COMMISSIONER OF INCOME TAX vs DOSHI RICE MILLS.

ASHOK BHAN, J. :

This is a petition under s. 256(2) of the IT Act, 1961 (hereinafter referred to as the Act), for referring the following question of law along with the statement of the case for the opinion of this Court :

"Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in deleting the addition of Rs. 9,68,474 made by the ITO on account of difference in the value of stock hypothecated with the bank and that shown in the books of account of the assessee ?"

Assessee is a registered firm engaged in running of rice huller at Muktsar. For the asst. yr. 1981-82 assessee filed its return on 22nd October, 1981 declaring net income of Rs. 27,240. During the assessment proceedings, assessee submitted two trading accounts with different figures of stock. ITO was not satisfied with the explanation given by the assessee. On examination of the books of account, it was found by the ITO that stock position did not tally with the stock position given by the assessee in the declared profit statement submitted to the New Bank of India. Details of the stock hypothecated with the said bank on 30th June, 1980, 30th September, 1980, 31st December, 1980 and 31st March, 1981 were obtained. Since there was a discrepancy between the stocks as per the books of account and as per the statement given to the bank, ITO made addition of Rs. 4,23,367 under s. 69 of the Act vide assessment order dt. 4th September, 1984.

Being aggrieved by the aforesaid order of the ITO, assessee filed an appeal before the CIT(A), Jalandhar. Appellate authority acceded to the request of the assessee to produce additional evidence. After taking into consideration the additional evidence, appellate authority deleted the addition of Rs. 4,23,367 made on account of understatement of stock in the books of account.

Revenue being dissatisfied with the order of CIT(A) filed an appeal before the Tribunal, Amritsar Bench, Amritsar, which was later on transferred to the Tribunal, Chandigarh Bench, Chandigarh. Tribunal dismissed the appeal filed by the Revenue vide its order dt. 9th January, 1990. Application filed by the Revenue under s. 256(1) of the Act requesting the Tribunal to draw up a statement of the case and refer the question of law claimed by the Revenue to this Court was also declined.

Counsel for the Revenue argued that a question of law does arise from the order of the Tribunal and in similar circumstances this Court in CIT vs. New Punjab Skin Co. ITC 60 of 1993, decided on 17th October, 1996), directed the Tribunal to refer a similar question of law to this Court for its opinion. Reliance was also placed upon a reference made by the Tribunal on the same question of law in the case of Mithan Lal Kalra Rice & General Mills (RA No. 10/ASR/87). In Mithan Lals case (supra), Tribunal has referred to this Court a question of law relating to the valuation of the stock. Relying upon the decision of Mithan Lals case (supra), this Court in New Punjab Skin Co.s case (supra), directed the Tribunal to refer a similar question of law to this Court for its opinion. As the Tribunal has already been directed to refer a similar question of law to this Court arising under similar facts, we direct the Tribunal in this case as well to refer the question of law claimed by the Revenue along with the statement of the case to this Court for its opinion.