Holding

The appellant is not the owner of the bitumen and bitumen does not constitute an "other valuable article" under Section 69A, rendering the tax addition invalid.

Summary

The appellant, a common carrier, was assessed under Section 69A of the Income Tax Act for short delivery of bitumen, with the assessing officer deeming the bitumen as an "other valuable article" owned by the appellant. The Supreme Court examined whether a carrier can be considered the owner of goods for tax purposes and whether bitumen falls within the ambit of "other valuable article" under Section 69A. Relying on the Contract Act, Sale of Goods Act and principles of bailment, the Court held that ownership requires the legal right to enjoy, alienate, and exclude others, which a carrier does not possess. Applying the doctrines of ejusdem generis and noscitur a sociis, the Court concluded that "other valuable article" refers only to high‑priced items like bullion or jewellery, and bitumen, being a low‑value bulk commodity, does not qualify. Consequently, the addition of tax under Section 69A was held illegal and the appeals were allowed.

Issues considered

The appellant's status as "owner" of the bitumen for purposes of Section 69A
Whether bitumen qualifies as an "other valuable article" under Section 69A
The proper interpretation of the term "owner" and "valuable article" in the statute
The applicability of the principles of ejusdem generis and noscitur a sociis to Section 69A

Legislation cited

Carriage by Road Act, 2007s. 15
Income Tax Act, 1961s. 69, s. 69A, s. 69B, s. 69C
Indian Contract Act, 1872s. 148, s. 151, s. 58
Indian Penal Code, 1860s. 405, s. 406
Sale of Goods Act, 1930s. 27, s. 39

Subjects

s.69Aownershipvaluable articlebitumencarrierbailmenttaxationejusdem generisnoscitur a sociisincome tax

Judgment

530 [2023]REPORTS
SUPREME COURT 7 S.C.R. 530 [2023] 7 S.C.R.

A M/s. D. N. SINGH
v.
COMMISSIONER OF INCOME TAX, CENTRAL, PATNA AND
ANOTHER
B (Civil Appeal No(s). 3738-3739 of 2023)
MAY 16, 2023
[K. M. JOSEPH AND HRISHIKESH ROY, JJ.]
Income Tax Act, 1961 – s.69A – Scope and applicability of –
C s.69A deals with unexplained money, bullion, jewellery or other
valuable articles – Deeming effect of the provision – When
applicable – 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 the
Officer must find that the other valuable article is owned by the
assessee – A bailee who is a common carrier is not the owner of the
D goods – A bailee who is a common carrier would necessarily be
entrusted with the possession of the goods – The purpose of bailment
is the delivery of the goods by the common carrier to the consignee
or as per the directions of the consignor – During the subsistence
of the contract of carriage of goods, the bailee would not become
E the owner of the goods – In the case of an entrustment to the carrier
otherwise than under a contract of sale of goods also, the possession
of the carrier would not convert it into the owner of the goods –
The full rights of an owner include the power of enjoyment which
further includes the power to destroy; the right to possession which
further includes the right to exclude others; the power to alienate
F
inter vivos or to charge as security and the power to bequeath the
property – A carrier has none of these rights or powers – Sale by a
carrier does not pass title except when it is immunised by the conduct
of the owner of the good which would in turn estop the owner from
impugning the title of the buyer – Held (per Hrishikesh Roy, J.)
G (concurring): s.69A provides as a rule of evidence that for the
deeming effect to apply- the assessee must be the owner of money,
bullion, jewellery and other valuable articles on which he is unable
to proffer a satisfactory explanation – Determining ownership of
goods is an important factor to impute tax liability – Someone having
mere possession and without legal ownership or title over the goods
H
530
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 531
CENTRAL, PATNA AND ANOTHER

will not be covered within the ambit of s.69A – An assessee may A
nevertheless be also regarded as deemed owner if possession is
imputed on the assessee and no other person having a better claim
is contesting the assessee’s claim – In the present case, the assessee
was certainly not the owner of the bitumen - but was the carrier
who was supplying goods from the consignor- oil marketing B
companies to the consignee-Road Construction Department –
Notably, due to short delivery of goods, the possession of the
assessee was unlawful – The inevitable conclusion therefore is that
the assessee is not the owner, for the purposes of s.69A – Contract
Act, 1872 – ss.148, 151 – Sale of Goods Act, 1930 – ss. 39, 27.
C
Income Tax Act, 1961 – s.69A – ‘Other valuable article’ within
meaning of s.69A – Whether it must be intrinsically costly – Whether
bitumen- the residual offshoot material during processing of crude
oil, excluding its valuable constituents like petrol, diesel, LPG,
aviation fuel etc., can be covered within the category of ‘other
valuable article’ alongside money, bullion and jewellery within the D
meaning of s.69A – Held (per K.M. Joseph, J.): Bitumen may be
found in small quantities or large quantities – If the ‘article’ is to be
found ‘valuable’, then in small quantity it must not just have some
value but it must be ‘worth a good price’ or ‘worth a great deal of
money’ and not that it has ‘value’ – s.69A would then stand attracted E
– ‘Bitumen’ as such cannot be treated as a ‘valuable article’ – Held
(per Hrishikesh Roy, J.) (concurring): When the principle of Ejusdem
Generis is applied, the preceding words in s.69A such as money,
bullion, jewellery would suggest that the phrase ‘other valuable
article’ which follows those words, would justify inclusion of only
F
high value goods – Any other way of reading the phrase ‘other
valuable article’ or ‘valuable article’ by ignoring the kind of specific
goods mentioned in the preceding part of s.69A, would be incorrect
and would do violence to the plain language of the provision and
will travel beyond the legislative intent – Additionally, the maxim
‘noscitur a sociis’ i.e. (a word is known by its associates) would also G
support the above view that the other valuable articles should be
items in the nature of silver bars, or jewellery or money i.e. only
high priced item – It is given, that no law could possibly provide for
an exhaustive list of all valuable items that may facilitate high income
assessees to adjust their income – Only an indicative list of valuable H
532 SUPREME COURT REPORTS [2023] 7 S.C.R.

A articles can practically be mentioned in the Section – But to include
bitumen within the expression ‘other valuable article’ in s.69A, would
result in absurdities, that one needs to eschew – The common place
items from kirana store and bitumen are intrinsically dissimilar to
the high value items in s.69A and through an interpretive exercise,
one should not categorise them with items such as gold bars and
B
jewellery.
Income Tax Act, 1961– s.69A – Can a thief be the owner of
the goods – Held (per K.M. Joseph, J.): The illegality of the
ownership may not ill square with the requirement of s.69A that the
assessing officer must find the assessee to be the owner of the article
C
– However, that is not to say that without finding ownership or
when it is obvious that someone else is the owner, a person found in
possession, which is illegal, can be found to be the owner under
s.69A – It would be straining the law beyond justification if the
Court were to recognise a thief as the owner of the property within
D the meaning of s.69A – Recognising a thief as the owner of the
property would also mean that the owner of the property would
cease to be recognised as the owner, which would indeed be the
most startling result – While possession of a person may in
appropriate cases, when there is no explanation forthcoming about
the source and quality of his possession, justify an assessing officer
E finding him to be the owner, when the facts are known that the
carrier is not the owner and somebody else is the owner, then to
describe him as the owner may produce results which are most illegal
apart from being unjust.
Income Tax Act, 1961 – s.69A – Article and Valuable Article
F – Distinguished – Held (per Hrishikesh Roy, J.): Articles of value
are a genus of which valuable articles are a species i.e. a subset of
high priced items – An article having value may not be a valuable
article – Categorising all sundry items as valuable articles will lead
to an interpretation which will be foreign to the purpose of the law
G and 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.

H
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 533
CENTRAL, PATNA AND ANOTHER

Allowing the appeals, the Court A
HELD: (Per K. M. Joseph, J.):
1. When goods are entrusted to a common carrier, the
entrustment would amount to a contract of bailment within the
meaning of Section 148 of the Contract Act, 1872 when it is for
being carried by road, as in this case. A contract for bailment may B
not involve any consideration being payable in which case Section
58 of the Contract Act obliges the bailor to repay to the bailee
the necessary expenses incurred by him for the purpose of
bailment. Possession is central to bailment. Section 151 of the
Contract Act declares that ‘in all cases of bailment the bailee is C
bound to take as much care of the goods bailed to him as a man of
ordinary prudence would, under similar circumstances, take of
his own goods of the same bulk, quality and value as the goods
bailed.’ Can it be said that the standard of care as declared in
Section 151 is alone applicable to the common carrier. The subject
matter is not res integra. [Para 37][555-D-F] D

2. To apply Section 69A of the Income Tax Act, it is
indispensable that the Officer must find that the other valuable
article, inter alia, is owned by the assessee. A bailee, who is a
common carrier, is not an owner of the goods. A bailee who is a
common carrier would necessarily be entrusted with the E
possession of the goods. The purpose of the bailment is the
delivery of the goods by the common carrier to the consignee or
as per the directions of the consignor. During the subsistence of
the contract of carriage of goods, the bailee would not become
the owner of the goods. In the case of an entrustment to the F
carrier otherwise than under a contract of sale of goods also, the
possession of the carrier would not convert it into the owner of
the goods. [Para 39][557-E-F]
3. Section 39 of the Sale of Goods Act, 1930 contemplates
delivery pursuant to a contract of sale by the seller to the carrier G
as prima facie to be deemed to be the delivery of the goods to
the buyer. It becomes the responsibility of the buyer of a carrier
to fulfil its contractual obligations and deliver the goods to the
consignee or as per its instructions. Sale by a carrier does not

H
534 SUPREME COURT REPORTS [2023] 7 S.C.R.

A pass title except when it is immunised by the conduct of the owner
of the good which would in turn estop the owner from impugning
the title of the buyer. [Paras 42 & 43][558-F-G; 559-D]
4. A person may own, contraband or prohibited articles and
still be within the embrace of Section 69A. In other words, the
B illegality of the ownership may not ill square with the requirement
of Section 69A that the assessing officer must find the assessee
to be the owner of the article. However, that is not to say that
without finding ownership or when it is obvious that someone
else is the owner, a person found in possession, which is illegal,
can be found to be the owner under Section 69A. The question
C would arise pointedly, as to, when a common carrier refuses to
deliver the consignment and continues to possess it contrary to
contract and law and converts it into his use and presumably sells
the same, as to whether he could be found to be the owner of the
goods. Would he be any different from a person who commits
D theft and sells it claiming to be the owner. Can a thief become the
owner? It would be straining the law beyond justification if the
Court were to recognise a thief as the owner of the property
within the meaning of Section 69A. Recognising a thief as the
owner of the property would also mean that the owner of the
property would cease to be recognised as the owner, which would
E indeed be the most startling result. While possession of a person
may in appropriate cases, when there is no explanation
forthcoming about the source and quality of his possession, justify
an assessing officer finding him to be the owner, when the facts
are known that the carrier is not the owner and somebody else is
F the owner, then to describe him as the owner may produce results
which are most illegal apart from being unjust. [Para 47][560-G;
561-A-D]
5. The full rights of an owner as set out in Additional
Commissioner of Income Tax, Bihar v. M/s. Sahay Properties and
G Investment Co.(P) Ltd. may again be reiterated as: (1) The power
of enjoyment which includes the power to destroy. (2) The right
to possession which includes the right to exclude others. (3) The
power to alienate inter vivos or to charge as security. (4) The
power to bequeath the property. A carrier has none of these rights
or powers. It may be true that in order to be an owner, all the
H
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 535
CENTRAL, PATNA AND ANOTHER

rights and powers of an owner need not be present at the same A
point of time in the same person. It may be true that ownership
may be associated with a better right to be in possession and
actual possession in a given case may be harmonised with
ownership. Being in possession with a right to be possession
may lead to a presumption that the possessor is the owner, unless
B
it be that there are indications to the contrary. The beneficial
vesting may in the context clothe the person with title as the
owner. Another concept which emerges is a person in receipt of
money having actual control over the property with no person
having a better right to defeat his claim of possession may open
the doors to a finding that he is the owner within the meaning of C
Section 69A. A person in actual physical control of the property
and realising the entire income for his own use may indicate the
presence of ownership. The absence of the conveyance needed
to complete the transfer may not detract from a person being
found to be the owner. The soul of the reasoning appears to be
D
the entitlement to receive the income from the property ‘in his
right’. [Paras 58 & 59][579-B-G]
6. Appellant as a carrier was entrusted with the goods. The
possession of the appellant began as a bailee. The Court proceeds
further on the basis that instead of delivering the goods, the
appellant did not deliver the goods to the concerned divisions of E
the department in the State of Bihar. Ownership of the goods in
question by no stretch of imagination stood vested at any point of
time in the appellant. Property would pass from the consignor to
the consignee on the basis of the principles which are declared
in the Sale of Goods Act. It is inconceivable that any of those F
provisions would countenance passing of property in the goods
to the appellant who was a mere carrier of the goods. Section 406
of the IPC makes it an offence for a person entrusted with property
which includes goods entrusted to a carrier being misappropriated
or dishonestly being converted to the use of the carrier. A specific
illustration under Section 406 makes it abundantly clear that any G
such act by a carrier attracts the offence under Section 406. The
Court in other words would have to allow the commission of an
offence by the appellant in the process of finding that the appellant
is the owner of the goods. In other words, proceeding on the
H
536 SUPREME COURT REPORTS [2023] 7 S.C.R.

A basis that there was short delivery of the goods by the appellant,
inevitably, the Court must find that the act was not a mere omission
or a mistake but a deliberate act by a carrier involving it in the
commission of an offence under Section 406. In other words, the
Court must necessarily find that the appellant continued to
possess the bitumen and misappropriated and it is in this state
B
that assessing officer would have to find that the appellant by the
deliberate act of short delivering the goods and continuing with
the possession of the goods not only contrary to the contract but
also to the law of the land, both in the Carriers Act 1865 and
breaking the penal law as well, the appellant must be treated as
C the owner. [Para 60][579-H; 580-A-E]
7. Bitumen may be found in small quantities or large
quantities. If the ‘article’ is to be found ‘valuable’, then in small
quantity it must not just have some value but it must be ‘worth a
good price’ or ‘worth a great deal of money’ and not that it has
D ‘value’. Section 69A would then stand attracted. But if to treat it
as ‘valuable article’, it requires ownership in large quantity, in
the sense that by multiplying the value in large quantity, a ‘good
price’ or ‘great deal of money’ is arrived at then it would not be
valuable article. This Court would conclude that ‘bitumen’ as such
cannot be treated as a ‘valuable article’. [Para 79][590-D-E]
E
Kotak Mahindra Bank Ltd. v. A. Balakrishnan and
another (2022) 9 SCC 186; Kishinchand Chellaram v.
Commissioner of Income Tax, Bombay City II, Bombay
(1980) Suppl. SCC 660 : [1981] 1 SCR 720; Chuharmal
S/O Takarmal Mohnani v. Commissioner of Income Tax,
F M.P., Bhopal (1988) 3 SCC 588; Commissoiner of
Income Tax, Salem v. K. Chinnathamban (2007) 7 SCC
390 : [2007] 8 SCR 496; Patel Roadways Ltd. v. Birla
Yamaha Ltd. (2000) 4 SCC 91 : [2000] 2 SCR 665;
Nath Bros. Exim International Ltd. v. Best Roadways
G Ltd. (2000) 4 SCC 553 : [2000] 2 SCR 538; R.B. Jodha
Mal Kuthiala v. Commissioner of Income Tax, Punjab,
Jammu and Kashmir, Himachal Pradesh and Patiala
(1971) 3 SCC 369 : [1972] 1 SCR 639; Late Nawab
Sir Mir Osman Ali Khan v. Commissioner of Wealth Tax,

H
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 537
CENTRAL, PATNA AND ANOTHER

Hyderabad (1986) Suppl. SCC 700 : [1986] 3 A
SCR 1072; Commissioner of Income Tax, Bombay &
Ors. v. Podar Cement Pvt. Ltd. & Ors. (1997) 5 SCC
482 : [1997 ] 1 Suppl. SCR 394; Additional Mysore
Minerals Ltd. M.G. Road, Bangalore v. Commissioners
of Income Tax, Karnataka, Bangalore (1999) 7 SCC
B
106 : [1999] 2 Suppl. SCR 182; Industrial Credit and
Development Syndicate Ltd. v. Commissioner of Income
Tax, Mysore & Anr. (2013) 3 SCC 541 : [2013] 3
SCR 1082; Commissioner of Income Tax, Kolkata v.
SMIFS Securities Limited (2012) 13 SCC 488 and Rohit
Pulp and Paper Mills Limited v. Collector of Central C
Excise, Baroda (1990) 3 SCC 447 : [1990] 2 SCR 797
– referred to.
Dhirajlal Haridas v. Commissioner of Income Tax
(Central), Bombay (1982) 138 ITR 570; Commissioner
of Income Tax v. Amrit lal Chunilal (1984) 40 CTR D
Bombay 387; Addl. Commissioner of Income Tax v. S.
Pichaimanickan Chettiar (1984) Vol 147 ITR 251;
Mohan B. Samtani v. Commissioner of Income–Tax
(1993) Vol 199 ITR 370; J.S. Parkar v. V.B. Palekar
(1974) 94 ITR 616 (Bom HC); Mohan B. Samtani v.
Commissioner of Income-Tax 1993 Vol. 199 ITR 370 E
Calcutta; Commissioner of Income Tax v. K.I. Pavunny
(1998) 232 ITR 837; Addl. Commissioner of Income
Tax v. S. Pichaimanickan Chettiar 1984 (147) ITR 251;
Commissioner of Income Tax, Bihar v. M/s. Sahay
Properties and Investment Co.(P) Ltd. 1983 (144) ITR F
357; Bhagwandas Narayandas v. Commissioner of
Income Tax, Ahmedabad and others 1973 Vol. 98 ITR
194; Commissioner of Income Tax v. M.K. Gabrial Babu
and others (1991) 188 ITR 464 Kerala and Dhanush
General Stores v. Commissioner of Income Tax (2011)
339 ITR 651 Chhattisgarh – referred to. G

HELD: (Per Hrishikesh Roy, J.) (Concurring):
1. If all sundry articles of nominal value are bracketed in
the category of valuable article, it will lead to an absurdity and
will also be inconsistent with the legislative intent. Focusing on H
538 SUPREME COURT REPORTS [2023] 7 S.C.R.

