Mohd. Yasin v. The Commissioner Of Income Tax, Jaipur & Anr

1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANBENCH 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. JHAVERIHON'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 thejudgment and order of the Tribunal whereby the Tribunal haspartly allowed the appeal of the assessee and dismissed theappeal of the Department. 2.The facts of the case are that the search operationswere carried out on 16.5.1997. During the course of searchoperations the residential and factory premises of theassessee were covered and certain assets were found andseized, besides incriminating papers. The notice u/s 158BCwas issued to the assessee on 20.7.1998 requiring theassessee to papers a true and correct return of his totalincome including the undisclosed income within 45 days ofservice of the notice. In compliance, no return was filed upto 16.3.1999 and therefore a show cause notice was issuedalongwith a notice u/s 142(1) of the Act on 16.3.1999requiring the assessee to furnish explanation with regard tothe assets found and seized from his premises and also toexplain all the incriminating seized papers. The return wasfiled on 29.4.1999 declaring therein undisclosed income ofRs.30 lakhs. While furnishing the return a brief note wasannexed describing therein the history of the assessee andalso the basis of showing such undisclosed income. The briefnote so annexed is reproduced hereunder for ready reference:- “1. The assessee was born in the year 1950 in apoor family. The assessee's Sh. Mohd. Umar wasdoing cycle repairing work and to meet thelivelihood the assessee started helping his father inhis work at a very early age. Thereafter theassessee started his own cycle repairing centre inthe year 1965 in Ramganj Bazar, Jaipur. He is stillpopularly known as Yasin Cyclewala in his area.The lady members of the family were also engagedin the job work of Purari & Bindai to support thefamily. 2.The assessee got married to Smt. RahmatBano in the year 1971. He has two daughtersnamely Yasmeen & Shaheen and one son namelyMohd. Arif Yasmeen got married to Mehrajudeen on29.3.1994 and Arif got married on 2.5.1997 toSabnam. The son of assessee Mr. Arif and son inlaw Mr. Mehrajudeen are assisting to assessee inhis work. 3.The assessee in course of time left the workof cycle repairing and started the business ofbrokerage of precious and semi-precious stonesand jewellery some time in the year 1989.Thereafter he started a proprietory concern in thename of M/s Umar Gems in the year 1993. The assessee has filed regular income tax return fromA.Y. 1992-93. 2.The assessee got married to Smt. RahmatBano in the year 1971. He has two daughtersnamely Yasmeen & Shaheen and one son namelyMohd. Arif Yasmeen got married to Mehrajudeen on29.3.1994 and Arif got married on 2.5.1997 toSabnam. The son of assessee Mr. Arif and son inlaw Mr. Mehrajudeen are assisting to assessee inhis work. 3.The assessee in course of time left the workof cycle repairing and started the business ofbrokerage of precious and semi-precious stonesand jewellery some time in the year 1989.Thereafter he started a proprietory concern in thename of M/s Umar Gems in the year 1993. The assessee has filed regular income tax return fromA.Y. 1992-93. 4.There was a search of assessee's premises on16.5.1997. In course of search certain loosepapers, bills and vouchers of his proprietoryconcern M/s Munar Gems were found and seized.However, the regular books of M/s Umar Gemswere not found since they were with theaccountant of the assessee. These books ofaccounts were produced before the ADIT on23.5.1997, in confirmation of which a letter dated27.5.1997 was filed to the ADIT. On the basis ofthese books the income for the A.Y. 1996-97 and1997-98 has been worked out. Since substantialsale during these years was export sales, theincome of the assessee from this concern was notchargeable to tax. For A.Y. 1997-98 due date offiling of return had not expired. This return wasfiled on 31.3.1999 at income of Rs.2330/- afterconsidering deduction u/s 80HHC at Rs.1406759/-.This income is taken as disclosed income in theblock return. For A.Y. 1996-97 also the total sale isexport sale. The return for this year was not filedbut the total income is NIL after consideringdeduction 80HHC at Rs. 421273/- copy of P &Laccount, Balance-sheet 80HHC certificate andcomputation of total income for this year isenclosed. 