MOHAMMAD YASIN vs. C I T JAIPUR

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ITA/18/2002HC RajasthanRJHC02040885200222 November 201621 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the search commenced on 16.5.1997, and no further search material was found thereafter, despite search proceedings continuing for seizure purposes until 16.8.1997. Relying on the decisions in Rakesh Kumar Jain vs. Joint Commissioner of Income Tax (Madras) and B.K. Nowlakha vs. Union of India & Ors (Delhi), the Court concluded that the limitation period for the assessment commenced on 31.8.1997. Consequently, the assessment order passed under Section 158BC was held to be barred by limitation. The contention of the revenue regarding practical difficulties for seizure was not accepted as a justification for extending the search beyond the point where no further material was found. The issue was decided in favour of the assessee, and the orders of the Tribunal and the Assessing Officer were set aside.

What were the facts?

During a search operation on 16.5.1997, the residential and factory premises of the assessee, Mohd. Yasin, were searched, and assets and incriminating papers were seized. A notice under Section 158BC was issued on 20.7.1998, requiring the assessee to file a return within 45 days. No return was filed by 16.3.1999, leading to a show cause notice and a notice under Section 142(1). The assessee filed a return on 29.4.1999, declaring undisclosed income of Rs. 30 lakhs, supported by a detailed note explaining the basis of this income, including investments in properties, household expenses, marriage expenses, and business-related stock and cash. The assessment year(s) are not explicitly stated for the block period, but the return was filed for AY 1998-99. The appeal challenges the order of the Tribunal.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessment order passed under Section 158BC of the Income Tax Act, 1961, was barred by limitation, considering the date of commencement and conclusion of the search and the subsequent issuance of notices. Assessee's Contention: The assessee argued that the search concluded on 16.5.1997, and no further search material was found subsequently. Therefore, the limitation period for issuing the assessment order should commence from 31.8.1997, making the assessment barred by limitation, relying on decisions like VLS Finance Ltd. and South Asian Enterprises Ltd. vs. CIT (Delhi) and Rakesh Kumar Jain vs. Joint Commissioner of Income Tax (Madras). Revenue's Contention: The revenue contended that the search proceedings continued until 16.8.1997, and practical difficulties justified the continuation of the search for seizure purposes. They relied on a Supreme Court decision, though not specifically named, to support their argument regarding the search conclusion and limitation.

Which sections of the Income-tax Act were involved?

Section 158BC,Section 142(1),Section 132(3),Section 158BE,Section 80HHC

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR. D.B. Income Tax Appeal No.18/2002 Mohd. Yasin vs. The Commissioner of Income Tax, Jaipur & Anr.

DATE OF ORDER ::: 22.11.2016 HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE MAHENDRA MAHESHWARI Mr. Sanjay Jhanwar with Mr. Prakul Khurana, for the appellant. Mr. Anil Mehta with Ms. Archana, for the respondent. ***** BY THE COURT:- (Per Hon'ble Jhaveri, J.)

1.

By way of this appeal, the assessee has challenged the judgment and order of the Tribunal whereby the Tribunal has partly allowed the appeal of the assessee and dismissed the appeal of the Department.

2.

The facts of the case are that the search operations were carried out on 16.5.1997. During the course of search operations the residential and factory premises of the assessee were covered and certain assets were found and seized, besides incriminating papers. The notice u/s 158BC was issued to the assessee on 20.7.1998 requiring the assessee to papers a true and correct return of his total income including the undisclosed income within 45 days of service of the notice. In compliance, no return was filed upto

2 16.3.1999 and therefore a show cause notice was issued alongwith a notice u/s 142(1) of the Act on 16.3.1999 requiring the assessee to furnish explanation with regard to the assets found and seized from his premises and also to explain all the incriminating seized papers. The return was filed on 29.4.1999 declaring therein undisclosed income of Rs.30 lakhs. While furnishing the return a brief note was annexed describing therein the history of the assessee and also the basis of showing such undisclosed income. The brief note so annexed is reproduced hereunder for ready reference:- “1. The assessee was born in the year 1950 in a poor family. The assessee's Sh. Mohd. Umar was doing cycle repairing work and to meet the livelihood the assessee started helping his father in his work at a very early age. Thereafter the assessee started his own cycle repairing centre in the year 1965 in Ramganj Bazar, Jaipur. He is still popularly known as Yasin Cyclewala in his area. The lady members of the family were also engaged in the job work of Purari & Bindai to support the family.

