1989 (8) TMI 375 - HC - Income Tax

Tribunal upholds treatment of excess stock value as undisclosed income under IT Act

The Tribunal upheld the authorities' decision to treat the excess stock value as income from undisclosed sources under the IT Act for the assessment year ... - Issues: Determination of unaccounted stocks as income from undisclosed sources under the IT Act for the assessment year 1971-72 based on a discrepancy in stock figures between the assessee's books and those pledged with the bank.Analysis:1. The Tribunal referred the question of law regarding the conclusion that a sum of Rs. 3,34,390 represented unaccounted stocks of the assessee. The discrepancy arose when the ITO found excess stock pledged with the bank compared to the books of accounts. The assessee failed to reconcile this difference, leading to the treatment of the excess stock value as income from undisclosed sources.2. The AAC considered the argument that the stocks would have been insured if present in the godowns, but this was not accepted as sufficient evidence. An affidavit highlighted the practice of furnishing false statements to the bank, but the bank's confirmation of the correctness of stock statements prevailed. The Tribunal, after examining all facts, upheld the lower authorities' decision, emphasizing the assessee's failure to provide concrete evidence to counter the presumption under section 69 of the IT Act.3. The Tribunal found the assessee's explanations lacking in credibility, noting the discrepancy in stock figures provided to the IT Department and the bank. The failure to explain this difference led to the conclusion that the undisclosed income was correctly assessed by the authorities. The Tribunal's decision was based on a thorough review of all evidence presented.4. Citing the Supreme Court's stance on assessing evidence based on human probabilities, the judgment emphasized the Tribunal's role as the final fact-finding authority. The weight of evidence, including the bank's statement and the lack of contradictory affidavit, was deemed appropriate for the Tribunal to evaluate in determining the credibility of the assessee's claims.5. The High Court concurred with the Tribunal's decision, stating that no legal question arose. The Tribunal's comprehensive consideration of all evidence and its factual findings were deemed conclusive. The judgment favored the Revenue, affirming the treatment of the excess stock value as income from undisclosed sources under the IT Act for the assessment year in question.