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TMI Blog2005 (11) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... ity and validity of action under section 132(1). The Hon'ble High Court stayed the proceedings initiated under section 132(5) vide its order dated 12-9-1990 and a subsequent order staying the search proceedings was passed on 23-11-1990. However, on 6-7-1999 the assessee's petition was dismissed after which order under section 132(5) was passed. In the meantime, notice under section 148 dated 23-8-1999 was also served on the assessee. Thereafter, assessment order was passed under section 143(3) on 3-11-1999. 4. In the course of search, gold ornaments of 1296 gms. [net] were found. In his statement recorded under section 132(4) on 17-8-1990, the assessee stated that the gold ornaments found in the search belonged to the following family members: 1. Smt. Meera Bai [wife] 667.3 gms. 2. Smt. Indra w/o Shri Bhagwandass Daughter-in-law 350.5 gms. 3. Smt. Krishna Daughter 101 gms. 4. Smt. Usha Khubani Daughter 177.2 gms. 5. When asked to state the source and evidence of possession of 667.3 gms. of gold ornaments as belonging to his wife it was stated that action under section 132(1) was also taken earlier in his case on 30-10-1983 in which inventory of gold ornaments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt search was not tallying. Pages 13 and 14 of the PB are the copy of the assessment order passed in the hands of Smt. Meera Bai under section 16(3) of the W.T. Act for assessment year 1978-79 in which the gold ornaments at 1100 gms. [net] have been assessed by the revenue. Page Nos. 15 to 21 of the PB are the W.T. assessment orders passed under section 16(3) in the hands of Smt. Meera Kalwani for the assessment years 1988-89 and 1989-90 in which gold ornaments of 667.300 gms. have been accepted. Not only that, the lady had claimed before the authorities below that she was in possession of jewellery which was coming from the period anterior to the earlier search conducted on the assessee in 1983. Simply because the assessee could not lead evidence for conversion or remaking of the jewellery, the possession of which is otherwise accepted, it cannot be said that the holding of gold jewellery to this extent cannot be accepted, when overwhelming evidence is available in which the revenue has assessed her at much more jewellery in the assessment year 1978-79 and to the present holding of jewellery in the assessment years 1988-89 and 1989-90. In our considered opinion, the ld. CIT(A) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his, the assessee in his statement recorded during the course of search also accepted this fact that some jewellery, IVPs and KVPs belonging to his daughters was lying with him. Apart from that, another important aspect, which cannot be lost sight of is that the gold jewellery was found in packets bearing the names of the ladies concerned. Copy of Panchnama placed at pages 65 onwards of the PB clearly admits the fact of different boxes containing jewellery belonging to these ladies separately. These facts indicate that the jewellery to the extent claimed did belong to the concerned ladies. In our considered opinion, the ld. CIT(A) was justified in deleting the addition which was erroneously made by the Assessing Officer. We, therefore, uphold his action. 7. The first ground raised by the assessee in his cross objection is against the initiation of assessment proceedings by issuance of notice under section 148 and the passing of consequential order. 8. It was contended by the ld. A.R. that the ld. CIT(A) was not justified in holding that the Assessing Officer had proper jurisdiction for issuance of notice under section 148 and passing of order. It was stated that the assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to decide as to whether or not the regular assessment proceedings were stayed by the Hon'ble High Court, when the passing of final order under section 132(5) was stayed by it? In order to appreciate the controversy at hand, it is appropriate to have a cursory look at the provisions of section 132(5) at the relevant point of time along with other connected sections. Section 132(5) states as under: "5. Where any money, bullion, jewellery or other valuable article or thing (hereafter in this section and in sections 132A and 132B referred to as the assets) is seized under sub-section (1) or sub-section (1A), the Income-tax Officer, after affording a reasonable opportunity to the person concerned of being heard and making such enquiry as may be prescribed, shall, within one hundred and twenty days of the seizure, make an order, with the previous approval of the Deputy Commissioner,- (i) estimating the undisclosed income (including the income from the undisclosed property) in a summary manner to the best of his judgment on the basis of such materials as are available with him; (ii) calculating the amount of tax on the income so estimated in accordance with the provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (5) of section 132 is to expedite the return of seized assets after retaining what is due by way of tax to the Government and has been illegally held by the person concerned. It stipulates that the summary enquiry must be made by the Assessing Officer with a view to ascertain that how much of the seized valuables should be retained against the unpaid tax liabilities. The excess is released on the passing of summary order under section 132(5). Since the very object of this section is to retain the approximate amount of tax due out of the seized assets, it has to be done