ABDULLA MOHAMMED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of an assessee to income-tax, the Income-tax Appellate Tribunal has referred the following question of law for the decision of this court:

(2.) THE respondent is the Revenue. THE matter relates to the assessment, year 1972-73 for which the accounting period ended on March 31, 1972, THE assesses is an individual. On August 18, 1971, the Central Excise authorities intercepted his car near Kasargod in which the assessee was travelling alone. On search, the authorities found a carton of English crockery articles and a bag containing negotiable instruments such as bank drafts, travellers cheques and foreign currency notes which amounted, in terms of Indian currency in value, to more than a lakh of rupees. THE assessee admitted that he was the owner of the car and that, on August 16, 1971, when he was in Bombay, a person by name Mohammed gave him a packet, which contained the goods seized then, with an instruction to hand over the same to someone else at Kasargod. THE Customs authorities confiscated the crockery and the car. THE negotiable instruments, dollar notes, etc., were handed over to the Foreign Exchange Enforcement authorities on August 21, 1971. THE said authority issued a show-cause notice to the assessee on August 1, 1972, for adjudication proceedings under the Foreign Exchange Regulation Act. In the said proceedings, the assessee stated that he was on his way from Bombay to Kasargod carrying five passengers in his car and when those passengers got down at Kasargod railway station, they had left behind the package in the car. This was entirely a different version. THE foreign demand drafts, etc., were sold by the Reserve Bank and a sum of Rs. 1,42,773 was realised. THE income-tax authorities questioned the assessee about the nature and source of acquisition of these properties. THE explanation of the assessee in that regard was rejected and a sum of Rs. 1,67,566 was estimated as the value of the seized goods. THE said sum was added as "unexplained investment" under "other sources". THE order of assessment was affirmed in appeal by the Appellate Assistant Commissioner of Income-tax, Calicut. But, the income from "other sources" estimated at Rs. 1,67,566 was reduced by Rs. 8,000. In second appeal, the Appellate Tribunal, by order dated July 31, 1978, affirmed the decision of the authorities below, but the amount to be estimated under "other sources" was limited to Rs. 1,25,000. Before the Appellate Tribunal, the assessee had an alternate contention that even if the amount is liable to be assessed as income from "other sources", since he had lost the amount, he will be entitled to deduct the loss. It was his plea that the Foreign Exchange Enforcement authorities seized the amount and took proceedings and so the amount was lost to him. It is in this perspective that the amount was claimed as a loss. This plea was rejected by the Income-tax Appellate Tribunal. It is thereafter, at the instance of the assessee, and in the proceedings initiated by him in O. P. No. 1049 of 1979, and as directed by this court that the question of law formulated hereinabove has been referred by the Income-tax Appellate Tribunal for the decision of this court.

(3.) A copy of this judgment under the seal of this court and the signature of the Registrar shall be forwarded to the Income-tax Appellate Tribunal, Cochin Bench.