TMI Blog1997 (6) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have been initiated or completed. 3.1 The learned Commissioner of Income-tax (Appeals) erred in holding that the appellant is owner of the gold bars seized from her person and baggage. 3.2 It is submitted that in the facts and circumstances of the case and in law the appellant could not have been held to be the owner of the gold bars. 4.1 Without prejudice to the above, the learned Commissioner of Income- tax (Appeals) erred in holding that the appellant is not eligible for set off of the goods seized by the custom authorities against the addition made. 4.2 The learned Commissioner of Income-tax (Appeals) failed to appreciate that there is no condition for allowability of business loss that the business must be a continuing one. 4.3 The learned Commissioner of Income-tax (Appeals) failed to appreciate that even one single venture can be deemed to be business. 4.4 It is submitted that in the facts and circumstances of the case and in law the appellant should have been allowed deduction of gold bars seized as business loss. The assessee has also raised an addition ground, which reads as follows :- The learned Assessing Officer is not justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me, she could not furnish the bills in support of the purchase of the same. She, however, did not name the owner of the seized goods. 5. As the assessee did not name the owner of the seized goods and as the goods were brought by her and were seized from her, the Assessing Officer held that she was the owner. As the source of the funds in the investment of gold and foreign currency was not explained, the Assessing Officer added the value of the gold of ₹ 8,55,494 (L.M.V.) and of the foreign currency of ₹ 26,234 as income under the head Other sources . 6. The CIT(Appeals) confirmed the additions with a slight modifications. He relied upon section 110 of the Evidence Act and held that in the light of its provisions, the burden of proving that the assessee is not the owner of the gold and foreign currency in question is on the assessee. He observed that even though the Evidence Act does not apply to taxation proceedings, the taxing authorities are not precluded from invoking the provisions of this Act. Accordingly, as the assessee was not able to rebut the burden that lay on her regarding the ownership of the gold and the foreign currency, he held that the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... text, reliance is placed upon the decision of the jurisdictional High Court in the case of CIT v. Lalchand Bhabutmal Jain [1985] 151 ITR 360 (Bom.) and also of the Hon ble Madras High Court in the case of Pichaimanickam Chettiar (supra). In support of the contention that the assessee was only a carrier, it is pleaded that she was functioning, during the relevant time, as an air-hostess and it was impossible from her meagre income to make a substantial investment of about ₹ 5 lakhs in gold and foreign currency. 10. To a query from the Bench, the learned counsel gave the details of the incomes declared by the assessee in her returns for the assessment years 1984-85 to 1988-89 and they are as follows :- 1984-85 ₹ 25,018 1985-86 ₹ 22,780 1986-87 ₹ 31,029 1987-88 ₹ 28,700 1988-89 ₹ 57,634 It is also pleaded that for the assessment year 1988-89, the assessee disclosed gross commission receipts of the order of ₹ 96,000 and these receipts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance ₹ 3,435 ₹ 48,380 Less : Standard Deduction under section 16(i) ₹ 10,000 ₹ 38,380 Business Income ₹ 38,380 Net Income as per Income Expenditure A/C ₹ 22,211 Income from Other Sources. Interest on S.B. A/C ₹ 6,367 Gross Total Income under section 80B(5) ₹ 66,958 Less : Deduction under Chapter VIA U/s 80(C) P.F. V.P.F. Rs. 2,653 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Apex Court in the case of Piara Singh (supra ) cannot be granted. 14. Regarding the additional ground in respect of levy of interest, the learned D.R. pleaded that the provisions of section 215(3) were introduced with effect from 1-4-1985 and these provisions are applicable for the levy of interest under section 217 in terms of section 217(2) and so, it is claimed that the decision of the Apex Court cited supra, does not apply to the facts of the present case. 15. Having regard to the rival submissions, we are of the view that the assessee is only a carrier, atleast in respect of gold. As per the ratio of the decision of the jurisdictional High Court in the case of Lalchand Bhabutmal Jain (supra), the onus is clearly on the department to prove that the assessee is the owner. The relevant portion of the head note of this decision reads as follows :- Held, that the Tribunal had not given the necessary and proper factual findings on the question that arose for determination before it. It had to decide on the basis of the available material, which was brought to its notice very properly by the Department, whether the assessee could be properly regarded as the owner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been signed by, or to be in the handwriting of, any particular person are in that person s handwriting and in the case of a document stamped, executed or attested that it was duly stamped and executed or attested by the person by whom it purports to have been executed or attested. The presumption contained in section 132(4A) is only for the purpose of seizure of valuables in a search operation and the provisions of section 132(4A) have no application for assessment purposes. This section casts a burden on the person in possession of proving that he is not the owner. In contrast, section 110 of the Indian Evidence Act comes into play only when another person disputes the title of the person who is in possession. At any rate, we are bound by the decision of the jurisdictional High Court in the case of Lalchand Bhabutmal Jain (supra) and we have to hold that the onus of proving that the assessee is the owner of the seized valuables lies on the department. We find that this view also finds support in the decision of the Hon ble Madras High Court in the case of S. Pichaimanickam Chettiar (supra). In this case, it was held that the assessee must be shown to be the owner of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal expenses abroad. Accordingly, she has to be assessed on her commission, which we estimate at 5% on the value of gold of ₹ 5,41,723 (I.M.V.). As no explanation is given for the acquisition of the foreign currency of the value of ₹ 26,234, we are of the view that this amount can be brought to tax under the head Other sources , besides the commission on the gold in respect of which we hold the assessee to be only a carrier. Accordingly, we determine her income at ₹ 53,320 (Rs. 27,086 + ₹ 26,234). So, out of the addition of ₹ 8,81,728 (Rs. 8,55,494 + ₹ 26,234) made by the Assessing Officer, we uphold the addition of ₹ 53,320. 19. Regarding the levy of interest under section 217, the provisions of section 215(3), read with section 217(2) are attracted. But the enhanced interest has to be levied only till the date of the original assessment and not till the date of the reopened assessment. The assessee may also be granted relief consequential to giving effect to this order. The appeal of the assessee is partly allowed. 20. Regarding the appeal of the Department, the learned counsel for the assessee pleaded that local value cannot be a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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