VIVEK LAWRENCE,KOCHI vs. ACIT CENTRAL CIRCLE -1, KOCHI

O R D E R

Per Sanjay Arora, AM

3.1 Before us, the assessee’s case was that once the AO has, as apparent, applying his mind to the matter, formed a view, which cannot be regarded as unreasonable, and completed the assessment on that basis, it is not open for the revisionary authority to unsettle the same in case he opines differently. The view adopted by the AO, before whom all details and explanations were furnished, is reasonable, and in fact supported by several decisions by the Tribunal, some of which find mention in the assessee’s paper-book.

3.2 The Revenue’s case, on the other hand, was the same as of the revisionary authority. The AO himself, as a reading of his order shows, was, on the contrary, of the clear view that the gold jewellery is to be assessed as income as unexplained investment. It is only in view of BI 1916, which rather requires him to, despite non- seizure, consider the jewellery found in search for assessment purposes, that ‘led’ him

ITANo. 972/Coch/2022 (AY: 2020-21) Vivek Lawrence vs. Pr. CIT not to do so. Further, if the assessee had indeed furnished the explanations and materials before the AO, explaining, as contended, the source of jewellery –though not brought on record by him, why should the assessee in that case feel aggrieved by the impugned order whereby the revisionary authority has not determined the matter, but only required it being adjudicated afresh, i.e., de hors BI 1916. The AO’s opinion, rather, is clearly to the contrary, defeating the assessee’s argument of a possible view.

4.2 The AO’s factual finding is, clearly, of the gold found during search being not satisfactorily explained and, accordingly, liable to be deemed as income for the relevant year. The BI, in his view, however, constrains him not to do so. It would be therefore necessary to peruse the same, which, also read-out during hearing, is reproduced as under: Page 3

ITANo. 972/Coch/2022 (AY: 2020-21) Vivek Lawrence vs. Pr. CIT “Instances of seizure of jewellery of small quantity in the course of operation under section 132 have come to the notice of the Board. The question of a common approach to situation where search parties come across items of jewellery has been examined by the Board and following guidelines are issued for strict compliance. (i) In the case of a wealth-tax assessee, gold jewellery and ornaments found in excess of the gross weight declared in the wealth-tax return only need to be seized. (ii) In the case of a person not assessed to wealth-tax gold jewellery and ornaments to the extent of 500 gms, per married lady 250 gms per unmarried lady and 100 gms, per male member of the family, need not be seized. [ (iii) The authorized officer may having regard to the status of the family and the customs and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure. This should be reported to the Director of Income-tax/Commissioner authorising the search all the time of furnishing the search report. (iv) In all cases, a detailed inventory of the jewellery and ornaments found must be prepared to be used for assessment purposes.”(emphasis, ours)

4.3 How we wonder, in face of such clear mandate, could anyone contend that the said BI provides for, much less prescribes, exclusion of unseized jewellery for assessment purposes; it, for the reasons stated, providing guidelines for the purpose of seizure by a search party qua gold jewellery. And, further, vide para (iv) thereof, specifically requires the assessing authority to consider the same for the purpose of assessment, i.e., from the stand-point of the investment being explained or otherwise. That is, he was obliged to, in terms of the Instruction itself, consider it, of course on merits, as per law. This is precisely what the revisionary authority has per the impugned order required the AO to do inasmuch as he has completely misread the same. There is, in purporting to adhere thereto, a complete disregard of BI 1916 by the AO in the instant case. His order is, per the law as amended by Finance Act, 2016, w.e.f. 01.06.2016, deemed as erroneous and prejudicial to the interest of the Revenue, liable for revision u/s. 263, to which provision (Explanation 2(c)to s. 263(1))reference was made during hearing. What, then, is the controversy about?

ITANo. 972/Coch/2022 (AY: 2020-21) Vivek Lawrence vs. Pr. CIT 4.4 We may, though, if only for the sake of completeness of our order, continue further. The BI, which forms the basis of the assessee’s case, is patently clear. The concession accorded thereby, also explaining the circumstances and reasons therefor, is to exclude gold jewellery under the circumstances and the extent specified therein, from seizure, making it, at the same time, clear that the same has nevertheless to be explained. Per contra, to the extent not, it would stand to be assessed as income as unexplained investment u/s. 69/69B of the Act. Could possibly, one may ask, the said provisions be construed as inapplicable to gold jewellery, even if unexplained as to its source, where found in search, in view of the BI 1916? The answer could only be an emphatic ‘No’, with there being further nothing in the said BI to even remotely so suggest, which led us to state hereinbefore of it having been in fact misread, and of there being, instead, a disregard thereof. Rather, were the BI to indeed provide otherwise, i.e., what the AO ascribes thereto, it would be outside the scope of s.119 of the Act, where-under the same is issued. The Board, even as explained time and again by the Hon'ble Apex Court, is not a judicial, but an administrative body, whose powers are clearly defined under the Act. It cannot, therefore, interfere in the exercise of judicial work by the Revenue authorities (CIT v. Greenworld Corporation [2009] 314 ITR 81 (SC); J.K. Synthetics Ltd. v. CBDT [1972] 83 ITR 335 (SC)). It is one thing to relax the rigor of the procedural law to mitigate ‘genuine hardship’ to any person or class of persons, and quite another to interpret the law. The interpretation being placed by the AO on the BI, besides being contrary thereto, is, with respect, outside the legal competence and mandate of the Board itself. Why, an interpretation whereby gold jewellery is to be under law treated differently from other assets, i.e., as not required to be explained as to its nature and source, would bear an inherent bias against persons holding assets other than gold jewellery, violating Art.14 of CoI.

4.5 The AO’s, who claims to be in making the impugned assessment guided by the said BI, understanding thereof is, much less a reasonable construction, as contended, a disregard thereof; rather, contrary thereto. The argument is in fact misconceived Page 5

ITANo. 972/Coch/2022 (AY: 2020-21) Vivek Lawrence vs. Pr. CIT inasmuch as a possible view, precluding revision, is only qua a provision of law, conspicuous by its absence. On merits, as explained, the Board cannot, as per settled law, travel outside its bounds under law or usurp the power of adjudication by the assessing authority. It has, as a matter of fact, not, so that questions of competence or reasonability of construction are academic, stated only to meet the arguments made during hearing. No reason for such construction, needless to add, stands furnished before us. The impugned assessment is a clear case of misapplication of law, liable for revision qua the relevant aspect. That some other authority may have read BI1916 likewise, i.e., contrary to what it says, is immaterial (Escorts Ltd. v. UoI [1993] 199 ITR 43, 60 (SC)). The same can, under the circumstances, only be regarded as it’s view in the matter, not supported by any cannon of interpretation of statutes – which the BI is in fact not, drawing inference from the fact of non-seizure advocated thereby, to thus travel outside its scope and purpose.