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TMI Blog1988 (10) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the envelope are: (1) 150 US Dollars @Rs. 8 per Dollar = 1,200 (2) 1560 French Francs @Rs. 1.50 per Franc = 2,340 (3) 3282 Pound Sterling @Rs. 17.50 per Pound = 56.776 The assessee was asked to explain about the foreign currency on the day of the search, which was 12th May, 1981, but the assessee could provide the answer only on 13th May, 1981. The assessee had stated that the foreign exchange belonged to an acquaintance of his in the International Trade Fairs, by name Mr. Islam Bhai and that it was left with him in safe custody, as he was proceeding to Ajmer to offer his prayers at the Durgah at Ajmer and he was to return by 12th May and collect the amount on his way back to Europe. The assessee also had stated that he had only received the envelope as it is and did not know its contents. The assessee could not provide any more particulars. The Department, therefore concluded that the assessee was the real owner of the amount so found and included the amount of Rs. 60,318 as unexplained income. The foreign exchange so seized was confiscated by the authorities under the FERA. 1.2. The plea of the assessee that the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the ITO having made an observation that he is proposing to include the said amount in the hands of the company on a protective basis, which assessment is pending, the same may be remanded back so that a finality could be arrived at by the Department by considering the cases together. 3. The learned Senior Departmental Representative Shri K.K. Boliya submitted that the assessee had ample opportunity for explaining the exchange found in his briefcase during the s. 132 proceedings and also during the assessment proceedings, and therefore there is no justification in affording him another opportunity. Referring to the s. 69A, he submitted that the wordings are clear to the effect that anything found on an assessee which he fails to explain to the satisfaction of the ITO, it could be concluded that the money belonged to him and therefore the addition was fully justified. 4. We have given our very careful considerations to the rival submissions and also to the various materials that are placed on our record. 4.1. Sec. 69A reads as under: "Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or any other valuable articles and suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the brief case belonging to the assessee contained the foreign exchange in an envelope, which he stated to be belonging to Mr. Islam Bhai, about whom the assessee could not provide any further particulars. It was in this connection that reliance was placed on the Madras High Court decision in the case of Pichaimanickam Chattiar, that the assessee could be carrier only and merely for the reason that it was found on him it should not be concluded that the assessee is the owner. In that case the business background of the assessee was taken note of and since the assessee was found to be small and petty businessman, the conclusion was that he could have been a carrier. In that case also the real owner could not be drafted by the authorities, though the assessee could only state that he was carrying the contraband for someone else. When we try to apply this case to the instant case before us, keeping in mind the business and other sources of income of the assessee, there appears to the some merit and perhaps an element of trust that the money was of Mr. Islam Bhai and not that of the assessee. 4.6. At the same time it cannot be overlooked that the money was recovered from him, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld perhaps be concluded that the Revenue must establish that the money found from the brief case and this must be established on the basis findings of fact and positively not merely on a presumption. It may further be required to establish that the money in foreign exchange was the outcome of conversion of the Indian currency, earned out of certain sources not so far declared by the assessee. 4.10. We on the one hand when we look to the plain language of the section may have to conclude that it is for the Revenue to establish the money found from the brief case is really owned by the assessee, but at the same time, we also feel that it would be too much to expect from the Revenue to establish something that is known only to an assessee. If on the one hand, we decide that the Revenue should have established that the money belonged to the assessee, the assessee would be a free man. At the same time if we hold that the addition is justified as the assessee could not bring any material to establish that he was not the owner, it could perhaps lead to situation of additions being upheld at the whims of the Revenue. This was very well appreciated by the FERA Board while deciding the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which were recovered from him. In the instant case the assessee is a partner in firm which exports garments and the sale values are all received through regular and normal banking business houses, which are duly controlled by the FERA authorities, and the company in which he is a Director, also carries on the business of manufacture and export of garments. When we examine the present issue from this angle as opined by the Madras High Court, perhaps there does appear not a remote possibility of the assessee having earned this foreign exchange from any of his business or other sources. 4.12. The foreign exchange was found on the assessee's person, which may need to be established on some basis as belonging to him. The explanation, offered by him, no doubt appears to be a made up affair, which could be rejected as unsatisfactory, but prior to such a rejection, there may be a need to give a finding on some basis of a fact that the money really was owned by him, which only could be the basis for rejecting his explanation as unreliable. The explanation offered by an assessee could seem not plausible enough, but mere rejection of such explanation may not be sufficient to treat him as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall consider and evaluate this issue. The assessee on his part shall provide full co-operation. On the alternative claim of allowing the confiscation of the exchange as a loss, we do not think it proper to express any opinion at this juncture as the primary finding of the ownership of the exchange seized needed to be examined afresh. 5. The other issue regarding the addition of Rs. 7,000 belonging to the wife Smt. Suman, it appears as per the order of the AAC dt. 19th Dec., 1985, has been added in her hands, with which fact there appears very little doubt, as the order of the AAC is on record and apparently the decision has been accepted by the Revenue. However, since the Revenue was not in a position to controvert it otherwise, but at the same time they being unable to provide an emphatic answer, we would remand this issue back to the files of ITO with the direction, that, in case the decision of the AAC had been and no second appeal was preferred, then no part of the amount shall be added in the assessee's hands. 6. The last of the issue is on charge of interest under s. 139(8) and under ss. 215 217. The plea of bona fide belief was raised, which to our mind, could be con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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