Law:

Section:

Section 69A of the Income-tax Act, 1961 - Unexplained moneys - Assessment year 1975-76 - Whether when explanation furnished by an assessee is not found satisfactory about possession of any cash or other valuables found in possession of a person, it is to be deemed as income of assessment year relevant to previous year in which assessee was found in possession of unexplained assets - Held, yes - During search, gold of substantial weight was recovered from assessee's possession - Tribunal presumed that same was attributable to number of years - However, Tribunal made addition to income to extent to which assessee could have earned during year of search - Whether a referable question of law arose from Tribunal's order - Held, yes FACTS During a search carried on in the premises of the respondent-assessee-HUF, the assessee was found in possession of 18.818 kg. of gold and gold ornaments, the source of which could not be satisfactorily explained by the assessee. The Assessing Officer made addition of the value of gold to income of assessment year 1975-76 as income from undisclosed sources. On appeal, the Commissioner (Appeals) partly accepted the claim of the assessee that 35 per cent of the total weight of gold as gold was in possession of the assessee's business of pawning. On further appeal, the Tribunal accepted the claim of the assessee that out of the remaining 12 kg. of gold, 5 kg. gold belonged to three daughters-in-law of the assessee and not to the assessee. Remaining 7 kg. gold was valued at Rs 1,85,000 and the Tribunal held that this could not be earned in one year, but sustained an addition of only Rs. 35,000, on the ground that during the year the assessee could have earned that much only. The Tribunal rejected the reference application of the revenue on the ground that questions raised were only questions of fact. On application under section 256(2) : HELD The conclusion of the Tribunal was erroneous that no questions of law arose out of its appellate order inasmuch as the questions raised clearly invited interpretation of section 69A. On the one hand, a presumption had been raised by the Tribunal that since the assessee was carrying on business for a…

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