R.K. Gulati, J. - (1.) THIS is an application under Section 256(2) of the Income-tax Act, 1961, seeking a direction to the Income-tax Appellate Tribunal, Delhi Bench "B", to refer the following five questions for the opinion of this court, which it is claimed, are questions of law and arise out of the order of the Income-tax Appellate Tribunal passed in appeal: "1. Whether the order of the Tribunal was vitiated in law because it rejected the evidence without sufficient ground and failed to consider the material on the record ? 2. Whether the Tribunal was justified in basing its conclusion of confirming the addition of Rs. 38,747 on the basis of stock statement dated March 31, 1981, which was not signed by the assessee and rejecting the bank certificate dated December 18, 1989, and further not considering the other essential matters on the record ? 3. Whether, on the facts in the circumstances of the case, the decision of the Tribunal approving the addition for stock discrepancy in the case of CIT v. General Metal Works 1988. 172 ITR 173 (All) ? 4. Whether the finding of the Tribunal that the Uchanti loan of 1,240 kgs. of R. C. Lates is an unexplained investment is contrary to the rules of natural justice, arbitrary and perverse ? 5. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in sustaining the attraction of Section 145(1) of the Income-tax Act, 1961, and consequently additions on this basis ?"
(2.) WE have heard learned counsel for the parties. We may state at the outset that learned counsel for the applicant-assessee did not address any argument in so far as questions Nos. 4 and 5 are concerned and, therefore, it is not necessary for us to advert to those questions. Learned counsel, however, argued that the Income-tax Appellate Tribunal misdirected itself in not making a reference to this court in so far as the other three questions are concerned. To appreciate the contentions addressed to this court on behalf of the assessee, it is necessary to refer to briefly to the relevant facts. The relevant assessment year is 1981-82 with the previous year ending on March 31, 1981. From the balance-sheet drawn up as on the last day of the previous year, the Income-tax Officer found that the assessee had shown a bank loan of Rs. 32,102 taken from the Punjab National Bank, Navyug Market, Ghaziabad, against hypothecation of stocks and stores, the value of which was shown as Rs. 41,004 in the column of assets. Being suspicious of the fact, an Inspector was deputed by the Income-tax Officer to obtain the details of stocks hypothecated as on March 31, 1981. On comparing the details so obtained with the stock account of the assessee, the Income-tax Officer noticed that there was difference between the details filed before him and those furnished to the bank. He sought an explanation from the assessee. The assessee explained that the details of stocks furnished to the bank were inflated with the object of securing higher overdraft facility. To substantiate the plea that there was no stock with the assessee outside the account books, it placed reliance on the half-yearly returns which were filed on September 30, 1980, and March 31, 1981, before the Rubber Board for payment of excise duty. Reliance was also placed on the assessment made under the Sales Tax Act. The assessee tried to explain that the stocks accounted for in the account books represented the real stock position and the details of stocks submitted to the bank being inflated, the rough figures were of no consequence. An affidavit of the director of the assessee-company was also filed and he was cross-examined where he tried to explain the difference. The Income-tax Officer noticed that the stock position given to the bank as on May 31, 1980, and August 31, 1980, also varied and the stocks hypothecated with the bank did not tally with the stocks shown in the stock account of the assessee. The excess stock hypothecated to the bank, in terms of value, was to the tune of Rs. 16,274 and Rs. 13,650, respectively, on the said dates. The Income-tax Officer being not satisfied with the reply submitted by the assessee brought to tax Rs. 38,747 as unexplained investment in the stocks hypothecated with the bank which represented the value of peak difference of the excess hypothecated stock not recorded in the account books.
(3.) THE successive appeals filed against the aforesaid addition to the Commissioner of Income-tax (Appeals), Meerut, and thereafter to the Income-tax Appellate Tribunal, were dismissed and brought no relief to the assessee. THE assessee having failed to get a reference from the Income-tax Appellate Tribunal has come up to this court through this application for a direction to the Tribunal to refer the questions set out earlier. The sum and substance of the questions which are sought to be referred is that the Income-tax Appellate Tribunal sustained the addition in question by rejecting the evidence on record without sufficient grounds and failed to take into consideration the material placed on the record, particularly the bank certificate dated December 18, 1984, and the reliance placed by the Income-tax Appellate Tribunal on the bank statement as on March 31, 1984, was misconceived as it had not been signed by the assessee. The order of the Tribunal is thus vitiated by misdirection in law. Learned counsel urged that once it is accepted that the stock statement submitted to the bank was inflated in order to get more overdraft facility then in that event the impugned addition could not be sustained by the Income-tax Appellate Tribunal. Learned counsel further contended that the material placed, that is, the returns filed before the Rubber Board, the order of the sales tax assessment and the audited balance-sheet of the assessee-com-pany, were not taken into consideration by the Income-tax Appellate Tribunal in upholding the addition in question and, therefore, the order of the Tribunal is vitiated and gives rise to the questions of law pressed before us.;