Income Tax Appellate Tribunal - Patna
Prabhat Ranjan Sarkar vs Income-Tax Officer on 29 January, 1993
Equivalent citations: [1994]48ITD47(PAT)
ORDER
B. Nath, Accountant Member
1. The assessee had filed the appeal originally on March 26, 1984. Several months after filing of the appeal, the assessee filed additional grounds of appeal, vide petition dated August 21, 1984. These grounds are against the charge of interest under Sections 139(8) and 217. It is mentioned in the petition that the additional grounds do not require any investigation and hence these should be admitted for being considered.
2. We have considered this request of the assessee. It is also clear that these grounds do not arise out of the order of the Appellate Assistant Commissioner. Moreover, these grounds would require investigation into facts. We do not agree with the assessee that these grounds do not require investigation into facts. The additional grounds of appeal filed, therefore, are not being admitted for consideration as these grounds were not raised in the original appeal as these grounds do not arise out of the order of the Appellate Assistant Commissioner and as these grounds require investigation into facts.
3. The main contention in this appeal is against the addition of a sum of Rs. 84,233 as income from undisclosed sources. The facts may be mentioned'here in short. There was a search in the residential premises of the assessee on October 24,1971. The residential premises of the assessee were at 176, Patliputra Colony, Patna, As a result of the raid and search, the following amounts were recovered and seized :
1.
Rs. 56,000 recovered from the Godrej almirah found in the bedroom of the assessee.
.2.
Rs. 28,233 recovered from the Godrej almirah found in the bedroom of the assessee's wife.
Rs. 84,233
4. At the time of search, the statement of one Shri Sarveshwaranand, the then joint secretary of Anand Marg Pracharak Sangh (hereinafter to be mentioned as "Anand Marg") was taken and he deposed that he did not know the nature and source of the amounts seized. He did not at all say that the amount belonged to Anand Marg. The Income-tax Officer, in his order under Section 132(5), held that these amounts were unexplained and it was the income of the assessee from undisclosed sources. It would be also relevant to mention here that the wife of the assessee, Smt. Uma Sarkar, had made a representation before the Income-tax Officer that a sum of Rs. 28,233, recovered from the Godrej almirah found in her bedroom belonged to her as her "stridhan". She further urged that she was separated from her husband and was in need of money at that time and that the same should be returned to her. The Income-tax Officer did not accept this plea of the wife of the assessee and held that the whole of the amount so seized was that of the assessee and was unexplained. The assessee, thereafter, filed a petition under Section 132(11) and the said petition was disposed of by the order of the Joint Secretary to the Government of India dated July 22, 1976, and the petition of the assessee was rejected. The Joint Secretary found that the plea of the assessee that the amount belonged to Anand Marg was not acceptable. The plea taken before the Joint Secretary was also that the assessee's then private secretary, Shri Vishokanand, had disappeared with the relevant books of Anand Marg and also with some cash belonging to Anand Marg a few days before the search. It was, thus, argued that the books of Anand Marg could not be produced in support of the plea taken. The conclusion given in paras 3 and 4 of the order of the Joint Secretary passed under Section 132(12) is as under :
" It would appear that the private secretary and some of the office bearers of the Sangh had been living in a building adjacent to Shri Sarkar's house. In order to explain away the detection of the seized cash in his own house, Shri Sarkar has alleged that Shri Vishokanand was staying with him. This allegation which is not corroborated by local reports does not, in any case, account for the fact that the cash was found in the bedrooms of Shri Sarkar and his wife.
In the circumstances, it is evident that Shri Sarkar had independent income of his own through undisclosed sources and that he was trying to pass it off as the Sangh's funds, using Shri Vishokanand as a pawn in this game. I see no reasons, therefore, to differ from the Income-tax Officer's inference in the matter."
4. Proceedings under Section 147(a) were taken and the Income-tax Officer passed the assessment order on the said amount of Rs. 84,233 as income from undisclosed sources.
5. The assessee filed appeal before the Appellate Assistant Commissioner and the Appellate Assistant Commissioner, vide appellate order dated November 26, 1983, dismissed the appeal of the assessee and confirmed the addition made.
