SAMBUDDHA CHAKRABARTI,J. - (1.) The petitioner herein seeks review of the judgments and orders, dated November 8, 2005 and November 14, 2005 respectively passed by a Division Bench of this Court in ITA No.81 of 2004.
(2.) The circumstances leading to the filing of the appeal may be summed up briefly to appreciate the scope of the review. Certain watch movements were found in the possession of the assessee by the Customs Department which were held to be of foreign origin. They were confiscated by the Customs authority. The assessee in turn claimed the same to be business loss in the return of income for the year 1989 -90. The tax authority as well as the Commissioner of appeal assessed the same as an income from undisclosed source and added to the income of the assessee as income from business. The Income Tax Appellate Tribunal affirmed the order against which the assessee had filed an appeal under Section 260A of the Income Tax Act to this Court.
(3.) Before this Court the primary question that came up for consideration was whether the confiscation of goods from the appellant amounted to a loss in business carried on by the appellant and was allowable under the Income Tax Act. The Division Bench after considering the submissions of both the parties and after considering the various judgments had observed that confiscation is a liability personal to the smuggler. There was nothing to indicate that smuggling was a part of the business activity of the assessee and he also did not admit that it was so. Ultimately the Court held that the confiscation of this smuggled goods could not be treated to be a business expenditure or a business loss for the purpose of deduction of the said amount in course of compensation of the profits and gains from the business of the assessee. Accordingly the appeal was dismissed.;