Income-tax---

----Income from undisclosed sources ---Assessee taking loan from Bank against pledge of goods to be purchased from particular party---Documents of title handed over to Bank---Goods received subsequent to date of execution of pledge document---Books of assessee showing substantial stocks available with assessee on dates of pledge---No inference possible that deficiency on dates of pledge supplied by undisclosed stock---Addition on account of undisclosed stocks not justified.

The assessee entered into an agreement to purchase 200 metric tonnes of chicory roots from a party R. R had purchased the goods from an agricultural cooperative society and took a loan from the assessee against pledge of the goods in question with the assessee. The assessee advanced the loan to R by two cheques drawn on its bank, and in order to secure funds from the bank, the assessee pledged the 200 metric tonnes of chicory roots purchased from R with the bank. The records of the bank showed that the goods were pledged on September 18 and 19, 1973. The goods were actually received by the assessee from R on September 18, 19, 20 and 21, 1973. On the ground that on September 18 and 19, 1973, only 100.230 metric tonnes of chicory roots were received by the assessee from R, whereas it had pledged 100 metric tonnes on each of these dates, the Assessing Officer treated the difference as undisclosed stock and brought the sum representing the value thereof as income from undisclosed sources, rejecting the assessee's explanation that though it had executed the documents of pledge in respect of 200 metric tonnes on the two dates, in fact, the goods under transaction had not reached its godown on those days and, therefore, they did not become the subject of pledge on the two dates but became the subject-matter of pledge on the four dates, respectively, when the goods were received by the assessee and not earlier. The facts recorded by the Tribunal showed that 1,56,992 kgs. of chicory roots were readily available with the assessee on the dates in question. Also, the assessee had executed trust receipts in favour of the bank on September 18 and 19, 1973, relating to the chicory roots to be received from R. The Tribunal, however, held against the assessee on they ground that the assessee had not claimed that any part of available stock was made available for pledging. On a reference:

Held, that when the assessee's clear case was that it in fact had not pledged 200 metric tonnes of chicory roots on the dates in question, but had in fact pledged the requisite quantity of goods covered by the transaction with R on four dates as and when the stock was actually received, it was not for the assessee to plead that it had supplied the deficiency from other stocks. Clearly, the goods which were contemplated to be the subject-matter of the pledge were the goods which were to be received from R. Therefore, the pledge in terms of the agreement could come into existence only on receipt of the goods specified under the said transactions. Moreover, even if the finding that though the assessee did not receive 200 metric tonnes of the stock under the transaction with R, it actually pledged 200 metric tonnes of the stock were to be accepted, it only established that part of such goods were not stocks received from R. but it could not lead to the further conclusion that the assessee did not have any other or sufficient stocks in its possession, which was disclosed in his books of account, which could be part of the pledge. On the other hand, there was positive evidence about the existence of the necessary quantity of disclosed stock with the assessee which could be part of actual delivery. Also, the trust receipts clearly showed that the documents of title to the goods were handed over to the assessee on the stipulation that the goods when received by the assessee shall be held by it as security for the bank. There was no stipulation that the goods would be received on the very date on which the trust receipts were executed. There was no room to conclude that any other goods than those covered by the receipts handed over to the assessee were even required to be pledged as security with the Bank. Further, the initial security come into existence, not by actual delivery of goods, but by delivery of documents of title to goods which were yet to be received. There was no material on the basis of which one could reach the conclusion that the assessee had in fact pledged the goods to cover the security under the transaction before receiving the goods, or that the assessee was in possession of undisclosed stock to fill the deficiency in actual receipts:

Held also, that making a reference to the voluntary disclosures by the assessee for the assessment years 1971-72 to 1974-75 was not relevant for the consideration of the question about actual delivery or non-delivery of the 200 metric tonnes of chicory roots on September 18 and 19, 1973, nor about the conclusion regarding supply of undisclosed stock to fill in the deficiency in the actual receipt of stocks under the R transaction for establishing a nexus between the said transaction and income from undisclosed sources during the relevant assessment year. .

Dhirajlal Girdharilal v. CIT (1954) 26 ITR 736 (SC) ref.

K.C. Patel for the Assessee.

Manish R. Bhatt for the Commissioner.

JUDGMENT

R. BALIA, J. ---At the instance of the assessee, two questions of law said to be arising out of its order in I.T.A. No.1555/(Ahd) of 1979 concerning assessment year 1974-75 have been referred to this Court for its opinion by the Income-tax Appellate Tribunal, Ahmedabad Bench "A", with the statement of the case.

