L B BELAMKAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee is a registered firm in Hubli, one of whose activities, according to the finding of the income-tax authorities, was a purchase gold. THE assessment year was 1959-60. On January 30, 1958, when an employee of the assessee took five bars of gold weighing 611 total to the National Refinery in Bombay for being made into bars, the Customs authorities seized it. On October 10, 1959, an order of confiscation was made under the Sea Customs Act.

(2.) IN the assessment relating to the assessement year 1959-60 the INcome-tax Officer added a sum of Rs. 73,320 to the total income of the assessee as income from undisclosed sources. The amount added was the value of the gold seized on January 30, 1958. But the Appellate Assistant Commissioner deleted that addition in the appeal preferred by the assessee on two grounds. The first was that the gold did not belong to the assessee and the second was that its confiscation resulted in also which should be set off against the income from undisclosed sources, if any.

(3.) SECTION 2(11) of the Indian Income-tax Act, 1922, which is the relevant statutory provision applicable to this case, makes it clear that the previous year with respect to income from undisclosed sources is the relevant financial year and not the year of accounting of the assessee if it is not the financial year. That that is so was not disputed by Mr. Rajasekhara Murthy appearing for the department, and the elucidation made by the Supreme Court in Civil Appeals Nos. 863 and 864 of 1966 was that the omly possible way in hwoch an incomee from an undisclosed source could be assessed is to make the assessment on the basis that the previous year of such income is the ordinary dinancial year.