LexM.B. ABDULLA versus COMMISSIONER OF INCOME-TAX, KERALA
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M.B. ABDULLA A v. COMMISSIONER OF INCOME-TAX, KERALA "'"tr MARCH 19, 1990 [SABYASACHI MUKHARJI, C.J. AND M.M. PUNCHHI, J.J B Income Tax Act, 1961: Section 256( 1)-Reference-Question arising out of the order of the Tribunal-Value of gold worth Rs.20 r Lakhs confiscated from the assessee added to the income-Application ··,, for treating the amount as business loss rejected-High Court dismissed the application fdr reference-Whether Rs.20 Lakhs could be treated as c income of the assessee and whether that sum could be deducted as --- business loss-Principles. On November II, 1968 the Petitioner was apprehended carrying J ,J,-.. contraband gold in a Maruti Car driven by him. He was taken into custody and the seized gold was confiscated. For the assessment year D 1960-70 the Petitioner had filed a return declaring total income of Rs.9,571. In fmalising the assessment the Income Tax Officer added Rs.20 Lakhs being the price of the confiscated gold as income from undisclosed source. The Petitioner went in appeal before the Appellate Assistant Commissioner who reduced the income by that amount hold- ing that the assessee was not the owner of the confiscated gold. On E . second appeal by the revenue the Tribunal restored the order of the ..A. I.T.O. The Petitioner then moved a Misc. Application under S. 254(1) for amendment for treating Rs.20 Lakhs as business loss which was rejected by the Tribunal. The Petitioner then moved a Petition u/s ..--- 256(1) of the Income Tax Act seeking reference to the High l:ourt raising certain questions, which was turned down by the Tribunal holding th:¥ F ~t none of the questions sought to be raised was decided by the Tribunal and as such did-not arise from its order. The High Court also declined :>--· the application to direct the Tribunal to refer the questions and to state the case to it. Hence this special leave petition directed againsfboth the order of G the Tribunal as well as the High Court. Dismissing the Special Leave 1 Petition, the Court, 'y- HELD: The_ real and .substantial question posed and canvassed before the Tribunal in its appellate order and in the appeal was'whether the sum of Rs.20 Lakhs be c1111Sidered .as part of the income of the h 5 6 SUPREME COURT REPORTS [ 1990] 2 S.C.R. A assessee and as such suffer taxation. The question sought to be raised is whether in view of the decision of the Court in Piara Singh's case this amount could be treated as legitimate business loss of the assessee. It is possible to take the view that this is substantially a different question, namely whether an amount is a business loss even assuming that it was B the income. It is possible and conceivable to consider two different questions, namely whether a certain sum of money is the income of the assessee and secondly, whether even a.•suming that such was. the income, was that income liable to be deducted in view of the provisions of the Act. Considerations which g0 into determination whether an amount should be treated as income and considerations which are rele- vant to determine whether even assuming that, that was the income the C amount was deductible, are different. The question in this form was not canvassed before the Tribunal. The view taken by the Tribunal and the High Court is a possible view and they have borne in mind the principles ot law laid down by the Court in Scindia Steam JV.avigation's case. [UB-E; 12E] D C.I. T., Patiala v. Piara Singh, 124 ITR 40 2 and C./. T., Bombay v. Scindia Steam Navigation Co. Ltd., [1961] 42 ITR 586, referred to. CIVIL APPELLA1E JURISDICTION: Special Leave Petition (Civil) Nos. 4973/89 and 12763/89. Ftom the Judgment and Order dated 31. 1.1989 of the Kerala E High Court in O.P. No. 3218/88 and dated 25.3.82 of the Income Tax Appellate Tribunal, Cochin in LT.A. No. 302/Coch/1977-78. K.K. Venugopal and K.R. Nambiar for the Petitioner. Soli J. Sorabjee, Attorney General, S. Ganesh and Ms. A. F Subhashini for the Respondents. The Judgment of the Court was delivered by SABY ASACHI MUKHAR.11, CJ. This is a petition under artide G 136 of the Constitution for leave to appeal against the orders of the tribunal and the High Court. The High Court vide its order dated 31st January, 1989 had dismissed the application for reference. There is . also an order of the tribunal refusing to make a reference under section 256(1) of the Income Tax Act, 1961 (hereinafter called 'the
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