Bitumen short delivered in carriage - Whether
valuable goods - Subject to addition under section 69A as unexplained
money
Facts:
Assessee
contractor was in charge of carrying bitumen from various oil companies to
government sites. In the carriage performed during assessment year 1996-97, it
was alleged that they short delivered substantial bitumen as against the bailed
quantity which was possibly sold by the assessee as per the AO and the short
delivered quantity x market price was added as unexplained money under section
69A by the AO. On appeal CIT(A) deleted the addition. On further appeal ITAT
concurred with CIT(A). On further appeal the High court reversed the order of
the ITAT. On higher appeal by the assessee -
Held
in favour of the assessee that the addition is not sustainable under section
69A.
1.
In a bailment there is no ownership except on certain circumstances. Exceptions
cannot be examples.
2.
Carrier does not have ownership of goods for carriage as it is a
contract of bailment.
3.
To fasten liability under section 69A ownership is a must - bailee is not
owner, so is the assessee.
4.
Goods ought to be valuable - bitumen is not a valuable good.
5.
Ejusdem generis/Noscitur a sociis to be applied in reading section 69A to
valuable articles listed thereto. Noscitus a sociis is more proximate reading
than ejusdem generis - of the same genus/genre.
6.
Meaning of ownership explained - possession alone without rights to exploit is
not ownership. Right to exploit without ownership triggers taxing rights to
state,
Ed. Note:
The decision by Justice KM Joseph who retired few days later to the judgment is
a landmark one as it discusses meaning of ownership in various dimensions
besides the exposition on section 69A.
Case: D.N. Singh v. CIT 2023 TaxPub(DT) 2966 (SC)