1984 (7) TMI 217 - AT - Income Tax

Summary

Issues:
1. Reassessment of the value of gold bars seized from the assessee as income from undisclosed sources.
2. Justification of reassessment by the Revenue based on variance between seized gold and disclosed gold in wealth-tax returns.
3. Contention of the assessee that only primary gold seized was disclosed in previous returns and no new investment was made.
4. Lack of evidence to establish the existence of any other gold with the assessee besides the seized gold.

Analysis:
The appeal before the Appellate Tribunal ITAT MADRAS-D involved the reassessment of the value of gold bars seized from the assessee, treated as income from undisclosed sources. The assessee, an individual, had disclosed primary gold in previous wealth-tax returns but faced reassessment for the asst. yr. 1975-76. The Revenue contended that the seized gold differed from the disclosed gold, justifying reassessment. However, the Tribunal found no evidence that the assessee possessed any other gold apart from the seized gold. The Revenue's attempt to show variance based on weighment differences and markings on the gold bars was deemed insufficient.

The Tribunal noted the Revenue's failure to establish the existence of any primary gold other than the seized gold. The discrepancy in weighment was attributed to approximate weight disclosure in previous returns versus accurate weighment during seizure. The presence of foreign markings or high purity did not prove recent importation, as foreign gold of similar standards was available in the market in 1959. The crucial question was whether the seized gold was acquired in previous years or held since 1959. The Tribunal emphasized the lack of evidence supporting acquisition in the previous year, rendering the reassessment baseless.

The Tribunal concluded that without proof of the assessee acquiring gold in the previous year, there was no jurisdiction for reassessment under s. 147. The absence of evidence on the acquisition of additional gold besides the seized amount negated any failure to disclose material particulars. Consequently, the Tribunal annulled the assessment, allowing the appeal in favor of the assessee. The decision highlighted the necessity of establishing foundational facts before initiating reassessment proceedings based on undisclosed income sources.