In its reference application under section 256(1), the assesee had suggested six questions which read as under:

"(1)????? Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the addition of Rs.1,24,600?

(2)??????? Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in solely relying upon the bank manager's version while deciding the legal character and true import in commercial practice of the trust receipt?

(3)??????? Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in placing the burden on assessee, and in holding that the same was not discharged even when the Tribunal itself had failed to take into consideration various evidence produced, and thus the final finding is not vitiated in law?

(4)??????? Whether, on the facts and in the circumstances of the case, the Tribunal's finding, as to the conduct of the assessee with special reference to the assessee's contention regarding availability of unpledged stock holding that the same is of no consequence can be justified in law and is sustainable from material on record?

(5)??????? Whether, on the facts and in the circumstances of the case, the Tribunal's ultimate conclusion can be justified in law it having taken into consideration irrelevant material in the form of past events unconnected with the issue at hand and it having ignored undisputed documentary evidence in the form of letters, etc., of third parties?

(6)??????? Whether the Tribunal's ultimate finding confirming the addition in question is not perverse, the same being based on mere inferences, conjectures and surmises and against material and evidence on record?"

The aforesaid questions are reproduced for the purpose of pointing out the various aspect of the controversy, which had been encompassed in the questions referred to us, inasmuch as the Tribunal itself has, instead of rejecting any of the questions suggested by the assessee, made it clear that the following questions referred by it will be sufficient to cover the points raised in the aforesaid questions:

"(1)????? Whether, on the facts and in the circumstances of the case and the material on record the Tribunal was justified in law in confirming the addition of Rs.1,24,600?

(2)??????? Whether the Tribunal was justified in law in basing its conclusion on material and past events which had no connection with the controversy at issue?"

The facts which have led to this reference may be briefly noticed as have been found by the Tribunal. In the assessment year 1974-75, the assessee-firm purchased 200 metric tonnes of chicory roots from Raxor Chicory Supply Co. of Jamnagar. For the purpose of this purchase, a loan was advanced by the assessee-firm to the said concern. The .said loan was made by two cheques drawn on the State Bank of Saurashtra, Jamnagar, and in order to secure funds from the bank, the assessee had pledged the said 200 metric tonnes of chicory roots with the Saurashtra Bank. The records of the State Bank of Saurashtra showed that the 200 metric tonnes of chicory were pledged with the said State Bank of Saurashtra on September 18, 1973, and September 19, 1973. The Income-tax Officer, during the assessment proceedings had found that on September 18, 1973, and September 19, 1973, only 100.230 metric tonnes of chicory roots were received from the transaction with Raxor Chicory Supply Co. and the assessee was required to explain that though the quantity of chicory roots pledged with the State Bank of Saurashtra in the relevant register is shown to be 100 metric tonnes each on September 18, 1973, and September 19, 1973, which was' at variance with the receipt of goods from the seller. The assessee, in its reply to the inquiry from the Income-tax Officer, made the following submission:

"In addition to what is stated therein it is submitted that the goods pledged by Raxor Chicory Supply Co. with us were the same that were pledged with the State Bank of Saurashtra by us. Raxor Chicory Supply Co. purchased the said goods from Jamnagar Agricultural Products and Processing Cooperative Society Ltd., who originally had pledged with the Jamnagar District Cooperative Bank Ltd., when Raxor Chicory Supply Co., purchased chicory roots from Jamnagar Agricultural Products Cooperative Society Ltd. the goods were delivered through Jamnagar District Cooperative Bank Ltd. as the same were within the custody of the bank, directly to our godown as the same were to be pledged with us by Raxor Chicory Supply Co. In short, goods were delivered to our godown through Jamnagar District Co-operative Bank Ltd. and we pledged the same to the State Bank of Saurashtra meaning thereby that goods which were within the custody of Jamnagar District Co-operative Bank Ltd. were transferred to the custody of State Bank of Saurashtra and hence delivery given by Jamnagar District Cooperative Bank Ltd. on various dates were the dates on which the goods were delivered. to us and in turn the dates on which we pledged the same with the State Bank of Saurashtra. Though the State Bank of Saurashtra has shown the dates of pledge as September 18, 1973, and September 19, 1973, the actual pledge was made on different dates as stated in our above letter."

The assessee had also executed two trust receipts in favour of the bank on September 18 and 19, 1973.

