ARUN ASHAR,MUMBAI vs. DCIT, CENTRAL CIRCLE 2(2), MUMBAI

1. In our considered opinion, if the entire cash transaction is understood\nin its true perspective, the provisions of Section 69A of the Act, do not\napply. The Hon'ble Supreme Court in the case of D. N. Singh v. CIT (supra)\nhas interalia held as under:-\n“28. Applying the provision to the facts of the case, it is noticed that the points that arise\nare as follows:\nI.\nThe question would arise, as to whether the appellant could be treated as\nthe owner of the bitumen;\nII.\nThe further question would arise, as to whether bitumen could be treated\nas other valuable articles;\nIII.\nThirdly, the question arises, as to how the value of the bitumen is to be\nascertained;\nIV.\nWhether the ITAT erred in passing contradictory Orders qua the\n Assessment Years 1995-1996 and 1996-1997, by Orders passed on the\nsame day and whether the facts were the same?\n29. As regards the first question, viz., whether the appellant could be treated as the owner\nof the bitumen is concerned, it is indisputable that the appellant was engaged as a carrier\nto deliver the bitumen, after having lifted the same from the Oil Companies to the various\nDivisions of the Road Construction Department of the Government of Bihar. Before the\nCourt proceeds to deal with this aspect, we may bear in mind, what this Court held in the\ndecision Chuharmal's case (supra). In the said case, the Court was dealing with wrist\nwatches being seized from the assessee during a search conducted by the Customs\nAuthorities from the bedroom of the assessee. The question fell for consideration, as to\nwhether the principles underlying Section 110 of the Evidence Act, 1872, would assist\nthe Revenue to conclude that a person, in possession, could be treated as the owner.\nThis Court held, inter alia, as follows:\n\"6. ... In other words, it follows from well settled principle of law that normally,\nunless contrary is established, title always follows possession. In the facts of this\ncase, indubitably, possession of the wrist-watches was found with the petitioner.\nThe petitioner did not adduce any evidence, far less discharged the onus of proving\nthat the wrist-watches in question did not belong to the petitioner. Hence, the\nHigh Court held, and in our opinion rightly, that the value of the wrist-watches\nis the income of the assessee.\"\n30. After referring to the Judgment of the High Court of Bombay reported in J.S.\nParkar v. V.B. Palekar [1974] 94 ITR 616, which dealt with seizure of gold, the\nCourt, held as follows :\n\"6. There a contention was raised that the provision in section 110 of\nthe Evidence Act where a person was found in possession of anything, the\nonus of proving that he was not the owner was on the person who affirmed\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 6874 & 6875/Mum/2024\n4\nthat he was not the owner, was incorrect and inapplicable to taxation\nproceedings. This contention was rejected. The High Court of Bombay\nheld that what was meant by saying that the Evidence Act did not apply\nto the proceedings under the Act was that the rigour of the rules of\nevidence contained in the Evidence Act, was not applicable but that did\nnot mean that the taxing authorities were desirous in invoking the\nprinciples of the Act in proceedings before them, they were prevented from\ndoing so. Secondly, all that section 110 of the Evidence Act does is that it\nembodies a salutary principle of common law jurisprudence which could\nbe attracted to a set of circumstances that satisfy its condition.\"\n31. The said view has been followed by this Court in CIT v. K. Chinnathamban [2007]\n162 Taxman 459/292 ITR 682/7 SCC 390. Therein the Court inter alia held:\n\"8. The High Court has rightly held that the expression \"income\" as used in Section\n69-A of the Act, has wide meaning which meant anything which came in or resulted in\ngain.\"\n32. It may be noticed that Section 15 of the Carriage by Road Act, 2007, which repealed\nthe Carriers Act, 1865, provides as follows:-\n\"15 Right of common carrier in case of consignee's default.\n(1)\nIf the consignee fails to take delivery of any consignment of goods within a\nperiod of thirty days from the date of notice given by the common carrier, such\nconsignment may be deemed as unclaimed: Provided that in case of perishable\nconsignment, the period of thirty days shall not apply and the consignment\nshall be deemed unclaimed after a period of twenty-four hours of service of\nnotice or any lesser period as may be mutually agreed to by and between the\ncommon carrier and the consignor.