9911796707
TMI Blog1983 (4) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... nt's Appeals : " (i) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in not upholding the entire assessment in the assessee's case ? (ii) Whether, on the facts and in the circumstances of the case, the entire assessment made on the assessee in the status of individual cannot be upheld and that the quantum should be re-determined ? The facts of the case are briefly as follows : On August 29, 1964, the police raided a room in Hotel-De-Broadway and found four persons, namely, K. M. Mohideen, M. V. Moosa, Abdulla and V. P. Ibrahim. On searching the room, the police found cash of Rs. 89,130, one refrigerator, two gold rings, gold bar and 383 wrist watches from K. M. Mohideen. They also found cash, watches, Parker fountain pen, etc., with M. V. Moosa. The police seized those articles as the persons had no receipts for them. K. M. Mohideen had stated that he had brought gold watches from Singapore worth Rs. 1 lakh concealed in his hold all. Moosa had stated that he assisted K. M. Mohideen at Bombay in the disposal of smuggled gold and watches. One Abdullah had stated that he, was the brother of Moosa and was guarding the smugg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by ample evidence and by the return of cash by the customs authorities to Moosa and Mohideen jointly as belonging to them in common and that both of them accepted the money as such from the customs authorities by issuing joint receipt. In his assessment Order, the ITO has assessed the value of the goods including cash at Rs. 1, 10,527 as the income of the assessees, viz., association of persons, from " other sources ". The ITO added Rs. 20,000 for household expenses of the members of the association. Taking the annuity deposit of Rs. 16,320, the ITO computed the reduced total income as Rs. 1, 14,210 and passed the assessment order dated March 28, 1970. In the protective assessment order, the ITO has mentioned that the case was discussed with the assessees and they filed statements at the time of hearing, that the statements showed a cash holding of Rs. 46,000 each at the end of the assessment year 1965-66, which represented the moiety of the cash seized by the police and customs authorities from the assessees and that since the assessees failed to produce any positive evidence as to the source of the cash and goods seized from them, protective assessment also was made und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in these references as baseless and without any material whatsoever. To dislodge the above conclusion of the Tribunal made in the latter half of paragraph 18 of the order, the earlier discussion made by the Tribunal in the earlier paragraphs have been brought to our notice. In paragraph 2 of its order, the Tribunal has proceeded to discuss about the raid made by the Madras City Police on August 29, 1964, on the information received from one Kaniklal at the junction of Broadway and Mannady, Madras, stating that he had a bag bearing marks " T. S. Ganpatram, Singapore" in which I 00 watches of foreign make and cash of Rs. 395 were found, which was seized by the city police, that on further information furnished by Kaniklal to the effect that he had received the watches from K. M. Mohideen staying in Room No. 1, Hotel-De-Broadway, Madras, and that he had selected the watches from the large number of watches shown to him by Mohideen when the latter was approached through Moosa. In paragraph 3 of the order, the Tribunal has discussed about the search made by the police party in room No. 1, Hotel-De-Broadway, and the detection of four persons, namely, V. P. Ibrahim, M. Moosa, M. Ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessees before the police had been admitted to be correct by the learned counsel for the assessees when the Tribunal questioned the counsel as to the correctness of the statements made to the police. Therefore, the Tribunal is not justified in its observations made in paragraph 18 to the effect that the assessees were constrained by force of circumstances to make a joint claim for the purpose of getting refund of the cash from the customs authorities. In the subsequent portion of paragraph 5, the Tribunal, at the request of the learned counsel for the assessees, has extracted the portions and the substance of the statements given by Mohideen, Moosa, Abdullah and Ibrahim and underlined certain portions in support of the argument of the learned counsel for the assessees before the Tribunal to say that those underlined portions and statements do not support the view of the Department that the assessees were an association of persons. According to the extracted portions of the statement of K. M. Mohideen, he had smuggled the foreign goods into India and handed them over to Moosa, who in turn handed them over to Kaniklal and that the cash was also the sale proceeds of the smug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dian currency notes seized from Mohideen bore stamps indicating that they were in circulation in India after his arrival at Bombay, that, therefore, they could not have been smuggled from abroad as stated by him before the Customs Officer alone on September 1, 1964, and that, therefore, Mohideen was summoned again by the customs authorities on April 3, 1965, for recording his statement. The Tribunal has further proceeded to observe that in the statement given by Mohideen on April 3, 1965, he had resiled from the previous statement given before the police on August 29, 1964, and the statement given before the customs authorities on