2.

The assessee got married to Smt. Rahmat Bano in the year 1971. He has two daughters namely Yasmeen & Shaheen and one son namely Mohd. Arif Yasmeen got married to Mehrajudeen on 29.3.1994 and Arif got married on 2.5.1997 to Sabnam. The son of assessee Mr. Arif and son in law Mr. Mehrajudeen are assisting to assessee in his work.

3.

The assessee in course of time left the work of cycle repairing and started the business of brokerage of precious and semi-precious stones and jewellery some time in the year 1989. Thereafter he started a proprietory concern in the name of M/s Umar Gems in the year 1993. The 3 assessee has filed regular income tax return from A.Y. 1992-93. 4. There was a search of assessee's premises on 16.5.1997. In course of search certain loose papers, bills and vouchers of his proprietory concern M/s Munar Gems were found and seized. However, the regular books of M/s Umar Gems were not found since they were with the accountant of the assessee. These books of accounts were produced before the ADIT on 23.5.1997, in confirmation of which a letter dated 27.5.1997 was filed to the ADIT. On the basis of these books the income for the A.Y. 1996-97 and 1997-98 has been worked out. Since substantial sale during these years was export sales, the income of the assessee from this concern was not chargeable to tax. For A.Y. 1997-98 due date of filing of return had not expired. This return was filed on 31.3.1999 at income of Rs.2330/- after considering deduction u/s 80HHC at Rs.1406759/-. This income is taken as disclosed income in the block return. For A.Y. 1996-97 also the total sale is export sale. The return for this year was not filed but the total income is NIL after considering deduction 80HHC at Rs. 421273/- copy of P &L account, Balance-sheet 80HHC certificate and computation of total income for this year is enclosed.

5.

In course of search stocks of semi-precious and precious stones valued at Rs.19,27,778/- was found and seized. Besides this, certain papers indicating the investment in properties, household expenses, marriage expenses etc. were found. From these papers it is not possible to work out year wise positive income. Hence, the undisclosed income for the block period is being worked out by deductive method in which all the undisclosed investments

and estimated

unexplained expenditure is aggregated. For this purpose investments held in the name of family members of the assessee are also considered in the hands of the assessee. In case of any such investment is considered in the hand of any other member, corresponding deduction be given in the assessee's case. This amount is equal to income since income is either spent or invested. On this basis the investment/expenditure for the block period is determined as under:-

4 a) Cash:- Total cash found was Rs.39,105/- from the residence of assessee. Out of which 19,105/- was released and balance Rs.20,000/- is seized. The cash balance available as per cash book of M/s Umar Gems as on 16.5.1997 is Rs.21,301/- and further a sum of Rs.5,000/- is considered as the savings of family members. The balance of Rs.12,804/- is considered as unexplained. b) Stock:- Total stock of precious and semi- precious stones were found and seized was valued at Rs.19,27,778/-. Out of which the book stock as on 31.3.1997 is Rs.96,586/-. The purchases from 1.4.1997 to 15.5.1996 amounts to Rs.4,19,492/-. There is no sale during the period. Thus, stock as per books as on the date of search is Rs.5,16,078/-.

The balance

stock

of Rs.14,11,700/- is considered as unexplained. c) Immovable properties:- During the block period the assessee has purchased residential house at 38-39 Dhanna Das Ki Bagichi, Jaipur for Rs.2,00,000/- approx. Further a sum of Rs.2,00,000/- was spent on repairs, addition and alteration from time to time. This residential plot is purchased in the name of Rahmat and Arif. Thus, total investment in this property is estimated to Rs.4 lakhs which is being offered in the block return. Further a house in the name of Rahmat & Arif was purchased in 1989-90 at 1375-76 Kamela Gali, MD Road, Jaipur. At present this house is being used as works office of M/s Umar Gems. Total investment in this house is estimated to Rs.1.75 lakhs which is being offered in the block return. The assessee also have a house at Dhanna Das Ji Ki Bagichi purchased in the year 1994-95 in the name of Rahmat & Shaheen. This house was purchased for Rs.1,11,000/-. Presently Sh. Mchrajudeen is living in this house. The investment in this house is being offered in the block return of the assessee. d) Maruti Esteem:- During the block period the assessee's son Mr. Mohd. Arif has purchased a Maruti Esteem Car. This car was financed from Lloyds Finance Co. The assessee has invested

