AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
1995 (2) TMI 130
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....ts consisting of loose papers, note books, etc., were found and seized. A study of the seized material allegedly disclosed that the deceased assessee had been carrying on various business activities undertaking foreign tours, making huge investments in movable and immovable properties since long and was actively engaged in the purchases and sales of works of arts and other antiques. Punchnamas, seizure memos and year-wise scrutiny reports were accordingly prepared. Photostat copies of all the relevant seized material were allegedly forwarded to the major legal heir of the deceased and she was required to explain the various income earning activities of the deceased assessee and investments made by him over the years. After obtaining permission under section 151(2) of the Act from Dy. CIT, Jaipur Range-I, Jaipur and recording reasons therefor, assessments for the years under consideration were reopened under section 147 by issuing notices under section 148 to the LRs. In response thereto, returns for Assessment years 1980-81, 1981-82 and 1982-83 were filed on 9-4-1991 declaring incomes at Rs. 9,300, 14,500 and Rs. 12,500 respectively. The return for 1987-88 was filed on 27-9-1991 at....
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.... the material seized, if found relevant and material in the assessment on the assessee, can be used against him in assessment proceedings without raising any presumption under section 132(4A) of the Act. The Id. Departmental representative further submitted that such on objection cannot be considered in these proceedings. 7. At the very outset, we would like to observe that the relevancy and admissibility of a piece of evidence, which is sought to be used against an assessee at the assessment proceedings may well be questioned by him in such proceedings. The right of the assessee to question the relevancy and admissibility of such evidence extends to the source and mode of acquisition of such evidence. We, therefore, overrule the objection of the Id. Departmental representative in that behalf. 8. The presumption created under section 132(4A) in respect of the books of account, other documents, money, bullion, other valuable articles or things etc. found in the possession or control of any person in the course of a search is limited in scope and is restricted to the summary proceedings under section 132 of the Act. Such presumption does not extend to the proceedings of regular ass....
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....e of the incriminating evidence found and seized in the course of search proceedings shall then be examined and judged not with reference to the provisions of section 132(4A) of the Act but to other provisions in the allied law which are applicable to the proceedings under the Act. We, therefore, hold that the incriminating evidence, which was found and seized in the course of search can be used against the deceased assessee without any reference to the provisions contained in section 132(4A) of the Act provided such evidence is found to be relevant and material for the assessment of the assessee and the same has been put to him before their use against him at his assessments. 9. The legality of the search conducted and the evidentiary value of the material found and seized in the search in this case has been challenged on the ground that neither the house was owned by the deceased nor the documents found and seized in such search were written and signed by him and came from his possession. The Id. Departmental representative has objected to the acceptance of such proposition with the contention that if such a proposition is accepted then the concealed income and/or wealth of a de....
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.... notice to produce the relevant books or documents. What is necessary for a valid search under this section is the presence of bona fide good faith and honesty of purpose in the act of the officer(s) issuing the authorisation and/or conducting the search. Where such power is exercised bona fide, in good faith and in furtherance of the statutory duties of the tax officer, any error of judgment on his part will not vitiate the exercise of the power. 11. The material obtained during a search and seizure, which may be illegally or irregularly conducted can nevertheless be utilised for the purpose of an ordinary assessment provided that it is relevant and material to such assessment and the person to be affected by the assessment has been given proper opportunity to explain such material and rebut it, if he so likes. What, therefore, is of utmost importance is the due safeguard of the right of the taxpayer to protect and defend himself from the consequences flowing from the use of seized material against him. It is necessary to do so in order to uphold the application of the principle of natural justice in the administration of tax justice. Once that is found to have been done in a giv....
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....e capacities. That error of judgment, if it is considered so, would not vitiate the search proceedings. The premises which were subjected to search had been in possession of the deceased and still were in the possession of his widow and children, may be in their own rights but admittedly in their capacities of the heirs and legal representatives of the deceased also. The documents seized might not be written and/or signed by the deceased but they incriminated him as they reflected his income earning and income investing activities. Such material was, therefore, relevant to and material for making assessment of the income of the deceased in various years. Before their use against the assessee in the assessment proceedings, those were put to his L/Rs who was given proper opportunity to explain them and if possible to rebut them also. Such material could have thus been legally used and was rightly and lawfully used in evidence against the deceased assessee. We thus find no illegality or invalidity either in the conduct of the search or in reading the seized material in evidence against the assessee in the assessment proceedings against him. Therefore, grounds relating to this point in....
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....is reasons in writing and to serve on the assessee a notice containing all or any of the requirement which may be included in a notice under section 139(2) of the Act. The Assessing Officer had done that the assessee had already died and the Departmental representative of the deceased had already been communicated the information coming to the possession of the ITO in consequence of which the intended action was proposed to be taken against the deceased assessee. No invalidity or irregularity was thus committed either in issuing the notices under section 148 or undertaking the assessment proceedings under section 147 of the Act. 17. The issue of a notice under section 148 is a condition precedent to the validity of the assessment to be made under section 147 of the Act. If no such notice is issued or if the notice issued is invalid or is not served in accordance with law, the assessment made would undoubtedly be bad. But it is not necessary that the notice under section 148 calling for a return should also specify the item of income which has escaped assessment or the source of such income or indicate whether it is issued under clause (a) or clause (b) of section 147. What is nece....
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.... to prove handicraft business which was alleged to have been carried on by the deceased assessee, he should not have set aside the issue to the Assessing Officer, yet we are of the opinion that since the Id. CIT(A) has not recorded his final verdict on the issue in the point, it would not be proper on our part to decide the issue either way finally. In this behalf we rely upon Rajasthan High Court decision in the case of Prem Agencies v. CIT [1988] 173 ITR 110 and dismiss the relevant grounds in all the appeals. 21. (b) On account of Photo Service Business (Common to all the years) : Late Shri R.N. Ghiya, the deceased assessee, had admittedly been earning business income from running Ghiya Photo Service and also from brokerage. In compliance of the notices issued under section 148, the widow of the deceased assessee returned her late husband's income from various sources without giving bifurcation, for various years but assessments were made at higher figures which were reduced to some extent in the appeals. The final position in this behalf comes to the following : -------------------------------------------------------------------------------------------------------------------....
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....ed in estimating his income from that business. But if these are found to be having no relation with them then separate addition may be considered. Presently, the addition of Rs. 42,820 is deleted. We direct accordingly. 24. (ii) Investment in plot purchased Rs. 20,000 : The Assessing Officer made an addition of Rs. 20,000 on account of purchase of a plot by the assessee for factory shed ; the source of which could not be explained. In appeal, the Id. CIT(A) for good reasons recorded in his order, has set aside the issue in the point to the assessee. Since no final opinion has been recorded by the Id. CIT(A) on the point, we decline to decide the issue finally at our stage. (2) A.Y. 1981-82 : 25. (i) Addition of Rs. 20,351 : This addition was made under section 69 of the Act on account of an unexplained receipt of Rs. 20,351 by the deceased assessee from one Shri Janki Das Mehta of Bikaner. The contention of the assessee was that this receipt related to deceased's activity of purchase of handicraft items for his customers in order to earn commission income. For reasons recorded in A.Y. 80-81 in respect of such activities we presently delete the addition and set aside the issue i....