6. The arguments raised by learned counsel of the assessee boil down to the following points :
(1) That the amount seized did not belong to the assessee and that the whole of it belonged to the society, Anand Marg.
(2) That, if the criteria is taken that the amount is to be taxed according to possession, the amount of Rs. 28,233 which was seized from the Godrej almirah in the bedroom of the assessee's wife should not have been assessed in the hands of the assessee as it was her money according to the contention raised by her before the Department.
(3) That the assessee was a saint after he left his service with the Railways in the financial year 1968-69 and thereafter the assessee does not have any income or assets whatsoever. He is only a religious head and whatever funds were found, they belonged to the charitable society, Anand Marg, and not to the assessee.
(4) Possession itself does not amount to ownership.
(5) Section 134(4A) does not apply to this year and being a substantive provision of law, it cannot be held that it was retrospective.
(6) Affidavit of Acharya Sradhanand Awadhoot, General Finance Secretary of Anand Marg, dated December 26, 1978, was filed before the Income-tax Officer in which it has been stated that the amount of Rs. 84,233 belongs to Anand Marg and that it represents voluntary contributions, donations and presents received from various devotees and the same was held in trust by the President of the Society, Shri P. R. Sarkar. This affidavit remains uncontradicted and the deponent was not cross-examined. The contents of this affidavit, therefore, should be taken as correct and the addition should be deleted for this reason alone.
(7) The proceedings under Section 147(a) are not legal and valid.
7. Learned counsel for the assessee argued and quoted several cases which have been mentioned in the written note given by him. His arguments are based on the points mentioned above.
8. The Departmental Representative argued that the addition made by the Income-tax Officer was wholly justified and was correctly confirmed by the Appellate Assistant Commissioner. The Departmental Representative made out the following points in the course of his arguments :
(i) The assessee could not produce any books which could confirm the version of the assessee that the said sum of Rs. 84,233 belonged to Anand Marg. It was not entered in the cash book of Anand Marg at any place. Anand Marg is maintaining its books of account and its books were seized in the course of the raid. These books do not at all reveal the said cash balance on any date and there is no material to hold that the said amount was really that of Anand Marg and not that of the assessee.
(ii) The plea of the assessee that the amount seized did not belong to him is not at all acceptable as the money was found in the residential premises of the assessee in two Godrej almirahs in two rooms.
(iii) The assessee admitted in his letter dated January 13, 1979, filed before the Income-tax Officer that the said amount was held by him in trust for Anand Marg. Thus he admitted that the amount was in his possession. No evidence has been tendered to show that he was holding the amount in trust for Anand Marg. Had it been so, the books of Anand Marg including the cash book could have revealed this fact. The assessee also admitted in his letter dated January 13, 1979, that the amount was seized from his residential premises.
(iv) There is no evidence to show that the assessee did not have any income or asset of his own. There is also no evidence to hold that the assessee had renounced the world and was a complete saint as alleged. Moreover, this plea has been raised for the first time and it does not arise out of the order of the Appellate Assistant Commissioner.
(v) The possession of the said amount is undisputed and is admitted by the assessee. The assessee has not been able to prove that the amount, though in his possession, belonged to somebody else. The contention that it belonged to Anand Marg is wholly disproved by the books of Anand Marg in which there is no such cash balance shown. At the time the search was conducted, the secretary of Anand Marg did not point it out and instead he said that he was not aware of the nature and source of this amount.
(vi) Section 132(4A) is a procedural section and is retrospective. As the amount was found in the possession of the assessee, it has to be held that the assessee was the owner of this amount. The assessee has not been able to prove that it was not so.
