| Headnote |
Income Tax Act, 1961 – s.69A – Scope and applicability of –s.69A deals with unexplained money, bullion, jewellery or othervaluable articles – Deeming effect of the provision – Whenapplicable – Ambit of the word ‘owner’ in s.69A – Held (per K.M.Joseph, J.) : To apply s.69A of the Act, it is indispensable that theOfficer must find that the other valuable article is owned by theassessee – A bailee who is a common carrier is not the owner of thegoods – A bailee who is a common carrier would necessarily beentrusted with the possession of the goods – The purpose of bailmentis the delivery of the goods by the common carrier to the consigneeor as per the directions of the consignor – During the subsistenceof the contract of carriage of goods, the bailee would not becomethe owner of the goods – In the case of an entrustment to the carrierotherwise than under a contract of sale of goods also, the possessionof the carrier would not convert it into the owner of the goods –The full rights of an owner include the power of enjoyment whichfurther includes the power to destroy; the right to possession whichfurther includes the right to exclude others; the power to alienateinter vivos or to charge as security and the power to bequeath theproperty – A carrier has none of these rights or powers – Sale by acarrier does not pass title except when it is immunised by the conductof the owner of the good which would in turn estop the owner fromimpugning the title of the buyer – Held (per Hrishikesh Roy, J.)(concurring): s.69A provides as a rule of evidence that for thedeeming effect to apply- the assessee must be the owner of money,bullion, jewellery and other valuable articles on which he is unableto proffer a satisfactory explanation – Determining ownership ofgoods is an important factor to impute tax liability – Someone havingmere possession and without legal ownership or title over the goods will not be covered within the ambit of s.69A – An assessee maynevertheless be also regarded as deemed owner if possession isimputed on the assessee and no other person having a better claimis contesting the assessee’s claim – In the present case, the assesseewas certainly not the owner of the bitumen - but was the carrierwho was supplying goods from the consignor- oi l market ingcompanies to the consignee-Road Construction Department –Notably, due to short delivery of goods, the possession of theassessee was unlawful – The inevitable conclusion therefore is thatthe assessee is not the owner, for the purposes of s.69A – ContractAct, 1872 – ss.148, 151 – Sale of Goods Act, 1930 – ss. 39, 27.Income Tax Act, 1961 – s.69A – ‘Other valuable article’ withinmeaning of s.69A – Whether it must be intrinsically costly – Whetherbitumen- the residual offshoot material during processing of crudeoil, excluding its valuable constituents like petrol, diesel, LPG,aviation fuel etc., can be covered within the category of ‘othervaluable article’ alongside money, bullion and jewellery within themeaning of s.69A – Held (per K.M. Joseph, J.): Bitumen may befound in small quantities or large quantities – If the ‘article’ is to befound ‘valuable’, then in small quantity it must not just have somevalue but it must be ‘worth a good price’ or ‘worth a great deal ofmoney’ and not that it has ‘value’ – s.69A would then stand attracted– ‘Bitumen’ as such cannot be treated as a ‘valuable article’ – Held(per Hrishikesh Roy, J.) (concurring): When the principle of EjusdemGeneris is applied, the preceding words in s.69A such as money,bullion, jewellery would suggest that the phrase ‘other valuablearticle’ which follows those words, would justify inclusion of onlyhigh value goods – Any other way of reading the phrase ‘othervaluable article’ or ‘valuable article’ by ignoring the kind of specificgoods mentioned in the preceding part of s.69A, would be incorrectand would do violence to the plain language of the provision andwill travel beyond the legislative intent – Additionally, the maxim‘noscitur a sociis’ i.e. (a word is known by its associates) would alsosupport the above view that the other valuable articles should beitems in the nature of silver bars, or jewellery or money i.e. onlyhigh priced item – It is given, that no law could possibly provide foran exhaustive list of all valuable items that may facilitate high incomeassessees to adjust their income – Only an indicative list of valuable articles can practically be mentioned in the Section – But to includebitumen within the expression ‘other valuable article’ in s.69A, wouldresult in absurdities, that one needs to eschew – The common placeitems from kirana store and bitumen are intrinsically dissimilar tothe high value items in s.69A and through an interpretive exercise,one should not categorise them with items such as gold bars andjewellery.Income Tax Act, 1961– s.69A – Can a thief be the owner ofthe goods – Held (per K.M. Joseph, J.): The illegality of theownership may not ill square with the requirement of s.69A that theassessing officer must find the assessee to be the owner of the article– However, that is not to say that without finding ownership orwhen it is obvious that someone else is the owner, a person found inpossession, which is illegal, can be found to be the owner unders.69A – It would be straining the law beyond justification if theCourt were to recognise a thief as the owner of the property withinthe meaning of s.69A – Recognising a thief as the owner of theproperty would also mean that the owner of the property wouldcease to be recognised as the owner, which would indeed be themost startling result – While possession of a person may inappropriate cases, when there is no explanation forthcoming aboutthe source and quality of his possession, justify an assessing officerfinding him to be the owner, when the facts are known that thecarrier is not the owner and somebody else is the owner, then todescribe him as the owner may produce results which are most illegalapart from being unjust.Income Tax Act, 1961 – s.69A – Article and Valuable Article– Distinguished – Held (per Hrishikesh Roy, J.): Articles of valueare a genus of which valuable articles are a species i.e. a subset ofhigh priced items – An article having value may not be a valuablearticle – Categorising all sundry items as valuable articles will leadto an interpretation which will be foreign to the purpose of the lawand the intention of the legislature in so far as s.69A is concerned.Doctrines/Principles – Noscitur a Sociis and ejusdem generis –Discussed.Maxims – Absoluta sententia expositore non indiget – Explained. |