5.In course of search stocks of semi-preciousand precious stones valued at Rs.19,27,778/- wasfound and seized. Besides this, certain papersindicating the investment in properties, householdexpenses, marriage expenses etc. were found.From these papers it is not possible to work outyear wise positive income. Hence, the undisclosedincome for the block period is being worked out bydeductive method in which all the undisclosedinvestmentsandestimatedunexplainedexpenditure is aggregated. For this purposeinvestments held in the name of family members ofthe assessee are also considered in the hands ofthe assessee. In case of any such investment isconsidered in the hand of any other member,corresponding deduction be given in the assessee'scase. This amount is equal to income since incomeis either spent or invested. On this basis theinvestment/expenditure for the block period isdetermined as under:- a)Cash:- Total cash found was Rs.39,105/-from the residence of assessee. Out of which19,105/- was released and balance Rs.20,000/- isseized. The cash balance available as per cashbook of M/s Umar Gems as on 16.5.1997 isRs.21,301/- and further a sum of Rs.5,000/- isconsidered as the savings of family members. Thebalance of Rs.12,804/- is considered asunexplained. b) Stock:- Total stock of precious and semi-precious stones were found and seized was valuedat Rs.19,27,778/-. Out of which the book stock ason 31.3.1997 is Rs.96,586/-. The purchases from1.4.1997 to 15.5.1996 amounts to Rs.4,19,492/-.There is no sale during the period. Thus, stock asper books as on the date of search isRs.5,16,078/-.ThebalancestockofRs.14,11,700/- is considered as unexplained. a)Cash:- Total cash found was Rs.39,105/-from the residence of assessee. Out of which19,105/- was released and balance Rs.20,000/- isseized. The cash balance available as per cashbook of M/s Umar Gems as on 16.5.1997 isRs.21,301/- and further a sum of Rs.5,000/- isconsidered as the savings of family members. Thebalance of Rs.12,804/- is considered asunexplained. b) Stock:- Total stock of precious and semi-precious stones were found and seized was valuedat Rs.19,27,778/-. Out of which the book stock ason 31.3.1997 is Rs.96,586/-. The purchases from1.4.1997 to 15.5.1996 amounts to Rs.4,19,492/-.There is no sale during the period. Thus, stock asper books as on the date of search isRs.5,16,078/-.ThebalancestockofRs.14,11,700/- is considered as unexplained. c) Immovable properties:- During the block periodthe assessee has purchased residential house at38-39 Dhanna Das Ki Bagichi, Jaipur forRs.2,00,000/- approx. Further a sum ofRs.2,00,000/- was spent on repairs, addition andalteration from time to time. This residential plot ispurchased in the name of Rahmat and Arif. Thus,total investment in this property is estimated toRs.4 lakhs which is being offered in the blockreturn. Further a house in the name of Rahmat & Arif waspurchased in 1989-90 at 1375-76 Kamela Gali, MDRoad, Jaipur. At present this house is being used asworks office of M/s Umar Gems. Total investmentin this house is estimated to Rs.1.75 lakhs which isbeing offered in the block return. The assessee also have a house at Dhanna Das JiKi Bagichi purchased in the year 1994-95 in thename of Rahmat & Shaheen. This house waspurchased for Rs.1,11,000/-. Presently Sh.Mchrajudeen is living in this house. The investmentin this house is being offered in the block return ofthe assessee. d) Maruti Esteem:- During the block period theassessee's son Mr. Mohd. Arif has purchased aMaruti Esteem Car. This car was financed fromLloyds Finance Co. The assessee has invested following sums, which is offered in the blockreturn:- Booking amount 5000/-Deposit with Llyods Finance 190000/-Other charges & Insurance 25603/-Installments paid (2x22966) 45932/--266535/ e) Marriage expenses:- During the block periodtwo marriage were performed:- i) Miss Yasmeen, daughter of Sh. Yasin29.3.1994ii) Mr. Mohd. Arid, Son of Shri Yasin 2.5.1997 Both the marriages were performed locally and ina simple manner. Not more than 300 personsattended the ceremony. The food served wasaccording to the customs of Muslim community.Total expenditure on these two marriages and ascoming from the loose papers are estimated toRs.4 lacs which is being offered in the block return. f) Further a sum f Rs 2,22,961/- is being offeredadditionally to cover any other uncoveredexpenditure/investment and ot make the aboveundisclosed income offered in the block