Judgment :- Radhakrishnan, J. This appeal has been preferred by the Commissioner of Income-tax Trivandrum aggrieved by the order of the Income-tax Appellate Tribunal in ITA.79/Coch/96 dated 28-4-2000. Though four questions have been framed in the appeal, revenue is primarily aggrieved by the order of the Tribunal in wrongly placing the burden of proof on the revenue. 2. Assessee is an individual and carries on business as the proprietrix of M/s. Padmaja Jewellers. A search was conducted in the business premises of the assessee on 23.1.1992. During the search operations it was found that the assessee was in possession of unaccounted stock of gold weighing 502.330 gms in the form of 77 numbers of new gold bangles. At the time of search on 23.1.92 one Govindraj, brother of the assessee’s husband was present in the assessee’s jewellery shop. Statement was recorded from him. He stated that he was engaged in the work of making gold ornaments, particularly bangles and that G.S. 12 register was kept for such work and that his brother Devarajan, the assessee’s husband was writing the said register. Further it was also stated that gold weighing 450 gms, were given for preparing ornaments by one Raju, brother of the assessee, on the morning of 22-1-92, a day previous to the date of search. Govindarajan also stated that gold was accepted by his elder brother Devarajan who was at the shop when the gold was given to him for making the ornaments, Govindarajan had also stated that gold given by Raju on the previous day was yet to be converted into new bangles. From the above facts the assessing officer came to the conclusion that if at all Raju had given to Govindarajan any gold ornaments, they were not converted into new gold ornaments, and therefore the new gold ornaments of 77 bangles found at the time of search at the shop was not accounted for and the source for the acquisition of the gold was not known or explained. 3. The assessee however, at the time of hearing filed a written statement before the Assistant Director of Investigation stating that the gold ornaments seized belong to five customers who had given gold ornaments for remaking them to new bangles. A letter to that effect was also sent to the investigating officer. 3. The assessee however, at the time of hearing filed a written statement before the Assistant Director of Investigation stating that the gold ornaments seized belong to five customers who had given gold ornaments for remaking them to new bangles. A letter to that effect was also sent to the investigating officer. Following are the names and quantity of gold ornaments alleged to have been given by five customers. 1. Smt. Krishnammal 116.400 gms. 2. Shri B. Rajendran 98.870 gms. 3. Shri P. Pushpadas 96.300 gms. 4. Shri P.M. Prasanna Babu 112.40 gms. 5. Shri Chandrasekharan Pillai 150.200 gms. Assessing authority noticed that the statement filed by the assessee was contrary to the sworn statement recorded from Govindarajan during the course of search. Govindarajan had clearly stated that about 450 gms. Of gold ornaments were brought by Raju partner of M/s. Karthika Jewellery on the morning of the previous day and that the ornaments were received by his brother Devarajan. Assessing authority did not believe the statement of the assessee that the gold ornaments were entrusted by five customers mentioned herein before. Assessing authority therefore concluded that the 5 claimants joined the fray just to help the assessee. It was therefore concluded that the gold ornaments weighing 502.330 gms seized from the business premises of the assessee really belong to the assessee. Value of gold ornaments assessed at Rs.233081/- was treated as the assessee’s income from undisclosed sources. 4. Aggrieved by the order of the assessing officer assessee took up the matter in appeal before the Commissioner of Income-tax (Appeals) who allowed the appeal on the following reasoning: “On consideration of the aforesaid evidence which have not been disproved in the impugned order, it is difficult to accept that the ornaments represented the assessee’s undisclosed income. The persons who had claimed ownership are persons of standing. One of the claimants is an employee in the Panchayat Office, another in a Kerala Govt. Undertaking yet another is a practicing lawyer and the fourth is a Live-Stock Inspector in the Veterinary Department of the Kerala Government. Considering the status of the claimants and the quantum of jewellery claimed to have been entrusted by them for converting into new ones and the fact that the machinery is capable for making more than 77 bangles, the preponderance of probability is that they belong to the claimants and not to the assessee. Considering the status of the claimants and the quantum of jewellery claimed to have been entrusted by them for converting into new ones and the fact that the machinery is capable for making more than 77 bangles, the preponderance of probability is