Case Law Details

Case Name : Bipinchandra K. Bhatia Vs DCIT (Gujarat High Court)
Appeal Number : Tax Appeal No. 107 of 2004
Date of Judgement/Order : 16/10/2014
Related Assessment Year :
Courts : All High Courts (5998) Gujarat High Court (598)

The facts giving rise to the Appeal  are that :-

The appellant – an  individual deals in bullion and gold jewellery.   On 12.01.1999, a search was carried out on the residential as well as the business premises of  the  appellant and substantial quantities of bullion was found and seized by   the Income Tax Department. On 18.01.1999, notice under Section 158BC was issued and in response, the return for the block period was furnished on 04.03.1999 by the appellant disclosing the total undisclosed income at Rs.1,39,75,834/-.

It is the case of the appellant that the Assessing Officer did not accept the figure of undisclosed income as stated in the computation of income furnished by the appellant for the block assessment period and additions/disallowances were made alongwith charging of interest u/s.158BFA(1) of the Income Tax Act, 1961.

One of the disallowance was pertaining to the claim of deduction of Rs.40,34,898/- on account   of gold seized by  the Custom Authorities.     The appellant preferred first appeal before    the learned CIT (Appeals) 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,

However, the Tribunal dismissed the appeal of the appellant.

On Appeal Honourable high court has held that  in view of the decision of the Hon’ble Apex Court in the case of Dr. T.A. Quereshi  Vs. 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 assessee.

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