M/S. D. N. SINGH versus COMMISSIONER OF INCOME TAX, CENTRAL, PATNA AND ANOTHER

Citation: [2023] 7 S.C.R. 530 · Decided: 16-05-2023 · Supreme Court of India · Bench: K.M. JOSEPH · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2023] 7 S.C.R.
M/s. D. N. SINGH
v.
COMMISSIONER OF INCOME TAX, CENTRAL, PATNA AND
ANOTHER
(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 –
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
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
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
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.)
(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
[2023] 7 S.C.R. 530
530
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will not be covered within the ambit of s.69A – An assessee may
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, 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.
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
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
– ‘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
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
support the above view that the other valuable articles should be
items in the nature of silver bars, or jewe

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