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TMI Blog1991 (4) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... above amount had been offered for taxation in order to buy peace in view of the fact that assessee had closed its business activity w.e.f. asst. yr. 1983-84 The assessee pleaded before the ITO that the assessee was engaged in the job work only and as such the cloth in question did not belong to the assessee. The assessee was asked to furnish names and addresses of the parties to whom the goods belonged and from whom the assessee had received for job work. The assessee did not furnish the details about names of the parties. According to the ITO, provisions of s. 69 were attracted because the assessee had cleared the goods without payment of excise duty. He, accordingly, inferred that the goods belonged to the assessee and added the amount of Rs. 3,60,269.25 being the price of the goods under s. 69 of the Act. 4. The assessee filed appeal before the CIT(A). It was again emphasised that the assessee never dealt in cloth and that the assessee did the job work only at the factory and that the cloth in question add not belong to the assessee but belonged to other parties for whom the job work had been done. Since those parties were not accepting ownership because of the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the person in question and that the person in question was a mere custodian of the goods. What inference should be drawn would depend on the facts and circumstances of cash case. In the present case, the assessee is doing job work in the factory premises. The past record as well as the future record indicate that it never dealt with cloth as such in the factory premises. In other words, it is not found that it ever was a dealer in cloth Admittedly, the assessee used to receive cloth from customers for doing job work. Hence, mere fact that assessee was in possession of certain cloth in the factory premises would not ordinarily give rise to presumption that he was the owner of the cloth that was there in the factory premises. The ordinary presumption would be that the cloth in question had come in the factory premises for the purpose of job work. Similarly, when any cloth is sent out of factory premises the ordinary presumption would b that the cloth belonged to some third party who had entrusted the cloth to the assessee for doing job work. Ordinarily there would not be an inference to the effect that the assessee was owner of the cloth that was sent out of the factory premise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by mentioning of the names of the parties. Names of the parties have been mentioned because it was necessary for the assessee to know as to what quantity of cloth has been processed in respected of particular party. IT was out of this necessity that names of the parties have been mentioned on the loose sheets. Consider in the entire circumstances, the proper inference would be that the cloth in question did not really belong to the assessee but the same belonged to he parties whose names are mentioned on the loose sheets that were seized. Consequently, value of cloth cannot be added to the income of the assessee. The only reasonable inference that could be drawn from the facts, of the present case is that the assessee received certain cloth, outside the books, from certain parties whose names are mentioned on the loose sheets and that those parties had not entered the transactions in their account books and that the assessee did the job work in respect of that cloth and that assessee received charges for job work from these parties which the assessee as well as those parties did not account it their respective account books. Consequently, only job charge in respect of the cloth m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation as to the owner of those watches before the customs authorities either at the time of raid or some days after the raid. It was on these facts that inference was drawn that the watches belonged to the assessee and that value of the watches was liable to be added as income under s. 69A of the Act. IN the present case, the assessee has given explanation from the very beginning. The explanation is that the cloth belonged to third parties who had entrusted the same for job work and that the said cloth did not belong to the assessee. This explanation is in accord with all the surrounding circumstances discussed above and is radility acceptable on the facts of the present case. Consequently, decision in the case of Chuharmal would not apply. 11. The other decision relied by the Department are CIT vs. Bimal Prakash Gupta (1990) 81 CTR (P H) 382 : (1989) 179 ITR 613 (P H), CIT vs. Lalachand Bhabutnal Jain (1984) 38 CTR (Bom) 183 : (1985) 151 ITR 360 (Bom), D. Mohanlal Praekh vs. CIT (1988) 184 ITR 134 (sic) and Ashok Kumar vs. CIT (1986) 53 CTR (MP) 226 : (1986) 160 ITR 497 (MP) In all these case the assessee was found to be in possession of gold and/or cash and the explanation o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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