Assistant Commissioner of Income Tax, Ernakulam V. Shri Karun Dutt Singh alias Rinku singh, Chennai

ITA 25/COCH/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0871 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 14-12-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 16-01-2009
• Court: TRIBUNAL
• Department Lawyers: ARISES OUT OF
• Keywords: Unexplained cash credit; Search and seizure; Additional evidence; Onus to prove
• Section: 143(3); 133A; 131; 68; 69; 132

Judgement Text

IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH, COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY AR ORA, AM I.T.A NO. 25/COCH/ 2009 ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, ERNAKULAM VS. SHRI KARUN DUTT SINGH ALIAS RINKU SINGH, C/O PRAKASH GOLD PALACE P. LTD., 144, PURASAWALKAM HIGH ROAD, KELLY, CHENNAI-600 010. [PAN: ATBPK 1179N] (REVENUE-APPELLANT) (ASSESSEE -RESPONDENT) OR D E R PER SANJAY ARORA, AM: THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, KOCHI (CIT(A) FOR SHORT) DATED 3.10.2008, ALLOWING THE ASSESSEES APPEAL DIRECTED AGAINST ITS ASSESSMENT U /S. 143(3) OF THE INCOME-TAX ACT, 1961 ('THE ACT', HEREINAFTER) DATED 26.3.2008. 2.1 THE FACTS OF THE CASE ARE THAT THE ASSESSEE WAS APPREHENDED BY THE HILL PALACE POLICE, TRIPUNITHURA WITH 7191.700 GMS . (NET WEIGHT; GROSS OF STONES BEING AT 7394.800 GMS.) OF GOLD ORNAMENTS WITHOUT ANY DOCUMENTS OR BI LLS. THE REVENUE, ON BEING INFORMED BY THE POLICE, REQUISITIONED THE SEIZED GO LD ORNAMENTS U/S. 132A OF THE ACT FROM THE SUB-INSPECTOR OF POLICE ON 24.7.2006. THE ASSESSEE, ON HIS EXAMINATION ON OATH U/S. 131 OF THE ACT DATED 24/7/2006, EXPLAINED HIMS ELF TO BE AN EMPLOYEE OF M/S. PRAKASH GOLD PALACE PVT. LTD., CHENNAI (`PGPL FOR SHORT), CARRYING THE GOLD ORNAMENTS FOR PROCURING ORDERS. THE SAID GOLD ORNAMENTS WERE BROU GHT BY HIM TO ERNAKULAM FROM CHENNAI ON 18.7.2006. THEREAFTER, AFTER STAYING FO R TWO DAYS AT THE COCHIN OFFICE OF PGPL, HE TRAVELLED TO PALAKKAD AND TRICHUR TO PROCU RE ORDERS, AND WAS APPREHENDED BY THE POLICE WHILE RETURNING FROM TRICHUR. THAT HE WA S NOT CARRYING ANY VOUCHER OR OTHER REVENUE BY SHRI PAVAN VED & SHRI S.C.SONKAR, CIT-DRS ASSESSEE BY SHRI T.N.SEETHARAMAN,ADV. & SHRI ARUN RAJ, ADV.-ARS ITA NO. 25/COCH./2009 2 DOCUMENT EXPLAINING THE SOURCE OF THE VALUABLES WIT H HIM, AS HE WAS CARRYING THE SAME ONLY AS SAMPLES, NOT MEANT FOR SALES (PB PGS. 2 TO 4) . A SURVEY U/S. 133A OF THE ACT WAS CARRIED OUT BY THE REVENUE AT THE CHENNAI OFFICE OF PGPL (ALSO REFERRED TO HEREINAFTER AS `THE COMPANY OR `THE EMPLOYER-FIRM) ON 25.7.2006. DURING THE SURVEY, SHRI ABHILASH KUMAR JAIN, DIRECTOR, PER HIS SWORN STATEMENT ON OA TH U/S. 133A, STATED THAT NO ORNAMENTS STOOD GIVEN TO THE ASSESSEE, AN EMPLOYEE OF THE COCHIN OFFICE, BY THE CHENNAI OFFICE/S. FURTHER, AS NO BOOKS OF ACCOUNTS OF THE O UT-STATION BRANCHES ARE MAINTAINED BY THE HEAD OFFICE (CHENNAI), THERE IS NO RECORD WITH IT OF ANY JEWELLERY ISSUED TO THE ASSESSEE. HE CONFIRMED THE PRACTICE OF ISSUING JEWE LLERY TO THE SALES REPRESENTATIVES FOR SALES AND CANVASSING ORDERS FROM REGULAR CUSTOMERS AS SAMPLES, THOUGH NO RECORD IN ITS RESPECT IS MAINTAINED AND, FURTHER, THAT THERE WAS NO OUTSTANDING JEWELLERY WITH THE SALES REPRESENTATIVES TO BE RETURNED TO THE COMPANY, WHIC H HAD RECEIVED BACK ALL THE JEWELLERY ISSUED THERETO DURING THE MONTHS OF JUNE & JULY, 20 06 (PB PGS. 5 TO 9 ). THERE WAS THUS A CLEAR CONTRADICTION BETWEEN THE TWO STATEMENTS, I.E ., AS TO HOW THE IMPUGNED JEWELLERY CAME TO BE POSSESSED BY THE ASSESSEE . THE KOCHI OFFICE OF THE COMPANY WAS ALSO SURVEYED BY THE REVENUE ON THE SAME DAY, I.E., 25.7 .2006. THERE WAS NOTHING TO INDICATE THAT THE PREMISES WAS BEING USED AS AN OFFICE; THER E BEING NO ACCOUNT BOOKS NOR ANY EQUIPMENT, SAFE, ALMIRAH, ETC., FOR WEIGHING OR EVE N SAFE-KEEPING THE JEWELLERY. THE STATEMENT OF SHRI ABHILASH KUMAR JAIN, DIRECTOR, SU GGESTING THAT THE IMPUGNED GOLD ORNAMENTS WOULD HAVE BEEN ONLY GIVEN TO THE ASSESSE E BY THE KOCHI OFFICE WAS THUS FOUND AS NOT SO, OR IN THE LEAST NOT CORROBORATED B Y ANY MATERIAL WITH THE KOCHI OFFICE. THE SAID PREMISES, AS UNDERSTOOD FROM SHRI S.K. CHA KRABORTY, THE SENIOR MANAGER OF THE COMPANY, WAS IN FACT BEING USED AS THE RESIDENCE OF THE ASSESSEE. ON 26.7.2006, SHRI CHAKRABORTY APPEARED BEFORE THE INVESTIGATING AUTHO RITIES IN RESPONSE TO SUMMONS U/S.131 AND PRODUCED THE STOCK REGISTER SHOWING ENT RIES THEREIN FOR THE PERIOD 1.4.2006 TO 19.7.2006. IT WAS EXPLAINED BY HIM THAT THE STOCK R EGISTER WAS PREPARED BY ONE, SH. DALEEL SINGH, ACCOUNTANT, AN EMPLOYEE OF THE CHENNA I OFFICE, ON 24/7/2006, AND WHO HAD COME TO KOCHI (FROM CHENNAI) SPECIFICALLY FOR T HE PURPOSE ON LEARNING OF THE RETENTION OF THE ASSESSEE. THE SAME EXHIBITED A BAL ANCE OF 7432.880 GMS . (NET WT.) OF GOLD ORNAMENTS AS ON 19.7.2006. THERE OUGHT TO HAV E BEEN, THUS, A BALANCE OF 241.180 GMS. OF GOLD ORNAMENTS WITH THE COCHIN BRANCH, I.E., AF TER EXCLUDING THAT ISSUED TO THE ITA NO. 25/COCH./2009 3 ASSESSEE, WHILE NONE WERE FOUND THEREWITH DURING SU RVEY ON 25/7/2006. IT WAS FURTHER SEEN THAT THE REGISTER SHOWED A RECEIPT OF 5584.550 GMS. (NET WEIGHT) GOLD ORNAMENTS ON 19.7.2006 . THE SAME WAS EXPLAINED BY THE SR. MANAGER TO HAVE BEEN BROUGHT FROM KOLKOTTA TO CHENNAI (VIDE TRANSFER NOTE DATED 19/7/2006 ISSUED BY THE TRANSFEROR OFFICE) BY ONE, SH. KAILASH SHARMA, AN EMPLOYEE OF THE CHEN NAI OFFICE. THIS WAS AGAIN QUIZZICAL AS THE GOLD ORNAMENTS, AS PER THE TRANSFER VOUCHER, WERE ISSUED ONLY TO THE COCHIN OFFICE , AND WHICH (DOCUMENT) ALSO CONTRADICTED THE ASSESSEE S STATEMENT OF HAVING BROUGHT THE SAME TO COCHIN FROM CHENNAI, AND ON 18.7.2006 ITSEL F. ON THE OTHER HAND, AS PER THE VERSION BEING NOW ADVANCED, THE GOLD ORNAMENTS WOUL D REACH CHENNAI ONLY ON OR AFTER 19/7/2006 . THE ASSESSEE, IN THE COURSE OF THE ASSESSMENT PRO CEEDINGS, SUBMITTED AN AFFIDAVIT VIDE HIS LETTER DATED 21/9/2007 TO THE EF FECT THAT HE WAS EMPLOYED AS A SALESMAN WITH PGPL, CHENNAI, SINCE FEBRUARY, 2005. THE GOLD ORNAMENTS SEIZED FROM HIM BELONGED TO THE EMPLOYER-FIRM, AGAINST WHOM PROCEED INGS U/S. 153C OF THE ACT MAY BE TAKEN UP. AN