Law:

Section:

Section 256 of the Income-tax Act, 1961 - Reference - Question of law - Assessee had pledged certain stocks with a bank which were not reflected in stock accounts and consequently ITO made addition of value of said stock in assessee's income rejecting assessee's explanation that what was pledged was only fake and imitated stock to defraud bank in order to obtain financial help - On appeal, AAC, however, accepted assessee's claim and deleted said addition - Whether as it had to be seen on facts of present case as to whether assessee's plea that it defrauded bank could be accepted so as to escape liability under 1961 Act any question of law arose out of Tribunal's order - Held, yes Facts For the assessment year 1971-72, the ITO, inter alia, found that on 10-4-1970, 43 ingots of tin were pledged with a bank of the value of Rs. 71,983 and this had not been shown in the relevant year by the assessee. When called upon to explain, the assessee stated that it did not make any purchase of tin in financial year 1970-71 and that 43 pieces/ingots of tin were purchased vide Bill No. 221/69 dated 3-10-1969 which were received on 27-11-1969 and were consumed on 24-3-1970, the receipt and consumption of which were reflected in the stock register for the financial year 1969-70 and that when the tin ingots were shown to have been pledged with the bank, in fact no stocks were pledged and only a fictitious representation was made by the assessee on the basis of invoice No. 221/69 dated 3-10-1969 referred to above. The ITO did not accept the assessee's plea and added the value of the said ingots in the assessee's income for the aforesaid assessment year 1971-72. On appeal, the AAC, however, accepted the assessee's explanation and deleted the said addition. On the revenue's appeal, the Tribunal also upheld the AAC's order. The Tribunal also rejected the revenue's application for reference. On application under section 256(2): PAGES ARE MISSED FROM HERE ONWARDS Held It was not disputed in the instant case that on pledging the so-called fake and imitated tin ingots the assessee had obtained financial help from the bank. Therefore, it had to be seen on the facts and in the…

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