Suhas Chandra Sen, J. - (1.) The assessee in this case is a registered firm carrying on business as dealer in precious stones and also as a middleman between sellers and buyers of precious stones. For the assessment year 1967-68, corresponding to the previous year being diwali 2022 (October 25, 1965, to November 12, 1966), the assessee filed a return on August 8, 1967, showing a total income of Rs. 22,120. The ITO received information from the Customs Officers of Preventive and Intelligence Unit, West Bengal, Calcutta, that at a search conducted in the business premises of the assessee on 2nd and 3rd August, 1966, diamonds, pearls and precious stones valued at Rs. 2,21,487 had been seized. When called upon to explain the source of these precious stones the assessee claimed that the seized goods were covered by the opening stock and purchases to the extent of Rs. 54,362 and that the remaining goods to the extent of Rs. 1,67,125 belonged to sixteen persons from whom they had been received on approval basis for sale or for repair on estimation. The assessee produced eleven persons whose statements were recorded by the ITO and written statements were filed from other persons. After examining the evidence the ITO came to the conclusion that only a part of the explanation of the assessee could be accepted. He held that the assessee was not able to explain properly: (1) the value of Rs. 58,256 alleged to have been received through Omkar Shankar Gupta; (2) the receipt of precious stones amounting to Rs. 1,184 alleged to have been received on approval from Banwarilal Srimal ; (3) the receipt of jewellery worth Rs. 1,850 from Parvin Chand C. Mehta ; and (4) the receipt of precious stones worth Rs. 13,476 from Bejoy Chand Bothra. Consequently, the ITO added the total sum of Rs. 74,766 being the unexplained value of precious stories as the income of the assessee from undisclosed sources and completed the assessment on a total of income of Rs. 1,00,126 after adding back certain other disallowable items.
(2.) The assessee appealed to the Assistant Commissioner who agreed with the ITO that the assessee had not satisfactorily explained the precious stones as alleged. He, therefore, confirmed the assessment by his order dated March 25, 1974.
(3.) The assessee appealed further to the Appellate Tribunal and reiterated the contentions that the receipt of the precious stones could be properly explained by the evidence on record. The Appellate Tribunal was of the view that the assessee had satisfactorily proved the receipt of the precious stones of the value of Rs. 1,184 from Banwarilal Srimal and, accordingly, deleted the addition of the sum of Rs. 1,184. Similarly, the Appellate Tribunal was of the view that the assessee had proved the receipt of precious stones worth Rs. 1,850 from Sri P. C. Mehta for cleaning. Thus, the Appellate Tribunal deleted an addition of Rs. 3,034 only. With regard to the rest of the items the Appellate Tribunal agreed with the authorities below that the assessee had not proved the source of the jewellery seized from the assessee and upheld the addition made under Section 69A of the Act.;