TMI Blog2023 (5) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... eyond justification if the Court were to recognise a thief as the owner of the property within the meaning of Section 69A. Recognising a thief as the owner of the property would also mean that the owner of the property would cease to be recognised as the owner, which would indeed be the most startling result. Ambit of the word owner in section 69A When it came to the Podar Cement Pvt. Ltd.[ 1997 (5) TMI 2 - SUPREME COURT] , this Court took into consideration the ground reality in the context of Section 22 of the Act and approved of taxing the income of a person who is entitled to receive income from the property in his own right under Section 22. We have elaborately referred to the judgment of the Patna High Court in the Sahay Properties case [ 1982 (12) TMI 27 - PATNA HIGH COURT] . 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. This Court may at this juncture observe that a carrier has none of these rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A was to get at income which has not been reflected in the books of account but found to belong to the assessee. Not only it must belong to the assessee, but it must be other valuable articles. 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 must be worth a good price {See Black s Law Dictionary (supra)} or worth a great deal of money {See Concise Oxford Dictionary (supra)} and not that it has value . Section 69A would then stand attracted. But if to treat it as valuable article , it requires ownership in large quantity, in the sense that by multiplying the value in large quantity, a good price or great deal of money is arrived at then it would not be valuable article. Thus, this Court would conclude that bitumen as such cannot be treated as a valuable article . For purpose of Section 69A of Income Tax Act, it is therefore declared that- an article shall be considered valuable if the concerned article is a high-priced article commanding a premium price. As a corollary, an ordinary article cannot be bracketed in the same category as the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .......................................... 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 SOCIIS ............................................................ 81 N. WHETHER BITUMEN IS OTHER VALUABLE ARTICLE .................................................................... 85 1. Delay condoned. 2. Leave granted. A. THE FACTS 3. The appellant-assessee carried on business as carriage contractor for bitumen loaded from oil companies namely HPCL, IOCL and BPCL from Haldia. The goods were to be delivered to various divisions of the Road Construction Department of the Government of Bihar. According to the appellant, it has been in the business for roughly three decades. 4. By the impugned Order dated 05.03.2009 in M.A. 214 of 2002, the High Court has dismissed the Appeal filed by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oticing 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 Junior Engineers, except two, had accepted delivery. After finding that the addition made by the Assessing Officer in respect of quantity, where Junior Engineers had accepted delivery, was untenable, the Appellate Authority ordered deletion of a sum of Rs.20114659/-. This amount represented the value of 4064.28 metric tonnes. In regard to the disputed quantity, viz., the dispute raised by Shri Madan Prasad and Ahia Ansari, Junior Engineers, the matter was remanded back for affording an opportunity for cross-examination. This Order related to the Assessment Year 1995-1996. 9. Next in chronological order, is the Order dated 18.12.2000 passed by the Appellate Authority in Appeal carried by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Bitumen as per challans furnished by the appellant, record their statements, allow the appellant an opportunity to cross examine them and, if necessary, refer their signatures to the hand writing experts to establish the genuineness of otherwise of such signatures. In view of these directions, in order the substitution of last para on page -7 extending up to 1st as page 8 of CIT(A) is or which has already been reproduced above by the following para: I have carefully considered the above submissions in the course of independent enquiries made by the A.O. by issue summons only 2 Jr. Engineers namely, l. Mr. Madan Prasad, 2. Mr. Ahiya Ansari have been examined in respect of reported sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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 to addition on account of short supply of bitumen for the Assessment Year 1996-1997, whereas, for the Assessment Year 1995-1996, taking note of the Order of the Commissioner Appeals, passed under Section 154 of the Act, by which, the matter stood remitted back, the Appeal of the Revenue and the Appeal of the appellant, challenging the Rectification Order, came to be dismissed. 13. This, in turn, triggered the Appeal, i.e., M.A. 214 of 2002 before the High Court by the appellant under Section 260A of the Act. The High Court, inter alia, refers to the appellant filing Return for the Assessment Year 1996-1997, disclosing total income of Rs.576133/-. 14. Reference is made t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the appellate tribunal had passed another order correctly or incorrectly, the same may have any effect rendering the judgment of the tribunal passed in present matter to be erroneous despite the same having been upheld in appeal by this Court? Answer has to be in negative. For the assessment year 1995-96, the matter has attained finality as the Division Bench has already accepted the view of the appellate tribunal to be correct in M.A. No.214 of 2002. The view of the same Tribunal or the same Bench of the Tribunal was correct or incorrect for a different assessment year was not the subject matter of the appeal. If one of the views of the appellate tribunal is in favou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 2012, when it actually related to 1996-1997. More importantly, the learned Senior Counsel would contend that bitumen cannot be treated as other valuable article within the meaning of Section 69A of the Act. The very company of words, in which the words other valuable article is found, viz., money, bullion and gold, should have persuaded the Court to find the addition illegal. It was also canvassed before us that the appellant cannot be treated as the owner, as appellant was a carrier. It fulfilled its obligations by lifting the goods in question and delivered the same. In fact, it is the contention of the appellant that the goods had been delive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ource 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 such assets are found to be owned by the assessee and he finds a mismatch between the amount spent for acquiring them or investing in them and the amount recorded in the Books of Accounts for any source of income and no explanation is offered or the explanation offered is not found satisfactory, the excess amount can be brought to tax. Section 69C, inserted w.e.f. 01.04.1976, deals with unexplained expenditure, being deemed to be the income of the assessee. 