5 following sums, which is offered in the block return:- Booking amount 5000/- Deposit with Llyods Finance 190000/- Other charges & Insurance 25603/- Installments paid (2x22966) 45932/- 266535/- e) Marriage expenses:- During the block period two marriage were performed:- i) Miss Yasmeen, daughter of Sh. Yasin 29.3.1994 ii) Mr. Mohd. Arid, Son of Shri Yasin 2.5.1997 Both the marriages were performed locally and in a simple manner. Not more than 300 persons attended the ceremony. The food served was according to the customs of Muslim community. Total expenditure on these two marriages and as coming from the loose papers are estimated to Rs.4 lacs which is being offered in the block return. f) Further a sum f Rs 2,22,961/- is being offered additionally to cover any other uncovered expenditure/investment and ot make the above undisclosed income offered in the block return to a round sum of Rs 30 lacs. Therefore, if any other assets, expenditure is found uncovered from loose papers and statements the same be covered out of the additional income so offered. Accordingly, the above amount of Rs 30 lacs is included in the block return of Mohd. Yasin in a fair and reasonable manner. If department wants to compute income in the individual hand of family members, then corresponding deduction be given in the case of assessee. Further the total undisclosed income for the block period is offered to tax in the search year i.e. A.Y. 98-99 as the rate of tax is same for the entire block period. If department computes year wise income then corresponding deduction be given in A.Y. 98-99 to that extent”.

3.

This Court while admitting the appeal framed the following substantial questions of law vide order dated 6.3.2002:-

6 “Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that assessment order passed under section 158 BC/143(3) dated 16.08.1999 is not barred by limitation as per explanation 2 to section 158/BE (1) (b) of the Act?” “Whether on the facts and in the circumstances of the case, the Tribunal was justified in not allowing deduction under section 80HHC on account of export income from business for the assessment year 1996-97 at Rs.4.23,073/- and for assessment

year

1997-98

At Rs.14,10,700/- in view of the provisions of Section 158 BA (3) of the Act?” “Whether on the facts and in the circumstances of the case, the Tribunal was justified in not allowing credit of purchases made between 31.3.1997 to 16.05.1997 at Rs. 4.19,495/- from the stock fund during the course of the search?” “Whether on the fact and in the circumstances of the case, the Tribunal was justified in holding that credit of income can not be given for various family members for which no returns were filed?”

4.

Counsel for the appellant Mr. Sanjay Jhanwar assisted by Mr. Prakul Khurana contended that out of the four issues which are raised only issue No.1 is to be considered and no other issues are consequential. Therefore, he has argued only question No.1. 5. Mr. Jhanwar contended that in view of the provisions of Section 132(2) & Section 158 BE which are reproduced as under:- “Section 132(2):-

7 (2) The authorized officer may requisition the services of any police officer or of any officer of the Central Government or of both, to assist him for all or any of the purposes specified in sub- section (1) [or sub-section (1A)] and it shall be the duty of every such officer to comply with such requisition. Section 158 BE :- Time limit for completion of block assessment. 158BE. 33[(1) The order under section 158BC shall be passed— (a) within one year from the end of the month in which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997; (b) within two years from the end of the month in which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January, 1997. (2) The period of limitation for completion of block assessment in the case of the other person referred to in section 158BD shall be— (a) one year from the end of the month in which the notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997; and (b) two years from the end of the month in which the notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January, 1997.]”

6.

(2002) 253 ITR 0534 wherein it has been held as under:- “5. Admittedly, only the following officers were authorised to conduct the search. Their names were :

1.

Shri K. Ramesh, DDIT (Investigation), Belgaum ;

2.

Shri M. L. Karmarkar, ADIT (Investigation), Belgaum;

3.

