SONI HINDAJI KUSHALJI AND CO ADONI Vs. COMMISSIONER OF INCOME TAX ANDHRA PRADESH
HIGH COURT OF ANDHRA PRADESH
SONI HINDAJI KUSHALJI AND CO., ADONI
COMMISSIONER OF INCOME-TAX, ANDHRA PRADESH
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Obul Reddi, J. -
(1.)Two questions have been referred to this Court under section 256 (1) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') and they are :
" (1) Whether the Tribunal is justified in law in disallowing the sum of Rs. 56,978 claimed as a business loss for the assessment year 1963-64? (2) Whether on the facts and in the circumstances of the case the Appellate Tribunal was justified in holding that the loss of Rs. 56,978 should have been claimed in the year in which the Collector has passed the order, but not when the Supreme Court has passed the order ?"
If our answer to the first question is in the affirmative, then the second question will not arise for consideration.
(2.)The facts necessary for determination of the questions are these : The petitioner is a firm doing business under the name and style of M/s. Soni Hinduji Kushalji & Company at Adoni. It is registered both under the Partnership Act as well as under section 26-A of the Act and carries on business in gold, silver and jewellery. The Customs Authorities had information that the petitioner-firm was smuggling gold from Goa to Adoni and then despatching the same to Bombay to the shop of one Bhimaji Punamchand for disposal. They, therefore, kept watch on a suspect by name Rukmanna Lambade going to the said shop in Bombay. On 28th October, 1955, the customs officials followed the said Rukmanna Lambade to the National Refinery Ltd., and after he had taken over some gold from the Refinery searched him and seized from him gold bullion and 'Rawa' weighing 251 tolas and 133 grams. He disclosed that he was a servant of the petitioner-firm and had brought the gold belonging to the firm. On the same day the customs officials intercepted an uninsured railway parcel sent by the assessee-firm which was opened at the shop of Bhimaji Punamchand and it was found to contain some more pieces of gold, 600 old rupee coins and silver scrap weighing 35 lbs. and 3 tolas. After seizing the gold from Rukmanna Lambade and the other items from the shop of Bhimaji Punamchand, a notice was issued on 31st December, 1955, to the assessee-firm to show cause why the gold seized of the value of Rs. 56,978 should not be confiscated. The assessee-firm filed a detailed reply in answer to the notice. The Collector of Customs, after considering the reply, ordered the confiscation of the smuggled gold. The firm then unsuccessfully preferred an appeal to the competent authority and a further appeal to the Central Government. Thereafter the assessee moved the Supreme Court under Article 32 of the Constitution contending inter alia that section 178 of the Sea Customs Act is ultra vires of the Constitution and thus inoperative and that petition was also dismissed.
(3.)As the sum of Rs. 56,978 represented the value of the gold seized by the Customs officials on 28th October, 1955, the firm in the assessment proceedings claimed this amount towards loss in Vattay account. The income-tax officer rejected the claim of the assessee that this amount represented loss in the business of the firm to claim deduction, on the ground that it did not relate to the business carried on by it, but it is due to the confiscation of the gold under the Sea Customs Act. The subsequent appeals preferred by the assessee-firm to the Appellate Assistant Commissioner and to the Appellate Tribunal were also dismissed. It is after that that the assessee-firm moved the Tribunal under section 256 (1) for reference to this Court.
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