KANTA P MEHTA Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS order will govern W.A. No. 248 of 1987 which is listed for admission and W.P. No. 4818 of 1982 which is taken up for hearing since we found that there was really no substance in the writ petition.

(2.) THE appellants-petitioners are the legal representatives of late Pravin J. Mehta. It is enough to mention that in respect of the asst. yr. 1967-68, a sum of Rs. 4,70,844 was added to the income of the original petitioner on the ground that he was not able to explain satisfactorily the source for the purchase of 315.81 carats of diamonds of alleged foreign origin which were valued by the customs authorities at that figure. Finally, however, in the assessment proceedings, the Tribunal reduced the addition to Rs. 3,70,844 on the basis of the presumption that could be the price at which he must have purchased the diamonds.

(3.) A bare perusal of the grounds on which the assessment proceedings are challenged will show that according to the petitioners, the income-tax authorities acted in a perverse manner when they proceeded on surmises and conjectures and that the orders are completely arbitrary and further that the ITO had not material at all and no assessment could be made on mere suspicion or assumption and hearsay evidence. It is difficult to see how the proceedings under the IT Act which culminated in the order of the ITAT could be questioned in the proceedings under art. 226 of the Constitution of India. The order of the Tribunal shows that the fact that the Central Board of Excise and Customs had set aside the order of the Addl. Collector was noticed by the Tribunal. The Tribunal also went into the evidence which was mainly circumstantial in nature. The Tribunal found that Loganathan who was a police Inspector could not have been the owner of the diamonds and admittedly Loganathan was utilised as a decoy by the Customs Department. The Tribunal also found that there was no proper explanation as to how the assessee with two other associates came to be found in the room in Dasaprakash hotel. The Tribunal observed that the only person who could be expected to be owner of the diamonds was either Loganathan, the assessee, Krishnamurthi, J. Srinivasan and the proprietors of hotel Dasaprakash. It was found that J. Srinivasan was a salaried employee of the assessee drawing a few hundred rupees as salary, but was not rich enough to be owner of diamonds worth Rs. 5 lakhs. Krishnamurthy was also known to be a play wright who was not financially well off. Even the assessee did not allege that the diamonds belonged to any one of these two persons. The only other persons accordings to the Tribunal who could own diamonds were the proprietors of hotel Dasaprakash and the Tribunal found that it would be preposterous to hold that they would throw away diamonds worth Rs. 5 lakhs in a matress and let it out to an unknown customer. In addition to these circumstances, the Tribunal found that there was no explanation as to why the deceased assessee had come there with a pistol and with anneping box. The Tribunal also noticed the fact that according to the handwriting expert the slip found in the purse could be in the hand writing of the assessee. The Tribunal thus took the view as follows :