AFFIDAVIT FROM THE MANAGING DIRECTOR OF THE SAID EMPLOYER-FIRM, NAMELY, SHRI D.B. PRAKASH CHAND JAIN, WAS ALSO FURNISHED, W HEREIN GOLD ORNAMENTS, AS FOUND AND SEIZED FROM THE ASSESSEE ON 22.7.2006, WERE OWNED-U P AS FORMING PART OF ITS TRADING STOCK, AND WHICH WAS EXPLAINED TO HAVE BEEN HANDED OVER TO THE ASSESSEE FOR TAKING THE SAME TO VARIOUS JEWELLERY SHOPS IN KERALA FOR APPRO VAL AND CONCOMITANT PROCUREMENT OF ORDERS. THE AO DID NOT FIND THE SAME ACCEPTABLE IN VIEW OF THE VARIOUS INCONSISTENCIES OBSERVED BY HIM ( ALSO REFER PG. 3 OF THE ASSESSMENT ORDER ). THE RELIANCE BY THE ASSESSEE ON THE DECISION IN THE CASE OF P.R. METRANI VS CIT , 287 ITR 209 (SC) TO THE EFFECT THAT THE PRESUMPTION U/S. 132(4A) OF THE ACT IS ONLY IN RELA TION TO THE PROCEEDINGS FOR SEARCH AND SEIZURE U/S. 132 - AND WOULD NOT BE AVAILABLE FOR F RAMING REGULAR ASSESSMENT - WAS ALSO CONSIDERED BY HIM AS NOT APPLICABLE AS THE ASSESSME NT WAS BEING FRAMED NOT ON THE BASIS OF THE PRESUMPTION U/S. 132(4A), BUT FOR THE REASON THAT HE HAD NOT AUTHENTICALLY ESTABLISHED EITHER DURING THE SURVEY PROCEEDINGS OR THE ASSESSMENT PROCEEDINGS THAT THE GOLD ORNAMENTS BELONGED TO THE SAID FIRM. HE, ACCO RDINGLY, BROUGHT THE SAME TO TAX. 2.2 IN APPEAL, THE LD. CIT(A) DID NOT FIND MUCH MERIT IN THE STAND TAKEN BY THE AO. IT WAS CLEAR FROM THE STATEMENTS OF THE ASSESSEE AND P GPL (THROUGH ITS EMPLOYEES AND DIRECTORS) THAT HE WAS ONLY AN EMPLOYEE OF THE LATT ER. THE STOCK REGISTER CLEARLY SHOWED ITA NO. 25/COCH./2009 4 THAT PGPL IS THE OWNER OF THE GOLD ORNAMENTS AND TH E APPELLANT WAS ONLY ITS CARRIER. THERE WAS NO JUSTIFIABLE REASON, THEREFORE, TO TREA T THE ASSESSEE AS THE OWNER OF THE SEIZED GOLD ORNAMENTS. THE AO COULD NOT DOUBT THE CORRECT NESS OF THE STOCK REGISTER WITHOUT TAKING COGNIZANCE OF THE CORRECTNESS OF THE ENTRIES IN THE STOCK REGISTER PERTAINING TO TRANSACTIONS WITH KNOWN ASSESSEES. HE, THEREFORE, D ELETED THE ADDITION ON ACCOUNT OF THE SEIZED GOLD ORNAMENTS. AGGRIEVED, THE REVENUE IS I N APPEAL. 3. BEFORE US, LIKE SUBMISSIONS STOOD RAISED BY EITHER SIDE, EACH RELYING ON THE ORDER OF THE AUTHORITY BELOW AS FAVOURABLE TO IT. THE LD. AR TOOK US THROUGH THE VARIOUS DOCUMENTS FORMING PART OF THE ASSESSEES PAPER-BOOK (PB), CON TENDING THAT UNDER THE CIRCUMSTANCES IT STOOD CONCLUSIVELY PROVED THAT THE ASSESSEE WAS ONLY AN EMPLOYEE OF THE COMPANY, SO THAT BRINGING THE SAME TO TAX IN HIS HANDS IS NOT M AINTAINABLE IN LAW. THE EVIDENCES ADDUCED BY THE EMPLOYER-FIRM, ON THE OTHER HAND, SH OWED IT TO BE FORMING PART OF ITS STOCK, SO THAT THERE WAS NO OCCASION TO DRAW ANY AD VERSE INFERENCE OR TREAT THE SAME AS UNEXPLAINED. THE LD. DR REITERATED THE REVENUES CA SE, CLAIMING NONE OF THE OBJECTIONS RAISED BY THE AO AS HAVING BEEN MET OR EXPLAINED BY THE ASSESSEE. 4. WE HAVE HEARD THE PARTIES, AND PERUSED TH E MATERIAL ON RECORD. 4.1 THE AO HAS EFFECTED AN ADDITION OF ` 63,64,123/- BY INVOKING SECTION 69A OF THE ACT, WHICH READS AS UNDER: UNEXPLAINED MONEY, ETC. 69A. WHERE IN ANY FINANCIAL YEAR THE ASSESSEE IS F OUND TO BE THE OWNER OF ANY BULLION, JEWELLERY OR VALUABLE ARTICLE AND SUCH MONEY, BULLI ON, JEWELLERY OR VALUABLE ARTICLE IS NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINE D BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NA TURE AND SOURCE OF ACQUISITION OF THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE , OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATIS FACTORY, THE MONEY AND THE VALUE OF THE BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. THE RULE OF EVIDENCE ENSHRINED IN SECTION 69A, AS W OULD BE READILY SEEN, ESSENTIALLY PROVIDES FOR A STATUTORY PRESUMPTION AS TO THE VALU ABLES POSSESSED BEING CONSIDERED OR ITA NO. 25/COCH./2009 5 DEEMED AS THE ASSESSEES INCOME FOR THE RELEVANT YE AR, I.E., UNLESS THE NATURE AND SOURCE OF ITS ACQUISITION IS SATISFACTORILY EXPLAINED. THE ASSESSEE IS THUS DEEMED TO BE OWNER OF THE IMPUGNED GOODS, I.E., ON THE BASIS OF THEIR POS SESSION BY HIM. THIS IS AS INCOME IN LAW COULD ONLY BE DEEMED OF THE OWNER. SECTION 110 OF THE INDIAN EVIDENCE ACT, 1872 IS RELEVANT IN THIS REGARD AND READS AS UNDER: 110. WHEN THE QUESTION IS WHETHER ANY PERSON IS TH E 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 TH AT HE IS NOT THE OWNER. AS SUCH, THE LAW PRESUMES POSSESSION TO BE A PRIMA FACIE PROOF OF OWNERSHIP, AND IS ITSELF AN EVIDENCE TO TITLE. IT IS FOR THIS REASON THAT S . 69A DOES NOT REQUIRE THE ASSESSEE (POSSESSOR) TO PROVE THE OWNERSHIP, BUT THE NATURE AND SOURCE OF HIS ACQUISITION. THE JUDGMENT BY THE HONBLE APEX COURT IN THE CASE OF CHUHARMAL VS. CIT (1998) 172 ITR 250 (SC) CONTINUES TO BE THE LEADING CASE IN THE MA TTER, WHEREIN, SPEAKING IN THE CONTEXT OF SECTION 69A OF THE ACT, IT WAS EXPLAINED BY IT T HAT WHAT ALL IS MEANT WHEN IT IS SAID THAT THE EVIDENCE ACT DID NOT APPLY TO THE PROCEEDINGS U NDER THE ACT WAS THAT THE RIGOUR OF THE RULES OF EVIDENCE CONTAINED IN THE EVIDENCE ACT ARE NOT APPLICABLE; AND THAT IT DID NOT MEAN THAT THE TAXING AUTHORITIES, WHERE DESIROUS OF INVOKING THE PROVISIONS OF THE EVIDENCE ACT IN THE PROCEEDINGS BEFORE THEM, WERE P REVENTED FROM DOING SO. THAT SECTION 110 OF THE EVIDENCE ACT ONLY EMBODIES A SALUTARY PR INCIPLE OF COMMON LAW JURISPRUDENCE, VIZ., WHERE A PERSON IS FOUND IN POS SESSION OF ANYTHING, THE BURDEN OF PROOF THAT HE IS NOT ITS OWNER WAS ON THE PERSON WH O CHALLENGES HIS OWNERSHIP, AND WOULD GET ATTRACTED WHERE THE SET OF CIRCUMSTANCES SATISF IES ITS CONDITIONS, AND WAS APPLICABLE TO TAXATION PROCEEDINGS. FURTHER, THE EXPRESSION `INCO ME AS USED IN S. 69A OF THE ACT HAS A WIDE MEANING. 