A the high total value of an article, ignoring its lowly per unit price
would mean including low-cost ordinary articles also in the
valuable category, under Section 69A. This would defy the
legislature’s logic. In this context, when the principle of Ejusdem
Generis is applied, the preceding words in Section 69A such as
money, bullion, jewellery would suggest that the phrase ‘other
B
valuable article’ which follows those words, would justify inclusion
of only high value goods. Any other way of reading the phrase
‘other valuable article’ or ‘valuable article’ by ignoring the kind
of specific goods mentioned in the preceding part of Section 69A,
would be incorrect and would do violence to the plain language
C of the provision and will travel beyond the legislative intent.
Additionally, the maxim ‘noscitur a sociis’ i.e. (a word is known by
its associates) would also support the above view that the other
valuable articles should be items in the nature of silver bars, or
jewellery or money i.e. only high priced item. [Paras 10 & 11][594-
G-H; 595-A-B]
D
2. For purposes of interpreting Section 69A of the Income
Tax, Act 1961- the ordinary and literal meaning should be opted
as the words in the statute are clear and unambiguous. The
provision does not need any addition or subtraction and stands
on its own legs. The phrase ‘valuable article’ would simply mean
E an item ‘worth a great deal of money’. It cannot mean, as is said
in the impugned order, to include ‘any article of value’. In the
context of Section 69A, unexplained valuable article has to be
high priced item which are procured to hide income, to avoid tax
liability. To adopt a wide interpretation for the phrase- ‘valuable
F article’ and thereby include within its scope any sundry article of
whatever value, is found to be unjustified. It needs to be also
reiterated that, ordinarily, fiscal laws including taxation statutes,
are to be strictly interpreted and tax must not be imposed through
analogy, inference or by extension of phrases used by the
legislature. [Para 15][596-E-G]
G
3. Bitumen is not a valuable article in the context of Section
69A and the assessee here was not the owner of the concerned
bitumen for the purpose of section 69A of the Income Tax Act,
1961. [Para 19][597-H]

H
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 539
CENTRAL, PATNA AND ANOTHER

Dhanush General Stores v. Commissioner of Income Tax A
(2011) 339 ITR 651 – approved.
Banarsi Debi v. ITO [1964] 7 SCR 539 and Augustan
Textile Colours Ltd. v. Director of Industries & Anr. (Civil
Appeal No. 2830/2022) (2022) 6 SCC 626; CIT v.
Kasturi 237 ITR 24 (SC); DN Singh v. Commissioner B
of Income Tax & Anr. (2010) 324 ITR 304; New
Shorrock Spinning and Manufacturing Co. Ltd. v. N.V.
Raval (1959) 37 ITR 41 and Capy Brandy Syndicate v.
Inland Revenue (1921) 1 KB 64– referred to.
Case Law Reference C

In the judgment of K.M. Joseph, J.
(2022) 9 SCC 186 referred to Para 21
[1981] 1 SCR 720 referred to Para 21
D
(1988) 3 SCC 588 referred to Para 29
[2007] 8 SCR 496 referred to Para 31
[2000] 2 SCR 665 referred to Para 37
[2000] 2 SCR 538 referred to Para 38 E
[1972] 1 SCR 639 referred to Para 50
[1986] 3 SCR 1072 referred to Para 52
[1997] 1 Suppl. SCR 394 referred to Para 54
F
[1999] 2 Suppl. SCR 182 referred to Para 55
[2013] 3 SCR 1082 referred to Para 56
(2012) 13 SCC 488 referred to Para 74
[1990] 2 SCR 797 referred to Para 75 G
In the judgment of Hrishikesh Roy, J.
[1964] 7 SCR 539 referred to Para 14
(2022) 6 SCC 626 referred to Para 14
H
540 SUPREME COURT REPORTS [2023] 7 S.C.R.

A CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3738-
3739 of 2023.
From the Judgment and Order dated 18.12.2017 in CR No. 102
of 2009 and dated 05.03.2009 in MA No. 214 of 2002 of the High Court
of Judicature at Patna.
B
Ramesh P. Bhatt, Sr. Adv., Diggaj Pathak, Mrs. Shweta Sharma,
Rohit Priya Ranjan, Ms. Prachi Kohli, Advs. for the Appellant.
N. Venkatraman, ASG, Ms. Diksha Rai, Shubranshu Padi, Sourabh
Mishra, Uday Khanna, Raj Bahadur Yadav, Advs. for the Respondents.
C The Judgments of the Court were delivered by
K. M. JOSEPH, J.
Index *
A. THE FACTS .............................................................................. 2
D B. SUBMISSIONS OF PARTIES ............................................... 15
C. ANALYSIS ............................................................................. 18
D. A CARRIER, A BAILEE? ..................................................... 30
E. THE CARRIAGE BY ROAD ACT, 2007 ............................. 34
E
F. CRIMINAL BREACH OF TRUST ....................................... 35
G. THE SALE OF GOODS ACT, 1930 ...................................... 36
H. IS A THIEF AN OWNER? OWNERSHIP BEING ILLEGAL . 37
I. THE CIRCULAR DATED 07.07.1964 .................................. 41
F
J. THE DEPARTMENTAL INSTRUCTIONS DATED
11.05.1994 ............................................................................... 42
K. R.B.JODHA MAL DISTINGUISHED BY HIGH COURT . 43
L. “OTHER VALUABLE ARTICLE” ....................................... 75
G M. PRINCIPLE OF EJUSDEM GENERIS; NOSCITUR A
SOCIIS.................................................................................... 81
N. WHETHER BITUMEN IS ‘OTHER VALUABLE
ARTICLE’ .............................................................................. 85

H *Ed. Note: Pagination in the Index is as per the original judgment.
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 541
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

1. Delay condoned. A
2. Leave granted.
A. THE FACTS
3. The appellant-assessee carried on business as carriage
contractor for bitumen loaded from oil companies namely HPCL, IOCL B
and BPCL from Haldia. The goods were to be delivered to various
divisions of the Road Construction Department of the Government of
Bihar. According to the appellant, it has been in the business for roughly
three decades.
4. By the impugned Order dated 05.03.2009 in M.A. 214 of 2002, C
the High Court has dismissed the Appeal filed by the appellant under
Section 260A of the Income-Tax Act, 1961 (hereinafter referred to as,
‘the Act’, for short). The assessment year involved in the impugned
Order is 1996-1997. Appellant filed a Review Petition, i.e., Review
Petition No. 102 of 2009. By Order dated 18.12.2017, the Review Petition
came to be dismissed. It is, accordingly, that the present Special Leave D
Petition has been filed, challenging both the Orders.
5. A scam was reported in the media. The scam consisted of
transporters of bitumen, lifted from oil companies, misappropriating the
bitumen and not delivering the quantity lifted to the various Divisions of
the Road Construction Department of the Government of Bihar. The E
scam had its repercussion in the assessments under the Act.
6. It all began, as far as the appellant is concerned, in the
assessment year 1995-1996.By an Assessment Order dated 27.03.1998
being passed, the Assessing Officer, taking note of the scam, issued
Show-Cause Notice dated 23.01.1998, alleging that the appellant had F
lifted 14507.81 metric tonnes of bitumen but delivered only 10064.1 metric
tonnes. This meant that the appellant had not delivered 4443.1 metric
tonnes. The appellant produced photocopies of challans to establish that
the bitumen had been delivered. Summons was issued by the Assessing
Officer to the Executive Engineers and Junior Engineers. It is the case
G
of the appellant that all Junior Engineers, except Shri Madan Prasad and
Ahia Ansari accepted the factum of delivery of bitumen. The Assessing
Officer, in fact, noticed that only those Junior Engineers accepted receipt
of bitumen, where the Engineer In-charge or the Executive Engineer
accepted the delivery. Shri Madan Prasad denied that the signature
alleged to be his, was not his signature. The Assessing Officer found H
542 SUPREME COURT REPORTS [2023] 7 S.C.R.

A that the Junior Engineers denied putting stamp and took the position that
if there was stamp, then, it must indicate the name of the section. The
Assessing Officer added a sum of Rs.21985700/- being the figure arrived
at, by finding that 4443.80 metric tonnes of bitumen had not been
delivered. This was done by invoking Section 69A of the Act.
B 7. Chronologically, this Court notices that for the assessment year
1996-1997, the Assessing Officer passed Order dated 31.03.1999. The
appellant, in its Return, disclosed a net profit of Rs.676133/-. On scrutiny,
the Assessing Officer, again, noticing the scam and finding that, while
10300.77 metric tonnes had been lifted by the appellant, only 8206.25
metric tonnes had been delivered. Accordingly, it was found that 2094.52
C metric tonnes had not been delivered. On the said basis and again invoking
Section 69A of the Act, a sum of Rs.10471720.30 was added as income
of the appellant.
8. As against the Order dated 27.03.1998 for the Assessment
Year 1995-1996, in Appeal, by Order dated 15.09.2000, the Commissioner
D Appeals found that all Junior Engineers, except two, had accepted
delivery. After finding that the addition made by the Assessing Officer in
respect of quantity, where Junior Engineers had accepted delivery, was
untenable, the Appellate Authority ordered deletion of a sum of
Rs.20114659/-. This amount represented the value of 4064.28 metric
E tonnes. In regard to the disputed quantity, viz., the dispute raised by Shri
Madan Prasad and Ahia Ansari, Junior Engineers, the matter was
remanded back for affording an opportunity for cross-examination. This
Order related to the Assessment Year 1995-1996.
9. Next in chronological order, is the Order dated 18.12.2000
F passed by the Appellate Authority in Appeal carried by the appellant
against the Order dated 31.03.1999, relating to the Assessment Year
1996-1997. The Appellate Authority referred to the assessment for the
previous year. It found merit in the case of the appellant that except two
Junior Engineers, the others had accepted the delivery. The addition of
Rs.10471720/- was ordered to be deleted.
G
10. The Revenue knocked at the doors of the Income-Tax Appellate
Tribunal (hereinafter referred to as, ‘the ITAT’, for short) for both the
Assessment Years, viz., 1995-1996 and 1996-1997. In regard to the Order
passed by the Appellate Authority for the Assessment Year 1995-1996,
another development took place during the pendency of the Appeal before
H the ITAT. By Application dated 07.02.2001, the Revenue, invoking Section
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 543
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

154 of the Act, sought rectification of the Order dated 15.09.2000. This A
Application came to be allowed by Order dated 31.05.2001. It is, at
once, noticed:
“It is also seen that although my learned predecessor on page 4 of
the appellate order has noted that “the Assistant Commissioner of
Income Tax also stated that only those Junior Engineers had B
accepted that they had received the Bitumen in which cases the
Executive Engineer of the division and Engineer in Chief had also
shown that Bitumen had been received. But while giving the finding
on pages 7 and 8 of ‘the appellate order he has missed this fact
while presuming that the Junior Engineers had confirmed the
receipt of 4064.28 MT of Bitumen out of total short supply of C
4443.80 MT of Bitumen as reported by engineer in chief… A
careful reading of the relevant para as reproduced above makes
it clear that while giving this finding the CIT(A) was under the
impression that in respect of total short supply of 4443.01 MT as
reported by Engineer in Chief and the Jr. Engineer had accepted D
the receipt of Bitumen barring two namely -I) Mr. Madan Prasad
and II) Mr. Ahiya Ansari during the course of independent
enquiries held by the A.O through issue of summons. Thus, I hold
that my predecessor has given relief of Rs. 2,01,14,659/- in respect
of 40.64.28 MT. Of Bitumen under the wrong presumption of
fact that the Jr. Engineers had confirmed the receipt of 4064.98 E
MT. Of Bitumen in their statements before the A.O. Since in the
cases Shri Madan Pd. and Mr. Ahiya Ansari who had denied to
have received the Bitumen, my ld. Predecessor had set aside the
matter to the file of the A.O. with the direction to re-decide the
matter after allowing the appellant an opportunity to cross- examine F
these two Jr. Engineers and after making further enquiries to
establish the genuineness or otherwise of their signatures on the
challans, I deem it proper to set aside this addition of Rs.2,01,14,659/
- in respect of 4064.98 MT of Bitumen also to the file of the A.O.
with the direction that he shall issue summons to the concerned
Jr. Engineers who have received 4064.98 MT of Bitumen as per G
challans furnished by the appellant, record their statements, allow
the appellant an opportunity to cross examine them and, if
necessary, refer their signatures to the handwriting experts to
establish the genuineness of otherwise of such signatures. In view
of these directions, in order the substitution of last para on page - H
544 SUPREME COURT REPORTS [2023] 7 S.C.R.

A 7 extending up to 1st as page 8 of CIT(A) is or which has already
been reproduced above by the following para:
I have carefully considered the above submissions in the course
of independent enquiries made by the A.O. by issue summons
only 2 Jr. Engineers namely, l. Mr. Madan Prasad, 2. Mr. Ahiya
B Ansari have been examined in respect of reported short supply of
Bitumen of 4443.01 MT. Sri Madan Prasad and Mr. Ahiya Ansari
have denied receipt of Bitumen to the extent of 204.45 MT
and174.37 MT, respectively. In respect of remaining quantity of
reported short supply of Bitumen i.e. 4064.28 MT. (-) 378.82=4064.
28MT of Bitumen no independent enquiries have been made by
C the A.O. barring the report received from Engineer in Chief/
Executive Engineer regarding this short supply. On the basis of
such report of Engineer in Chief/Executive Engineers alone; the
A.O. is not justified in making the addition on account of short
supply of 4064.28 MT of Bitumen valued at Rs.2,01,14,659/-, I
D deem it proper to set aside this addition of Rs.2,01,14,659/- to the
file of the A.O. with the direction that he shall issue summons to
the concerned Jr. Engineers, who have received 4064.28 MT of
Bitumen as per challans furnished by the appellant, record their
statement, allow the appellant an opportunity to cross- examine
them and, if necessary, refer their signatures to the handwriting
E experts to establish the genuineness or otherwise of such
signatures, after carrying out these directions any addition, if called
for shall be made.”
11. As noticed, the Revenue had filed an Appeal before the ITAT
for the Assessment Year 1995-1996 (ITA 358 Patna/2000). The appellant
F had filed cross-objection (2/2001) in the said Appeal. The appellant also
filed ITA 319 (Patna/2001) before the ITAT. The cross-objection of the
appellant purported to support the deletion of the addition of Rs.20114559/
-. It also purported to ventilate the objection of the appellant in regard to
other matters. The Appeal filed by the appellant was directed against
G the Order of Rectification passed under Section 154 of the Act. The
ITAT dismissed the Appeals filed by the Revenue and the appellant. The
cross-objection came to be disposed of. This Order is dated 11.01.2002.
12. For the Assessment Year 1996-1997, the ITAT disposed of
the Appeal filed by the Revenue and also the cross-objection filed against
H the Order dated 18.12.2000. The Appeal filed by the Revenue [ITA 240
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 545
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

(Patna/2001)] was allowed. The Tribunal finds that the appellant had A
not disputed the lifting of the bitumen. The claim made by the appellant
that full supply was made, stood demolished, when photocopies of delivery
challans were found to be false and fabricated. The Executive Engineers,
it was further found, had confirmed non-delivery to the tune of 2090.40
metric tonnes. The Commissioner Appeals, it was found, reached a wrong
B
conclusion, as he did not address himself to the explanation offered by
the Junior Engineers. It was found that all Executive Engineers of the
Consignee Divisions presented a case of non-delivery before the
Assessing Officer. Thus, on the same day, i.e., on 11.01.2002, the ITAT
allowed the Appeal filed by the Revenue and sustained the Order of the
Assessing Officer relating to addition on account of short supply of C
bitumen for the Assessment Year 1996-1997, whereas, for the
Assessment Year 1995-1996, taking note of the Order of the
Commissioner Appeals, passed under Section 154 of the Act, by which,
the matter stood remitted back, the Appeal of the Revenue and the Appeal
of the appellant, challenging the Rectification Order, came to be
D
dismissed.
13. This, in turn, triggered the Appeal, i.e., M.A. 214 of 2002
before the High Court by the appellant under Section 260A of the Act.
The High Court, inter alia, refers to the appellant filing Return for the
Assessment Year 1996-1997, disclosing total income of Rs.576133/-.
E
14. Reference is made to the addition of Rs.1,04,72,720.30 on the
basis of short supply of bitumen. After referring to the submissions, the
court focussed on the scope of Section 69A of the Act. The High Court
found that the word ‘owner’ has different meaning in different contexts
and when a transporter sells the goods and receives money for that not
on behalf of the real owner, it became the owner for the purpose of tax. F
Having lifted bitumen and not supplied to the Road Construction
Department to which it was to be supplied, the appellant would be liable
to pay tax on the bitumen lifted and not delivered. The High Court
distinguished the Judgment in Dhirajlal Haridas v. Commissioner of
Income Tax (Central), Bombay1 by noting that for determining the person G
liable to pay tax, the test laid down by this Court was to find out the
person entitled to that income. The Court also went on to distinguish the
judgment in Commissioner of Income Tax v. Amrit lal Chunilal2 It

1
(1982) 138 ITR 570
2
(1984) 40 CTR Bombay 387. H
546 SUPREME COURT REPORTS [2023] 7 S.C.R.