26. Section 69 and Section 69A, apart from being close neighbours, do bear resemblance with one another. Section 69 deals with unexplained investment. Section 69 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 Takarmal Mohnani v. Commissioner of Income Tax, M.P., Bhopal (1988) 3 SCC 588. In the said case, the Court was dealing with wrist watches being seized from the assessee during a search conducted by the Customs Authorities from the bedroom of the assessee. The question fell for consideration, as to whether the principles underlying Section 110 of the Evidence Act, 1872, would assist the Revenue to conclude that a person, in possession, could be treated as the owner. This Court held, inter alia, as follows: 6. In other words, it follows from well settled principle of law that normally, unless contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 fifteen days from the date of receipt of the notice and in case of failure to comply with the notice, the common carrier shall have the right to sell such consignment without any further notice to the consignee or the consignor, as the case may be. (3) The common carrier shall, out of the sale proceeds received under sub-section (2), retain a sum equal to the freight, storage and other charges due including expenses incurred for the sale, and the surplus, if any, from such sale proceeds shall be returned to the consignee or the consignor, as the case may be. (4) Unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Collector of Customs dated May 30, 1973. The Chogyal was the head of an independent State at the relevant time and it was necessary, if the claim for ownership of the Chogyal is to be disputed, to have the said letter verified by obtaining the original from the customs authorities. Merely because the packages were presented before the customs authority, it does not ipso facto prove the ownership of the assessee of the goods. 7. In our view, it has not been established or found that the assessee is the owner of the said idol and pedestal. On the contrary, the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 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 under: For the present purpose it is not material to inquire how it was that the common law of England came to govern the duties and liabilities of common carriers throughout India. The fact itself is beyond dispute. It is recognised by the Indian Legislature in the Carriers Act, 1865, an Act framed on the lines of the English Carriers Act of 1830. 15. In the meantime, Parliament intervened and the Carriers Act, 1865 was enacted with the result that the liability of a common carrier came to be considered in the light of the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the carrier would acquire a good title even as against the consignee. It may be true that as far as the sale proceeds received by the common carrier from the sale, he would be accountable to the consignee as provided in Section 15 of the Act. Likewise, in a case covered under Section 15 (4), the common carrier would have the power to dispose of the consignment for recovery of dues from the consignee. In such cases if the other ingredients of Section 69A are satisfied, there may be no fallacy involved if an assessee is fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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 fact that, on a search, certain articles are found in the possession of a person cannot be said to attract the provisions of this section unless it is established that the person in whose possession articles were found is the owner thereof. An assessee is to be the owner before anything in his possession can be deemed to be his income. It cannot be said in the case of stolen property that the thief is the owner thereof. Section 69A was enacted to treat the value of certain i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. 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 and sells it claiming to be the owner. Can a thief become the owner? It would be straining the law beyond justification if the Court were to recognise a thief as the owner of the property within the meaning of Section 69A. Recognising a thief as the owner of the property would also mean that the owner of the property would cease to be recognised as the owner, which would indeed be the most startling result. While possession of a person may in appropriate cases, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -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 of seizure of jewellery of small quantity in course of operations under section 132 have come to the notice to the Board. The question of a common approach to situations where search parties come across items of jewellery, has been examined by the Board and following guidelines are issued for strict compliance:- (i) In the case of a wealth-tax assessee, gold jewellery and ornaments found in excess of the gross weight declared in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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 left by them in Pakistan though they did not get a paisa out of those properties and businesses. Fortunately no one in the past interpreted the law in the manner Mr Mahajan wants us to interpret. It is true that equitable considerations are irrelevant in interpreting tax laws. But those laws, like all other laws have to be interpreted reasonably and in consonance with justice. 