4.2 THE LAW IN THE MATTER IS WELLSETTLED, AN D FOR WHICH WE MAY REFER TO, AMONG OTHERS, THE FOLLOWING CASE LAW BY THE HIGHER COURTS OF LAW: CHUHARMAL VS. CIT (1988) 172 ITR 250 (SC) (SEE AT PG. 251) ON A REFERENCE, THE HIGH COURT HELD (I) THAT THE T RIBUNAL HAD RIGHTLY TREATED THE PETITIONER AS THE OWNER OF THE WATCHES SINCE HE DID NOT ADDUCE ANY EV IDENCE, FAR LESS DISCHARGE THE ONUS ON HIM OF ITA NO. 25/COCH./2009 6 PROVING THAT THEY DID NOT BELONG TO HIM; AND THAT T HEIR VALUE WAS RIGHTLY ASSESSED AS THE INCOME OF THE PETITIONER; AND (II) THAT IN VIEW OF EXPLANATION TO SECTION 271(1) (C), THE DEPARTMENT HAD DISCHARGED ITS BURDEN OF ESTABLISHING CONCEALMENT. ON A PETITION TO THE SUPREME COURT FOR SPECIAL LEAV E TO APPEAL, THE DECISION BY THE HIGH COURT WAS AFFIRMED BY IT. CIT V. ASHOK TEXTILES (P) LTD ., 141 ITR 785 (KER.) HELD THAT IN VIEW OF THE PLEDGING OF GOODS AND THE CATEGORICAL ADMISSION INVOLVED IN THE DECLARATION OF THE ASSESSEE TO THE BANK THAT ALL TH E STOCKS IN THE GODOWN WERE THE ASSESSEES OWN BONA FIDE PROPERTY, IN THE ABSENCE OF ANY EVIDENCE TO SHOW T HAT THE PLEDGE WAS OF GOODS BELONGING TO SOMEONE ELSE , THE ITO WAS RIGHT IN ASSUMING THAT THE GOODS BELO NGED TO THE ASSESSEE. [EMPHASIS SUPPLIED] [SLP TO THE SUPREME COURT AGAINST THIS DECISION STA NDS DISMISSED; REPORTED AT (1982) 138 ITR (ST.) 1] CIT VS. K.I.PAVUNNY , 232 ITR 837 (KER.) (AT PG. 841) THE AFORESAID AUTHORITY SQUARELY APPLIES TO THE FA CTS OF THE CASE AT HAND. WHEN THE GOLD ARTICLE WERE RECOVERED FROM THE COMPOUND OF THE ASSESSEE, U NLESS COGENT EVIDENCE IS ADDUCED BY THE ASSESSEE, IT WOULD HAVE TO BE PRESUMED THAT THE ART ICLES BELONGED TO HIM AND THEY WERE OWNED BY THE ASSESSEE HIMSELF. NOT ONLY THIS, UNLESS THE AS SESSEE SETS UP A CLEAR CASE AND LEADS COGENT EVIDENCE TO SHOW THAT THE GOLD ARTICLES WERE ACQUIR ED IN SOME DIFFERENT YEAR, THERE WOULD BE A FURTHER PRESUMPTION THAT THE ARTICLES WERE ACQUIRED IN THE YEAR IN QUESTION, AND THEY REPRESENTED THE CONCEALED INCOME OF THE YEAR IN QUESTION ITSELF . THE POSSESSOR, THEREFORE, TO DISLODGE TH E STATUTORY PRESUMPTION AS TO THE OWNERSHIP, IS TO ADDUCE COGENT EVIDENCE/S TOWARD SO MEONE ELSE - AND NOT HE - BEING THE OWNER. THAT IS, HIS OBLIGATION OR THE BURDEN OF PRO OF, GIVEN THE MANDATE OF LAW, AND AS FURTHER EXPLAINED BY THE HIGHER COURTS OF LAW, DOES NOT STOP AT JUST DENYING THE OWNERSHIP, BUT IN SHOWING AS TO WHO THE OWNER IS, AS THE OWNER SHIP CANNOT BE IN VACUUM AND HAS NECESSARILY TO VEST IN SOME PERSON/S. 4.3 THE LD. FIRST APPELLATE AUTHORITY HAS DELETE D THE ADDITION ON THE BASIS THAT THE ASSESSEE HAS ESTABLISHED THAT HE IS NOT THE OWNER O F THE IMPUGNED GOLD ORNAMENTS BUT ONLY THEIR CARRIER. THE ISSUE ARISING IN APPEAL FOR OUR ADJUDICATION, T HUS, IS A PURE QUESTION OF FACT, I.E., WHETHER THE ASSESSEE HAS BE EN ABLE TO SUCCESSFULLY ESTABLISH OF NOT HIM BUT SOMEONE ELSE BEING THE OWNER, I.E., GIVEN T HE MANDATE OF S. 110 OF THE EVIDENCE ACT. ? OR, EQUIVALENTLY, WHETHER THE ASSESSEE CAN BE SAI D TO HAVE SATISFACTORILY EXPLAINED ITA NO. 25/COCH./2009 7 THE NATURE AND SOURCE OF THE ACQUISITION OR POSSESS ION OF THE GOODS WITH HIM? THE LD. CIT(A) FOUND THE POSSESSION OF THE IMPUGNED JEWELLE RY WITH THE ASSESSEE AS EXPLAINED WITH REFERENCE TO THE STOCK REGISTER OF THE COCHIN BRANCH OF PGPL ADDUCED BEFORE THE REVENUE ON 26/7/2006; HIS BEING AN EMPLOYEE BEING A PPARENT. TOWARD HIS CASE, WE FIND THE ASSESSEES ONLY EXPLANATION IS THAT HE IS AN EM PLOYEE OF PGPL, A CHENNAI-BASED BUSINESS HOUSE OF JEWELLERY, AND WAS CARRYING THE J EWELLERY AS ITS SALES REPRESENTATIVE AS SAMPLES FOR CANVASSING ORDERS FROM VARIOUS RETAIL J EWELLERS . 4.4 HAVING ALLUDED TO THE PRINCIPLES OF LAW GOVE RNING THE MATTER, AS ALSO THE ASSESSEES CASE, AS WELL AS THE BASIS ON WHICH HE STANDS ALLOW ED RELIEF, WE EXAMINE THE EVIDENCES RELIED UPON BY THE ASSESSEE IN DISCHARGE OF THE BUR DEN OF PROOF CAST ON HIM UNDER THE LAW, I.E., S. 69A OF THE ACT, WHICH SUBSUMES THE CONDITI ON OF S. 110 OF THE EVIDENCE ACT. THE FOLLOWING ARE THE EVIDENCES IN THE MAIN:- A) AUTHORIZATION TO THE ASSESSEE UNDER TN GENERAL SALES TAX ACT, 1959 (PB PG. 1); B) STATEMENT OF ASSESSEE DATED 24.7.2006 U/S. 131 O F THE ACT (PB PGS. 2 TO 4) ; C) STATEMENT DATED 25.7.2006 TO SHRI ABHILASH KUMAR JAIN, DIRECTOR, PGPL U/S. 133A OF THE ACT (PB PGS. 5 TO 9) ; D) SHOP INSPECTION REPORT DATED 25/7/2006 (PB PG. 1 0) ; E) LETTER OF SR. MANAGER DATED 26.7.2006 TO THE DIT (INV.), KOCHI (PB PG.11 ); F) STOCK REGISTER OF COCHIN BRANCH OF PGPL FOR THE PERIOD 1.4.2006 TO 19.7.2006 ALONG WITH THE TRANSFER VOUCHERS (PB PG. 15 TO 19) ; G) APPROVAL/DELIVERY CHALLAN DTD. 20/7/2006 ISSUED IN FAVOUR OF THE ASSESSEE (PB PG. 20); H) REPLY DATED 28.7.2006 BY PGPL TO NOTICE U/S. 62( 1) OF THE KVAT ACT, 2003 DATED 25.7.2006 (PB PG. 23 TO 25) ; I) ASSESSMENT ORDERS UNDER THE ACT IN THE ASSESSEE S CASE FOR AY 2001-02 TO AY 2006-07 (PB PGS. 30 TO 41) . J) LETTER DATED 21.9.2007 OF THE ASSESSEE TO THE A O ALONG WITH THE AFFIDAVIT BY SHRI D.B.PRAKASH CHAND JAIN, MD, PGPL, AVERRING THAT THE IMPUGNED GOODS BELONG TO THE COMPANY, PGPL (INCORPORATED IN THE ASSES SMENT ORDER). ITA NO. 25/COCH./2009 8 4.5 COMING TO THE ASSESSEES EXPLANATION, TWO TH INGS NEED TO BE SATISFACTORILY SHOWN, BEFORE HE COULD BE SAID TO HAVE SUCCESSFULLY EXPLAI NED THE POSSESSION OF THE GOODS WITH HIM. FIRSTLY, THAT HE IS THE EMPLOYEE OF PGPL AND, SECONDLY, OF THE TRANSFER/ISSUE OF THE GOODS TO HIM BY HIS EMPLOYER. COMING TO THE FIRST P ART, WE FIND THAT THE ASSESSEE HAS EXHIBITED THE SAME. THAT, FIRSTLY, HAS BEEN HIS CON SISTENT STAND THROUGHOUT (DULY FURNISHING THE NAME & FULL ADDRESS OF HIS STATED EM PLOYER, INCLUDING THAT OF THE LOCAL, COCHIN BRANCH), AS ALSO THAT OF THE COMPANY, PGPL, AND FOR WHICH ONE MAY REFER TO THE STATEMENTS OF THE ASSESSEE AS WELL AS THE DIRECTOR OF PGPL, STATING OF HIM TO BE AN EMPLOYEE OF ITS COCHIN BRANCH ( REFERRED TO AT SERIAL NOS. (B) & (C) OF PARA 4.4 ). THE AUTHORIZATION IN FORM D-3 [ISSUED UNDER TAMIL NADU GENERAL SALES TAX RULES, 1959] DATED 20/12/2005, BEARING HIS PHOTOGRAPH AND SIGNAT URE, ISSUED UNDER THE SIGNATURE AND SEAL OF THE ISSUING AUTHORITY, I.E., THE COMMERCIAL TAX OFFICER, AYANAVARAM ASSESSMENT CIRCLE, KURLAGAM, CHENNAI, AS THE SALES REPRESENTAT IVE OF PGPL, CHENNAI (PB PG. 1 ), CONCLUSIVELY PROVES THE SAME. THOUGH THE SAME IS VA LID ONLY UP TO 31/3/2006, THERE IS NOTHING TO SUGGEST THAT THE EMPLOYMENT STANDS DISCONTINUED THEREAFTER. IN FACT, THE REVENU E HAS ITSELF ASSESSED HIM QUA SALARY RECEIVED FROM THE SAID FIRM FROM FEBRUARY, 2005 ONW ARDS, INCLUDING FOR THE CURRENT YEAR. SO HOWEVER, SURPRISINGLY, WHILE HE STATES IN JULY, 2006 (IN ANSWER TO