A statement of the branch manager of the State Bank of Saurashtra was also recorded. As regards the trust receipt, he has stated that it was with a view to ensure that the full delivery of the goods pledged was completed by the end of the same day and not on subsequent dates. The bank manager had shown the pledge of goods in its register on September 18 and 19, 1973.

The assessing authority rejected the assessee's plea that pledge of the goods received under transaction with Raxor took place on four days, namely, 18th to 21st September, 1973, and held that the actual pledge had taken place on September 18 and 19, 1973. On reaching this conclusion, it further drew the inference that because the assessee had not claimed that goods on September 18 and 19, 1973, were supplied to the bank for pledging from any other source available with him, the difference between the quantity shown to be pledged with the bank on September 18 and 19 and quantity of commodity actually received from Raxor transacted on these dates represented undisclosed stock of the assessee which found place in pledgement with the bank and to that extent its value represented income of the assessee from undisclosed source of that year.

Obviously, the question whether any actual delivery of 200 metric tonnes had taken place on September 18 and 19, 1973, to the bank as security or not is primarily a question of fact and so also whether the assessee had any undisclosed stock in his possession to represent the deficiency between the goods received from the Raxor and pledged with the bank is also a finding of fact and can only be examined on the anvil of well-known principles which vitiates the finding of fact and takes out the rigour of its binding nature.

The facts, that the assessee has entered into an agreement , to purchase 200 metric tonnes of chicory from Raxor, that he advanced a loan of Rs.2,30,000 to the said Raxor by drawing cheques on the State Bank of Saurashtra on the security of goods to be purchased under that agreement, that the said goods were made the subject-matter of security for the advance of funds by honouring the said two cheques and that the goods under that transaction were in fact received on September 18, 1973, September 19, 1973, September 20, 1973, and September 21, 1973, only are not in dispute. It- has not been the case of the assessee at any time that he received 200 metric tonnes of chicory from Raxor on September 18 and 19, 1973, and pledged the same on that date. It is admitted that though pledge documents were executed on September 18 and 19, 1973, in fact pledge of those goods had taken place only on the four aforesaid dates as and when the part delivery has been received by the assessee at his godown, which were held by him for the bank as security for the aforesaid loan and he had not received the full stocks of the transaction on the two relevant dates to fulfil the obligation of actual delivery out of stock to the bank on those days. The assessee has clearly pleaded that though he had executed the documents of pledge of 200 metric tonnes on the two dates, in fact the goods under transaction had not reached his godown on those days and, therefore, they did not become the subject of pledge on the two dates but became the subject-matter of pledge on the four dates respectively when the goods were received by the assessee and not earlier to that. There is no dispute up to this extent. The dispute is in respect of two aspects, firstly, whether the actual delivery was given of 200 metric tonnes to the bank as pledge on September 18 and 19, 1973, and, secondly, if actual delivery has been accepted to have taken place on September 18 and 19, 1973, whether it leads to the further conclusion that the assessee supplied the deficiency by some undisclosed stock.

The well-known grounds on which the finding of fact becomes a question of law are whether it is based on no material or whether it is based on partly relevant and partly irrelevant material and it cannot be said to what extent irrelevant considerations have influenced the finding or it has been arrived at by taking into consideration irrelevant material and circumstances or by ignoring relevant and material circumstances necessary for reaching a conclusion of fact.

The proposition found its classic expression in Dhirajlal Girdharialal v. CIT (1954) 26 ITR 736; AIR 1955 SC 271, 273, a case arising under section 66 of the Indian Income Tax Act, 1922, corresponding to section 256 of the Income Tax Act, 1961. In the words of Mahajan C.J. (page 739):

?...if the Court of fact, whose decision on a question of fact is final, arrives at this decision by considering material which is irrelevant to the enquiry, or by considering material which is partly relevant and partly irrelevant, or bases its decision partly on conjectures, surmises and suspicions, and partly on evidence, then in such a situation clearly an issue of law arise..:.. It is well? established that when a Court of fact acts on material, partly relevant and partly irrelevant, it is impossible to say to what extent 'the mind of the Court was affected by the irrelevant material used by it in arriving at its finding. Such a finding is vitiated because of the use of inadmissible material and thereby an issue of law arises."

