Civil Appeal No 317 of 1984
From the Judgment and Order dated 10180 of the Bombay High Court in Special Civil Application No 147175
PH Parekh for the appellants
UR Lalit BP Maheshwari and RS Rana for the respondents
The Judgment of the Court was delivered by KANIA J
This is an appeal against the judgment of a Division Bench of the Bombay High Court delivered on January 10 1980
The appellants before us are the Kalyan Municipal Council referred to 834 hereinafter as the Municipal Council  its Chief officer and the State of Maharashtra respectively
Respondent No 1 is a Private Limited Company and is the owner of an industrial undertaking within the limits of the Municipal Council
We propose to refer to respondent No 1 as the Company 
The relevant facts lie within a narrow compass and there is no dispute regarding the same
Property Tax was levied by the Municipal Council on the immovable properties of the Company within the territorial limits of the Municipal Council in respect of the years 1970 71 1971 72 and 1972 73
In September 1973 the Municipal Council claimed that it had detected certain new construction and alterations in the existing construction belonging to the Company and a report to that effect was made to the Standing Committee
A proposal was submitted to the Standing Committee to increase the property tax in respect of the said immovable property from 1470 to 31374
On October 3 1973 the Standing Committee passed a resolution increasing the rateable value of the said immovable property of the Company from 1470 to 31374
After serving a notice on the Company as required under the provisions of Section 1231 of the Maharashtra Municipalities Act referred to hereinafter as the said Act  and hearing the objections filed by the Company against the proposed increase a demand notice was issued on the Company on January 9 1975 demanding an amount of Rs5162669 and an appropriate amount of Educational Cess and additional Health Tax
This notice of demand was challenged by the Company by way of Special Civil Application No 147 of 1975 before the High Court of Judicature at Bombay
The Division Bench of the Bombay High Court which decided the said Special Civil Application held that the case was covered by the decision of a Full Bench of the Bombay High Court in Sholapur Municipal Corporation vs Ramchandra Ramappa Madgundi 1972 74 Bombay Law Reporter p 469
The Division Bench of the Bombay High Court in the impugned judgment has pointed out that there was no dispute that a notice dated November 17 1973 being the notice as contemplated by Section 1231 of the said Act was issued to the Company for amending the assessment list
This notice was served after 17th November 1973
After analysing the provisions of Section 123 of the said Act and following the aforesaid decision of the Full Bench the Division Bench took the view that alteration made in the assessment list after following the procedure under Section 1231 of the said Act does not become effective for any period prior to the commencement of the official year in which the alteration in the assessment list is made and the Municipality is not entitled to levy tax for an official year or 835 any part thereof which is already expired
The Division Bench pointed out in the present case the alteration in the assessment list was made after 31st March 1974 and before 31st March 1975
In view of this the said alteration could not have the effect of increasing the assessment for any year prior to the year commencing from 1st April 1974
It is the correctness of this decision which is sought to be assailed before us in this appeal
Since the decision under appeal is based mainly on the said decision of a Full Bench in the case of Sholapur Municipal Corporation vs Ramchandra Ramappa Madgundi supra we may briefly refer to the said decision
That decision was based on the provisions of the Bombay Municipal Boroughs Act 1925 but the ratio of the decision applies to the case before us because the relevant provisions of the Bombay Municipal Borough Act and the said Act are in pari materia
As far as the question raised before us is concerned the provisions of Section 82 Sub section 3 of the Bombay Municipal Boroughs Act are in pari materia with the provisions of Section 1233 of the said Act
The Full Bench of the Bombay High Court in that case came to conclusion that the alteration made under Section 823 of the Bombay Municipal Boroughs Act in the assessment list prepared under Section 73 of that Act does not become effective for any period prior to the commencement of the official year in which the alteration in the assessment list is made and therefore the Municipality is not entitled to levy tax for an official year or any part thereof which has already expired
It was also held that the expression current official year in Section 823 of that Act means the earliest day in the official year which is current when the amendment of the assessment list takes place that is to say the expression refers to that official year which is running at the time when the amendment is made by insertion or alteration of an entry under Section 821 of the Act
The submission of Mr Parekh learned counsel for the appellants is that the aforesaid case before the Full Bench was wrongly decided and as the judgment under appeal follows the said decision of the Full Bench that judgment is also erroneous and liable to be set aside
In our view this contention must be negatived in view of the decision of this Court rendered by a Bench of three learned Judges in Municipal Corporation of City of Hubli vs Subha Rao Hanumatharao Prayag  Ors 1976 3 SCR p 883
A perusal of the said decision makes it clear that this Court took the view that the scheme of relevant provisions of the Bombay Municipal Boroughs Act 1925 shows that the official year is the unit of time for the levy of property tax under 836 that Act
It was further held that the expression current official year in the context in which it occurs in Section 82 Sub section 3 clearly signifies the earliest day in the official year which is current when the amendment in the assessment list takes place and that expression refers only to the official year which is running at the time when the amendment is made by insertion or alteration of an entry under sub section 1 of Section 82
Thereafter this Court goes on to point out as follows It would therefore seem clear on a combined reading of Sub sections 1 and 3 of Section 82 that an amendment in order to be effective in levying tax for an official year must be made during the currency of the official year
This is now well settled as a result of several decisions of Bombay High Court culminating in the Full Bench decision in Sholapur Municipal Corporation vs Ramchandra supra and we do not see any reason to take a different view
 The aforesaid statement in the judgment of this Court clearly shows that the decision of the Full Bench of the Bombay High Court in Sholapur Municipal Corporation vs Ramchandra supra was approved by this Court