(vii) That no doubt the affidavit of Shri Sradhanand Awadhoot has been filed, but this affidavit has no leg to stand on. It is a self-serving document which cannot be taken to be conclusive according to the leading decision of the Supreme Court in the case of CIT v. Durga Prasad More [1971] 82 ITR 540. Reliance was also placed by the Departmental Representative, in this connection, on the decision of the Allahabad High Court reported as Sri Krishna v. CIT [1983] 142 ITR 618 in which it has been held as under (at page 623) :
" It is neither a rule of prudence nor a rule of law that the statements made in an affidavit which remains uncontroverted, must invariably be accepted as true and reliable. Ordinarily, in the absence of denial, the statements may be accepted as true but if there are circumstances which suggest that the statements on affidavit should not be accepted as true, the absence of denial by the other side, would not by itself be sufficient to clothe the statements on affidavit with truthfulness and reliability."
(viii) The assessee has been taking shifting and different stands on different occasions. On the one hand, it was argued that the amount of Rs. 28,233 belonged to the assessee's wife but in the said affidavit and in the arguments it was contended that the whole of the amount of Rs. 84,233 belonged to Anand Marg only. The contention of the assessee, thus, is devoid of any credence.
(ix) The cases relied upon by counsel of the assessee are not relevant as the facts in those cases were entirely different.
9. We have given our careful consideration to the facts of the case and also the rival arguments. The following facts are undisputed :
(1) The amount of Rs. 84,233 was recovered from the possession of the assessee (in his residential premises).
(2) There are no books of account of Anand Marg which establishes that it was a part of the cash balance of Anand Marg on the date it was detected and seized.
(3) Shri Sarveshwaranand, the Joint Secretary of Anand Marg, was examined on oath at the time of the raid and he said that he did not know the nature and sources of the amount seized.
(4) The Joint Secretary of the Government of India, after considering the relevant facts and contentions of the assessee, held in his order under Section 132(12) that the amount was unexplained and it represented the assessee's income from undisclosed sources.
10. The legality and validity of proceedings under Section 147(a) are clearly established by the fact that the said huge amount was found in the premises of the assessee which was unproved and unexplained. We hold that the proceedings under Section 147(a) are legal. It is an important principle of jurisprudence that possession is prima facie evidence of ownership. Here, in the case under consideration before us the fact that the amount was detected and seized from the possession of the assessee is not disputed. The only plea taken by the assessee is that the amount belonged to Anand Marg. Anand Marg maintains books of account but, from those books of account, the contention of the assessee is disproved wholly. The plea of the assessee that his then private secretary, Shri Vishokanand, disappeared with the books of Anand Marg and some cash cannot be accepted as there is no evidence of the same and as per reasons mentioned in the order under Section 132(12) quoted above. Another plea taken by the assessee that the assessee was a complete saint and that he had no assets or income of his own is not established by any evidence. This plea also does not arise out of the order of the Appellate Assistant Commissioner. Anand Marg may be receiving donations, contributions, but the assessee was the president of Anand Marg and it cannot be denied that he may have been receiving amounts from the devotees for his own purposes. The affidavit on which reliance has been placed, viz., the affidavit of Shri Acharya Sarveshwaranand was filed very late after the search, i.e., seven years after the search, and is clearly without any supporting or corroborating evidence. It is in the nature of a self-serving document only and it is for the assessee to establish the truth of such document according to the decision of their Lordships of the Supreme Court in the case of Durga Prasad More [19711 82 ITR 540. Further, according to the decision of the Allahabad High Court ( see [19831 142 ITR 618 ) relied upon by the Departmental Representative, the affidavit is not to be accepted as there are clear circumstances and facts which show that the facts mentioned in the affidavit are not acceptable. Learned counsel for the assessee has argued on the basis of the decision of the Supreme Court in Mehta Parikh and Co. v. CIT [1956] 30 ITR 181 that the facts mentioned in the said affidavit should be accepted as correct. We hold, according to the latest decision of the Supreme Court mentioned above and also of the latest decision of the Allahabad High Court (see [1983] 142 ITR 618) that the affidavit is only in the nature of a self-serving document and that there are clear facts to show that the statement in the said affidavit is not correct and is only an afterthought. We, therefore, do not place reliance on the said affidavit. The other cases relied upon by learned counsel for the assessee are not relevant as the facts in the case under consideration before us are wholly different. In our opinion, the amount of Rs. 84,233 was unexplained and it was correctly assessed in the hands of the assessee. The decision of the Madras High Court relied upon and mentioned in the grounds of appeal No. 6 has been discussed by the Appellate Assistant Commissioner in his appellate order. In that case, the facts were wholly different. The Appellate Assistant Commissioner, in his appellate order, has mentioned the facts and has correctly relied upon the case law cited as J.S. Parkar v. V.B. Palekar [1974] 94 ITR 616 (Bom) in which the facts were similar to the facts in the present case before us.