\n(2) In the case of an unclaimed consignment under sub-section (1), the common\ncarrier may,\n(a) if such consignment is perishable in nature, have the right\nto sell the consignment; or\n(b) if such consignment is not perishable in nature, cause a\nnotice to be served upon the consignee or upon the consignor\nif the consignee is not available, requiring him to remove the\ngoods within a period of fifteen days from the date of receipt\nof the notice and in case of failure to comply with the notice,\nthe common carrier shall have the right to sell such\nconsignment without any further notice to the consignee or\nthe consignor, as the case may be.\n(3) The common carrier shall, out of the sale proceeds received under sub-section\n(2), retain a sum equal to the freight, storage and other charges due including\nexpenses incurred for the sale, and the surplus, if any, from such sale proceeds\nshall be returned to the consignee or the consignor, as the case may be.\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 6874 & 6875/Mum/2024\n5\n(4)\nUnless otherwise agreed upon between the common carrier and consignor,\nthe common carrier shall be entitled to detain or dispose off the consignment\nin part or full to recover his dues in the event of the consignee failing to make\npayment of the freight and other charges payable to the common carrier at the\ntime of taking delivery.\"\n33. Therefore, under section 15, if the consignee fails to take delivery of any consignment\nof goods within thirty days, the consignment is to be treated as unclaimed. The period of\nthirty days is declared inapplicable to perishable consignments, in which case, a period of\ntwenty-four hours' notice or any lesser period, as may be agreed between the consignor\nand the common carrier, suffices. In the case of perishable consignment, following such\nnotice, the consignment can be sold. In a case where the goods are not perishable, if there\nis failure by the consignee to remove the goods after the receipt of a notice of fifteen days\nfrom the carrier, the common carrier is given a right to sell the consignment without\nfurther notice. Section 15(3) enables the carrier to retain a sum equal to the freights,\nstorage and other charges, due, including expenses incurred for the sale. The surplus from\nthe sale proceeds is to be returned to the consigner or the consignee. Section 15(4) clothes\nthe carrier with a right to sell in the event of failure by the consignee to make payment of\nthe freight and other charges, at the time of taking delivery.\n34. This Court, in this case, is dealing with the assessment years 1996-1997. The law\napplicable was contained in the Carriers Act, 1865. It is unnecessary for us to dwell\nfurther, as it is not the case of either party that the appellant had become the owner of the\nbitumen in question in a manner authorised by law. On the other hand, the specific case\nof the appellant is that the appellant never became the owner and it remained only a\ncarrier. However, as noticed, if it is found that there has been short delivery, this would\nmean that the appellant continued in possession contrary to the terms of contract of\ncarriage.\n35. In Mohan B. Samtani's case (supra), the appellant, who was found in possession of a\npackage, which, when opened at the airport, contained a bronze idle of Nataraja and its\npedestal, was sought to be roped in as owner with the aid of Section 69A of the Act :\n\"6. From the facts on record, there cannot be any dispute that the consignor was\nthe State Trading Corporation of Sikkim and the consignee was the Chogyal of\nSikkim and the assessee was a representative of the State Trading Corporation of\nSikkim. The assessee also claimed that the Chogyal of Sikkim was the owner and,\nunder his verbal instruction conveyed through his A.D.C., he arranged for\ndespatch thereof by signing the papers. In fact, the Chogyal also claimed\nownership of the said packages on the basis of the letter by the Under Secretary of\nthe Chogyal of Sikkim addressed to the Assistant Collector of Customs dated May\n30, 1973. The Chogyal was the head of an independent State at the relevant time\nand it was necessary, if the claim for ownership of the Chogyal is to be disputed,\nto have the said letter verified by obtaining the original from the customs\nauthorities. Merely because the packages were presented before the customs\nauthority, it does not ipso facto prove the ownership of the assessee of the goods.\n7. In our view, it has not been established or found that the assessee is the owner\nof the said idol and pedestal. On the contrary, the said letter dated May 30, 1973,\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 6874 & 6875/Mum/2024\n6\naddressed to the Assistant Collector of Customs shows that the Chogyal is the\nowner of the said articles. Under such circumstances, there is no reason to hold\nthe assessee liable and to add Rs.80,000 being the value of the said articles to his\nincome.\"\n8.