Patna High Court
Prabhat Ranjan Sarker vs Income Tax Officer. on 29 January, 1993
Equivalent citations: (1993)46TTJ(NULL)582
ORDER
B. NATH, A. M. : September, 1985 The assessee had filed the appeal originally on 26th March, 1984. After several months of filing of the appeal, the assessee filed additional grounds of appeal vide petition dt. 21st Aug., 1984. These grounds are against the charge of interest under Ss. 139(8) and 217. It is mentioned in the petition that the additional grounds do not require 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 AAC. 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 filed, as these grounds do not arise out of the order of AAC; and as these grounds would 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 search in the residential premises of the assessee on 24th Oct., 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 bed room of the assessee.
2. Rs. 28,233 recovered from the Godrej Almirah found in the bed room of the assessees wife.
84,233 At the time of search 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 ITO in his order under S. 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 ITO that a sum of Rs. 28,233 recovered from the Godrej Almirah found in her bed room 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 the same should be returned to her. ITO did not accept this plea of the wife of the assessee and held that the whole of the amount so seized was of the assessee and was unexplained. The assessee thereafter filed petition under S. 132(11) and the said petition was disposed of by the order of Jt. Secretary to Government of India dt. 22nd July, 1976 and the petition of the assessee was rejected. The Jt. 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 assessees 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 & 4 of the order of the Jt. Secretary passed under S. 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 Sarkars 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 Sanghs funds, using Shri Vishokanand as a pawn in this game. I see no reasons, therefore, to differ from the ITOs inference in the matter."
Proceedings under S. 147(a) were taken and the ITO passed the assessment order on the said amount of Rs. 84,233 as income from undisclosed sources.
4. The assessee filed appeal before AAC and the AAC vide appellate order dt. 26th Nov., 1983 dismissed the appeal of the assessee and confirmed the addition made.
5. The arguments raised by the 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 the possession, the amount of Rs. 28,233 which was seized from the Godrej Almirah in the bedroom of the assessees 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 financial year 1968-69 and thereafter the assessee does not have any income or assets whatsoever. He is only a religious head and whatsoever funds were found belonged to charitable society, Anand Marg and not to the assessee.
(4) Possession itself does not amount to ownership.
(5) Sec. 132(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 dt. 28th Dec., 1978 was filed before the ITO in which it has been stated that the amount of Rs. 84,233 belongs to Anand Marg and 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 S. 147(a) are not legal and valid.
The learned counsel for the assessee argued and quoted several case laws which have been mentioned in the written note given by him. His arguments are based on the points mentioned above.
6. The Departmental Representative argued that the addition made by the ITO was wholly justified and was correctly confirmed by the AAC. 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 into cash book of Anand Marg at any place. Anand Marg is maintaining its books of accounts and its books were seized in the course of 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 of Anand Marg and not 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 dt. 13th Jan., 1979 filed before the ITO 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 dt. 13th Jan., 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 AAC.
(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 showed. 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) Sec. 132(4A) is a procedural section and is retrospective. As the amount was found from the possession of the assessee it has to be held that the assessee was the owner of this amount. The assessee had 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. It is a self-serving document which cannot be taken to be conclusive according to the leading decision of Supreme Court in the case of CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC). Reliance was also placed by the Departmental Representative in this connection, on the decision of Allahabad High Court reported at Sri Krishna (by LRs) vs. CIT (1983) 142 ITR 618 (All) in which it has been held as under :
"It is neither a rule of prudence nor a rule of law that the statements made in an affidavit which remains uncontradicted, 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 affidavits 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 assessees 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 case laws relied upon by the counsel of the assessee are not relevant as facts in those cases were entirely different.
7. 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 is no book of account of Anand Marg which establishes that it was a part of cash balance of Anand Marg on the date it was detected and seized.
(3) Shri Sarveshwaranand, the Jt. Secretary of Anand Marg was examined on oath at the time of raid and he said that he did not know the nature and sources of the amount seized.
(4) The Jt. Secretary of the Government of India, after considering the relevant facts and contentions of the assessee, held in his order under S. 132(12) that the amount was unexplained and it represented the assessees income from undisclosed sources.