Shri Amol S. Kamat, ACIT, Panaji; and 4. Shri J. B. Chavan, ITI W-2, Belgaum. Admittedly, the name of Mr. Abrol does not figure here. So also admittedly, there was only one search warrant, which was issued on October 16, 1996, and executed between October 16, 1996, and October 20, 1996, and which expired thus on October 20, 1996. The warrant was issued on October 7, 1996, and the search was conducted continuously between October 16, 1996, and October 20, 1996. In between, the search was suspended only during the late hours of the night. On October 20, 1996, having seized all the relevant materials and valuables, the search party obviously had come to the conclusion that there was no further material to be seized and no more search operation to continue. The search comes to an end when the search party leaves the premises after carrying with it the seized material and thus authorisation for search is fully implemented and execution is complete. For this proposition, the Income-tax Appellate Tribunal Bench, Pune, took support of the decision of the Bangalore Bench in the case of Kirloskar Investments and Finance Ltd. v. Asst. CIT [1998] 67 ITD 504. In the present case at hand, the cupboard in which 45 kgs. of silver articles were kept was sealed by making an order under Section 132(3) of the Income-tax Act. The 9 authorised officers were obviously very much aware of the contents of the cupboard and the nature of the articles in view of the inventory made by them. They had also come to the conclusion that the said 45 kgs. of silver articles need not be seized. There was no practical impediment to seizure of the said 45 kgs. of silver, if it was considered by the authorised officer as necessary. The contention of learned counsel for the Department that it was not practical to seize huge quantity of silver at odd hours, was rightly held to be untenable by the Income-tax Appellate Tribunal, because at the same odd hour, the search party seized and removed from the premises of the assessee 5,729 gms. of gold ornaments, cash of Rs. 1,69,000 and books of account, weighing nearly 500 kgs. on October 26, 1996, 6 kgs. of silver articles in the said cupboard were released, a panchanama was made and a further order under Section 132(3)passed with respect to the said sealed cupboard and the seal was placed again. Thus, the Income-tax Appellate Tribunal rightly held that the proceedings. On October 26, 1996, could not be considered as part of the execution of the search proceedings which concluded on October 20, 1996. Indeed, by simply staring in the panchanama that the search is temporarily suspended, the authorised officer cannot keep the search proceedings in operation by passing a restraint order under Section 132(3). Reliance placed by the Department on the judgment of the Allahabad High Court in the case of Sriram Jaiswal v. Union of India [1989] 176 ITR 261, was correct. The restraint order in view of this authority cannot be cancelled and renewed from time-to-time. Action under Section 132(3) of the Income-tax Act can be resorted to only if there is any practical difficulty in seizing the item which is liable to be seized. When there is no such practical difficulty the officer is left with no other alternative but to seize the item, if he is of the view that it represented undisclosed income. Power under Section 132(3) of the Income-tax Act thus cannot be exercised so as to circumvent the provisions of Section 132(3) read with Section 132(5) of the Income-tax Act. The position has become much more clear after the insertion of the Explanation to Section 132(3) effective from July 1, 1995, that a restraint order does not amount to seizure. Therefore, by passing a restraint order, the time limit available for framing of the order cannot be extended.

7.

As far as the validity of the panchanama is concerned, one has to look to the provisions of the Criminal Procedure Code, 1973. The panchanama is to be drawn as far as possible, keeping in mind the provisions of the Criminal Procedure Code. It has to be said that obtaining of panch witnesses was not an impossible task for Mr. Abrol, who is supposed to have 10 conducted the deemed seizure operation on December 13, 1996. In fact, the Department itself has admitted that there were many defects in the panchanama. They were repeatedly saying that there were many defects in the panchanama and still were saying that "believe in it and accept it", is not acceptable. Having heard both the advocates at length and having gone through the impugned order, so also the various authorities cited by Mr. Rivonkar, in our opinion, no fault can be found with the impugned order of the Income-tax Appellate Tribunal, Pune Bench. The impugned assessment indeed is barred by limitation and also invalid. In view of this, therefore, the impugned assessment was rightly annulled. No interference is therefore warranted.”

7.