Since the foundation of addition of Rs.1,24,000 representing the value of a part of the stock pledged with the bank in the assessable income of the assessee for the relevant assessment year is the inference about availability of undisclosed stock of chicory root with the assessee on September 18 and 19, 1973, that is to be first examined whether the finding about the assessee having in its possession undisclosed stock which could be pledged with the bank is supported by any material and is based on relevant considerations and not tainted with irrelevant considerations. We examine the question on the assumption but without expressing any opinion about the correctness of the finding of actual delivery of 200 metric tonnes of chicory roots having been made to the bank on September 18 and 19, 1973, by the assessee. Here, it would be pertinent to notice one very relevant fact which has come on record and has found place in the order of the Tribunal as well. The assessee had placed that he had on the relevant dates 1,56,992 kgs. of stock of chicory roots recorded in its books of account, which was readily available with it for pledging. Therefore, it had no need to concoct the story of non-delivery if in fact it had delivered the stocks on those two days. The correctness of the fact that the assessee had with it stock weighing 1,56,992 kgs. and which was readily available for it to pledge was not questioned and was assumed to be correct. However, no significance to this was attached by the Tribunal or for that matter any of the authorities below, for the reason that the assessee has not claimed that any part of that stock was made available for pledging.

In the light of this the scenario which emerges is that the assessee actually delivered 200 metric tonnes of chicory to the bank on September 18 and 19, 1973, for pledge which was required to be given as security for the financial facility made available by the bank to the assessee for advancing the loan to Raxor for purchase of 200 metric tonnes of chicory roots. The purchased goods were contemplated to be the subject-matter of pledge. The pledge documents were executed for 200 metric tonnes of chicory roots. Though from the order of the Assessing Officer, it appears that the original pledge letters were available for his perusal at the time of assessment and were part of assessment records, the same had not been made part of the statement of case. The 200 metric tonnes of chicory roots which were pledged with the bank on September 18 and 19, 1973, did not entirely come out of the stocks purchased from Raxor. The next question that arises for consideration is whether from this alone any inference could be reasonably drawn that the stocks must have come from undisclosed stocks of the assessee.

We are unable to agree with learned counsel for the Revenue that the only conclusion possible from these facts is that the assessee had pledged undisclosed stock unless it had come out with an alternative plea nor we are impressed with the arguments that it lead to even the plausible inference in the facts and circumstances of the present case that the assessee had pledged undisclosed goods. We have noticed above that the assessee has clearly brought to the notice of the Department that it had sufficient stocks in its books of account to supplement the deficiency in actual receipts from Raxor to complete the obligation of pledge. This cannot be said to be of no consequence before a finding could be arrived at about supply of the deficiency in stocks received from Raxor by undisclosed stocks by the assessee. On the contrary, when the assessee's clear case was that it in fact had not pledged 200 metric tonnes of chicory roots on that date but had in tact pledged the requisite quantity of goods covered by the transaction from Raxor on four dates as and when stock was actually received, it was not for him to plead that he supplied the deficiency from some other stock. He has simply pleaded that he had sufficient stock to support his credibility about the stand taken in view of the actual delivery against the pledgement of goods purchased from Raxor. This was possible to say so if the assessee had pleaded that he had in fact delivered 200 metric tonnes stocks on September 18 and 19 out of goods received from Raxor. In that event, proof of non-receipt of stock from Raxor on the two dates would have rendered the assessee's explanation about actual delivery being related of stock record false and in the absence of any proof furnished by the assessee about the source of actual delivery made by him, a legitimate inference could be drawn against the assessee. But where the assessee pleads that he did not in fact deliver the stocks of 200 metric tonnes on 18th and 19th September, because lie has not in fact received the stock which was to be pledged with the bank, and the pledge has not taken in fact on these two dates, this plea is not falsified by the fact that the assessee had not received the full quantity of chicory roots purchased and agreed to be pledged on the two relevant dates. On the contrary this supports the plea that the chicory roots of Raxor transaction could not have been the subject-matter of actual delivery for pledge on 18th and 19th September. Its plea was in consonance with the terms of the whole transaction as spelt out in the Tribunal's order. Clearly only the goods which were contemplated to be the subject-matter of pledge security were the goods which were to be received from Raxor. Therefore, the pledge in terms of the agreement could come into existence only on receipt of the goods specified under the said transactions.

