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Issues: Whether the income-tax authorities could make an addition under section 69 of the Income-tax Act on the basis of a higher stock figure found in seized documents when the assessee's closing stock had already been accepted by the commercial tax authorities under the Tamil Nadu General Sales Tax Act.
Analysis: The assessment authority under the Income-tax Act can examine only whether the accounts and returns stand accepted by the competent statutory authority and cannot, in the absence of variation by that authority, go behind the closing stock value accepted under the sales tax law. Since falsification or variation of the stock position under the sales tax regime carries its own legal consequences, the return accepted by the commercial tax department was treated as binding for income-tax purposes. On that basis, the Assessing Officer had no jurisdiction to disregard the accepted stock figure and adopt the higher value reflected in the seized material.
Conclusion: The addition of the differential stock value was not sustainable and the appeal failed.
Ratio Decidendi: Where a competent statutory authority has accepted the assessee's stock position under the relevant tax law, the income-tax authorities cannot, without any variation by that competent authority, go behind that accepted figure to make an addition on the basis of seized material alone.
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