Dinesh Maheshwari, J. - (1.) THIS application under Section 256(2) of the Income Tax Act (hereinafter referred to as the Act) has been moved by the CIT, Udaipur because the Tribunal, Jaipur Bench, Jaipur has refused the application made by the department to refer the following as a question of law for consideration of this Court : Whether on the facts and in the circumstances of the case, the Tribunal was justified in upholding the order of the Commissioner (Appeals) who deleted the additions made on account of discrepancy in the value of closing stock as per books of account and the value declared to the bank ?
(2.) THE question aforesaid was proposed for reference in the background of the facts that in relation to the assessment year 1982 -83, the assessee Udaipur Chemicals & Fertilizer (P) Ltd., a company engaged in manufacture of single superphosphate from processing of raw phosphates with sulphuric acid, filed a return declaring loss of Rs. 7,02,880. While passing the assessment order on 26 -3 -1985, the learned assessing officer ('the assessing officer) observed that many facts were similar to those of the last year like valuation of closing stock as per the assessee's record and as per the bank records; and that he shall be taking the same view as taken for the last year, more so because the department was in appeal on those points. The assessing officer found that this year also there was a discrepancy in the value of closing stock declared in the books of account and that declared to the bank for the purpose of availing overdraft/loan facilities; that as per books of account, the value of closing stock, debtors and advances was Rs. 20,13,748, while the value of these assets was declared to the bank at Rs. 23,37,248; that there was a difference of Rs. 3,23,500 and the arguments of the assessee in justification were the same as those of last year which have already been rebutted and, therefore, need not be repeated. On the question of quantum of addition on this ground, the learned assessing officer observed that though a communication was sent to Central bank of India, Udaipur to know the exact value of goods hypothecated and declared by assessee with it but reply of the bank was not received so far; and the case was getting time -barred and, therefore, he would adopt the value as per the record available with him with a right to take remedial action in case of substantial difference being found after getting information from the bank. Accordingly, the learned assessing officer proceeded to make addition to the tune of Rs. 3,23,500, i.e., the entire amount of difference between the value of assets as stated in the books and as stated to the bank. In appeal before the Commissioner (Appeals) ('Commissioner (Appeals)'), the assessee contended that no addition should have been made in relation to the value of assets because the value was shown on higher side to the banking authorities for the purpose of obtaining the loan and there was no discrepancy in the actual stock. The assessee referred to the decision of appellate authorities in its own case for the assessment year 1981 -82. After considering the factual position and the order passed in relation to the assessee for the assessment year 1981 -82, the learned Commissioner (Appeals) found that in the absence of any material to the contrary indicating any real discrepancy in the quantity of the stock as reflected in the books of account vis -a -vis the quantity of stock pledged with the bank, the addition was unjust and, accordingly, deleted the same.
(3.) IN the appeal preferred by the department, the Income Tax Appellate Tribunal ('the Tribunal') agreed with the order passed by the Commissioner (Appeals) and observed that it was not brought about by the assessing officer as to whether the alleged discrepancy was only in value or in quantity too; and it was also not pointed out as to on which particular date the alleged discrepancy was noted -;