9911796707
TMI Blog1987 (8) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... ments weighing 1038.5 gms. total weight being 1220.5 gms. and the value as estimated by those authorities being Rs. 61,000. Those authorities found that the assessee was carrying on business in gold although the assessee had not obtained any licence for said business and as such assessee had contravened the provisions of the Gold (Control) Act. The Collector of the Customs passed an order in April, 1976 imposing penalty of Rs. 10,000 on the firm and Rs. 2,500 on each of the two partners under section 74 of the said Act. He ordered that the gold and gold ornaments found on business premises be confiscated under section 71 of the said Act. He further directed u/s. 73 of the said Act that on payment of Rs. 20,000 as fine in lieu of confiscatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts were concerned the figure of Rs. 531 should be discounted by 8 per cent because of the fact that there was impurity of 8 per cent in the gold ornaments. He deleted the disallowance of Rs. 35,000 paid as fine. According to him, since business of gold carried on by the assessee was an illegal business, expenses of said illegal business were deductible and that said amount of Rs. 35,000 represented expenses of illegal business. Both the assessee and the department are in appeals before us. 7. in the assessee's appeal two grounds have been raised. The first is that rate of gold ornaments should have been adopted at Rs. 400 per 10 grams. The second is that the Commissioner of Income-tax (Appeals), instead of directing reducing the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties doing business in gold ornaments. The price that would be required to be considered is the price which these ornaments would fetch if sold in the open market. Since the ornaments were new, there would be no need to melt them before selling. There would be an open market for sale of new ornaments. The purchaser would pay for not only the value of gold contained in the ornaments but also labour charges or making charges as they are called. These charges are quite considerable. Consequently, the direction to give only 8 per cent discount in the computation of value of Rs. 531 per 10 gms. does not call for any interference. The rate of Rs. 400 per 10 grams claimed by the assessee was wholly unacceptable. We accordingly confirm the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e now come to the appeal filed by the department. We have already stated that the Collector of Customs (Preventive) Bombay had imposed (i) a fine of Rs. 10,000 on the assessee-firm, and (ii) a fine of Rs. 250 on each of the two partners of the assessee-firm. Total fine imposed is Rs. 15,000 and it has been imposed under section 74 of the Gold (Control) Act. Besides, he ordered the gold and gold ornaments to be confiscated u/s. 71 of the Act and gave u/s. 73 of the Act an option to the assessee-firm to redeem the said gold and gold ornaments on payment of fine of Rs. 20,000. Thus total fine payable by the assessee-firm was Rs. 35,000. By raising an additional ground before the Commissioner of Income-tax (Appeals) the assessee claimed deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he representative of the assessee submitted that the assessee had, in the return filed u/s. 148, included the value of 585.5 gms. (1220.5 grams minus 635 grams declared under V. D. S.) as income but the assessee did not admit that the said value represented income of the assessee from business. Declaration of income, according to the assessee, was by way of a precautionary measure. It was also submitted before the Income-tax Officer that assessee did not admit that said ornaments belonged to the firm. Even 635 gms. declared under V. D. S., according the assessee, did not belong to the firm. In view of these submissions, the Income-tax Officer took resort to section 69 of the Act and included the value of gold and gold ornaments seized under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t lawful business assessee made investments in gold and gold ornaments for which there is no satisfactory explanation and as such presumption that said investments represented income is drawn under section 69 of the Act. On these facts, principle laid down in the case of Piara Singh would not apply. In that case, the income tax authorities had found that the assessee was carrying on business in smuggling and had assessed him on income from business of smuggling. In the present case, although gold control authorities inferred that the assessee was carrying on business in gold and gold ornaments, there was no material before the Income tax Officer to hold that the assessee had derived income from business of gold or gold ornaments. So no inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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