A was found that in the said case the assessee therein was not found to be
the owner whereas the ITAT found the appellant to be the owner. The
High court agreed with the said finding. Thereafter, the High Court went
on to deal with the argument that the words ‘other valuable articles’ in
Section 69A could not include ‘bitumen’. The argument of the appellant
which is noted is that for applying Section 69A bitumen should have
B
some nexus with money, bullion or jewellery. It was found that any article
which has value would come under the expression ‘valuable article’
under Article 69A and the value of such article can be deemed to be the
income of the assessee, should the assessee fail to offer any explanation
or the explanation offered be unsatisfactory. The argument that Section
C 69A would not apply as the appellant had offered an explanation was
not accepted as it was found that an explanation though offered, being
not accepted, would lead to the invocation of Section 69A, if the
explanation was not satisfactory. In other words, Section 69A applied.
Lastly, in regard to the argument of the appellant that the cost of the
D bitumen and not the value thereof was added as income, the High Court
finds that the appellant did not have a case that it had sold the bitumen at
the price lower than the cost. The appellant was found to be the owner
of the bitumen and the addition was sustained. This order was passed on
05.03.2009.
15. Thereupon, the appellant filed Review Petition No. 102 of
E
2009.The appellant purported to point out that in separate appeals filed
for assessment year 1995-96 and 1996-97 on the same set of facts, the
ITAT had allowed the appeal of the Revenue for the year 1996-97, but
for the assessment year 1995-96, the matter was remanded back. This
argument was rejected by the High court in the review on the following
F reasoning:
“However, the question would be whether the fact that the appellate
tribunal had passed another order correctly or incorrectly, the same
may have any effect rendering the judgment of the tribunal passed
in present matter to be erroneous despite the same having been
G upheld in appeal by this Court? Answer has to be in negative. For
the assessment year 1995-96, the matter has attained finality as
the Division Bench has already accepted the view of the appellate
tribunal to be correct in M.A. No.214 of 2002. The view of the
same Tribunal or the same Bench of the Tribunal was correct or
incorrect for a different assessment year was not the subject matter
H
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 547
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

of the appeal. If one of the views of the appellate tribunal is in A
favour of the assessee that does not mean that the said view
would be correct and the view taken in the present case was
incorrect. The view formed by the revenue in the present case
for the assessment year 1995-96 has been scrutinized not only by
the appellate tribunal but also by the Division Bench of this Court
B
and the same has been found to be correct.”
16. The court found that there was no patent error. The fact that
for the same assessee but for the different assessment year, the same
Bench of the ITAT had accepted their plea of short supply of bitumen as
it was not within its knowledge as to whether the case travelled in appeal
before the High Court or not, whereas the decision rendered by the C
Tribunal for the assessment year 1995-96 had “travelled upto this Court
in M.A. 214 OF 2002”. It is against the order dated 05.03.2009 in M.A.
214 of 2002 and the order dated 18.12.2017 in the Review Petition 102
of 2009 that the appellant is before this Court.
B. SUBMISSIONS OF PARTIES D

17. The Court heard Shri Ramesh P. Bhat, learned Senior Advocate
on behalf of the appellant and Shri N. Venkatraman, learned Additional
Solicitor General on behalf of the Revenue.
18. Shri Ramesh P Bhat strenuously urged before us that impugned E
Orders betray palpable errors. When the error was pointed out in Review
though it is taken note of, the High Court has failed to rectify the fallacy.
In short, the error on facts is as follows:
“There are two assessment years involved namely 1995-96
and 1996-97. In the assessment year 1995-96, an addition was F
made in a sum of Rs.20114659/- towards short delivery of bitumen
which the appellant as carrier was obliged to transport and deliver
to the Department in Bihar. In the assessment year 1996-97,
likewise the appellant was multed with an addition in a sum of
Rs.10471720/-.”
G
19. It is pointed out that for the Assessment Year 1995-1996, as
noticed earlier, by virtue of the Order of Rectification dated 31.05.2001,
on the basis of which, the Appeal filed by the Revenue, was dismissed
by the ITAT and Appeal filed by the appellant, against which, Order
came to be dismissed, the matter was to be considered by the Assessing
Officer. The same Tribunal, on the same day, i.e., 11.01.2002, on the H
548 SUPREME COURT REPORTS [2023] 7 S.C.R.

A other hand, allowed the Appeal of the Revenue and set aside the Order
dated 18.12.2000, by which, the Commissioner Appeals had ordered the
deletion based on the alleged non-delivery of bitumen. In fact, it is pointed
out that the High Court notes in the Order dated 05.03.2009, as if the
Appeal was filed by the appellant against the Assessment Year 1995-
1996. Even when the conflicting views taken by the Tribunal was pointed
B
out in the Review Petition, despite noticing the argument, the High Court
has rejected the same without just cause. In the Order, it is pointed out
that the Court observed that the matter for the year 1995-1996 had
travelled to the Court in M.A. 214 of 2012, when it actually related to
1996-1997.More importantly, the learned Senior Counsel would contend
C that bitumen cannot be treated as other valuable article within the meaning
of Section 69A of the Act. The very company of words, in which the
words ‘other valuable article’ is found, viz., money, bullion and gold,
should have persuaded the Court to find the addition illegal. It was also
canvassed before us that the appellant cannot be treated as the owner,
as appellant was a carrier. It fulfilled its obligations by lifting the goods in
D
question and delivered the same. In fact, it is the contention of the
appellant that the goods had been delivered and there was no
misappropriation. There was no complaint by the oil companies from
whom, the bitumen had been lifted, about there being short delivery.
There was even no complaint from the Consignee Department. The
E right to cross-examination should have been offered. The burden shifted
to the Department to prove its case. The learned Senior Counsel would
draw support from the following case law:
i. (1984) Vol 147 ITR 251; Addl. Commissioner of Income
Tax v. S. Pichaimanickan Chettiar.
F ii. (1993) Vol 199 ITR 370; Mohan B. Samtani v.
Commissioner of Income-Tax.
20. The appellant would contend that the finding that the
photocopies of the delivery challans were fabricated was a gross error.
The appellant has a case that this is more so as the two Junior Engineers
G had failed to appear for cross-examination.
21. The appellant also relied upon Judgment of this Court in
Kotak Mahindra Bank Ltd. v. A. Balakrishnan and another 3. He
further drew our attention to the Judgment of this Court in Kishinchand
3
H (2022) 9 SCC 186
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 549
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

Chellaram v. Commissioner of Income Tax, Bombay City II, A
Bombay 4 .
22. Shri N. Venkatraman, learned Additional Solicitor General
countered the submissions and submitted that no case was made out.
He would rely upon Chuharmal (supra). The view taken by the High
Court represents the correct position in law. B
C. ANALYSIS
23. Section 69 deals with unexplained investments. It reads as
follows:
“69. Unexplained investments Where in the financial year C
immediately preceding the assessment year the assessee has made
investments which are not recorded in the books of account, if
any, maintained by him for any source of income, and the assessee
offers no explanation about the nature and source of the
investments or the explanation offered by him is not, in the opinion
of the 2 Assessing] Officer, satisfactory, the value of the D
investments may be deemed to be the income of the assessee of
such financial year.”
24. Section 69A came to be inserted by Finance Act, 1964 (Act 5
of 1964) w.e.f. 01.05.1964. It reads as follows:
E
“69A. Unexplained money, etc. Where in any financial year the
assessee is found to be the owner of any money, bullion, jewellery
or other valuable article and such money, bullion, jewellery or
valuable article is not recorded in the books of account, if any,
maintained by him for any source of income, and the assessee
offers no explanation about the nature and source of acquisition F
of the money, bullion, jewellery or other valuable article, or the
explanation offered by him is not, in the opinion of the 4 Assessing]
Officer, satisfactory, the money and the value of the bullion,
jewellery or other valuable article may be deemed to be the income
of the assessee for such financial year.” G
25. Section 69B provides for power with the Assessing Officer
to deal with investments made by an assessee in bullion, jewellery and
other valuable article, when such assets are found to be owned by the

4
(1980) Suppl. SCC 660 H
550 SUPREME COURT REPORTS [2023] 7 S.C.R.

A assessee and he finds a mismatch between the amount spent for
acquiring them or investing in them and the amount recorded in the
Books of Accounts for any source of income and no explanation is
offered or the explanation offered is not found satisfactory, the excess
amount can be brought to tax. Section 69C, inserted w.e.f. 01.04.1976,
deals with unexplained expenditure, being deemed to be the income of
B
the assessee.
26. Section 69 and Section 69A, apart from being close neighbours,
do bear resemblance with one another. Section 69 deals with unexplained
investment. Section 69A deals with unexplained money, bullion, jewellery
or other valuable articles. Section 69A was inserted by Amending Act 5
C of 1964 and it came into effect w.e.f. 01.04.1964. Both Sections require
that the subject matter of the provisions, viz., investments in the case of
Section 69 and money, bullion, jewellery or other valuable articles in the
case of Section 69A are not recorded in the Books of Account. That is,
in a case where Books of Accounts are maintained. In the case of
D investments under Section 69, necessarily, the Law-Giver contemplates
the Assessing Officer finding that the assessee had made the investments.
In the case of Section 69A, the assessee must be found to be the owner
of the money, bullion, jewellery or other valuable articles. In both cases,
if the assessee is able to offer an explanation for the nature and the
source for the investments and money, bullion, jewellery or other valuable
E articles, respectively, and it is not found unsatisfactory, there can be no
deemed income under either Section.
27. Turning more to Section 69A, it may be broken down into the
following essential parts:

F a. The assessee must be found to be the owner;
b. He must be the owner of any money, bullion, jewellery or
other valuable articles;
c. The said articles must not be recorded in the Books of
Account, if any maintained;
G
d. The assessee is unable to offer an explanation regarding
the nature and the source of acquiring the articles in question;
or
The explanation, which is offered, is found to be, in the
opinion of the Officer, not satisfactory;
H
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 551
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

e. If the aforesaid conditions are satisfied, then, the value of A
the bullion, jewellery or other valuable article may be
deemed as the income of the financial year in which the
assessee is found to be the owner;
f. In the case of money, the money can be deemed to be the
income of the financial year; B
28. Applying the provision to the facts of the case, it is noticed
that the points that arise are as follows:
I. The question would arise, as to whether the appellant could
be treated as the owner of the bitumen;
C
II. The further question would arise, as to whether bitumen
could be treated as other valuable articles;
III. Thirdly, the question arises, as to how the value of the
bitumen is to be ascertained;
IV. Whether the ITAT erred in passing contradictory Orders D
qua the Assessment Years 1995-1996 and 1996-1997, by
Orders passed on the same day and whether the facts were
the same?
29. As regards the first question, viz., whether the appellant could
be treated as the owner of the bitumen is concerned, it is indisputable E
that the appellant was engaged as a carrier to deliver the bitumen, after
having lifted the same from the Oil Companies to the various Divisions
of the Road Construction Department of the Government of Bihar. Before
the Court proceeds to deal with this aspect, we may bear in mind, what
this Court held in the decision reported in Chuharmal S/O Takarmal
F
Mohnani v. Commissioner of Income Tax, M.P., Bhopal5. In the said
case, the Court was dealing with wrist watches being seized from the
assessee during a search conducted by the Customs Authorities from
the bedroom of the assessee. The question fell for consideration, as to
whether the principles underlying Section 110 of the Evidence Act, 1872,
would assist the Revenue to conclude that a person, in possession, could G
be treated as the owner. This Court held, inter alia, as follows:
“6. … In other words, it follows from well settled principle of law
that normally, unless contrary is established, title always follows

5
(1988) 3 SCC 588 H
552 SUPREME COURT REPORTS [2023] 7 S.C.R.

A possession. In the facts of this case, indubitably, possession of the
wrist-watches was found with the petitioner. The petitioner did
not adduce any evidence, far less discharged the onus of proving
that the wrist-watches in question did not belong to the petitioner.
Hence, the High Court held, and in our opinion rightly, that the
value of the wrist-watches is the income of the assessee.”
B
30. After referring to the Judgment of the High Court of Bombay
reported in J.S. Parkar v. V.B. Palekar6, which dealt with seizure of
gold, the Court, held as follows:
“6. … There a contention was raised that the provision in Section
C 110 of the Evidence Act where a person was found in possession
of anything, the onus of proving that he was not the owner was on
the person who affirmed that he was not the owner, was incorrect
and inapplicable to taxation proceedings. This contention was
rejected. The High Court of Bombay held that what was meant
by saying that the Evidence Act did not apply to the proceedings
D under the Act was that the rigour of the rules of evidence contained
in the Evidence Act, was not applicable but that did not mean that
the taxing authorities were desirous in invoking the principles of
the Act in proceedings before them, they were prevented from
doing so. Secondly, all that Section 110 of the Evidence Act does
E is that it embodies a salutary principle of common law jurisprudence
which could be attracted to a set of circumstances that satisfy its
condition.”
31. The said view has been followed by this Court in Commissoiner
of Income Tax, Salem v. K. Chinnathamban7. Therein the Court inter
alia held:
F
“8. … The High Court has rightly held that the expression
“income” as used in Section 69-A of the Act, has wide meaning
which meant anything which came in or resulted in gain.”
32. It may be noticed that Section 15 of the Carriage by Road
Act, 2007, which repealed the Carriers Act, 1865, provides as follows:
G
“15 Right of common carrier in case of consignee’s default.
(1) If the consignee fails to take delivery of any consignment of
goods within a period of thirty days from the date of notice given
6
(1974) 94 ITR 616 (Bom HC)
H 7
(2007) 7 SCC 390
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 553
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

by the common carrier, such consignment may be deemed as A
unclaimed: Provided that in case of perishable consignment, the
period of thirty days shall not apply and the consignment shall be
deemed unclaimed after a period of twenty-four hours of service
of notice or any lesser period as may be mutually agreed to by
and between the common carrier and the consignor.
B
(2) In the case of an unclaimed consignment under sub-section (1),
the common carrier may,
(a) if such consignment is perishable in nature, have the right
to sell the consignment; or
(b) if such consignment is not perishable in nature, cause a C
notice to be served upon the consignee or upon the consignor
if the consignee is not available, requiring him to remove the
goods within a period of fifteen days from the date of receipt
of the notice and in case of failure to comply with the notice,
the common carrier shall have the right to sell such consignment D
without any further notice to the consignee or the consignor,
as the case may be.
(3) The common carrier shall, out of the sale proceeds received
under sub-section (2), retain a sum equal to the freight, storage
and other charges due including expenses incurred for the sale, E
and the surplus, if any, from such sale proceeds shall be returned
to the consignee or the consignor, as the case may be.
(4) Unless otherwise agreed upon between the common carrier
and consignor, the common carrier shall be entitled to detain or
dispose off the consignment in part or full to recover his dues in F
the event of the consignee failing to make payment of the freight
and other charges payable to the common carrier at the time of
taking delivery.”
33. Therefore, under Section 15, if the consignee fails to take
delivery of any consignment of goods within thirty days, the consignment
G
is to be treated as unclaimed. The period of thirty days is declared
inapplicable to perishable consignments, in which case, a period of twenty-
four hours’ notice or any lesser period, as may be agreed between the
consignor and the common carrier, suffices. In the case of perishable
consignment, following such notice, the consignment can be sold. In a
case where the goods are not perishable, if there is failure by the consignee H
554 SUPREME COURT REPORTS [2023] 7 S.C.R.

