COMMISSIONER OF INCOME TAX Vs. SETH PURUSHOTHAMDAS DWARKADAS

JUDGEMENT

(1.) AT the instance of the Department, the Tribunal has referred the following question for our opinion under s. 256(1) of the IT Act, 1961 :

(2.) THE assessee, Seth Purushothamdas Dwarkadas, is an individual carrying on business in moneylending. For the asst. yr. 1972-73, he filed a return on 18th May, 1973, admitting an income of Rs. 4,775. Before that, on 24th April, 1972, the intelligence wing of the IT Department raided the house of the assessee and seized pronotes valued at Rs. 67,100, cash amounting to Rs, 39,412 and jewellery worth about Rs. 21,328. THE said jewellery were found in the locker belonging to Smt. Parameswaribai, the wife of the assessee. Since the pronotes did not find a place in the accounts maintained by the assessee, he was asked to explain the omission. Since the assessee did not properly explain the same, the ITO held that the sum represented undisclosed income of the assessee. But, he found that only Rs. 39,000 related to the year in question and accordingly included that amount into consideration. Regarding the cash seized, the ITO added Rs. 36,607, as the assessee's contention that it represented gifts received by his wife during the married life of about 30 years was not substantiated by evidence. As the assessee did not explain properly the source of the jewellery as belonging to the assessee's wife, the ITO included Rs. 18,869 as income for the year 1972-73. A sum of Rs. 18,800 was also added towards income from business. Thus, in all a sum of Rs. 1,13,276 was added to the income of the assessee. THE ITO also initiated proceedings under s. 271(1)(c) of the Act and referred the matter to the IAC under s. 274(2) of the Act. On appeal, the AAC deleted the addition made towards unexplained jewellery amounting to Rs. 18,869 and also the income from business carried on in the name of the wife of the assessee in a sum of Rs. 18,800 and a sum of Rs. 11,400 towards seized cash. He, however, confirmed the addition made towards pronotes. THE assessee preferred an appeal to the Tribunal against the addition of Rs. 39,000 towards seized pronotes and Rs. 25,207 towards unexplained cash, sustained by the AAC. THE Tribunal, on a consideration of the matter, deleted the addition of Rs. 25,207 being unexplained cash as not relating to the year under consideration, but sustained the addition of Rs. 39,000 being the unexplained investment in pronotes as income of the assessee.