TaxTMI 
TaxTMI 
1993 (2) TMI 136
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that the assessee had hypothecated approximately 2,760,55 metres of cotton art silk fabrics as on 31st Aug., 1986. The Assessing Officer worked out the particulars of cloth purchased and sold after 31st Aug., 1986 till the close of the accounting period on 10th Nov., 1986 and came to the conclusion that after taking into account the closing stock figure of 2,33,960 metres, there was a shortfall of 20,587 metres. These details are available in the Assessing Officers order in para 6 at page 3. Since the assessee had not maintained any proper account of shortage and shrinkage, and the percentage of shinkage was much higher at 2.98% during the year under consideration as compared to the immediately preceding year in which shrinkage was claimed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....also pointed out that the quantity of 2,760,55 metres was also approximate quantity and the rate applied was also an approximate uniform rate of Rs. 4.50 per metre. In other words so ran the submission, all these figures were based on guess estimate and were not exact figures which the Assessing Officer had wrongly thought to be. It was explained that by the very nature of things, the assessee could not have precisely pointed out the exact figure of stock in a statement sent two days earlier than the date on which the position was reflected. Inviting our attention to page 14 of the assessee's compilation it was pointed out that in asst. yr. 1985-86 the proportion of cotton fabric was more than that of the man-made fabric. This proportion, a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ourse of the accounting year. It was submitted that the assessee had worked out the exact position as on the last date of the accounting period for which no discrepancy had been discovered or pointed out by the Revenue. The learned counsel for the assessee also placed reliance on the Allahabad High Court judgment in the case of CIT vs. General Metal Works (1988) 172 ITR 173 (All) in which the Tribunal found that the stock was merely hypothecated with the bank which meant that the goods remained in the possession and control of the assessee and were not physically verified at the time of hypothecation. The Tribunal deleted the addition and the High Court held that no question of law arose from the order of the Tribunal. 5. We have carefull....