COMMISSIONER OF INCOME TAX Vs. P. NATESAN ACHARY

JUDGEMENT

(1.) These tax reference cases are at the instance of the Revenue. The following two questions of law have been referred by the Tribunal. Cochin Bench, for our opinion:

(2.) The short facts are the following:

(3.) In the return filed by the assessee for the year 1989-90, he declared a total income of Rs. 54,470. The AO completed the assessment at a total income of Rs. 9,53,450 by making additions invoking Section 69A of the IT Act, In short, his claim before the AO was that the gold and the gold ornaments seized belong to himself and other six goldsmiths working with him and also that part of the seized articles belong to M/s Bhima & Brother, Alleppey and M/s Laxmi Das Jewellers, Mangalore. The AO summoned various persons and examined them in the process of completion of assessment. He considered the statements given before the central excise authorities and the confirmation letters furnished by the other claimants. Ultimately, he accepted the contention of the assessee only to the extent of 935.700 gms. representing gold received from M/s Bhima & Brother, Alleppey and M/s Laxmi Das Jewellers, Mangalore. Thus, he treated the balance of 2,835.100 gms. as unaccounted gold and gold ornaments as belonging to the appellant. Apart from that, there were claims for 877.900 gms. of gold jewellery found at the assessee s residence, which his wife claimed as her, being the jewellery given at the time of marriage. The same had been released by the central excise authorities accepting her claim. The AO treated 77.900 gms. of gold as unaccounted jewellery belonging to him. Thus, the total quantity of unaccounted gold and gold jewellery was determined at 2,913 grams. Its value was assessed @ Rs. 300 per gram totalling Rs. 8,73,900 and the same was treated as income under the head Other sources by invoking Section 69A of the Act. In appeal, the matter was elaborately considered by the CIT(A) and the assessment order was modified by directing the AO to exclude 77.900 gms. from the quantity of unaccounted gold and gold ornaments and as far as the quantity of 2,835.100 gms. is concerned, the appellate authority upheld the AO s action. The Tribunal accepted the pleas of the assessee and allowed the appeal on all grounds except ground No. 9.