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D. Mohanlal Parekh Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberT.C.P. No. 405 of 1982
Judge
Reported in[1984]148ITR131(Mad)
ActsIncome Tax Act, 1961 - Sections 28 and 69A
AppellantD. Mohanlal Parekh
RespondentCommissioner of Income-tax
Appellant AdvocateK.M.L. Majele, Adv.
Respondent AdvocateDeokinandan, Adv.
Excerpt:
- - 69a was satisfied in regard to the aforesaid addition of rs. the assessee took the matter in appeal to the commissioner(appeals) but without success. 6. learned counsel for the assessee contends that merely because the assessee failed to give an explanation as to how he came by the gold bars, a presumption cannot be drawn that he is the owner thereof......tribunal was right in law in holding that the amount of rs. 15,975 representing the value of nine gold bars recovered from the assessee's residence was properly includible in the assessee's total income for the assessment year 1969-70 and (2) whether, on the facts and in the circumstances of the case, the income-tax appellate tribunal was right in law in holding that the provision of s. 69a was satisfied in regard to the aforesaid addition of rs. 15,975 ?' 2. there is no dispute in this case as to the factual position. the assessee is a banker and a commission agent for the purchase and sale of gold and gold jewels. on the night of july 31, 1968, the customs officers made a raid in the assessee's residence and found nine gold bars kept concealed in a tin box inside the water drain in.....
Judgment:

Ramanujam, J.

1. The assessee has applied under s. 256(2) of the I.T. Act, 1961, to direct the Tribunal to state case and refer the following questions for the opinion of this court :

'(1) Whether, on the facts and in the circumstances of the appellant's case, the Income-tax Appellate Tribunal was right in law in holding that the amount of Rs. 15,975 representing the value of nine gold bars recovered from the assessee's residence was properly includible in the assessee's total income for the assessment year 1969-70 and

(2) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the provision of s. 69A was satisfied in regard to the aforesaid addition of Rs. 15,975 ?'

2. There is no dispute in this case as to the factual position. The assessee is a banker and a commission agent for the purchase and sale of gold and gold jewels. On the night of July 31, 1968, the customs officers made a raid in the assessee's residence and found nine gold bars kept concealed in a tin box inside the water drain in the bath room. The assessee, when questioned about the said gold bars, explained before the customs authorities that he had received 15 gold bars from one Mr. Mohan for sale on commission and that out of the said 15 gold bars he had sold six gold bars for a sum of Rs. 11,000 and the rest nine gold bars still remained to be sold. During the search a sum of Rs. 27,000 odd was also seized from the assessee's premises.

3. Accepting the assessee's stand that out of the said sum of Rs. 27,000, Rs. 11,000 odd represented the sale value of six gold bars sold by him the customs authorities confiscated the nine gold bars as also the sum of Rs. 11,000 odd representing the sale value of six gold bars said to have been sold by the assessee on behalf of the third party, Mr. Mohan.

4. After coming to know of the said seizure of gold bars and the cash by the customs department the ITO initiated proceedings under s. 69A of the Act and included, the value of nine gold bars as also the cash found at the time of the search by the customs authorities. This was objected to by the assessee on the ground that the gold bars and the sum of Rs. 11,000 odd representing the sale value of six gold bars should not have been added as they belonged to a third party, Mr. Mohan. But this explanation was not accepted by the ITO. The assessee took the matter in appeal to the Commissioner(Appeals) but without success. Thereafter, the matter was taken to the Tribunal. Before the Tribunal, the assessee questioned the addition of the value of the nine gold bars as also the cash recovered from the assessee's premises. The Tribunal held that since the assessee who was found in possession of the gold bars and the cash has not given any acceptable explanation as to whom it belonged, the addition was justified. In this petition, the assessee seeks a reference only on the question whether the value of the gold bars amounting to Rs. 15,975 could be added to the assessee's total income.

5. As already stated, the Tribunal took note of the fact that when the gold bars were seized by the customs authorities, the assessee gave an explanation that the gold bars belonged to some third party, and apart from the explanation given by the assessee before the customs officers, no other evidence was adduced before the income-tax authorities. In the circumstances, the Tribunal felt that there are two equally probable inferences to be drawn, namely, one, that the gold is being delivered in pursuance of an earlier agreement under which the assessee had already paid for it or the assessee had made an advance, and the other, that the gold is being delivered either for cash payment to be made at the time of delivery or in trust for sale on commission basis, but that the preponderance of probabilities is against the assessee and that the Revenue is, therefore, justified in the absence of any explanation from the assessee as to how he came to be possessed of the gold bars, in presuming that the gold bars have been possessed by him as owner when they were recovered from him by the customs authorities. Before the Tribunal, the assessee contended that the house from which the gold bars were recovered belonged to his wife and not to him, and, therefore, the gold bars found in the wife's house could not be presumed to be those of the assessee since they could equally belong to the wife of the assessee. The Tribunal was not, however, impressed with this argument. Admittedly, the assessee was in occupation of the house though it was said to belong to his wife and he was in full control of it at the time when he gold bars were found in the premises. Even according to him, the house was in his possession, though it belonged to his wife at the time when the gold bars were recovered from the house and though the assessee had originally given an explanation before the customs authorities that the gold bars belonged to some third party, he has himself resiled from that stand and merely said that the gold bars did not belong to him. Whatever that be, once the gold bars which are movable, are found to be in the possession of the assessee and admittedly taken from his possession, it is for him to show as to who is the true owner thereof and if he fails to furnish the name and address of the person who is the owner of the gold bars found in his possession, he cannot disclaim the ownership of the gold bars. The assessee being a person who was in possession of the gold bars at the time of their recovery, the onus is on him to establish as to who is the owner of the property. If he fails to establish the same, then a presumption can be drawn, as has been done in this case, that he is the owner of the gold bars. It is in this view, the Tribunal has held that the value of the gold bars has rightly been included in the total income of the assessee.

6. Learned counsel for the assessee contends that merely because the assessee failed to give an explanation as to how he came by the gold bars, a presumption cannot be drawn that he is the owner thereof. We do not see how this stand of the assessee could be accepted. Since the assessee was admittedly found in possession of the gold bars at the time they were recovered, he must have the exclusive knowledge as to from where he had obtained these gold bars or how he came to possess them. If he keeps mum and does not give any acceptable explanation as to how he came to be possessed of them, it can reasonably be presumed that he is the owner of the gold bars, as, otherwise, he should be in a position to establish as to the person from whom he obtained possession of the gold bars. In the circumstances of the case, we are of the view that the Tribunal is right in finding that the gold bars belonged to the assessee. In the face of the finding given by the Tribunal that the gold bars belonged to the assessee, the initiation of the proceedings under s. 69A of the Act was justified.

7. The petition is, therefore, dismissed. There will be no order as to costs.


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