11. We hold that the order of the Appellate Assistant Commissioner was correct. The addition has been correctly upheld.
12. In the result, the appeal is dismissed.
U. S. Dhusia, Judicial Member
13. The only issue that was raised in this appeal, was regarding the taxability of a sum of Rs. 84,233 which was found from the two cupboards lying in the two rooms of the premises No. 176, Patliputra Colony. The premises No. 176, Patliputra Colony were taken on rent by Anand Marg Pracharak Sangh to house its president and its spiritual head while premises No. 160, Patliputra Colony, was the address of the office of Anand Marg Pracharak Sangh as will appear from the description given in the search list prepared by the Special Police Establishment Branch. It appears that the Special Police Establishment undertook a search of the two premises on October 24, 1971, from 9 a.m. to 7.30 p.m. where Shri M. P. Sinha, Inspector, Central Excise, and Md. Hasan, Income-tax Inspector, Patna, were also associated as witnesses. In the remarks column, the following entry was made :
" House No. 160, Patliputra Colony, Patna-Office of A.M.P.S. (Shri Sarveshwaranand Avadhut, General Secretary and Shri Hiraji, S/o. Shri Musafirji, Sasaram, Shahabad (Bihar), at present 160, Patliputra Colony, Patna, remained present all throughout during the search).
The search of the premises 160, Patliputra Colony, was taken in compliance with the warrant of search issued by the Court of Special Magistrate, Patna, dated October 22, 1971. Before entering the premises, the warrant was shown to Shri Sarveshwaranand Avadhut, General Secretary, A.M.P.S., who signed the warrant. The police party comprising myself, Inspector, Md. Taiyab and Inspector, Shri Rameshwar Jha, and S.I., N.N. Singh, accompanied by the witnesses named above, entered the premises after giving personal searches to Shri Sarveshwaranand Avadhut. No documents or any other incriminating papers except the idendity card and the usual investigation kit were on the person of the party, Shri Sarveshwaranand in between also visited the premises 176, Patliputra Colony, Patna, for witnessing the search there by another police party. During his absence, Shri Hiraji named above remained present in these premises on behalf of Shri Sarveshwaranand Avadhut. The records and documents shown in the enclosed list were seized. The initials of the witnesses were also obtained on the documents so seized. After the search, personal searches were again made while leaving the premises. Nothing except the records seized, the identity card and the investigation kit was with the party. The memo is drawn and read over and explained to all concerned. At the fag end of the searches, Shri H. K. Verma, Dy. S.P. with Inspector, Shri Ram Prasad Singh, also joined us after observing the usual legal formalities and procedures. Currency notes of Rs. 816 and Rs. 203 found in each of the steel almirahs (two) were taken by Shri Sarveshwaranand Avadhut and not taken in possession."
14. It appears that on the same day after securing the authorisation from the Commissioner of Income-tax, R.B. Saran, Income-tax Officer, A-Ward and Shri G. N. Kaul, ADI (Inv.), Patna, searched the presmises No. 176, Patliputra Colony, at 4 p.m. and discovered cash of Rs. 84,233 in two rooms in the same premises. The relevant extracts from the panchnama prepared after the search are reproduced as under :
" (D) The following valuable articles and things including cash were then taken possession of in the course of the search. As per annexure 'A'.
ANNEXURE 'A' To the Panchnama dated October 24, 1971.
Details (Rs.) (1) Cash recovered from the Godrej almirah found in the bedroom of Shri Prabhat Ranjan Sarkar alias Anand Murti 100 X 100 10,000 100 X 100 10,000 100 x 100 10,000 100 X 100 10,000 100 X 100 10,000 100 X 47 4,700 10 X 62 620 10 X 68 680 56,000 (2) Cash recovered from the Godrej almirah found in the bedroom of Shrimati Prabhat Ranjan Sarkar.