14. For determining the person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sewhere . [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 following statement: 11. The material expression with which we are concerned in this appeal is belonging to the assessee on the valuation date . Did the assets in the circumstances mentioned hereinbefore namely, the properties in respect of which registered sale deeds had not been executed but consideration for sale of which had been received and possession in respect of which had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rigin 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 the following discussion: 17. This Court had occasion to discuss Section 9 of the Income Tax Act, 1922 and the meaning of the expression owner in the case of R.B. Jodha Mal Kuthiala v. CIT [(1971) 3 SCC 369 : AIR 1972 SC 126 : (1971) 82 ITR 570] . There it was held that for the purpose of Section 9 of the Indian Income Tax Act, 1922, the owner must be the person who can exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 the same: 32. The learned Judges observed at page 361: The emphasis, therefore, in this statutory provision is that the tax under the section is in respect of ownership. But this matter is not as simple as it looks. This leaves us to a more vexed question as to what is ownership. Should the assessment be made at the hands of the person who has the bare husk of the leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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, 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.' A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., 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 in receipt of money having actual control over the property with no person having better right to defeat his claim of possession or a person in legal parlance who may remain a remainder man, say, at the end or extinction of the period of occupation after, again say, a thousand years? The answer to this question in fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty, 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 between an agreement void as such and an agreement void in the absence of something which the vendor could do and had expressly or impliedly contracted to do, and where a vendor agrees to sell his share of property, including sir land, there is an implied term in the contract that he will apply for sanction to the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpreted 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, Bangalore v. Commissioners of Income Tax, Karnataka, Bangalore (1999) 7 SCC 106 the assessee company though allotted houses by delivery of possession by the Housing Board, an actual deed of conveyance had not been executed in its favour. The houses so allotted were for the use of its staff. Assessee claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 . 19. It is well settled that there cannot be two owners of the property simultaneously and in the same sense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 under Section 2(30) was rejected. It was further found that if the lessee was in fact the owner, he would have claimed depreciation, which was not done. It was also found that the entire lease rent was assessed as business income in the hands of the assessee. The Court went ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 property with no person having a better right to defeat his claim of possession may open the doors to a finding that he is the owner within the meaning of Section 69A. A person in actual physical control of the property and realising the entire income for his own u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax. 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 consignee is the consignee and if not the consignor. This Court has already found that the appellant is bereft of any of the rights or powers associated with ownership of property. The only aspect was the alleged possession of the goods which is clearly wrongful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 valuable article. Our attention is drawn to the Circular No. 20D dated 07.07.1964 issued by Central Board of Direct Taxes, which has been adverted to. {see paragraph 48} 65. In Bhagwandas Narayandas v. Commissioner of Income Tax, Ahmedabad and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 immovable property would be covered within the expression other value article or thing within the meaning of Section 132(1) of the Act. The Court held: 4. A word in a statue is quite often judged by the company its keeps. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 valued by weight M. PRINCIPLE OF EJUSDEM GENERIS; NOSCITUR A SOCIIS 73. Section 69A provides for unexplained money, bullion, jewellery . It is thereafter followed by the words or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ric 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 may be ascertained by reference to the meaning of words associated with it; such doctrine is broader than the maxim ejusdem generis . In fact the latt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciis 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 be bought and sold in a market. An article, would also not encompass an item of immovable property. This Court can safely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 must be worth a good price {See Black s Law Dictionary (supra)} or worth a great deal of money {See Concise Oxfor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 question on whether bitumen is a valuable article under Section 69A, we must understand what sort of artic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, the findings, will also be applicable to Section 69B. Although Section 69A deals with unexp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 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, to income tax, where such articles are typically owned with the intention of avoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 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 room for any intendment. There is no equity about a tax. There is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 a cue from the song s lyrics, it can be appropriately said that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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