A to remove the goods after the receipt of a notice of fifteen days from the
carrier, the common carrier is given a right to sell the consignment without
further notice. Section 15(3) enables the carrier to retain a sum equal to
the freights, storage and other charges, due, including expenses incurred
for the sale. The surplus from the sale proceeds is to be returned to the
consigner or the consignee. Section 15(4) clothes the carrier with a right
B
to sell in the event of failure by the consignee to make payment of the
freight and other charges, at the time of taking delivery.
34. This Court, in this case, is dealing with the assessment years
1996-1997. The law applicable was contained in the Carriers Act, 1865.
It is unnecessary for us to dwell further, as it is not the case of either
C party that the appellant had become the owner of the bitumen in question
in a manner authorised by law. On the other hand, the specific case of
the appellant is that the appellant never became the owner and it remained
only a carrier. However, as noticed, if it is found that there has been
short delivery, this would mean that the appellant continued in possession
D contrary to the terms of contract of carriage.
35. In Mohan B. Samtani v. Commissioner of Income-Tax8, the
appellant, who was found in possession of a package, which, when opened
at the airport, contained a bronze idle of Nataraja and its pedestal, was
sought to be roped in as owner with the aid of Section 69A of the Act:
E “6. From the facts on record, there cannot be any dispute that the
consignor was the State Trading Corporation of Sikkim and the
consignee was the Chogyal of Sikkim and the assessee was a
representative of the State Trading Corporation of Sikkim. The
assessee also claimed that the Chogyal of Sikkim was the owner
and, under his verbal instruction conveyed through his A.D.C., he
F
arranged for despatch thereof by signing the papers. In fact, the
Chogyal also claimed ownership of the said packages on the basis
of the letter by the Under Secretary of the Chogyal of Sikkim
addressed to the Assistant Collector of Customs dated May 30,
1973. The Chogyal was the head of an independent State at the
G relevant time and it was necessary, if the claim for ownership of
the Chogyal is to be disputed, to have the said letter verified by
obtaining the original from the customs authorities. Merely because
the packages were presented before the customs authority, it does
not ipso facto prove the ownership of the assessee of the goods.
H 8
1993 Vol. 199 ITR 370 Calcutta
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 555
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

7. In our view, it has not been established or found that the assessee A
is the owner of the said idol and pedestal. On the contrary, the
said letter dated May 30, 1973, addressed to the Assistant Collector
of Customs shows that the Chogyal is the owner of the said articles.
Under such circumstances, there is no reason to hold the assessee
liable and to add Rs. 80,000 being the value of the said articles to
B
his income.
36. The High Court went on to distinguish Chuharmal (supra) by
holding that in the case before the High Court, the assessee had produced
the evidence to substantiate that the article found in his possession
belonged to the Chogyal of Sikkim. C
D. A CARRIER, A BAILEE?
37. When goods are entrusted to a common carrier, the entrustment
would amount to a contract of bailment within the meaning of Section
148 of the Contract Act, 1872 when it is for being carried by road, as in
this case. A contract for bailment may not involve any consideration D
being payable in which case Section 58 of the Contract Act obliges the
bailor to repay to the bailee the necessary expenses incurred by him for
the purpose of bailment. Possession is central to bailment. [See Pullock
and Mulla in the Indian Contract and Specific Relief Act]. Section 151
of the Contract Act declares that ‘in all cases of bailment the bailee is
E
bound to take as much care of the goods bailed to him as a man of
ordinary prudence would, under similar circumstances, take of his own
goods of the same bulk, quality and value as the goods bailed.’ Can it be
said that the standard of care as declared in Section 151 is alone applicable
to the common carrier. The subject matter is not res integra. In Patel
Roadways Ltd. v. Birla Yamaha Ltd.9, the Court held inter alia as F
follows: -
“31. Coming to the question of liability of a common carrier for
loss of or damage to goods, the position of law has to be taken as
fairly well settled that the liability of a carrier in India, as in England,
is more extensive and the liability is that of an insurer. The absolute G
liability of the carrier is subject to two exceptions: an act of God
and a special contract which the carrier may choose to enter with
the customer.”

9
(2000) 4 SCC 91 H
556 SUPREME COURT REPORTS [2023] 7 S.C.R.

A 38. In the same year, and what is more, in the same volume, this
Court spoke on the subject in the decision reported in Nath Bros. Exim
International Ltd. v. Best Roadways Ltd.10. The Court held, inter alia,
as follows: -
“14. These provisions, in effect, embody the English common law
B rule as to the liability of the bailee. Under the English common
law rule, the measure of care required of the person to whom the
goods were bailed, was the same as a man of ordinary prudence
would take of his own goods. In other words, it was a mere matter
of negligence on which the liability was founded. If a person was
negligent and did not take as much care as he would have taken
C of his own goods, he would be liable in damages. These principles
of the English common law rule were also applied in this country
as indicated in the decision of the Privy Council in Irrawaddy
Flotilla Co. Ltd. v. Bugwandass in which, it was, inter alia, observed
as under:
D “For the present purpose it is not material to inquire how it was
that the common law of England came to govern the duties
and liabilities of common carriers throughout India. The fact
itself is beyond dispute. It is recognised by the Indian Legislature
in the Carriers Act, 1865, an Act framed on the lines of the
E English Carriers Act of 1830.”
“15. In the meantime, Parliament intervened and the Carriers Act,
1865 was enacted with the result that the liability of a common
carrier came to be considered in the light of the provisions
contained in that Act. It is true that Section 158 of the Indian
F Contract Act speaks of bailment of the goods for being carried on
behalf of that bailor, but it is also to be noticed that the bailment
spoken of in that section is gratuitous as it is specifically provided
“bailment” as set out in Section 148 of the Indian Contract Act
may be said to be wide enough so as to cover “entrustment of
goods” to a carrier for carriage. But as pointed out above, with
G the enactment of the Carriers Act, 1865, the extent of liability of
the carrier has to be found in that Act.”
“25. We have already reproduced the provisions of Section 6, 8
and 9 above. Section 6 enables the common carrier to limit his
10
H (2000) 4 SCC 553
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 557
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

liability by a special contract. But the special contract will not A
absolve the carrier if the damage or loss to the goods, entrusted to
him, has been caused by his own negligence or criminal act or
that of his agents or servants. In that situation, the carrier would
be liable for the damage to or loss or non-delivery of goods. In
this situation, if a suit is filed for recovery of damages, the burden
B
of proof will not be on the owner or the plaintiff to show that the
loss or damage was caused owing to the negligence or criminal
act of the carrier as provided by Section 9. The carrier can escape
his liability only if it is established that the loss or damage was due
to an act of God or enemies of the State (or the enemies of King,
a phrase used by the Privy Council). The Calcutta decision in C
British & Foreign Marine Insurance Co. v. India General
Navigation and Rly. Co. Ltd., the Assam decision in River steam
Navigation Co. Ltd. v. Syam Sunder Tea Co. Ltd., the Rajasthan
decision in Vidya Ratan v. Kota Transport Co. Ltd. and the Kerala
decision in Kerala Transport Co. v. Kunnath Textiles which have
D
already been referred to above, have considered the effect of
special contract within the meaning of Sections 6 and 8 of the
Carriers Act, 1865 and in, our opinion, they lay down the correct
law.”
39. To apply Section 69A of the Act, it is indispensable that the
Officer must find that the other valuable article, inter alia, is owned by E
the assessee. A bailee, who is a common carrier, is not an owner of the
goods. A bailee who is a common carrier would necessarily be entrusted
with the possession of the goods. The purpose of the bailment is the
delivery of the goods by the common carrier to the consignee or as per
the directions of the consignor. During the subsistence of the contract of F
carriage of goods, the bailee would not become the owner of the goods.
In the case of an entrustment to the carrier otherwise than under a
contract of sale of goods also, the possession of the carrier would not
convert it into the owner of the goods.
E. THE CARRIAGE BY ROAD ACT, 2007 G
40. Under Section 15 of the Carriage by Road Act, 2007, the
carrier can, after issuing notice as provided, when there is a failure by
the consignee to take delivery, sell the goods in the case of a sale which
is so authorised by a statute. The buyer from the carrier would acquire
a good title even as against the consignee. It may be true that as far as H
558 SUPREME COURT REPORTS [2023] 7 S.C.R.

A the sale proceeds received by the common carrier from the sale, he
would be accountable to the consignee as provided in Section 15 of the
Act. Likewise, in a case covered under Section 15(4), the common carrier
would have the power to dispose of the consignment for recovery of
dues from the consignee. In such cases if the other ingredients of Section
69A are satisfied, there may be no fallacy involved if an assessee is
B
found to be the owner of the goods which he disposes of under the
authority of law.
F. CRIMINAL BREACH OF TRUST
41. Section 405 of the Indian Penal Code, 1860 reads as follows:
C “405. Criminal Breach of Trust
Whoever, being in any manner entrusted with property, or with
any dominion over property, dishonestly misappropriates or
converts to his own use that property, or dishonestly uses or disposes
of that property in violation of any direction of law prescribing the
D mode in which such trust is to be discharged, or of any legal
contract, express or implied, which he has made touching the
discharge of such trust, or wilfully suffers any other person so to
do, commits “criminal breach of trust”.
Illustration (f) under Section 405 is apposite and it reads as
E follows: -
“Illustration f. A, a carrier, is entrusted by Z with property to be
carried by land or by water. A dishonestly misappropriates the
property. A has committed a criminal breach of trust.”
G. THE SALE OF GOODS ACT, 1930
F
42. Section 39 of the Sale of Goods Act, 1930,inter alia,
contemplates delivery pursuant to a contract of sale by the seller to the
carrier as prima facie to be deemed to be the delivery of the goods to the
buyer. It becomes the responsibility of the buyer of a carrier to fulfil its
contractual obligations and deliver the goods to the consignee or as per
G its instructions. Section 27 of the Sale of Goods Act deals with sale by a
person who is not the owner. It reads as follows: -
“27. Sale by person not the owner. —
Subject to the provisions of this Act and of any other law for the
H time being in force, where goods are sold by a person who is not
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 559
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

the owner thereof and who does not sell them under the authority A
or with the consent of the owner, the buyer acquires no better title
to the goods than the seller had, unless the owner of the goods is
by his conduct precluded from denying the seller’s authority to
sell:
Provided that, where a mercantile agent is, with the consent of B
the owner, in possession of the goods or of a document of title to
the goods, any sale made by him, when acting in the ordinary
course of business of a mercantile agent, shall be as valid as if he
were expressly authorised by the owner of the goods to make the
same; provided that the buyer acts in good faith and has not at the C
time of the contract of sale notice that the seller has not authority
to sell.”
43. Sale by a carrier does not pass title except when it is immunised
by the conduct of the owner of the good which would in turn estop the
owner from impugning the title of the buyer. Under Section 15 of the D
Carriage by Road Act, 2007, a sale by a carrier is permitted and it can
convey good title to the buyer.
H. IS A THIEF AN OWNER? OWNERSHIP BEING
ILLEGAL.
44. Can a thief be treated as the owner of the goods? In this E
regard, this Court notices the following discussion in the commentary on
Sampath Iyengar’s, Law of Income Tax.
“12. Sine qua non is “ownership”.- The words “is found to be the
owner” appearing in this section clearly show that the mere fact
that, on a search, certain articles are found in the possession of a F
person cannot be said to attract the provisions of this section unless
it is established that the person in whose possession articles were
found is the owner thereof. An assessee is to be the owner before
anything in his possession can be deemed to be his income. It
cannot be said in the case of stolen property that the thief is the G
owner thereof. Section 69A was enacted to treat the value of
certain items as income by a deeming provision but facts must be
found to bring a case within that deeming provision. In the case of
a deeming provision the court has to assume an unreal state of
things to be real.”
H
560 SUPREME COURT REPORTS [2023] 7 S.C.R.

A 45. In Commissioner of Income Tax v. K.I. Pavunny11, a Division
Bench was dealing with the case where excise authorities found articles
covered by Section 69A in a box. The assessee sought to attribute
ownership to another person with whom he was on inimical terms. The
High Court of Kerala found that the assessee did not discharge his onus
to establish that the articles belonged to someone else. What is of interest
B
to this Court is the following discussion:
“13. …But for the prohibitory law, any article being a property
can be owned by a person. Simply because the law prohibits
retention of a property that does not mean that such property is
without ownership. Even contraband or prohibited articles can be
C owned and possessed unlawfully. It is entirely a different thing
that the law may not permit the owner of given articles to retain
possession of them or the articles may be liable under law to be
confiscated.”
46. Appellant places reliance on judgment in Addl. Commissioner
D of Income Tax vs. S. Pichaimanickan Chettiar reported in 1984 (147)
ITR 251. In the said case, it is noted that Section 69A of the Act was
invoked after finding the assessee and one Ameen were found to be in
possession of gold at railway station and were convicted under Section
135(b)(ii) of the Customs Act. The Court held against the revenue after
E holding as follows:
“In this case, the assessee has been convicted only as a carrier
by the Chief Presidency Magistrate and not as the owner of the
gold. The Chief Presidency Magistrate has specifically observed
that the actual owners of the goods or financial magnates are
F underground. Therefore, merely on the basis of s. 110 of the
Evidence Act, the value of the gold cannot be taken to be his
income. Merely because the assessee has kept silent and has not
disclosed the name of the owners of the gold, he cannot be assessed
under s. 69A of the I.T. Act. Liability to be taxed under s. 69A
can arise only if he is shown to be the owner of the goods.”
G
47. Both views can be reconciled. No doubt, it may be true that a
person may own, contraband or prohibited articles and still be within the
embrace of Section 69A. In other words, the illegality of the ownership
may not ill square with the requirement of Section 69A that the assessing

H 11
(1998) 232 ITR 837
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 561
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

officer must find the assessee to be the owner of the article. However, A
that is not to say that without finding ownership or when it is obvious that
someone else is the owner, a person found in possession, which is illegal,
can be found to be the owner under Section 69A.The question would
arise pointedly, as to, when a common carrier refuses to deliver the
consignment and continues to possess it contrary to contract and law
B
and converts it into his use and presumably sells the same, as to whether
he could be found to be the owner of the goods. Would he be any different
from a person who commits theft and sells it claiming to be the owner.
Can a thief become the owner? It would be straining the law beyond
justification if the Court were to recognise a thief as the owner of the
property within the meaning of Section 69A. Recognising a thief as the C
owner of the property would also mean that the owner of the property
would cease to be recognised as the owner, which would indeed be the
most startling result. While possession of a person may in appropriate
cases, when there is no explanation forthcoming about the source and
quality of his possession, justify an assessing officer finding him to be
D
the owner, when the facts are known that the carrier is not the owner
and somebody else is the owner, then to describe him as the owner may
produce results which are most illegal apart from being unjust.
I. THE CIRCULAR DATED 07.07.1964
48. In this regard, the following are the contents of the Circular E
issued by the Board, dated 7th July 1964, namely, Circular No. 20 of
1964. It reads as follows:
“86. This provision is complementary to the provisions in Section
69 which enables the assessment of the value of investments which
have not been recorded in the books of account of the assessee F
and the source of which has not been explained by him
satisfactorily.
87. It has to be carefully noted that the conditions precedent to
the application of the provisions of Section 69A are that (i) the
money, bullion, jewellery or other valuable articles in question are G
not recorded in the books of account, if any, maintained by the
assessee concerned for any source of income; and (ii) that the
assessee either offers no explanation as to the nature and source
of acquisition thereof or the explanation offered by him is, in the
opinion of the Income-tax Officer (now Assessing Officer), not
satisfactory. In coming to the conclusions that the explanation H
562 SUPREME COURT REPORTS [2023] 7 S.C.R.

A offered by the assessee in support of his case is not satisfactory,
all the facts, circumstances and the evidence in the case have to
be considered very carefully, and for this purpose, the assessee
should be given due opportunity to adduce evidence in support of
his explanations.
B 88. In this connection, the following statement made by the Minister
of Finance in the Lok Sabha on 18th April, 1964 in reply to some
criticism that the provisions of this section might result in hardship
to persons whose ornaments or jewellery were given to them by
their forefathers, have to be borne in mind:
C “Often times, people convert their black money into gold. They
make gold jewellery or gold vessels and then say it is heirloom.
This is the common way of bringing unaccounted money into
something which is reputable and can be cashed….. Any way
this (Section 69A) is not intended to hurt the middle class persons.
Generally, it will be used in dealing with cases of persons who pay
D
wealth-tax, who probably have declared Rs.25,000 as jewels, and
we could ask them ‘How did you get more jewels?’…. I can
promise that this department shall not go and hurt any lower middle
class man at all in this way, because we will get what is our due in
other ways. They are not paying the taxes at all….. we will give
E them notice….. we shall bring them on the tax rolls. But big
assesses as are contemplated in this provision cannot be allowed
to escape.”
J. THE DEPARTMENTAL INSTRUCTIONS DATED
11.05.1994
F
49. This Court notices Departmental Instruction No. 1916 dated
11th May, 1994.
“2. Departmental instructions. – Instruction read as under:
“Seizure of Jewellery and Ornaments in Course of Search
G Operations- Guidelines for.- Instances of seizure of jewellery of
small quantity in course of operations under section 132 have come
to the notice to the Board. The question of a common approach to
situations where search parties come across items of jewellery,
has been examined by the Board and following guidelines are
issued for strict compliance:-
H
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 563
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

(i) In the case of a wealth-tax assessee, gold jewellery and A
ornaments found in excess of the gross weight declared in the
wealth-tax return only need be seized.
(ii) In the case of a person not assessed to wealth-tax, gold
jewellery and ornaments to the extent of 500 gms. Per married
lady, 250 gms. Per unmarried lady and 100 gms. Per male member B
of the family, need not be seized.
(iii) The authorised officer may, having regard to the status of the
family and the custom and practices of the community to which
the family belongs and other circumstances of the case, decide to
exclude a larger quantity of jewellery and ornaments from seizure. C
This should be reported to the Director of Income-tax/
Commissioner authorising the search at the time of furnishing the
search report.
In all cases, a detailed inventory of the jewellery and ornaments
found must be prepared to be used for assessment purposes.”
D
K. R. B. JODHA MAL DISTINGUISHED BY HIGH
COURT
50. The High Court has distinguished the judgment of this Court
in R.B. Jodha Mal Kuthiala Vs. Commissioner of Income Tax, Punjab,
Jammu and Kashmir, Himachal Pradesh and Patiala12. In the said E
case, the appellant claimed losses for three assessment years. The losses
were claimed on account of interest payable to the bank. The appellant
assessee had availed the loan in connection with his business which was
being conducted in erstwhile Pakistan. With the creation of Pakistan,
the hotel which was a part of the appellant’s business came to be declared
as evacuee property and vested in the custodian in Pakistan. The claim F
of the appellant assessee in the said case was resisted by the Assessing
Officer on the basis of that no income or loss from that hotel could be
considered as the property stood vested with the custodian. In other
words, since the appellant was resting his claim made under Section 9 of
the Income Tax act, 1922 (which corresponds to Section 22 of the Act) G
as the appellant was not the owner, no relief could be granted to the
appellant. The contention of the appellant was that the property vested
in the custodian wholly for the purpose of administration and the assessee
continued to an owner. This Court, inter alia, held as under:
12
(1971) 3 SCC 369 H
564 SUPREME COURT REPORTS [2023] 7 S.C.R.

