GARIBDAS CHANDRIKA PRASAD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference at the instance of the assessee and the following questions of law have been referred by the Tribunal for answer of this court, which read as under :

(2.) THE relevant facts are that the assessee is a registered firm carrying on money-lending business. In the return, the income of the assessee was Rs. 24,770 and Rs. 13,170 for the assessment years 1985-86 and 1986-87. A search was conducted under Section 132 of the Income-tax Act, 1961, at the business premises of the assessee. A certain number of pawned ornaments which were not recorded in the books of account and valued it at Rs. 74,793 inclusive of the interest deemed as accrued for the assessment year 1985-86 and at Rs. 40,842 for the assessment year 1986-87, were found in and seized from the assessee's possession. THE assessee explained that the said ornaments belonged to Shri Uma Shankar, one of the partners of the assessee-firm, who was carrying on his individual and separate business of money-lending for the last 10 years under a money-lender's licence issued to him by the State Government under the M. P. Professional Tax Act. In this behalf, the assessee relied upon, viz., the return of income filed by Shri Uma Shankar for the assessment year 1983-84 and 1984-85 on October 25, 1985, for the first time, and the service of notices upon Shri Uma Shankar by some of the persons who had allegedly pawned their ornaments with him. THE Income-tax Officer rejected all the contentions holding them to be irrelevant, immaterial, afterthought, false and fabricated- THE Income-tax Officer, therefore, concluded that the ornaments belonged to the assessee. Accordingly, he made an addition of Rs. 74,783 for the assessment year 1985-86 and of Rs. 40,842 for the assessment year 1986-87 to the total income of the assessee as its income from undisclosed sources. On appeal, the Appellate Assistant Commissioner confirmed the addition.