1 Murali Export House & Ors. vs. Commissioner of Income Tax no.5 & 13 holding as under:- “There could be only one authorisation and a panchanama drawn as regards the conduct of the search, i.e., once when the search party concluded the search and leaves the premises after carrying with them the seized material, the authorisation for the search is full implemented upon and execution completed. There afterwards, if the Department has 11 to enter the premises again, as by way of search, certainly, one requires fresh authorisation; however, no such authorisation is required to enter the premises to inspect the materials, which are the subject matter of prohibitory order or restraint order. The said order itself acts as an authorisation to enter the premises and inspect the materials, which are the subject matter of those orders. However, after entering the premises of such person, he has to confine his actions only for inspection of the subject-matter of prohibitory order or restraint order. He cannot search the premises over again. Any material seized after such inspection would be the undisclosed income for the purpose of the block assessment in pursuance of search under Section 132(1) of the Act. Thus, the panchanama evidencing such inspection and seizure would be the last panchanama in respect of the said premises. But for the purpose of limitation under Section 158BE, it would not be the last panchanama drawn in proof of conclusion of search, as defined in Explanation 2 to Section 158BE. For the purpose of limitation, there can by only one search and one panchanama. Merely because, more than one panchanama is drawn in the given case on one authorisation, one cannot construe that the subsequent and the last of the panchanama issued as one flowing out of the search as a last of the panchanama referrable to Explanation (2) to Section 158BE. Once the warrant of authorisation has been issued and the premises is searched and the search party leaves the premises, there is the end of the search and what could be postponed is only seizure of the articles and issuance of prohibitory order; however, limitation for the completion of the block assessment begins on the conclusion of the search and issuance of panchanama and in case of single authorisaiton, the moment such party leaves the premises by drawing of the panchanama noting

conclusion of the search, the limitation period begins.”

8.

He further contended that the limitation starts from 31.8.1997 and relied on other judgment in the case of B.K. Nowlakha vs. Union of India & Ors. reported in (1991) 192 ITR 0436 wherein it has been held as under:-

12

10.

In the affidavit-in-reply, it has been stated that the stocks which were found in the premises were not seized because the petitioners had not been able to explain the existence of the stocks by any documentary evidence. It was further stated that the petitioners had not come forward to identify the items of stock from the purchase vouchers and to give the value of the various items. It is the case of the respondents, while justifying the authorisation under s. 132(1) that the entries in the books which were retained did not show possession of the items of stock correctly. There were a large number of handicraft items some of which were antique which the petitioners could not identify or co-relate with the purchase vouchers which were available with them. This may be a ground or good reason for effecting seizure but, in our opinion, it cannot be said that this is a valid ground for exercising jurisdiction under s. 132(3). Sec. 132(3) can be resorted to if there is any practical difficulty in seizing the item which is liable to be seized. If there is no practical difficulty, then an authorised officer has the jurisdiction and duty to seize the books of account, other documents, money, bullion, valuable articles, etc., which are found as a result of the search, if no explanation is coming forward in respect thereof. Therefore, when the search was effected on 11th Feb., 1991, and the petitioners were unable to give any valid explanation as demanded by the respondents, then the only power which could have been exercised or should have been exercised by the authorised officer was to effect seizure. It could not be said that, because no explanation is being offered by the petitioners, it is impracticable to effect seizure. When no explanation or an unsatisfactory explanation is offered and valuable articles are found at the time of search, then the authorised officer would be fully justified in effecting seizure. Once seizure is effected, the period of limitation starts and an order under sub- s. (5) of s. 132 has to be passed within the stipulated period. In our opinion, the power under s. 132(3) cannot be so exercised as to circumvent the provisions of s. 132(1) r/w sub-s. (5) thereof. When a search is conducted and valuable movable articles are found which are liable for seizure, then they should be seized. Because such seizure was not effected due

