COMMISSIONER OF INCOME-TAX Vs. KHALSA ENGINEERING WORKS

JUDGEMENT

(1.) M/s. Khalsa Engineering Works (hereinafter called "the assessee") filed a return showing an income of Rs. 24,565. During the assessment proceedings, in response to notice under Section 143 (2) of the Income-tax Act (hereinafter called "the Act"), it was found that the assessee had taken overdrafts from certain banks. The assessee was asked by the Income-tax Officer to furnish certificates from the concerned banks confirming the overdrafts with details of the securities pledged with them to secure the overdrafts. As per the certificates, it was disclosed that on March 31, 1971, the following stocks stood pledged with the two banks :-s. no. Name of the bank Particulars of the stock pledged 1. Allahabad bank 185. 3 tons of pig iron 41 slabs of tin

(2.) PUNJAB National 31 slabs of copper. Bank 2. With the State Bank of India, small stocks of pig iron and tin-slabs were pledged, but that is no longer the subject-matter of dispute.

(3.) THE question of pledge of 41 slabs of tin with the Allahabad Bank and 31 slabs of copper with the Punjab National Bank came up for pointed consideration before the Income-tax Officer, because those stocks were not found entered in the stock register and account books of the assessee. On getting information from the concerned banks, it was found that on April 10, 1970, 43 ingots of tin were pledged with Allahabad Bank of the value of Rs. 71,983 and out of that two tin ingots of the value of Rs. 3,348 were taken back on April 11, 1970, and the balance of 41 tin ingots remained pledged with the bank till the end of the financial year, i. e. , till March 31,1971. As regards 31 copper slabs, it was found that the same were pledged with the Punjab National Bank on February 26, 1971, and they remained pledged till March 31,1971.