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TMI Blog1996 (2) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities prima facie did not find any case under the Customs Act and the relevant law and regulations. 4. The situation was passed over to the Enforcement Directorate. The Enforcement Directorate enquired and investigated the matter. The assessee Shri K. Hamza and one Shri P.M. Hassan of Kottacherry, Kannhangad were held guilty and were penalised for ₹ 25,000. This was the outcome of the adjudication order dated 18-8-1984. On the basis of the finding of guilt, being contravention of section 9(1)(b) of the Foreign Exchange Regulation Act, the substance of the accusation was that the amount was received and was attempted to pay as per the instructions of the non-residents. The provisions were thought of as not sufficient for confiscation of the amount under section 63 of the Foreign Exchange Regulation Act and therefore the Enforcement Directorate passed over the matter to the Income-tax Department along with the cash amounts found with the assessee and Shri K. Hamza. 5. The Department proceeded after taking charge of the amount under section 132A(1) of the Act on 27-6-1985 and consequently proceeded to deal with the question as to what is to be done under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms authority on 4-7-1982 also is referred to, to the effect that the amount was given to the assessee by him on instructions from Shri Kunhabdulla Haji, his nephew. It is also mentioned that at the other end the statement of Shri P.M. Hassan in the department proceedings showed that the amount represented loans, the amount of which was repaid by the firm Messrs Ashraf Fabrics on 14-6-1982. There is a reference to the statement of Shri P.M. Hassan (16-12-1986) to the effect of retraction, stating that in fact the money was not handed over by him to the assessee but it was handed over by Smt. Beefathumma, wife of Kunhabdulla Haji to the assessee. 14. The assessing authority found discrepancies referred to above. The authority also emphasised that with regard to the withdrawals from Messrs Ashraf Fabrics of which Shri P.M. Hassan is a partner, there was no whisper in the material before the customs authorities. The assessing authority recorded that there are discrepancies, improvements with regard to the version relating to the manner in which the amount changed hands. The assessing authority has also considered in the context close relationship of Shri P.M. Hassan, Shri P.M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to deal with such huge amount as she was not dealing with such amount in the past. In the process the authority has resorted to the question of discharge of onus in a situation where the only undisputed fact is the physical possession of the cash in the hands of the assessee, to the consequence that this position is the direct inference of ownership in regard thereto. The assessing authority has placed reliance on the decision of the Madhya Pradesh High Court in Ashok Kumar v. CIT [1986] 160 ITR 4971 for the proposition quoted ad verbatim in the order. 18. The appellate authority - the Commissioner (Appeals) however did not agree with the inductive leap of the assessing authority. The appellate authority, in paragraph 4 of its order has summarised the factual matrix already dealt with in extenso hereinbefore. On the basis thereof, the appellate authority observed that it is clear from the material on record that none has ever said that the sum of ₹ 1,50,000 belong to the assessee- appellant. The appellate authority emphasised that even as regards possession of cash, only ₹ 40,000 was found in the possession of the assessee at the time of the seizure of the cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record. The golden thread running throughout the factual matrix would show one thing definitely and positively that there is no material even by whisper that the amount could be said to be of ownership of the assessee in question. Assuming the strength of the discrepancies vis-a-vis the material before the customs authorities and the income-tax authorities, in our judgment the Tribunal is more than correct in tracing the golden thread that no material can even provide an indirect pointer to the assessee except that he was a carrier. 23. No wonder, therefore, that the department is strenuous in invoking the presumption on the basis of the undisputed fact that ₹ 40,000 was found on the person of the assessee whereas ₹ 1,10,000 was found on the first of his companion Shri K. Hamza. It is a common adage that possession is nine points in law. Even with regard to immovable properties, actual and physical possession has been a source of legal rise in regard thereto. It is either in regard to the recognition of substantive rights or in the nature of creating a bar of limitation adverse in regard thereto. In all such situations with reference to immovables or movables ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appreciated in terms of duration as against the concept of possession. It is more permanent, ultimate and residuary in character, as distinguished from the concept of possession. There is yet another aspect to understand the difference. Possession is the source of legal rights with regard to the property depending on its nature. But such rights as flowing from the concept of possession can never be understood as of a permanent nature except as a bar for others to deal with them. At the other end ownership has its source in the system of law and rights in regard thereto are to be derived from the legal rules provided by the system. In the process of final analysis concept of ownership is understood in a system of law as against which the custom of possession has to be looked into with reference to the factual situation in regard thereto. In other words, the person connected with the rights of possession has to be understood with reference to the property in the context and also with reference to the members of the society at large, admittedly the relationship to be under stood is not other than a factual relationship emerging from the concept. At the other end, the ownership gets t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed- (i)that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii)that the contents of such books of account and other documents are true; and (iii)that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. If the above provision is read the presumption could be said to arise when it is established that the article or thing in question, in this matter cash is found in the possession or control of any person in the course of a search. It is only after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e than hazard to say that the situation of the amount being found on the person by itself is capable of giving rise to the presumption at the inception. In our judgment for the purpose of raising presumption the amount has to be basically proved to have been in possession of the person concerned that all the necessary requirements of the character of possession and not showing situation of a chance in regard thereto. The law relating to the requirement and justification of the rise of presumption requires possession to be understood in the context of the situation. 32. Alternatively, even assuming that mere fact of finding cash on the person of the assessee would give rise to the presumption and requiring us to consider the consequence situation as to whether the material on record provide proof of rebuttal. The conclusion could not be contrary to the one reached by the two authorities below, when not only that there is no material to connect the assessee and his companion with the cash amount except that it was found on their person. The material on record discussed hereinbefore leaves no manner of doubt that the ownership is traceable at other persons and not the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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