2002 (6) TMI 332 - AT - Income Tax

Summary

Issues Involved:
1. Validity of search and requisition under sections 132 and 132A.
2. Confirmation of various additions by CIT(A).
3. Compliance with Rule 112D of the Income-tax Rules, 1962.
4. Justification of the block assessment and adherence to procedural requirements.
5. Specific relief granted by CIT(A) regarding cash seized.

Detailed Analysis:

1. Validity of Search and Requisition under Sections 132 and 132A
The assessee contended that there was no search under section 132 nor were any books of account, documents, or assets requisitioned under section 132A. The Punjab Police released the cash and gold jewelry to the assessee, not to the department. The CIT(A) upheld the assessment under section 158BC(c), stating that the action was taken under section 132A on 30-11-1998, and the assessment was framed under section 158BA. The limitation for completing the assessment was two years from the end of the month in which the warrant was executed.

2. Confirmation of Various Additions by CIT(A)
The CIT(A) confirmed the following additions:
- Rs. 8,48,383 on account of peak investment in jewelry.
- Rs. 10,16,833 on account of jewelry belonging to customers.
- Rs. 1,37,773 on account of a gift (jewelry) received from the grandmother.
- Rs. 3,14,000 on account of cash seized from the occupants of the car.
The assessee argued these additions were excessive and not justified.

3. Compliance with Rule 112D of the Income-tax Rules, 1962
The assessee argued that the requisition under section 132A was not complied with because the goods and cash were not handed over by the police to the Income-tax Department. The CIT(A) did not address this contention adequately. The Tribunal noted that the CIT(A) should have passed a speaking order and verified whether Rule 112D was complied with, including whether the documents were delivered to the Revenue Department.

4. Justification of the Block Assessment and Adherence to Procedural Requirements
The assessee filed a return declaring undisclosed income as 'nil'. The Assessing Officer issued notices and assessed the undisclosed income at Rs. 23,15,990. The CIT(A) upheld this assessment, but the Tribunal found that the CIT(A) did not provide sufficient reasoning or a speaking order. The Tribunal emphasized the need for the CIT(A) to verify facts and provide a detailed order.

5. Specific Relief Granted by CIT(A) Regarding Cash Seized
The CIT(A) allowed relief of Rs. 1,57,000 out of the addition of Rs. 3,14,000 on account of cash seized. The Revenue contended that this relief was granted without a proper basis or a speaking order. The Tribunal agreed that the CIT(A) should provide a detailed explanation for this relief.

Conclusion
The Tribunal set aside the order of the CIT(A) and restored the matter to his file for fresh adjudication. The CIT(A) is directed to decide all grounds of appeal afresh, ensuring compliance with relevant rules and providing a speaking order. Both parties are to be given a reasonable opportunity to be heard. For statistical purposes, both appeals are allowed.