9911796707
TMI Blog2006 (11) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... . R. Metrarii was also a partner in this firm. P. R. Metrani as well as Y. R. Metrani have died during the pendency of these cases. A search of the residential premises Ranganatha Nilaya was conducted by the Income-tax, Central Excise and Customs Departments on June 30, 1982 and July 1, 1982, and as well as the business premises where the business of the firm was being conducted. The residential premises of J. J. Bakale, nephew of P. R. Metrani were also searched. The search brought to surface unaccounted money, gold biscuits, gold jewellery, silver etc. besides some important documents. For the purpose of assessment for the assessment years 1981-82 and 1982-83 three documents were found to be relevant by the Assessing Officer and they were marked as PRM-1, PRM-7 and PRM-13 at the time of search and seizure, which were seized from the residential premises namely, "Ranganatha Nilaya". The statement of J. J. Bakale was recorded at the time of search. P. R. Metrani was away to Rajasthan on a business tour. He was examined after his return to Hubli on July 13, 1982. He denied the possession of PRM-1, PRM-13 and PRM-14. He also denied that these papers contain any writing made by him. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on the presumptions in terms of section 132 (4A) of the Act. It was held that the presumptions under section 132(4A) were not confined to the orders passed under section 132 only, but, were available for framing the regular assessments as well. The assessee being aggrieved filed a further appeal before the Incometax Appellate Tribunal, Bangalore (for short" the Tribunal"). The Tribunal relying upon the judgment of the Allahabad High Court in the case of Pushkar Narain Sarraf v. CIT [1990] 183 ITR 388, on the scope of section 132(4A) held that the presumptions under section 132(4A) are confined to the framing of the order under section 132(5) only and are not available for framing the regular assessment. The Tribunal accepted the appeals, set aside the orders passed by the Commissioner (Appeals) as well as the assessing authority except to the extent of addition of Rs. 2,62,100. At the instance of the Revenue, the Tribunal referred the following two questions for both the assessment years 1981-82 and 1982-83 for the opinion of the High Court: "(1) Whether the Income-tax Appellate Tribunal was correct in law in holding that the presumption under sub-section (4A) of section 132 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eizure to order the confiscation of the assets seized under section 132 of the Act. The presumption arising under sub-section (4A) of section 132 applies only in relation to the provisional adjudication which is contemplated under section 132(5) and the same was Clot available for framing the regular assessment. Subsequently the High Court of Delhi in Daya Chand v. CIT [2001] 250 ITR 327, has taken a somewhat similar view and has held "that presumption arising under section 132(4A) must be held to be applicable only in relation to the provisional adjudication as contemplated under sub-section (5) of section 132 and the presumption cannot be said to have the effect of excluding the application of section 68." The Kamataka High Court in the impugned judgment has taken the following view: "The Tribunal holds that looking to the scheme it appears that the presumption of sub-section (4A) is only for the limited purpose of passing an order under sub-section (5). According to the Tribunal the assessing authority was wrong in drawing an inference under section 132(4A) in the proceedings. In that view of the matter, the Tribunal rejected the case of the Department. This finding in our vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act. Therefore, a reading of the provision with regard to the seized documents clearly indicates that its presumptive value cannot by any stretch of imagination be restricted only to section 132(5) as held by the Tribunal. It is a 'non-rebuttable presumption' under section 132(5) of the Act and in other cases it is a 'rebuttable presumption'. Mr. G. Sarangan, further has placed before us a judgment of the Allahabad High Court in the case of Pushkar Narain Sarraf v. CIT [1990] 183 ITR 388. With respect we are unable to subscribe to the view of the decision of the Allahabad High Court. We have carefully gone through the said judgment. We find in the said case that no reasons are forthcoming as to why the said presumption is to be restricted to section 132(5) only. In fact that judgment on the other hand states that section 68 cannot said to have been excluded for regular assessments." Sections 132 to 132B of the Act embody an integrated scheme laying down the procedure comprehensively for search and seizure and the power of the authorities making the search and seizure to order the confiscation of the assets seized. Section 132A gives power to the authorities to requisition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Indian Income-tax Act, 1922 (11 of 1922), or this Act; (iia) determining the amount of interest payable and the amount of penalty imposable in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act, as if the order had been the order of regular assessment; (iii) specifying the amount that will be required to satisfy any existing liability under this Act and anyone or more of the Acts specified in clause (a) of sub-section (1) of section 230A in respect of which such person is in default or is deemed to be in default, and retain in his custody such assets/or part thereof as are in his opinion sufficient to satisfy the aggregate of the amounts referred to in clauses (ii), (iia) and (iii) and forthwith release the remaining portion, if any, of the assets to the person from whose cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, Sub-sections (9) and (10) are of the same nature. Subsection (11) provides that if any person objects for any reason to an order made under sub-section (5), he can within 30 days of the date of such order make an application to the Chief Commissioner stating the reasons therein for such objections and requesting for appropriate relief in the matter. Further, sub-section provides for applicability of the Code of Criminal Procedure and making of rules by the Board in search or seizure, etc. The section considered as a whole, shows that it has its own procedure for search, seizure, determination of the point in dispute, quantum to be retained and also the quantum of the tax and interest on the undisclosed income. Under sub-section (11) as it existed till May 31, 2002, the person aggrieved has been given the right to file an application (in place of appeal) objecting to the order passed under sub-section(5) and request for appropriate relief in the matter. It has all the fortifications of a code. This provision exists in complete isolation of the other provisions of the Act. It has the trappings of a small code in itself. The proceedings under section 132(5) as it existed till Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and bring it to assessment. It is not merely an information of undisclosed income but also to seize money, bullion, etc., representing the undisclosed income and to retain them for the purposes of realization of taxes, penalties etc. Search and seizure is a serious invasion into the privacy of the person. Section 132 which is a complete code by itself provides that the money, bullion or the books of account etc. should not be retained unnecessarily and that the provisional assessment made under section 132 for the purpose of retention of the books is passed within a specified time in accordance with law. It provides that the books of account, money and bullion which are not required are not retained unnecessarily thereby causing harassment to the person concerned. In order to see that the assessment order is framed within the time frame provided under section 132, the Legislature provided for a rebuttable presumption to be raised against the person from whose possession and control the books of account, money, bullion, etc. are seized so that the order can be passed within the time frame provided under section 132. A presumption is an inference of fact drawn from other known or pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder sub-section (4A) of section 132, it has provided so. It has not been provided that the presumption available under section 132 (4A) would be available for framing the regular assessment under section 143 as well. This is also evident from the fact that whereas the Legislature under section 132(4) has provided that the books of account, money, bullion, jewellery and other valuable articles or things and any statement made by such person during examination may thereafter be used as evidence in any other proceedings under the Act it has not provided so under sub-section (4A) of section 132. It does not provide that the presumption under section 132(4A) would be available while framing the regular assessment or for that matter under any other proceeding under the Act except under section 278D. Section 132 being a complete code in itself cannot intrude into any other provision of the Act. Similarly, other provisions of the Act cannot interfere with the scheme or the working of section 132 or its provisions. The presumption under section 132(4A) is available only in regard to the proceedings for search and seizure and for the purpose of retaining the assets under section 132(5) a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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