The decision of the aforesaid Bench of this Court is binding on us and is clearly applicable to the case before us
In that judgment this Court pointed out that once it was accepted that the process of levying the tax is complete only when the assessment list is authenticated and it is only then that the tax is levied on the ratepayers it is difficult to resist the conclusion that the authentication must be made within the official year
The tax being a tax for the official year must obviously be levied during the official year and since the levy of the tax is complete only when the assessment list is authenticated it must follow that the authentication must take place in the official year
Mr Parekh urged although not with much conviction that the decision of this Court in the case of Municipal Corporation of City of Hubli vs Subha Rao Hanumatharao Prayag  Ors
supra can be distinguished because in that case there was no question of any additional construction or new construction being detected
In our view it is not possible to make any such distinction
The question which arose before the Court was whether an assessment list which was finalised and authenticated on July 24 1952 after the expiry of the official year 1951 52 on 3131952 could be regarded as a good or valid assessment list for the official year 1951 52
The entire scheme of the provisions 837 pertaining to the preparation of the assessment list and the levy of property tax under the Bombay Municipal Boroughs Act which is materially similar to the scheme under the said Act was considered and the aforesaid conclusion were arrived at
There is no substance in the contention that the said decision can be distinguished
Moreover with respect we see no reason to take a different view from the one taken in the aforesaid case
The official year is the unit of taxation as far as Municipal Property taxes are concerned and if the contention of Mr Parekh is accepted the result would be that an assessment list could be altered at any time if the conditions set out in Section 123 of the said Act are satisfied with the result that there would be complete uncertainty in the field of taxation of property and the unwarry purchasers of immovable property might be put to the difficulty of having of discharge the liabilities for property taxes for years long prior to the time when they purchased the immovable property in order to save the property from being sold in recovery proceedings
In the result the appeal fails and is dismissed with costs
SL Appeal dismissed


Summary:
Petitioner is the assessee
For the assessment year 1974 75 he submitted his return of income showing a total income of Rs3113 and stated that he derived this income from two stores which he had been running
On May 12 1973 in a search by the Customs authorities 565 watches of foreign make of the value of Rs87455 were seized from the petitioner s bedroom
A panchnama was prepared
The Income Tax Officer issued a notice dated January 19 1974 to the petitioner to show cause why a sum of Rs87455 the value of the watches seized should not be treated as his concealed income and brought to tax under section 69A of the Act
He further directed issuance of notice under section 2711c of the Act
Being aggrieved the petitioner filed an appeal before the Appellate Assistant Commissioner who dismissed the appeal holding that in view of the order passed by the Collector of Customs confiscating the watches and levying penalty of Rs2 lakhs under the Customs Act the Income Tax Officer was justified in including the cost of watches in the income of the assessee for the assessment year 1974 75
789 Thereafter on March 29 1978 the Assistant Commissioner issued a notice of penalty under section 2711c of the Act imposing a penalty of Rs90000
The two appeals filed by the petitioner were dismissed by the Income tax Appellate Tribunal and the petitioner sought a reference to the High Court under section 2561 of the Act
The High Court held that i by virtue of the search in the house of the petitioner the watches were seized and a Panchnama was prepared that under Section 110 of the it clearly establishes that the possession of the wrist watches was found with the petitioner that as the petitioner did not adduce any evidence he had not discharged the onus by proving that the wrist watches did not belong to him the Tribunal had rightly held that the value of the wrist watches is the income of assessee and ii that in view of the Explanation to section 2711c the Department had discharged the burden of establishing concealment
The reference was accordingly answered against the assessee
Dismissing the Special Leave Petition  HELD 1
The expression income  as used in section 69A of the Income Tax Act 1961 has a wide meaning which meant any thing which came in or resulted in gain794D 2
Section 110 of the Evidence Act provides that where a person was found in possession of anything the onus of proving that he was not the owner was on the person who affirms that he was not the owner
The High Court in JS Parker vs VB Palekar held that what was meant by saying that the Evidence Act did not apply to proceedings under the Income Tax Act was that the rigour of the rules of evidence contained in the Evidence Act was not applicable but that does not mean that when the taxing authorities were desirous in invoking the principles of the Evidence Act in proceedings before them they were prevented from doing so
793G H794A B 3
All that section 110 of the Evidence Act does is that it embodies a salutary principle of common law jurisprudence which could be attracted to a set of circumstances that satisfy its condition
794B 4
In the instant case possession of the wrist watches was found with the petitioner
The petitioner did not adduce any evidence far less 790 discharged the onus of proving that the wrist watches in question did not belong to him
Hence the High Court held and according to this Court rightly that the value of the wrist watches is the income of the assessee by virtue of Section 69A of the Act
793D E 5
The amendment to the Explanation to section 2711c by the Taxation Laws Amendment Act 1975 is prospective in effect
795G 6
In the instant case the assessee had shown only a total income of Rs3113 and subsequently the raiding party seized wrist watches worth Rs87455
The value of that income was included in the assessable income of the assessee
The total assessable income of the assessee came to Rs90568 whereas the returned income was Rs3113 which was certainly less than 80 of the total income and as such Explanation to section 2711c applied
Accordingly the Revenue has discharged the onus of proving concealment of income
795E Vishwakarma Industries vs Commissioner of Income tax and Commissioner of Income Tax vs Bherulal Shrikishan  approved
Though the penalty proceedings are penal in nature in the facts of this case the onus on the Revenue has been duly discharged
795G H