13 to their physical characteristics, Parliament thought it necessary to enact the second proviso to s. 132(1). Whereas previously due to the weight, volume or physical characteristics, only restraint orders under s. 132(3) were passed, now w.e.f. 1st April, 1989, such restraint orders are being regarded as deemed seizure under sub-cl. (iii) of s. 132(1). The intention of the legislature is very clear, viz., it is the duty of the authorised officers to effect seizure wherever any valuable article or thing is found during the course of the search and the words “ not practicable to seize” used in s. 132(3) have to be understood in this sense, viz., where there is a practicable difficulty in effecting seizure, then an order under s. 132(3) can be passed. Not knowing the value of the articles or whether they are antique or not cannot be regarded as a practical difficulty on the part of the authorised officer in effecting seizure. In our opinion, therefore, the orders which were issued under s. 132(3) were not validly issued and the goods which were found at the premises could have been seized by actually seizing the articles or by making an order of restraint under the second proviso to s. 132(1) of the Act. This was not done in the present case. Whenever there is a seizure of articles under s. 132(1) including a deemed seizure, an order under sub-s. (5) has to be passed within 120 days of the seizure. Where on such order is passed, the goods have to be released. The period of 120 days came to an end on or about 8th June, 1991. As no order under s. 132(5) has been passed, the said goods are liable to be released.

11.

There is another reason for ordering the release of the said goods even on the assumption that a valid order under s. 132(3) was passed. Firstly, when an order under s. 132(3) is issued, it must, in our opinion, be recorded as to why it is not practicable to effect seizure. This is for the reason that whenever any such order is passed, then the CIT can grant an extension under sub-s. (8A) of s. 132 after recording reasons in writing. In the present case, we are informed that, on 20th June, 1991, reasons were recorded by the CIT while granting extension. Be that as it may, we find that, just prior to the expiry of 60 days of the order, dt. 11th Feb., 1991, the order under s. 132(3) was revoked on 9th April, 1991, and a fresh order in respect of the same goods was again

14 passed on 9th April, 1991. This exercise was repeated on 6th June, 1991. In our opinion, it is not permissible to do so. The orders which are passed under s. 132(3) may have a very far-reaching effect on the business of an assessee. The order of restraint may adversely affect the business and, therefore, adequate safeguards are sought to be provided in the Act by the insertion of the provisions of sub-s. (8A) in s.

132.

In order that the restraint order must not be continued indefinitely, sub-s. (8A) of s. 132 provides that the restraint order can be continued only if, before the expiry of 60 days, and for reasons to be recorded the CIT grants an extension. The provisions of sub-s. (8A) cannot be by-passed or rendered nugatory by revoking an order under s. 132(3) and thereafter passing another order on the same date. On 11th Feb., 1991, an order under s. 132(3) has been passed. The 60 days would expire on or about 10th April, 1991. If the order under s. 132(3) was to be continued, then the CIT should have granted approval under sub-s. (8A). What was done in the present case was to cancel the order dt. 11th Feb., 1991, on 9th April, 1991, and then to pass a fresh order under s. 132(3) on that very date. No approval of the CIT was sought. The same thing happened on 6th June, 1991. The order under s. 132(3) was, in effect, extended twice without any concurrence from the CIT and merely on the Asstt. Director of Income-tax deciding to revoke the order and passing a fresh order. The provisions of sub-s. (8A) of s. 132 were thereby circumvented. In our opinion, once an order under s. 132(3) has been passed, then the limitation period commences and such order cannot be continued unless and until the provisions of s. 132(8A) are satisfied.

12.

It has been contended by learned counsel for the respondents that, on 9th April, 1991, and 6th June, 1991, the earlier orders of restraint were revoked because the Department officials along with the officials of the Archaeology Department wanted to inspect the goods. In our opinion, even when an order under s. 132(3) has been passed, the Department officials are not restrained from examining the goods. An order under s. 132(3) restrains the owner or the person in possession of the goods from removing, parting with possession or dealing with them. The order of restraint is 15 effective against the owner or the person in possession thereof and is not aimed at the Department itself. By issuing an order under s. 132(3), the Department is not restrained from examining the goods in respect of which a restraint order has been passed. There was no valid reason, therefore, for seeking to revoke the orders on 9th April, 1991, and 6th June, 1991. Seeing the dates when such auction was taken, we find considerable force in the contention of learned counsel for the petitioner that this device was resorted to solely with a view to circumvent the provisions of s. 132(8A). The first revocation effected on 9th April, 1991, only about one or two days before the expiry of 60 days. Similarly, the second revocation of 6th June, 1991, was also effected only about one or two days before the expiry of 60 days from 9th April, 1991. We are, therefore, of the opinion that the approval of the CIT not having been obtained under s. 132(8A), the continuation of the restraint order under s. 132(3), even if it could be validly passed, was not warranted.

9.