return to around sum of Rs 30 lacs. Therefore, if any otherassets, expenditure is found uncovered from loosepapers and statements the same be covered out ofthe additional income so offered. Accordingly, the above amount of Rs 30 lacs isincluded in the block return of Mohd. Yasin in a fairand reasonable manner. If department wants tocompute income in the individual hand of familymembers, then corresponding deduction be givenin the case of assessee. Further the totalundisclosed income for the block period is offeredto tax in the search year i.e. A.Y. 98-99 as the rateof tax is same for the entire block period. Ifdepartment computes year wise income thencorresponding deduction be given in A.Y. 98-99 tothat extent”. 3.This Court while admitting the appeal framed thefollowing substantial questions of law vide order dated6.3.2002:- Accordingly, the above amount of Rs 30 lacs isincluded in the block return of Mohd. Yasin in a fairand reasonable manner. If department wants tocompute income in the individual hand of familymembers, then corresponding deduction be givenin the case of assessee. Further the totalundisclosed income for the block period is offeredto tax in the search year i.e. A.Y. 98-99 as the rateof tax is same for the entire block period. Ifdepartment computes year wise income thencorresponding deduction be given in A.Y. 98-99 tothat extent”. 3.This Court while admitting the appeal framed thefollowing substantial questions of law vide order dated6.3.2002:- “Whether on the facts and in thecircumstances of the case, the Tribunalwas justified in holding that assessmentorder passed under section 158 BC/143(3)dated 16.08.1999 is not barred bylimitation as per explanation 2 to section158/BE (1) (b) of the Act?” “Whether on the facts and in thecircumstances of the case, the Tribunalwas justified in not allowing deductionunder section 80HHC on account of exportincome from business for the assessmentyear 1996-97 at Rs.4.23,073/- and forassessmentyear1997-98AtRs.14,10,700/- in view of the provisions ofSection 158 BA (3) of the Act?” “Whether on the facts and in thecircumstances of the case, the Tribunalwas justified in not allowing credit ofpurchases made between 31.3.1997 to16.05.1997 at Rs. 4.19,495/- from thestock fund during the course of thesearch?” “Whether on the fact and in thecircumstances of the case, the Tribunalwas justified in holding that credit ofincome can not be given for various familymembers for which no returns were filed?” 4.Counsel for the appellant Mr. Sanjay Jhanwar assistedby Mr. Prakul Khurana contended that out of the four issueswhich are raised only issue No.1 is to be considered and noother issues are consequential. Therefore, he has arguedonly question No.1. 5.Mr. Jhanwar contended that in view of the provisions ofSection 132(2) & Section 158 BE which are reproduced asunder:- “Section 132(2):- (2)The authorized officer may requisition theservices of any police officer or of any officer of theCentral Government or of both, to assist him for all orany of the purposes specified in sub- section (1) [orsub-section (1A)] and it shall be the duty of everysuch officer to comply with such requisition. Section 158 BE :- Time limit for completion of block assessment. 158BE.[33][(1) The order under section 158BCshall be passed— (a) within one year from the end of the month inwhich the last of the authorisations for searchunder section 132or for requisition undersection 132A, as the case may be, was executedin cases where a search is initiated or books ofaccount or other documents or any assets arerequisitioned after the 30th day of June, 1995,but before the 1st day of January, 1997; (b) within two years from the end of the monthin which the last of the authorisations for searchunder section 132or for requisition undersection 132A, as the case may be, was executedin cases where a search is initiated or books ofaccount or other documents or any assets arerequisitioned on or after the 1st day of January,1997. (2) The period of limitation for completion ofblock assessment in the case of the other personreferred to insection 158BDshall be— (a) one year from the end of the month in whichthe notice under this Chapter was served onsuch other person in respect of search initiatedor books of account or other documents or anyassets 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 inwhich the notice under this Chapter was servedon such other person in respect of