Q # 5 OF HIS STATEMENT DATED 24/7/2006) TO HAVE BEEN EMPLOYED TH EREWITH FOR THE LAST 11 MONTHS, I.E., SINCE AUGUST 2005 , VIDE HIS LETTER DATED 21.9.2007 TO THE AO HE STATES OF BEING SO SINCE FEBRUARY, 2005 . A PERSON WOULD NOT ORDINARILY FORGET THE MONTH OF HIS FIRST EMPLOYMENT AND THAT TOO WITHIN A REASONABLE PERIOD OF HIS CONT INUOUS EMPLOYMENT. THAT, HOWEVER, SHOULD BE OF LITTLE MOMENT AS, IN EITHER CASE, HE W AS IN EMPLOYMENT WITH PGPL ON THE DATE OF HIS APPREHENSION, AND FOR SOMETIME. BE THAT AS IT MAY, WE PROCEED FURTHER, TAKING HIS STATUS AS AN EMPLOYEE OF PGPL AS A GIVEN. RATHE R, THE MORE SURPRISING AND INCOMPREHENSIBLE ASPECT OF HIS EMPLOYMENT IS THAT W HILE THE DIRECTOR SAYS OF HIM AS BEING NOT AN EMPLOYEE OF THE CHENNAI OFFICE ( THE RECORDS OF THAT OFFICE NOT REVEALING HIS NAME IN THE LIST OF ITS EMPLOYEES ), BUT OF THE COCHIN BRANCH, THE BRANCH HAS NO RECO RD OF ITS EMPLOYEES! THE BRANCH, AS FOUND ON A VISIT THER ETO, IS BARELY FUNCTIONAL. THE ONLY ACTIVITY EVIDENCED, GOING BY THE ONLY RECORD - STOC K REGISTER PRODUCED, ALBEIT LATER, IS THE RECEIPT OF JEWELLERY AND ITS SUPPLY TO THE CUSTOMER S, IMPLYING IT TO BE READY TO SALE ITA NO. 25/COCH./2009 9 JEWELLERY AGAINST THEIR ORDERS . AND, FURTHER, CARRIED ON AT AN EXTREMELY LOW LEVE L OF ROUGHLY ONE RECEIPT AND TWO DELIVERIES A MONTH. THE AUTHORISATION (IN FORM D-3) SHOWS/DECLARES THE ASSESSEE AS AN EMPLOYEE OF THE C HENNAI (HEAD OFFICE (HO)), AND NOWHERE MENTIONS OF HIS BEING ASSIGNED TO OR ASSOCI ATED WITH A PARTICULAR BRANCH (AS THE COCHIN BRANCH). IN FACT, THE SAID AUTHORIZATION WOU LD NOT BE REQUIRED IF THE EMPLOYEE WAS NOT REQUIRED TO WORK IN TAMIL NADU, I.E., WAS N OT AN EMPLOYEE OF THE CHENNAI OFFICE. IN HIS STATEMENT, THE ASSESSEE ALSO REFERS ONLY TO THE HEAD OFFICE WHEN HE SPEAKS OF HIS EMPLOYMENT. AS SUCH, THE ONLY REASONABLE INFERENCE THAT CAN BE DRAWN IS THAT HE WAS LATER EITHER SHIFTED TO THE ERNAKULAM BRANCH (THOUGH THE DIRECTOR DOES NOT SPEAK OF ANY SUCH TRANSFER, AND WHICH WOULD REQUIRE A SIMILAR INTIMAT ION TO THE KERALA GOVT., APART FROM WITHDRAWAL OF THE SAID D3) OR, CONSIDERING THE NATU RE AND VOLUME OF ACTIVITY AT THE BRANCH, WAS WORKING AT BOTH THE PLACES, I.E., AS RE QUIRED, COMMUTING BETWEEN CHENNAI AND KERALA IN THE COURSE OF HIS DUTIES, STAYING AT THE BRANCH OFFICE WHILE AT COCHIN. EITHER WAY, THE DIRECTORS STATEMENT, AS APPARENT, DOES NO T REVEAL THE TRUE AND FULL PICTURE. 4.6 NEXT, WE EXAMINE HIS CASE QUA THE ISSUE OF THE IMPUGNED GOODS TO HIM. THIS IS AS HIS BEING AN EMPLOYEE WOULD NOT AUTOMATICALLY PROVE THE IMPUGNED GOODS AS BEING HIS EMPLOYERS STOCK. IN THIS REGARD WE FIND THAT NO TR ANSFER/ISSUE VOUCHER WAS FOUND ON HIS PERSON OR WITH HIM AT THE TIME OF HIS APPREHENSION ( REFER PARA 1 OF THE ASSESSMENT ORDER / ANSWER TO Q # 2 OF THE ASSESSEES STATEMENT DATED 2 4/7/2006 ). WHY? THE ASSESSEE EXPLAINS THIS AS ON ACCOUNT OF THE FACT THAT WHAT H E WAS CARRYING ARE ONLY SAMPLES, NOT MEANT FOR SALE. THIS CAN HARDLY BE A REASON FOR BEI NG NOT ISSUED ANY VALID DOCUMENT, THE INGREDIENTS OF WHICH, RATHER, STAND DEFINED BY THE SALES-TAX LAW; THE GOODS (WHETHER ARRIVING DIRECTLY FROM WEST BENGAL OR FROM TAMIL NA DU) CROSSING THE STATE (KERALA) BORDER, WOULD BE SUBJECT TO CENTRAL SALES-TAX LEGIS LATION AS WELL. REFERENCE IN THIS REGARD IS MADE TO THE `PERMIT REFERRED TO IN S. 47 OF THE KVAT ACT AND THE `DECLARATION (IN FORM F) FOR GOODS SHIPPED OUT OF WEST BENGAL. THE A BSENCE OF VALID AND PROPER DOCUMENTS IS, THEREFORE, INCOMPREHENSIBLE TO SAY TH E LEAST. ALSO, HE WAS NOT CARRYING ANY ORDER-BOOK . THE ASSESSEE OR HIS EMPLOYER, PGPL, HAVE NOWHERE EXPLAINED ALL THIS. ONLY THEY COULD; THE ONUS TO EXPLAIN THE POSSESSION AND MEET THE CONCOMITANT STATUTORY PRESUMPTION OF OWNERSHIP BEING ON IT. RATHER, IF, AS DEPOSED BY SH. ABHILASH K. JAIN, ITA NO. 25/COCH./2009 10 DIRECTOR, PGPL ON 25/7/2006 (IN ANSWER TO Q. # 10, 12), NO RECORD IS BEING MAINTAINED BY THE FIRM IN RESPECT OF THE ORNAMENTS ISSUED BY I T TO ITS EMPLOYEES/SALE-PERSONS FOR SALES AND CANVASSING ORDERS, THERE IS NO SCOPE OF THERE B EING ANY CONTEMPORANEOUS EVIDENCE QUA THE ISSUE OF AND, THUS, POSSESSION OF GOODS WITH I TS EMPLOYEES/SALESMEN AND, CONSEQUENTLY, OF IT BEING EXPLAINED BY THEM WITH RE FERENCE TO THE FIRM . THIS, APART FROM BEING INEXPLICABLE AND SANS ANY BUSINESS SENSE, IS ALSO IN BREACH OF LAW, BESI DES INVITING ACTION AS THE PRESENT ONE, I.E., ON BEING FOUND WIT H AN EMPLOYEE. THE EXPLANATION TENDERED BY THE ASSESSEES EMPLOYER BEFORE THE SALE S-TAX AUTHORITIES IS THAT THE ASSESSEE BEING ON A TRAIN, WHICH IS NOT A VEHICLE, THE ABS ENCE OF THE PRESCRIBED DOCUMENTS WITH HIM CANNOT OFFEND THE LAW. THE SAME IS HARDLY INSPI RING OR SATISFACTORY. IT IS IN FACT A TACIT ADMISSION OF THE GOODS BEING REQUIRED TO BE ACCOMPA NIED BY THE STATED DOCUMENTS. FURTHER, IF NOT ON THE ASSESSEES PERSON, THE SAME OUGHT TO BE AT THE LOCAL BRANCH. ONE CAN UNDERSTAND OF THE DOCUMENTS ACCOMPANYING THE GOODS SHIPPED ACROSS THE BORDER, WHICH WOULD BE IN RELATION TO THE ENTIRE CONSIGNMENT RECE IVED, HAVING BEEN DEPOSITED AT THE BRANCH OFFICE, WITH THE JEWELLERY THEREFROM BEING H ANDED OVER THE SALESMAN ON THE BASIS THEREOF FOR BOOKING OF ORDERS WITHIN THE STATE. IN THIS REGARD, WE FIND THE ASSESSEE T O HAVE ADDUCED A DOCUMENT TITLED `APPROVAL/DELIVERY CHALLAN DATED 20/7/2006 ISSUED TO HIM BY THE COCHIN BRANCH FOR 6572.620 GMS. OF 22 CT. GOLD ORNAMENTS ( PB PG. 20 ). THIS IS STRANGE, CONTRADICT AS IT DOES THE CLEAR FINDINGS ON HIS APPREHENSION AND THE FOLL OWING DEPOSITION ( PB PG. 2 TO 4 ). WHY WAS, THEN, THE ASSESSEE NOT CARRYING THIS VOUCHER, PURPORTEDLY ISSUED ONLY TO HIM, HAVING BEEN NOT FOUND WITH HIM ? OR, DID HE LIE, AND WHY ? THIS IS ALSO APPARENT FROM THE FACT OF ABSENCE OF ANY QUESTION QUA THE SAID VOUCHER ON HIS EXAMINATION DATED 24/7/200 6, WHICH WOULD OTHERWISE FOLLOW. EVEN ASSUMING THAT HE HELD THE CHALLAN, WHY WAS IT NOT DISCLOSED TO THE AUTHORITIES ON BEING QUESTIONED IN THE MATTE R, WITH HIM, RATHER, JUSTIFYING THE ABSENCE OF ANY SUCH. FURTHER, HE DEPOSES IN CONTRADICTION TO THE SAID VO UCHER, STATING THAT THE JEWELLERY STANDS BROUGHT BY HIM TO COCHIN