9911796707
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Issues involved: Determination of income from undisclosed sources based on seized gold, justification of separate addition of income, interpretation of previous judgments on undisclosed income.
Summary: The assessee-firm, engaged in the business of buying and selling gold and silver ornaments, showed a gross profit of Rs. 42,428 on sales of Rs. 3,78,064 for the assessment year 1962-63. The Income Tax Officer (ITO) estimated sales at Rs. 3,85,000 and gross profit at 13.8% due to a previous incident where gold was seized by excise authorities from an employee of the assessee. The ITO added Rs. 10,702 to the income based on estimated turnover and Rs. 9,375 for the seized gold, considering it income from undisclosed sources. The assessee appealed to the Appellate Authority (AAC), which upheld the addition of Rs. 9,375. The Income-tax Appellate Tribunal later deleted this addition, leading to a reference to the High Court on whether the deletion was justified. The High Court referred to the Supreme Court's ruling that undisclosed income from previous years could be a source for subsequent expenditures. The Tribunal's decision to delete the Rs. 9,375 addition was supported by the argument that the source of the disputed amount could be assumed to come from previous intangible additions. The Revenue contended that the gold acquisition could not be linked to the turnover addition made by the ITO, as the assessee did not raise this point earlier. However, the Court found no merit in this argument and upheld the Tribunal's decision, concluding that the Rs. 10,702 addition was a reasonable source for the gold acquisition. In conclusion, the High Court affirmed the Tribunal's decision to delete the Rs. 9,375 addition as income from undisclosed sources, in favor of the assessee. The Revenue was directed to pay the costs of the reference to the assessee.
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