A “9. The question is who is the “owner” referred to in this
section? Is it the person in whom the property vests or is it he
who is entitled to some beneficial interest in the property? It must
be remembered that Section 9 brings to tax the income from
property and not the interest of a person in the property. A property
cannot be owned by two persons, each one having independent
B
and exclusive right over it. Hence for the purpose of Section 9,
the owner must be that person who can exercise the rights of the
owner, not on behalf of the owner but in his own right.
10. For a minute, let us look at things from the practical point
of view. If the thousands of evacuees who left practically all their
C properties as well as businesses in Pakistan had been considered
as the owners of those properties and businesses as long as the
“Ordinance” was in force then those unfortunate persons would
have had to pay income tax on the basis of the annual letting
value of their properties and on the income, gains and profits of
D the businesses left by them in Pakistan though they did not get a
paisa out of those properties and businesses. Fortunately no one
in the past interpreted the law in the manner Mr Mahajan wants
us to interpret. It is true that equitable considerations are irrelevant
in interpreting tax laws. But those laws, like all other laws have to
be interpreted reasonably and in consonance with justice.
E
14. For determining the person liable to pay tax, the test laid
down by the court was to find out the person entitled to that income.
An attempt was made by Mr Mahajan to distinguish this case on
the ground that under the corresponding English statute the liability
to tax in respect of income from property is not laid on the owner
F of the property. It is true that Section 82 of the English Income
Tax Act, 1952, is worded differently. But the principles underlying
the two statutes are identical. This is clear from the various
provisions in that Act.
17. Those observations have to be understood in the context in
G which they were made. Therein, Their Lordships were considering
whether the right of an evacuee in respect of the property left by
him in the country from which he migrated was property right for
the purpose of Article 19(1)(f) of the Constitution. No one denies
that an evacuee from Pakistan has a residual right in the property
H that he left in Pakistan. But the real question is, can that right be
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 565
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

considered as ownership within the meaning of Section 9 of the A
Act. As mentioned earlier that section seeks to bring to tax income
of the property in the hands of the owner. Hence the focus of that
section is on the receipt of the income. The word “owner” has
different meanings in different contexts. Under certain
circumstances a lessee may be considered as the owner of the
B
property leased to him. In Stroud’s Judicial Dictionary (3rd Edn.),
various meanings of the word “owner” are given. It is not
necessary for our present purpose to examine what the word
“owner” means in different contexts. The meaning that we give
to the word “owner” in Section 9 must not be such as to make
that provision capable of being made an instrument of oppression. C
It must be in consonance with the principles underlying the Act.
18. Mr Mahajan next invited our attention to the observations
in Pollock on Jurisprudence (6th Edn. 1929) pp. 178-80:
“Ownership may be described as the entirety of the powers of
use and disposal allowed by law .... The owner of a thing is not D
necessarily the person who at a given time has the whole power
of use and disposal; very often there is no such person. We must
look for the person having the residue of all such power when we
have accounted for every detached and limited portion of it; and
he will be the owner even if the immediate power of control and
use is elsewhere”. E
[Emphasis supplied]
51. This Court formed the view that since Section 9 of the Income
Tax Act, 1922 required that in order that a person be assessed to tax in
the form of income from house property, he should be the owner and as
F
the custodian in Pakistan was the owner, the High Court was right in the
view it took.
52. In Late Nawab Sir Mir Osman Ali Khan v. Commissioner
of Wealth Tax, Hyderabad13; the matter arose under the Wealth Tax
Act, 1957. Section 2(m) of the said Act defined net wealth as being
G
predicated with reference to assets “belonging to” the assessee. The
assessee in the said case had sold out the property without executing the
sale deed. The possession was handed over to the buyer after receiving
full consideration. The Court notices the following statement:
13
1986 (supp.) SCC 700 H
566 SUPREME COURT REPORTS [2023] 7 S.C.R.

A “11. The material expression with which we are concerned in
this appeal is ‘belonging to the assessee on the valuation date’.
Did the assets in the circumstances mentioned hereinbefore
namely, the properties in respect of which registered sale deeds
had not been executed but consideration for sale of which had
been received and possession in respect of which had been handed
B
over to the purchasers belonged to the assessee for the purpose
of inclusion in his net wealth? Section 53-A of the Transfer of
Property Act gives the party in possession in those circumstances
the right to retain possession. Where a contract has been executed
in terms mentioned hereinbefore and full consideration has been
C paid by the purchasers to the vendor and where the purchasers
have been put in the possession by the vendor, the vendees have
right to retain that possession and resist suit for specific
performance. The purchasers can also enforce suit for specific
performance for execution of formal registered deed if the vendor
was unwilling to do so. But in the eye of law, the purchasers
D
cannot and are not treated as legal owners of the property in
question. It is not necessary, in our opinion, for the purpose of this
case to be tied down with the controversy whether in India there
is any concept of legal ownership apart from equitable ownership
or not or whether under Sections 9 and 10 of the Indian Income
E Tax Act, 1922 and Sections 22 to 24 of the Indian income Tax
Act, 1961, where ‘owner’ is spoken in respect of the house
properties, the legal owner is meant and not the equitable or
beneficial owner. Salmond On Jurisprudence, 12 th edn.,
discusses the different ingredients of ‘ownership’ from pages 246
to 264. ‘Ownership’, according to Salmond, denotes the relation
F
between a person and an object forming the subject-matter of his
ownership. It consists of a complex of rights, all of which are
rights in rem, being good against all the world and not merely
against specific persons. Firstly, Salmond says, the owner will
have a right to possess the thing which he owns. He may not
G necessarily have possession. Secondly, the owner normally has
the right to use and enjoy the thing owned: the right to manage it,
i.e., the right to decide how it shall be used; and the right to the
income from it. Thirdly, the owner has the right to consume, destroy
or alienate the thing. Fourthly, ownership has the characteristic of
being indeterminate in duration. The position of an owner differs
H
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 567
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

from that of a non-owner in possession in that the latter’s interest A
is subject to be determined at some future time. Fifthly, ownership
has a residuary character. Salmond also notes the distinction
between legal and equitable ownership. Legal ownership is that
which has its origin in the rules of the common law, while equitable
ownership is that which proceeds from rules of equity different
from the common law. The courts of common law in England B
refused to recognise equitable ownership and denied the equitable
owner as an owner at all.”
53. The Court further took the view that it was not concerned
with the expression ‘owner’ but it was dealing with the issue as to whether
the assets belonged to the assessee anymore. It was found that “mere C
possession or joint possession unaccompanied by the right of possession
or ownership of property would not bring the property within the definition
of net wealth for it would not be an asset belonging to “the assessee”.
The decisions under the Income Tax Act were distinguished. In regard
to R.B. Jodha Mal (supra),this Court finds the following discussion: D
“17. This Court had occasion to discuss Section 9 of the Income
Tax Act, 1922 and the meaning of the expression “owner” in the
case of R.B. Jodha Mal Kuthiala v. CIT [(1971) 3 SCC 369 : AIR
1972 SC 126 : (1971) 82 ITR 570] . There it was held that for the
purpose of Section 9 of the Indian Income Tax Act, 1922, the
E
owner must be the person who can exercise the rights of the
owner, not on behalf of the owner but in his own right. An assessee
whose property remained vested in the Custodian of Evacuee
Property was not the owner of the property. This again as observed
dealt with the expression of Section 9 of the Indian Income Tax
Act, 1922. At p. 575 (SCC p. 373, para 11) of the report certain F
observations were relied upon in order to stress the point that
these observations were in consonance with the observations of
the Gujarat High Court which we shall presently note. We are,
however, not concerned in this controversy at the present moment.
It has to be borne in mind that in interpreting the liability for wealth
tax normally the equitable considerations are irrelevant. But it is G
well to remember that in the scheme of the administration of justice,
tax law like any other laws will have to be interpreted reasonably
and whenever possible in consonance with equity and justice.
Therefore, specially in view of the fact that the expression used
by the legislature has deliberately and significantly not used the H
568 SUPREME COURT REPORTS [2023] 7 S.C.R.

A expression “assets owned by the assessee” but assets “belonging
to the assessee”, in our opinion, is an aspect which has to be
borne in mind.”
The question was, therefore, answered in favour of the revenue
and it was found that the asset continued to belong to the assessee for
B the purpose of Wealth Tax.
54. In Commissioner of Income Tax, Bombay & Ors. v. Podar
Cement Pvt. Ltd. & Ors.14, a Bench of three learned Judges had occasion
to revisit the issue in the following set of facts. The matter arose by way
of reference under Section 257 of the Act to the Supreme Court in view
C of the conflicting judgment of the High Courts. The assessee in one of
the cases claimed that the rental income was assessable as income from
other sources in as much as the assessee company was not the legal
owner of the flats. This was for the reason that the title of the property
had not been conveyed to the cooperative society which was formed by
the purchaser of the flats. In one of the appeals, the assessee claimed
D that the income must be assessed under Section 22. The claim was
rejected on the ground that assessee was only a lessee and had only
tenancy rights. The common question which arose in all the cases was
the scope of Section 22 of the Act vis-à-vis Section 56 of the Act.
Section 22 of the Act brings to tax income from house property and the
E section expressly declares that the assessee must be the owner of the
building or lands. Section 27 purports to define the expression owner of
house property, inter alia, for the purpose of Sections 22 to 26. It includes
a person who is allowed to take or retain possession of any building or
part thereof, in part performance of a contract of the nature referred to
in Section 53(A) of the Transfer of Property Act. The Court distinguished
F Jodha Mal (supra).This Court further referred to in great detail the
judgment of the Patna High Court in Additional Commissioner of
Income Tax, Bihar v. M/s. Sahay Properties and Investment Co.(P)
Ltd.15. Since this Court has approved the reasoning adopted by the Patna
High Court, it is deemed appropriate to refer to the same:
G “32. The learned Judges observed at page 361:
“The emphasis, therefore, in this statutory provision is that the
tax under the section is in respect of ownership. But this matter is

14
(1997) 5 SCC 482
H 15
1983 (144) ITR 357
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 569
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

not as simple as it looks. This leaves us to a more vexed question A
as to what is ownership. Should the assessment be made at the
hands of the person who has the bare husk of the legal title or at
the hands of the person who has the rights of an owner of a
property in a practical sense? Enjoyment as an owner only in a
practical sense can be attributed to the term ‘owner’ in the context B
of this section — a person who can exercise the rights of the
owner and is entitled to the income from the property for his own
benefit. It is well settled, and learned counsel for either side were
not at loggerheads, that the section cannot be so construed as to
make it an instrument of oppression, to use the language of Hegde,
J., in the case of Jodha Mal [(1971) 3 SCC 369 : (1971) 82 ITR C
570] .
We are very much alive to the legal position that it is true that
there is no equity about a tax, there is no presumption as to a tax.
Nothing is to be read in — nothing is to be implied. We can look
only fairly at the language used. Nonetheless, the tax laws have D
to be interpreted reasonably and in consonance with justice. This
is well settled by numerous decisions of the Supreme Court itself.
We have, therefore, to judge and interpret the language of
Section 22 of the Act in the context of that particular section, and
that context we shall come back to hereinafter at a more E
appropriate place.
In the meantime, it would not be irrelevant to go into the concept
of ‘ownership’. What is ownership after all? Read from the Roman
law up to the English law at the present stage, medieval stage
having been interspersed with different formulae, the position that F
now juristically emerges is this. The full rights of an owner as
now recognised are:
‘(a) The power of enjoyment (e.g., the determination of the
use to which the res is to be put, the power to deal with produce
as he pleases, the power to destroy); G

(b) possession which includes the right to exclude others;
(c) power to alienate inter vivos, or to charge as security;
(d) power to leave the res by will.’
H
570 SUPREME COURT REPORTS [2023] 7 S.C.R.

A One of the most important of these powers is the right to exclude
others. The property right is essentially a guarantee of the exclusion
of other persons from the use or handling of the thing…. But
every owner does not possess all the rights set out above — a
particular owner’s powers may be restricted by law or by an
agreement he has made with another.’ (Refer to G.W. Paton
B
on Jurisprudence, 4th Edn., pp. 517-18.)
While dealing with the concept of possession and enumerating
the illustrative cases and rules in this respect, Paton says at p. 577
in clause (x):

C ‘To acquire possession of a thing it is necessary to exercise
such physical control over the thing as the thing is capable of, and
to evince an intention to exclude others:….’
Reference in this connection has been made to the case
of Tubantia: Young v. Hichens and of Pierson v. Post [(1805) 3
Caines 175 (Supreme Court of New York)] .
D
It would thus be seen that where the possession of a property
is acquired, with a right to exercise such necessary control over
the property acquired which it is capable of, it is the intention to
exclude others which evinces an element of ownership.
To the same effect and with a more vigorous impact is the
E
subject dealt with by Dias on Jurisprudence, (4th Edn., at p.
400):
‘The position, therefore, seems to be that the idea of ownership
of land is essentially one of the ‘better right’ to be in possession
and to obtain it, whereas with chattels the concept is a more
F absolute one. Actual possession implies a right to retain it until the
contrary is proved, and to that extent a possessor is presumed to
be owner.’
“Again, at p. 404, the learned author says:
‘Special attention should also be drawn to the distinction between
G
“legal” ownership recognised at common law and “equitable”
ownership recognised at equity. This occurs principally when there
is a trust, which is purely the result of the peculiar historical
development of English law. A trust implies the existence of two
kinds of concurrent ownerships, that of the trustee at law and that
H of the beneficiary at equity.’
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 571
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

We are not concerned in this case with any case of trust either A
under the equitable principles or under the law as engrafted in the
Indian Trusts Act. Because, the ‘beneficiary might himself be a
trustee of his interest for a third person, in which case his equitable
ownership is as devoid of advantage to him as the legal ownership
is to the trustee. So, when described in terms of ownership, the
B
distinction between legal and equitable ownership lies in the
historical factors that govern their creation and function; in terms
of advantage, the distinction is between the bare right, whether
legal or equitable, and the beneficial right’ (vide pp. 404-405 of Dias
on Jurisprudence, 4th Edn.).
We, therefore, need not go into the questions involving trusts C
where a person holds the property and receives the income in
trust for others who are the legal beneficiaries. The crux of the
matter is as to whether, as already stated above, the actual
possession in a given particular case gives a right to retain such a
possession until the contrary is proved and so long as that is not D
done, to that extent a possessor is presumed to be the owner.
Incidentally, although the Supreme Court in the case of Jodha
Mal [(1971) 3 SCC 369 : (1971) 82 ITR 570] merely mentioned
that Stroud’s Judicial Dictionary had given several definitions
and illustrations of ownership, it refrained from going into the details E
on account of the practical approach that was made in that case,
to which we shall hereinafter refer and dilate upon. We think it
worthwhile, the matter having been canvassed at length at the
Bar, to give a full illustration of the definitions of ‘ownership’ as
Stroud puts it. One such definition is that the ‘owner’ or ‘proprietor’
of a property is the person in whom (with his or her assent) it is F
for the time being beneficially vested, and who has the occupation,
or control, or usufruct, of it, e.g., a lessee is, during the term, the
owner of the property demised. Yet another definition that has
been given by Stroud is that:
‘“Owner” applies to every person in possession or receipt either G
of the whole, or of any part, of the rents or profits of any land or
tenement; or in the occupation of such land or tenement, other
than as a tenant from year to year or for any less term or as a
tenant at will.’ (Stroud’s Judicial Dictionary, 3rd Edn., Vol. 3, p.
2060) H
572 SUPREME COURT REPORTS [2023] 7 S.C.R.