searchinitiated or books of account or other documentsor any assets are requisitioned on or after the1st day of January, 1997.]” (2) The period of limitation for completion ofblock assessment in the case of the other personreferred to insection 158BDshall be— (a) one year from the end of the month in whichthe notice under this Chapter was served onsuch other person in respect of search initiatedor books of account or other documents or anyassets 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 inwhich the notice under this Chapter was servedon such other person in respect of searchinitiated or books of account or other documentsor any assets are requisitioned on or after the1st day of January, 1997.]” 6.The search warrant was issued on 15.5.1997 andsearch of factory premises concluded on 16.5.1997. However, on the panchnama prepared, restrain order waspassed on 14.8.1997 and again factory was searched on14.7.1997, valuation was done and last panchnama wasdrawn on 14.8.1997, therefore, it would be valid on01.08.1997 and limitation started on 31.08.1997. 7.He has taken us to the provisions of Section 132(2)and also 158BE and contended that in view of the decisionof Bombay High Court in the case of Commissioner of Income Tax vs. MRS. Sandhya P. Naik reported in (2002) 253 ITR 0534 wherein it has beenheld as under:- “5.Admittedly, only the following officers wereauthorised to conduct the search. Their names were : 1. Shri K. Ramesh, DDIT (Investigation), Belgaum ; 2. Shri M. L. Karmarkar, ADIT (Investigation), Belgaum; 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 executedbetween October 16, 1996, and October 20, 1996, andwhich expired thus on October 20, 1996. The warrantwas issued on October 7, 1996, and the search wasconducted continuously between October 16, 1996,and October 20, 1996. In between, the search wassuspended only during the late hours of the night. OnOctober 20, 1996, having seized all the relevantmaterials and valuables, the search party obviouslyhad come to the conclusion that there was no furthermaterial to be seized and no more search operation tocontinue. The search comes to an end when the searchparty leaves the premises after carrying with it theseized material and thus authorisation for search isfully implemented and execution is complete. For thisproposition, the Income-tax Appellate Tribunal Bench,Pune, took support of the decision of the BangaloreBench in the case of Kirloskar Investments and FinanceLtd. v. Asst. CIT [1998] 67 ITD 504. In the presentcase at hand, the cupboard in which 45 kgs. of silverarticles were kept was sealed by making an orderunder Section 132(3) of the Income-tax Act. The authorised officers were obviously very much aware ofthe contents of the cupboard and the nature of thearticles in view of the inventory made by them. Theyhad also come to the conclusion that the said 45 kgs.of silver articles need not be seized. There was nopractical impediment to seizure of the said 45 kgs. ofsilver, if it was considered by the authorised officer asnecessary. The contention of learned counsel for theDepartment that it was not practical to seize hugequantity of silver at odd hours, was rightly held to beuntenable by the Income-tax Appellate Tribunal,because at the same odd hour, the search party seizedand removed from the premises of the assessee 5,729gms. of gold ornaments, cash of Rs. 1,69,000 andbooks of account, weighing nearly 500 kgs. on October26, 1996, 6 kgs. of silver articles in the said cupboardwere released, a panchanama was made and a furtherorder under Section 132(3)passed with respect to thesaid sealed cupboard and the seal was placed again.Thus, the Income-tax Appellate Tribunal rightly heldthat the proceedings. On October 26, 1996, could notbe considered as part of the execution of the searchproceedings which concluded on October 20, 1996.Indeed, by simply staring in the panchanama that thesearch is temporarily suspended, the authorised officercannot keep the search proceedings in operation bypassing a restraint order under Section 132(3).Reliance placed by the Department on the judgment ofthe Allahabad High Court in the case of Sriram Jaiswalv. Union of India [1989] 176 ITR 261, was correct. Therestraint order in view of this authority cannot becancelled and renewed from time-to-time. Actionunder Section 132(3) of the Income-tax Act can beresorted to only if there is any practical difficulty inseizing the item which is liable to be seized. Whenthere is no such practical difficulty the officer is leftwith no other alternative but to seize the item, if he isof the view that it represented undisclosed income.Power under Section 132(3) of the Income-tax Actthus cannot be exercised so as to circumvent theprovisions of Section 132(3) read with Section132(5) of the Income-tax Act. The position has becomemuch more clear after the insertion of the Explanationto Section 132(3) effective from July 1, 1995, that arestraint order does not amount to seizure. Therefore,by passing a restraint order, the time limit available forframing of the order cannot be extended. 