Stock discrepancy alone cannot prove suppressed purchases when valuation is only estimated and records are incomplete.

A stock discrepancy relied on to treat purchases as outside the books was not sufficient where there was no item-wise inventory, weighing, or day-to-day stock register, and the books recorded value only. The Commercial Taxes figure was treated as an estimate, so the gap could not be conclusively linked to suppressed stock or secret purchases. The cancellation of penalty under the Rajasthan Sales Tax Act further indicated that the factual foundation for the addition was weak. On that basis, the addition of Rs. 13,575 was held unsustainable and was deleted.

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Issues: Whether the addition of Rs. 13,575 as investment in purchases outside the books, based on a discrepancy in stock valuation noticed by the Commercial Taxes authorities, was justified.

Analysis: The record did not show any inventory of the stock, item-wise verification, or weighing of the goods. The assessee's books recorded only value and not weight, and no day-to-day stock register was maintained. In these circumstances, the figure of Rs. 97,000 adopted by the Commercial Taxes authorities was only an estimate, and the difference of Rs. 15,000 could not be treated as conclusively representing suppressed stock or purchases out of secret funds. The cancellation of the penalty under section 22(6) of the Rajasthan Sales Tax Act also showed that the foundation for relying on the stock discrepancy was lacking.

Conclusion: The addition of Rs. 13,575 was not sustainable and was rightly deleted.

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