Court affirms deletion of addition by Assessing Officer based on satisfactory explanation for stock discrepancies.

The High Court upheld the decision of the CIT(A) and Tribunal to delete the addition made by the Assessing Officer, finding that the explanation provided by the assessee regarding discrepancies in stock values was satisfactory. The Court emphasized that the lower forums' factual findings did not give rise to a question of law, leading to the dismissal of the Revenue's appeal.

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Issues:
1. Whether the deletion of an addition made by the AC on the grounds of discrepancy in stock was justified by the CIT(A) and the Tribunal.

Analysis:
The appeal under s. 260A of the IT Act, 1961 was filed by the Revenue against the order of the Income-tax Appellate Tribunal (Tribunal) regarding the addition made by the AC. The main issue was whether the excess stock returned to the bank corresponded to undeclared sales, indicating an extra credit facility rather than a discrepancy in stock. The AO concluded that the assessee had kept a difference of stock outside the books, leading to an addition under s. 69B of the Act. The CIT(A) and the Tribunal later deleted this addition after considering the explanation provided by the assessee.

The assessee, a trader in iron and steel, maintained regular books of accounts, including a stock register, and produced them before the AO for examination. Discrepancies were found between the stock position as per the assessee's records and that shown to the bank. The AO made an addition based on the difference in stock values. However, the CIT(A) accepted the explanation that the excess stock shown to the bank was due to lower sales figures reported to the bank, leading to a higher stock value. The CIT(A) concluded that there was no excess stock available with the assessee, and therefore, the addition was deleted.

The Revenue appealed this decision, but the Tribunal upheld the CIT(A)'s order. The appellant argued that the bank statement should be considered as evidence under the Bankers Books Evidence Act, 1891. On the other hand, the respondent contended that both the CIT(A) and the Tribunal had carefully examined the records and reached a factual conclusion that no excess stock existed. They cited a decision of the Delhi High Court to support their argument that when the stock indicated by the assessee's account books is accepted by the Tribunal, it is a conclusion of fact not giving rise to a question of law.

After reviewing the orders of the AO, CIT(A), and the Tribunal, the High Court found that the explanation provided by the assessee was satisfactory. The High Court noted that the findings of fact by the lower forums did not raise any question of law, and therefore, the appeal was dismissed. The High Court emphasized that the deletion of the addition was justified based on the proper explanation provided by the assessee and the factual findings of the lower forums.

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