7.As far as the validity of the panchanama isconcerned, one has to look to the provisions of theCriminal Procedure Code, 1973. The panchanama is tobe drawn as far as possible, keeping in mind theprovisions of the Criminal Procedure Code. It has to besaid that obtaining of panch witnesses was not animpossible task for Mr. Abrol, who is supposed to have conducted the deemed seizure operation on December13, 1996. In fact, the Department itself has admittedthat there were many defects in the panchanama. Theywere repeatedly saying that there were many defectsin the panchanama and still were saying that "believein it and accept it", is not acceptable. Having heard both the advocates at length and havinggone through the impugned order, so also the variousauthorities cited by Mr. Rivonkar, in our opinion, nofault can be found with the impugned order of theIncome-tax Appellate Tribunal, Pune Bench. Theimpugned assessment indeed is barred by limitationand also invalid. In view of this, therefore, theimpugned assessment was rightly annulled. Nointerference is therefore warranted.” conducted the deemed seizure operation on December13, 1996. In fact, the Department itself has admittedthat there were many defects in the panchanama. Theywere repeatedly saying that there were many defectsin the panchanama and still were saying that "believein it and accept it", is not acceptable. Having heard both the advocates at length and havinggone through the impugned order, so also the variousauthorities cited by Mr. Rivonkar, in our opinion, nofault can be found with the impugned order of theIncome-tax Appellate Tribunal, Pune Bench. Theimpugned assessment indeed is barred by limitationand also invalid. In view of this, therefore, theimpugned assessment was rightly annulled. Nointerference is therefore warranted.” 7.1Decision of this Court in case of Commissioner ofIncome Tax vs. Om Prakash Mandora reported in (2014) 222TAXMAN 0138 (Rajasthan) the other decision of GujaratHigh Court in the case of Income Tax Officer vs. VXL IndiaLimited reported in (2009) 312ITR 187 (Guj.), in case ofMurali Export House & Ors. vs. Commissioner of Income Taxreported in (2000) 159 ITR 0257, in case of Commissionerof Income Tax vs. Gupta Fabs reported in (2005) 274 ITR0620, in case of Commissioner of Income Tax vs. LateManohar lal soni reported in (2009) 316 ITR 0365 and lastjudgment of Madras High Court in the case of RakeshKumar Jain vs. Joint Commissioner of Income Tax reportedin (2012) 254 CTR 0576 and more particularly in paragraphno.5 & 13 holding as under:- “There could be only one authorisation and apanchanama drawn as regards the conduct of thesearch, i.e., once when the search party concludedthe search and leaves the premises after carryingwith them the seized material, the authorisation forthe search is full implemented upon and executioncompleted. There afterwards, if the Department has to enter the premises again, as by way of search,certainly, one requires fresh authorisation;however, no such authorisation is required to enterthe premises to inspect the materials, which are thesubject matter of prohibitory order or restraintorder. The said order itself acts as an authorisationto enter the premises and inspect the materials,which are the subject matter of those orders.However, after entering the premises of suchperson, he has to confine his actions only forinspection of the subject-matter of prohibitoryorder or restraint order. He cannot search thepremises over again. Any material seized after suchinspection would be the undisclosed income for thepurpose of the block assessment in pursuance ofsearch under Section 132(1) of the Act. Thus, thepanchanama evidencing such inspection andseizure would be the last panchanama in respect ofthe said premises. But for the purpose