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TMI Blog1982 (8) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... toms and Central Excise authorities, on April 8, 1963. They were arrested and the gold was seized and confiscated by Government. Both the assessee and the said Ameen were convicted by the Chief Presidency Magistrate, Madras, and fined Rs. 1,000 under s. 135(b)(ii) of the Customs Act, 1962, for being found in possession of the contraband gold. The assessee, when examined by the ITO, disowned ownership of the gold. He, however, did not disclose the name of the true owner of the gold which was in his possession. The assessee owns a house and an oilman stores. For the assessment year 1964-65 a sum of Rs. 7,822 was disclosed by the assessee as income in the returns filed by him for that year. The ITO felt that Rs. 5,000 out of the sum returned has to be taken as income for 1967-68. The ITO, however, came to the conclusion that the value of the seized gold amounts to Rs. 29,200 and should be taken as the income of the assessee for the assessment year 1964-65 and assessed the same under the head " Other sources " along with the other admitted income of Rs. 2,872. The said assessment was questioned before the AAC, who held that as the assessee had not been shown to be the owner of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th s. 123(1) of the Customs Act, clearly indicate that the assessee was convicted only for possession of contraband gold and not as an owner thereof. It has also been found by the Tribunal that the assessee is running a petty oilman stores at Madurai and that he is not a dealer in gold. These two factors have been taken into account by the Tribunal as indicating that the assessee could not have been the owner of the gold seized from him. The Tribunal then proceeded to state that before an assessment could be made under s. 69A of the I.T. Act, the Revenue has to positively prove that the seized gold was owned by the assessee and, in this case, the Revenue, except relying on the judgment of the criminal court, has not adduced any material to show that the gold seized was owned by the assessee. The question is whether the Tribunal's conclusion is legally tenable. Learned counsel for the Revenue contends that the Tribunal has thrown very heavy burden on the Revenue to show that the gold seized from the assessee was really his property, that the onus should be cast on the assessee to show that he is not the owner of the gold as he is in full possession of the facts relating to the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded on the basis that the assessee is only a carrier and that the owners of the gold are underground. From the mere fact that the assessee has not stated as to who is the owner of the gold, it cannot be assumed that the assessee is the owner of the gold. It may be that the assessee himself may not know as to who is the owner and he may be one of the carriers passing on the gold without knowing as to who the true owner of the gold is. The Tribunal, apart from relying on the finding of the Chief Presidency Magistrate that the assessee is only a carrier and his conviction on the basis that he is in possession of the smuggled gold, also refers to the fact that the assessee has only a petty oilman stores at Madurai and that he is not a dealer in gold. The fact that the assessee is a small oilman stores owner and not a dealer in gold is a relevant material to find out whether the assessee could have acquired the gold for himself. Therefore, on the materials available, the Tribunal has come to the right conclusion that the materials produced in the case do not indicate that the gold belonged to the assessee. Learned counsel for the Revenue placed strong reliance on s. 110 of the Evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee from disgrace. Fifthly, the assessee had the power of disposition over the said gold. There was one other clinching circumstance in that case and it was that the Magistrate before whom the assessee was tried, found him guilty under s. 120B, IPC, and s. 167(81) of the Sea Customs Act and s. 23 of the Foreign Exchange Regulation Act of 1947 and convicted and sentenced him to two years' imprisonment. All these materials established a presumption that the gold belonged to the assessee. It was, in those circumstances, the Revenue was held entitled to invoke s.110 of the Evidence Act. Even though the Revenue has not discharged its onus that the gold was owned by the assessee as required in s. 69A of the I.T. Act, the other materials available in that case led to an inference that the gold should belong to the assessee. Hence, the principle of that decision will not apply to the facts of this case. In this case, except relying on s. 110 of the Evidence Act, the Revenue has not produced any other material to indicate that the gold should belong to the assessee. In this case, the assessee has been convicted only as a carrier by the Chief Presidency Magistrate and not as the own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e business and that, as such, it was a loss which sprang directly from the carrying on of the business and was incidental to it and its deduction has to be allowed under s. 10 of the 1922 Act. However, the said decision of the Supreme Court may not apply to the facts of this case. There, the value of the currency seized from the assessee was taken to be an income arising out of smuggling operations and confiscation of the same by the customs authorities was held to be an incidental feature of such operations. If the value of the currency seized can be taken as business income of the assessee, then the loss arising out of confiscation of the same should be taken as a deduction under s. 10 as the, confiscation has arisen as an incident of his business operations which involved smuggling. Here, the value of the gold has been assessed, not as business income, but as income from other sources. The assessee is not entitled to claim deduction of the value of the gold confiscated by Government as business loss. In the view expressed by us, all the questions are answered in the affirmative and against the Revenue. The assessee will have the costs from the Revenue. Counsel's fee Rs. 500. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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