COMMISSIONER OF INCOME TAX Vs. MANOHAR LAL GUPTA

JUDGEMENT

(1.) THIS is reference application under Section 256(2) of the IT Act, 1961 at the instance of the Revenue.

(2.) MANOHAR Lal Gupta (for short, 'the assessee'), on 9th Oct., 1979 was apprehended by the Customs authorities, Jaipur at Ghat Gate, Jaipur. The search was conducted on his person and the file bag that he was carrying in which emeralds and Ruby (finished goods) of about Rs. 3,48,116 were recovered. For want of any proof by him for lawful acquisition/possession of the said goods, the Customs authorities seized the said goods somewhere in the third week of October, 1979. The seized goods were delivered to the authorised officer (ITO) under Section 132A(2) of the IT Act, 1961 by the Customs authorities on 29th Dec, 1980. Pertinently, the ITO, H -Ward, Jaipur, on 27th Nov., 1981, passed a provisional order of assessment under Section 132(5) assessing undisclosed income of the assessee at Rs. 3,48,116 and raising total tax liability at Rs. 3,49,509. On 31st May, 1982, the assessee filed a return of income for the asst. yr. 1980 -81 showing total income of Rs. 9,610. The concerned ITO passed an order on 15th June, 1982 under Section 143(1) accepting the returned income. However, on 16th Nov., 1983, the ITO, H -Ward issued a notice under Section 147/148 to the assessee for escapement of his income. The assessee responded to the notice and raised various objections. The AO by his order dt. 14th Feb., 1986 assessed the appellant's income at Rs. 1,90,090 (this included income from undisclosed source amounting to Rs. 1,73,992 being value of precious and semi -precious stones based on the value by the Appraiser, Foreign Post Office, Jaipur of the seized goods by the Customs authorities).

(3.) THE CIT(A) allowed the appeal by his order dt. 23rd March, 1988 and set aside the order of AO holding that the reopening of the assessment under Section 147 of the IT Act was bad in law as primary and basic facts were within the knowledge of the AO.