Melting loss claims in stock discrepancy cases require fresh factual verification before treating the difference as unexplained investment.

An alleged stock discrepancy under section 69B cannot be resolved without verifying the assessee's claim that the difference arose from melting loss in the conversion of old jewellery into refined gold. The documentary support, including vouchers, refinery receipts and related records, must be examined to determine whether the reduction in weight reflects a genuine business loss or unexplained investment. Where the existing record does not satisfactorily establish the claimed melting loss, the matter requires fresh factual verification by the Assessing Officer, with further evidence to be produced by the assessee. The substantive tax issue therefore remains open for reconsideration.

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Issues: Whether the addition made on account of alleged unexplained stock under section 69B could be sustained without properly examining the assessee's claim of melting loss and the supporting evidence.

Analysis: The excess stock was found during survey and the assessee had offered the amount in the return, but the dispute remained whether the resulting difference represented unexplained investment or a business-related melting loss arising from conversion of old jewellery into refined gold. The explanation required examination of the contemporaneous vouchers, refinery receipts, and other documentary material relied upon to show the weight reduction attributable to melting and refining. As the explanation of the alleged huge melting loss was not satisfactorily verified on the existing record, the matter required fresh factual examination by the Assessing Officer.

Conclusion: The addition was not finally upheld or deleted on merits and the issue was remanded to the Assessing Officer for fresh adjudication after giving the assessee an opportunity to produce further evidence.

Final Conclusion: The assessee obtained a remand and the appeal was treated as allowed for statistical purposes, leaving the substantive tax issue open for reconsideration.

Ratio Decidendi: Where the explanation for an alleged stock discrepancy depends on a claimed melting loss supported by documentary evidence, the issue cannot be conclusively decided without fresh verification of the underlying facts.

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