9911796707
TMI Blog2023 (5) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... ................................................................................................................. 30 E. THE CARRIAGE BY ROAD ACT, 2007 .............................................................................................. 34 F. CRIMINAL BREACH OF TRUST ....................................................................................................... 35 G. THE SALE OF GOODS ACT, 1930 .................................................................................................... 36 H. IS A THIEF AN OWNER? OWNERSHIP BEING ILLEGAL. .................................................................. 37 I. THE CIRCULAR DATED 07.07.1964 ................................................................................................ 41 J. THE DEPARTMENTAL INSTRUCTIONS DATED 11.05.1994 ............................................................ 42 K. R. B. JODHA MAL DISTINGUISHED BY HIGH COURT ...................................................................... 43 L. "OTHER VALUABLE ARTICLE" ........................................................................................................ 75 M. PRINCIPLE OF EJUSDEM GENERIS; NOSCITUR A SOCII ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dan Prasad denied that the signature alleged to be his, was not his signature. The Assessing Officer found that the Junior Engineers denied putting stamp and took the position that if there was stamp, then, it must indicate the name of the section. The Assessing Officer added a sum of Rs.21985700/- being the figure arrived at, by finding that 4443.80 metric tonnes of bitumen had not been delivered. This was done by invoking Section 69A of the Act. 7. Chronologically, this Court notices that for the assessment year 1996-1997, the Assessing Officer passed Order dated 31.03.1999. The appellant, in its Return, disclosed a net profit of Rs.676133/-. On scrutiny, the Assessing Officer, again, noticing the scam and finding that, while 10300.77 metric tonnes had been lifted by the appellant, only 8206.25 metric tonnes had been delivered. Accordingly, it was found that 2094.52 metric tonnes had not been delivered. On the said basis and again invoking Section 69A of the Act, a sum of Rs.10471720.30 was added as income of the appellant. 8. As against the Order dated 27.03.1998 for the Assessment Year 1995-1996, in Appeal, by Order dated 15.09.2000, the Commissioner Appeals found that all Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in respect of total short supply of 4443.01 MT as reported by Engineer in Chief and the Jr. Engineer had accepted the receipt of Bitumen barring two namely -I) Mr. Madan Prasad and II) Mr. Ahiya Ansari during the course of independent enquiries held by the A.O through issue of summons. Thus, I hold that my predecessor has given relief of Rs. 2,01,14,659/- in respect of 40.64.28 MT. Of Bitumen under the wrong presumption of fact that the Jr. Engineers had confirmed the receipt of 4064.98 MT. Of Bitumen in their statements before the A.O. Since in the cases Shri Madan Pd. and Mr. Ahiya Ansari who had denied to have received the Bitumen, my ld. Predecessor had set aside the matter to the file of the A.O. with the direction to re-decide the matter after allowing the appellant an opportunity to cross- examine these two Jr. Engineers and after making further enquiries to establish the genuineness or otherwise of their signatures on the challans, I deem it proper to set aside this addition of Rs.2,01,14,659/- in respect of 4064.98 MT of Bitumen also to the file of the A.O. with the direction that he shall issue summons to the concerned Jr. Engineers who have received 4064.98 MT of Bitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n passed under Section 154 of the Act. The ITAT dismissed the Appeals filed by the Revenue and the appellant. The cross-objection came to be disposed of. This Order is dated 11.01.2002. 12. For the Assessment Year 1996-1997, the ITAT disposed of the Appeal filed by the Revenue and also the cross-objection filed against the Order dated 18.12.2000. The Appeal filed by the Revenue [ITA 240 (Patna/2001)] was allowed. The Tribunal finds that the appellant had not disputed the lifting of the bitumen. The claim made by the appellant that full supply was made, stood demolished, when photocopies of delivery challans were found to be false and fabricated. The Executive Engineers, it was further found, had confirmed non-delivery to the tune of 2090.40 metric tonnes. The Commissioner Appeals, it was found, reached a wrong conclusion, as he did not address himself to the explanation offered by the Junior Engineers. It was found that all Executive Engineers of the Consignee Divisions presented a case of non-delivery before the Assessing Officer. Thus, on the same day, i.e., on 11.01.2002, the ITAT allowed the Appeal filed by the Revenue and sustained the Order of the Assessing Officer relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation offered be unsatisfactory. The argument that Section 69A would not apply as the appellant had offered an explanation was not accepted as it was found that an explanation though offered, being not accepted, would lead to the invocation of Section 69A, if the explanation was not satisfactory. In other words, Section 69A applied. Lastly, in regard to the argument of the appellant that the cost of the bitumen and not the value thereof was added as income, the High Court finds that the appellant did not have a case that it had sold the bitumen at the price lower than the cost. The appellant was found to be the owner of the bitumen and the addition was sustained. This order was passed on 05.03.2009. 