VISHNU KUMAR SONI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference made by the Income-tax Appellate Tribunal on a direction from this court issued in M.C.C. No. 405 of 1974, decided on January 11, 1980, for answering the question "Whether, in the facts and circumstances of the case, the Tribunal was right in disallowing Rs. 40,000 as business loss ?"

(2.) THE facts stated in the reference are that the assessee is an individual who is engaged in the manufacture of gold and silver ornaments and has also a small cloth trade. THE relevant assessment year is 1966-67 for the year ending Diwali 1965. THE applicant returned an income of Rs. 1,990 from his profession as a goldsmith and from his cloth trade. THE ITO, however, estimated the applicant's income from his profession at Rs. 3,000 in the absence of any accounts. He further added a sum of Rs. 40,000 as the income of the applicant from undisclosed sources and in support of this he relied on the findings of the Additional Collector of Customs, Bombay. According to the ITO, the applicant had failed to explain and prove the source of acquisition of 280 tolas of gold which was found in the possession of the applicant and was confiscated by the Additional Collector of Customs.

(3.) LEARNED counsel appearing for the assessee contended that as this gold was confiscated by the Customs Department, it has to be exempted as expenses in the course of trade and in support of his contention, learned counsel placed reliance on the decision in CIT v. Piara Singh [1980] 124 ITR 40 (SC); AIR 1980 SC 1271.