Presumption of ownership in cash possession defeats section 69A claim where the assessee fails to rebut ownership.

Money found in a person's possession is presumed to belong to him, and for section 69A purposes the burden rests on that person to prove that he is not the owner. The Madras HC applied this presumption, relying on section 110 of the Evidence Act and Chuharmal v. CIT, and held that the assessee's bare admission of possession without cogent proof that the cash belonged to others was insufficient. The addition was therefore sustainable only to the extent of the amount actually found in his possession, and the larger proposed sum was not brought to tax on this issue.

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Issues: Whether the amount of Rs. 4,28,713 found in the assessee's possession was assessable under section 69A of the Income-tax Act, 1961, in view of the presumption arising from possession and the assessee's failure to prove that he was not its owner.

Analysis: The currency was found in the assessee's possession during the search. The assessee admitted possession but failed to establish, by cogent evidence, that the money belonged to someone else or that he was merely a distributor on behalf of unnamed principals. In proceedings under section 69A, the person found in possession must rebut the presumption of ownership; section 110 of the Evidence Act supports that principle and applies in tax proceedings. The decision in Chuharmal v. CIT was treated as governing the issue and the contrary view taken in earlier High Court authority was not accepted.

Conclusion: The assessee did not discharge the burden of proving that he was not the owner of the amount found in his possession. The addition was therefore sustainable under section 69A to the extent of Rs. 4,28,713, and the question was answered in the negative in favour of the Revenue only to that extent.

Final Conclusion: The reference was answered against the assessee on the core ownership issue, but the taxability was confined to the amount actually found in his possession and not to the larger sum originally proposed under the head of other sources.

Ratio Decidendi: Where money is found in a person's possession, the presumption of ownership applies and, for section 69A purposes, the burden lies on that person to prove that he is not the owner; failure to rebut that presumption renders the amount assessable as unexplained money.

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