Punjab-Haryana High Court
Commissioner Of Income-Tax vs Bimal Parkash Gupta (Prop. Vijay Soap ... on 18 January, 1989
Equivalent citations: [1989]179ITR613(P&H)
JUDGMENT Gokal Chand Mital, J.
1. On a mandamus issued by this court, the following questions have been referred for our opinion :
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the onus of proving ownership of the gold lay on the Department ?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the addition of Rs. 44,000 representing the value of 220 tolas of gold recovered from the assessee's person could not be sustained under Section 69A of the Income-tax Act, 1961 ?"
2. Bimal Parkash Gupta was the proprietor of Vijay Soap Factory. On April 14, 1967, 220 tolas of gold was recovered from the possession of Bimal Parkash near Ganaur bus stand on G. T. Road, while he was on his way from Delhi to Ambala. The Income-tax Officer treated the gold as belonging to the assessee and deemed the value thereof to be the income of the assessee for the financial year ending March 31, 1968. The assessee failed before the Appellate Assistant Commissioner, but on appeal to the Tribunal, it was held that the Revenue failed to discharge the onus of proving that the assessee was the owner of the gold, although it was accepted by the Tribunal that the recovery was made from the possession of Bimal Parkash. The relevant observations of the Tribunal are as follows :
"So far as we know, the factum of recovery of any article from the person of an individual may warrant a presumption that that individual Had the exclusive possession of that article. We are, however, aware of no authority that such presumption would lead to a further presumption that the individual concerned is the owner of that article."
3. The addition of the value of the gold was deleted by the Tribunal.
4. On a consideration of the matter, we are of the opinion that the Tribunal erred in deleting the addition. Section 110 of the Evidence Act, 1872, embodies a salutary principle of common law jurisprudence to the effect that if a person is found in possession of something, he is deemed to be its owner by virtue of possessory title and the onus would be on him if he wants to disclaim the ownership. Therefore, since the assessee was found in possession of the gold while travelling from Delhi to Ambala, his place of business, under Section 110 of the Evidence Act, 1872, an inference has to be drawn that he was the owner of the recovered gold and had income which he had invested in purchasing the same. However, it was upon the assessee to rebut the same but he failed to rebut in this case. The Tribunal erred in placing the onus on the Department to prove that it was the income of the assessee. A similar question arose before the Supreme Court in Chuharmal v. CIT [1988] 172 ITR 250, and while affirming the view of the Madhya Pradesh High Court, the aforesaid view was taken and the matter was decided against the assessee.
5. The Supreme court also held that the expression "income" as used in Section 69A of the Income-tax Act, 1961 (for short "the Act"), had a wide meaning which meant anything which came in or resulted in gain and on this basis, concluded that the assessee had income which he had invested in purchasing wrist watches which were seized from his bedroom and he could be held to be the owner of the wrist watches and their value could be deemed to be his income by virtue of Section 69A of the Act.
6. For the reasons recorded above, we answer both the questions in favour of the Revenue, that is, in the negative, to the effect that the Tribunal erred in holding that the onus of proving ownership of the gold lay on the Department and also that the Tribunal erred in holding that the addition of Rs. 44,000 representing the value of 220 tolas of gold could not be sustained under Section 69A of the Act. No costs.