1982 (8) TMI 9 - HC - Income Tax

Summary

Issues Involved:
1. Ownership of contraband gold.
2. Deletion of Rs. 29,200 from the assessment for 1964-65.
3. Burden of proof u/s 69A of the Income-tax Act.

Summary:

Issue 1: Ownership of Contraband Gold
The Appellate Tribunal concluded that the Department had not proven that the assessee was the owner of the contraband gold. The Tribunal's decision was based on the fact that the assessee was convicted under s. 135(b)(ii) of the Customs Act for possession, not ownership, of the gold. The Tribunal also noted that the assessee ran a small oilman store and was not a gold dealer, indicating he could not have been the owner. The Tribunal held that the Revenue must establish ownership to apply s. 69A of the I.T. Act, which was not done in this case.

Issue 2: Deletion of Rs. 29,200 from the Assessment for 1964-65
The Tribunal deleted the sum of Rs. 29,200 from the assessment, reasoning that the Revenue had not shown the assessee to be the owner of the gold. The Tribunal emphasized that mere possession does not imply ownership, and the Revenue failed to provide additional evidence beyond the criminal court's judgment.

Issue 3: Burden of Proof u/s 69A of the Income-tax Act
The Tribunal held that the burden of proof lies on the Revenue to show that the seized gold was owned by the assessee for s. 69A to apply. The Tribunal found that the Revenue did not produce any material evidence to indicate ownership by the assessee. The court rejected the Revenue's reliance on s. 110 of the Evidence Act, stating that mere possession does not automatically transfer the burden of proving non-ownership to the assessee.

Conclusion:
The court affirmed the Tribunal's conclusions, holding that the Revenue failed to prove the assessee's ownership of the gold. Consequently, the assessment of Rs. 29,200 as income from "Other sources" was not sustainable. The court also noted that the assessee could not claim the confiscated gold's value as a business loss since it was not assessed as business income. All questions were answered in the affirmative and against the Revenue, with costs awarded to the assessee.