A Thus the juristic principle from the viewpoint of each one is to
determine the true connotation of the term ‘owner’ within the
meaning of Section 22 of the Act in its practical sense, leaving the
husk of the legal title beyond the domain of ownership for the
purpose of this statutory provision. The reason is obvious. After
all, who is to be taxed or assessed to be taxed more accurately —
B
a person in receipt of money having actual control over the property
with no person having better right to defeat his claim of possession
or a person in legal parlance who may remain a remainder man,
say, at the end or extinction of the period of occupation after,
again say, a thousand years? The answer to this question in favour
C of the assessee would not merely be doing palpable injustice but
would cause absurd inconvenience and would make the legislature
to be dubbed as being a party to a nonsensical legislation. One
cannot reasonably and logically visualise as to when a person in
actual physical control of the property realising the entire income
and usufructs of the property for his own use and not for the use
D
of any other person, having the absolute power of disposal of the
income so received, should be held not liable to tax merely because
a vestige of legal ownership or a husk of title in the long run may
yet clothe another person with the power of a residual ownership
when such contingency arises which is not a case even here. A
E plain reading of clause 4 of the agreement, as extracted above,
clearly goes to show that the physical possession of the properties
has passed on or is deemed to have passed on to the assessee to
have and to hold for ever and absolutely with the power to use the
same in whatsoever manner it thinks best and the assessee shall
derive all income and benefits together with full power of disposal
F
of the properties as well as the income thereof. Can it then be
said that the recipient of the income being the assessee only having
an absolute and exclusive control over the property without any
let or hindrance on the part of the so-called vendor which, indeed,
under law it was not entitled to do, as we shall presently show,
G shall be immune from the taxing provision in Section 22 of the
Act? The answer in our view is clearly in the negative. The reason
is simple. The consideration money has been paid in full. The
assessee has been put in exclusive and absolute possession of the
property. It has been empowered to deal with the income as it
likes. It has been empowered to dispose of and even to alienate
H
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 573
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

the property. Reference to Section 54 or, for that matter, Section A
55 of the Transfer of Property Act by the Tribunal merely
emphasises the fact that the legal title does not pass unless there
is a deed of conveyance duly registered. The agreement is in
writing and the value of the property is admittedly worth more
than hundred rupees. Section 54 of the Transfer of Property Act
B
would, therefore, exclude the conferment of absolute title by
transfer to the assessee. That, however, would not take away the
right of the assessee to remain in possession of the property, to
realise and receive the rents and profits therefrom and to
appropriate the entire income for its own use. The so-called vendor
is not permitted in law to dispossess or to question the title of the C
assessee (the so-called vendee). It was for this very practical
purpose that the doctrine of the equity of part performance was
introduced in the Transfer of Property Act, 1882, by inserting
Section 53-A therein. The section specifically allows the doctrine
of part performance to be applied to the agreements which, though
D
required to be registered, are not registered and to transfers not
completed in the manner prescribed therefor by any law. The
section is, therefore, applicable to cases where the transfer is not
completed in a manner required by law unless such a non-
compliance with the procedure results in the transfer being void.
There is, however, a distinction between an agreement void as E
such and an agreement void in the absence of something which
the vendor could do and had expressly or impliedly contracted to
do, and where a vendor agrees to sell his share of property,
including sir land, there is an implied term in the contract that he
will apply for sanction to the revenue authorities necessary for
F
such transfers and the court will direct him to do so. It cannot be
said that such an agreement is void because no sanction has been
obtained. In the instant case, having reference to clause 5 of the
agreement it would be seen that the option was given to the
assessee to demand at its pleasure a conveyance duly registered
being executed in its favour by the Sahay family (the vendor) and G
to get its name mutated in the official records. The assessee has
not exercised its option for reasons best known to it — presumably
to have a double weapon in its hands to be used as and when
circumstances so demanded. Can it yet be said that for the default
on the part of the assessee itself it would be entitled to say that it
H
574 SUPREME COURT REPORTS [2023] 7 S.C.R.

A is not the owner of the property for all practical purposes, receiving
the rent all the time, appropriating the usufructs for its own purposes
all the time and having no interference at the instance of the
vendor? Can that be a practical and logical approach to the true
construction and purport of the substance and spirit of Section 22
of the Act? The answer, in our view, is clearly in the negative and
B
against the assessee. Having taken all the advantages and still
taking all the advantages under the contract without any hindrance
or obstruction on the part of anyone including the vendor which
the vendor could not do in view of Section 53-A of the Transfer of
Property Act, the assessee cannot now turn back and say that
C because of its default in having a deed registered at its sweet will
it was not an owner within the meaning of Section 22 of the Act.
It may bear repetition to say that it was on account of these facts
that juristic principles have now emerged saying that one of the
most important of the powers of ownership is the right to exclude
others from possession and the property right is essentially a
D
guarantee of the exclusion of other persons from the use or handling
of the thing. In that sense, therefore, the assessee itself became
the owner of the property in question. In our view, any decision to
the contrary would not be in consonance with the juristic principle
either at common law or in equity. In either case, it would not be
E subservient to the intent and purpose of Section 22 of the Act,
with regard to which, as we have already stated, we can fairly
look at the language used and the tax laws have to be interpreted
reasonably and in consonance with justice. So far we have dealt
with the case in this respect on juristic principles as if it were a
matter of first impression. We have, therefore, now to refer to the
F
case-law on the subject.”
(Emphasis supplied)
Further, it is found that the Court also noticed the memorandum
explaining provisions in Finance Bill 1987 concerning Section 27 and
G found that the amendment was intended to supply an obvious omission
or clear up the doubts surrounding the word owner in Section 22 of the
Act. The Court answered the reference in favour of the Revenue by
holding that “in the context of Section 22 of the Act having regard to the
ground realities and to the object of the Act, namely, to tax the income of
the “owner as a person who is entitled to receive income from the property
H in his own right.”
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 575
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

55. In Mysore Minerals Ltd. M.G. Road, Bangalore v. A
Commissioners of Income Tax, Karnataka, Bangalore16 the assessee
company though allotted houses by delivery of possession by the Housing
Board, an actual deed of conveyance had not been executed in its favour.
The houses so allotted were for the use of its staff. Assessee claimed
depreciation under Section 32 of the Act. Section 32 of the Act also
B
contemplates ownership of the asset as a condition for claiming the benefit
of depreciation. The Court, inter alia, held as follows:
“4. Section 32 of the Income Tax Act confers a benefit on the
assessee. The provision should be so interpreted and the words
used therein should be assigned such meaning as would enable
the assessee to secure the benefit intended to be given by the C
legislature to the assessee. It is also well settled that where there
are two possible interpretations of a taxing provision the one which
is favourable to the assessee should be preferred.
5. What is ownership? The terms “own”, “ownership”,
“owned” are generic and relative terms. They have a wide and D
also a narrow connotation. The meaning would depend on the
context in which the terms are used. Black’s Law Dictionary (6th
Edn.) defines “owner” as under:
“Owner.—The person in whom is vested the ownership,
dominion, or title of property; proprietor. He who has dominion of E
a thing, real or personal, corporeal or incorporeal, which he has a
right to enjoy and do with as he pleases, even to spoil or destroy it,
as far as the law permits, unless he be prevented by some
agreement or covenant which restrains his right.
The term is, however, a nomen generalissimum, and its F
meaning is to be gathered from the connection in which it is used,
and from the subject-matter to which it is applied. The primary
meaning of the word as applied to land is one who owns the fee
and who has the right to dispose of the property, but the term also
includes one having a possessory right to land or the person G
occupying or cultivating it.
The term ‘owner’ is used to indicate a person in whom one or
more interests are vested for his own benefit.”

16
(1999) 7 SCC 106 H
576 SUPREME COURT REPORTS [2023] 7 S.C.R.

A 6. In the same dictionary, the term “ownership” has been
defined to mean, inter alia, as—
“Collection of rights to use and enjoy property, including right
to transmit it to others. … The right of one or more persons to
possess or use a thing to the exclusion of others. The right by
B which a thing belongs to someone in particular, to the exclusion of
all other persons. The exclusive right of possession, enjoyment,
and disposal; involving as an essential attribute the right to control,
handle, and dispose.”
7.Dias on Jurisprudence (4th Edn., at p. 400) states:
C “The position, therefore, seems to be that the idea of ownership
of land is essentially one of the ‘better right’ to be in possession
and to obtain it, whereas with chattels the concept is a more
absolute one. Actual possession implies a right to retain it until the
contrary is proved, and to that extent a possessor is presumed to
D be owner.”
8.Stroud’s Judicial Dictionary gives several definitions and
illustrations of ownership. One such definition is that the “owner”
or “proprietor” of a property is the person in whom (with his or
her assent) it is for the time being beneficially vested, and who
E has the occupation, or control, or usufruct, of it; e.g., a lessee is,
during the term, the owner of the property demised. Yet another
definition that has been given by Stroud is:
“ ‘owner’ applies ‘to every person in possession or receipt
either of the whole, or of any part, of the rents or profits of any
F land or tenement; or in the occupation of such land or tenement,
other than as a tenant from year to year or for any less term or as
a tenant at will’.”
19. It is well settled that there cannot be two owners of the
property simultaneously and in the same sense of the term. The
intention of the legislature in enacting Section 32 of the Act would
G
be best fulfilled by allowing deduction in respect of depreciation
to the person in whom for the time being vests the dominion over
the building and who is entitled to use it in his own right and is
using the same for the purposes of his business or profession.
Assigning any different meaning would not subserve the legislative
H
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 577
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

intent. To take the case at hand it is the appellant assessee who A
having paid part of the price, has been placed in possession of the
houses as an owner and is using the buildings for the purpose of
its business in its own right. Still the assessee has been denied the
benefit of Section 32. On the other hand, the Housing Board would
be denied the benefit of Section 32 because in spite of its being
B
the legal owner it was not using the building for its business or
profession. We do not think such a benefit-to-none situation could
have been intended by the legislature. The finding of fact arrived
at in the case at hand is that though a document of title was not
executed by the Housing Board in favour of the assessee, but the
houses were allotted to the assessee by the Housing Board, part- C
payment received and possession delivered so as to confer
dominion over the property on the assessee whereafter the
assessee had in its own right allotted the quarters to the staff and
they were being actually used by the staff of the assessee. It is
common knowledge, under the various schemes floated by bodies
D
like Housing Boards, houses are constructed on a large scale and
allotted on part-payment to those who have booked them.
Possession is also delivered to the allottee so as to enable enjoyment
of the property. Execution of document transferring title necessarily
follows if the schedule of payment is observed by the allottee. If
only the allottee may default the property may revert back to the E
Board. That is a matter only between the Housing Board and the
allottee. No third person intervenes. The part-payments made by
the allottee are with the intention of acquiring title. The delivery
of possession by the Housing Board to the allottee is also a step
towards conferring ownership. Documentation is delayed only with
F
the idea of compelling the allottee to observe the schedule of
payment.”
(Emphasis supplied)
56. Lastly, there is the judgment of this Court in Industrial Credit
and Development Syndicate Ltd. v. Commissioner of Income Tax, G
Mysore & Anr.17. The assessee was engaged in the business of hire
purchase, leasing and real estate etc. As part of its business, it leased
out vehicles to its customers, and thereafter, had no physical connection
with the vehicles. What is more, the lessees were registered as the
17
(2013) 3 SCC 541 H
578 SUPREME COURT REPORTS [2023] 7 S.C.R.

A owners of the vehicles in the Certificate of Registration under the Motor
Vehicles Act. The claim of depreciation made under Section 32 of the
Act was rejected on the basis that the assessee was not the owner of
the vehicles. The Court found from the lease agreement that it was
agreed that the assessee was to be the exclusive owner of the vehicle at
all points of time. The argument of the Revenue that the name of the
B
lessee was entered in the Certificate of Registration under Motor Vehicle
Act, and therefore, it must be treated as the owner under Section 2(30)
was rejected. It was further found that if the lessee was in fact the
owner, he would have claimed depreciation, which was not done. It was
also found that the entire lease rent was assessed as business income in
C the hands of the assessee. The Court went on to hold that in the facts it
was the appellant-assessee which could be treated as the owner of the
vehicles entitling it to claim the benefit of depreciation under Section 32.
57. This Court is called upon to decide the ambit of the word
‘owner’ in section 69A in the facts before us. This Court agrees with
D the High Court that the concept of ‘owner’ cannot be divorced from the
context in which the expression is employed. In the case of Jodha Mal
(supra), the property undoubtedly stood vested as evacuee property with
the custodian in Pakistan. The assessee wanted to claim the benefit of
the losses it had made at a time when he had ceased to be the owner.
E This Court bore in mind the effect of the Act under which the custodian
in Pakistan became the owner. The claim of the assessee in the said
case was that the custodian was owner only for the purpose of
administration and that the assessee still continued to be the owner in
the sense that he had the ultimate right to the property. This Court took
a practical view as well noticing that thousands of evacuees who had
F left all the properties in Pakistan would be visited with tax even though
they had left Pakistan and they did not get a paisa out of those properties
and businesses. It was found that for the purpose of Section 9, the owner
must be that person who can exercise the rights of the owner, not on
behalf of the owner, but in his own right. The Court also accepted that
G an evacuee from Pakistan had a residual right in the property. It was in
this context that the Court considered as to whether that residual right
can be considered as ownership for the purposes of Section 9 of the
earlier Act. It was still further in the said context that the Court held that
the focus of the Section is on the receipt of the income and that the word
owner had different meanings in different contexts.
H
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 579
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

58. When it came to the Podar Cement Pvt. Ltd. (supra), this A
Court took into consideration the ground reality in the context of Section
22 of the Act and approved of taxing the income of a person who is
entitled to receive income from the property in his own right under Section
22. We have elaborately referred to the judgment of the Patna High
Court in the Sahay Properties case. The full rights of an owner as set
B
out therein may again be reiterated as:
(1) The power of enjoyment which includes the power to
destroy.
(2) The right to possession which includes the right to exclude
others. C
(3) The power to alienate inter vivos or to charge as security.
(4) The power to bequeath the property.
59. This Court may at this juncture observe that a carrier has
none of these rights or powers. It may be true that in order to be an D
owner, all the rights and powers of an owner need not be present at the
same point of time in the same person. It may be true that ownership
may be associated with a better right to be in possession and actual
possession in a given case may be harmonised with ownership. Being in
possession with a right to be possession may lead to a presumption that
the possessor is the owner, unless it be that there are indications to the E
contrary. The beneficial vesting may in the context clothe the person
with title as the owner. Another concept which emerges is a person in
receipt of money having actual control over the property with no person
having a better right to defeat his claim of possession may open the
doors to a finding that he is the owner within the meaning of Section F
69A. A person in actual physical control of the property and realising the
entire income for his own use may indicate the presence of ownership.
The absence of the conveyance needed to complete the transfer may
not detract from a person being found to be the owner. The soul of the
reasoning appears to be the entitlement to receive the income from the
property ‘in his right’. G
60. Let us apply these tests and ascertain whether the appellant
can be treated as the owner in any sense of the expression. Appellant as
a carrier was entrusted with the goods. The possession of the appellant
began as a bailee. The Court proceeds further on the basis that instead
of delivering the goods, the appellant did not deliver the goods to the H
580 SUPREME COURT REPORTS [2023] 7 S.C.R.

A concerned divisions of the department in the State of Bihar. Ownership
of the goods in question by no stretch of imagination stood vested at any
point of time in the appellant. Property would pass from the consignor to
the consignee on the basis of the principles which are declared in the
Sale of Goods Act. It is inconceivable that any of those provisions would
countenance passing of property in the goods to the appellant who was
B
a mere carrier of the goods. Section 406 of the IPC makes it an offence
for a person entrusted with property which includes goods entrusted to a
carrier being misappropriated or dishonestly being converted to the use
of the carrier. A specific illustration under Section 406 makes it abundantly
clear that any such act by a carrier attracts the offence under Section
C 406. The Court in other words would have to allow the commission of
an offence by the appellant in the process of finding that the appellant is
the owner of the goods. In other words, proceeding on the basis that
there was short delivery of the goods by the appellant, inevitably, the
Court must find that the act was not a mere omission or a mistake but a
deliberate act by a carrier involving it in the commission of an offence
D
under Section 406. In other words, the Court must necessarily find that
the appellant continued to possess the bitumen and misappropriated and
it is in this state that assessing officer would have to find that the appellant
by the deliberate act of short delivering the goods and continuing with
the possession of the goods not only contrary to the contract but also to
E the law of the land, both in the Carriers Act 1865 and breaking the penal
law as well, the appellant must be treated as the owner.
61. There is no equity about a tax. Equally, a person cannot be
taxed based on intendment. Unlike the possession of a person who for
all intents and purposes, and in his own right, earns income from house
F property, lawfully otherwise, and falls short of ownership only for want
of a formal conveyance as required under Section 54 of Transfer of
Property Act, a carrier who clings on to possession not only without
having a shadow of a right, but what is more, both contrary to the contract
as also the law cannot be found to be the owner. The possession of the
carrier who deliberately refuses to act under the contract but contrary
G to it, is not only wrongful, but more importantly, makes it a case where
the possession itself is without any right with the carrier to justify his
possession. Recognising any right with the carrier in law would involve
negation of the right of the actual owner which if the property in the
goods under the contract has passed on to the consignee is the consignee
H and if not the consignor. This Court has already found that the appellant
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 581
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

is bereft of any of the rights or powers associated with ownership of A
property. The only aspect was the alleged possession of the goods which
is clearly wrongful when it continued with the appellant contrary to the
terms of the contract and the law.
62. The Court is conscious of the fact that income derived from
an illegal business can be legitimately brought to tax [See AIR 1980 SC B
1271]. However, that is a far cry from justifying invocation of Section
69A of the Act as it is indispensable to invoke the said provision that the
assessing officer must find that the articles in question was under the
ownership of the assessee in the financial year. This is apart from other
requirements being met.
C
63. This Court may approach the issue from another angle. Section
69A was inserted in 1964 to get at income which was sought to be
screened from tax by purchasing valuable articles such as bullion and
gold and jewellery besides keeping it in the form of money also. The
object of such assessee would also be achieved by becoming the owners
of other valuable articles. In this case, is it a case where the appellant D
was attempting to conceal taxable income by illegally possessing the
bitumen? Proceeding further and assuming again that the assessee
possessed the bitumen albeit illegally and proceeded to dispose of the
same. The rationale of the Revenue involves ownership of the bitumen
being ascribed to the appellant based on possession of the bitumen E
contrary to the contract of carriage and with the intention to
misappropriate the same, which further involves the sale of the bitumen
for which there is no material as such. But this Court proceeds on the
basis that such a sale also took place. What is however important is, the
requirement in Section 69A that the assessing officer must find that the
assessee is the owner of the bitumen. This Court is unable to agree that F
in the facts it could be found that the appellant could be found to the
owner. It is further found that the appellant could not be said to be in
possession in his own right, accepting the case of the Revenue that
there was short delivery. This Court finds that the appellant did not
possess the power of alienation. Quite clearly, if the case of short delivery G
is accepted, the consignee if property had passed to it had every right
over the bitumen and proceeding on the basis that the assessing officer’s
reasoning is correct, the department definitely had a case that it had not
received the bitumen in question. The right over the bitumen as an owner
at no point of time could have been claimed by the appellant. The
H
582 SUPREME COURT REPORTS [2023] 7 S.C.R.

