JUDGEMENT
Rajes Kumar, J. -
(1.)The Income Tax Appellate Tribunal has referred the following questions of law under Section 256 (1) of the Income Tax Act, 1961 (hereinafter referred to as" Act") for the assessment year 1981-82 and 1982-83 for opinion to this Court.
"(a). Whether on the facts and in the circumstances of the case, the Tribunal was correct in confirming the order of the CIT (A) holding that the difference between the stock value shown in the books of accounts of the assessee and value disclosed to the bank was not assessable to tax as deemed income?" "(b) Whether on the facts and circumstances of the case, the Tribunal was correct in confirming the order of the CIT (A) for granting renewal of registration to the Firm?"
(2.)The brief facts of the case are as follows:The assessee/opposite party hereinafter referred to as 'assessee') was a resident having the status of unregistered Firm and the accounting period ending with 31st March, 1981 and 31st March, 1982 respectively for the assessment years 1981-82 and 1982-83, was originally assessed under Section 143(1) which was completed on 20th March, 1982 and 9th September, 1983 respectively on an income of Rs. 9,320/- and Rs. 9,820/-. Subsequently notice under Section 148 was issued to the assessee on 23rd February, 1987 and 7th January, 1987 respectively. In response to which, return was filed by the assessee on 24th April, 1987 and 6th February, 1987 respectively on net income of Rs. 9,320/- and Rs. 9,820/-. The assessee was enjoying income from manufacturing and sale of harrow and chauff cutter On 30th July, 1985, a search under Section 132 was conducted on the factory and residential premises of the assessee and various incriminating; documents and books were found which were seized, as mentioned in the orders of assessment, Scrutiny of papers revealed the position to the assessing officer as found on comparison respectively for the assessment years as given below: As per return As per annexure 1981-83 1982-83 1981-82 1982-83 G.P. 52,013 16,26492,013 83,453 N.P. 9,320 9,81526,320 17,651 Total of Balance sheet 1,72,526 2,14,500
(3.)From the balance sheet which was filed with the Union Bank of India, it was found by the Assessing Officer that stock of harrow and chauff cutter was of Rs. 82,325/- and Rs. 25,638/- for the assessment year 1981-82 and Rs. 63,700/- and Rs. 24,361/- for the assessment year 1982-83, while as per the balance-sheet submitted to the Department, the assessee showed closing stock respectively of Rs. 12,325/- and Rs. 4,521/- for the assessment year 1981-82 and Rs. 18,381/and Rs. 2,815/- for the assessment year 1982-83. Thus, the Assessing Officer found an excess stock of Rs. 70,000/- and Rs. 21.117/- respectively for the assessment year 1981-82 and Rs. 45,319/- and Rs. 21,546/- for the assessment year 1982-83. The explanation of the assessee was that the inflated figure in the balance sheet and P & L account was to get the bank credit facility. The A.O. rejected such explanation by viewing that once the assessee had shown himself excess stock in the balance sheet submitted to the bank, there was no reason as to why the lesser stock should be shown to the department besides that the assessee's bocks of the years in question were not available as confirmed by the assessee. Ultimately, the A. O. added the difference in the stock of Rs. 91,117/- and Rs. 66,865/- to the assessee's income respectively for the assessment year 1981-82 and 1982-83.