immediately after the close of search and order under section 132(5) is required to be passed within 120 days of the seizure. The matter does not end simply on the passing of the g order under section 132(5), which is only in the nature of a summary provisional enquiry. Regular assessment follows under the law in which the income is determined after considering the entire material after allowing reasonable opportunity of being heard to the assessee within the time stipulated under Chapter XIV of the Act. Here it is important to mention that it is not in each and every case that the proceedings under section 132(5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder under section 132(5). Once the passing of provisional summary order under section 132(5) was stayed, the application of retained assets under section 132B became impossible. In such circumstances, the Assessing Officer was rightly not competent to put on hold the passing of order under section 132(5) and jump to pass the final order of regular assessment. We are not inclined to accept the contention of the ld. A.R. that proceedings under section 143(3) could have continued and concluded without the passing of order under section 132(5) for the reason that the order under the later section has to precede the regular assessment order. This position has been made clear by the Legislature itself through the above extracted section 132B(4), which deals with the payment of simple interest on the amount of excess amount retained. Clause (b) provides that such interest shall run from the date immediately following the expiry of six months from the date of order under sub-section (5) of section 132 to the date of assessment or reassessment. The sequence in which the orders are to be passed has been made abundantly clear by this clause, as per which order under section 132(5) is require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 147. The position would have been different if the Assessing Officer had framed assessment pursuant to notice under section 148 after bidding farewell to the earlier notice under section 143(2). In that situation all the decisions relied upon by the ld. A.R. would have come into force to hold the resultant assessment order under section 147 to be illegal. Since the situation under consideration is totally different wherein the Assessing Officer realized his folly of issuing notice under section 148 when the proceedings under section 143(2) were pending, he set the situation right by ignoring notice under section 148 and completing the assessment under section 143(3). The ld. CIT(A) has, though upheld the action of the Assessing Officer, but failed to consider the facts in the right perspective that the Assessing Officer had not passed the order pursuant to notice under section 148. As the order itself was passed under section 143(3), in our considered opinion, the p challenge to the validity of issuance of notice under section 148 and thereby contending the assessment order to be void, is alien to the scope of the appeal and hence bereft of any force. This ground is, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue authorities cannot be interfered with, if such estimate is within the reasonable limits. Adverting to the facts of the case, where the assessee had no material to substantiate his dalali income, in our considered opinion, the ld. CIT(A) was justified in upholding the estimate at Rs. 1 lakh as against the declared income of Rs. 81,605/-. We, therefore, uphold the same. This ground is not accepted. 16. Ground No. 3 of the cross objection is against the confirmation of addition of Rs. 27,000/- representing IVPs and KVPs in the name of assessee's daughter, Smt. Usha Khubani, as unexplained investment by the assessee. 17. In the course of search, IVPs worth Rs. 7,000/- [purchased on 24.5.1990] and KVPs worth Rs. 20,000/- [purchased on 25.5.1990] in the name of Smt. Usha Khubani were found. The assessee in the concluding statement, stated that the IVPs and KVPs belonged to Smt. Usha Khubani, his daughter. The assessee also filed a letter duly signed by Smt. Usha Khubani stating that she purchased IVPs of Rs. 12,000/- and KVPs of Rs. 20,000/- while she was at Jodhpur and the same were left in the custody of her mother. She further explained that the IVPs were purchased out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cross objection deals with estimation of household expenses at Rs. 60,000/-, which led to the making of addition of Rs. 16,200/-. 20. The assessee had shown household withdrawals at Rs. 19,800/-. Smt. Meera Kalwani the assessee's wife in her statement recorded Under Section 132(4) stated that the household expenses were ranging between Rs. 4,000/- and Rs. 5000/- p.m. and such household expenses were met out by her husband and partly from rental income. The Assessing Officer, going by the statement of Smt. Meera, estimated the household expenses at Rs. 60,000/- per annum and made addition of Rs. 16,200/- by allowing credit for Rs. 19,800/- being the amount of withdrawals shown and Rs. 18,900/- being the rental income. No relief was allowed in the first appeal. 21. Having heard the rival submissions and perused the relevant material o record, it is found that the assessee's wife in her statement admitted the household expenses were in the range of Rs. 4,000/- to Rs. 5000/- per month In such circumstances, the estimate of household expenses at Rs. 5,000/- p.m cannot be held to be excessive in any manner. Moreover, the ld. CIT(A) has already allowed the benefit of telesc ..... 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