TMI Blog1984 (8) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... , by name and informed that order under section 132(5) was passed and the proceedings initiated under section 132 were dropped. Therefore, the materials seized should be released immediately. Subsequently, however, the Commissioner invoked the provisions of section 263 vide notice dated 3-4-1982 on some ground. After considering the objections made by the assessee, he set aside the order of the ITO under section 132(5) and directed him to make fresh assessment in accordance with law. He held as follows : 1.Order under section 132(5) passed by the ITO has not mentioned any reasons for his decision, though, however, he recorded these reasons in a separate note which formed part of the record. 2. The ITO accepted part of the ornaments seized as belonging to Smt. Premlataben C. Khetan, daughter-in-law of the assessee, and rest of the ornaments were accepted to be belonging to Smt. Savitriben, wife of the assessee. In doing so, he did not verify the returns filed by the two ladies but merely relied upon a certificate of the chartered accountants to the effect that two ladies were being assessed to wealth-tax in Bombay. 3. In case of Smt. Premlataben, he found on verification of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lth-tax, even if the returns were filed after the search, the ITO had taken various details orally as well as in writing and had also considered the evidence including, inter alia, the place from which the ornaments were found, viz., from the bed-room of the daughter-in-law and the ornaments were claimed by her and accepted as such in the wealth-tax returns. In respect of jewellery certificate, dated 31-12-1981, the approved valuer had personally inspected in May 1981 when also initially valuation report was obtained. Valuation report dated 31-12-1981 was only a subsequent report because for three years the first valuation report was valued as per the direction of the CBDT. 5. In respect of Smt. Savitriben also, the will was verified by the ITO. Not only that, even parties who attested the will were summoned and their statements recorded. Even the return filed under the Estate Duty Act, 1953, was also on record. Besides, there was ample material which was considered by the ITO. 4. The learned departmental representative submitted that not only there was an error, but it was prejudicial to the revenue. Since the department apprehended that there might be loss of the revenue if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties specified under section 230A of the Act in respect of which the assessee is in default and thereafter retaining such assets or part thereof as are in his opinion sufficient to satisfy the aggregate of liabilities. The proviso to the same section also enables the ITO, with the previous approval of the Commissioner, to release the assets or such part thereof as he may deem fit. This envisages that decision taken under section 132(5) regarding release or otherwise is always by at least two administrative authorities, usually the ITO, whose decision is approved by the IAC and secondly, in the cases where satisfactory arrangements for payments of taxes is made as per proviso to section 132(5), the two authorities would be the ITO with the previous approval of the Commissioner. Under this section, essentially the order contemplates wholly the decision regarding retention or otherwise, any part or fully the assets seized and remaining in the custody of the department. Therefore, the decision taken by the ITO for releasing of the assets seized with the previous approval of the IAC, which is a condition precedent, is in substance a decision by the IAC himself. To put it simply, because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1963, the ITO made the following entry in the order sheet of his records : " Penalty dropped vide IAC-P-e-M.O.A.Alld./63-64 dated 9-9-1963." On the same date, the ITO wrote to the assessee saying : " This is to inform you that your penalty proceedings started under section 271(1)(c) for the assessment year 1962-63 have been dropped." On the above basis, the question arose as to whether the words ' no penalty ' written by the IAC constituted an order made under section 274(2)/271(1)(c) of the Act or not. Their Lordships held that it was an order. While reversing the decision of the Tribunal that it was only a formal requisite of the proceedings before an order could be made, their Lordships observed that it was open to the IAC and will be desirable that when a reference was made to him by the ITO he should apply his mind to the question, whether or not it was a case of penalty or not. They further observed that the ITO made an entry in the order sheet noting that the penalty proceedings had been dropped and they referred in that behalf to the communication received from the IAC and stated that when the ITO made such entries, the ITO cannot be considered to have made an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted. Moreover, the order under section 132(5) is basically a summary order in the sense that no detailed scrutiny of the case is required to be done, factual position apart. The enquiry only centres round to find whether any income or wealth has escaped assessment. If on broad enquiries it is found that prima facie there is no reason to believe that such position exists, then before releasing the assets an incidental enquiry regarding advisability or otherwise of retaining assets for outstanding taxes is considered and if no such circumstances exist, the decision for releasing of assets is taken and necessary order passed. Hence, this being a summary assessment based on power motivated with intention to unearth escaping income or wealth, primarily actions are not taken with a purpose to ensure recovery of outstanding dues. Hence, department cannot be allowed to withhold the assets without there being case as such. Since this second condition is not fulfilled, we refrain from commenting elaborately upon the decision in respect of fulfilling the first condition as to whether order of the ITO was erroneous. Suffice it to say that one of the two conditions necessary for invoking p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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