GORDHANDAS HARGOVANDAS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference at the instance of the assessees under s. 66(2) of the Indian I.T. Act, 1922. As directed, the Tribunal has referred the following two questions to the High Court for its advisory opinion : '(1) Whether, on the facts and in the circumstances of the case, there was any material to support the Tribunal's findings that the sums of Rs. 1,91,984 and Rs. 1,81,772 representing the sale proceeds of gold bars and jewellery were liable to be assessed as the undisclosed income of the assessees and whether the said finding is merely based on conjectures, suspicion and surmises ? (2) Whether, in any event, the Tribunal having accepted the genuineness of the sale of gold bars and jewellery and having only doubted the origin of the gold and jewellery, the said amounts of Rs. 1,91,984 and Rs. 1,81,772 could be legally brought to tax as income for the assessment year 1957 -58, without any evidence or finding that the gold and jewellery sold had been purchased out of or represented the income of the relevant previous year ?'

(2.) IT may be mentioned that the reference arises from two appears disposed of by the Tribunal by a common judgment inasmuch as the points involved were identical. The two assessees concerned were Gordhandas Hargovands and Dharamdas Hargovandas, brothers, and the sum of Rs. 1,91,984 mentioned in question No. 1 pertained to the assessment of Gordhandas, whereas the other sum of Rs. 1,81,772 pertained to the assessment of Dharamdas. In this reference, we are concerned with the assessment year 1957 -58, and the accounting year, so far as the disputed income is concerned, is the financial year 1956 -57.

(3.) THE assessees carried the matter in appeal to the AAC, who fully upheld the conclusions of the ITO. The matter was thereafter carried in second appeal before the Tribunal. Before the Tribunal, the assessees' case was that their parents left them gold (in bars and in ornaments) and other jewellery, that the ornaments were inherited by them and there was proof of melting and sale of gold and jwellery. The sale of gold and jwellery was not disputed by the department though there was some dispute about melting. It may be mentioned that this dispute was whether it was any ornament that was got melted at the time of preparation of the bars, which were subsequently sold. The more serious question, however, was about the origin of the gold ornaments sold, alleged to have been got melted. It was contended for the assessees that there was evidence of purchase in the books of account of Hargovandas, the father of the assessees, of gold bars and guineas in the years 1939 and 1940. The extracts from the accounts for these years showed purchase of 1,500 guineas and gold bars weighing altogether about 4,074 totals of gold. The aggregate sales of gold made by both the assessees in the various years including the material year came to 9,048 1/2 tolas. The relevant weight of gold that was required to be considered, therefore, was the difference between 9,048 1/2 and 4,074, i.e, 4,974 1/2 tolas. According to the assessees, this quantity of gold was obtained from the melting of gold ornaments left by Hargovandas.