B.S.DHILLON, J. - (1.) THE following question law has been referred to this Court for its opinion at the instance of the assessee : "Whether on the facts and in the circumstances of the case, there is any evidence or material for fixing the margin of error at 5 per cent ?"
(2.) THE brief facts giving rise to the reference are that the assessee is a registered firm and derives income from property and business. It also runs a re-rolling mill at Phagwara. For the accounting period ending on 31st Dec., 1962, relevant to the asst. yr. 1963-64, the assessee firm declared, in respect of its re-rolling mill, a gross profit of Rs. 68,086/-. The assessee firm enjoyed overdraft facilities from the Central Bank of India, Phagwara, against pledge and as well as hypothecation of stocks. On comparison of the stocks of the assessee firm as per its stock register with the stocks pledged and hypothecated with the Bank, the ITO found a number of discrepancies which find mention in his order. The assess by its written explanation dt. 22nd March, 1968, submitted that in open yard, weighment was never made by the godown-keeper; that the value of the goods pledged was always determined on an estimate basis and as such the certificate de. 6th Dec., 1966, issued by the Central Bank of India, Phagwara, giving the value of the goods pledged and hypothecated, was not reliable. The ITO rejected his explanation and made additions to the income of the assessee to the tune of Rs. 1,45,00/-, which find mention in his order.
(3.) ON appeal, the AAC upheld the addition of Rs. 1,39,553/- to the income of the assessee as income from undisclosed sources but deleted the other addition of Rs. 5,447/-.;