Counsel for the respondent Mr. Mehta has taken us to the decision of Supreme Court in the case of VLS Finance Ltd. & ors. vs. Commissioner of Income Tax & ors. reported in (2016)384 ITR 1 (SC) and contended that in view of the recent decision of Supreme Court, the issue is now decided in favour of the Department.

10.

In view of the concurrent finding of the Authority, the search was continued and it concluded on 14.8.1997, therefore, the limitation starts from 31.8.1997. 11. Counsel for the assessee Mr. Jhanwar has drawn our specific attention to the paragraph no. 27, 29 & 30 of ITAT holding as under:-

27.

Rival submissions have been head in the light of material placed on record. The assessee's wife

16 Smt. Rehmat Bano gave a statement that monthly house hold expenses of family are Rs. 15,000/-. She is not merely a Pardanshin lady but is found to have income from business. Contributions have also been claimed by her towards house hold expenses. Under such circumstances, the statement given by her constitutes information available with the assessing officer for the purpose of computation of undisclosed income of the block period of the assessee. However, the contributions for house hold expenses have not been substantiated with any cogent material. Returns were also not filed before date of search. Findings of AO and CIT(A) on this aspect cannot be lightly disturbed. Assessee's wife in her statement also stated that the amount for house hold expenses is paid as per needs by her husband. Expenses admitted are at Rs. 15,000/-p.m. She did not say that this was for the entire block period. Assessee's visits to foreign countries, acquisition of house hold goods esteem car and marriages are only recent incidents and cannot be said to be referable to a longer period, nor it could be said that the assessee had been enjoying a stylish life over the entire block period so as to form any good basis for estimation of house hold expenses. The assessee in fact had been running a cycle repair shop in the block period itself and known as Yasin Cyclewala. This has also not been denied by the department. However, the statement of assessee's wife is indicative of the current expenditure of Rs. 15,000/- per month and the AO could, therefore, estimate the expenditure in the immediately preceding year i.e. preceding year 1996-97 and to the date of search. Mere payment of school fees cannot be said to constitute sufficient material more particularly when the assessing officer himself has made the statement of the lady as the base and not the material and no estimation is permissible dehors material. Accordingly, we uphold the estimation of house hold expenses for the previous year 1996-97 to the date of search @ Rs. 15,000/- per month and accordingly the addition of Rs. 1,48,500/- for this period as worked out by the assessing officer at internal page 29 of his order is confirmed. The assessing officer has also given a chart at internal page 29 of its order for claim of withdrawals for house-hold expenses by the assessee himself during the block period out of which Rs. 3,68,850/- are relatable to the 17 previous year 1987-88 to 1995-96 and the same could be considered as house hold expenses incurred by the assessee. Since the assessee himself has disclosed only Rs. 2,53,850/- for the previous years 91-92 to 95-96 for which, the AO is found to have given credit, the balance of Rs. 1,14,800/- shall also constitute undisclosed income of the block period. With this out of the total undisclosed income of Rs. 9,74,650/- sustained by the CIT(A) only Rs. 2,63,300/- is confirmed and balance is directed to be deleted.

29.

On the other hand, the ld. DR has opposed the submissions of the assessee and has also filed written submissions. He has relied upon the detailed findings given by the assessing officer as well as the CIT(A) and contends that the facts mentioned in the orer may be considered in detail. The ld. DR also contends that there was sufficient material found as a result of search on the basis of which the assessing officer could have made estimation. Reliance has been placed on the decision or Rajendra Pd. Gupta v/s CIT, 25 Tax World 87 and certain other decisions, referred in the written submissions filed by him.

30.

