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TMI Blog2004 (9) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... gs. valued at Rs. 4,18,80,933 were found besides one register and three note books. During the course of search, statement of Shri Bishan Dayal, Prop. of M/s. Bishan Dayal and Sons, Narnaul, stated to be the occupant of the searched premises was recorded. In his statement so recorded, the said deponent stated, inter alia, of having contacts with Shri Prakash Chand Lunia, i.e. the assessee in the present case. He also stated that Shri Prakash Chand Lunia was offering him silver business on commission. As per the modus operandi of the said business explained by Shri Bishan Dayal in his statement, foreign made silver was being supplied to him by the assessee and he was making pieces of the said silver and selling it to the different parties according to the instructions of the assessee. He also stated that his son Shri Viswanath was assisting him in the said business for which commission of Rs. 70 per kg. was being paid by the assessee. The statement of Shri Bishan Dayal was also recorded by the Assessing Officer during the course of assessment proceedings in his case wherein he denied any connection with the silver weighing 5301.84 kgs. cash amounting to Rs. 2,25,000 as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s during the course of search. However, after taking into consideration all the facts of the case as well as the findings of the search conducted by the DRI authorities, the Collector of Customs held in paragraph No. 18 of his appellate order dated 19-3-1993 passed in the proceedings under the Customs Act that the assessee, i.e. Shri Prakash Chand Lunia is the main person who organized the entire smuggling of silver and is knowingly concerned not only with the seized silver but also with F/M silver already disposed of at his direction. He, therefore, held the assessee to be liable for penal action and imposed penalty of Rs. 25 lakhs under section 112( d ) of the Customs Act, 1962 besides confiscating the silver and cash found and seized by the DRI authorities under section 111( d ) of the Customs Act, 1962. Keeping in view all these facts including the specific finding recorded by the Collector of Customs in his appellate order, a notice under section 148 was issued by the Assessing Officer to the assessee in order to tax the transactions relating to silver and cash found and seized by the DRI authorities. In response to the said notice, a return of income was filed by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main person who organized the entire smuggling of silver as well as on the audit report filed by the assessee alongwith his return of income wherein it was mentioned in the notes on accounts that "the stock of silver and cash lying with the DRI authorities requires suitable adjustment". 5. Meanwhile, as per the directions given by the learned CIT(A), Rohtak in the case of Shri Bishan Dayal, the Assessing Officer proceeded with his assessment in the set aside proceedings giving opportunity to the assessee of being heard. Availing the said opportunity, various objections/contentions were raised on behalf of Shri Bishan Dayal in the set aside proceedings. The Assessing Officer, however, found the same to be unacceptable for the various reasons/findings given in his order and holding that the silver valued at Rs. 4,18,80,933 as well as cash of Rs. 2,25,000 found and seized by the DRI authorities belong to Shri Bishan Dayal, the Assessing Officer added the same in his hands under section 69A. 6. Aggrieved by the order of the Assessing Officer assessing the value of aforesaid silver in his hands on substantive basis, the assessee in the present case preferred an appeal before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in course of DRI search in their hands, I deem it proper to direct the Assessing Officer to add the value of silver and cash to the income of the appellant on protective basis till the finalisation of appeal filed by the appellant before the Customs, Excise Gold (Control) Appellate Tribunal. The Assessing Officer must pursue the matter with the Custom Department. In case Shri P.C. Lunia looses the appeal, then assessment made in case of Shri P.C. Lunia should become a substantive assessment." 7. Aggrieved by the aforesaid relief allowed by the learned CIT(A), the Revenue has preferred the present appeal before us. 8. We have heard the arguments of both the sides and also perused the relevant material on record. At the outset, it is worthwhile to mention that the substantive assessment made on account of silver and cash seized by the DRI authorities in the hands of Shri Bishan Dayal was also challenged by the said assessee in an appeal filed before the learned CIT(A) and after having failed to succeed therein, he also preferred an appeal before the Tribunal. The said appeal was also heard alongwith the present appeal by us and in the order dated 10-9-2004 passed in the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 per kg. It was further observed in the said para that these two persons had rented a godown at Village Surana for storage of smuggled silver bars where they used to melt and convert the contraband silver into 15 kg. slabs. Further, criminal proceedings were also initiated against the related persons including the assessee as well as Prakash Chand Lunia and in his order passed in the said proceedings on 24-12-2002, the Chief Judicial Magistrate, Narnaul held both of them guilty and convicted them for commission of offence punishable under section 135( b )( ii ) of the Customs Act observing that the contraband silver seized by the DRI authorities during the intervening night of 5th 6th January, 1992 was possessed by accused Shri Bishan Dayal i.e., the assessee and was owned by Shri Prakash Chand Lunia. Further on page 41 of its order, the Chief Judicial Magistrate, Narnaul recorded his findings to the effect that the contraband silver was seized from the possession of accused Shri Bishan Dayal i.e., the assessee in the present case, which was brought to him by accused Prakash Chand Lunia who was instrumental in bringing the silver to the godown from which it was seized. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 10. The learned counsel for the assessee, on the other hand, has submitted that the addition on account of silver and cash found and seized by the DRI authorities was initially made by the Assessing Officer in the hands of the assessee on protective basis just because the similar addition made on substantive basis in the hands of Shri Bishan Dayal was set aside by the learned CIT(A). He has also submitted that the said silver and cash were undisputedly found and seized from the control and possession of Shri Bishan Dayal and in the search operation conducted by DRI authorities in the case of the assessee, nothing incriminating was found to link him with the said contraband silver or even the cash stated to be realization of sale of contraband silver. He has further submitted that the presumption under section 132(4A) was available to be drawn against Shri Bishan Dayal about the ownership of the said cash and silver and there was nothing to implicate the assessee in the said transactions. He has also submitted that Income-tax Act, 1961 is a self-contained code and the chargeability of any amount under the said Act has to be decided independently without referring to any findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said proceedings as regards the ownership of the silver and cash seized during the course of the search, the Collector of Customs, New Delhi vide paragraph No. 18 of his appellate order dated 19-3-1993 categorically held that Shri Prakash Chand Lunia was the main person who organized the entire smuggling of the entire silver and was knowingly concerned not only with the seized silver but also with F/M silver already disposed of at his direction by Shri Bishan Dayal. Further, criminal proceedings were also initiated against all the concerned persons including the assessee as well as Shri Bishan Dayal and in his order passed in the said proceedings on 24-12-2002, the Chief Judicial Magistrate, Narnaul held both of them guilty and convicted them for commission of offence punishable under section 135( b )( ii ) of the Customs Act observing that the contraband silver seized by the DRI authorities was possessed by accused Shri Bishan Dayal and was owned by Shri Prakash Chand Lunia i.e., the assessee in the present case. Further, on page 41 of his order, the Chief Judicial Magistrate, Narnaul recorded his finding to the effect that the contraband silver was seized from the possess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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