15. Thereupon, the appellant filed Review Petition No. 102 of 2009. The appellant purported to point out that in separate appeals filed for assessment year 1995-96 and 1996-97 on the same set of facts, the ITAT had allowed the appeal of the Revenue for the year 1996-97, but for the assessment year 1995-96, the matter was remanded back. This argument was rejected by the High court in the review on the following reasoning: "However, the question would be whether the fact that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year 1996-97, likewise the appellant was multed with an addition in a sum of Rs.10471720/-." 19. It is pointed out that for the Assessment Year 1995-1996, as noticed earlier, by virtue of the Order of Rectification dated 31.05.2001, on the basis of which, the Appeal filed by the Revenue, was dismissed by the ITAT and Appeal filed by the appellant, against which, Order came to be dismissed, the matter was to be considered by the Assessing Officer. The same Tribunal, on the same day, i.e., 11.01.2002, on the other hand, allowed the Appeal of the Revenue and set aside the Order dated 18.12.2000, by which, the Commissioner Appeals had ordered the deletion based on the alleged non-delivery of bitumen. In fact, it is pointed out that the High Court notes in the Order dated 05.03.2009, as if the Appeal was filed by the appellant against the Assessment Year 1995-1996. Even when the conflicting views taken by the Tribunal was pointed out in the Review Petition, despite noticing the argument, the High Court has rejected the same without just cause. In the Order, it is pointed out that the Court observed that the matter for the year 1995-1996 had travelled to the Court in M.A. 214 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... source of the investments or the explanation offered by him is not, in the opinion of the 2 Assessing] Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year." 24. Section 69A came to be inserted by Finance Act, 1964 (Act 5 of 1964) w.e.f. 01.05.1964. It reads as follows: "69A. Unexplained money, etc. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the 4 Assessing] Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year." 25. Section 69B provides for power with the Assessing Officer to deal with investments made by an assessee in bullion, jewellery and other valuable article, when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be the owner; f. In the case of money, the money can be deemed to be the income of the financial year; 28. Applying the provision to the facts of the case, it is noticed that the points that arise are as follows: I. The question would arise, as to whether the appellant could be treated as the owner of the bitumen; II. The further question would arise, as to whether bitumen could be treated as other valuable articles; III. Thirdly, the question arises, as to how the value of the bitumen is to be ascertained; IV. Whether the ITAT erred in passing contradictory Orders qua the Assessment Years 1995-1996 and 1996-1997, by Orders passed on the same day and whether the facts were the same? 29. As regards the first question, viz., whether the appellant could be treated as the owner of the bitumen is concerned, it is indisputable that the appellant was engaged as a carrier to deliver the bitumen, after having lifted the same from the Oil Companies to the various Divisions of the Road Construction Department of the Government of Bihar. Before the Court proceeds to deal with this aspect, we may bear in mind, what this Court held in the decision reported in Chuharmal S/O Takarma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Section 69-A of the Act, has wide meaning which meant anything which came in or resulted in gain." 32. It may be noticed that Section 15 of the Carriage by Road Act, 2007, which repealed the Carriers Act, 1865, provides as follows: "15 Right of common carrier in case of consignee's default. (1) If the consignee fails to take delivery of any consignment of goods within a period of thirty days from the date of notice given by the common carrier, such consignment may be deemed as unclaimed: Provided that in case of perishable consignment, the period of thirty days shall not apply and the consignment shall be deemed unclaimed after a period of twenty-four hours of service of notice or any lesser period as may be mutually agreed to by and between the common carrier and the consignor. (2) In the case of an unclaimed consignment under sub-section (1), the common carrier may, (a) if such consignment is perishable in nature, have the right to sell the consignment; or (b) if such consignment is not perishable in nature, cause a notice to be served upon the consignee or upon the consignor if the consignee is not available, requiring him to remove the goods within a period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specific case of the appellant is that the appellant never became the owner and it remained only a carrier. However, as noticed, if it is found that there has been short delivery, this would mean that the appellant continued in possession contrary to the terms of contract of carriage. 35. In Mohan B. Samtani v. Commissioner of Income-Tax 1993 Vol. 199 ITR 370 Calcutta, the appellant, who was found in possession of a package, which, when opened at the airport, contained a bronze idle of Nataraja and its pedestal, was sought to be roped in as owner with the aid of Section 69A of the Act: "6. From the facts on record, there cannot be any dispute that the consignor was the State Trading Corporation of Sikkim and the consignee was the Chogyal of Sikkim and the assessee was a representative of the State Trading Corporation of Sikkim. The assessee also claimed that the Chogyal of Sikkim was the owner and, under his verbal instruction conveyed through his A.D.C., he arranged for despatch thereof by signing the papers. In fact, the Chogyal also claimed ownership of the said packages on the basis of the letter by the Under Secretary of the Chogyal of Sikkim addressed to the Assistant Coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia, as in England, is more extensive and the liability is that of an insurer. The absolute liability of the carrier is subject to two exceptions: an act of God and a special contract which the carrier may choose to enter with the customer." 