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TMI Blog1992 (3) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax (Investigation) authorised the requisitioning officer to require the police inspector to deliver the seized cash to the requisitioning officer. On April 10, 1990, the Director of Income-tax (Investigation) also issued an authorisation under section 132 in respect of Locker No. 810 in Panchratna Safe Deposit Vault Private Limited, Ahmedabad, standing in the name of the petitioner. The locker was, sealed on that date and, during the search made on April 11, 1990, cash of Rs. 1,01,400 and a diary were found therefrom. They were seized by the authorised officers. The petitioner's statement was also recorded on that day under section 132(4) of the Act. Thereafter, on April 16, 1990, the petitioner was given a notice under section 132(5) read with rule 112A for explaining the nature of possession and the source of acquisition of the said cash. During the course of the proceedings under section 132(5), the petitioner's statement was recorded on July 23, 1990. The Assistant Commissioner of Income-tax, respondent No. 1, then passed an order on August 6, 1990, under section 132(5), estimating the petitioner's income at Rs. 43,62,705, calculated the tax on that income at Rs. 23,31,664 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovides for search and seizure. Sub-section (1) confers powers on certain officers to authorise the officers referred to in that sub-section to enter and search premises and search any person and to seize the books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search and to take necessary incidental steps. Sub-sections (1A), (2) and (3) are not necessary for our purpose and they need not be referred to. Sub-section (4) empowers the authorised officer to examine on oath any person who is found to be in possession or control of such books or articles during the course of search and seizure. Any statement made by such person during such examination can be used in evidence in any proceeding under the Act. Sub-section (4A) creates a presumption in respect of the books of account, etc., found in the possession or control of any person in the course of a search. The presumptions that may be raised are that such books of account or articles belong to such person, that the contents of such books of account and other documents are true and that the signature and every other part of such books of account or other documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as the case may be, as if such income or part were the total income chargeable to tax at the rates in force in the financial year in which the assets were seized and may also determine the interest or penalty, if any, payable or imposable accordingly: Provided further that where a person has paid or made satisfactory arrangements for payment of all the amounts referred to in clauses (ii), (iia), and (iii) or any part thereof, the Assessing Officer may, with the previous approval of the Chief Commissioner or Commissioner, release the assets or such part thereof as he may deem fit in the circumstances of the case." Sub-sections (6) to (10) are not relevant for our purpose. Sub-section (11) confers a right on the person objecting to an order made under subsection (5) to make an application to the Chief Commissioner or Commissioner within 30 days of the date of such order, stating therein the reasons for his objection. Sub-section (12) requires the Chief Commissioner or the Commissioner to pass an order thereon, after giving an opportunity of hearing to the applicant. Section 132A confers powers on the officers mentioned therein to authorise the specified officers, who are, des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which has ended before the date of the search, but the return of income for such year has not been furnished before the said date or, where such return has been furnished before the said date, such income has not been declared therein ; or (b) for any previous year which is to end on or after the date of the search, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of penalty under clause (c) of subsection (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income, unless, (1) such income is, or the transactions resulting in such income, are recorded, (i) in a case falling under clause (a), before the date of the search ; and (ii) in a case falling under clause (b), on or before such date, in the books of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the Chief Commissioner or Commissioner before the said date ; or (2) he, in the course of the search, makes a statement under sub-section (4) of section 132 that any money, bullion, jewel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement under sub-section (4) of section 132 and explained his possession of Rs. 42,82,300 and, therefore, the petitioner can be said to have discharged the burden imposed by that Explanation for rebutting the presumption that the petitioner had concealed his source of income or furnished inaccurate particulars thereof. It was also submitted in the alternative that, in case it is held that Explanation 5 is not attracted in this case, then there was no other material before the Assessing Officer on the basis of which it can be said that the petitioner had concealed the particulars of his income or furnished inaccurate particulars of such income. A conjoint reading of section 132 and section. 132A clearly discloses that the Department may come to know of undisclosed assets, either as a result of search and seizure under section 132 or as a result of requisition made under section 132A. In either case, it has to deal with the undisclosed assets in the manner provided under sub-sections (5) to (10) of section 132. Sub-section (5) permits the Assessing Officer to retain in his custody such assets or part thereof as are sufficient to satisfy the amount of tax, interest, penalty and an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 271(1)(c) and, therefore, the Assessing Officer could not have determined Rs. 19,50,636 as penalty imposable under that section and, thus, retention of much amount by the respondents is clearly illegal and without authority of law. Therefore the real question which arises for consideration is whether, in view of the facts and circumstances of the case, penalty had become imposable under section 971. If it is held that Explanation 5 to section 271 is applicable to the facts of the case and that the conditions laid down in the Explanation are satisfied, then the only question which will have to be considered is whether the benefit of that Explanation would be available for the whole amount seized or only in respect of that income which is found to be the undisclosed income of that year only in which search is made and not for the undisclosed income of earlier years. Whereas it was submitted on behalf of the petitioner that Explanation 5 is attracted in this case, learned counsel for the respondents contended that the said Explanation was applied to the seizure of Rs. 1,01,400 only and though the assessee had not been given the benefit of that Explanation with respect to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "...During the course of search at my house on April 9, 1990, in the presence of the witnesses, you have found cash of Rs. 41,80,900 in the drawer of the cot used by me as bed room and the tizori. The cash is in respect of the ankadas of the cricket match business. I accept the ' ankadas' and also play myself. Besides, I was doing satta betting business out of which the above cash was lying with me. " In the statement recorded on April 11, 1990, during the search, he has stated that till that date he had not filed any income-tax return. When asked about his source of income and that of his family members, he stated as under: "Ans. : My annual income is approximately Rs. 20,000 to Rs. 25,000. There is no other income of mine or my family members. I carry out betting of matches and 'worli matka' and my annual income of Rs. 20,000 to Rs. 25,000 earned is out of this business only. The said business I was doing since last one year on small scale. From the beginning of April, 1990, the said business expanded and presently I am doing on large scale." He was asked as to what was the source of income regarding the amount of Rs. 43,62,705 written in the diary. He gave the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as earned. " It was urged that, under sub-section (4A) of section 132, the contents of the books of account and other documents found during the search can be presumed to be true and they can be presumed to be in the handwriting of the person reasonably assumed to have put the signature and, therefore, in the absence of any other material, the Assessing Officer ought to have proceeded on the basis that what was written in the diary was true and that the said diary was written by the petitioner. In our opinion, this contention has no merit, because sub-section (4A) merely permits raising of such a presumption. The Assessing Officer may take the help of such presumption for the purpose of taking further steps under section 132, but he is not bound to do so and it would certainly be open to him to record a finding that the contents of such books of account and other documents are not true. In this case, if the order passed by the Assessing Officer is read as a whole, it can be said without any doubt that he has doubted the correctness of the contents of the diary and also the correctness of the statements made by the assessee. The Assessing Officer has not accepted the statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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