COMMISSIONER OF INCOME-TAX Vs. RAM CHANDER

JUDGEMENT

(1.) THE assessee was apprehended on March 20, 1974, by the customs authorities near village Ismalla on Delhi-Rohtak Road, while he was going to Rohtak on a scooter. As a result of the search of the scooter, a specially designed cavity in the foot-board near the foot-brake covered with rubber mat was discovered and from its search, 10 gold bars weighing 10 tolas each bearing Swiss markings were recovered. The explanation offered by the assessee that the said gold bars were delivered to him by one Champat Rai of Rohtak for delivering the same to one Lal Chand was not accepted and the customs authorities forfeited the said gold valued at Rs. 65,000.

(2.) DURING the assessment proceedings relating to the year 1974-75, the assessing authority added Rs. 65,000 to the returned income of the assessee as the latter had failed to explain the source of investment in the acquisition of the said gold bars. Having failed before the Appellate Assistant Commissioner, the assessee went in second appeal before the Tribunal who accepted the same and allowed Rs. 65,000 as trading loss. On an application by the Commissioner of Income-tax, the following question arising out of the order of the Tribunal has been referred to this court: "whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the assessee is entitled to the deduction of the value of the gold bars seized from him as trading loss ?"

(3.) THE finding recorded by the assessing authority was that the assessee had been carrying on smuggling of gold for the last several years and this finding was never challenged by the Revenue at any stage. In view of this finding, the learned counsel for the Revenue could not dispute that the present case is fully covered by the decision of this court in CIT v. Piara Singh [1972] 83 ITR 678 which is affirmed by the Supreme Court in CIT v. Piara Singh [1980] 124 ITR 40. Accordingly, the said question is answered in the negative, i. e. , in favour of the assessee and against the Revenue. The assessee shall also be entitled to costs which are assessed at Rs. 250.