COMMISSIONER OF INCOME TAX Vs. PADMAVATHI COTTON MILLS

JUDGEMENT

(1.) THESE are petitions filed by the Revenue under s. 256(2)of the IT Act, 1961, (hereinafter referred to as 'the Act'), to direct the Tribunal to state a case and refer the following questions of law :

(2.) WHETHER, on the facts and in the circumstances of the case, the Tribunal is correct in deleting the addition of Rs. 1,47,557 made by the ITO to the income declared ?"

(3.) WE have carefully considered the rival contentions. The Tribunal noticed that the books of account have not been rejected by the Department as not representing the correct stock position, the Tribunal also found that the assessee had declared a higher quantity of the closing stock to the bank for the purpose of securing the loan. The Tribunal has not rejected the contention urged on behalf of the assessee that the stock position reflected in the accounts tallied with the R.G. Register. In view of the above factual settings, the Tribunal came to the conclusion that the closing stock declared in the return filed by the assessee was based on the books of account and it should be accepted rather than the closing stock as declared to the bank which was made for the purpose of securing a loan.