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Issues Involved:
The issue involves the deletion of an addition made by the Assessing Officer on account of variation between the stock figures of paddy disclosed to the bank and the stock as reflected in the books of account for the assessment year 1978-79. Summary: The Revenue filed an application under section 262(2) of the Income-tax Act, 1961, seeking reference of the question regarding the deletion of an addition of Rs. 3,78,270 made by the Assessing Officer. The assessee, a registered firm engaged in the business of running a rice mill, had an overdraft facility with a bank. The original assessment added Rs. 3,78,270 as unexplained investment in paddy stock. The Appellate Commissioner deleted the addition, but the Revenue appealed to the Income-tax Tribunal. The assessing authority recorded statements and found discrepancies in the stock figures. The Appellate Authority relied on the inspection by Regional Food Controller officers and deleted the addition. The Tribunal upheld the deletion, leading the Revenue to file the present application for reference. The Revenue challenged the reliance on a statement suggesting inflated stock figures for obtaining higher credit facilities. Citing legal precedents, the Revenue argued against accepting inflated figures as valid evidence. In contrast, the assessee cited a case supporting the method of accounting for income disclosure purposes. The Court noted the practice of inflating figures for credit purposes but emphasized the burden on the assessee to prove the accuracy of accounts over sworn statements to banks. The Court observed that the reliance on Regional Food Controller's inspection over bank officials' findings was a factual determination. The assessing authority's reliance on indirect evidence from bank officials was rightfully disbelieved by the Appellate Authority. The reliance on the levy register by the Regional Food Controller officials was deemed more reliable, and no legal question arose. Consequently, the application was dismissed, affirming the deletion of the addition by the lower authorities.
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