R.K.Abichandani - (1.) The Income Tax Appellate Tribunal, Ahmedabad Bench 'C', has referred the following questions under sec. 256(1) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') for the opinion of this Court : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee had been found in possession of gold valued at Rs. 48.72 lacs and as such he was owner of said gold and value of said gold was liable to be included in the income of the assessee because of the fact that no explanation regarding source from which investment in said gold had been made, had been given by the assessee? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that no deduction in respect of value of gold which had been confiscated was allowable from the income of the assessee?"
(2.) The relevant Assessment Year is 1984-85. The assessee derived income from the firm of M/s. Fakir Mohmed Haji Hassan & Co., Jam-Khambhalia, of which the assessee was a partner. His minor son's share in the said firm was liable to be included in his income. The assessee filed return for the Assessment Year 1984-85 on 12th February 1985 declaring an income of Rs. 48,520.00. The ITO issued notice under sec. 143(2) of the Act seeking certain information. In response thereto, the assessee's Accountant had attended the office of the ITO and explained the return. The ITO called upon the assessee to give information about the incident of seizure of gold worth Rs. 48,72,000.00 on 19th April 1983. The assessee disclosed to the ITO that the Customs Department had confiscated the gold in question and the proceedings under the Customs Act were pending against the assessee. The Collector of Customs, in adjudication proceedings, had imposed penalty of Rs. 25 lacs on the assessee by his order dated 30th November 1983 passed under sec. 112 of the Customs Act,1962 in connection with the smuggling of 2320 tolas of gold of foreign original valued at Rs. 48,72,000.00. The ITO recorded a finding that the value of the said gold was liable to be added in the income of the assessee under sec. 69A of the Act and made the addition accordingly. During the search by the Customs authorities, an amount of Rs. 46,000.00 was also recovered, which was not explained by the assessee and that amount was also consequently added in the income of the assessee by the ITO. In appeal, the CIT (Appeals) confirmed the additions and in further appeal, the Tribunal upheld those decisions.
(3.) The Tribunal found that the facts as disclosed in the Customs proceedings, which were relied on in the Income-tax proceedings, were that specific information was received by the Customs Department, Ahmedabad indicating that the assessee would bring imported gold on 19th April 1983 in his car and would make delivery thereof at a place near Quality Restaurant, Kankaria, Ahmedabad. On the basis of such information, a watch was kept and at about 4.30 p.m. when the Customs Officers spotted the persons who were concerned and accosted them and after a scuffle apprehended three persons, one of whom was the assessee. The car was seized in presence of the panch witnesses and at that time during search 232 gold bars of foreign markings valued at Rs. 48,72,000/were recovered. These were concealed in five cotton strips kept in dashboard behind the air-conditioner of the car. A bag containing currency notes of Rs. 46,000/- was also recovered. All these articles were seized. The statements which were recorded under sec. 108 of the Customs Act were considered in the adjudication proceedings and the gold was confiscated absolutely to the Government by an order made by the Customs authorities. The assessee was given an option to redeem the car on payment of fine of Rs. 28,000.00.;