TMI Blog2016 (11) TMI 1495X X X X Extracts X X X X X X X X Extracts X X X X ..... Archana JUDGMENT K. S. Jhaveri J. 1. By way of this appeal, the assessee has challenged the judgment and order of the Tribunal whereby the Tribunal has partly allowed the appeal of the assessee and dismissed the appeal of the Department. 2. The facts of the case are that the search operations were carried out on May 16, 1997. During the course of search operations the residential and factory premises of the assessee were covered and certain assets were found and seized, besides incriminating papers. The notice under section 158BC was issued to the assessee on July 20, 1998 requiring the assessee to paper a true and correct return of his total income including the undisclosed income within 45 days of service of the notice. In compliance with, no return was filed up to March 16, 1999 and therefore a show-cause notice was issued along with a notice under section 142(1) of the Act on March 16, 1999 requiring the assessee to furnish explanation with regard to the assets found and seized from his premises and also to explain all the incriminating seized papers. The return was filed on April 29, 1999 declaring therein undisclosed income of ₹ 30 lakhs. While furnishi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the block return. For the assessment year 1996-97 also the total sale is export sale. The return for this year was not filed but the total income is nil after considering deduction under section 80HHC at ₹ 4,21,273 copy of profit and loss account, balance-sheet 80HHC certificate and computation of total income for this year is enclosed. 5. In course of search stocks of semi-precious and precious stones valued at ₹ 19,27,778 was found and seized. Besides this, certain papers indicating the investment in properties, household expenses, marriage expenses, etc. were found. From these papers it is not possible to work out year-wise positive income. Hence, the undisclosed income for the block period is being worked out by deductive method in which all the undisclosed investments and estimated unexplained expenditure is aggregated. For this purpose investments held in the name of family members of the assessee are also considered in the hands of the assessee. In case of any such investment is considered in the hand of any other member, corresponding deduction be given in the assessee's case. This amount is equal to income since income is either spent or invested. On t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,90,000 Other charges and insurance 25,603 Installments paid (2 x 22,966) 45,932 2,66,535 (e) Marriage expenses : During the block period two marriage were performed :- (i) Miss Yasmeen, daughter of Sh. Yasin 29-3-1994. (ii) Mr. Mohd. Arif, Son of Shri Yasin 2-5-1997. Both the marriages were performed locally and in a simple manner. Not more than 300 persons attended the ceremony. The food served was according to the customs of Muslim community. Total expenditure on these two marriages and as coming from the loose papers are estimated to ₹ 4 lakhs which is being offered in the block return. (f) Further a sum of ₹ 2,22,961 is being offered additionally to cover any other uncovered expenditure/investment and to make the above undisclosed income offered in the block return to a round sum of ₹ 30 lakhs. Therefore, if any other assets, expenditure is found uncovered from loose papers and statements the same be covered out of the additional income so offered. Accordingly, the above a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty of every such officer to comply with such requisition. 158BE. Time limit for completion of block assessment.-(1) The order under section 158BC shall be passed,- (a) within one year from the end of the month in which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997 ; (b) within two years from the end of the month in which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January, 1997. (2) The period of limitation for completion of block assessment in the case of the other person referred to in section 158BD shall be- (a) one year from the end of the month in which the notice under this Chapter was served on such other person in respect of search initiated or books of account or ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Kirloskar Investments and Finance Ltd. v. Asst. CIT [1998] 67 ITD 504 (Bangalore). In the present case at hand, the cup board in which 45 kgs. of silver articles were kept was sealed by making an order under section 132(3) of the Income-tax Act. The authorised officers were obviously very much aware of the contents of the cupboard and the nature of the articles in view of the inventory made by them. They had also come to the conclusion that the said 45 kgs. of silver articles need not be seized. There was no practical impediment to seizure of the said 45 kgs. of silver, if it was considered by the authorised officer as necessary. The contention of learned counsel for the Department that it was not practical to seize huge quantity of silver at odd hours, was rightly held to be untenable by the Income-tax Appellate Tribunal, because at the same odd hour, the search party seized and removed from the premises of the assessee 5,729 gms. of gold ornaments, cash of ₹ 1,69,000 and books of account, weighing nearly 500 kgs. on October 26, 1996, 6 kgs. of silver articles in the said cupboard were released, a panchnama was made and a further order under section 132(3) passed wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he impugned order of the Income-tax Appellate Tribunal, Pune Bench. The impugned assessment indeed is barred by limitation and also invalid. In view of this, therefore, the impugned assessment was rightly annulled. No interference is therefore warranted. 7.1 The decision of this court in the case of CIT v. Om Prakash Mandora reported in [2014] 222 Taxman 138 (Raj) the other decision of the Gujarat High Court in the case of ITO v. VXL India Ltd. reported in [2009] 312 ITR 187 (Guj), in the case of Murali Export House v. CIT reported in [1999] 238 ITR 257 (Cal), in the case of CIT v. Gupta Fabs reported in [2005] 274 ITR 620 (P H), in the case of CIT v. Manohar Lal Soni [2009] 316 ITR 365 (Raj) and last judgment of the Madras High Court in the case of A. Rakesh Kumar Jain v. Joint CIT reported in [2012] 254 CTR (Mad) 576 and more particularly in paragraph Nos. 13 and 15 holding as under : There could be only one authorisation and a panchnama drawn as regards the conduct of the search, i.e., once when the search party concluded the search and leaves the premises after carrying with them the seized material, the authorisation for the search is fully implemented upon and execu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause the petitioners had not been able to explain the existence of the stocks by any documentary evidence. It was further stated that the petitioners had not come forward to identify the items of stock from the purchase vouchers and to give the value of the various items. It is the case of the respondents, while justifying the