Ita/48/2012 Of Karun Dutt Singh Alias Rinku Singh v. Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC &THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU WEDNESDAY, THE 23RD DAY OF AUGUST 2017/1ST BHADRA, 1939ITA.No. 48 of 2012 () ---------------------- APPELLANT/RESPONDENT/ASSESSEE: ------------------------------ KARUN DUTT SINGH ALIAS RINKU SINGH C/O.PRAKASH GOLD PALACE (P) LTD, 144, PURUSAWALKAM HIGH ROAD, KELLY, CHENNAI - 600 010. BY ADVS.SRI.R.BINDU (SASTHAMANGALAM) SRI.PRASANTH M.P RESPONDENT/APPELLANT/REVENUE: ----------------------------- COMMISSIONER OF INCOME TAX, KOCHI - 682 018. R BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 23-08-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA No.48 of 2012 APPENDIX TRUE COPY P.S.TO JUDGE Antony Dominic & Dama Seshadri Naidu, JJ. ------------------------------------------- ITA No.48 of 2012 -------------------------------------------- Dated this the 23[rd] day of August, 2017 JUDGMENT Antony Dominic, J. In this appeal filed by the assessee the order passed by theIncome Tax Appellate Tribunal, Cochin Bench in ITA No.25 of2009 concerning the assessment year 2007-2008 is challengedand the questions of law framed for the consideration of thisCourt are the following: a)Whether the Tribunal was correct, in law and fact ofthe case, in setting aside Annexure C order of the CIT(Appeals)-I, Kochi and restoring the addition made by theassessing officer to the tune of Rs.63,64,123/- (the valueof the gold ornaments requisitioned) in the hands of theappellant for the AY 2007-08? b)Having accepted that the appellant is anemployee/traveling sales man of M/s Prakash Gold PalacePvt. Ltd., Chennai; Was the Tribunal correct, in law andfact of the case, in upholding the finding of the assessingofficer that the gold jewellery found in possession of theappellant did not belong to the Company M/s PrakashGold Palace Pvt. Ltd., Chennai and therefore to assess thevalue of the Gold of Rs.63,64,123/- in the hands of theappellant under section 69A of the Income Tax Act, 1961?Is not the said finding perverse? c)The assessing officer having accepted the returnsfiled by the appellant for the Ays 2005-06 and 2006-07admitting the salary income received from Prakash Gold ITA No.48 of 2012 2 Palace Pvt. Ltd., Chennai, whether the Tribunal wascorrect, in law and fact of the case in restoring theaddition made to the returned income for the AY 2007-2008 by the assessing officer of the value of the Goldornaments seized from the possession of the appellant(who is an employee of Prakash Gold Palace Pvt. Ltd.,Chennai) to the tune of Rs.63,64,123/- in the hands of theappellant? Is not the said finding perverse? d)Whether the Tribunal was right, in law and in factsand circumstances of the case, in holding that theappellant has not proved that he is not the owner of Goldornaments requisitioned by the Income Tax departmentand the nature and source of acquisition and also as towho the real owner is? e)Was the Tribunal right in law and facts of the case,in suo motu raising question of its own both on facts andon law after reserving the appeal for orders andanswering such questions in a manner prejudicial to theinterest of the appellant without affording opportunity ofbeing heard on such questions raised? f)Was the Tribunal right in law and facts of the case,in referring to various judicial decisions and also theprovisions of Evidence Act which was not cited by any ofthe parties or discussed during the hearing before theTribunal and thereby taking a decision without affordingthe opportunity of being heard on the above? g)Whether the Tribunal was right in law and facts ofthe case in holding that the presumption u/s 132 (4A) ofthe Income Tax Act is not applicable in the present case. 2. On 24.7.2006, the Sub Inspector of Police, Hill Palace, f)Was the Tribunal right in law and facts of the case,in referring to various judicial decisions and also theprovisions of Evidence Act which was not cited by any ofthe parties or discussed during the hearing before theTribunal and thereby taking a decision without affordingthe opportunity of being heard on the above? g)Whether the Tribunal was right in law and facts ofthe case in holding that the presumption u/s 132 (4A) ofthe Income Tax Act is not applicable in the present case. 2. On 24.7.2006, the Sub Inspector