If the finding is to be accepted that though the assessee did not receive 200 metric tonnes of the stock under the transaction with Raxor, but it actually pledged 200 metric tonnes of the stock, it only establishes that part of such goods were not stock received from Raxor, but it cannot lead to the further conclusion that the assessee did not have any other or sufficient stock in his possession, which was disclosed in his books of account, which could be part of the pledge. On the other hand, there was positive evidence about the existence of the necessary quantity of disclosed stock with the assessee which could be part of actual delivery and total want of any evidence to draw an inference of any sort that the assessee had in his possession any unaccounted stocks from which alone he could have furnished the deficiency in the stocks receivable from Raxor to fulfil his obligation to deliver the goods to the bank against the pledge. In the face of existence of positive material about availability of sufficient disclosed stock, the finding about the deficiency coning out of undisclosed stock, when the assessee's plea about non-delivery has not been accepted, is not supported by any material apart from the same being on ignoring the very relevant material on record about the availability of disclosed stock of the chicory root in the books of account with the assessee on the relevant dates.

The Tribunal apparently appears to have ignored very a relevant factor in reaching its conclusion about actual delivery of goods to the bank on the 18th and 19th and delivery of undisclosed stock of chicory roots. The case of the assessee had throughout been that the financial accommodation in question sought from the bank was in connection with goods to be purchased from Raxor and only the goods to be purchased were to be security for the said financial accommodation. This part of the whole transaction had not been at issue at any time. Even the bank manager had accepted that trust receipts were taken from the borrower to ensure the full delivery of goods pledged is completed by the end of day. Reference to trust receipts which form part of statement of case goes to show that they were executed on September 18 and. 19, 1973. They also show that they related to chicory roots to be received from Raxor Chicory Supply Co. and delivery was to come from Jamnagar District Co-operative Bank Ltd. The assessee had also placed on record documents showing that the goods to be supplied to the assessee were in fact in the possession of Jamnagar District Co-operative Bank and actual delivery was to be made from the said bank. Further facts which are clear from those two receipts are that the documents of these goods were in the first instance handed over to the bank as security. The trust receipts were executed in lieu of handing over these documents to the assessee by the bank and securing that when delivery of the said goods is taken by the assessee through these documents the same remain the security of the bank, in respect of the transaction. We reproduce one of the trust receipts, the other is in identical terms:

In consideration of your handing over to me/us the R.Rs of the goods as per particulars at the foot of this receipt held by your bank as security towards our cash credit account, we hereby undertake to clear the said goods in trust for the bank store them in godowns as directed by the bank".

Particulars of goods above referred:

This establishes in unmistakably clear terms that documents of the goods were handed over to the assessee on the stipulation that the goods of the documents when received by the assessee shall be held by it as security for the bank. There was no stipulation that the goods will be received on the very date on which the trust receipt has been executed, as stated by the bank manager. This statement on the face of it is contrary to the document itself. Secondly, only specific goods covered by the documents handed over to the assessee were to remain security in the hands of the assessee when received by it and the same was to be stored at the direction of the bank, not necessarily at the godowns owned by the bank. There was no room to conclude that any other goods than those covered by the receipts handed over to the assessee were even required to be pledged as security with the bank. The assessee's case throughout has been consistent with these terms. It was not the case of the bank either that the assessee had not acted in accordance with the terms of the stipulations, nor was there any material with the Revenue to discard the assessee's explanation that it has in fact acted in accordance with the stipulation that the goods received from Raxor Supply Co. became part of the security as and when received at his godown and not before. It is not in dispute that the goods from Raxor Supply covered by documents delivered to the assessee by the bank reached him between 18th and 21st September and not on 18th and 19th September only when the receipts were executed. When it was nobody's case that any other goods were required to be pledged on September 18 and 19, 1973, irrespective of the delivery of goods from the seller, and in fact those goods were received two days later, we fail to understand what was the material on the basis of which one could reach the conclusion that the assessee has in fact pledged the goods to cover the security under the transaction before receiving the goods. In our opinion, the. Tribunal apparently was swayed by wholly irrelevant considerations in the first place in assuming that any goods were required to be pledged on 18th and 19th September de hors the stipulations between the parties. It ignored the vital aspect of the stipulation between the parties as to requirement of security, which clearly spelt out from the trust receipts, which was very much before it. Yet another error which the Tribunal committed was to assume, without any basis, that on 18th and 19th September, the assessee was in possession of undisclosed stock to fill the deficiency in actual receipts. As discussed above, there was no basis for such assumption in the facts and circumstances of the present case. One more relevant circumstance which has been lost sight of is that the initial security has come into existence, not by actual delivery of goods, but by delivery of documents of goods which were yet to be received. These documents were redelivered by the assessee on 18th and 19th, respectively, with the stipulation that the goods secured under those documents shall be held by the assessee as security for the bank and shall be also as per its direction. It did not stipulate actual physical delivery of the same to the bank. The documents of pledge were also executed on 18th and 19th September, respectively, for 100 metric tonnes each, that is to say contemporaneously with the execution of the trust receipts. In the light of those two factors it stands to reason that in lieu of delivery of documents of goods to the customer with the stipulation that he shall hold the goods in trust for the bank, pledge documents " in respect, of the goods covered by the documents have been obtained on respective dates to take possession of the goods when received as the subject ?matter or security the moment they come into the possession of the assessee and were to be held in trust for the bank.