38. In the same year, and what is more, in the same volume, this Court spoke on the subject in the decision reported in Nath Bros. Exim International Ltd. v. Best Roadways Ltd. (2000) 4 SCC 553. The Court held, inter alia, as follows: - "14. These provisions, in effect, embody the English common law rule as to the liability of the bailee. Under the English common law rule, the measure of care required of the person to whom the goods were bailed, was the same as a man of ordinary prudence would take of his own goods. In other words, it was a mere matter of negligence on which the liability was founded. If a person was negligent and did not take as much care as he would have taken of his own goods, he would be liable in damages. These principles of the English common law rule were also applied in this country as indicated in the decision of the Privy Council in Irrawaddy Flotilla Co. Ltd. v. Bugwandass in which, it was, inter alia, observed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered the effect of special contract within the meaning of Sections 6 and 8 of the Carriers Act, 1865 and in, our opinion, they lay down the correct law." 39. To apply Section 69A of the Act, it is indispensable that the Officer must find that the other valuable article, inter alia, is owned by the assessee. A bailee, who is a common carrier, is not an owner of the goods. A bailee who is a common carrier would necessarily be entrusted with the possession of the goods. The purpose of the bailment is the delivery of the goods by the common carrier to the consignee or as per the directions of the consignor. During the subsistence of the contract of carriage of goods, the bailee would not become the owner of the goods. In the case of an entrustment to the carrier otherwise than under a contract of sale of goods also, the possession of the carrier would not convert it into the owner of the goods. E. THE CARRIAGE BY ROAD ACT, 2007 40. Under Section 15 of the Carriage by Road Act, 2007, the carrier can, after issuing notice as provided, when there is a failure by the consignee to take delivery, sell the goods in the case of a sale which is so authorised by a statute. The buyer from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct precluded from denying the seller's authority to sell: Provided that, where a mercantile agent is, with the consent of the owner, in possession of the goods or of a document of title to the goods, any sale made by him, when acting in the ordinary course of business of a mercantile agent, shall be as valid as if he were expressly authorised by the owner of the goods to make the same; provided that the buyer acts in good faith and has not at the time of the contract of sale notice that the seller has not authority to sell." 43. Sale by a carrier does not pass title except when it is immunised by the conduct of the owner of the good which would in turn estop the owner from impugning the title of the buyer. Under Section 15 of the Carriage by Road Act, 2007, a sale by a carrier is permitted and it can convey good title to the buyer. H. IS A THIEF AN OWNER? OWNERSHIP BEING ILLEGAL. 44. Can a thief be treated as the owner of the goods? In this regard, this Court notices the following discussion in the commentary on Sampath Iyengar's, Law of Income Tax. "12. Sine qua non is "ownership".- The words "is found to be the owner" appearing in this section clearly show that the mere f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he value of the gold cannot be taken to be his income. Merely because the assessee has kept silent and has not disclosed the name of the owners of the gold, he cannot be assessed under s. 69A of the I.T. Act. Liability to be taxed under s. 69A can arise only if he is shown to be the owner of the goods." 47. Both views can be reconciled. No doubt, it may be true that a person may own, contraband or prohibited articles and still be within the embrace of Section 69A. In other words, the illegality of the ownership may not ill square with the requirement of Section 69A that the assessing officer must find the assessee to be the owner of the article. However, that is not to say that without finding ownership or when it is obvious that someone else is the owner, a person found in possession, which is illegal, can be found to be the owner under Section 69A. The question would arise pointedly, as to, when a common carrier refuses to deliver the consignment and continues to possess it contrary to contract and law and converts it into his use and presumably sells the same, as to whether he could be found to be the owner of the goods. Would he be any different from a person who commits theft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to them by their forefathers, have to be borne in mind: "Often times, people convert their black money into gold. They make gold jewellery or gold vessels and then say it is heirloom. This is the common way of bringing unaccounted money into something which is reputable and can be cashed..... Any way this (Section 69A) is not intended to hurt the middle class persons. Generally, it will be used in dealing with cases of persons who pay wealth-tax, who probably have declared Rs.25,000 as jewels, and we could ask them 'How did you get more jewels?'