Girdharilal Agrawal vs Commissioner of Income Tax

Heard Shri B.L. Nema, the counsel for the applicant on admission. The applicant, an individual assessee under the income tax Act, 1961 (''the Act'') has filed this application for reference u/s 256(2) of the Act.

The residential house of the applicant was searched from 6-9-1985 to 10-9-1985. The search disclosed cash amounting to Rs. 38,055, gold ornaments, silver bullion and silver ornaments as set out in Annexure C/2 to the Panchnama dated 9-9-1985. Out of this cash amounting to Rs. 35,000 and silver and silver ornaments weighing 20.300 kgs. were seized. The assessee was able to explain the possession of cash amounting to Rs. 6,851 in the course of proceedings u/s 132(5) of the Act. All other silver ornaments, silver articles and gold ornaments were also explained, except to the extent of 20.317 kgs. In the course of regular assessment proceedings u/s 143(3) of the Act, the assessee has further explained possession regarding the same. The Assessing Officer accepted the explanation in part only and proceeded to complete the assessment, including Rs. 7,704 as income from undisclosed sources in the form of cash and Rs. 28,000 as unexplained investment in silver and silver articles. In appeal, the Commissioner (Appeals) allowed credit of Rs. 7,704 from the income. The Tribunal declined to interfere with the order of the Commissioner (Appeals). The Tribunal also declined to make any reference u/s 256(1). Hence, this application.

The question sought to be referred and as formulated in the application are as follows:

Whether, on the facts and in the circumstances of the case and the material on record, there is justification in law to sustain an addition of Rs. 28,000 on account of alleged unexplained investment in silver/silver articles?

Whether the findings of the learned authorities below were justified and legal?

Whether, in view of the overwhelming evidence produced in regard to the agricultural income, which was utilised for the purchase of silver, there is warrant in law to hold that the source of silver was unexplained especially when the agricultural income was not disputed by the authorities below?

We find, on a reading of the questions, that they involve only questions of fact, not deserving any reference to this Court.

The learned counsel for the applicant contended that a finding recorded ignoring legal evidence might give rise to a question of law. The learned counsel invited our attention to the discussion by the assessing authority in regard to agricultural income of the assessee and his brothers. His contention is that the assessee and his brothers had substantial agricultural income which was used in the investment of silver. Paragraph A(3) discusses the claim of the assessee regarding the agricultural income of himself and his brothers Ambika Prasad and Shyam Biharilal. It is claimed that the two brothers have a income of Rs. 5,000 per year and the third brother has an income of Rs. 6,000 per year. The assessing authority has noticed that the assessee has not kept any reliable record of such income and therefore, the claim was unacceptable. But on an over all consideration of the evidence, he partially accepted the claim of the assessee to the extent of Rs. 8,000 as income from agriculture. Paragraph B(2) deals with the claim of investment of agricultural income is silver balloon, the assessing authority referred to the earlier discussion and allowance of Rs. 8,000 was given. In this view, he held that the claim of the assessee that 3,600 kgs. of silver bullion was purchased from the agricultural income was accepted and the balance of 8,000 kgs. of silver bullion was treated as unexplained investment. The order of the assessing authority would clearly disclose the material placed before the authority in regard to agricultural income and the finding of fact duly arrived at on this point; it cannot be said that the assessing authority ignored any legal evidence and, therefore, committed any legality. The questions posed, therefore, do not arise for reference. The application is accordingly dismissed.