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TMI Blog1987 (3) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 was added to the income of the original petitioner on the ground that he was not able to explain satisfactorily the source for the purchase of 315.81 carats of diamonds of alleged foreign origin which were valued by the customs authorities at that figure. Finally, however, in the assessment proceedings, the Tribunal reduced the addition to Rs. 3,70,844 on the basis of the presumption that that could be the price at which he must have purchased the diamonds. The assessee, i.e., the deceased Pravin J. Mehta had asked for a reference under section 256(1) of the Income-tax Act, 1961, referring substantially the question as to whether there was any valid material for sustaining the addition of Rs. 3,70,844 as income from other sources. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal on various grounds. Admittedly, these proceedings were taken only after the recovery proceedings were commenced. The facts actually show that in recovery proceedings, after demand was issued to the deceased assessee, the assessee's house was brought to sale. The assessee, in the meantime, died on October 9, 1980. When the sale was about to be confirmed on May 20, 1982, the City Civil Court granted an injunction in a suit filed by the present petitioners. It appears that it was after that suit was filed, the petitioners came to this court by way of a writ petition. We are now informed that the petition was actually filed earlier and the suit was filed later ; but the petition came up for hearing after the injunction was granted. A sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of the Tribunal shows that the fact that the Central Board of Excise and Customs had set aside the order of the Additional Collector was noticed by the Tribunal. The Tribunal also went into the evidence which was mainly circumstantial in nature. The Tribunal found that Loganathan who was Police Inspector could not have been the owner of the diamonds and admittedly Loganathan was utilised as a decoy by the Customs Department. The Tribunal also found that there was no proper explanation as to how the assessee with two other associates came to be found in a room in Dasaprakash hotel. The Tribunal observed that the only person who could be expected to be the owner of the diamonds was either Loganathan, the assessee, Krishnamurthi, J. Sr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess, etc., shows that he is not telling the truth. As validly contended by the learned departmental representative, in matters of this type, a decision has to be made on the basis of preponderance of probabilities and an appreciation of the circumstantial evidence available. This clearly points to the fact that the assessee, himself a jewellery merchant of repute, alone would be the possible owner of the diamonds detected. The income-tax authorities, therefore, are correct in requiring him to explain the source of these amounts. Since he has flatly denied his ownership and thus not offered any valid explanation, they are entitled to include the value of the diamonds as the income from undisclosed sources." In view of the findings of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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