1982 (5) TMI 72 - AT - Income Tax

Tribunal upholds Commissioner's jurisdiction to revise ITO's order, deems it erroneous and prejudicial to revenue interests.

The Tribunal held that the Commissioner had jurisdiction under section 263 to revise the ITO's order under section 132(5) as it was appealable and subject ... Orders Passed, Seized Assets Issues Involved:1. Jurisdiction of the Commissioner under section 263 to revise the order passed by the ITO under section 132(5).2. Justification of the Commissioner's order on the merits of the case.Issue-wise Detailed Analysis:1. Jurisdiction of the Commissioner under section 263 to revise the order passed by the ITO under section 132(5):The assessee contended that the Commissioner lacked jurisdiction under section 263 to revise the order passed by the ITO under section 132(5) because it was not an assessment order but a summary order. The argument was based on the premise that the ITO's order under section 132(5) required prior approval from the IAC, making it effectively an order of the IAC. Additionally, the assessee argued that revising the order would extend the 90-day limitation period prescribed under section 132(5), which the Commissioner could not do.The Tribunal rejected these contentions, stating that section 263 allows the Commissioner to revise any order passed by the ITO if it is erroneous and prejudicial to the interests of the revenue. The Tribunal clarified that the ITO's order under section 132(5) is indeed an appealable order and thus subject to revision under section 263. The Tribunal emphasized that the ITO is required to take the IAC's approval but is not bound by the IAC's directions, distinguishing this from the provisions under section 144B. The Tribunal also cited the Supreme Court's ruling in Director of Inspection of Income-tax v. Pooran Mall & Sons [1974] 96 ITR 390, which held that the statutory limit of 90 days applies only to the initial order, not to subsequent orders required to give effect to superior authorities' decisions. Similarly, the Gujarat High Court in Vasani & Co. v. CIT [1978] 112 ITR 819 held that the time limit does not apply when higher authorities remand the case.2. Justification of the Commissioner's order on the merits of the case:On the merits, the Commissioner found that the ITO's order was based on possibilities and assumptions rather than concrete evidence. The ITO had accepted the explanation that the diamonds and jewelry seized belonged to the assessee's wife and were received at the time of her marriage, based on the family's social status. However, the Commissioner noted several inconsistencies and lack of evidence in the ITO's findings. For instance, the ITO did not verify the wife's claim about receiving the jewelry at her marriage or from relatives, nor did he resolve contradictions in her statements. Similarly, the ITO accepted without verification that the assessee's daughter received gold ornaments worth Rs. 10,860 on birthdays and festivals.The Commissioner concluded that the ITO's order was erroneous and prejudicial to the interests of the revenue because it was based on imagination and possibilities rather than sound findings. The Tribunal agreed with the Commissioner's reasoning, noting that the ITO's conclusions were based on inferences, surmises, and conjectures rather than material evidence. The Tribunal emphasized that the onus was on the assessee to prove the ownership and source of the seized assets, which was not adequately discharged.In conclusion, the Tribunal upheld the Commissioner's order, directing the ITO to pass a fresh order determining the amounts as laid down in clauses (i), (ii), (iia), and (iii) of sub-section (5) of section 132 and to retain the assets seized to the extent necessary to satisfy the aggregate amounts referred to in section 132(5)(ii), (iia), and (iii). The appeal was dismissed.