.... I can promise that this department shall not go and hurt any lower middle class man at all in this way, because we will get what is our due in other ways. They are not paying the taxes at all..... we will give them notice..... we shall bring them on the tax rolls. But big assesses as are contemplated in this provision cannot be allowed to escape." J. THE DEPARTMENTAL INSTRUCTIONS DATED 11.05.1994 49. This Court notices Departmental Instruction No. 1916 dated 11th May, 1994. "2. Departmental instructions. - Instruction read as under: "Seizure of Jewellery and Ornaments in Course of Search Operations- Guidelines for.- Instances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the property vested in the custodian wholly for the purpose of administration and the assessee continued to an owner. This Court, inter alia, held as under: "9. The question is who is the "owner" referred to in this section? Is it the person in whom the property vests or is it he who is entitled to some beneficial interest in the property? It must be remembered that Section 9 brings to tax the income from property and not the interest of a person in the property. A property cannot be owned by two persons, each one having independent and exclusive right over it. Hence for the purpose of Section 9, the owner must be that person who can exercise the rights of the owner, not on behalf of the owner but in his own right. 10. For a minute, let us look at things from the practical point of view. If the thousands of evacuees who left practically all their properties as well as businesses in Pakistan had been considered as the owners of those properties and businesses as long as the "Ordinance" was in force then those unfortunate persons would have had to pay income tax on the basis of the annual letting value of their properties and on the income, gains and profits of the businesses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wers of use and disposal allowed by law .... The owner of a thing is not necessarily the person who at a given time has the whole power of use and disposal; very often there is no such person. We must look for the person having the residue of all such power when we have accounted for every detached and limited portion of it; and he will be the owner even if the immediate power of control and use is elsewhere". [Emphasis supplied] 51. This Court formed the view that since Section 9 of the Income Tax Act, 1922 required that in order that a person be assessed to tax in the form of income from house property, he should be the owner and as the custodian in Pakistan was the owner, the High Court was right in the view it took. 52. In Late Nawab Sir Mir Osman Ali Khan v. Commissioner of Wealth Tax, Hyderabad 1986 (supp.) SCC 700; the matter arose under the Wealth Tax Act, 1957. Section 2(m) of the said Act defined net wealth as being predicated with reference to assets "belonging to" the assessee. The assessee in the said case had sold out the property without executing the sale deed. The possession was handed over to the buyer after receiving full consideration. The Court notices the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. Fourthly, ownership has the characteristic of being indeterminate in duration. The position of an owner differs from that of a non-owner in possession in that the latter's interest is subject to be determined at some future time. Fifthly, ownership has a residuary character. Salmond also notes the distinction between legal and equitable ownership. Legal ownership is that which has its origin in the rules of the common law, while equitable ownership is that which proceeds from rules of equity different from the common law. The courts of common law in England refused to recognise equitable ownership and denied the equitable owner as an owner at all." 53. The Court further took the view that it was not concerned with the expression 'owner' but it was dealing with the issue as to whether the assets belonged to the assessee anymore. It was found that "mere possession or joint possession unaccompanied by the right of possession or ownership of property would not bring the property within the definition of net wealth for it would not be an asset belonging to "the assessee". The decisions under the Income Tax Act were distinguished. In regard to R.B. Jodha Mal (supra), this Court finds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed by the purchaser of the flats. In one of the appeals, the assessee claimed that the income must be assessed under Section 22. The claim was rejected on the ground that assessee was only a lessee and had only tenancy rights. The common question which arose in all the cases was the scope of Section 22 of the Act vis-a-vis Section 56 of the Act. Section 22 of the Act brings to tax income from house property and the section expressly declares that the assessee must be the owner of the building or lands. Section 27 purports to define the expression owner of house property, inter alia, for the purpose of Sections 22 to 26. It includes a person who is allowed to take or retain possession of any building or part thereof, in part performance of a contract of the nature referred to in Section 53(A)of the Transfer of Property Act. The Court distinguished Jodha Mal (supra). This Court further referred to in great detail the judgment of the Patna High Court in Additional Commissioner of Income Tax, Bihar v. M/s. Sahay Properties and Investment Co.