1996 (8) TMI 36 - HC - Income Tax

Summary

Issues Involved:
1. Applicability of Section 69A of the Income-tax Act, 1961.
2. Ownership and possession of the seized currency.
3. Burden of proof u/s 110 of the Evidence Act.

Summary:

1. Applicability of Section 69A of the Income-tax Act, 1961:
The primary issue was whether the provisions of section 69A of the Income-tax Act are attracted in this case. The Tribunal initially held that section 69A was not applicable as the assessee was not the owner but merely a distributor of the money. However, the High Court disagreed, stating that the assessee failed to prove he was not the owner of the money found in his possession. The High Court concluded that the sum of Rs. 4,28,713 is liable to be assessed u/s 69A of the Act.

2. Ownership and possession of the seized currency:
The assessee was found in possession of Rs. 4,28,713 during a raid by the Enforcement Directorate. The assessee claimed the money belonged to others and was meant for distribution. The High Court noted that the assessee failed to provide convincing evidence to support this claim. The Tribunal's view that mere possession does not imply ownership was rejected by the High Court, which emphasized that possession typically implies ownership unless proven otherwise.

3. Burden of proof u/s 110 of the Evidence Act:
The High Court highlighted that u/s 110 of the Evidence Act, the onus is on the person in possession of the money to prove they are not the owner. The Supreme Court's decision in Chuharmal v. CIT [1988] 172 ITR 250 was cited, which upheld that possession implies ownership unless the contrary is established. The High Court concluded that the assessee did not discharge this burden of proof, thereby making the amount assessable as his income.

Conclusion:
The High Court ruled that the assessee failed to establish that he was not the owner of the seized amount of Rs. 4,28,713. Consequently, this amount is assessable as income u/s 69A of the Income-tax Act. The Tribunal's decision to the contrary was overturned, and the addition of Rs. 4,28,713 to the assessee's income was upheld.