While taking into consideration the statement of the bank manager, the Revenue Authorities ignored the principle that ordinarily where the terms of an agreement are documented, oral evidence in respect of the terms cannot be taken into consideration. The bank manager while explaining the meaning of the trust receipts has stated that the trust receipts are executed to ensure delivery of the goods covered by the documents on the very day. This was clearly not to be found in the trust receipt. The trust letter/receipts is a well-?known term in the field of banking. In Dictionary of Banking by Gerald Klein, trust letter/receipt has been explained:

"Trust letter/receipt. Where a produce loan has been given by a banker to his customer, and the goods are held by the bank as security for the loan, then in order to repay the loan, the customer needs to sell the goods. For this purpose a trust letter is signed, making the customer the agent of the bank. This protects the bank from the customer's bankruptcy and any claim from the insolvency practitioner. It requests that the customer protects the goods and on sale transfers the proceeds to the bank. The trust receipt is delivered to the bank who will on receipts give the customer a letter to the warehouse-keeper requesting that the goods be transferred into the name of the customer. "

??????????? In Black's Law Dictionary, the term has been stated to mean:

"Trust receipt. A pre-U.C.C. security device now governed by Article 9 of the Code. A receipt stating that the wholesale buyer has possession of the goods for the benefit of the financier. Today there usually must be a security agreement coupled with the filing of a financing statement. Method of financing commercial transactions by means of which title passes directly from manufacturer or seller to banker or 'lender who as owner delivers goods to dealer in whose behalf he is acting secondarily, and to whom title goes ultimately when primary right of banker or lender has been satisfied:"

From the above it is abundantly clear that the trust letters/receipts are executed to ensure that goods, which are either in the possession of the bank are released to the debtor or are to be received by the buyer remain as security for the bank while in the custody of the buyer. It has nothing to do with time and act of delivery of goods to the bank. Moreover, this also makes it clear that the trust letters/receipts, in case the goods are yet to come into the possession of the customer, are executed and such goods are received and delivered by the customer as security on behalf of the bank. That is to say where a trust letter is executed in respect of documents of title the goods covered by these documents only become the subject of security or in other words specific goods relating to which documents are handed over to the debtor by the financier alone are intended to be subjected to security agreement. The statement of the bank manager that the bank was not concerned with the goods received from Raxor but was only concerned with the customer so far as the goods covered by the trust receipts are concerned, was clearly contrary to the trade practice of the trust letters/receipts and the terms contained therein. The Tribunal failed to notice this very vital aspect of the matter.

As a result, we answer question No. 1 referred to us in the negative, that is to say, in favour of the assessee and against the Revenue by holding that on the material before it the Tribunal could not have reasonably reached the conclusion that the assessee had actually delivered 200 metric tonnes of chicory roots to the bank on 18th and 19th September and that part of such delivery came out of his undisclosed stock and that the Tribunal has reached its conclusions by partly ignoring relevant material and circumstances and partly by irrelevant consideration, hence the same stand vitiated.

So far as question No.2 is concerned, both learned counsel are in agreement, and in our opinion rightly so, that making a reference to the voluntary disclosures by the assessee for the assessment years 1971-72 to 1974-75 was not relevant for the consideration of the question about actual delivery or non-delivery of the 200 metric tonnes of chicory roots on September 18 and 19, 1973, nor about the conclusion regarding supply of undisclosed stock to fill in the deficiency in the actual receipt of stocks under the Raxor transaction for establishing a nexus between the said transaction and having income from undisclosed sources during the relevant assessment year. The same is also therefore answered in the negative, that is to say, in favour of the assessee and against the Revenue.

Accordingly, this reference stands disposed of with no order as to costs.

M.B.A./1426/FC ??????????????????????????????????????????????????????????????????? Reference answered.