8. The legality and validity of proceedings under S. 147(a) is 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 S. 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 for the same and as per reasons mentioned in the order under S. 132(12) quoted above. The another plea taken by the assessee that the assessee was a complete saint and 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 AAC. 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, seven years after the search and is clearly without any supporting or corroborating evidence. It is in the nature of self-serving document and it is for the assessee to establish the truth of such document according to the decision of their Lordships of Supreme Court in the case of Durga Prasad More (supra). Further, according to the decision of Allahabad High Court (supra) relied upon by the Departmental Representative the affidavit has not to be accepted as there are clear circumstances and facts which show that the facts mentioned in the affidavit are not acceptable. The learned counsel of the assessee has argued on the basis of the decision of Supreme Court in Mehta Parikh & Co. vs. CIT (1956) 30 ITR 181 (SC) that the facts mentioned in the said affidavit should be accepted as correct. We hold, according to the latest decision of Supreme Court mentioned above and also of the latest decision of Allahabad High Court (supra) that the affidavit is only in the nature of self-serving document and there are clear facts to show that the statement in the said affidavit is not correct and is only an after thought. We, therefore, do not place reliance on the said affidavit. The other case laws relied upon by the learned counsel of 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 AAC in his appellate order. In that case the facts were wholly different. The AAC in his appellate order has mentioned the facts and has correctly relied upon the case law cited at J. S. Parkar vs. V. B. Palekar (1974) 94 ITR 616 (Bom) in which the facts were similar to the facts in the case of the present assessee before us.
9. We hold that the order of AAC was correct. The addition has been correctly upheld.
10. In the result, the appeal is dismissed.
U. S. DHUSIA, J. M. : 8th November, 1985 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 cubboards lying in the two rooms of the premises No. 176, Patliputra Colony. The premises No. 176, Patliputra Colony was 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 SPE Branch. It appears that the Spl. Police Establishment undertook a search of the two premises on 24th Oct., 1971 at 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 Genl. Secy. & Shri Hiraji, s/o Shri Musafirji, Sasaram, Shahabad (Bihar) at present 160, Patliputra Colony, Patna remained present all through during the search).
The search of the premises 160, Patliputra Colony was taken in compliance of the warrant of search issued by the Court of Special Magistrate, Patna dt. 22nd Oct., 1971. Before entering the premises the warrant was shown to Shri Sarveshwaranand Avadhut, Genl. Secy., A. M. P. S. who signed the warrant. The Police party comprising of myself, Insp. Md. Taiyab and Insp. 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 identity 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 given 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 searches Shri H. K. Verma, Dy. S. P. with Insp. 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 Almirah (two) were taken by Shri Sarveshwaranand Avadhut and not taken in possession."
It appears that on the same day after securing the authorisation from the CIT, R. B. Saran, ITO, A-Ward, and Shri G. N. Kaul, ADI (Inv.), Patna searched the premises No. 176, Patliputra Colony at 4 P. M. the aforesaid premises and discovered the cash of Rs. 84,233 in two rooms in the same premises. The relevant extracts from 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 dt. 24th Oct., 1971 Details Rs.
(1) Cash recovered from the Godrej Almirah found in the bed room of Shri Prabhat Ranjan Sarkar, alias Anand Murti 100 x 100 100 x 100 100 x 100 100 x 100 100 x 100 100 x 47 10 x 62 10 x 68 10,000 10,000 10,000 10,000 10,000 4,700 620 680 56,000 (2) Cash recovered from the Godrej Almirah found in the bed room 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 Panchas Signatures (1) Sd/- Sd/-
24th Oct., 1971 24th Oct., 1971 (2) Sd/- Authorised Official 24th Oct., 1971 24th Oct., 1971
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. The same belonged to Anand Marg Pracharak Sangh yet the ITO nevertheless rejected the plea and treated the amount as income from undisclosed sources. His cryptic finding is as under :
"The assessees representative Shri R. N. Rai appeared and filed in written statements that Shri P. R. Sarkar stating therein the consolidated amount of Rs. 84,233 found by the Department did not belong to him and the same amount belong 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 out to Sanghs fund. I, therefore, hold that the amount of Rs. 84,233 found in the premises of Shri Prabhat Ranjan Sarkar as income from undisclosed sources."
The ITO took it for granted that the two sums referred in the Panchnama came out of the possession of the assessee. That is exactly how the AAC also proceeded. The concluding lines of his finding was :
"In view of all these claims and counter claims without any supporting evidences the only fact which emerges is that S. 110 of the Evidence Act has got to be applied. In that case the person from whose possession the money has been seized and 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."
