MARY AUTOPY Vs. STATE OF KERALA

JUDGEMENT

(1.) DOUBTING correctness of certain conclusions arrived at and observations made by a Division Bench of this Court in Lovely Thomas v. State of Kerala, 1999 113 STC 505, the present reference has been made to a larger Bench. The view expressed in Lovely Thomas' case 1999 113 STC 505 (Ker.), was that where unaccounted purchases are there, it is for the revenue to explain as to wherefrom the unaccounted purchases were made. This conclusion was arrived at by observing that Arrack could be purchased only from the Government Distilleries and not from open market. It was further observed that simply because the Books of Accounts were not found to be fully posted at the time of the inspection, no addition could be made only for that reason drawing the inference that the Books of Accounts were not fully and regularly posted because assessee involved herself in unaccounted purchase. So far as the first aspect is concerned source of unaccounted purchase is within the knowledge of the Assessee and it is not possible on the part of the Revenue to show as to wherefrom the unaccounted purchases were made. This is a fact which is exclusively within Assessee's knowledge. Assessee is required to prove by proper and cogent evidence the source of purchase. The Assessee is entitled to have evidence produced and an inference to be drawn therefrom. There is a prima facie presumption that one who is found in possession of an article or thing is the owner thereof unless that presumption is rebutted by cogent evidence. Section 110 of the Indian evidence Act, 1872 (in short "the Evidence Act") embodies a salutory principle of Common Law Jurisprudence to that effect. (See chuharmal v. Commissioner of Income Tax, M. P. 1988 172 ITR 250 (SC ). The expression "burden of proof" really means two different things. It means sometimes that a party is required to prove an allegation before judgment can be given in its favour; it also means that on a contested issue one of the two contending parties has to introduce evidence. The burden of proof is of importance only where by reason of not discharging the burden which was put upon it, a party must eventually fail. There is an essential distinction between "burden of proof" and "onus of proof". Burden of proof lies on the person who has to prove a fact and it never shifts, but the onus of proof shifts. Such a shifting of onus is a continuous process in the evaluation of evidence. (See A. Raghavamma v. A. Chenchamma air 1964 SC 136 ). In view of the above position in law, conclusions in lovely Thomas' case 1999 113 STC 505 (Ker), are not acceptable. The other question is whether an adverse inference warranting addition can be drawn when books of Accounts are found to be not fully posted at the time of inspection. It would depend upon fact-situation of each case. If Assessee explains the reason why Books of Accounts were found to be not fully posted, the explanation may be accepted and no adverse inference may be drawn. But if the Assessee offers an explanation which is found to be unacceptable or contrary to the material on record, certainly adverse inference can be drawn by the Assessing authority to doubt the correctness of the Books of Account. As indicated above, it would depend upon fact-situation of the case and no rule of universal application can be laid down. The initial burden of establishing correctness of books of Accounts and Return filed by an Assessee is on him. If satisfactory, clinching and acceptable proof to substantiate figures in the Return filed is forthcoming, then the Revenue, if it intends to depart therefrom, should in its turn bring such materials on record, as would prove the contrary. As to what would be the measure of acceptable evidence on either side is a varying factor depending upon the facts of each case. No rigid or inelastic formula can be laid down. When Accounts are not reliable, best judgment assessment can be done. To sum up if accounts are not fully posted at the time of inspection, unless contrary is established by the Assessee, the inevitable conclusion is that Accounts are not properly maintained and such an adverse inference can be drawn. Reference is answered accordingly. The matter be placed before the Division Bench for hearing on merits.