Justice Antony Dominic and Justice Dama Seshadri Naidu of Kerala High Court, recently upheld an Income Tax Addition on ground of unexplained investment against an individual observing that the determination of ownership of the gold recovered from him must be in terms with Section 110 of the Indian Evidence Act, 1872.
Before the High Court, the assessee contended that his employer vide, communication dated 26.7.2006 claimed ownership over the gold recovered. Therefore, if at all it was found that the gold was not accounted by his employer, they having accepted the ownership over the same, the assessing officer ought to have taken recourse to proceedings under Section 69A against the employer and not against the assessee.
Rebutting the above arguments, the department contended that under section 69A, the burden to prove that the ownership is not that of the assesse is upon the assessee himself. It further contended that the case should be appreciated in the light of the principles governing section 110 of the Evidence Act.
After analyzing the provisions of Section 69A, the bench observed that the burden is cast entirely upon the assessee to explain about the nature and source of acquisition of the jewellery and if the assessing officer forms an opinion that the explanation offered is not satisfactory, he may deem it to be the income of the assessee.
The bench also noticed the decision of the Apex Court in the judgment in Commissioner of Income Tax, Salem v K.Chinnathamban (supra), wherein it has been held that in order to find out whether the assessee is the owner of any money in terms of Section 69A of the Act, the principle of common law jurisprudence in section 110 of the Evidence Act, 1872 can be applied.
As per Section 110 of the Evidence Act when the question is whether any person is the owner of anything of which he is shown to be in possession, the burden of proving that he is not the owner is on the person who affirms that he is not the owner.
In the light of the above findings, the bench rejected the assessees’ contention that the jewellery belongs to the company M/s Prakash Gold Palace (P) Ltd. in which the assessee is an employee is not at all acceptable.
“The assessee Shri.Karun Dutt Singh as well as the company M/s Prakash Gold Palace (P)Ltd. had never established at the time of surveys conducted and during the course of sworn in statements recorded u/s 131 of the IT Act, that the gold seized belongs to the company. In the circumstances, it is decided to assess the value of the gold of Rs.63,64,123/- in the hands of the assessee, Shri. Karun Dutt Singh as his unexplained investments for the assessment year 2007-2008 after considering all the facts and circumstances of the case.”
Read the full text of the Judgment below.