of Police, Hill Palace, Thripunithura apprehended the assessee and recovered goldornaments weighing 7191.700 gms. The recovery was reported ITA No.48 of 2012 3 to the Income Tax Department which requisitioned the goldunder Section 132 of the Income Tax Act. On that basisassessment proceedings were initiated against the assessee. ByAnnexure-A assessment order, Rs.63,64,123/- being the value ofthe gold recovered was added to the income of the assesseeunder Section 69A of the Act. The assessment order was setaside by the First Appellate Authority, the Commissioner ofIncome Tax (Appeals). The revenue carried the matter in appealto the Tribunal. The Tribunal allowed the appeal by Annexure-corder and restored Annexure-A assessment order. It is in thisbackground the assessee has filed this revision. 3. We heard the counsel for the assessee and the seniorcounsel appearing for the revenue. 4. The contentions raised by the counsel for the assesseeare mainly that he is a salesman of M/s Prakash Gold Palace (P)Ltd., 144, Purasawalkam High Road, Kellys, Chennai- 10 that hisemployer had issued communication dated 26.7.2006 assertingownership over the gold recovered and that if at all it was foundthat the gold was not accounted by his employer, they havingaccepted the ownership over the same, the assessing officerought to have taken recourse to proceedings under Section 69A ITA No.48 of 2012 4 against the employer and not against the assessee. The assesseefurther referred us to the Writ Petition No.24585 of 2007 filedby him and his employer seeking release of the gold in question.It is contended by judgment dated 22[nd] August 2007, the writpetition was disposed of directing release of the gold, onfurnishing of bank guarantee for 70% of its value and executinga simple bond for the balance 30%. It is stated that aggrieved bythe aforesaid condition, the assessee and his employer filed WritAppeal No.168 of 2008 which was disposed of by a DivisionBench of this Court by its judgment of 25[th] January 2008directing that the employer shall deposit a sum of Rs.24 lakhswith the Income Tax Department and that if such deposit ismade, the gold shall be released either in favour of the employeror in favour of the assessee. Judgment further shows that libertywas reserved to the department to recover any amount that maybe found due after completing assessment proceedings againsteither the employer or the assessee. It is, therefore, contendedthat the assessee having disclosed to the police and to theIncome Tax Department at the earliest possible opportunity thatthe ownership of the recovered gold is that of his employer M/sPrakash Gold Palace Pvt. Ltd. and his employer having accepted ITA No.48 of 2012 5 the ownership by a letter issued on 26.7.2006, the assessmentproceedings should not have been completed against theassessee. These contentions were refuted by the counsel for therevenue mainly contending that in a proceedings under section69A, the burden to prove that the ownership is not that of theassessee is entirely upon him and that the case should beappreciated in the light of the principles governing section 110of the Evidence Act. ITA No.48 of 2012 5 the ownership by a letter issued on 26.7.2006, the assessmentproceedings should not have been completed against theassessee. These contentions were refuted by the counsel for therevenue mainly contending that in a proceedings under section69A, the burden to prove that the ownership is not that of theassessee is entirely upon him and that the case should beappreciated in the light of the principles governing section 110of the Evidence Act. 5. The learned senior counsel referred in this context to usthe judgment of the Apex Court in Commissioner of Income Tax,Salem v K.Chinnathamban[1]. According to him, a reading of theorder impugned would show that the findings therein arerendered entirely on appreciation of the evidence available andit being completely factual, no question of law arises for theconsideration of this Court in this appeal. 