TaxTMI 
TaxTMI 
2018 (2) TMI 101
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.... 11,89,296/-. A search u/s 132 of IT Act, 1961 was conducted at his residential premises as well as on the premises of his other concerns/business associates. Notices u/s 153A of the Act dated 31.12.2012 was issued to the appellant for reopening the case u/s 147 of the Act. Against the said notice the appellant filed the return showing the same income of Rs. 11,89,296/- and agriculture income of Rs. 3,02,432/-. The assessment was completed at the income of Rs. 34,54,921/- and agriculture income of Rs. 3,02,432/- by making addition of Rs. 22,65,625/- against ornaments and jewellery found during the course of search. 3. Aggrieved by this, the assessee preferred an appeal before the Ld.CIT(A) but could not succeed. 4. Now the assessee is in appeal before the Tribunal pressing following grounds of appeal. 1. That on the facts and in the circumstances of the case the Ld. CIT(A) erred in confirming the action of Assessing Officer by reopening the case u/s 147 though under the facts and circumstances of the case, the reopening is unjustified, unwarranted and bad in law. 2. That on the facts and in the circumstances of the case the Ld. CIT(A) erred in confirming the....
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....close fully and truly all material facts necessary for his assessment, an income assessable to tax has escaped assessment. Explanation 1 to proviso of section 147 further clarifies that production before the AO of books of accounts and other evidence does not exonerate the assessee from the duty to made full and true disclosure of material fact, if some material necessary for assessment lay embedded in books of accounts or other evidence which the AO could have uncovered with due diligence but did not. Then, production of account books or other evidence will not tantamount to full and true disclosure of material facts. For the sake of convenience, Explanation 1 below proviso to section 147 is reproduced as under: "Explanation 1 - Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso". 4.3 It is well settled principle of law that AO should have material on the basis of which he could form a bonafide belief that the income as assessable to tax has escaped assessm....
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....ay be made of the following cases: - Sarabhai M Lakhani 243 ITR 1 (SC); and - ALA Firm 189 ITR 285 (SC). 4.3.5 Further reliance in this regard is placed on the decisions in the cases of ITO v Selected Dalurband Coal Co. P. Ltd (1996) 217 ITR 597 (SC) and Raymond Woollen Mills Ltd. v ITO (1999) 236 ITR 34 (SC) where the ratio laid down is clearly applicable on the case under consideration. 4.4 The legal principles that merge from the aforementioned decisions may be summarized as under:- - That for valid reopening of assessment after four years, the AO should have reason to believe that the income of the assessee has escaped assessment by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. It is a condition precedent for assumption of jurisdiction under 147(1). - The condition that the AO has reason to believe that the income of the assessee had escaped assessment is question of jurisdiction can always be investigated by Court. The word `has reason to believe' in section 147 are stronger than the words `is satisfied'. The belief entertained by the AO mu....
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....reme Court referred to earlier in this order, I am of the considered view that AO has not committed any error in facts and in law while issuing the notice u/s 148 and was justified in forming a belief that the income of the appellant had escaped assessment for the assessment year under consideration. In the case of ITO vs. Biju Patnaik (1991) 188 ITR 247, the Apex Court has sounded the note of caution that at the stage of notice under section 147/148 of the Act, the Court is not to go into the merits of the controversy whether a particular income is taxable. Taking, the totality of the facts and circumstances of this case into consideration, I uphold the reopening of assessment u/s 148. Therefore, the ground No.1 of the appeal is dismissed". 10. In the result Ground No.1 of the assessee is dismissed. 11. Ground No. 2 and 3 relates to the addition of Rs. 22,65,625/- for gold ornaments, diamond jewellery and silver found during the course of search. These included 614.25 (net weight) of gold jewellery, diamond jewellery of 30 carrats and 3 carrots and silver ornaments weighing 2000 grams (net weight). 12. The Ld. Counsel for the assessee submitted that both the lower authori....
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....he 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 authorizing 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." 15. From the perusal of the above mentioned CBDT instructions which in our view provides a guideline to the search conducting team that no seizure should be made of the jewellery and ornaments found during the course of search proceedings u/s 132 of the Act, if the same have been duly declared in the wealth tax returns filed by the tax payer or where such ornaments are within the prescribed limits of 500, 250 or 100 grams as stated in the said instructions. 16. Now turning towards the facts of the present appeal we find that out of total seized jewellery of Rs. 22,65,625/- (being the value of seized jewellery as on the date of search), we find that the ....