1980 (5) TMI 2

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....kistan border into Pakistan. A sum of Rs. 65,500 in currency notes was recovered from his person. On interrogation he stated that he was taking the currency notes to Pakistan to enable him to purchase gold in that country with a view to smuggling it into India. The Collector of Central Excise and Land Customs ordered the confiscation of the currency notes. The ITO now took proceedings under the Indian I.T. Act, 1922, for assessing the assessee's income and determining his tax liability. He came to the finding that out of Rs. 65,500 an amount of Rs. 60,500 constituted the income of the assessee from undisclosed sources. An appeal by the assessee was dismissed by the AAC. In second appeal before the Income-tax Appellate Tribunal, the assesse....

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....fit. The currency notes were necessary for acquiring the gold. The carriage of currency notes across the border was an essential part of the smuggling operation. If the activity of smuggling can be regarded as a business, those who are carrying on that business must be deemed to be aware that a necessary incident involved in the business is detection by the customs authorities and the consequent confiscation of the currency notes. It is an incident as predictable in the course of carrying on the activity as any other feature of it. Having regard to the nature of the activity possible detection by the customs authorities constitutes a normal feature integrated into all that is implied and involved in it. The confiscation of the currency note....

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....ss of importing dates from abroad and selling them in India. The import of dates by steamer was prohibited. None the less he imported dates from Iraq by steamer, and the consignments were confiscated by the customs authorities. But the dates were released subsequently on payment of fine. The assessee's claim to deduction under s. 10(2)(xv) of the Indian I.T. Act, 1922, was rejected on the ground that the amount was paid by way of penalty for a breach of the law. An infraction of the law was not a normal incident of business carried on by the assessee, and the penalty was rightly held to fall on the assessee in some character other than that of a trader. Reference was made by the revenue to Soni Hinduji Kushalji & Co. v. CIT [1973] 89 ITR 11....