(P) Ltd. 1983 (144) ITR 357. Since this Court has approved the reasoning adopted by the Patna High Court, it is deemed appropriate to refer to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exclusion of other persons from the use or handling of the thing.... But every owner does not possess all the rights set out above - a particular owner's powers may be restricted by law or by an agreement he has made with another.' (Refer to G.W. Paton on Jurisprudence, 4th Edn., pp. 517-18.) While dealing with the concept of possession and enumerating the illustrative cases and rules in this respect, Paton says at p. 577 in clause (x): 'To acquire possession of a thing it is necessary to exercise such physical control over the thing as the thing is capable of, and to evince an intention to exclude others:....' Reference in this connection has been made to the case of Tubantia: Young v. Hichens and of Pierson v. Post [(1805) 3 Caines 175 (Supreme Court of New York)] . It would thus be seen that where the possession of a property is acquired, with a right to exercise such necessary control over the property acquired which it is capable of, it is the intention to exclude others which evinces an element of ownership. To the same effect and with a more vigorous impact is the subject dealt with by Dias on Jurisprudence, (4th Edn., at p. 400): 'The position, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ength at the Bar, to give a full illustration of the definitions of 'ownership' as Stroud puts it. One such definition is that the 'owner' or 'proprietor' of a property is the person in whom (with his or her assent) it is for the time being beneficially vested, and who has the occupation, or control, or usufruct, of it, e.g., a lessee is, during the term, the owner of the property demised. Yet another definition that has been given by Stroud is that: '"Owner" applies to every person in possession or receipt either of the whole, or of any part, of the rents or profits of any land or tenement; or in the occupation of such land or tenement, other than as a tenant from year to year or for any less term or as a tenant at will.' (Stroud's Judicial Dictionary, 3rd Edn., Vol. 3, p. 2060) Thus the juristic principle from the viewpoint of each one is to determine the true connotation of the term 'owner' within the meaning of Section 22 of the Act in its practical sense, leaving the husk of the legal title beyond the domain of ownership for the purpose of this statutory provision. The reason is obvious. After all, who is to be taxed or assessed to be taxed more accurately - a person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is in writing and the value of the property is admittedly worth more than hundred rupees. Section 54 of the Transfer of Property Act would, therefore, exclude the conferment of absolute title by transfer to the assessee. That, however, would not take away the right of the assessee to remain in possession of the property, to realise and receive the rents and profits therefrom and to appropriate the entire income for its own use. The so-called vendor is not permitted in law to dispossess or to question the title of the assessee (the so-called vendee). It was for this very practical purpose that the doctrine of the equity of part performance was introduced in the Transfer of Property Act, 1882, by inserting Section 53-A therein. The section specifically allows the doctrine of part performance to be applied to the agreements which, though required to be registered, are not registered and to transfers not completed in the manner prescribed therefor by any law. The section is, therefore, applicable to cases where the transfer is not completed in a manner required by law unless such a non-compliance with the procedure results in the transfer being void. There is, however, a distinction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contrary would not be in consonance with the juristic principle either at common law or in equity. In either case, it would not be subservient to the intent and purpose of Section 22 of the Act, with regard to which, as we have already stated, we can fairly look at the language used and the tax laws have to be interpreted reasonably and in consonance with justice. So far we have dealt with the case in this respect on juristic principles as if it were a matter of first impression. We have, therefore, now to refer to the case-law on the subject." (Emphasis supplied) Further, it is found that the Court also noticed the memorandum explaining provisions in Finance Bill 1987 concerning Section 27 and found that the amendment was intended to supply an obvious omission or clear up the doubts surrounding the word owner in Section 22 of the Act. The Court answered the reference in favour of the Revenue by holding that "in the context of Section 22 of the Act having regard to the ground realities and to the object of the Act, namely, to tax the income of the "owner as a person who is entitled to receive income from the property in his own right." 55. In Mysore Minerals Ltd. M.G. Road, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by which a thing belongs to someone in particular, to the exclusion of all other persons. The exclusive right of possession, enjoyment, and disposal; involving as an essential attribute the right to control, handle, and dispose." 7. Dias on Jurisprudence (4th Edn., at p. 400) states: "The position, therefore, seems to be that the idea of ownership of land is essentially one of the 'better right' to be in possession and to obtain it, whereas with chattels the concept is a more absolute one. Actual possession implies a right to retain it until the contrary is proved, and to that extent a possessor is presumed to be owner." 