FROM CHENNAI ON 18/7/2006 . WHICH OF THE TWO IS THE TRUE VERSION? WOULD A PERSON DEPOSE IN CONTRADICTION TO A DOCUMEN T HE HOLDS, DISCLOSES, AND RELIES ON ? CERTAINLY, NOT, WHICH WOULD IMPLY THAT HE EITHER DID NOT HOLD IT OR, IF SO, DID NOT INTEND NOT TO DISCLOSE I T? WHY? OR IS IT A CASE OF THE STATEMENT HAVING BEEN MADE IN IGNORANCE OF IT; AS THERE IS PO SSIBLY NO REASON FOR NOT DISCLOSING THE ITA NO. 25/COCH./2009 11 SAME. EVEN SO, THE STATEMENT, MADE UNMINDFUL OF THE DOCUMENT, COULD ONLY BE A TRUE STATEMENT, AS ELSE HE WOULD HAVE ONLY MADE A CORROB ORATIVE, CALCULATIVE STATEMENT, SO THAT THE SAME DISPROVES THE DOCUMENT. WE SAY SO AS A PER SON WOULD NOT STATE SOMETHING IN CONTRADICTION OF THE DOCUMENT FOUND WITH HIM, UNLES S OF COURSE, HE EXPLAINS, SIMULTANEOUSLY, THE REASON FOR THE ANOMALY; THERE B EING DIFFERENCE IN THE DATE (TIME), STATION (PLACE) AND THE QUANTITY, BETWEEN THE TWO, I.E., THE STATEMENT AND THE DOCUMENT. IN OTHER WORDS, EITHER THE DOCUMENT DID NOT EXIST AT T HE RELEVANT TIME OR STANDS DISPROVED BY THE STATEMENT, ONLY ONE OF WHICH COULD, IN ANY CASE , BE TRUE. IT IS ALSO NOT CLEAR FROM THE RECORD AS TO WHEN AND BEFORE WHOM THIS DOCUMENT STO OD FURNISHED BY THE ASSESSEE (I.E., ASSUMING SO); THERE BEING NO REFERENCE THERETO IN T HE ASSESSMENT ORDER, AND NEITHER ANY APPLICATION BEFORE THE FIRST APPELLATE AUTHORITY FO R ITS ADMISSION AS ADDITIONAL EVIDENCE. AS SUCH, THE ADMISSIBILITY OF THE DOCUMENT ITSELF, APA RT FROM ITS CREDIBILITY BEING SHROUDED IN CONSIDERABLE DOUBT, IS HIGHLY SUSPECT. EVEN SO, THE FIRM PRESUMABLY ONLY ISSUING SUCH VOUCHERS ONLY IN THE NORMAL AND REGULAR COURSE OF I TS BUSINESS, THE SAME BEARS NO NUMBER. WHY? THE FURTHER QUESTION IS WHY WAS ITS OFFICE CO PY NOT FOUND AT THE COCHIN OFFICE DURING SURVEY BY THE DEPARTMENT ON 25/7/2006. NOT O NLY THAT, THIS BEING ADMITTEDLY NOT THE FIRST TIME JEWELLERY STOOD ISSUED BY THE BRANCH TO A SALESMAN, THERE OUGHT TO HAVE BEEN FOUND COPIES OF EARLIER SIMILAR ISSUES AS WELL; NAY , A RECORD OF SUCH ISSUES ALONG WITH THE SUBSEQUENT DEPOSIT OF THE JEWELLERY WITH THE COMPAN Y. NO EXPLANATION, AGAIN, EVEN AS HE IS A TRUSTED EMPLOYEE OF THE CONCERN, WELL VERSED W ITH ITS PROCEDURES AND METHODS, WHILE THE DIRECTOR IN INQUIRY STATES THAT NO RECORD IS MA INTAINED. AGAIN, WHY DID NOT THE SENIOR MANAGER EXPLAIN ITS EXISTENCE, IF SO (OR ABSENCE, A S THE CASE MAY BE); THE STOCK POSITION WITH THE BRANCH, INCLUDING THE MANNER IN WHICH THE SAME CAME TO BE ACQUIRED WITH IT; THE MODUS OPERANDI FOLLOWED BY THE OFFICE, BOTH AS REGARDS THE OPERAT IONS AND MAINTENANCE OF RECORDS, ETC.; THE REVENUE HAVING COME TO ITS PR EMISES ONLY TO INVESTIGATE THE FACTS AND KNOW THE TRUTH OF THE SOURCE OF THE IMPOUNDED JEWEL LERY. THE OFFICE COPY OF THE ISSUE VOUCHER, OR ITS FORMING PART OF THE BRANCH RECORD, WOULD PROVIDE CREDIBILITY TO IT AS AN AUTHENTIC, RELIABLE DOCUMENT. THE SURVEY BY THE SAL ES TAX DEPARTMENT ALSO YIELDS A BLANK: NO RECORDS, NO BOOKS, NO EXPLANATION. EVEN I GNORING THE SAME FOR A MOMENT, WE FIND UNEXPLAINED DIFFERENCES. WHILE THE ASSESSEE IS ADMITTEDLY FOUND WITH GOLD JEWELLERY WEIGHING 7191.700 GMS (NET WT.), WHICH HE STATES TO HAVE BROUGHT FROM CH ENNAI ON ITA NO. 25/COCH./2009 12 18/7/2006, THE ISSUE VOUCHER IS ISSUED BY THE COCHI N OFFICE ON 20/7/2006 FOR 6572.620 GMS . WHEN, WHERE, AND WHAT QUANTITY (OF THE IMPUGNED JEW ELLERY) IS ISSUED TO THE ASSESSEE ? NO DEFINITE ANSWER TO THIS VITAL QUESTION OF FACT EMANATES. SURELY, ONLY ONE OF THEM, IF AT ALL, COULD BE THE TRUE VERSION. IN ANY CASE, HE COULD NOT POSSIBLY GO FOR CANVASSING ORDERS WITHOUT AN ORDER-BOOK, WHICH WAS NOT FOUND WITH HIM ON HIS APPREHENSION . 4.7 CONTINUING FURTHER, WE PROCEED TO EXAMINE I F THE EMPLOYER COULD BE SAID TO BE IN POSSESSION OF THE JEWELLERY. THIS IS OF PRIME RELEV ANCE AS THE ASSESSEE COULD BE GIVEN OR TRANSFERRED THE JEWELLERY ONLY WHERE ITS POSSESSION WITH THE EMPLOYER IS EXHIBITED. OF COURSE, AN EXCEPTION TO THIS STATEMENT WOULD BE WHE RE THE EMPLOYER ADMITS THE SAME AS REPRESENTING ITS UNACCOUNTED STOCK-IN-TRADE, IN WHI CH CASE NO FURTHER OBLIGATION LIES ON THE ASSESSEE; HIS STATUS OF AN EMPLOYEE AND SALESMA N GIVING HIM THE OCCASION AND LOCUS STANDI TO ACCEPT THE JEWELLERY FROM HIS EMPLOYER . THE SAME QUESTIONS, I.E., AS TO THE TIME AND PLACE OF THE TRANSFER, ARISE, AND TO THE SAME, INDEFINITE ANSWERS. IT IS ONLY ONCE THE TIME, PLACE AND QUANTITY OF THE TRANSFER IS CONCLUS IVELY OR POSITIVELY ESTABLISHED THAT THE AVAILABILITY OF THE STOCK WITH THE FIRM TO THAT EXT ENT AT THE RELEVANT TIME AND PLACE COULD BE EXAMINED, I.E., W.R.T. THE MATERIALS ADDUCED. TH E EXISTENCE OF JEWELLERY AT ONE PLACE WOULD NOT AMOUNT TO OR PROVE ITS SIMULTANEOUS EXIST ENCE AT ANOTHER. THE ASSESSEES CASE IN THIS REGARD, IN OTHER WORDS, IS A NON-STARTER, W ITH TWO VARYING VERSIONS EMANATING, ONLY ONE OF WHICH COULD POSSIBLY BE CORRECT. IF THE STOCK WAS ISSUED TO THE ASSESSEE AT CHENNAI, AS STATED BY HIM, OF WHAT VALUE IS THE STOCK REGIST ER OF THE COCHIN BRANCH ? IN FACT, THE MANAGER ALSO STATES OF THE JEWELLERY HAVING BEEN BR OUGHT FROM KOLKATTA BY ONE, SH. KAILASH SHARMA (OF THE CHENNAI OFFICE), TO CHENNAI . THE SAME CORROBORATES THE ASSESSEES STATEMENT OF HAVING BROUGHT THE JEWELLER Y HIMSELF FROM CHENNAI. AND IN WHICH CASE, THE RECORDS OF THE CHENNAI OFFICE BECOME RELE VANT. HOWEVER, THE DIRECTOR, IN CONTRADICTION, CATEGORICALLY STATES THAT NO JEWELLE RY STANDS ISSUED TO THE ASSEESSEE, AN EMPLOYEE OF THE COCHIN OFFICE, BY THE CHENNAI OFFIC E, WITH NO JEWELLERY ISSUED BY THE SAID OFFICE DURING JUNE & JULY, 2006 TO ITS EMPLOYE ES OUTSTANDING WITH THEM. NO DOUBT, THE MANAGER (OR EVEN THE DIRECTOR) COULD HAVE ERRED , SO THAT THE SAID EMPLOYEE COULD HAVE DELIVERED THE JEWELLERY AT COCHIN INSTEAD OF C HENNAI (OR THE OTHER WAY ROUND). BUT, ITA NO. 25/COCH./2009 13 THEN AGAIN, ONLY ONE VERSION COULD BE TRUE, AND WHI CH COULD BE ESTABLISHED ONLY ON THE BASIS OF SOME MATERIALS. WHY IS ONE OF THEM, IF NOT BOTH, NOT SPEAKING THE T RUTH ? IN FACT, AS WE OBSERVE, BOTH THE VERSIONS ARE LARGELY UNSUBSTAN TIATED, EVEN AS THAT BY THE ASSEESSEE GETS SUPPORTED BY THE FACT OF IT BEING