PRAKASH CHAND NAHTA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference by the Income Tax Appellate tribunal under Section 256 (1) of the Income Tax Act, 1961 at the instance of the assessee in respect of the following two questions:

(2.) TO deal with the aforesaid questions the facts which are essential to be stated are that the assessee is an individual and carries on business of purchase and sale of silver ornaments, utensils, etc. in the name of M/s Anil kumar Sheetal Kumar Nahata. A search was conducted by the Income-tax Department on the residential and business premises of the assessee commencing 13. 12. 1983 to 17. 12. 1983. During the search silver ornaments and utensils were seized and were found to be in excess of the accounts as per books of account. After the assessment proceeding silver ornaments amounting to 125. 44 kilograms were held by the Income Tax Officer unexplained and he made an addition of Rs. 3,49,225/-for the purpose of computation under the Act. The assessee had explained that the said silver to have purchased from one Rashid and Company of jabalpur. The aforesaid explanation was not accepted by the revenue because at the time of search this silver was not found recorded in the books of account and further the assessee in his examination under Section 132 (4) of the Act had not offered any explanation about the source of acquisition. That apart on inquiry Mohd. Rashid, the alleged proprietor was found to be a man of very humble means and the assessee did not produce him for examination. It is worth noting that the assessing officer examined the said Mohd. Rashid behind the back of the assessee. The assessee made a prayer under Section 131 of the Act to summon Mohd. Rashid, the proprietor of Mohd Rashid and company for cross-examination on the ground that the statement of Mohd. Rashid was utilised against the assessee. The said prayer of the assessee was not acceded to by the assessing officer and the order of assessment came to be passed.

(3.) BEING dissatisfied with the aforesaid order the assessee preferred an appeal before the Commissioner of Income Tax (Appeal) who by order dated 16. 5. 1986 confirmed the same. Being aggrieved by the said order the assessee preferred an appeal before the tribunal and the tribunal gave the stamp of approval to the order passed by the first appellate authority. An application was filed for rectification of the order which was declined. Thereafter an application was made to refer the questions of law to this Court and on the basis of the said application the present reference was made.