8. Stroud's Judicial Dictionary gives several definitions and illustrations of ownership. One such definition is that the "owner" or "proprietor" of a property is the person in whom (with his or her assent) it is for the time being beneficially vested, and who has the occupation, or control, or usufruct, of it; e.g., a lessee is, during the term, the owner of the property demised. Yet another definition that has been given by Stroud is: " 'owner' applies 'to every person in possession or receipt either of the whole, or of any part, of the rents or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssession by the Housing Board to the allottee is also a step towards conferring ownership. Documentation is delayed only with the idea of compelling the allottee to observe the schedule of payment." (Emphasis supplied) 56. Lastly, there is the judgment of this Court in Industrial Credit and Development Syndicate Ltd. v. Commissioner of Income Tax, Mysore & Anr. (2013) 3 SCC 541. The assessee was engaged in the business of hire purchase, leasing and real estate etc. As part of its business, it leased out vehicles to its customers, and thereafter, had no physical connection with the vehicles. What is more, the lessees were registered as the owners of the vehicles in the Certificate of Registration under the Motor Vehicles Act. The claim of depreciation made under Section 32 of the Act was rejected on the basis that the assessee was not the owner of the vehicles. The Court found from the lease agreement that it was agreed that the assessee was to be the exclusive owner of the vehicle at all points of time. The argument of the Revenue that the name of the lessee was entered in the Certificate of Registration under Motor Vehicle Act, and therefore, it must be treated as the owner und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight under Section 22. We have elaborately referred to the judgment of the Patna High Court in the Sahay Properties case. The full rights of an owner as set out therein may again be reiterated as: (1) The power of enjoyment which includes the power to destroy. (2) The right to possession which includes the right to exclude others. (3) The power to alienate inter vivos or to charge as security. (4) The power to bequeath the property. 59. This Court may at this juncture observe that a carrier has none of these rights or powers. It may be true that in order to be an owner, all the rights and powers of an owner need not be present at the same point of time in the same person. It may be true that ownership may be associated with a better right to be in possession and actual possession in a given case may be harmonised with ownership. Being in possession with a right to be possession may lead to a presumption that the possessor is the owner, unless it be that there are indications to the contrary. The beneficial vesting may in the context clothe the person with title as the owner. Another concept which emerges is a person in receipt of money having actual control over the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continuing with the possession of the goods not only contrary to the contract but also to the law of the land, both in the Carriers Act 1865 and breaking the penal law as well, the appellant must be treated as the owner. 61. There is no equity about a tax. Equally, a person cannot be taxed based on intendment. Unlike the possession of a person who for all intents and purposes, and in his own right, earns income from house property, lawfully otherwise, and falls short of ownership only for want of a formal conveyance as required under Section 54 of Transfer of Property Act, a carrier who clings on to possession not only without having a shadow of a right, but what is more, both contrary to the contract as also the law cannot be found to be the owner. The possession of the carrier who deliberately refuses to act under the contract but contrary to it, is not only wrongful, but more importantly, makes it a case where the possession itself is without any right with the carrier to justify his possession. Recognising any right with the carrier in law would involve negation of the right of the actual owner which if the property in the goods under the contract has passed on to the consign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad every right over the bitumen and proceeding on the basis that the assessing officer's reasoning is correct, the department definitely had a case that it had not received the bitumen in question. The right over the bitumen as an owner at no point of time could have been claimed by the appellant. The possession of the appellant at best is a shade better than that of a thief as the possession had its origin under a contract of bailment. This is also not a case where any case is set up of the carrier exercising rights available in law entitling it possess goods as of right or pass on title to another under law as permitted. Hence, this Court would hold that the Assessing Officer acted illegally in holding that one appellant was the 'owner' and on the said basis made the addition. L. "OTHER VALUABLE ARTICLE" 64. It is a case of the appellant that applying the Principle of Ejusdem Generis, bitumen would stand out as a strange bed fellow in the company of its immediate predecessor words, viz., money, bullion and jewellery. In other words, it is the case of the appellant that bitumen is a clear misfit and it could not have been the legislative intention to treat bitumen as other valua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f title, which have no greater value than an evidentiary one, and which do not carry any saleable interest, are not the "valuable things or articles" contemplated either by subsection (5) of section 132 of the Act or by rule 112A of the Rules. There is nothing in the record to show that the fixed deposit receipts, which are seized in this case, carry any inherent market value with them. They are merely the documents evidencing the debt due to the assessee. Similarly, the documents of title relating to an immovable property also contain no more value than an evidentiary one. Thus, since none of those documents has got any intrinsic value in terms of money, we are of the opinion that they are not covered by sub-section (5) of section 132 of the Act or rule 112A of the Rules." (Emphasis supplied) 66. Unlike a document of title or a fixed deposit receipt, which cannot, by itself, be disposed of or alienated, bitumen would be goods, which can be transferred. It would have a value in the market depending upon its quality. In Commissioner of Income Tax v. M.K. Gabrial Babu and others (1991) 188 ITR 464 Kerala, the High Court of Kerala was dealing with the question, as to whether immova ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it was not an income under the provisions of s.69 of the Act, 1961. As such, the substantial question of law, i.e., (i) and (iii) are answered accordingly." (Emphasis supplied) 68. The word 'valuable' has been defined in Black's Law Dictionary as follows: - "Valuable adjective. Worth a good price; having financial or market value." 