Law:

Section:

Section 69B of the Income-tax Act, 1961 - Undisclosed investment - Assessee- firm ' carried on business of manufacturing and sale of rubber products - It pledged synthetic sheets to bank for obtaining key loan accommodation but it was not reflected in assessee's books of account - Assessing authority noticed aforesaid discrepancy and examined bank agent as witness who stated that bank relied on declaration by parties - Assessee's explanation on said discrepancy was held not to be satisfactory by assessing authority - In midst of enquiry assessee got said stock from bank and sold it without informing ITO - Whether in view of assessee's conduct as well as his declaration to bank, value of said stock was rightly added by ITO in assessee's income - Held, yes Facts The assessee-firm carried on business of manufacturing: and sale of rubber products, etc. The assessing authority noticed that the pledged documents signed and submitted by the assessee to the bank for obtaining key loan accommodation showed that the goods pledged were synthetic sheets. The said goods were not reflected in the books of account of the assessee. The assessee did not make available the said goods to the assessing authority for verification and disposed of the same without notice to the assessing authority. The assessing authority examined the bank agent of said bank as witness who stated that the bank relied on declaration by parties. Considering the overall conduct of the assessee the assessing authority took the view that the aforesaid circumstances coupled with the declaration of the assessee contained in the pledged documents was sufficient to hold that the assessee had a stock of unaccounted synthetic sheets and, thus, made additions under the head 'Income from other sources'. On appeal, the AAC declared that the assessee, in order to obtain the key loan accommodation from the Central Bank, had pledged only ordinary insertion sheets and not synthetic sheets and, therefore, the addition made by the assessing authority was not sustainable. Accordingly, the same was directed to be deleted from the assessment. On appeal by the revenue, the Tribunal also upheld the AAC's order. On reference:…

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