Rambhai Nathbhai Gadhavi v. Asstt. Commissioner of Income-tax
[Citation -2014-LL-1105-8]

Citation 2014-LL-1105-8
Appellant Name Rambhai Nathbhai Gadhavi
Respondent Name Asstt. Commissioner of Income-tax
Court HIGH COURT OF GUJARAT AT AHMEDABAD
Relevant Act Income-tax
Date of Order 05/11/2014
Assessment Year 1994-95
Judgment View Judgment
Keyword Tags business expenditure • undisclosed income • business premises • block assessment • block period • gold seized
Bot Summary: The appellant preferred appeal before the first appellate authority who confirmed the order of the Assessing Officer. The Tribunal dismissed the appeal by disregarding the contention of the appellants on facts as well as in law. The facts giving rise to the Appeal are that :- The appellant an individual deals in bullion and gold jewellery. The appellant preferred first appeal before the learned CIT who confirm the allowances by rejecting the contentions of the appellant. The appellant preferred second appeal before the Tribunal and raised the contentions and explanations supported by documentary evidence on record to impress upon the Hon'ble Tribunal that claim for deduction of Rs.40,34,898/- on account of gold seized by the Custom Authorities was an allowable business expenditure under the Income Tax, 1961. The Tribunal dismissed the appeal of the appellant. Learned Counsel for the appellant contended that in view of the decision of the Hon'ble Apex Court in the case of Dr. T.A. Quereshi v. Commissioner of Income-tax, Bhopal reported in 287 Income Tax Reports 547, the loss which was incurred during the course of business even if the same is illegal is required to be compensated and for the loss suffered by the appellant, the Court is required to answer this Tax Appeal in favour of the assessee.


JUDGMENT IN HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1062 of 2005 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================
1 Whether Reporters of Local Papers may be allowed to see judgment ? 2 To be referred to Reporter or not ? 3 Whether their Lordships wish to see fair copy of judgment ? 4 Whether this case involves substantial question of law as to interpretation of Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to civil judge ? ================================================================ RAMBHAI NATHBHAI GADHAVI....Appellant(s) Versus ASSTT. COMMISSIONER OF INCOME-TAX....Opponent(s)
================================================================ Appearance: MR RK PATEL, ADVOCATE for Appellant(s) No. 1 MR.VARUN K.PATEL, ADVOCATE for Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Page 1 of 5 HC-NIC Page 1 of 5 Created On Fri May 06 11:47:32 IST 2016 O/TAXAP/1062/2005 JUDGMENT Date : 05/11/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. By way of this appeal, appellant has challenged judgement and order dated 16.03.2005 passed by Income Tax Appellate Tribunal, Rajkot Bench in Income Tax Appeal No. 40/RJT/2000 for assessment year 1994-95. 2. appeal was admitted by this Court for consideration of following question of law: Whether on facts and in circumstances of case, Tribunal has substantially erred in disregarding fact that business is being carried on by appellant and hence, loss incidental to business is allowable u/s. 28 and provision of section 37(1) of Income-Tax Act, 1961 cannot override provision of section 28? 3. business premises of appellant was raided by police on 19.06.1993 and on finding foreign made computer parts and air conditioner police informed Customs Department. Assessing Officer assessed total income of assessee after raid to be around Rs. 1,39,69,385/-. appellant preferred appeal before first appellate authority who confirmed order of Assessing Officer. Being aggrieved by order of learned CIT(A), appellant preferred appeal before Tribunal. Tribunal dismissed appeal by disregarding contention of appellants on facts as well as in law. Page 2 of 5 HC-NIC Page 2 of 5 Created On Fri May 06 11:47:32 IST 2016 O/TAXAP/1062/2005 JUDGMENT 4. This appeal was ordered to be heard with Tax Appeal No. 107 of 2004 which has already been decided by this Court vide judgement dated 16.10.2014 wherein this Court has passed following order: 1. By way of this Tax Appeal, appellant has challenged judgment and order dated 29.01.2004 passed by Income Tax Appellate Tribunal, Rajkot Bench, Rajkot whereby Tribunal has dismissed Appeal. 2. While admitting matter on 21.12.2004, this Court had framed following issue :- Whether, on facts and in circumstances of case, Tribunal has substantially erred in disregarding fact that business is being carried on by appellant and hence, loss incidental to business is allowable u/s 28 and provision of Section 37(1) of Income Tax Act, 1961 cannot override provision of Section 28? 3. facts giving rise to Appeal are that :- appellant individual deals in bullion and gold jewellery. On 12.01.1999, search was carried out on residential as well as business premises of appellant and substantial quantities of bullion was found and seized by Income Tax Department. On 18.01.1999, notice under Section 158BC was issued and in response, return for block period was furnished on 04.03.1999 by appellant disclosing total undisclosed income at Rs.1,39,75,834/=. It is case of appellant that Assessing Officer did not accept figure of undisclosed income as stated in computation of income furnished by appellant for block assessment period and additions/disallowances were made alongwith charging of interest u/s.158BFA(1) of Income Tax Act, 1961. Page 3 of 5 HC-NIC Page 3 of 5 Created On Fri May 06 11:47:32 IST 2016 O/TAXAP/1062/2005 JUDGMENT One of disallowance was pertaining to claim of deduction of Rs.40,34,898/- on account of gold seized by Custom Authorities. appellant preferred first appeal before learned CIT (Appeals) who confirm allowances by rejecting contentions of appellant. appellant preferred second appeal before Tribunal and raised contentions and explanations supported by documentary evidence on record to impress upon Hon'ble Tribunal that claim for deduction of Rs.40,34,898/- on account of gold seized by Custom Authorities was allowable business expenditure under Income Tax, 1961. However, Tribunal dismissed appeal of appellant. 4. Learned Counsel for appellant contended that in view of decision of Hon'ble Apex Court in case of Dr. T.A. Quereshi v. Commissioner of Income-tax, Bhopal reported in 287 Income Tax Reports 547, loss which was incurred during course of business even if same is illegal is required to be compensated and for loss suffered by appellant, Court is required to answer this Tax Appeal in favour of assessee. 5. Having heard learned Advocates appearing for parties, this Appeal is answered in favour of assessee and against revenue. 6. Appeal is allowed to aforesaid extent. 5. In view of aforesaid decision, since present appeal is also governed by same set of facts, this appeal also deserves to be answered in favour of assessee and against revenue. Present appeal is therefore allowed to aforesaid extent. (K.S.JHAVERI, J.) Page 4 of 5 HC-NIC Page 4 of 5 Created On Fri May 06 11:47:32 IST 2016 O/TAXAP/1062/2005 JUDGMENT (K.J.THAKER, J) divya Page 5 of 5 HC-NIC Page 5 of 5 Created On Fri May 06 11:47:32 IST 2016 Rambhai Nathbhai Gadhavi v. Asstt. Commissioner of Income-tax
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