69. The word 'valuable' has been defined in the Concise Oxford Dictionary as follows: - The word 'valuable' has been defined as again an adjective. "worth a great deal of money. Very useful or important." 70. The word 'money' has been described in Black's Law Dictionary as follows: - "money. 1. The medium of exchange authorized or adopted by a government as part of its currency; esp. domestic currency .2. Assets that can be easily converted to cash . 3. Capital that is invested or traded as a commodity . 4. Funds; sums of money . - Also spelled (in sense4) monies. See Medium of Exchange; Legal Tender." 71. The word 'article' has been defined in Black's Law Dictionary as "Generally, a particular item or thing . 72. The Word 'bullion' has been defined in the Concise Oxford Dictionary as 'gold or silver in bulk before coining, or v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and considered the applicability of the Principle of Noscitur a Sociis, to the facts: "12. The principle of statutory interpretation by which a generic word receives a limited interpretation by reason of its context is well established. In the context with which we are concerned, we can legitimately draw upon the "noscitur a sociis" principle. This expression simply means that "the meaning of a word is to be judged by the company it keeps." Gajendragadkar, J. explained the scope of the rule in State of Bombay v. Hosptial Mazdoor Sabha [(1960) 2 SCR 866 : AIR 1960 SC 610 : (1960) 1 LLJ 251] in the following words: (SCR pp. 873-74) "This rule, according to Maxwell, means that, when two or more words which are susceptible of analogous meaning are coupled together they are understood to be used in their cognate sense. They take as it were their colour from each other, that is, the more general is restricted to a sense analogous to a less general. The same rule is thus interpreted in "Words and Phrases" (Vol. XIV, p. 207): "Associated words take their meaning from one another under the doctrine of noscitur a sociis, the philosophy of which is that the meaning of a doubtful word ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogous to that indicated by the words following it, was considered relevant for the purposes of the statute." 76. About Noscitur a Sociis and how it compares with ejusdem generis, the following statement in G.P. Singh (supra) on Statutory Interpretation is apposite: "It is a rule wider than the rule of ejusdem generis; rather the latter rule is only an application of the former." N. WHETHER BITUMEN IS 'OTHER VALUABLE ARTICLE' 77. This Court has referred to the Principles of Ejusdem Generis and Noscitur a Sociis, which undoubtedly are rules of construction the latter being described as having treacherous underpinnings and the former requiring the existence of a genus which is not exhausted by the categories catalogued in the statute. This Court has also referred to the definition of the words, money, bullion valuable and article. The Court approves the view taken by the High Court of Gujarat in Bhagwandas Narayandas (supra) that a document of title to immovable property or a fixed deposit receipt would not qualify as other valuable article. The reasons which have been given appear to us to be sound. A document of title or a fixed deposit receipt would not be 'articles' which can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'other valuable articles'. The concept of 'other valuable articles' may evolve with the arrival in the market of articles, which can be treated as other valuable articles on satisfying the other tests. 78. Bitumen is defined in the Concise Oxford English Dictionary as 'a black viscous mixture of hydrocarbons obtained naturally or as a residue from petroleum distillation, used for road surfacing and roofing'. Bitumen appears to be a residual product in the petroleum refineries and it is usually used in road construction which is also probabalised by the fact that the appellant was to deliver the bitumen to the Road Construction Department of the State. Bitumen is sold in bulk ordinarily. In the Assessment Order, the Officer has proceeded to take Rs. 4999.58 per metric ton as taken in the AG Report on bitumen scam. Thus, it is that the cost of bitumen for 2094.52 metric ton has been arrived at as Rs. 1,04,71,720.30. This would mean that for a kilogram of bitumen, the price would be only Rs.5 in 1995-1996 (F.Y). 