9911796707
TMI Blog1981 (9) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee as security for the loan of Rs. 5,99,865, is the absolute property of the assessee, the Income-tax Appellate Tribunal was right in law in casting the burden of proving the ownership of undisclosed stock on the Income-tax Officer and not on the assessee ? 2. Whether, on the facts and in the circumstances of the case, the finding Of the Income-tax Appellate Tribunal that the ownership of the undisclosed stock lay with Vijayakumar Cotton Press and not with the assessee-company is based on mere conjectures or surmises and is unreasonable, arbitrary and perverse ? 3. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal had any material before it to come to the finding that the declaration mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een introduced by the assessee into the business. It was found that there were borrowings from the Indian Overseas Bank Ltd., Coimbatore, on the hypothecation of stock. On obtaining details of the stock as pledged and comparing such details with the stock account of the company the ITO noticed that 1,379 bales of Cambodia cotton outside the books of the assessee had been pledged, by the assessee with the Indian Overseas Bank Ltd., Coimbatore branch, during the period from November 25, 1958, to December 27, 1958, and this remained unsold at the end of the accounting year ending on December 31, 1958. Similarly he noticed that a quantity of 125 bales of Cambodia cotton have been pledged by the assessee to the said bank during the accounting ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of the assessee being determined as Rs. 1,10,284 for the assessment year 1959-60 and Rs. 98,999 for the assessment year 1960-61. The assessee took up the matter in appeal to the AAC. He did not accept the case of the assessee. The AAC found that the assessee had failed to establish that the quantity of Cambodia cotton pledged with the Indian Overseas Bank Ltd. and outside the books of account were not shown to belong to Vijayakumar Cotton Press or that the same was purchased in later years. The additions were confirmed. Thereupon the assessee filed appeals to the Tribunal. The Tribunal allowed the appeals finding that the fact that this quantity of cotton is not seen accounted for in the accounts of Vijayakumar Cotton Press is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Further, it was noticed that the pledged goods were movables and in the custody of Vijayakumar Cotton Press so much so that " unless the contrary is proved by the person who alleges it, it is to be presumed that it is owned by the person in whose custody it is found ". On this approach the Tribunal allowed the appeal by the assessee. The declaration by the assessee to the Indian Overseas Bank has been extracted in the order of the Income-tax Appellate Tribunal. It is categorically mentioned in the declaration, " we also certify that all stocks in the godown are our own bona fide property ". What is more interesting is that the assessee has no case that the assessee did not pledge the goods. The pledge having been categorically admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --- According to the stock statement, 456 bales were already lying at Coimbatore. These bales are moved as and when required to Alwaye from Coimbatore, by lorries and railways, but Vijayakumar Cotton Press has been drawing invoices at their convenience. " Even the reference to the 864 bales of cotton said to have been sold on August 31, 1959, is very vague and there is no case that those are identical with the goods which were pledged. . If that had been said, then whether any goods were sold on March 31, 1959, and if so, whether they were subsequently transported and for that reason they could be said to be independent of the goods pledged with the bank could easily have been verified by reference to accounts. But there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The fact that Mr. G. Krishnan was one of those in control of the assessee-company and was also the manager of Vijayakumar Cotton Press is, by itself, of no consequence at all. In fact the explanation sets up no case based on it. It is a case which has not been set up by the assessee that has been found by the Tribunal and that without any justification and without any material. At any rate the Tribunal should have found that the circumstances of the declaration made to the bank in order to receive substantial loans, the bank acting upon them and issuing the loans was not to be taken lightly, particularly when no attempt was made to explain it. The Tribunal's approach to this is reflected in its statement, in para. 9: " We shall presen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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