SUHAS CHANDRA SEN, J. - (1.) THE Tribunal has referred the following question of law to this Court under S. 256(2) of the IT Act : "Whether, the conclusion arrived at by the Tribunal that the sum of Rs. 3,34,390 represented unaccounted stocks of the assessee is perverse, based upon conjectures, surmises, suspicions and/or inadmissible and extraneous material and/or was occasioned by the failure to consider material evidence ?"
(2.) THE assessment year involved is 1971-72 for which the relevant year of accounting is 2027 R.N. The facts as stated by the Tribunal in the statement of case is as under : The assessee is a dealer in scrap matter. While examining the assessee's bank account with the State Bank of India, Siliguri along with the books of accounts Moolji Iron & Steel Industries, the ITO found that the assessee had overdraft of Rs. 1,99,403 as on 3rd April, 1971, the last day of the previous year relevant to the assessment year under appeal. The ITO asked the assessee to file a letter from the State Bank of India, Silliguri showing goods hypothecated or pledged on 3rd April, 1971 against the said overdraft of Rs. 1,99,483. The assessee, however, showed its inability to file such a letter on the ground that the bank refused to issue a letter unless the IT authorities write to them directly. The ITO naturally became suspicious of the plea taken by the assessee. The ITO, thereupon, wrote a letter to the said bank for necessary details. The ITO got a letter from the bank showing the details of steels pledged with the bank as under : The ITO asked the assessee to reconcile the quantity shown to the bank and in the books of accounts. But the assessee failed to reconcile the discrepancy with regard to the stocks as shown in the books of the bank and as shown in its own books. Thereupon the ITO held that the excess stock of 595 MT pledged with the bank was not reconciled and as such the value thereof at Rs. ,34,390 was treated as the income of the assessee from other sources. The AAC, on appeal, took note of the argument of the assessee that if the stocks had been there in the godowns, the same would have been insured with the insurance company. the assessee had to show the figures of stocks in order to oblige the State Bank of India, Siliguri as the senior official of the Reserve Bank of India was coming at that time to inspect and verify the position of the stock pledged with the bank. The arguments, however, did not carry conviction with the AAC. He accordingly held that the circumstantial evidence regarding the insurance that no stocks at Khalpara were insured, was not accepted by the ITO. The affidavit filed by Sri Puranmal Agarwalla had also evidentiary value. In fact, this affidavit affirmed that for a long period of time the firm went on furnishing false and fabricated statement to the State Bank of India, Siliguri for the purpose of obtaining credit facilities. but the Manager of the State Bank of India, Siliguri categorically stated that on inspection by bank official the stock statements furnished by the assessee had been found to be correct. On the basis of the all these facts, the AAC came to the No. of Location Quantity Rate Total value 9 Khalpara 285 MT 562 1,60,170 10 Khalpara 310 MT 562 1,74,220 . 595 MT . 3,34,390 conclusion that there was no substance in the arguments advanced before him of behalf of the assessee. On further appeal the Tribunal took into account the arguments advanced by the assessee. The Tribunal examined all the facts. The Tribunal took note of the fact that the bank authorities had stated that the stock statements furnished by the assessee had been found to be correct on inspection. This obviously meant that more stock was pledged with the bank than disclosed in its books. The assessee had failed to produce any acceptable evidence in support of its case. The Tribunal came to the conclusion : "We have also gone through the paper book filed before us. On dispassionate and objective appeasement of all the facts we are of the view that the authorities below were justified in treating the sum of Rs. 3,34,390 as income from undisclosed sources under S. 69 of the IT Act, 1961. There is no doubt that the presumption under S. 69 is refutable but the fact remains that the assessee had filed to rebut the evidence by any hard facts and cogent evidence. It is for the assessee to prove that apparent is not the real state of affairs. There is doubt the discrepancy in the stocks pledged with the bank and those shown in the accounts was found by the ITO. As a matter of fact, it was categorically affirmed by the bank authorities. The assessee had not been able to prove that the wrong figures were given simply because the senior officer of the Reserve Bank of India was visiting and inspecting the accounts of the bank. The assessee has also not been able to produce any evidence regarding the margin allowed by the bank. But surprisingly the assessee has never been able to give the percentage of the margin on the goods pledged with the bank. The fact of the matter is that the assessee had pledged stocks with the bank about which it did not give any cogent and convincing explanation to the ITO. The assessee had thus been playing fast and loose and blowing hot and cold in the same breath. Instead of making such shifting statement the assessee should have tried to reconcile the figures. It is not necessary in the case of this type to give inference regarding the realities of the situation. The assessee must face the hard and logical facts of the point at issue. This being the position the authorities below had no other option but to treat the difference as income from undisclosed sources." The Tribunal further observed : "It has been found that the assessee has never been showing the correct figures to the IT Department. It has shown some figures of stocks in the account books and altogether different figures to the bank with whom the stock were pledged or hypothecated. The plea that the assessee obliged the State Bank of India is not borne out by the facts of the case. The bank categorically affirmed the position that the stocks were found to be correct on inspection. In such a case the addition made by the ITO and sustained by the AAC is justified. No interference is, therefore, called for." 3. The basic fact is that there was a discrepancy found in the books of accounts of the assessee. The closing stock figure did not tally with the figures furnished to the bank. It was for the assessee to explain the discrepancy to the satisfaction of the IT authorities which the assessee had failed to do. The entire evidence that was produced has been duly considered by the Tribunal. It is not a case of perversity. What weight is to be given to which piece of evidence must be decided by the Tribunal. Dr. Pal has argued that there was an affidavit filed on behalf of the assessee. The bank merely made a statement. No. affidavit had been filed on behalf of the bank. But the statement made by the bank is a valuable piece of evidence. What weight is to be attached to that evidence must be decided by the Tribunal having regard to all the surrounding circumstances.
(3.) THE Supreme Court in the case of CIT vs. Durga Prasad More reported in 1973 CTR (SC) 500 : (1971) 82 ITR 540 (SC) observed that science has not yet invented any instrument to test the reliability of the evidence placed before a Court or Tribunal. Therefore, the Courts and Tribunals have to judge the evidence before them by applying test of human probabilities. Human minds may differ as to the reliability of a piece of evidence. But in that sphere, the decision of the final fact-finding authority is made conclusive by law. The Supreme Court further observed that at any rate what value should be attached to a piece of evidence was for final-fact finding body to decide.;