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TMI Blog2008 (3) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... t in law in holding that section 69A is not attracted? (2) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the additions made under section 69A of the Income-tax Act are eligible to be deleted?" 2. The short facts are the following: The Central excise authorities had conducted a search at the residence and business premises of the assessee on June 15, 1988. They seized certain gold ornaments totalling 3770.800 grams Out of this, 1257.300 grams were seized from his residence and this included various items like new bangles (757.300 grams), melted gold rods (170.500 grams), gold coins (84 grams) and gold wire (245.500 grams). From the business premises, they seized ornaments to the tune of 2323.500 grams which includes gold bangles (1718.800 grams), gold coin locket (410.200 grams), primary gold in the form of rod (186.500 grams) and melted gold rod (8 grams). Apart from that, 877.900 grams of gold ornaments were found in the residence and accepting the explanation of the appellant's wife that these ornaments belong to her and her daughter, they were not seized by the Central excise authorities. As per order No. 8/89, dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 77.900 grams from the quantity of unaccounted gold and gold ornaments and as far as the quantity of 2835.100 grams is concerned, the appellate authority upheld the Assessing Officer's action. The Tribunal accepted the pleas of the assessee and allowed the appeal on all grounds except ground No. 9. 4. We heard Shri P. K. R. Menon, learned senior counsel for the Revenue and Shri P. Balachandran, learned senior counsel for the respondent. It is contended by learned senior counsel for the Revenue relying upon the decision of a Division Bench of this court in CIT v. Smt. Jayalakshmi Devarajan [2006] 286 ITR 412 that the burden to prove that the articles belonged to him is on the assessee and really the Tribunal misdirected itself in casting the burden on the Revenue. It was strongly contended that the approach made by the Tribunal is totally perverse and the findings of fact have been reversed without considering the evidence available on record. It is submitted that the proceedings of the Collector of Central Excise and that of the Customs, Excise and Gold (Control) Appellate Tribunal have clearly found the claim of the assessee and others working with him unsustainable and as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was noticed in paragraph 10 of the order that even though the total number of bangles seized from the business premises is only 272, the claims have been put forth in respect of 336 bangles by six persons. It was found that none of the claimants had put forth the claim immediately after the seizure or at the time of recording their statements and the claims have been made belatedly, i.e., after five days from the seizure. The Appellate Tribunal found that in the absence of any acceptable evidence in regard to the acquisition of gold bangles by the above persons, the lower authority has rightly rejected their claim and the reasoning of the lower authority is well founded. 7. The Assessing Officer and the Commissioner of Income-tax (Appeals) have considered the effect of the above orders while considering the various aspects. In fact, the Assessing Officer had considered the statements given before the Central excise authorities, confirmation letters furnished and also the statements recorded from them in detail. 8. In fact, the goldsmiths working under him uniformly have set up a case that the gold bangles belonged to them and were kept for safe custody with the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goldsmiths, viz., Ms. Mohanan, P. C. Gopalakrishnan, K. K. Sasi and Murugappan, who were witnesses in the mahazar prepared by the Central excise authorities, had claimed these bangles as belonging to them during the course of search and seizure. Their deposition that though they had informed the Central excise authorities about this, it was not incorporated in the mahazar, is not acceptable, in the absence of any evidence." 9. In fact, the above findings were rendered after considering the findings rendered by the Customs and Central excise authorities also. 10. The Commissioner of Income-tax (Appeals) considered the contentions of the assessee in paragraph 4 of the order. The Commissioner agreed with the findings of the Assessing Officer while dealing with the case of the assessee that the goldsmiths working along with him are not the owners of the bangles of which ownership was claimed by them. Referring to the contentions by the claimants that they had received gold from their parents, the Commissioner rightly concluded that there is no proof or evidence regarding that. He found it difficult also to agree with the contentions raised by many of them that they were ke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d any fine to redeem them. According to the appellant as well as these people, the said gold ornaments belonged to those goldsmiths and workers and the supporting facts are that these people claimed themselves to be the claimants before the Central excise authorities, paid fine to get the ornaments redeemed. This supports the contention of the appellant against the mere presumption of the Assessing Officer that these people could not have acquired the gold ornaments as they were not in a position and hence the gold ornaments did not belong to them. Presumption cannot take the place of facts. The principal evidence adduced in this respect being sound has to be accepted." 13. Ultimately, in paragraph 28 the issue found by the Tribunal is in the following terms: "The facts and evidence lead us to draw an inference favourable to the appellant to accept his explanation and the explanation of other claimants claiming certain quantity of gold ornaments as belonging to them." 14. This conclusion was arrived at by relying upon the dictum laid down in CIT v. L. G. Ramamurthi [1977] 110 ITR 453 (Mad) to the effect that if there is a possibility of drawing two probable inferences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 961". We respectfully follow the above dictum laid down by this court and judged in the light of the above dictum, we hold that the approach made by the Tribunal is totally without any legal foundation. Even though Shri P. Balachandran, learned senior counsel for the assessee contended that the findings rendered by the Tribunal are purely on questions of fact, we find that the findings have been rendered purely on surmises and conjectures and the approach made is totally perverse and the Tribunal has ignored the evidence which was available before the Assessing Officer and other authorities. Therefore, as held by the Division Bench in the above quoted case, the wrong application of law amounted to an error of law giving rise to a substantial question of law. 16. Going by the provisions of section 69A of the Act, the additions made herein with reference to the claims raised by the other goldsmiths ought not to have been deleted. We find that the reasoning adopted by the Tribunal referring to redemption of gold and gold ornaments by the claimants after availing of loans and by paying fine to the Central excise authorities, has no significance in the light of the findings rendered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regards the remaining items like gold coins, gold lockets, melted gold rods, etc. claimed by the assessee as belonging to him, his wife and daughter which were found in favour of the assessee by the Tribunal, they do not call for any interference. 19. We, therefore, hold that the Tribunal acted perversely in accepting the explanation offered by the assessee and other goldsmiths and therefore the addition of the value of such gold and gold ornaments by the Assessing Officer, has to be upheld. We answer the questions in favour of the Revenue. 20. The Tribunal is directed to pass appropriate consequential orders. 21. In I. T. R. No. 274/1999 the following question has been referred for decision of this court: "Whether, on the facts and in the circumstances of the case, was the Tribunal right in deleting the interest levied under sections 234B and 234C?" 22. The question is answered in favour of the Revenue, in the light of our findings as above, as levy of interest is automatic. But the assessee will be at liberty to move for waiver of interest and subject to the above, the question is answered in favour of the Revenue. 23. The tax reference cases are disposed of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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