TMI Blog1992 (7) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... accounted stock of the assessee for which the source of investment was not explained satisfactorily. Therefore, the value of excess gold jewellery found was assessed as concealed income. 3. On appeal, the CIT (A) noted the fact that the addition was made heavily relying on the statements given by various persons claiming ownership of the ornaments as recorded by the Gold Control authorities and he has not given separate opportunity to the assessee or to the various persons before acting upon the findings given by the Deputy Collector of Central Excise Customs, Pune. He also noted the fact that the proceedings of the Deputy Collector of Central Excise Customs, Pune have been subsequently set aside by the Collector of Customs (Appeals) and remanded back for de novo consideration by his order dated 30-3-1981. He has further noted the fact that the fresh order has been passed by the Dy. Collector on 5-12-1986 wherein the explanation offered by the assessee was not accepted by him and pointed out various breaches of regulations under the Gold Control Act mentioned in para 12 of the appellate order. Therefore, the CIT (A) in para 13 of his order observed that the Gold Control autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the statement of Shri Gangaram Maganlal Soni could not be disbelieved and consequently gold stated to have been received from Shri Gangaram Maganlal Soni as per Sr. Nos. 1 and 4 of 8 items enumerated by the ITO in para 7 of his order could not be disbelieved, but must be believed. In para 15(ii), the CIT (A) considered the transactions relating to Shri Mahavir Vasant Jain which covered Sr. Nos. 2,6 and 7 of transaction noted by the ITO in para 7 of his order. Here also, the CIT (A) came to the conclusion that there is no doubt that Shri M. V. Jain had 160 gms. of gold and this statement was disbelieved on the ground that gold issued to him is assumed to be primary gold and not gold ornaments. Here also, the CIT(A) concluded that much of gold was available with him and was returned by him to the assessee and therefore, no addition could be made on that account. In para 15(iii), the CIT (A) pointed out that the register as well as the statement of Shri Babulalji Soni confirmed the return of 84.400 gms. of gold ornaments on 5-5-1976 to the assessee out of 205 gms. of primary gold and copper weighing 6.200 gms. given to him on 29-4-1976. Balance of gold ornaments were returned b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns stating that receipts of gold on the date of raid on 5-5-1976 which were not properly explained to the Central Excise authorities at the time of seizure were subsequently explained fully. The various records maintained by the assessee fully supported the stand of issues and receipts, as stated by the assessee. Each of the artisans or concerned persons has in his statement confirmed the position stated by the assessee. The names of the persons who have brought the gold and who have taken the gold have been furnished and the parties have been examined and they also confirmed the correct position. The owners of gold in the case of repair register have confirmed their ownership of gold. In the case of Smt. Rupa Sodha, corresponding amounts have been found to be disclosed in her wealth-tax return also. Octroi duty is not paid on each and every receipt or issue has to be paid on consolidated basis based on record for the year. The ITO has not separately examined any of the concerned parties and none of them retracted from the statements or admitted as false. On the other hand, the statements clearly establish the fact that the relevant ornaments were entered in the record and register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 110 of the Evidence Act, 1872 embodied a salutary principle of common law jurisprudence, viz., where a person was found in possession of anything, the onus of proving that he was not its owner was on that person and this principle could be attracted to a set of circumstances that satisfy its conditions and was applicable to taxation proceedings. Reliance was also placed on the judgment of the Bombay High Court in the case of J. S. Parkar v. V. B. Palekar [1974] 94 ITR 616 wherein their Lordships of the Bombay High Court have observed that it is well settled that the provisions of the Evidence Act do not apply to proceedings before the Income-tax Officer. However, no fault could be found with the Income-tax authorities if they chose to rely on the proceedings and the judgments in the criminal courts where the petitioner was tried for the same set of facts. The findings recorded in the criminal courts were undoubtedly relevant for deciding the controversies that had arisen in the assessment proceedings. The High Court held in that case that when smuggled gold was confiscated and that assessee was found to be owner of the bullion, therefore, the value of such bullion could be pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set, it has to be observed that there is no doubt about the principles laid down by their Lordships of the Supreme Court in the case of Chuharmal. Section 110 of the Evidence Act, 1872 embodied a salutary principle of common law jurisprudence, namely, where a person was found in possession of anything, the onus of proving that he was not its owner was on that person. Unless he discharges the onus, he will be treated as the owner of the property. Therefore, the assessment of deemed income representing unexplained investment in the property found possession with the assessee arises if the assessee fails to discharge the onus which means that he has failed to offer satisfactory explanation regarding the nature and source of investment in such property. In the case of Chuharmal the assessee failed miserably and the value of such investment was assessed as deemed income under section 69A of the Income-tax Act, 1961. 9. In the case of J. S. Parkar, the assessee simply denied possession of gold in question and did not offer any other explanation. Before the Tribunal, he stated that he was in possession of the gold as a carrier, but the Tribunal rejected the said explanation. The High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the order passed by the Dy. Collector of Central Excise and Customs, Pune passed in November 1978. It appears that this order was set aside by the Collector of Central Excise Customs (Appeals) and remanded for de novo consideration by order dated 30-3-1981. It also appears that the Dy. Collector has passed fresh order reiterating the same view as was taken earlier by his order dated 5-12-1986. At the time of hearing, the learned counsel for the assessee filed a paper compilation containing the Customs, Excise Gold Control Appellate Tribunal order dated 30-9-1991 in the case of the assessee. The Tribunal no doubt accepted the explanation offered by the assessee regarding excess gold found at the time of search, but which was sought to be explained on 18-5-1986 after delay of 12 days. This explanation was rejected on the ground that it was belated and the subsequent production of registers of artisans/goldsmiths were not acceptable as they were only belated attempt to cover the excess. Therefore, it is clear that the appellate authority was not willing to accept the belated attempt of explanation for the excess of gold found. However, the Tribunal proceeded to consider the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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