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.
2. 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 has relied to appreciate that the alleged amount of Rs. 84,233 came out of the possession of the assessee Shri P. R. Sarkar alias Anand 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 was searched and raided was house No. 160, Patliputra Colony which accommodated the office of the Anand Marg Pracharak Sangh. About premises No. 176, the AAC 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 IT Deptt. was associated in that search on the strength of authorisation under S. 132 issued by the CIT, Bihar. At the time of the search Shri Sarveshwaranand Avadhoot, Secretary was also present."
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 IT 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, Genl. 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 taking 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 cupboard 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 two different rooms belonged to the assessee. No doubt the Anand Marg Pracharak Sangh had rented the premises for staying its President and its spiritual head but that was not enough to show that the alleged cash either belonged to the assessee or they came out of the possession of the assessee. The two rooms where the two cupboards were found have been referred to as the bed rooms of the assessee and his spouse Uma Devi. Elementary concept of possession requires an intention to use exclusively and bar the user by others. There is no material brought on record to show how the persons who searched these rooms were allowed entrance in 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 room where others from Anand Marg 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, 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 was 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 then 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 have been locked, Panchnama should have described that the key had been obtained from the assessee or from some one else who held it on his behalf or in the alternative locks were broken open. In the absence of any such material I am not able to appreciate how the possession of the cupboards could be attributed to the assessee. If the cupboards were open as appeared to be the case in 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 was said to be used by the assessee and his wife for resting at night. Looked at in 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 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 ITO, A-Ward, Special Circle dt. 13th Jan., 1979, appearing at page 22 of the paper books. In this letter the assessee had 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 on only 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 both 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 the access to the two rooms was banned to others except to the assessee and his spouse or that the two cupboard belonged to the assessee and were found locked at the time of 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 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, 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 alongwith 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 it was alleged searches had taken place had disappeared from view altogether. Revenue had no good reason to reject the plea of 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 in the house of the assessee. The case needs more facts and proper appraisal of facts.
3. In my view facts brought on record have not been properly appraised. A fresh appraisal is called for so that Revenue is able to do better home work before proceeding on the proposition for which it has not marshalled proper or adequate material. It will be fair also for other side. I would accordingly set aside the finding of the AAC and direct him to dispose of the appeal afresh after undertaking proper appraisal of facts. He should allow both the parties to put forward their case with proper material.
ORDER OF REFERENCE UNDER S. 255(4) OF THE IT ACT 8th November, 1985 We, the Members of Patna Bench having differed on the above issue while deciding the case of Shri Prabhat Ranjan Sarkar, Calcutta in ITA No. 198 (Pat) of 1984 for the asst. yr. 1972-73 refer the following question to President, Tribunal under S. 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 income of the assessee for the asst. yr. 1972-73 on the ground that it was recovered out of his possession?"
P. J. GORADIA, A. M. (THIRD MEMBER) : 29th January, 1993 Because of the difference of opinion following question was referred by the two members on 8th Nov., 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 asst. yr. 1972-73 on the ground that it was recovered out of his possession?"
2. The case was posted for hearing on 11th Jan., 1993. The notice issued to the assessee at the last known address was sent by Speed Post on 31st Dec., 1992. At the time of hearing nobody represented the assessee nor was there any communication and, therefore, service of notice was presumed. Sec. 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 13th Jan., 1993 the notice sent by speed post was received back undelivered with the remark of the postal authorities "unclaimed-Refused".
3. 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.
4. In para 2 of the order passed by the learned Judicial Member, a reference is made to a letter from the assessee dt. 13th Jan., 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 Anand Marg 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 amount 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 Anand Marg 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 the 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 Anand Marg Pracharak Sangh and it was found as a matter of fact that the Sangh, which was maintaining regular books of accounts could not be considered as the owner of the cash since no entries were made in its books of accounts. 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 assessees 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. The circumstance that prior to the search the erstwhile Secretary of the Sangh had disappeared alongwith the papers and documents becomes irrelevant because the fact remains that entries were not found in the books of accounts of Sangh. If the cash was received by the Sangh, then instantly the 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.
5. The matter will now go before the Division Bench for appropriate order in accordance with the majority view.