COMMISSIONER OF INCOME TAX Vs. KALIKOTH KUNCHI TIMBERS

JUDGEMENT

(1.) AT the instance of the Revenue, the following question has been referred under Section 256(1) of the Income-tax Act, 1961 (in short "the Act"), for opinion of this court, by the Income-tax Appellate Tribunal, Cochin Bench (in short "the Tribunal") :

(2.) THE factual position, as indicated in the statement of case, is as follows : THE assessee is a partnership firm which, inter alia, carried on business in timber logs, teak poles, scantlings, fire wood, fish oil, etc. For the assessment year 1984-85 corresponding to the previous year ended on March 31, 1984, the Assessing Officer added a sum of Rs. 4,98,110 to the value of the closing stock and correspondingly to the profit by holding that there was undervaluation. Such conclusion was arrived at on the basis of certain books of account seized during a search conducted under Section 132 of the Act at the business and residential premises of the assessee and its partners on December 10, 1987. A register was seized from the business premises wherein it was noted by the assessee that it had the following stock of timber and poles as on April 1, 1984 :

(3.) IN appeal before the Tribunal, the assessee's contention was that the property mark register was only a record showing the maximum quantity of timber allowed for transportation from the forest and the quantity of the timber transported thereby. The Tribunal held that the property mark register indicated the transportation of timber logs through the forest under permits issued by the forest department, but it did not contain the quantity of timber purchased from other sources and transported to the assessee's depot under the permits issued in the names of the suppliers and it did not contain the quantity details of logs taken for sawing or for local sales occasioning transportation of logs outside the forest area. With these observations, the Tribunal concluded that the property mark register could not be considered as a stock register and a comparison of the stock as found in the property mark register with other registers cannot be a foolproof comparison. Accordingly, the Tribunal deleted the addition of Rs. 4,98,110. Accepting the assessee's prayer for reference, the Tribunal has made a reference, as indicated above.