A possession of the appellant at best is a shade better than that of a thief
as the possession had its origin under a contract of bailment. This is also
not a case where any case is set up of the carrier exercising rights
available in law entitling it possess goods as of right or pass on title to
another under law as permitted. Hence, this Court would hold that the
Assessing Officer acted illegally in holding that one appellant was the
B
‘owner’ and on the said basis made the addition.
L. “OTHER VALUABLE ARTICLE”
64. It is a case of the appellant that applying the Principle of
Ejusdem Generis, bitumen would stand out as a strange bed fellow in
C the company of its immediate predecessor words, viz., money, bullion
and jewellery. In other words, it is the case of the appellant that bitumen
is a clear misfit and it could not have been the legislative intention to
treat bitumen as other valuable article. Our attention is drawn to the
Circular No. 20D dated 07.07.1964 issued by Central Board of Direct
Taxes, which has been adverted to. {see paragraph 48}
D
65. In Bhagwandas Narayandas v. Commissioner of Income
Tax, Ahmedabad and others18, the question, which, inter alia, fell for
consideration before a learned Single Judge of High Court of Gujarat,
was, whether fixed deposit receipts and title deeds of immovable property
were ‘valuable things or articles’, which required a show-cause notice
E under Rule 112A of the Income-Tax Rules, 1962. Section 132 if the Act
also employs the expression ‘other valuable articles’. The Court, inter
alia, held as follows:
“18. On close consideration of the scheme of sub-section (5) of
section 132, we find that the above referred contention of Shri
F Bhatt is not acceptable. As already pointed out by us in the
foregoing discussion, it is evident from the scheme of sub-section
(5) of section 132 that the “assets”, which are seized during the
course of an authorised search under section 132, are expected
to be retained only for the purpose of satisfying the tax liability of
G an assessee as ascertained from his undisclosed income.
Therefore, by using the words “valuable article or thing”, what
the legislature has intended to imply is that the assets covered by
these words should be such as could be converted into cash so
that the tax liability of the assessee concerned, as revealed from

H 18
1973 Vol. 98 ITR 194
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 583
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

his undisclosed income, could be duly satisfied. In other words, A
the thing or article which can be retained under sub-section (5) of
section 132 should be the one which is carrying its own intrinsic
value in terms of money. Therefore, the question is whether the
fixed deposit receipts and documents of title relating to an
immovable property are the things or articles which can be
B
evaluated in terms of money. Obviously, a document of title relating
to an immovable property or even a fixed deposit receipt issued
by a bank in favour of a particular person are merely the
documents of title which, though possessing much evidentiary
value, do not passes any intrinsic market value. They do supply
evidence of assets which by themselves are valuable but they C
being mere documents of title, they can neither be negotiated nor
be transferred for a valuable consideration. Under the
circumstances, we are of the opinion that documents of title, which
have no greater value than an evidentiary one, and which do not
carry any saleable interest, are not the “valuable things or articles”
D
contemplated either by subsection (5) of section 132 of the Act or
by rule 112A of the Rules. There is nothing in the record to show
that the fixed deposit receipts, which are seized in this case, carry
any inherent market value with them. They are merely the
documents evidencing the debt due to the assessee. Similarly, the
documents of title relating to an immovable property also contain E
no more value than an evidentiary one. Thus, since none of those
documents has got any intrinsic value in terms of money, we are
of the opinion that they are not covered by sub-section (5) of
section 132 of the Act or rule 112A of the Rules.”
(Emphasis supplied) F
66. Unlike a document of title or a fixed deposit receipt, which
cannot, by itself, be disposed of or alienated, bitumen would be goods,
which can be transferred. It would have a value in the market depending
upon its quality. In Commissioner of Income Tax v. M.K. Gabrial Babu
and others19, the High Court of Kerala was dealing with the question, G
as to whether immovable property would be covered within the expression
‘other value article or thing’ within the meaning of Section 132(1) of the
Act. The Court held:

19
(1991) 188 ITR 464 Kerala H
584 SUPREME COURT REPORTS [2023] 7 S.C.R.

A “4. … A word in a statue is quite often judged by the company its
keeps. The preceding words of Section 132(1), cannot be ignored
or overlooked. Money, bullion, jewellery, which precede “other
valuable article or thing” forge a genus and, consequently, the
words “other valuable article or thing” assume a constricted
meaning and interpretation in that context. The general principles
B
of interpretation of a restricted meaning being given to certain
words, whether it be by applying the principles of ejusdem generis
or otherwise restricting it, had been followed by judicial decisions
covering much area and many topics. They are not necessarily
confined to Income Tax legislation. Those connected with the
C terms under the Income Tax enactment have been referred to by
the learned judge in support of his conclusion. We concur with
that view. It is unnecessary, therefore, to supplement it by
adventitious decisions available from other jurisdictions as well.
We affirm the judgment of the learned Single Judge (M.K. Gabriel
Babu v. Asst. Director of I.T. (Investigation) [(1990) 186 ITR
D
435 (Ker.).]”
67. In contrast to the view taken in the impugned order before us,
in Dhanush General Stores v. Commissioner of Income Tax20, the
Court, inter alia, on facts, held as follows:
E “13. If there is undisclosed investment in bullion, jewellery or other
valuable articles, which are not fully disclosed in the books of
account the case would fall under the ambit of s. 69B of the Act,
1961. In the case on hand, there was excess stock, which can be
held as unexplained investment, not investment in bullion, jewellery
or other valuable articles. In the entire survey, it was not found
F that any bullion, jewellery or other valuable articles has been found.
The Kirana articles cannot be held as other valuable articles.
14. “Valuable article” means an article which is valuable and having
a high price, not other ordinary articles, as in the instant case.

G 15. The surrendered income ought to have been treated as deemed
income under the provisions of s.69 of the Act, 1961, however, on
the wrong provision applied in the assessment order though the
effect is one and the same the surrendered income cannot be
held that it was not an income under the provisions of s.69 of the
20
H (2011) 339 ITR 651 Chhattisgarh
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 585
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

Act, 1961. As such, the substantial question of law, i.e., (i) and A
(iii) are answered accordingly.”
(Emphasis supplied)
68. The word ‘valuable’ has been defined in Black’s Law
Dictionary as follows: -
B
“Valuable adjective. Worth a good price; having financial or market
value.”
69. The word ‘valuable’ has been defined in the Concise Oxford
Dictionary as follows: -
The word ‘valuable’ has been defined as again an adjective. “worth C
a great deal of money. Very useful or important.”
70. The word ‘money’ has been described in Black’s Law
Dictionary as follows: -
“money. 1. The medium of exchange authorized or adopted by a
D
government as part of its currency; esp. domestic currency <coins
and currency are money>.2. Assets that can be easily converted
to cash <demand deposits are money>. 3. Capital that is invested
or traded as a commodity <the money market>. 4. Funds; sums
of money <investment moneys>. – Also spelled (in sense4) monies.
See Medium of Exchange; Legal Tender.” E
71. The word ‘article’ has been defined in Black’s Law Dictionary
as “Generally, a particular item or thing <article of clothing>.
72. The Word ‘bullion’ has been defined in the Concise Oxford
Dictionary as ‘gold or silver in bulk before coining, or valued by weight’
F
M. PRINCIPLE OF EJUSDEM GENERIS; NOSCITUR A
SOCIIS
73. Section 69A provides for unexplained ‘money, bullion,
jewellery’. It is thereafter followed by the words ‘or other valuable
articles’. Does this mean that the words ‘other valuable articles’ must G
be read e jusdem generis? The principle applies when the following
conditions are present [Principles of Statutory Interpretation by Justice
G P Singh, 14th Edition]:
“(1) the statue contains an enumeration of specific words; (2) the
subjects of enumeration constitutes a class or category; (3) that
H
586 SUPREME COURT REPORTS [2023] 7 S.C.R.

A class or category is not exhausted by the enumeration; (4) the
general terms follow the enumeration; and (5) there is no indication
of a different legislative intent”. If the subjects of enumeration
belong to a broad based genus as also to a narrower genus, there
is no principle that the general words should be confined to the
narrower genus.”
B
74. In the context of Explanation 3(b) to Section 32(1) of the Act,
this Court in Commissioner of Income Tax, Kolkata v. SMIFS
Securities Limited21, held as follows:
“8. We quote hereinbelow Explanation 3 to Section 32(1) of
C the Act:
“Explanation 3.—For the purposes of this sub-section, the
expressions ‘assets’ and ‘block of assets’ shall mean—
(a) tangible assets, being buildings, machinery, plant or
furniture;
D
(b) intangible assets, being know-how, patents,
copyrights, trademarks, licences, franchises or any other
business or commercial rights of similar nature.”
Explanation 3 states that the expression “asset” shall mean an
intangible asset, being know-how, patents, copyrights, trademarks,
E
licences, franchises or any other business or commercial rights of
similar nature. A reading of the words “any other business or
commercial rights of similar nature” in clause (b) of Explanation
3 indicates that goodwill would fall under the expression “any
other business or commercial right of a similar nature”. The
F principle of ejusdem generis would strictly apply while interpreting
the said expression which finds place in Explanation 3(b).
9. In the circumstances, we are of the view that “goodwill” is
an asset under Explanation 3(b) to Section 32(1) of the Act.”
75. In Rohit Pulp and Paper Mills Limited v. Collector of
G Central Excise, Baroda22, the Court was dealing with an exception
clause in an exemption notification and considered the applicability of
the Principle of Noscitur a Sociis, to the facts:

21
(2012) 13 SCC 488
22
H (1990) 3 SCC 447
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 587
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

“12. The principle of statutory interpretation by which a generic A
word receives a limited interpretation by reason of its context is
well established. In the context with which we are concerned, we
can legitimately draw upon the “noscitur a sociis” principle. This
expression simply means that “the meaning of a word is to be
judged by the company it keeps.” Gajendragadkar, J. explained
the scope of the rule in State of Bombay v. Hosptial Mazdoor B
Sabha [(1960) 2 SCR 866 : AIR 1960 SC 610 : (1960) 1 LLJ 251]
in the following words: (SCR pp. 873-74)
“This rule, according to Maxwell, means that, when two or
more words which are susceptible of analogous meaning are
coupled together they are understood to be used in their cognate C
sense. They take as it were their colour from each other, that
is, the more general is restricted to a sense analogous to a less
general. The same rule is thus interpreted in “Words and
Phrases” (Vol. XIV, p. 207): “Associated words take their
meaning from one another under the doctrine of noscitur a
sociis, the philosophy of which is that the meaning of a doubtful D
word may be ascertained by reference to the meaning of words
associated with it; such doctrine is broader than the
maxim ejusdem generis”. In fact the latter maxim “is only an
illustration or specific application of the broader maxim noscitur
a sociis”. The argument is that certain essential features of E
attributes are invariably associated with the words “business
and trade” as understood in the popular and conventional sense,
and it is the colour of these attributes which is taken by the
other words used in the definition though their normal import
may be much wider. We are not impressed by this argument.
It must be borne in mind that noscitur a sociis is merely a F
rule of construction and it cannot prevail in cases where it is
clear that the wider words have been deliberately used in order
to make the scope of the defined word correspondingly wider.
It is only where the intention of the legislature in associating
wider words with words of narrower significance is doubtful,
G
or otherwise not clear that the present rule of construction can
be usefully applied. It can also be applied where the meaning
of the words of wider import is doubtful; but, where the object
of the legislature in using wider words is clear and free of
ambiguity, the rule of construction in question cannot be pressed
into service.” H
588 SUPREME COURT REPORTS [2023] 7 S.C.R.

A This principle has been applied in a number of contexts in judicial
decisions where the court is clear in its mind that the larger meaning
of the word in question could not have been intended in the context
in which it has been used. The cases are too numerous to need
discussion here. It should be sufficient to refer to one of them by
way of illustration. In Rainbow Steels Ltd. v. CST [(1981) 2 SCC
B
141 : 1981 SCC (Tax) 90] this Court had to understand the meaning
of the word ‘old’ in the context of an entry in a taxing traffic
which read thus:
“Old, discarded, unserviceable or obsolete machinery, stores
or vehicles including waste products......”
C
Though the tariff item started with the use of the wide word
‘old’, the court came to the conclusion that “in order to fall within
the expression ‘old machinery’ occurring in the entry, the machinery
must be old machinery in the sense that it has become non-
functional or non-usable”. In other words, not the mere age of the
D
machinery, which would be relevant in the wider sense, but the
condition of the machinery analogous to that indicated by the words
following it, was considered relevant for the purposes of the
statute.”
76. About Noscitur a Sociis and how it compares with ejusdem
E generis, the following statement in G.P. Singh (supra) on Statutory
Interpretation is apposite:
“It is a rule wider than the rule of ejusdem generis; rather the
latter rule is only an application of the former.”
F N. WHETHER BITUMEN IS ‘OTHER VALUABLE
ARTICLE’
77. This Court has referred to the Principles of Ejusdem Generis
and Noscitur a Sociis, which undoubtedly are rules of construction the
latter being described as having treacherous underpinnings and the former
G requiring the existence of a genus which is not exhausted by the categories
catalogued in the statute. This Court has also referred to the definition
of the words, money, bullion valuable and article. The Court approves
the view taken by the High Court of Gujarat in Bhagwandas
Narayandas (supra) that a document of title to immovable property or
a fixed deposit receipt would not qualify as other valuable article. The
H
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 589
CENTRAL, PATNA AND ANOTHER [K. M. JOSEPH, J.]

reasons which have been given appear to us to be sound. A document of A
title or a fixed deposit receipt would not be ‘articles’ which can be bought
and sold in a market. An article, would also not encompass an item of
immovable property. This Court can safely conclude that an article must
be movable property. One strong indication that the Principle of Ejusdem
Generis may not apply is a decision of this Court in Chuharmal (supra),
B
where the articles involved were watches. Watches by no stretch of
imagination can be brought in on the basis of ejusdem generis. They do
not belong to the so-called genus of money or bullion or jewellery. The
hallmark of a watch in the context of the expression ‘other valuable
article’ would be that it is marketable and it has value. When it comes to
value, it is noticed that in the definition of the word ‘valuable’ in Black’s C
Law Dictionary, it is defined as ‘worth a good price; having a financial
or market value’. The word ‘valuable’ has been defined again as an
adjective and as meaning worth a great deal of money in the Concise
Oxford Dictionary. Valuable, therefore, cannot be understood as anything
which has any value. The intention of the law-giver in introducing Section
D
69A was to get at income which has not been reflected in the books of
account but found to belong to the assessee. Not only it must belong to
the assessee, but it must be other valuable articles. Let us consider a
few examples. Let us take the case of an assessee who is found to be
the owner of 50 mobile phones each having a market value of Rs.2
lakhs each. The value of such articles each having a price of Rs.2 lakhs E
would amount to a sum of Rs.1 crore. Let us take another example
where the assessee is found to be the owner of 25 highly expensive
cameras. Could it be said that despite having a good price or worth a
great deal of money, they would stand excluded from the purview of
Section 69A. On the other hand, let us take an example where a person
F
is found to be in possession of 500 tender coconuts. They would have a
value and even be marketable but it may be wholly inapposite to describe
the 500 tender coconuts as valuable articles. It goes both to the
marketability, as also the fact that it may not be described as worth a
‘good’ price. Each case must be decided with reference to the facts to
find out that while articles or movables worth a great deal of money or G
worth a good price are comprehended articles which may not command
any such price must stand excluded from the ambit of the words ‘other
valuable articles’. The concept of ‘other valuable articles’ may evolve
with the arrival in the market of articles, which can be treated as other
valuable articles on satisfying the other tests.
H
590 SUPREME COURT REPORTS [2023] 7 S.C.R.