that they belong to the claimants and not to the assessee. The addition on this account is therefore deleted.” Revenue aggrieved by the said order took up the matter in appeal before the Tribunal. Tribunal concurred with the view of the appellate authority and held as follows: “Considering the facts brought on record, we are of the view that there is no reason to disturb the order of the first appellate authority. The reason is, as rightly pointed out by the first appellate authority, the persons who came forward with the claim that they had entrusted gold with the assessee, are persons of means. Therefore, there is no reason why their statements should be discarded or disbelieved. It is not brought on record to show that the claim of the assessee that the machinery installed at her jewellery shop could produce or convert gold into 100 bangles per day was incorrect. No attempt has been made to discredit the above statement. It is true that there is inconsistencies in the statements of the assessee. The deponents say that they had entrusted gold as directed by Sri. Raju. The inconsistency in the statements that gold was entrusted by Sri. Raju or it was entrusted as directed by him alone is not sufficient to discredit the claim of the give parties. The reason is, it is difficult to believe that these five persons, who are either in service or carrying on profession as lawyer, will come forward with such a false claim only to accommodate the assessee. In the light of the above facts, we are of the view that no sufficient material has been brought on record to dislodge the findings of the CIT (Appeals). Sri. P.K. Ravindranatha Menon, Senior Central Government Standing Counsel (Taxes) submitted that CIT (Appeals) as well as the Tribunal have committed a grave error in placing burden of proof on the revenue. Counsel submitted that the reasoning adopted by the appellate authority as well as the tribunal to accept the statement of five customers are unsustainable and made on an afterthought. P.K. Ravindranatha Menon, Senior Central Government Standing Counsel (Taxes) submitted that CIT (Appeals) as well as the Tribunal have committed a grave error in placing burden of proof on the revenue. Counsel submitted that the reasoning adopted by the appellate authority as well as the tribunal to accept the statement of five customers are unsustainable and made on an afterthought. Counsel took us through the sworn statement given by Govindarajan which was recorded during the course of search operation and which would indicate that the entire gold ornaments were brought by one V.S. Raju, partner of M/s. Karthika Jewellery on the morning of the previous day of the search and that the gold ornaments were received by his brother Devarajan, who had handed over it to Govindarajan for preparing new ornaments. Counsel submitted there is no reason to disbelieve those statements made by a person in charge of jewellery, and it is only to wriggle out of the sworn statement made during the period of search that letters of five customers were subsequently obtained to show the source from where gold ornaments were obtained. Counsel placed reliance on the decision of the apex court in Chuharmal v. CIT (1988) 172 ITR 250 and submitted that since possession of the gold ornaments with the assessee has been established, the onus of proving that those gold ornaments do not belong to the assessee is of the assessee. Counsel submitted that the burden of proof was wrongly placed on the revenue and it amounts to a substantial question of law. Counsel made reference to the decision of the apex court in Parimisetti Seetharamamma v. Commr. Of Income-tax (1965) 57 ITR 532, Counsel also made reference to the judgment of the Bombay High Court in J.S. O.Parkar v. V.B. Palekar, (1974) 94 ITR 616. Reference was made to the provisions of the Evidence Act. Referring to section 110 of the Evidence Act counsel submitted that all that section 110 of the Evidence Act does is that it embodies a salutary principle of common law jurisprudence which could be attracted to a set of circumstances that satisfy its condition. Section 110 of the Evidence Act provides that where a person is found in possession of anything, the burden of proving that he is not the owner is on the person who affirms that he not the owner. Section 110 of the Evidence Act provides that where a person is found in possession of anything, the burden of proving that he is not the owner is on the person who affirms that he not the owner. Counsel also referred to a decision of the Calcutta High Court in Commissioner of Income-tax v. Precision Finance Pvt. Ltd., (1994) 208 ITR 465. The court held that it is for the assessee to prove the identity of the creditor, their creditworthiness and the geniuses of the transactions. 