H N LAKHANI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This is a reference made under s. 66(2) of the Indian I.T. Act, 1922, at the instance of the assessee, who is now no more. An application is being made for bringing on record the legal representatives of the assessee, who will be substituted in place of the assessee in the reference.

(2.) In the course of assessment proceedings for the assessment year 1955-56 relevant to the accounting period ending on March 31, 1955, the assessee had sold gold ornaments of the value of Rs. 35,653. When called upon to explain the source and the time of acquisition of the said ornaments, the assessee claimed that these ornaments belonged to his wife and that she had received them at the time of her marriage and on some ceremonial occasions. Some ornaments were claimed to have been given to the wife by the mother of the assessee. This explanation was rejected by the ITO and he held that having regard to the status of the assessee who belonged to a rich Marwari family, the sudden sale of his wife's ornaments was not warranted, and no dire need for money to be raised by sale of ornaments was proved. The amount of Rs. 35,653 was thus added to the income of the assessee as income from undisclosed sources.

(3.) The AAC found that the assessee the assessee had not stated as to why he sold the ornaments in question and found that there was no direct or circumstantial evidence to support the explanation given by the assessee. He also found that the assessee was drawing fat cheques as and when he liked to meet his own needs and it was not known why he should have sold the ornaments. Holding that the acquistion of the ornaments had not been proved, he declined to interfere with the assessment order.