MADE UNDER O ATH AND FIRST HAND. THE ASSESSEES CLAIMS ARE IN ANY CASE SUBJECT TO VERIFICATION, I.E ., EVEN IF THERE WAS ONLY ONE VERSION, AND WHICH WE FIND HIM TO HAVE ABYSMALLY FAILED IN. WE HAVE ALREADY OBSERVED THE ABSENCE OF ANY PERMITS/SALES-TAX DECLARATIONS (EVEN AS THE IMP UGNED GOODS ARRIVE FROM ACROSS THE BORDER AND ONLY IN THE COURSE OF INTER-STATE TRADE & COMMERCE), TRANSFER VOUCHERS, CHALLANS, SALES BILLS/INVOICES, ORDER-BOOKS, ETC. A T THE BRANCH. MR. KAILASH SHARMA WOULD HAVE TRAVELLED ONLY BY AIR (CONSIDERING THAT THE GO ODS, GOING PER THE STOCK REGISTER, REACH COCHIN THE SAME DAY OF THEIR ISSUE FROM KOLKATA) AN D/OR TRAIN (POSSIBLY) - AND ONLY ON FIRM EXPENSE - SO THAT A PROOF OF HIS TRAVEL WOULD EXHIBIT THE TIME AND PLACE WHERE THE JEWELLERY FROM KOLKATTA WAS DELIVERED BY HIM. IT IS NOT AS MUCH THE QUESTION AS TO WHICH OF THE TWO OPPOSITE VERSIONS IS TRUE, BUT OF THE AS SESSEES CLAIM OF THE JEWELLERY BELONGING TO HIS EMPLOYER AS ESTABLISHED WITH REFERENCE TO SO ME CONTEMPORANEOUS AND CREDIBLE MATERIALS, PARTICULARLY IN VIEW OF THE CONTRADICTOR Y STANDS EMANATING IN EXPLANATION. THERE IS NOTHING ON RECORD TO EXHIBIT THE MOVEMENT OF JEWELLERY FROM KOLKATTA EITHER TO CHENNAI (AND THEN TO KOCHI) OR TO KOCHI DIRECTLY . THE FACTUAL FINDINGS BY THE REVENUE DURING VISIT TO THE COCHIN BRANCH ON 25/7/2006 ARE OF VITAL SIGNIFICANCE. WHETHER BROUGHT BY THE ASSESSEE OR BY SOMEONE ELSE, THE JEWELLERY H AD ARRIVED WITH THE COCHIN BRANCH BY THE RELEVANT DATE. WHY WAS THE SAME, AS FOUND ON SURVEY, NOT RECORDED ? EVEN SO, WHY WAS THE TRANSFER VOUCHER (# 18/2006-07) DATED 19/7/2006 ISSUED BY THE KOLKATA OFFICE NOT FOUND THEREAT ? AGAIN, NO ANSWERS ARE FORTHCOMING. WE CAN UNDERST AND THAT THE SAID ISSUE VOUCHER PLACED IN A SERIAL MANNER IN A SEPARATE FIL E MAINTAINED FOR THE PURPOSE; THE BRANCH HAVING ADMITTEDLY RECEIVED JEWELLERY FROM KO LKATTA OVER THE PRECEDING MONTHS, EVEN THOUGH THE ENTRIES IN THE STOCK REGISTER FOR S OME RECENT DATES STAND NOT MADE, WHILE HERE, LEAVE ALONE THE TRANSFER VOUCHERS, NO STOCK R EGISTER OR EVEN BILL BOOKS, REFLECTING SALES EFFECTED BY THE BRANCH, WAS FOUND. WE HAVE AL READY OBSERVED THAT THE CHALLANS, PURPORTEDLY ISSUED TO THE SALESMEN ON BEING GIVEN J EWELLERY EITHER FOR DELIVERY OR FOR APPROVAL, INCLUDING THAT DATED 20/7/2006 `ISSUED T O THE ASSESSEE, OR A RECORD IN RESPECT THEREOF, STOOD NOT FOUND ON SURVEY FROM THE COCHIN OFFICE. THE SAME RESULT OBTAINS ON ITA NO. 25/COCH./2009 14 THE VISIT OF THE SALES TAX DEPARTMENT ON THE VERY S AME DAY. THE ASSSESSEE, IN THIS REGARD, ADVERTS TO THE SHOP INSPECTION REPORT DATED 25/7/20 06 (PB PG. 10) , SEEKING TO DRAW SUPPORT THERE-FROM. WE ARE UNABLE TO AGREE. THE SA ME CLEARLY STATES THAT NO RECORDS OR BOOKS PERTAINING TO F.Y. 2006-07 WERE FOUND IN INSP ECTION. WHAT COULD BE MORE INDICTING ? THIS IS MORE SO WHEN NO ANSWER/S IN EXPLANATION ARE FORTHCOMING. FURTHER, IF 6572.620 GMS. OF JEWELLERY STOOD ISSUED TO THE ASSESSEEE, I. E., AS SPECIFIED IN THE ISSUE VOUCHER, THERE IS ADMITTEDLY NO EXPLANATION FOR THE BALANCE 619.080 GMS. (7191.7 6572.62) OF JEWELLERY FOUND WITH HIM. ALSO, EQUALLY IMPORTANTLY , WHERE WAS THE BALANCE 860.260 GMS. OF JEWELLERY (I.E., AFTER EXCLUDING THE JEWELL ERY ISSUED FROM THAT REFLECTED IN ITS STOCK REGISTER AS ON 19/7/2006), BEING OSTENSIBLY AVAILAB LE WITH THE BRANCH?. NOT ONLY THAT, THERE WERE NO EQUIPMENTS, SAFE, ALMIRAH, ETC. THERE AT. WHERE AND HOW WOULD THE JEWELLERY BE STORED BY THE BRANCH? HOW WOULD THE BRANCH ISSUE JEWELLERY TO THE SALESMEN, WHICH REQUIRES A HIGH CALIBRE WEIGHING SCALE? IT IS, UNDE R THE CIRCUMSTANCES; NONE OF THE PRIMARY FACTS, WHICH ARE HIGHLY INCRIMINATING AND INDICTING OF THE ASSESSEES CASE, HAVING BEEN REBUTTED OR MET, NOT POSSIBLE TO SAY THAT THE POSSE SSION OF THE JEWELLERY WITH THE ASSESSEES EMPLOYER AT THE RELEVANT TIME AND PLACE IS ESTABLISHED; IT EVEN FAILING TO CLARIFY, AS AFORE-NOTED, THE CONTRADICTIONS ARISING OF ITS O WN EVIDENCES, I.E., ON WHICH IT PLACES RELIANCE, AND EXPLANATIONS. 4.8 THE ASSESSEE STANDS ALLOWED RELIEF BY THE LD . CIT(A) ON THE BASIS OF THE STOCK REGISTER. THAT THE SAME WAS NOT MAINTAINED IN THE REGULAR COURSE OF BUSINESS, EVEN AS OBSERVED BY THE AO, STANDS ADMITTED BY THE SENIOR M ANAGER OF THE COMPANY, WHO PRODUCED THE SAME BEFORE THE REVENUE FOR THE FIRST TIME ON 26/7/2006, ALSO EXPLAINING THE CIRCUMSTANCES UNDER WHICH IT WAS PREPARED. COULD IT, THEREFORE, BE SAID TO BE RELIABLE ? PUT DIFFERENTLY, COULD THE AOS TREATING IT AS NOT SO, HAVING BEEN PREPARED ONLY SOME TIME AGO AND NON-EXISTENT A DAY EARLIER, AND CONSEQUENTL Y, HIS INFERENCE OF IT AS HAVING BEEN PREPARED ONLY TO EXPLAIN THE JEWELLERY FOUND, BE CH ALLENGED? WE THINK NOT. SECTION 34 OF THE EVIDENCE ACT TREATS BOOKS OF ACCOUNTS, WHERE TH ESE ARE MAINTAINED IN THE REGULAR COURSE OF BUSINESS, AS ADMISSIBLE EVIDENCE, WHILE H ERE THIS IS ADMITTEDLY NOT THE CASE; THE REVENUES FINDING AS TO IT, BASED ON IT FINDING NO STOCK REGISTER DURING SURVEY ON 25/7/2006, AND THE MANNER OF ITS WRITING, HAVING BE EN AFFIRMED BY THE BRANCH MANAGER. ITA NO. 25/COCH./2009 15 ON WHAT BASIS, THEREFORE, ONE MAY ASK, THE ASSESSEE SEEKS TO PLACE RELIANCE THEREON ? THE LD. CIT(A), THUS, EVEN IGNORING THE NUMBER OF UNANS WERED QUESTIONS THAT EMANATE FROM THE ASSESSEES EXPLANATION, SO THAT IT IS SURPRISIN G THAT IT COULD BE CONSIDERED AS SATISFACTORY, FINDS FAULT WITH THE NON-RELIANCE BY THE AO ON THE SAID STOCK REGISTER. WE CAN HARDLY AGREE. WHERE WERE THESE VOUCHERS AND DOCUMENTS ON THE BASI S OF WHICH THE STOCK REGISTER IS PREPARED, HAVING NOT BEEN FOUND D URING SURVEY ? IT COULD STILL BE UNDERSTANDABLE IF THE STOCK REGISTER WAS PARTLY MAI NTAINED, WITH THE STAFF EXPLAINING AS TO HOW AND ON WHAT BASIS THEY DETERMINE THE STOCK POSI TION IN THE ABSENCE OF ITS CONTEMPORANEOUS MAINTENANCE, OR EVEN WHERE THE ENTI RE EVIDENCES ON THE BASIS OF WHICH THE STOCK REGISTER STANDS WRITTEN, MONTHS LATER, WE RE FOUND, WHICH WOULD REQUIRE A FURTHER EXAMINATION OF THE ASSESSEES CLAIMS IN THIS REGARD , BUT HERE ADMITTEDLY NEITHER THE STOCK REGISTER OR ANY OTHER DOCUMENT IS BEING MAINTAINED TO RECORD THE STOCK MOVEMENT