September 1, 1964, by stating that the statements were given under pressure, that they were recorded wrongly by the authorities, that he had disowned the watches, gold jewellery and currency notes seized from him and that he claimed only two watches, two rings, cash of Rs. 130 and some sundry goods as his belongings along with a suit case, a hand bag and a plastic air-hand bag. The Tribunal has further proceeded to discuss that Mohideen had stated that he met Moosa on July 22, 1964, at Bombay in room No. 9, Sathar Bishi Lodge, Bombay, and stayed with him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... among which the explanations of Abdullah and Ibrahim were having the same tenor and were in consonance with their previous statements, that the explanation of Mohideen and Moosa were of the same tenor as those of their previous statements made before the Customs Officer, that Mohideen denied ownership of cash and watches, while Moosa claimed ownership of money alone, denying the ownership of watches, and that Kaniklal had resiled from his earlier statement and disclaimed the possession of all the 160 watches. After obtaining the above explanations, the Collector of Customs passed an order on February 21, 1968 confiscating almost all the watches, gold bar, refrigerator, etc., and directing refund of Rs. 276 to V.P. Ibrahim, Rs. 395 to Kaniklal, Rs. 676 to Moosa and Rs. 89,130 seized from K.M. Mohideen and claimed by Moosa to the parties. In pursuance of the said order passed by the Collector of Customs on February 21, 1968, Mohideen and Moosa executed a joint receipt and received the cash of Rs. 89,130, at which point of time, the Income-tax Department had come to the scene on April 6, 1968, and seized the amount of Rs. 89,130 from Mohideen and Moosa. The customs authorities laun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we find absolutely no circumstance or any pressing need, which had constrained the assessees to admit the ownership of cash in equal half shares, consequent on the Department having made up its mind to proceed against the assessees as an association of persons, as incorrectly and without basis as observed by the Tribunal. In fact, the Income-tax Department came to the scene, as observed by the Appellate Tribunal only on April 6, 1968, whereas the Collector of Customs passed his order on February 21, 1968 for the refund of cash. Therefore, by no stretch of imagination it can be said that the Income-tax Department had contemplated on February, 21, 1968, to treat the assessees, Mohideen and Moosa, as an association of persons, since it was the Customs Collector who had passed the orders to refund Rs. 89,130 to both parties and, accordingly, they both went with joint receipt for taking back the amount. There is none and there cannot be any material for any surmise that the Collector of Customs had been influenced to pass an order of refund of Rs. 89,130 jointly to Mohideen and Moosa in anticipation of assessing them in the status of association of persons. On the other hand, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment were the first version coupled with the joint receipt given to the customs authorities .... .. are quite baseless and not supported by any evidence on record. We are unable to comprehend which admission of ownership made by the assessees and in which statement, either given before the police or given before the Customs Officers on several dates, that has been referred to by the Tribunal. The cumulative effect of several statements given by the assessees, starting from the police up to the representation made by the counsel on behalf of the assessees in the assessment proceedings, will lead to the irresistible conclusion that there was only a joint activity and that that alone had forced the assessees to submit a joint receipt to receive the entire amount of Rs. 89,130. The Tribunal has failed to discuss as to why the assessees should file NIL return first and then claim equal amounts at the stage of assessment proceedings. Similarly, the Tribunal has failed to discuss as to why Mohideen, who had claimed cash in his earlier statements, should resile from those earlier statements and disown the entire cash and wrist watches. This court could not read as to what had passed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operated such a costly venture. In none of the statements, the individuals have stated that except Mohideen, the rest were employees. Though in the initial stages, Kaniklal mentioned about the commission as the remuneration, there is no material to arrive at a conclusion that Mohideen was the principal and the rest were commission agents. Ibrahim was the brother of Mohideen and Abdullah is the brother of Moosa. The above concerted activities of the four persons, hailing from Kerala, only probabilise the joint activity by the four persons belonging to the Kerala State, who had taken rooms in lodges at Bombay and at Madras. Under s. 2(31)(v) of the I.T. Act, " persons " includes an association of persons or a body of individuals, whether incorporated or not. In the facts and circumstances of this case, Mohideen and Moosa come within the above category or status of persons as defined in s. 2(31)(v) of the I.T. Act. Even assuming for argument's sake that Mohideen alone had smuggled the contraband articles in to India, the disposal of the same had been done only by the joint activity of Mohideen, Moosa, Abdullah, Ibrahim and Kaniklal. Since Ibrahim, Abdullah and Kaniklal did not clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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