VALLABHBHAI DAHYABHAI PATEL vs COMMISSIONER OF INCOME TAX

R. K. ABICHANDANI, J:

The applicant has suggested the following questions seeking a direction on the Tribunal, to furnish statement of case in respect thereof under s. 256(2) of the IT Act, 1961 :

" 1. Whether, the Hon''ble Tribunal is right 1. in law in holding that Rs. 4,16,275 was required to be added to the assessee''s income under s. 69169A of the IT Act, 1961 for the asst. yr. 1985-86-,

Whether, in the facts and circumstances of the case, the Hon''ble Tribunal is right in reaching tho factual conclusion that the diamonds in question were not stock-in-trade of the assessee when the facts on record are contrary to the said finding? ".

According to the applicant, the Tribunal did not take into consideration certain aspects of the matter, which showed that the diamonds in question were stock-in-trade, as could be seen from the balance sheet of Sarrivat Year 2040-2041. According to the learned counsel, it was not as it the assessee had disclosed the value of the diamonds for taxation because cost of the diamonds was Rs. 4,16,275 while the assessee had disclosed a sum of Rs. 4 lakhs. It was submitted that since the diamonds were purchased by the assessee as stock in-trade, the question of invoking the provisions of ss. 69/ 69A of the Act would not arise. It was contended that in fact, the Tribunal ought to have rectified it''s order on the basis of the application which was made by the assessee under s. 254 of the Act.

The application which was made under s. 256(1) of the Act to the Tribunal for referring the aforesaid questions, was rejected on 22nd March, 1994, by the Tribunal on the ground that the view of the Tribunal that the sum of Rs. 4,16,275 was required to be added to the assessee''s income under ss. 69/ 69A of the Act, was based on consideration of the facts of the case emanating from the evidence on record. It will be noticed that the Tribunal in its order dt. 29th April, 1993, in respect of which the reference is sought, did take note of the contention of the assessee that the value of the diamonds was Rs. 4,16,275 and that, according to him, the diamonds in question were stock-in-trade of the

assessee. This fact is clearly mentioned in paragraph 12 of the order of the Tribunal. Again the Tribunal in paragraph 14 of its order has stated that it had considered the relevant facts on record. The Tribunal then proceeded on the footing that it was not disputed by the assessee that the diamonds in question were found from his possession at the time of search and that the assessee himself had claimed ownership of those diamonds. It was also recorded that the assessee had admitted that the value of those diamonds was liable to be included in his income. It also noted that the fact that the value of those diamonds was liable to be included in the income of the assessee, had not been challenged at any stage of the proceedings and the only dispute between the assessee and the Department was (i) whether the amount representing the value of diamonds was assessable in the asst. yr. 1985-86 or 1986-87 and further (ii) whether the value of the diamonds in question should be taken at Rs. 7,74,214 as contended on behalf of the Department or at Rs. 4,16,275 as pleaded by the assessee.

The search proceedings had commenced on 12th Dec., 1984 and continued on 13th Dec., 1984. In his statement, the assessee had, on 12th Dec., 1984, stated that he did not keep any account of his business and that he had slip of paper in which amounts received and paid during the day, were written, but that slip was being destroyed on each day. He had also stated that he did not keep any cash book or daily book or any ''kachha'' account. When asked as to where were his books of accounts, the assessee had stated that his account books were written only upto S.Y. 2036. He stated that no account books were

written after S.Y. 2036. He had also stated that he had filed returns only upto and did not file any return thereafter. It is then noted by the Tribunal that in his statement dt. 13th Dec~, 1984, the assessee had stated, to a specific question as to where were the account books for the period from the S.Y. 2037 to 9.Y. 2041, that there were no account books for those years and he categorically stated that there were no rojmel, khatawahi, bill book and details of purchase and sales maintained by him. On being asked as to what was the closing balance of his business, he had stated that he did not keep any cash book or account and the cash balance was only Rs. 24,071 which was found at the time of the search. From these statements of the assessee, the Tribunal concluded that the assessee had clearly indicated that he did not maintain any books of account for several years prior to the date of search. When the assessee had clearly stated that he did not maintain any books of account after S.Y. 2036, there was no question of placing any reliance or even taking in to consideration the record which was sought to be pointed out by the assessee in the rectification application referring to the balance sheet etc. of S.Y. 20402041. In view of the above facts, it can never be said that the Tribunal has omitted to consider any relevant material. The finding of the Tribunal is clearly based on the material on record including the admissions of the assessee that he did not maintain any books of account and that he was the owner of the diamonds in question and further that, even according to the assessee, the entire value of the diamonds was liable to be included in the income of the assessee. The Tribunal, after taking into account all the relevant aspects of the matter and a clear admission made by the assessee that the value of the diamonds was liable to be brought to tax, came to a finding that the provisions of ss. 69 and 69A were attracted and the amount representing the value of diamonds was liable to be assessed in the assessment year relevant to concerned financial year. The Tribunal rightly found that all the conditions of ss. 69 and 69A were satisfied.

We, therefore, do not find any error having been committed by the Tribunal. The Tribunal has based it''s findings on the facts, which emanate from the record. There being no perversity in the findings of the Tribunal, no question arises for disturbing these findings by calling for a reference under s. 256(2) of the Act. The application is, therefore, rejected.

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