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Issues Involved:
1. Whether there was any material to support the Tribunal's findings that the sale proceeds of gold bars and jewellery were liable to be assessed as undisclosed income of the assessees. 2. Whether the amounts could be legally brought to tax as income for the assessment year 1957-58 without any evidence or finding that the gold and jewellery sold had been purchased out of or represented income of the relevant previous year. Issue-Wise Detailed Analysis: Issue 1: Material to Support Tribunal's Findings on Undisclosed Income The Tribunal had to determine if the sums of Rs. 1,91,984 and Rs. 1,81,772, representing the sale proceeds of gold bars and jewellery, were liable to be assessed as undisclosed income of the assessees. The assessees claimed that these amounts were from the sale of gold bars, which were converted from inherited gold ornaments. The ITO and AAC did not accept this explanation, leading to the Tribunal's examination. The Tribunal noted that the assessees' father, Hargovandas, was a multimillionaire and had purchased gold bars and guineas in 1939 and 1940. However, there was no inventory or specific mention of inherited ornaments in the books of account or any documentation. The Tribunal found that the certificates from refineries did not indicate that ornaments were melted to prepare the gold bars. The purity of the gold bars suggested they were not pure gold, but this was not conclusive evidence that they were made from melted ornaments. The Tribunal also considered past assessments where the assessees had sold gold, but there was no mention of inherited ornaments. The Tribunal concluded that the absence of any inventory or specific documentation, combined with the lack of mention in past assessments, supported the view that the sale proceeds were from undisclosed income. The Tribunal's approach was to examine the probabilities and the available evidence, concluding that the assessees' explanation was not credible. The Tribunal's findings were based on the cumulative effect of various pieces of evidence and were not considered to be based on conjectures, suspicion, or surmises. Issue 2: Taxability of Amounts Without Evidence of Relevant Previous Year Income The second issue was whether the amounts could be taxed as income for the assessment year 1957-58 without evidence that the gold and jewellery sold were purchased or represented income of the relevant previous year. The assessees argued that the amounts could not be taxed without such evidence, relying on the principle that the source of the money must be established. The court referred to Section 69A of the Income Tax Act, 1961, which provides that unexplained money, bullion, jewellery, or other valuable articles can be deemed as income if the assessee offers no satisfactory explanation. Although Section 69A was introduced after the relevant assessment year, the court noted that it reflects a commonsense approach to evidence. The court held that the rule of evidence in Section 69A could be applied as a commonsense principle even for assessments before its introduction. The assessees' explanation for the source of the gold was found unacceptable, and there was no material to show that the amounts related to income from any other year. Therefore, the amounts were deemed to be the assessees' income from undisclosed sources for the year in question. The court concluded that the Tribunal's findings were supported by material evidence and were not based on conjectures or surmises. The amounts were rightly assessed as undisclosed income for the relevant assessment year. Conclusion: - Question 1: There was material to support the Tribunal's findings that the sums were liable to be assessed as undisclosed income of the assessees, and the findings were not based on conjectures, suspicion, or surmises. - Question 2: The amounts could be legally brought to tax as income for the assessment year 1957-58, and the assessees' explanation for the source of the gold was found unacceptable. The assessees were liable to pay costs to the Commissioner.
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