Rival submissions have been heard with reference to the case laws relied upon. During the course of search, evidence with respect of expenditure incurred on celebration of marriage of two children namely, Yasmeen, daughter and Arif, son, during the block period has been found recorded in the seized Annex. A-6 and A-5. Nothing was disclosed in the regular returns. However, the assessee disclosed Rs. 4,00,000/- as undisclosed income in the block return filed by him on estimate basis as the expenditure found through seized annexure A-6 for the marriage of daughter on 29.3.94 and was calculated by the assessee at Rs.2,26,124/- and through seized Annex. A-5 for the marriage of his son on 2.5.97 the expenditure was calculated at Rs. 1,53,019/- as per details given at assessee's written submissions 9 & 10. However, in the block return filed, the assessee had appended a note mentioning therein that not more than 300 persons attended the ceremony, which was one of the basis of the total estimate of expenditure of Rs. 4,00,000/- on both the marriages. No split up for this amount was given by the appellant though the function comprised of two different previous years in the block period. From the loose papers so found and seized, the 18 assessing officer noticed that the assessee has omitted to consider some of the seized papers and in some cases estimated the expenditure on lower side besides not including any expenditure on certain essential items which are compulsorily incurred in the marriage but notincluded by the assessee in the estimates given. The assessing officer also found that the assessee has paid service charges for ice cream to 900 persons while the assessee has claimed attendance of only 300 persons. Further more, consumption of mawa weighing 1,010 kg. Curd 265 kg. and milk 500 kg and their purchase 3-4 times on different dates on this occasion and consumption of 250 kg. milk for coffee alone was sufficient material to show the stay of guest for 2-3 days and incurring of higher expenditure by the assessee than his own estimates. For the material available on record and reasons given, the assessing officer was competent to make estimate of expenditure. From the order of the CIT(A) it is evident that the invitation card for the marriage of daughter indicates that the marriage of these girls and one boy was ceremonised together and this was not at the invitation of appellant alone. The assessee did not show any contribution from any other person nor did he place any material that it was a joint marriage for which expenditure can be said to have been met by any other person. The CIT(A) took note of all such glaring facts for holding that the assessing officer has made a bonafide estimate on the basis of seized documents, statements and surrounding circumstances. He has, however, observed that by its very nature estimate may be under estimate or over estimate. The assessee's counsel also has contended that certain expenses viz. on milk, electricity, tent and decoration, list of dowry items etc. have already been considered by the assessee in his estimates. Such a claim does support his plea to some extent that the estimates are excessive we, therefore, keeping in view the totality of the facts and circumstances as brought before us, consider the estimate of expenditure at Rs. 5,50,000/- to be reasonable as against the estimates of Rs. 7,00,000/- in the marriage of assessee's daughter and Rs. 2,50,000/- in the marriage of assessee's son as against Rs. 3,00,000/- confirmed by the ld. CIT(A). The assessee gets a total relief on Rs. 2,00,000/-.”

19 12. reported in (2002) 253 ITR 0534 and held as under: “The respondents could have, on the very first day of the search, seized all relevant and irrelevant documents and books of the petitioners, but they did not do so. We are of the view that their decision on this (in favour of the petitioners) cannot be used against them. We have also kept in mind two facts, namely, that even by adopting this procedure, the Respondents did not exceed the 60 day limit as provided by Section 132 (8A) of the Act and that for making the assessment order the Respondents had still more than adequate time available, making it unnecessary for them to resort to any subterfuge so early on. Consequently, we are of the opinion that the Respondents did not complete the search on 22nd June, 1998 as alleged by the Petitioners, nor did they unduly prolong it. The search concluded on 5th August, 1998 and so in terms of Explanation 2 to Section 158BE of the Act the period of limitation would being from the end of August, 1998, that is, 31st August, 1998 onwards. The Second issue raised by learned counsel for the Petitioners would stand answered accordingly.”

13.

We have heard counsel for the parties.

14.

Before proceeding with the matter, it will not be out of place to mention that the search proceeding u/s 132(3) was India & Ors reported in (1991) 192 ITR 0436, we are of the opinion that the search has commenced on 16.5.1997, no further search was conducted therefore limitation was started on 31.8.1997. 15. Therefore, the first issue is answered in favour the assessee against the department.

16.

No other issues are required to be answered.

17.

The contention which has been raised by the department that the search could not be completed because of the practical difficulty, in our view, that is only for the purpose of seizure, no further search was conducted that will not explain the limitation beyond which the search can be continued and no further material was found on record so that practical difficulty is accepted for the seizure. Therefore, this contention is also not accepted.

21

18.

Consequently, the issue is decided in favour of the assessee and order passed by the Tribunal and the AO is also set aside.

19.

The appeal is accordingly allowed. (Mahendra Maheshwari), J. (K.S. Jhaveri), J. Brijesh3.

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