TMI Blog1984 (6) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... and silver ornaments and has also a small cloth trade. The relevant assessment year is 1966-67 for the year ending Diwali 1965. The applicant returned an income of Rs. 1,990 from his profession as a goldsmith and from his cloth trade. The ITO, however, estimated the applicant's income from his profession at Rs. 3,000 in the absence of any accounts. He farther added a sum of Rs. 40,000 as the income of the applicant from undisclosed sources and in support of this he relied on the findings of the Additional Collector of Customs, Bombay. According to the ITO, the applicant had failed to explain and prove the source of acquisition of 280 tolas of gold which was found in the possession of the applicant and was confiscated by the Additional Coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support of his contention, learned counsel placed reliance on the decision in CIT v. Piara Singh [1980] 124 ITR 40 (SC); AIR 1980 SC 1271. Learned counsel for the Department, on the other hand, contended that the exemption could not be claimed as expenses in the course of business as it was not the case of the assessee that he was carrying on the business of smuggling gold. Learned counsel, however, contended that apart from AIR 1980 SC 1271 which is also reported as CIT v. Piara Singh [1980] 124 ITR 40, there are other cases taking a similar view. They are Soni Hinduji Kushalji Co. [1973] 89 ITR 112 (AP), Parkar v. Palekar [1974] 94 ITR 616 (Bom) and CIT v. Kothari [1971] 82 ITR 794 (SC). Learned counsel for the Department on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess was caught and his gold was confiscated. It is, therefore, plain from a reading of the Tribunal's order that the applicant was found to be indulging in smuggling activities and that could not be disputed to be the kind of business in which the assessee indulged. In the decision to which reference is made by the learned counsel for the Department, i.e., CIT v. Kothari [1971] 82 ITR 794 (SC), their Lordships observed that if the business in which the loss was sustained was the same as the business in which profit was derived, then the loss should be taken into account while computing the profits of the business under s. 10(1) even if the business was illegal, and, therefore, the decision does not help the contention of the learned coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the question is whether the confiscation of the currency notes entitles the assessee to the deduction claimed. The currency notes carried by the assessee across the border constituted the means for acquiring gold in Pakistan, which gold he subsequently sold in India at a profit. The currency notes were necessary for acquiring the gold. The carriage of currency notes across the border was an essential part of the smuggling operation. If the activity of smuggling can be regarded as a business, those who are carrying on that business must be deemed to be aware that a necessary incident involved in the business is detection by the customs authorities and the consequent confiscation of the currency notes. It is an incident as predictable in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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