fact which did not give rise to any question of law. In fact that decision supports the view which we have taken in the instant case that the order of the Income-tax Appellate Tribunal does not give rise to any question of law. Learned coun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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