100 X 255 25,500 10 X 62 620 10 X 100 1,000 10 X 14 140 5 X 88 440 2 X 1 2 1 X 11 11 5 X 104 520 28,233 Total (1) 56,000 (2) 28,233 84,233 Pancha's signatures Sd.
(1) Sd. 24-4-1971
24. X .71 Authorised Offical (2) Sd. 24-10-1971 24.10.71
15. The assessee, Shri Prabhat Ranjan Sarkar, contended again and again that the amount of Rs. 84,233 found by the Department did not belong to him and the same belonged to Anand Marg Pracharak Sangh and yet the Income-tax Officer nevertheless rejected the plea and treated the amount as income from undisclosed sources. His cryptic finding is as under :
"The assessee's representative, Shri R. N. Rai, appeared and filed in written statements that Shri P. R. Sarkar stating ( sic) therein the consolidated amount of Rs. 84,233 found by the Department did not belong to him and the same amount belongs to Anand Marg Pracharak Sangh. But no evidence such as account books showing the entries of the amount was produced.
In the circumstances, it is evident that Sri Sarkar who has earned income from undisclosed sources tried to pass it off as Sangh's fund. I, therefore, hold that the amount of Rs. 84,233 found in the premises of Shri Prabhat Ranjan Sarkar is income from undisclosed sources."
16. The Income-tax Officer took it for granted that the two sums referred in the panchnama came out of the possession of the assessee. This is exactly how the AAC also proceeded. The concluding lines of his finding were :
" In view of all these claims and counter claims without any supporting evidence the only fact which emerges is that Section 110 of the Evidence Act has got to be applied. In that case, the person from whose possession the money has been seized has got to be taken as the owner of the money. Conversely, as Anand Murtijee was having income from convocation or income from embezzlement, the entire amount found in his possession has to be taxed as income. Considering all these facts in my opinion the ITO has rightly taxed the seized amounts in the hands of the appellant."
17. The learned Accountant Member in his finding has also proceeded on the proposition that the amount of Rs. 84,233 came out of the possession of the assessee and applying the principle laid down in several pronouncements, the amount, according to him, has to be taxed as his income.
18. My appraisal of facts brought on record has not encouraged me to hang on to the proposition on which the lower authorities as well as the learned Accountant Member have relied to appreciate that the alleged amount of Rs. 84,233 came out of the possession of the assessee, Shri P.R. Sarkar alias Murtijee. A perusal of the entries in the search list made by the Dy. S.P.E., C.B.I, shows that the premises which were searched and raided was house No. 160, Patliputra Colony, which accommodated the office of the Anand Marg Pracharak Sangh. About premises No. 176, the Appellate Assistant Commissioner observed in the first part of his order as under :
" The premises 176 of Patliputra Colony had been taken on rent by the religious organisation of which the appellant was the head. The Income-tax Department was associated in that search on the strength of the authorisation under Section 132 issued by the Commissioner of Income-tax, Bihar. The income-tax authorities also carried out a search. At the time of the.search, Shri Sarveshwaranand Avadhoot, Secretary was also present."
