TMI Blog2000 (8) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 lakhs and as such he was the owner of the said gold and the value of the said gold was liable to be included in the income of the assessee because of the fact that no explanation regarding source from which investment in the said gold had been made, had been given by the assessee ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that no deduction in respect of the value of the gold which had been confiscated was allowable from the income of the assessee ?" The relevant assessment year is 1984-85. The assessee derived income from the firm of Fakir Mohmed Haji Hassan and Co., Jam-Khambhalia, of which the assessee was a partner. His minor son's share in the said firm was liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further appeal, the Tribunal upheld those decisions. The Tribunal found that the facts as disclosed in the customs proceedings, which were relied on in the income-tax proceedings, were that specific information was received by the Customs Department, Ahmedabad, indicating that the assessee would bring imported gold on April 19, 1983, in his car and would make delivery thereof at a place near Quality Restaurant, Kankaria, Ahmedabad. On the basis of such information, a watch was kept and at about 4.30 p.m. when the customs officers spotted the persons who were concerned and accosted them and after a scuffle apprehended three persons, one of whom was the assessee. The car was seized in the presence of the panch witnesses and at that time du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hands of the assessee. No deduction could therefore be allowed as claimed by the assessee. In our opinion, the Tribunal has come to these findings on the basis of the material on record, reaching a fair decision in the process. The Tribunal rightly held that the ratio of the decisions in CIT v. S. C. Kothari [1971] 82 ITR 794 (SC); CIT v. Piara Singh [1980] 124 ITR 40 (SC) and CIT v. Shri Ram Chander [1986] 159 ITR 689 (P H) did not apply to the facts of the present case because, what was included in the assessee's income was not the profits of an illegal business, but an unexplained investment in gold, which was found in the possession of the assessee. Under section 4 of the Income-tax Act, income-tax is to be charged in accordance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd will, therefore, be known and the income would be treated under the appropriate head of income for assessment as per the provisions of the Act. However, when these provisions apply because no source is disclosed at all on the basis of which the income can be classified under one of the heads of income under section 14 of the Act, it would not be possible to classify such deemed income under any of these heads including income from "other sources" which have to be sources known or explained. When the income cannot be so classified under any one of the heads of income under section 14, it follows that the question of giving any deductions under the provisions which correspond to such heads of income will not arise. If it is possible to peg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in or acquisition of gold, which was recovered from the assessee was not recorded in the books of account and the assessee offered no explanation about the nature and source of such investment or acquisition and the value of such gold was not recorded in the books of account, nor the nature and source of its acquisition explained, there could arise no question of treating the value of such gold, which was deemed to be the income of the assessee, as a deductible trading loss on its confiscation, because, such deemed income did not fall under the head of income "profits and gains of business or profession". In our opinion, therefore, the Tribunal was perfectly right in holding that the value of the gold was liable to be included in the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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