6. We have considered the submissions made. 7. Section 69A of the Act provides that where in any financial year, the assessee is found to be the owner of anyjewellery and such jewellery is not recorded in the books ofaccount, if any, maintained by him for any source of income, and ITA No.48 of 2012 6 the assessee offers no explanation about the nature and sourceof acquisition of the jewellery or the explanation offered by himis not, in the opinion of the assessing officer, satisfactory, themoney and the value of the jewellery may be deemed to be theincome of the assessee for such financial year. Reading of thisprovision shows that the burden is cast entirely upon theassessee to explain about the nature and source of acquisition ofthe jewellery and if the assessing officer forms an opinion thatthe explanation offered is not satisfactory, he may deem it to bethe income of the assessee. This provision has been construedby the Apex Court in the judgment in Commissioner of IncomeTax, Salem v K.Chinnathamban (supra), where it inter alia hasbeen held that in order to find out whether the assessee is theowner of any money in terms of Section 69A of the Act, theprinciple of common law jurisprudence in section 110 of theEvidence Act, 1872 can be applied. Section 110 of the EvidenceAct provides that when the question is whether any person is theowner of anything of which he is shown to be in possession, theburden of proving that he is not the owner is on the person whoaffirms that he is not the owner. It is in the light of the abovestatutory provisions and the principles laid down by the Apex ITA No.48 of 2012 7 Court that we have to appreciate the case of the assessee andthe legality of the conclusions rendered by the Tribunal. 8. Reading of the orders passed by the assessing officer shows that the assessing officer has analysed the case of theassessee in the light of the statements of the Director and Senior Manager of his employer and found out the followingcontradictions are noted in paragraph-5:- a. Shri.Karun Dutt Singh stated that he had brought the gold ornaments to Kochi from Chennai. But Shri.Abhilash Kumar Jain, Director of the company statedthat no gold ornaments were given to Shri.Karun DuttSingh either for sale or as samples for canvassing fromChennai. b. Shri.Abhilash Kumar Jain stated that the books of account of Branch offices are maintained at the Branchitself. But during the course of survey u/s 133A at KochiBranch, no books of account were found. c. The Stock Register of Kochi Branch produced by Shri.Chakaraborthy, Sr.Manager was not the onemaintained in the normal course of business, but onewritten subsequently to show the existence of goldornaments at Kochi Branch and to link it with the goldornaments Shri.Karun Dutt Singh was carrying with himwhen he was apprehended by the police. d. As per the Stock Register and transfer voucher dated Shri.Abhilash Kumar Jain, Director of the company statedthat no gold ornaments were given to Shri.Karun DuttSingh either for sale or as samples for canvassing fromChennai. b. Shri.Abhilash Kumar Jain stated that the books of account of Branch offices are maintained at the Branchitself. But during the course of survey u/s 133A at KochiBranch, no books of account were found. c. The Stock Register of Kochi Branch produced by Shri.Chakaraborthy, Sr.Manager was not the onemaintained in the normal course of business, but onewritten subsequently to show the existence of goldornaments at Kochi Branch and to link it with the goldornaments Shri.Karun Dutt Singh was carrying with himwhen he was apprehended by the police. d. As per the Stock Register and transfer voucher dated 19.7.2006, produced by Shri.Chakraborthy the goldornaments weighing 5584.550 gms. reached Chennaioffice after 19.7.2006, the date of the transfer voucher,stated to be prepared at Kolkota. But according to thestatement of the assessee he reached Kochi fromChennai with gold ornaments on 18.7.2006. e. As per the transfer documents subsequently produced,the quantity of gold ornaments transferred to Kochi was7432.880 gms. The quantity of gold ornaments seized ITA No.48 of 2012 8 was only 7191.700 gms. The assessee or the officials ofM/s. Prakash Gold Palace (P) Ltd. could not explain thewhereabouts or absence of the balance quantity of241.180 gms. of gold. 9. Thereafter the claims of the assessee with respect to hisbeing employed and the ownership of gold recovered from himwere held to be not acceptable in paragraph-9 of the assessmentorder which also reads thus: •During the course of Survey at the Chennai office ofM/s Prakash Gold Palace (P) Ltd., there were no books ofaccounts or other documents to show any jewelleryhaving been sent to Kochi Branch or given to Karun DuttSingh as samples to procure orders.