19. A perusal of the above observation as well as entries in the search list prepared by the Dy. S.P.E., C.B.I, specified the places which were raided and searched--one at 160, Patliputra Colony, housing the office of the Anand Marg Pracharak Sangh while 176, Patliputra Colony, was taken on rent by the Anand Marg Pracharak Sangh for accommodating its president (the assessee). A perusal of the two, the search list by the police and the panchnama by the Income tax personnel, makes it abundantly clear who-were found at the time of the search. It was not the assessee at either of the two premises but only Sarveshwaranand Avadhoot, General Secretary, Anand Marg Pracharak Sangh, who had received the personnel from the police and other departments which had raided the two premises for the purpose of making the search, at both the places leading to the unmistakable conclusion that both the premises at the moment were under the control and dominion of the secretary, Sarveshwaranand. It is the admitted position also that the assessee was not present at the time of the search at any of the two premises. The question arises as to how it was determined that the amount of Rs. 84,233 recovered from the two cupboards lying in the two different rooms at the premises at 176, Patliputra Colony, was found to belong to the assessee. Was there any material discovered which led to this finding that the cash found in the two cupboards found in the two different rooms belonged to the assessee ? No doubt the Anand Marg Pracharak Sangh had rented the premises for the stay of its president and its spiritual head but that was not enough to show that the alleged cash either belonged to the assessee or that it came out of the possession of the assessee. The two rooms where the two cupboards were found have been referred to as the bedrooms of the assessee and his spouse, Uma Devi. Elementary concept of possession requires an intention to use exclusively and bar user by others. There is no material brought on record to show how the person who searched these rooms was allowed entrance into the rooms after they were received by Sarveshwaranand at the entrance. There is no evidence that these rooms were kept locked by the assessee and those locks were opened either by applying the key or by breaking open to secure access in those rooms to search the cupboards. If the rooms were open how could it be considered that the assessee had exclusive possession of the two rooms where others from Anand Pracharak Sangh could also reach, which had rented out the premises. Undoubtedly, the house No. 160, Patliputra Colony, accommodated the office of Anand Marg Pracharak Sangh. A cart load of books, documents and papers given in the list of documents seized by the police running from item No. 1 to item No. 172 established beyond measure that the premises containing these cart load of books, accounts, documents and registers were not only in name but in fact the office of the Anand Marg Pracharak Sangh. But no such material I find referred to in respect of premises No. 176, Patliputra Colony, which housed the assessee and his spouse. No part of the premises is found set apart to be used by the assessee or his spouse for their exclusive use. It may be that when he was in Patna being the head, he and his spouse occupied rooms but that would not make out that the two rooms were in his absolute and exclusive possession. If it was in his absolute and exclusive possession it would have been kept locked and the proceedings of the search recorded must have referred to the locks having been removed or broken. Besides what is more important is that there is no evidence of any personal article or articles belonging to the assessee being found in any of the two rooms, as the books and documents and registers of the Anand Marg Pracharak Sangh were found in 160, Patliputra Colony. There is no evidence brought on record to show that there were cots or cushions or any personal articles which belonged to the assessee and which were used during his stay in the premises. Even there is no evidence on record to show that the two cupboards belonged to the assessee. What I have pointed out in respect of the rooms has to be repeated in the case of the two cupboards also. The panchnama is completely silent whether the cupboards were open or locked. If the cupboards had been locked, the panchnama should have described that the key had been obtained from the assessee or from someone else who held it on his behalf or in the alternative, the locks were broken open. In the absence of any such material I am not able to appreciate how possession of the cupboards could be attributed to the assessee. If the cupboards were open as appeared to be the case in the absence of any description I fail to attribute possession of the sum discovered during the search to the assessee. No one will leave such a huge amount in an open almirah when he was not present if the sum belonged to him. Therefore, while I have on the one hand the evidence of Anand Marg Pracharak Sangh renting the said premises for housing its president and spiritual head and its general secretary being found on the spot at the time of search, on the other hand, I do not find any article belonging to the assessee being found in the premises or in any of the two rooms which were said to be used by the assessee and his wife for resting at night. Looked at from this perspective, can one justifiably attribute the possession of the cash to the assessee who was not found present at the premises at the time of the search. The position is further complicated by the denial of the assessee that the amount belonged to him in a series of statements which was supported by