2012 (7) TMI 559 - HC - Income Tax

Block assessment Order u/s 158BC r.w.s. 143(3) - jewellery, silver utensils and cash amounting were seized during search - assessee submitted that the articles belong to third party & are covered under the Voluntary Disclosure of Income Scheme, 1997 - Held that - Mere declaration by third parties may not be sufficient unless the assessee also establishes as to how the items in question reached the assessee from third parties and consequentially found in his possession at the time of search - entire issue was restored to the file of the AO but the petitioner, instead of attending the hearing before the AO and producing the necessary evidence in support of his claim, filed the present petition in the Court - as the adjudication proceedings consequent to the order of the ITAT are pending before the AO it is desirable that assessee should attend the personal hearing as and when the matter is fixed for hearing by the AO - in favour of revenue.

Issues:
1. Quashing of notice for document production and assessment completion.
2. Release of seized cash, jewellery, and silver utensils.
3. Dispute over ownership of seized items.
4. Delay in assessment proceedings and petitioner's avoidance of hearing.

Issue 1: Quashing of notice for document production and assessment completion
The petitioner sought to quash a notice from the Assistant Commissioner of Income Tax dated June 6, 2011, requiring document production and personal attendance for assessment completion. The High Court declined to interfere as the assessment proceedings were ongoing, and the petitioner's avoidance of the hearing was deemed unjustified. The petitioner was directed to submit evidence within a month and attend the hearing as scheduled by the Assessing Officer.

Issue 2: Release of seized cash, jewellery, and silver utensils
During a search on January 30, 1997, items including jewellery, silver utensils, and cash were seized. Subsequent block assessment proceedings were initiated, during which the Assessing Officer rejected the petitioner's claim that some seized items belonged to third parties. The Income Tax Appellate Tribunal set aside the departmental orders, directing a fresh examination to determine ownership. The High Court did not order the release of the seized items but emphasized the need for the petitioner to participate in the assessment proceedings.

Issue 3: Dispute over ownership of seized items
The Tribunal highlighted the necessity for the petitioner to establish ownership of seized items claimed to belong to third parties. Mere disclosure under the Voluntary Disclosure of Income Scheme was deemed insufficient. The Tribunal stressed the need for the petitioner to provide evidence on how the items reached them from third parties to rebut the presumption under Section 132(4A) of the Income Tax Act.

Issue 4: Delay in assessment proceedings and petitioner's avoidance of hearing
The petitioner's counsel cited delay and the petitioner's age as reasons to quash the proceedings. However, the High Court found the petitioner's avoidance of the hearing unjustified, especially since the assessment proceedings were ongoing. The court directed the petitioner to submit evidence promptly and participate in the hearing, urging the Assessing Officer to expedite the proceedings within six months.

In conclusion, the High Court dismissed the petition, emphasizing the importance of the petitioner's active participation in the assessment proceedings and the submission of necessary evidence to support their claims.

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