• The Director of the company Shri.Abhilas Kumar Jainstated in his sworn affidavit that Shri.Karun Dutt Singhalias Rinku Singh was not given any ornaments fromChennai and there was no record to show that he wasgiven gold ornaments for sale or canvassing. Thesubsequent reversal of stand is only an afterthought.• No books of account were found during the course ofsurvey u/s 133A on 25.7.2006 at the Kochi Branch officeat Poothullil House, 2[nd] Floor, Manastry Road, Cochin 11.As admitted by the Manager, the books producedsubsequently have been written up after the survey.• In his letter dated 21.9.2007, Shri.Karun Dutt Singhhas stated that Asst.Director of Income-tax (Inv)-1verified the Stock Book of Ernakulam branch of M/sPrakash Gold Palace (P) Ltd., which was carried by himto various jewellery shops. But the ADI(Inv)-1 reportedthat the Stock Book produced before him is a fabricatedone due to the reasons mentioned in Para No.4 and alsothe assessee is silent about the absence of this stockregister at the time of survey u/s 133A on 25.7.2006 atthe Kochi Branch Office at Poothullil House, 2[nd] Floor,Monastry Road, Cochin 11. It is pertinent to note thatShri.Karun Dutt Singh himself was present at Kochi ITA No.48 of 2012 9 Branch office at the time of Survey. So, the productionof the Stock Register before the ADI(Inv)-I is an afterthought. • In his letter dated 21.9.2007, the assessee alsorequested to assess the value of this jewellery as belongsto M/s Prakash Gold Palace (P) Ltd. U/s 153C of theIncome-tax Act, 1961. But Shri.Karun Dutt Singh as wellas the company M/s Prakash Gold Palace (P) Ltd. failedto establish that the seized gold ornaments belonged tothe company. Merely furnishing of an affidavit from M/sPrakash Gold Palace (P) Ltd. is not sufficient to establishthat the gold jewellery belongs to company. ITA No.48 of 2012 9 Branch office at the time of Survey. So, the productionof the Stock Register before the ADI(Inv)-I is an afterthought. • In his letter dated 21.9.2007, the assessee alsorequested to assess the value of this jewellery as belongsto M/s Prakash Gold Palace (P) Ltd. U/s 153C of theIncome-tax Act, 1961. But Shri.Karun Dutt Singh as wellas the company M/s Prakash Gold Palace (P) Ltd. failedto establish that the seized gold ornaments belonged tothe company. Merely furnishing of an affidavit from M/sPrakash Gold Palace (P) Ltd. is not sufficient to establishthat the gold jewellery belongs to company. 10. This being the position, the contention raised by theassessee that the jewellery belongs to the company M/s PrakashGold Palace (P) Ltd. in which the assessee is an employee is notat all acceptable. The assessee Shri.Karun Dutt Singh as well asthe company M/s Prakash Gold Palace (P)Ltd. had neverestablished at the time of surveys conducted and during thecourse of sworn in statements recorded u/s 131 of the IT Act,that the gold seized belongs to the company. In thecircumstances, it is decided to assess the value of the gold ofRs.63,64,123/- in the hands of the assessee, Shri. Karun DuttSingh as his unexplained investments for the assessment year2007-2008 after considering all the facts and circumstances ofthe case. 11. It is these factual conclusions which were nullified by ITA No.48 of 2012 10 the First Appellate Authority on an erroneous appreciation of theevidence in the case and it was therefore that the Tribunal re-appreciated the entire evidence before it and set aside the FirstAppellate Authority's order and restored the assessment order.A reading of the Tribunal's order shows that the Tribunal hasdiscussed each and every piece of evidence before it and came tothe factual conclusion that the assessee has failed to dischargehis burden under section 69A of the Income Tax Act read withsection 110 of the Evidence Act. These conclusions, as rightlycontended by the learned senior counsel for the revenue, arecompletely factual and therefore, it does not give rise to anyquestion of law for the consideration of this Court in an appealfiled under Section 260A of the Income Tax Act to interfere with.Appeal, therefore, fails and is accordingly, dismissed. sd/- Antony Dominic, Judge css/ true copy sd/- Dama Seshadri Naidu, Judge P.S.TO JUDGE