the affidavit of the secretary of Anand Marg Pracharak Sangh that the amount recovered in the search belonged to Anand Marg Pracharak Sangh. While there is support available for the contention of the latter that the premises No. 160, Patliputra Colony, being its office which contained cart loads of books, registers belonging to it owned, it also rented the premises No. 176, Patliputra Colony, for accommodating its president, there is no intrinsic or extrinsic evidence not a shred of it to support the plea of the Revenue except one statement made nine years after the search. I would next discuss that the two amounts came out of the possession of the assessee. There is a letter from the assessee addressed to the Income-tax Officer, A-Ward, Special Circle, dated January 13, 1979, appearing at page 22 of the paper book. In this letter, the assessee has claimed that the sum of Rs. 84,233 did not belong to him but was held in trust by him for the Anand Marg Pracharak Sangh. It is only on this solitary admission that it can be claimed that the amount came out of the possession of the assessee, but if this letter is to be relied upon, reliance on the letter has to be complete and full and not partial. In law, there is no partial acceptance of a document. Either it is to be considered reliable or it is to be held unreliable but it cannot be held partly reliable and partly unreliable. There is another consideration which arises in my mind in this context. Whatever I have stated about the absence of any material to show that access to the two rooms was barred to others except to the assessee and his spouse or that the two cupboards belonged to the assessee and were found locked at the time of the search, fits in with the plea of the assessee that the two amounts represented the cash belonging to the Anand Marg Pracharak Sangh only. That the assessee could not leave the two amounts in two open cupboards which were not locked in a premises which was accessable to others including Sarveshwaranand, Secretary of Anand Marg Pracharak Sangh, if they belonged to the assessee as his fund. The circumstances found at the time of the search accords more with the claim of the assessee that the two amounts belonged to Anand Marg Pracharak Sangh than with the finding of the Revenue that the two amounts did not belong to the Anand Marg Pracharak Sangh. No doubt, the Revenue raised a plea that the plea of the assessee found no support from the entries appearing in the books and accounts of Anand Marg Pracharak Sangh. But, in my view, the Revenue was not justified in rejecting the plea of the assessee that prior to the search the erstwhile secretary Vishokanand had disappeared along with the papers and documents containing an account of the sums together with his spouse, Uma Devi. It was a fact that Vishokanand at whose instance alleged searches had taken place had disappeared from view altogether. The Revenue had no good reason to reject the plea off the cuff without undertaking any investigation. Therefore, in the present stage, I am not inclined to arrive at any conclusive finding regarding the taxability of Rs. 84,233 found in the house of the assessee. The case needs more facts and proper appraisal of facts.
20. In my view, the facts brought on record have not been properly appraised. A fresh appraisal is called for so that the Revenue is able to do better homework before proceeding on the proposition for which it has not marshalled proper or adequate material. It will be fair also to the other side. I would accordingly set aside the finding of the Appellate Assistant Commissioner and direct him to dispose of the appeal afresh after undertaking a proper appraisal of facts. He should allow both the parties to put forward their respective cases with proper material.
ORDER OF REFERENCE TO THIRD MEMBER
21. We, the Members of the Patna Bench having differed on the above issue while deciding the case of Shri Prabhat Ranjan Sarkar, Calcutta, in ITA No. 198 (Patna) of 1984, for the assessment year 1972-73, refer the following question to the President, ITAT, under Section 255(4) :
" Whether, on the facts and in the circumstances of the case, the amount of Rs. 84,233 could be charged to tax as the income of the assessee for the assessment year 1972-73 on the ground that it was recovered out of his possession ?"
22. Registry while sending the above will send the records of the case.
ORDER OF THIRD MEMBER P.J. Goradia, Accountant Member
23. Because of the difference of opinion, the following question was referred by the two members on November 8, 1985 :
" Whether, on the facts and in the circumstances of the case, the amount of Rs. 84,233 could be charged to tax as income of the assessee for the assessment year 1972-73 on the ground that it was recovered out of his possession ? "
24. The case was posted for hearing on January 11, 1993. The notice issued to the assessee at the last known address was sent by speed post on December 31, 1992. At the time of hearing, nobody represented the assessee nor was there any communication and, therefore, service of notice was presumed. Section 27 of the General Clauses Act, 1897, provides that service by post is deemed to have been effected by properly addressing, pre-paying and posting by registered post, a letter containing the notice required to be served and, unless the contrary is proved, the service is deemed to have been effected at the time at which the letter would be delivered in the ordinary course of post. The Departmental Representative was, therefore, heard. Subsequently, on January 13, 1993, the notice sent by speed post was received back undelivered with the remark of the postal authorities " unclaimed-refused ".