authorisation under section 132(1) that the entries in the books which were retained did not show possession of the items of stock correctly. There were a large number of handicraft items some of which were antique which the petitioners could not identify or co-relate with the purchase vouchers which were available with them. This may be a ground or good reason for effecting seizure but, in our opinion, it cannot be said that this is a valid ground for exercising jurisdiction under section 132(3). Section 132(3) can be resorted to if there is any practical difficulty in seizing the item which is liable to be seized. If there is no practical difficulty, then an authorised officer has the jurisdiction and duty to seize the books of account, other documents, money, bullion, valuable articles, etc., which are found as a result of the search, if no explanation is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This was not done in the present case. Whenever there is a seizure of articles under section 132(1) including a deemed seizure, an order under sub-section (5) has to be passed within 120 days of the seizure. Where no such order is passed, the goods have to be released. The period of 120 days came to an end on or about June 8, 1991. As no order under section 132(5) has been passed, the said goods are liable to be released. There is another reason for ordering the release of the said goods even on the assumption that a valid order under section 132(3) was passed. Firstly, when an order under section 132(3) is issued, it must, in our opinion, be recorded as to why it is not practicable to effect seizure. This is for the reason that whenever any such order is passed, then the Commissioner of Income-tax can grant an extension under sub-section (8A) of section 132 after recording reasons in writing. In the present case, we are informed that, on June 20, 1991, reasons were recorded by the Commissioner of Income-tax while granting extension. Be that as it may, we find that, just prior to the expiry of 60 days of the order, dated February 11, 1991, the order under section 132(3) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not restrained from examining the goods. An order under section 132(3) restrains the owner or the per son in possession of the goods from removing, parting with possession or dealing with them. The order of restraint is effective against the owner or the person in possession thereof and is not aimed at the Department itself. By issuing an order under section 132(3), the Department is not restrained from examining the goods in respect of which a restraint order has been passed. There was no valid reason, therefore, for seeking to revoke the orders on April 9, 1991, and June 6, 1991. Seeing the dates when such auction was taken, we find considerable force in the contention of learned counsel for the petitioner that this device was resorted to solely with a view to circumvent the provisions of section 132(8A). The first revocation was effected on April 9, 1991, only about one or two days before the expiry of 60 days. Similarly, the second revocation of June 6, 1991, was also effected only about one or two days before the expiry of 60 days from April 9, 1991. We are, therefore, of the opinion that the approval of the Commissioner of Income-tax not having been obtained under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee's wife is indicative of the current expenditure of ₹ 15,000 per month and the Assessing Officer could, therefore, estimate the expenditure in the immediately preceding year, i.e., preceding year 1996-97 and to the date of search. Mere payment of school fees cannot be said to constitute sufficient material more particularly when the Assessing Officer himself has made the statement of the lady as the base and not the material and no estimation is permissible dehors material. Accordingly, we uphold the estimation of household expenses for the previous year 1996-97 to the date of search at ₹ 15,000 per month and accordingly the addition of ₹ 1,48,500 for this period as worked out by the Assessing Officer at internal page 29 of his order is confirmed. The Assessing Officer has also given a chart at internal page 29 of his order for claim of withdrawals for household expenses by the assessee himself during the block period out of which ₹ 3,68,850 are relatable to the previous years 1987-88 to 1995-96 and the same could be considered as household expenses incurred by the assessee. Since the assessee himself has disclosed only ₹ 2,53,850 for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed that the assessee has omitted to consider some of the seized papers and in some cases estimated the expenditure on lower side besides not including any expenditure on certain essential items which are compulsorily incurred in the marriage but not included by the assessee in the estimates given. The Assessing Officer also found that the assessee has paid service charges for ice cream to 900 persons while the assessee has claimed attendance of only 300 persons. Furthermore, consumption of mawa weighing 1,010 kg., curd 265 kg. and milk 500 kg. and their purchase 3-4 times on different dates on this occasion and consumption of 250 kg. milk for coffee alone was sufficient material to show the stay of guest for 2-3 days and incurring of higher expenditure by the assessee than his own estimates. For the material available on record and reasons given, the Assessing Officer was competent to make estimate of expenditure. From the order of the Commissioner of Income-tax (Appeals) it is evident that the invitation card for the marriage of his daughter indicates that the marriage of these girls and one boy was ceremonised together and this was not at the invitation of the appellant alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the respondents did not complete the search on June 22, 1998 as alleged by the petitioners, nor did they unduly prolong it. The search concluded on August 5, 1998 and so in terms of Explanation 2 to section 158BE of the Act the period of limitation would begin from the end of August, 1998, that is, August 31, 1998 onwards . . . The second issue raised by learned counsel for the petitioners would stand answered accordingly. 13. We have heard counsel for the parties. 14. Before proceeding with the matter, it will not be out of place to mention that the search proceeding under section 132(3) was continued up to August 16, 1997, however by subsequent restraint order where only for the purpose of seizure, no further search material was found and specifically panchnama was drawn. In that view of the matter, Mr. Mehta endeavoured to rely upon the decision of the Supreme Court which will not come to his rescue inasmuch as on subsequent search, no further material was found. In that view of the matter, relying on the decision of the Madras High Court in the case of A. Rakesh Kumar Jain v. Joint CIT reported in [2012] 254 CTR (Mad) 576 and decision of the Delhi High Court in B. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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