NOR ANY UNDERLYING EVIDENCES ON THE BASIS OF WHICH THE SAME COULD BE READILY WORKED OUT. FURTHER, THAT IT IS NOT A CORRECT RECORD IS PROVED BY THE FACT OF ABSENCE OF THE JEWELLERY REFLECTED BY IT (I.E., 860.260 GMS.) ON INSPECTION; IN FACT, THERE BEING NO PROVI SION FOR STOCKING ANY. FURTHER, EQUALLY SIGNIFICANTLY, WE OBSER VE THAT THE STOCK REGISTER BEARS NO COLUMN FOR RECORDING THE ORNAMENTS ISSUED TO THE EMPLOYEES /SALES REPRESENTATIVES, AS THE ASSESSEE, AS SAMPLES, FOR CANVASSING ORDERS. HOW COULD THE SAME, IN THAT CASE, BE REGARDED AS A RELIABLE RECORD OF THE STOCK MOVEMENT AND POSITION AT THE BRANCH ? OR IS IT THAT SOME OTHER CONTEMPORANEOUS RECORD IN ITS RESPE CT IS BEING MAINTAINED BY THE BRANCH? IF SO, WHAT IS, AND WHERE IS, IT? A PERUSAL OF THE REPLY DATED 28.7.2006 BY PGPL TO THE SALES-TAX AUTHORITIES REVEALS THAT THE SALESMEN CAR RY PATTERNS (OF JEWELLERY) TO THE JEWELLERS, ON THE BASIS OF WHICH ORDERS FROM THEM A RE TAKEN (PB PGS. 23 TO 25) . AS SUCH, THE SAME ARE MEANT NOT TO BE SOLD/DELIVERED TO THE CUSTOMERS, BUT ONLY FOR EXHIBITION THERE-TO, FOR PROCURING ORDERS. THIS PERHAPS ALSO E XPLAINS WHY THERE IS NO COLUMN FOR THE ISSUE OF SAMPLES TO SALESMEN IN THE STOCK REGISTER, THOUGH, AS OBSERVED EARLIER, HE OUGHT TO BE HAVING SOME ORDER-BOOK, ETC. WITH HIM, WHICH IS ALSO NOT THE CASE. PUT DIFFERENTLY, WHEN THE GOODS DELIVERED TO THE SALESMEN ARE ADMITT EDLY NOT RECORDED IN THE STOCK REGISTER, HOW DOES THE SAME EXPLAIN THE GOODS WITH THEM ? THIS GETS FURTHER SUPPORTED BY THE OBSERVATION THAT THE JEWELLERY RECEIVED FROM KO LKATTA IN THE PAST STANDS DELIVERED TO ITA NO. 25/COCH./2009 16 THE CUSTOMERS, INDICATING THAT THE JEWELLERY RECEIV ED THERE-FROM IS NOT PATTERNS, BUT ONLY THAT WHICH IS FOR READY DELIVERY TO THE CUSTOMERS, I.E., AGAINST THEIR ORDERS. ON THE OTHER HAND, THE JEWELLERY ISSUED TO THE ASSESSEE, BEING O NLY FOR CANVASSING ORDERS, IS DECIDEDLY AND ADMITTEDLY `PATTERNS, BEING THE CONSISTENT STA ND OF THE ASSESSEE AND HIS EMPLOYER, AND AS ALSO BORNE OUT OF THE ISSUE VOUCHER DATED 20 /7/2006 PURPORTEDLY ISSUED TO HIM; THE SAME BEARING THE REMARKS `ON APPROVAL, NOT FOR SALE ON IT. IF `PATTERNS, BEING NOT A PART OF THE READY STOCK FOR SALE, ARE NOT ENTERED IN THE STOCK REGISTER ON ITS ISSUE (TO THE SALESMEN), IT WOULD SIMILARLY NOT BE ENTERED ON ITS RECEIPT, I.E., ON THE RECEIPT SIDE OF ITS STOCK REGISTER. IT CANNOT BE OTHERWISE IF THE STOC K REGISTER IS TO SHOW THE CORRECT STOCK POSITION. IT IS, THUS, IN CONSIDERABLE DOUBT IF THE JEWELLERY BROUGHT FROM KOLKATTA TO KOCHI, I.E., EVEN GRANTING SO, COULD EXPLAIN THE IM PUGNED JEWELLERY. IN FACT, THE SUBSEQUENT ENTRIES THEREIN, I.E., IF IN RESPECT OF SALES/DELIVERY TO THE CUSTOMERS, AS IN THE PAST, WOULD DISPROVE THE ASSESSEES CASE. THE CONT RADICTION (IN THE EXPLANATION/DOCUMENTS FURNISHED) IS COMPLETE. IF TH E JEWELLERY RECEIVED FROM KOLKATTA (AND GIVEN TO THE ASSESSEE) IS `PATTERNS, I.E., AS PER THE STATEMENTS AND `VOUCHER, IT WOULD NOT BE RECORDED IN THE STOCK REGISTER, SO THAT IT C ANNOT BE EXPLAINED WITH REFERENCE THERETO. ON THE OTHER HAND, IF IT IS READY JEWELLERY, I.E., FOR SALE/DELIVERY TO CUSTOMERS, AS IT APPEARS ON THE BASIS OF ITS RECEIPT BY THE BRANCH BEING REC ORDED IN THE STOCK REGISTER, WHY WAS ITS ISSUE (TO THE ASSESSEE) NOT SIMILARLY RECORDED IN T HE STOCK REGISTER? THE SAME, IN FACT, WOULD ONLY BE AGAINST ORDER/S BOOKED EARLIER. EVEN CONSIDERING THAT THERE IS NO REGISTER, AS WAS FOUND BY THE REVENUE ON SURVEY, SOME DOCUMEN T/S IN RELATION TO THE SAME WOULD BE FOUND OR EXPLAINED, WHILE NONE WAS. HOW WOULD TH E BRANCH STAFF, IN THE ABSENCE OF THE RELEVANT DETAILS, KNOW AS TO WHAT JEWELLERY IS TO B E DELIVERED TO WHICH CUSTOMER? IN FACT, IN THAT CASE, THE ASSSESSEE WOULD BE FOUND WITH SAL E BILLS (OR AT LEAST BLANK BILLS TO BE PREPARED ON DELIVERY OF GOODS TO THE CUSTOMERS) AS WELL AS THE LIST OF THE CUSTOMERS TO WHOM THE SAME IS TO BE DELIVERED ALONG WITH THE PAR TICULARS OF THE JEWELLERY TO BE SO. AND, WHY DOES HE NOT ADMIT OR CONFIRM THAT; HIS STA TEMENT U/S. 131 (DATED 24/7/2006) AS ALSO THE DELIVERY CHALLAN DATED 20/7/2006 (PB PG. 2 0) WHERE-UNDER THE IMPUGNED JEWELLERY STANDS (TO THE EXTENT OF 6572.620 GMS.) I S ISSUED TO HIM, SUGGESTING OTHERWISE, SO THAT IT IS NOT FOR SALE. THE STOCK REGISTER, THU S, DOES NOT PROVE THE IMPUGNED JEWELLERY ITA NO. 25/COCH./2009 17 AND, FURTHER, IS NOT A RELIABLE PIECE OF EVIDENCE, I.E., FOR THE PURPOSE OF EXPLAINING THE JEWELLERY WITH THE ASSESSEE. 4.9 THE ASSESSEE HAS BEFORE THE LD. CIT(A) ALSO ARGUED THAT NOTICES STAND ISSUED AND PROCEEDINGS INITIATED BY THE SALES-TAX AUTHORITIES ON ITS EMPLOYER, AND ONLY ON THE BASIS THAT THE IMPUGNED JEWELLERY CONSTITUTES ITS STOCK. THE INCOME-TAX DEPARTMENT, THEREFORE, COULD NOT POSSIBLY TAKE A DIFFERENT STAND IN THE MA TTER. THE ARGUMENT IS MISCONCEIVED. THE REVENUE, IN BRINGING THE IMPUGNED JEWELLERY TO TAX IN THE HANDS OF THE ASSESSEE, IS NOT TAKING A CONTRARY STAND, I.E., TO THAT BY THE S TATE REVENUE AUTHORITIES. FIRSTLY, THEIR CONCLUSIONS, THOUGH RELEVANT, ARE NOT BINDING ON IT . THE MATTER, AS CLARIFIED EARLIER, IS PURELY ONE OF FACT. THE ACTION INITIATED BY THE STA TE DEPARTMENT IS ON THE BASIS OF THE RELEVANT PROVISIONS, THE SCOPE AND APPLICATION OF W HICH IS VASTLY DIFFERENT. IN FACT, EVEN AS THE FATE OF THE SAID PROCEEDINGS HAS NOT BEEN BROUG HT TO OUR NOTICE, AND WHICH WOULD ONLY LEAD TO AN ADVERSE INFERENCE IN THE MATTER, EVEN IF THE SAID DEPARTMENT FOUND THE ASSESSEES CASE ADMISSIBLE IN VIEW OF THE IMPUGNED JEWELLERY BEING `PATTERNS, NOT MEANT FOR SALE, BUT GIVEN TO HIM AS THE SALESMAN ONLY FOR PROCURING ORDERS (THOUGH HE DID NOT BEAR ANY ORDER-BOOK), SO THAT NO CASE OF OUT-OF-BOO KS SALES AND, THUS, SALES-TAX EVASION IS MADE OUT, THIS WOULD HAVE NO BEARING ON THE INSTANT CASE; THE ASSESSEE BEING STILL UNABLE TO EXPLAIN THE NATURE AND SOURCE OF THE JEWELLERY W ITH HIM, AND WHICH HE SEEKS TO WITH REFERENCE TO THE STOCK WITH ITS EMPLOYER AT THE REL EVANT TIME & PLACE. THIS IS AS THE SCOPE OF THE PROCEEDINGS UNDER THE SALES-TAX ACT IS WITH REFERENCE TO ANY UNACCOUNTED SALES/TURNOVER. ALSO, AS STATED EARLIER, THE GOODS