25. The relevant facts and the evidence, direct and circumstantial, are elaborately stated in both the orders passed by two Members and, therefore, repetition of the same is avoided. The orders of both the Members are to be treated as part of this order. On going through the orders and after hearing the Departmental Representative, I am of the opinion that the view taken by the Accountant Member which is against the assessee is required to be upheld. I am also in agreement with the reasons recorded by the learned Accountant Member. I would, therefore, proceed to record my reasons as to why I do not agree with the view expressed by the learned Judicial Member.
26. In paragraph 2 of the order passed by the learned Judicial Member, a reference is made to a letter from the assessee dated January 13, 1979, appearing at page 22 of the paper books, where the assessee claimed that the sum of Rs. 84,233 did not belong to him but was held in trust by him for the Anandmarg Pracharak Sangh. On this aspect of admission by the assessee, there is no dispute between both the Members. However, according to the learned Judicial Member, this admission of the assessee that the amo'unt came out of the possession of the assessee could not be relied upon because, if the same were to be relied upon then the reliance had to be complete and full and not partial. According to him, if the possession of the cash as per the admission is to be accepted, then the ownership of the cash, as stated by the assessee, that it belonged to Anandmarg Pracharak Sangh had also to be accepted and that is why, according to him, unless further enquiries are made, no addition could be made. I am referring to this particular aspect of the order passed by the learned Judicial Member because, in my opinion, this aspect will clinch the issue. In my opinion, it is a settled principle that the possession is the evidence of ownership of any asset and the strength of the presumption of ownership arising from the fact of possession depends on the nature of the property involved. This presumption is strongest in the case of cash found in possession of a person since cash is such property which is transferable by mere delivery of possession. In such a situation, unless any cogent explanation is given by the person in possession of the cash to show that someone else was the owner of that amount of money, it would be reasonable to assume that the cash belonged to the person who claimed possession. Now, in this case, the assessee having admitted the possession of the cash, it was for him to lead cogent evidence to prove that somebody else was the owner of the cash. The evidence tendered by the assessee has been considered by the tax authorities as also by the learned Accountant Member and all of them, came to the conclusion that the explanation tendered by the assessee could not be accepted. The assessee had explained that the cash was held in trust by him for Anandmarg Pracharak Sangh and it was found as a matter of fact that the Sangh which was maintaining regular books of account could not be considered as the owner of the cash since no entries were made in its books of account. On this aspect also, there is no dispute. Therefore, when a reliance was placed on the admission by the assessee, by the learned Accountant Member, it cannot be said that the reliance was not complete and full because, to make it complete and full, the explanation given by the assessee with regard to the source of cash was required to be considered and the same was considered and only thereafter the possession of the cash was taken equivalent to the ownership by the assessee. The question whether the assessee's explanation regarding the source was acceptable or not was purely one of fact, keeping in mind the nature of the property that is to say, the cash found as also there being clear evidence on the basis of which it was found that the explanation offered by the assessee regarding the source could not be accepted.
27. The circumstance that, prior to the search, the erstwhile secretary of the Sangh had disappeared along with the papers and documents becomes irrelevant because the fact remains that entries were not found in the books of account of the Sangh. If the cash was received by the Sangh, then instantly, entries are normally made in the cash book but no such entry was found. If the cash was held by the assessee in trust for the Sangh, then after recording the receipt of cash in the books of the Sangh, there could have been corresponding entry for payment of the cash to the assessee, who alleged that the cash was held by him in trust. Therefore, the explanation of the assessee regarding source of the cash cannot be accepted. In this view of the matter, it has to be held that the admission of the assessee was not partly relied upon but was fully relied upon. Once I have recorded a finding that the statement of the assessee was fully relied upon, then there does not remain any dispute on the point regarding inclusion of the amount of the cash in the assessment of the assessee. I would, therefore, agree with the view expressed by the learned Accountant Member and the view is against the assessee.
28.The matter will now go before the Division Bench for appropriate order in accordance with the majority view.