A 78. Bitumen is defined in the Concise Oxford English Dictionary
as ‘a black viscous mixture of hydrocarbons obtained naturally or as a
residue from petroleum distillation, used for road surfacing and roofing’.
Bitumen appears to be a residual product in the petroleum refineries and
it is usually used in road construction which is also probabalised by the
B fact that the appellant was to deliver the bitumen to the Road Construction
Department of the State. Bitumen is sold in bulk ordinarily. In the
Assessment Order, the Officer has proceeded to take Rs. 4999.58 per
metric ton as taken in the AG Report on bitumen scam. Thus, it is that
the cost of bitumen for 2094.52 metric ton has been arrived at as Rs.
1,04,71,720.30. This would mean that for a kilogram of bitumen, the
C price would be only Rs.5 in 1995-1996 (F.Y).
79. Bitumen may be found in small quantities or large quantities.
If the ‘article’ is to be found ‘valuable’, then in small quantity it must not
just have some value but it must be ‘worth a good price’ {See Black’s
Law Dictionary (supra)} or ‘worth a great deal of money’ {See Concise
D Oxford Dictionary (supra)} and not that it has ‘value’. Section 69A would
then stand attracted. But if to treat it as ‘valuable article’, it requires
ownership in large quantity, in the sense that by multiplying the value in
large quantity, a ‘good price’ or ‘great deal of money’ is arrived at then
it would not be valuable article. Thus, this Court would conclude that
E ‘bitumen’ as such cannot be treated as a ‘valuable article’. In view of
these findings, this Court need not pronounce on points III and IV. The
appeals are allowed. The impugned judgment will stand set aside and
though on different grounds, the order by the Commissioner Appeals
deleting the addition made on the aforesaid basis will stand restored.
F
HRISHIKESH ROY, J.
1. I have perused the erudite opinion of my esteemed brother
Justice KM Joseph. I am in accord with his judgment that for the purposes
of Section 69A of the Income Tax Act, 1961-the deeming effect of the
G provision will only apply, if the assesseeis the owner of the impugned
goods and secondly, for any article to be considered as ‘valuable
article’under Section 69A, it must be intrinsically costly, and it will not
be regarded as valuable if huge mass of a non precious and common
place article is taken into account, for imputing high value. I wish to add
H the following reasoning to justify my opinion.
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 591
CENTRAL, PATNA AND ANOTHER [HRISHIKESH ROY, J.]

2. Two principal questions arise in this matter.Firstly,whether the A
assessee herein can be regarded as an ‘owner’for the concerned goods,
and, secondly, whether ‘bitumen’ can be covered within the category of
‘other valuable article’, alongside money, bullion and jewellery, as
mentioned in Section 69A of the Income Tax Act, 1961.
3. In the general scheme of the Income Tax Act, 1961, direct B
taxation, except in areas such as e-commerce, is inextricably connected
to the ownership and not just possession of the underlying asset, creating
income. Section 22 of the Act, which provides for taxation of income
from house property provides that the assessee must be the owner of
such property generating income. Section 45 provides for income tax on
C
capital gains to be imputed on owners of capital assets who transfer
such assets and those who convert them for lawful gains. Likewise,
section 69A provides as a rule of evidence that for the deeming effect to
apply- the assessee must be the owner of money, bullion, jewellery and
other valuable articles on which he is unable to proffer a satisfactory
explanation. Section 69B provides that in cases of understated D
investments the assessee should be the owner of money, bullion, jewellery
and other valuable article(s). Hence, determining ownership of impugned
goods is an important factor to impute tax liability. Someone having mere
possession and without legal ownership or title over the goods, will not
be covered within the ambit of Section 69A.An assessee may E
nevertheless be also regarded as deemed owner if possession is imputed
on the assessee and no other person having a better claim is contesting
the assessee’s claim. In the present case, the assessee was certainly
not the owner of the bitumen - but was the carrier who was supplying
goods from the consignor- oil marketing companies to the consignee-
Road Construction Department. Notably, due to short delivery of goods, F
the possession of the assessee was unlawful. The inevitable conclusion
therefore is that the assessee is not the owner, for the purposes of Section
69A.
4. To address the second question on whether bitumen is a valuable
article under Section 69A,we must understand whatsort of article is G
bitumen. Commonly, bitumen is described as a sticky, black, highly viscous,
liquid or a semi-solid form of petroleum and a crude oil by-product,which
is also known as asphalt.When crude oil is subjectedto refining- by
fractional distillation, i.e.before it is converted into industrially viable
finished petroleum products, midway, several useful articles are obtained. H
592 SUPREME COURT REPORTS [2023] 7 S.C.R.

A In the process of distillation of crude oil in the fractionating column-
top distillates like liquified petroleum gas (LPG), middle distillates like-
kerosene, diesel, jet fuel and paraffin are obtained and in the lower
column, distillates like lubricants and greases, are collected. At the
residual level at the bottom of the column, bitumen and asphalt are the
offshoot of the distillation process. Bitumen, the highly viscous complex
B
of hydrocarbons is mostly used for road surfacing, roofing and for
water and alkaline resistant painting. The question is whether this
residual offshoot from crude oil refining, can be categorised as a
valuable article, in the context of Section 69A of the Income Tax Act
keeping in mind that the section, specifically lists three items i.e. money,
C jewellery and bullion. To provide more clarity it is relevant to quote the
section in full. It reads as follows:
“69A. Unexplained money, etc. Where in any financial year the
assessee is found to be the owner of any money, bullion, jewellery
or other valuable article and such money, bullion, jewellery or
D valuable article is not recorded in the books of account, if any,
maintained by him for any source of income, and the assessee
offers no explanation about the nature and source of acquisition
of the money, bullion, jewellery or other valuable article, or the
explanation offered by him is not, in the opinion of the Assessing
E Officer, satisfactory, the money and the value of the bullion,
jewellery or other valuable article may be deemed to be the income
of the assessee for such financial year.”
5. The Patna High Court in the order challenged before us- held
that under Section 69A “any article which has value will come under
F the expression “valuable article” as mentioned in Section 69A of
the Act…”1 According to the Division Bench, for purposes of Section
69A, it will not be relevant whether the article in question is generally
considered to be of high value and is a precious item. It possibly could be
a commonplace and ordinary article but all that will be relevant is that
the considered item has some value. The article can be a run-of-the-mill
G item or it can be a high priced one. According to the High Court the
nature of the article is immaterial so long as it is of some value which
may be accounted only by volume. In this case, the addition to assessee’s
income related to Rs. 1.05 crores worth of bitumen. In particular, the

1
H DN Singh Vs. Commissioner of Income Tax &Anr. (2010) 324 ITR 304
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 593
CENTRAL, PATNA AND ANOTHER [HRISHIKESH ROY, J.]

impugned judgement also noted that in Section 69A the word ‘valuable A
article’ is a ‘separate item’ from bullion, money and jewellery and
concluded that it may include any article of value.
6. At this juncture, it is also relevant to consider,the decision of the
Chhattisgarh High Court in Dhanush vs. CIT2 under a related anti-
avoidance provision, i.e. Section 69B of the Act. However, before B
adverting to the decision, it is pertinent to note that on the question of
interpretation of the phrase ‘other valuable article’ in Section 69A, the
findings, will alsobe applicable to Section 69B. Although Section 69A
deals with unexplained ownership of valuable articles, and the provision
in Section 69B covers cases of understatement of expenditure incurred C
on acquisition of valuable articles, both provisions deal with the ownership
of valuable articles. Section 69B, inserted by virtue of the Finance Act,
1965 (10 of 1965), reads as follows:
“69B. Amount of investments, etc., not fully disclosed in books of
account. Where in any financial year the assessee has made D
investments or is found to be the owner of any bullion, jewellery
or other valuable article, and the Assessing Officer finds that the
amount expended on making such investments or in acquiring such
bullion, jewellery or other valuable article exceeds the amount
recorded in this behalf in the books of account maintained by the
assessee for any source of income, and the assessee offers no E
explanation about such excess amount or the explanation offered
by him is not, in the opinion of the Assessing Officer, satisfactory,
the excess amount may be deemed to be the income of the
assessee for such financial year.”
7. Now returning to the facts of Dhanush (supra), the learned F
Division Bench, in contrast, held that the stock in kirana store is not a
valuable article for the purposes of Section 69B.The Court noted that
kirana store items are not valuable articles having a high price and are
rather in the nature of ordinary articles. In that case the excess stock
worked out to around Rs. 87,000/-. G
8. Between the two contrary opinions, on the applicability of
Section 69A/69B as mentioned above, on the nature of the article for
the purpose of tax liability, I feel that the Chhattisgarh High Court in

2
Dhanush General Stores vs. Commissioner of Income Tax (2011) 339 ITR 651 H
594 SUPREME COURT REPORTS [2023] 7 S.C.R.

A Dhanush (supra) propagates the correct view. I do not see any basis to
give a wide interpretation to Section 69A and include within its ambit,
any and every article of value. Notably, it can be seen that- articles of
value- are a genus of which valuable articles are a species i.e. a subset
of high priced items. To put it differently, an article having value, may
not be a valuable article. As for instance, a bag of cement, a sack of rice
B
or a diamond stone will certainly have some value. But only the diamond
stone can be regarded as a high costvaluable item. To categorise all
sundry items as valuable articles will mean an interpretation which will
be foreign to the purpose of the law and the intention of the legislature in
so far as Section 69A is concerned.
C 9. At this point, it may also be useful to refer to the Circular
No. 20 of 1964- Dated 7.7.1964.In this Circular the then Minister of
Finance, while defending the insertion of Section 69A- stated that
the 1964 Amendment is enacted not to subject lower middle-class
people to taxation by taxing gold or jewellery inherited from
D forefathers, but provision is mandated for ‘big assessees’ who convert
their black money and unaccounted wealth into gold jewellery and
gold vessels and claim it to be heirloom. This makes it clear that the
legislature never intended that any and every article of value should
be brought within the ambit of Section 69A.It is only the high priced
precious items- that command a premium price and are often used
E by high wealth individuals to park their unaccounted income- by
converting it into gold and bullion - that the Section 69A was inserted
to address and to make such articles taxable under the Income Tax
Act. Therefore, theintent of the legislature,through the Amendment
– was to subject articles like gold, jewellery and other valuable items,
F to income tax, where such articles are typically owned with the
intention of avoiding income tax.
10. Conversely, if all sundry articles of nominal value are
bracketed in the category of valuable article, it will lead to an absurdity
and will also be inconsistent with the legislative intent. Focusing on the
G high total value of an article, ignoring it slowly per unit price would
mean including low-cost ordinary articles also in the valuable category,
under Section 69A. This would defy the legislature’s logic. In this
context, when the principle of Ejusdem Generis is applied, the
preceding words in Section 69A such as money, bullion, jewellery would
suggest that the phrase ‘other valuable article’ which follows those
H
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 595
CENTRAL, PATNA AND ANOTHER [HRISHIKESH ROY, J.]

words, would justify inclusion of only high value goods. Any other way A
of reading the phrase ‘other valuable article’ or ‘valuable article’ by
ignoring the kind of specific goods mentioned in the preceding part of
Section 69A, would be incorrect and would do violence to the plain
language of the provision and will travel beyond the legislative intent.
11. Additionally, the maxim ‘noscitur a sociis’ i.e. (a word is B
known by its associates) would also support the above view that the
other valuable articles should be items in the nature of silver bars, or
jewellery or money i.e. only high priced item. It is given, that no law
could possibly provide for an exhaustive list of all valuable items that
may facilitate high income assessees to adjust their income. Only an
C
indicative list of valuable articles can practically be mentioned in the
Section. But to include bitumen- the residual offshoot material during
processing of crude oil, excluding its valuable constituents like petrol,
diesel, LPG, aviation fuel etc., within the expression ‘other valuable article’
in Section 69A, would in my opinion, result in absurdities, that we need
to eschew. The common place items from kirana store and bitumen are D
intrinsically dissimilar to the high value items in Section 69A and through
an interpretive exercise, we should not categorise them with items such
as gold bars and jewellery.
12. At this stage it may also be beneficial to advert to the principle-
“absoluta sententia expositore non indiget” i.e. (a simple proposition E
needs no expositor). The maxim provides that if the language employed
by the legislature provides for adequate comprehensibility, then nothing
additional is required. In New Shorrock Spinning and Manufacturing
Co. Ltd. vs. N.V. Raval3 the Division Bench of the Bombay High Court,
dealt with the construction of sub-section (10) of section 35 of the Income F
Tax Act, 1922, introduced by Amendment through the Finance Act, 1956.
In this regard the Court held that-
“One safe and infallible principle which is of guidance in
these matters is to read the words through and see if the rule
is clearly stated. If the language employed gives the rule in G
words of sufficient clarity and precision, no more requires to
be done.”

3
New Shorrock Spinning and Manufacturing Co. Ltd. vs. N.V. Raval(1959) 37
ITR 41
4
See CIT vs. Kasturi 237 ITR 24 (SC) H
596 SUPREME COURT REPORTS [2023] 7 S.C.R.

A 13. Furthermore, the principle that a fiscal statute should be
strictly construed is, well settled.4 The classical words of Justice Rowlatt
in the 1920s case of Cape Brandy Syndicate5 would be of valuable
assistance here. Justice Rowlatt while interpreting the phrase- ‘pre-
war trade years’ in context of the British Finance Act,1915-16,
observed as follows:
B
“…….…in a taxing Act one has to look merely at what is clearly
said. There is no room for any intendment. There is no equity
about a tax. There is no presumption as to a tax. Nothing is to
be read in, nothing is to be implied. One can only look fairly
C at the language used………”
14. The above opinion of Justice Rowlatt was approvingly cited
by former Chief Justice Koka Subba Rao, writing fora three judge bench
of this Court in the case of Banarsi Debi vs. ITO.6 The principle that
provisions and exemptions under taxation statutes are to be strictly
D interpreted in accordance with legislative intent was also upheld by one
of us recently in 2022, in Augustan Textile Colours.7
15. Following the aforesaid discussion, it must be said that for
purposes of interpreting Section 69A of the Income Tax, Act 1961-
the ordinary and literal meaning should be opted as the words in the
E statute are clear and unambiguous. The provision does not need any
addition or subtraction and stands on its own legs. The phrase
‘valuable article’ would simply mean an item ‘worth a great deal of
money’. It cannot mean, as is said in the impugned order, to
include‘any article of value’. Therefore, in the context of Section
69A, unexplained valuable article has to be high priced item which
F are procured to hide income, to avoid tax liability. To adopt a wide
interpretation for the phrase- ‘valuable article’ and thereby include
within its scope any sundry article of whatever value, is found to
be unjustified. It needs to be also reiterated that, ordinarily, fiscal
laws including taxation statutes, are to be strictly interpreted and tax
G must not be imposed through analogy, inference or by extension of
phrases used by the legislature.

5
Capy Brandy Syndicate vs. Inland Revenue (1921) 1 KB 64
6
Banarsi Debi vs. ITO (1964) 7 SCR 539- See paragraph 6.
7
Augustan Textile Colours Ltd. vs. Director of Industries &Anr. (Civil Appeal
H No. 2830/2022) per Justice Hrishikesh Roy. See paragraphs 13 & 14
M/s. D. N. SINGH v. COMMISSIONER OF INCOME TAX, 597
CENTRAL, PATNA AND ANOTHER [HRISHIKESH ROY, J.]

16. For purpose of Section 69A of Income Tax Act, it is therefore A
declared that- an ‘article’ shall be considered ‘valuable’ if the concerned
article is a high-priced article commanding a premium price. As a corollary,
an ordinary ‘article’ cannot be bracketed in the same category as the
other high-priced articles like bullion, gold, jewellery mentioned in Section
69A by attributing high value to the run-of-the-mill article, only on the B
strength of its bulk quantity. To put it in another way, it is not the ownership
of huge volume of some low cost ordinary article but the precious gold
and the like, that would attract the implication of deemed income under
Section 69A.

17. Earlier, it is the high value, less bulky items which were owned C
discreetly, that aided the assessee in avoiding tax. The 1964 Amendment
was primarily enacted to address mischief of this nature. The wisdom of
the legislature as reflected in the Amendment – was to subject to income
tax, articles like gold, jewellery and other valuable items- typically owned
with the intention of avoiding income tax-by translating income into buying
D
and then hiding such precious high value items. Premium price cannot
be attributed to an otherwise ordinary and common place article like
bitumen only on the basis of huge mass of bitumen. It would be an
incorrect way to categorize bitumen as a ‘valuable article’, under Section
69A of the Income Tax, Act.
E
18. While doing the above analysis,the 1976 song “The First Hello,
The Last Goodbye” written & sung by the British singer Roger Whittaker
is buzzing in my mind. The singer here goes lyrical while crooning about
things of great value andaptly sings”…gold would not be precious if
we all had gold to spare…..”. Taking a cue from the song’s lyrics, it
F
can be appropriately said that the legislature while introducing section
69A to the Income Tax, Act, 1961 by the Finance Act, 1964, was
concerned only with such precious and aspirational articles like bullion
and jewellery which are capable of being repositories of hidden earnings
but were not really concerned about commonplace stuff like “bitumen”,
which would not attract a second glance, on any road surface of our G
country.

19. In conclusion, it is held that bitumen is not a valuable article
in the context of Section 69A and the assessee here was not the
owner of the concerned bitumen for the purpose of section 69A of
H
598 SUPREME COURT REPORTS [2023] 7 S.C.R.

A the Income Tax Act, 1961.With the additional reasoning in the
preceding paragraphs, I concur with the judgment delivered by my
brother Justice K.M. Joseph.

Bibhuti Bhushan Bose Appeals allowed.
B (Assisted by : Neha Sharma, LCRA)

C

D

E

F

G

H