COMMISSIONER OF INCOME TAX Vs. HIRANAND

JUDGEMENT

(1.) : The Tribunal, Jaipur Bench, Jaipur (for short, `the Tribunal'), has referred, under s. 256(2) of the IT Act, 1961 (hereinafter shall be referred to as `the Act, 1961'), at the instance of the Revenue, following questions of law to this Court for decision: (i) Whether, on the facts and in the circumstances of the case, the decision of Tribunal is perverse inasmuch as the relevant material was not properly evaluated and wrong conclusions were drawn? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal had any material to the conclusion that the assessee was carrying on the illegal business of smuggling of gold? (iii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the loss arising to the assessee due to confiscation of gold by customs authorities is to be deducted from the amount included in his income as unexplained investment?"

(2.) THE Central Excise Department, Jaipur, on 24th of Jan., 1979, seized foreign gold weighing 1,469 gms. worth Rs. 1,32,500 from the assessee at Jaipur under s. 110 of the Customs Act, 1962 (for short, `the Act, 1962'), for contravention of the restrictions/prohibitions imposed vide notification issued under s. 11 of the Act, 1962, r/w s. 13(1) of the Foreign Exchange Regulations Act, 1973 (for short, `the Act, 1973').

(3.) THE AO, after considering all these, was of the view that the amount of Rs. 1,32,500 is treated the income of the assessee from undisclosed sources. Before the AO the assessee did claim deduction of this amount as business loss and placed reliance on the decision of Honourable Supreme Court in CIT vs. Piara Singh (1980) 17 CTR (SC) 111 : (1980) 124 ITR 40 (SC). THE AO did not allow the claim on the ground that the assessee never admitted of carrying on any business of gold smuggling.