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TMI Blog2005 (1) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the trading account of the assessee and the books of account maintained by it which has also been accepted by the Central Excise Department as well as by the Sales Tax Department could not be disbelieved. The explanation given by the assessee was that it inflated the value and quantity of the stocks in the bank declaration to obtain a number of drafts from the bank. This explanation was accepted by the Tribunal. The matter came up before this Court and it was held that Tribunal s decision was correct. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment proceedings found that the stock as per balance sheet was only ₹ 2,33,631 and the value of the fixed assets including building and machinery was ₹ 1,55,000. The total of these two sums comes to ₹ 3,83,000. It was much below the overdraft obtained. He was of the view that as the overdraft facility was to the tune of ₹ 5,10,114 and was higher than the stocks shown in the books of assessee, the assessee was indulging in out of book transactions. The explanation offered by the assessee with regard to the above discrepancy was rejected by the Income-tax Officer and he made an addition to the assessee s income on the above terms. The assessment order was confirmed in appeal by the Commissioner of Income-tax (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly insured. The Tribunal observed that wrong declaration of the stock to the bank could not warrant any addition. It observed that the statement submitted by the assessee was not verified by the Bank Officials. The stocks were only hypothecated and not pledged. The Income-tax Officer could not point out any defect in the trading account of the assessee and the books of account maintained by it which has also been accepted by the Central Excise Department as well as by the Sales Tax Department could not be disbelieved. The Tribunal has placed reliance on the following cases : 1.India Motor Parts Accessories (P.) Ltd. v. CIT [1966] 60 ITR 531 (Mad.) 2.CIT v. Ramkrishna Mills (Coimbatore) Ltd. [1974] 93 ITR 49 (Mad.) 3.Coimbatore Spg. Wvg. Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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