BEING `PATTERNS ONLY IMPLIES THAT THESE ARE NOT MEANT FOR SALE AND, THEREFORE, DO NOT FIND REFLECTION IN THE STOCK REGISTER. FURTHER, AS STATED HEREINBEFORE, IT IS OPEN TO THE ASSESSEE TO EXPLAIN THE POSSESSION OF JEWELLERY WITH HIM U/S. 69A AS HIS EMPLOYERS UNACCOUNTED STO CK, IN WHICH CASE, WHERE SO ADMITTED BY THE EMPLOYER, THE ASSESSEE HAS FULLY MET THE STA TUTORY PRESUMPTION U/S. 110 OF THE EVIDENCE ACT OF HIS BEING NOT THE OWNER THEREOF. HO WEVER, WHERE THAT IS NOT THE CASE, AS IN THE INSTANT CASE, AND THE JEWELLERY EXPLAINED WI TH REFERENCE TO THE ACCOUNTED STOCK OF THE EMPLOYER, THE ACTUAL, PHYSICAL STOCK POSITION O F THE EMPLOYER AT THE RELEVANT TIME AND PLACE ASSUMES CRITICAL SIGNIFICANCE; IS, IN FACT, ` FACT-IN-ISSUE, AND WHERE NOT SATISFACTORILY SHOWN, THE CONDITION OF S. 69A OF THE ACT IS SATISF IED, AND THE REVENUE IS FREE TO LEVY TAX ITA NO. 25/COCH./2009 18 ON THE SAME, TREATING THE ASSESSEE AS THE DEEMED OW NER BY VIRTUE OF HIS POSSESSION. THE REVENUE, IT MAY BE CLARIFIED, ONCE A SATISFACTORY E XPLANATION AS TO ACQUISITION IS NOT FORTHCOMING, IS NOT OBLIGED TO UNDERTAKE ANY INQUIR Y INTO THE POSSIBLE SOURCE/S THEREOF. THE FOLLOWING OBSERVATION BY THE APEX COURT IN THE CASE OF CIT V. DEVI PRASAD VISHWANATH PRASAD (1969) 72 ITR 194 (SC), THOUGH STATING TRITE LAW A ND IN CONTEXT OF ANOTHER DEEMING PROVISION (S. 68), WOULD BE ILLUSTR ATIVE: ` WHERE THERE IS AN UNEXPLAINED CREDIT, IT IS OPEN TO THE INCOME-TAX OFFICER TO HOLD THAT IT IS INCOME OF THE ASSESSEE, AND NO FURTHER BURDEN LI ES ON THE INCOME-TAX OFFICER TO SHOW THAT THAT INCOME IS FROM A PARTICULAR SOURCE . FURTHER, THE SALES-TAX DEPARTMENT HAS ALSO, IN FACT , LEVIED TAX AND PENALTY ONLY ON THE BASIS THAT THE SAME REPRESENTS THE EMPLOYERS UNDIS CLOSED, I.E., UNACCOUNTED, TURNOVER. 4.10 FINALLY, THE ASSESSEE HAS ALSO ADVANCED ARG UMENTS BASED ON THE DECISION IN THE CASE OF P.R. METRANI VS. CIT (2006) 287 ITR 209 (SC), WHEREBY IT STANDS HELD TH AT THE PRESUMPTION U/S. 132(4A), ACCORDING INFERENCE OF TR UTHFULNESS TO THE BOOKS OF ACCOUNTS, DOCUMENTS, ETC. FOUND IN SEARCH, AND THAT THEY BELO NG TO THE PERSON(S) FROM WHOSE POSSESSION THE SAME ARE FOUND, IS OF LIMITED RELEVA NCE/APPLICABILITY WHICH EXTENDS TO THE PROCEEDINGS U/S. 132 ONLY. THE RELIANCE ON THE SAID DECISION BY THE ASSESSEE IS MISPLACED, AS EXPLAINED IN THE DECISION IN THE CASE OF PUSHKAR NARAYAN SARAF VS. CIT 183 ITR 308 (ALL.) AND DAYA CHAND VS. CIT , 250 ITR 327 (DEL.) (WHICH STAND APPROVED BY THE H ONBLE APEX COURT). THE SAME DOES NOT OBVIATE THE NECESSIT Y TO ESTABLISH BY INDEPENDENT EVIDENCE(S) THE GENUINENESS OF THE CASH CREDIT(S) U /S. 68 OF THE ACT, I.E., DOES NOT HAVE THE EFFECT OF EXCLUDING THE REGULAR PROVISIONS OF THE A CT. THE LAW IN THE MATTER, WHICH HAS NOT WITNESSED ANY CHANGE SINCE, STANDS, AS AFORE-ST ATED, DULY EXPLAINED BY THE APEX COURT IN THE CASE OF CHUHARMAL VS. CIT (SUPRA). IN FACT, SECTION 292C, CO-OPTED ON THE S TATUTE BY THE FINANCE ACT, 2007, W.R.E.F. 1.10.75, WOULD S ETTLE THE MATTER CONCLUSIVELY AND ANSWER THE ARGUMENT/S RAISED BY THE ASSESSEE AGAINS T IT. CONTINUING FURTHER, EVEN THOUGH NOT ARGUED BEFORE U S, WE MAY ADVERT TO THE DECISION IN THE CASE OF CIT VS. NOORJAHAN (P.K.) (1999) 237 ITR 570 (SC). THIS IS AS IT MAY WELL BE ARGUED THAT THE ASSESSEES STATUS AS AN EMPLOYEE , AND THUS A MAN OF LIMITED MEANS, BEING ACCEPTED, SECTION 69A COULD NOT BE INVOKED AN D TAX IN RESPECT OF GOODS VALUING ITA NO. 25/COCH./2009 19 OVER RS. 63 LAKHS LEVIED. WE ARE AFRAID TO SAY, THE ARGUMENT WOULD NOT HOLD. FIRSTLY, THE SAID DECISION IS WITH REFERENCE TO S. 69 OF THE ACT , WHICH IS DIFFERENTLY WORDED. THE SAME ALLOWS SCOPE FOR THE CONSIDERATION OF THE ASSEESSEE , IN THE FACT OF ITS CASE, BEING THE BENAMI OF THE SOME ONE ELSE, THOUGH THE IMPLICATION S OF THE BENAMI PROHIBITION ACT IN THIS REGARD WOULD HAVE TO BE SEEN. SECONDLY, THE V ERY FACT OF HIS BEING AN EMPLOYEE OF A REPUTED FIRM OF JEWELLERS LEADS TO A PROXIMATE BASI S FOR THE JEWELLERY COMING TO HIS POSSESSION, WHICH WAS ABSENT IN THE CITED CASE, SO THAT THERE WAS NO CLUE AS TO WHEREFROM THE VALUABLES CAME IN THE POSSESSION OF THE ASSESSE E-RESPONDENT. AS AFORE-NOTED, IF THE JEWELLERY IS ACCEPTED AS ITS (EMPLOYERS) UNDISCLO SED INCOME, THAT IS THE END OF THE MATTER. WHERE, HOWEVER, IT IS NOT SO, THE CONDITIO N OF SECTION 110 OF THE EVIDENCE ACT READ WITH SECTION 69A OF THE ACT WOULD BE MET ONLY WHERE THE SOURCE OF ACQUISITION IN THE ASSESSEES HANDS IS SPECIFICALLY EXPLAINED, I.E ., WITH REFERENCE TO THE ACTUAL, PHYSICAL STOCK POSITION OF THE EMPLOYER AT THE RELEVANT TIME AND PLACE. NO DOUBT, THE REVENUE IS AT LIBERTY, AND COULD HAVE ASSESSED THE EMPLOYER AL SO ON A PROTECTIVE BASIS, BUT ITS NOT DOING SO WOULD NOT IN ANY MANNER LEAD TO THE ASSESS EE BEING DISCHARGED OF ITS BURDEN OF PROOF. THAT THE REVENUE IS NOT OBLIGED TO GO INTO THE SOURCE OR THE MEANS OF ACQUISITION WITH THE ASSESSEE, IS A PART OF THE SETTLED LAW. T HIRDLY, WE FIND THAT THE ASSESSEE HAS PAID TAX AT ` 24 LAKHS ON 2.2.2008, I.E., EVEN PRIOR TO THE COMPL ETION OF ASSESSMENT ON 26.3.2008. THE CONTENTION OF THE ASSESSEE BEING A M AN OF NO MEANS, THUS, STANDS DISPROVED. THE SAID DECISION, IT WOULD BE NOTED, S TANDS RENDERED ON THE FACTS OF ITS CASE. 5. IN VIEW OF THE FOREGOING, WE ENDORSE THE FIN DING/S OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT SATISFACTORILY EXPLAINED THE ACQUI SITION OF THE IMPUGNED JEWELLERY WITH HIM, SO THAT HE HAS RIGHTLY BROUGHT THE SAME TO TAX AS INCOME FOR THE YEAR. CONSEQUENTLY, WE SET ASIDE THE IMPUGNED ORDER, REVERSING THE FIND INGS OF THE FIRST APPELLATE AUTHORITY IN THE MATTER. WE DECIDE ACCORDINGLY. ITA NO. 25/COCH./2009 20 6. IN THE RESULT, THE REVENUES APPEAL IS ALL OWED. SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 09 TH FEBRUARY, 2011 GJ COPY TO: 1. SHRI KARUN DUTT SINGH ALIAS RINKU SINGH, C/O PRA KASH GOLD PALACE P. LTD., 144, PURASAWALKAM HIGH ROAD, KELLY, CHENNAI-600 010. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRA L CIRCLE-1, ERNAKULAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, K OCHI. 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR)