1. M/s. Vimla Stores a firm deals in agricultural implements, diesel, G. I. pipes, paints, spare parts and hardware, etc. It has three partners, namely, Sri Jagdish Narain and his two brothers. The firm Vimla Stores, hereinafter referred to as the assessee filed return for the assessment year 1996-97 on August 31, 1996, declaring an income of Rs. 11,193 and seeking refund of Rs. 37,054.

2. On December 13, 1995, the Assessing Officer, Sasaram along with six Income-tax Officers conducted a survey at the business premises of the assessee under the provisions of Section 133A of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The stock found in the survey was as follows:

Rs.

Stock in shop premises 1,28,114

Stock in godown 11,14,687

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Total 12,42,801

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3 On the basis of sales tax return and cash memos it was found that for the period April 1, 1995, to December 13, 1995, sale of the value of Rs. 6,60,437 was effected. On the basis of purchase invoices it transpired that the assessee during the said period purchased goods of the value of Rs. 8,88,437.70. Thus, in the survey unaccounted stock of Rs. 3,16,537 was found with the assessee. Statement of one of the partners of the firm, namely, Jagdish Narain was recorded and in his statement he declared the value of all the unaccounted stock to be Rs. 5 lakhs. He also volunteered to pay a sum of Rs. 2 lakhs as advance tax. In the statement he had further disclosed that the assessee-firm belongs to three persons including him and three of his brothers and have equal share in the firm.

4. It is relevant here to state that although the said Jagdish Narain, a partner of the assessee had made that statement during the survey operation but had filed application before the Chief Commissioner of Income-tax on December 15, 1995, in which he has, inter alia, stated that one of the partners of the assessee who was present at the business premises was asked to own unaccounted stock of Rs. 5 lakhs on the threat of being arrested by the police personnel and sealing of the business premises.

5. The Assessing Officer computed the assessment on a total income of Rs. 8,74,200 consisting of business income of Rs. 3,74,200 and income of Rs. 5 lakhs from other sources under the provisions of Section 69 of the Act.

6. Aggrieved by the order of assessment, the assessee preferred appeal before the Commissioner of Income-tax (Appeals) who reduced the income from business from Rs. 3,74,200 to Rs. 50,000 and affirmed the addition of Rs. 5,00,000 (five lakhs) as income from other sources under the provisions of Section 69 of the Act.

7. Aggrieved by the same, the assessee preferred appeal before the Patna Bench of the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal"). The Tribunal accepted the estimate of business income of Rs. 50,000 (fifty thousand) and concurred with the finding of the Commissioner of Income-tax in this regard. While doing so the Tribunal observed as follows:

After allowing the expenses to the tune of Rs. 2,60,000, the Assessing Officer assessed the business income of the assessee at Rs. 3,74,200. This estimation could not find legs and gave way when the matter was considered by the Commissioner (Appeals). The Commissioner (Appeals) also estimated the business income of the assessee at Rs. 50,000, without giving any basis for the same. Thus, two estimations of business income of the assessee are placed before us, one by the Assessing Officer and the other by the Commissioner (Appeals). One of these estimations favours the assessee. Consequently, we are inclined to accept the estimation of the business income of the assessee made by the Commissioner (Appeals). Therefore, we affirm the addition in the business income of the assessee at Rs. 50,00