MURUGAPPA CHETTIAR S Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee, the Income-tax Appellate Tribunal, Cochin Bench, has referred the following question of law for the decision of this court :

(2.) THE relevant assessment year is 1964-65. THE assessee is a manufacturer of tiles. THE Income-tax Officer noticed a huge difference between the stocks of tiles as per the accounts of the assessee and that supplied by the assessee to the bank for overdraft purposes. THE assessee pleaded that the figures accounted for by him in his accounts are the real figures and that the figures supplied to the bank are inflated for the purpose of easy overdraft facilities. THE Income-tax Officer rejected the explanation of the assessee. He concluded that the figures supplied to the bank are the real figures. On this basis, finally, he added a sum of RS. 50,528 representing the cost of production and the gross profit to the trading account. In appeal, the Appellate Assistant Commissioner sustained half of the addition. In further appeal, the Tribunal held that the accounted figures in the stock book of the assessee cannot be accepted as genuine. THE assessee himself has furnished two contradictory figures which is sufficient to reject the accounts unless there is material to corroborate the book figures as the correct figures. THE plea of the assessee that if the capacity of the factory and the quantum of the current consumed and wages paid are taken into account, he could not have produced more than what is accounted for was rejected. THE Tribunal took the view that there is no acceptable data to show that a certain unit of current can produce only a certain number of tiles. THE books of account were rejected. THE Tribunal held that an addition of Rs. 18,000 would be sufficient to meet the ends of justice and allowed the appeal in part. On motion by the assessee, the above question of law has been referred to this court for decision.

(3.) A copy of this judgment, under the seal of this court and the signature of the Registrar, shall be forwarded to the Tribunal as required by law.