5. Counsel appearing for the respondent Sri. K. Anand on the other hand contended that there is no reason to disbelieve the letter of the assessee dated 13-5-1992 and the letters and affidavit submitted by five customers who had entrusted the gold for remaking the same to gold bangles. Counsel submitted that they are men of means and status in the society and their statement ought to have been accepted. Counsel further submitted that the Commissioner of appeals as well as the Tribunal on facts concurrently found that gold ornaments were entrusted by five customers and consequently there is no reason to discard their evidence. In any view of the matter, counsel submitted than no substantial question of law arises for consideration in this appeal and consequently this court shall not disturb the findings of fact rendered by the authorities below. Counsel made reference to a recent decision of the apex court in (2005) 2 SCC 550. 6. We are of the view this is a case where the commissioner of Income tax (Appeals) as well as the Tribunal wrongly placed the burden of proof on the revenue. It is trite law that a person who is in possession of an article has to privet its source. Tribunal in its order though found inconsistency in the statement of the assessee concluded that there is no reason to discard those statements of five customers. Further, tribunal has stated that those customers are persons of means and so there is no reason why their statement should no be disbelieved. We fail to see how the question of means determines the acceptability or otherwise of the statements. Further the assessee is pitted against the sworn statement of Govindarajan for which the assessee has no explanation. In the sworn statement given by Govindarajan the following questions were put to him. We fail to see how the question of means determines the acceptability or otherwise of the statements. Further the assessee is pitted against the sworn statement of Govindarajan for which the assessee has no explanation. In the sworn statement given by Govindarajan the following questions were put to him. “Q. As per G.S. 21 Register of this shop, it is seen that nobody has given any gold to this institution for making after 1-11-1991. Is this correct? A. Yes, it is correct. The work was very less for the last may days. So no gold was received for work. Q. What is the stock of gold in this shop present? A. There is approximately more than 500 gms of gold here at present. Q. Who has given the above-mentioned gold? A. It was received yesterday at 9.00 A.M. from Mr. Raju, Karthika Jewellery, Alleppey. Q. When gold was received for working from Karthika Jewellery, whether the legal voucher was given along with its? A. I do not know. It is my elder brother who is writing all these things. Q. All the gold given by Mr. Raju yesterday from his shop are kept here working, isn’t it so? A. Yes.” The original statement in Malayalam with regard to the last of the above questions and answers reads as follows. Sworn statement given by Govindarajan would show that the gold ornaments were brought to the shop by Raju, partner of Karthika Jewellery on the morning of the previous day, i.e., 22-1-1992 and the gold ornaments were received by his brother Devarajan who has handed over it for preparing new ornaments. It is evident from the sworn statement that the gold ornaments given by Raju on the previous day was yet to be converted into new bangles. But what were seized from the premises of the assessee on 23-1-1992 were 77 newly made bangles. There is overwhelming evidence to show that the new gold ornaments by way of 77 bangles found the time of search at the shop Padmaja Jewellery were not accounted for and there was no evidence for its source. Consequently, it can safely be concluded that those bangles belong to the assessee. Burden is heavy on the assessee to dislodge the above facts for which no evidence was adduced by the assessee. Consequently, it can safely be concluded that those bangles belong to the assessee. Burden is heavy on the assessee to dislodge the above facts for which no evidence was adduced by the assessee. Without any reliable documents it is difficult to accept the subsequent statement of those customers even if they are men of standing or men of means. 7. Commissioner of Income tax (Appeals) as well as the Tribunal, in our view wrongly cast the burden on the revenue and a wrong application of settled principles of law amounts to an error of law giving rise to a substantial question of law within the meaning of Section 260 A of the I.T. Act. No reliable document such as register under rule 16(3) of the Gold Control (Forms etc.) Rules was kept or produced at the time of search. Since the assessee had not complied with the statutory requirement the burden was heavy on the assessee to show that the gold bangles does not belong to the assessee. That being the factual and legal position we are inclined to allow this appeal and set aside the orders of the Commissioner of Income tax (Appeals) as well as the Tribunal and restore the order of the assessing authority. ITA is allowed as above.