TaxTMI 
TaxTMI 
1980 (1) TMI 140
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....ok up the assessment and completed the same on 27th Feb., 71 determining the total income of the assessee as under: Business (brokerage & in pearls) Rs. 8,000 Other sources Rs. 1,30,785 . Rs. 1,38,785 This amount of Rs. 1,30,785 added under the head "Other Sources" represented the value of the currency seized from the assessee's premises at Bombay in the aforesaid raid. The assessee went up in appeal before the AAC of Income-tax, Trichy. The AAC, after considering all the aspects of the case, was of the opinion that the case required further scrutiny, verification of facts and questioning of the concerned parties. For this purpose he remained the case to the ITO. The ITO submitted his remand report, dt. 13th Jan., 72, wherein he observed that inasmuch as the money was found in the room occupied by the assessee and inasmuch as the assessee was not able to fully and positively establish the ownership of the funds of anybody else, it has to be concluded that the amount should be assessed in his hands as unexplained money under s. 69A of the Act. The AAC after the receipt of the above remand report passed his order on 6th Feb., 78. He observed that as no proper exp....
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.... addressed by the assessee to the 3rd ITO, BI-Ward, Bombay, letter addressed by M/s N.C. Rajagopal & Co., dt. 25th October 71, to the IAC, Range-II, Madurai and the petition praying for settlement, dt. 28th Oct., 71, filed before the CIT Madras. Besides relying on the orders of the authorities below both with reference to the assessment and the penalty, he urged that from the conduct of the assessee as evidenced in the letters filed by him, it is established that the assessee had exercised acts of ownership with reference to the cash of Rs. 1,30,785 seized from him and, therefore, the provisions of s. 69-A are clearly attracted to this case. He further referred to the judgment of the Bombay High Court in the case of J.P. Parkar vs. V.B. Palekar and others(1), and pointed out that the assessee has not discharged the onus of showing that he is not the owner of the above sum. He, therefore, strenuously urged that the assessment and the penalty levied should be confirmed. 5. We have considered the rival submissions. We have also perused the records brought to our notice. It is true that there was a raid in the premises of the assessee at Bombay by the Enforcement Directorate on 29th....
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.... and from running of a mess @ Rs. 8,000 as against the amount admitted of Rs. 5,000 the ITO chose to make assessment of the above sum of Rs. 1,30,785 which was the currency seized at the premises of the assessee during the above raid as income from other sources on the ground that there was definite proof of possession of such an amount. The AAC, who first heard the appeal and who remanded the matter to the ITO, directed the ITO to bring all the facts for the purpose of deciding whether the sum in question can be taken as the assessee's income. Before submitting the remand report, the ITO, Ramanathapuram, had examined the assessee. We have perused those statements. In those statement also the assessee had disowned the ownership for the above currency. In the remand report, dt. 13th Jan., 72, the ITO has not referred to any other material to show that the assessee was the owner of the above money seized from the premises. On the other hand, in the last paragraph of his remand report, the ITO has observed as under: "In as much as the money was found in the room occupied by the assessee and in as much as the assessee is not able to fully and positively establish the ownership of th....
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.... final. The learned representative for the assessee stated that the assessee had not so far been served with the order of the enforcement directorate. In para 15 of the order of the enforcement directorate the act that the assessee disowned the money even on the date of the raid has not been taken due note of. On the other hand, the enforcement directorate has presumed that the assessee has started disowning the amount as an afterthought for evading the consequence arising from the operation of the provisions of the Foreign Exchange Regulations Act. On the above presumption the enforcement directorate has held that the above sum represented sale proceeds of foreign exchange concealed by the assessee. We are of the opinion that the order of the enforcement directorate in these circumstances cannot be taken to constitute material to show that the assessee is the owner of the above sum. The learned departmental representative argued that the assessee wrote to the ITO, Bombay, on 5th Jan., 66 requesting him to recover all the moneys taken away by the enforcement directorate on 29th July, 65 and, therefore, it was clear that the assessee was exercising acts of ownership in respect of th....