TAX CASES No.12 OF 1995 Statement of case in R.A. No. 15 (Pat)/94 (arising out of ITA.No.463 (Pat)/89,Asstt. Year 1981-82, Shri Bisholal Saraf,Madhubani. ------- BISHOLAL SARAF, Ghoghardiha, Madhubani ---- Appellant Versus The Commissioner of Income- Tax,Bihar, Patna---Respondent. ------ For the Appellant : Mr. Ajay Kumar Rastogi, Advocate. For the Revenue : Mr.Harshwardhan Prasad Senior Standing Counsel Mrs. Archana Sinha, Junior StandingCounsel ------ P R E S E N T THE HON'BLE MR. JUSTICE CHANDRAMAULI KR. PRASAD THE HON'BLE DR. JUSTICE RAVI RANJAN Prasad & Ranjan: JJ This is a reference under section 256 (1) of the Income- Tax Act, 1961. The business and residential premises of Bisholal Saraf, (hereinafter referred to as the “assessee”) was searched in exercise of the power under section 132 of the Income-tax Act on 20th November, 1980. During the course of search, besides other things, jewellery of the value of Rs. 2,83,000/- was found and seized. In course of the proceeding under - 2 - section 132 (6) of the Income-tax Act, (hereinafter referred to as the “Act”) and also during assessment proceeding the assessee contended that the jewellery seized, belong to his wife Chameli Devi and his daughter-in-law Asha Devi. It was further pointed out that the assessee’s wife and daughter-in-law were assessed to the wealth tax. The Assessing Officer found that the jewellery valued at Rs. 1,34,450/- was explained and the rest of the jewellery, the assessee was treated to be the owner. The Assessing Officer thereafter observed that sources of acquisition of the jewellery have not been explained and accordingly, added a sum of Rs. 1,69,550/- as undisclosed income under section 69A of the Act. Assessee aggrieved by the same, preferred appeal and the Commissioner of Income-tax deleted the addition of the amount of Rs. 1,69,530/- as undisclosed income on its finding that Assessing Officer did not record any finding in regard to the ownership of jewellery. While doing so, the Tribunal has observed as follows: “He no doubt, accepted that the jewellery disclosed by the ladies to the department were much more in quantity then found and seized at the time of raid. It is also stated that no other jewellery was found from the premises at the time of raid. There is thus nothing on record, to suggest - 3 - ownership of jewellery in appellant’s case. It is true that possession is an important indicator of ownership and may give rise to necessary presumption. In this case, however, this has been rebutted. There is thus, in my view, no proper finding in the matter of ownership of jewellery in the case of the appellant. The inferences in this regard drawn by the Income-tax Officer are, therefore, to be held as not supported.” The revenue carried the matter in appeal before the Patna Bench of the Income-tax Tribunal (hereinafter referred to as the “Tribunal”). The Tribunal set aside the order of the Commissioner of Income-tax (Appeal) and restored the order of Assessing Officer and while doing so, it observed that the Assessing Officer was justified in treating the jewellery seized as undisclosed income of the assessee under section 69A of the Act. At the instance of the assessee the Tribunal has drawn the statement of the case and referred the following question of law for our opinion: “Whether, in the facts and in the circumstances of the case, the Tribunal was justified in confirming the addition of Rs. 1,69,550/- without giving their finding as to the ownership in the hands of the appellant?” Mr. Ajay Kumar Rastogi, appearing on behalf of the petitioner raises a very short point. He submits that the value of - 4 - the jewellery can be deemed to be unexplained investments only when it is found that the assessee is the owner of the jewellery. He points out that Commissioner of Income-tax (Appeal) while reversing the order of Assessing Officer has clearly held that assessee is not the owner of the jewellery and without reversing the aforesaid finding, the Tribunal was not justified in setting aside its order and restoring the order of the Assessing Officer. He has drawn our attention to the statement of the case drawn by the Tribunal in which it has been observed follows:- “there is no finding in the order of the Tribunal reproduced above regarding the ownership of the jewellery” Mr. Harshwardhan Prasad, appearing on behalf of the Revenue, however, submits that as the Assessee was found in possession of the jewellery, it has to be assumed that he was the owner thereof. In view of the finding of the Tribunal while setting aside the order of the Commissioner that it has not recorded any finding in regard to the ownership of jewellery, we deem it inexpedient to go into this question. We have to proceed on an assumption that the Tribunal had not recorded any finding in regard to the ownership of the jewellery. It has - 5 - not held that the assessee is the owner thereof. Once, it is held so, it can not be said that the value of the jewellery is unexplained income of the assessee. Accordingly, our answer to the question for our opinion is in the negative, against the revenue and in favour of the assessee and it is held that the Tribunal was not right in confirming the addition of Rs. 1,69,550/- without giving any finding as to the ownership of the jewellery in the hands of the assessee. Let our opinion be forwarded to the Patna Bench of the Income-tax Tribunal. Tax Case disposed of accordingly. Patna High Court Dated, the 18th Nov.2008 NAFR/Rahman (Chandramauli Kr. Prasad, J.) (Dr. Ravi Ranjan, J.)