Stock statement discrepancy can justify addition, but aggregated monthly differences must be restricted to the peak amount.

A stock statement furnished to a bank can operate as an admission against the assessee unless it is convincingly rebutted. The books of account are not accepted automatically merely because they are regularly maintained; where the assessee alone is in special knowledge of both sets of figures, the burden lies on the assessee to prove that the bank statement is incorrect or that the books were independently verified as correct. On that basis, an addition for discrepancy between book stock and bank stock was sustainable in principle, but where monthly differences were aggregated, the addition had to be confined to the peak outstanding discrepancy only.

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Issues: Whether the addition arising from the difference between the stock shown in the books and the stock statement furnished to the bank was sustainable in principle, and if so, whether it had to be restricted to the peak difference only.

Analysis: The stock statement furnished to the bank was treated as an admission binding on the assessee unless rebutted. The books of account were not automatically preferred merely because they were maintained in the ordinary course, and the assessee, being in special knowledge of both sets of figures, carried the burden of proving that the bank statement was incorrect. In the absence of reliable evidence showing that the bank statement was false or that the books had been independently verified as correct, the assessee could not escape the effect of the admitted discrepancy. At the same time, where multiple monthly differences were aggregated, only the highest outstanding discrepancy could properly be brought to tax.

Conclusion: The addition was justified in principle, but it was wrongly computed by aggregating monthly differences; it was therefore restricted to the peak amount.

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