79. Bitumen may be found in small quantities or large quantities. If the 'article' is to be found 'valuable', then in small quantity it must not just have some value but it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence that for the deeming effect to apply- the assessee must be the owner of money, bullion, jewellery and other valuable articles on which he is unable to proffer a satisfactory explanation. Section 69B provides that in cases of understated investments the assessee should be the owner of money, bullion, jewellery and other valuable article(s). Hence, determining ownership of impugned goods is an important factor to impute tax liability. Someone having mere possession and without legal ownership or title over the goods, will not be covered within the ambit of Section 69A. An assessee may nevertheless be also regarded as deemed owner if possession is imputed on the assessee and no other person having a better claim is contesting the assessee's claim. In the present case, the assessee was certainly not the owner of the bitumen - but was the carrier who was supplying goods from the consignor- oil marketing companies to the consignee- Road Construction Department. Notably, due to short delivery of goods, the possession of the assessee was unlawful. The inevitable conclusion therefore is that the assessee is not the owner, for the purposes of Section 69A. 4. To address the second ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 69A, it will not be relevant whether the article in question is generally considered to be of high value and is a precious item. It possibly could be a common place and ordinary article but all that will be relevant is that the considered item has some value. The article can be a run-of-the-mill item or it can be a high priced one. According to the High Court the nature of the article is immaterial so long as it is of some value which may be accounted only by volume. In this case, the addition to assessee's income related to Rs. 1.05 crores worth of bitumen. In particular, the impugned judgement also noted that in Section 69A the word 'valuable article' is a 'separate item' from bullion, money and jewellery and concluded that it may include any article of value. 6. At this juncture, it is also relevant to consider, the decision of the Chhattisgarh High Court in Dhanush vs. CIT Dhanush General Stores vs. Commissioner of Income Tax (2011) 339 ITR 651 under a related anti-avoidance provision, i.e. Section 69B of the Act. However, before adverting to the decision, it is pertinent to note that on the question of interpretation of the phrase 'other valuable article' in Section 69A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be foreign to the purpose of the law and the intention of the legislature in so far as Section 69A is concerned. 9. At this point, it may also be useful to refer to the Circular No. 20 of 1964- Dated 7.7.1964. In this Circular the then Minister of Finance, while defending the insertion of Section 69A- stated that the 1964 Amendment is enacted not to subject lower middle-class people to taxation by taxing gold or jewellery inherited from forefathers, but provision is mandated for 'big assessees' who convert their black money and unaccounted wealth into gold jewellery and gold vessels and claim it to be heirloom. This makes it clear that the legislature never intended that any and every article of value should be brought within the ambit of Section 69A. It is only the high priced precious items- that command a premium price and are often used by high wealth individuals to park their unaccounted income- by converting it into gold and bullion - that the Section 69A was inserted to address and to make such articles taxable under the Income Tax Act. Therefore, the intent of the legislature, through the Amendment - was to subject articles like gold, jewellery and other valuable items, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng additional is required. In New Shorrock Spinning and Manufacturing Co. Ltd. vs. N.V. Raval New Shorrock Spinning and Manufacturing Co. Ltd. vs. N.V. Raval (1959) 37 ITR 41 the Division Bench of the Bombay High Court, dealt with the construction of sub-section (10) of section 35 of the Income Tax Act, 1922, introduced by Amendment through the Finance Act, 1956. In this regard the Court held that- "One safe and infallible principle which is of guidance in these matters is to read the words through and see if the rule is clearly stated. If the language employed gives the rule in words of sufficient clarity and precision, no more requires to be done." 13. Furthermore, the principle that a fiscal statute should be strictly construed is, well settled. See CIT vs. Kasturi 237 ITR 24 (SC) The classical words of Justice Rowlatt in the 1920s case of Cape Brandy Syndicate Capy Brandy Syndicate vs. Inland Revenue (1921) 1 KB 64 would be of valuable assistance here. Justice Rowlatt while interpreting the phrase- 'pre-war trade years' in context of the British Finance Act,1915-16, observed as follows: "..........in a taxing Act one has to look merely at what is clearly said. There is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost ordinary article but the precious gold and the like, that would attract the implication of deemed income under Section 69A. 17. Earlier, it is the high value, less bulky items which were owned discreetly, that aided the assessee in avoiding tax. The 1964 Amendment was primarily enacted to address mischief of this nature. The wisdom of the legislature as reflected in the Amendment - was to subject to income tax, articles like gold, jewellery and other valuable items- typically owned with the intention of avoiding income tax-by translating income into buying and then hiding such precious high value items. Premium price cannot be attributed to an otherwise ordinary and common place article like bitumen only on the basis of huge mass of bitumen. It would be an incorrect way to categorize bitumen as a 'valuable article', under Section 69A of the Income Tax, Act. 18. While doing the above analysis, the 1976 song "The First Hello, The Last Goodbye" written & sung by the British singer Roger Whittaker is buzzing in my mind. The singer here goes lyrical while crooning about things of great value and aptly sings "...gold would not be precious if we all had gold to spare.....". Taking ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
