1983 (2) TMI 12 - HC - Income Tax

Summary

Issues:
1. Inclusion of the value of gold bars in the assessee's total income for the assessment year 1969-70.
2. Satisfaction of the provision of section 69A regarding the addition of the value of gold bars.

Detailed Analysis:
The judgment pertains to an application under section 256(2) of the Income Tax Act, 1961, where the assessee sought a reference on two questions related to the inclusion of the value of nine gold bars in the total income for the assessment year 1969-70 and the satisfaction of section 69A in this regard. The factual background reveals that the assessee, a banker and commission agent for gold, had nine gold bars seized from his residence during a raid by customs officers. The assessee claimed that the gold bars belonged to a third party, Mr. Mohan, and were meant for sale on commission. However, the Income Tax Officer (ITO) initiated proceedings under section 69A and included the value of the gold bars in the assessee's income, which was upheld by the Commissioner (Appeals) and subsequently challenged before the Tribunal.

The Tribunal considered the explanation provided by the assessee that the gold bars belonged to a third party but noted the lack of additional evidence supporting this claim. The Tribunal opined that in the absence of a satisfactory explanation from the assessee regarding the ownership of the gold bars, it was reasonable to presume that the assessee was the owner. The Tribunal also dismissed the argument that the gold bars were found in the wife's house, emphasizing that the assessee was in control of the premises where the gold bars were discovered. Consequently, the Tribunal upheld the inclusion of the value of the gold bars in the assessee's total income based on the principle that the onus was on the assessee to prove ownership, which he failed to do.

The judgment further addresses the contention of the assessee's counsel that the mere failure to explain the source of the gold bars should not lead to a presumption of ownership. The court rejected this argument, emphasizing that since the assessee was in possession of the gold bars and did not provide a satisfactory explanation regarding their ownership, it was reasonable to infer that he was the owner. The court upheld the Tribunal's decision that the gold bars belonged to the assessee, justifying the initiation of proceedings under section 69A. Ultimately, the petition was dismissed, and no costs were awarded in the case.