9911796707
TMI Blog1989 (12) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... ther sources, that means by earning dividend income. Subsequent to the completion of the original assessments the Income-tax Officer came to know that the assessee was dealing in purchase and sale of foreign watches and deriving income therefrom and such income earned by the assessee in the accounting years relevant to the assessment years 1974-75 and 1975-76 was not disclosed in the income-tax returns filed by the assessee. Therefore, the Income-tax Officer initiated action under section 147 against the assessee and issued notices under section 148 on 10-4-1978. In response to the said notices the assessee filed a letter dated 20-10-1978 requesting the Income-tax Officer to treat the original returns filed with the 10th Income-tax Officer, City Circle-IV, as those filed in response to the notices under section 148. 2. During the accounting year relevant to the assessment year 1974-75 the Customs Authorities seized 147 foreign wrist watches valued at Rs. 9,400 from the assessee's premises. So also for the assessment year 1975-76 the Customs Authorities seized 183 foreign wrist watches valued at Rs. 34,500 from the assessee's premises. Notices under section 143(2) were issued to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,280 under the original assessment. So also he determined the total income for 1975-76 at Rs. 36,637 for the assessment year 1975-76 as against Rs. 2,140 originally determined. 3. Aggrieved against the inclusion under section 69A of Rs. 9,400 for the assessment year 1974-75 and Rs. 34,500 for the assessment year 1975-76 the assessee went in appeal before the Appellate Assistant Commissioner. Admittedly the Appellate Assistant Commissioner dismissed the appeals and confirmed the additions made under the reassessments. The order of the Appellate Assistant Commissioner confirming the Income-tax Officer's reassessment for 1975-76 was filed in a paper compilation before me. That order is dated 19-12-1983. But it was admitted that for the assessment year 1974-75 also a similar order was passed by the Appellate Assistant Commissioner confirming the reassessment for that year. The Appellate Assistant Commissioner's order confirming the additions made in the reassessments became final since no further appeals were taken against them. 4. The assessee, however, filed petitions under section 154 dated 15-4-1985 stating the loss arising on account of confiscation of watches by the customs au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years. He thus confirmed the orders of rejection passed by the Income-tax Officer and dismissed the appeals filed before him. 5. As against the dismissal by the Appellate Assistant Commissioner the matters are now brought to the Tribunal and these matters stand for my consideration. I have heard Shri T.N. Seetharaman, the learned counsel for the assessee-appellant and Shri Jha, the learned departmental representative. I am of the considered opinion that the appeals are misconceived and they are liable to be dismissed for the following reasons. As per ground No. 3 raised in the grounds of appeal before the Appellate Assistant Commissioner the admitted position of the assessee is that the assessee's claim for deduction of the confiscation loss is totally different from the addition representing investment in the contraband watches which was contested in appeal before the Appellate Assistant Commissioner. Admittedly the assessee did not disclose any income from illegal business or smuggling business said to be carried on by the assessee in either of the assessment years under consideration either in the original return or in pursuance of section 148 notice. So also the assessee did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd he could not disclose the identity of the real owner and therefore the penalty proceedings are to be dropped. While dealing with these penalty proceedings the Income-tax Officer held that it is a confirmed fact that watches were seized from the assessee and the assessee failed to disprove the ownership of those watches. For the reasons best known the assessee preferred not to disclose the identity of the alleged real owner and he utterly failed to shift the ownership of the watches on anybody. In order to cover up his unlawful activities and to hide the fruits of such activities from the purview of the Income-tax Act the assessee unsuccessfully invented the theory that he was only a carrier but not the principal with regard to the contraband watches and that the principal managed to escape from the clutches of law. No evidence of any sort to substantiate the theory propounded by the assessee was given or proved. The version of the assessee was negatived both by the customs authorities as well as by the court and both of them held that the assessee was the real owner of the smuggled goods. The Income-tax Officer ultimately held the assessee to be the real owner of the contraband ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee to prove this contention and the assessee did not adduce any evidence in that regard and did not produce Balu. Having regard to the fact that consistently for two consecutive assessment years the assessee was found to be in possession of contraband goods, having foreign markings, it must be held that the assessee carried on smuggling business in the accounting years relevant to these two assessment years. It is also to be held that ultimately the whole of the contraband goods in which the assessee wants to transact illegal business was seized and confiscated by the customs authorities and he was also fined for having found to be in possession of the contraband, contravening the provisions of the Customs Act, 1962. Apart from the contraband which was seized from the assessee and ultimately confiscated by the customs authorities the department did not prove that the assessee had transacted some more smuggling activity. The very fact that only an addition of Rs. 9,400 for the assessment year 1974-75 and Rs. 34,500 for the assessment year 1975-76 would show that those additions made only represent the value put against the contraband seized from the assessee by the customs auth ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