of limitationunder Section 158BE, it would not be the lastpanchanama drawn in proof of conclusion of search,as defined in Explanation 2 to Section 158BE. Forthe purpose of limitation, there can by only onesearch and one panchanama. Merely because, more than one panchanama isdrawn in the given case on one authorisation, onecannot construe that the subsequent and the last ofthe panchanama issued as one flowing out of thesearch as a last of the panchanama referrable toExplanation (2) to Section 158BE. Once thewarrant of authorisation has been issued and thepremises is searched and the search party leavesthe premises, there is the end of the search andwhat could be postponed is only seizure of thearticles and issuance of prohibitory order; however,limitation for the completion of the blockassessment begins on the conclusion of the searchand issuance of panchanama and in case of singleauthorisaiton, the moment such party leaves thepremises by drawing of the panchanama notingconclusion of the search, the limitation periodbegins.” 8.He further contended that the limitation starts from31.8.1997 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:- 10. In the affidavit-in-reply, it has been statedthat the stocks which were found in the premiseswere not seized because the petitioners had notbeen able to explain the existence of the stocks byany documentary evidence. It was further statedthat the petitioners had not come forward toidentify the items of stock from the purchasevouchers and to give the value of the variousitems. It is the case of the respondents, whilejustifying the authorisation under s. 132(1) thatthe entries in the books which were retained didnot show possession of the items of stockcorrectly. There were a large number of handicraftitems some of which were antique which thepetitioners could not identify or co-relate with thepurchase vouchers which were available withthem. This may be a ground or good reason foreffecting seizure but, in our opinion, it cannot besaid that this is a valid ground for exercisingjurisdiction under s. 132(3). Sec. 132(3) can beresorted to if there is any practical difficulty inseizing the item which is liable to be seized. Ifthere is no practical difficulty, then an authorisedofficer has the jurisdiction and duty to seize thebooks of account, other documents, money,bullion, valuable articles, etc., which are found asa result of the search, if no explanation is comingforward in respect thereof. Therefore, when thesearch was effected on 11[th] Feb., 1991, and thepetitioners were unable to give any validexplanation as demanded by the respondents,then the only power which could have beenexercised or should have been exercised by theauthorised officer was to effect seizure. It couldnot be said that, because no explanation is beingoffered by the petitioners, it is impracticable toeffect seizure. When no explanation or anunsatisfactory explanation is offered and valuablearticles are found at the time of search, then theauthorised officer would be fully justified ineffecting seizure. Once seizure is effected, theperiod of limitation starts and an order under sub-s. (5) of s. 132 has to be passed within thestipulated period. In our opinion, the power under s. 132(3) cannotbe so exercised as to circumvent the provisions ofs. 132(1) r/w sub-s. (5) thereof. When a search isconducted and valuable movable articles are foundwhich are liable for seizure, then they should beseized. Because such seizure was not effected due to their physical characteristics, Parliamentthought it necessary to enact the second provisoto s. 132(1). Whereas previously due to theweight, volume or physical characteristics, onlyrestraint orders under s. 132(3) were passed, noww.e.f. 1[st] April, 1989, such restraint orders arebeing regarded as deemed seizure under sub-cl.(iii) of s. 132(1). The intention of the legislature isvery clear, viz., it is the duty of the authorisedofficers to effect seizure wherever any valuablearticle or thing is found during the course of thesearch and the words “ not practicable to seize”used in s. 132(3) have to be understood in thissense, viz., where there is a practicable difficultyin effecting seizure, then an order under s. 132(3)can be passed. Not knowing the value of thearticles or whether they are antique or not cannotbe regarded as a practical difficulty on the part ofthe authorised officer in effecting seizure. In ouropinion, therefore, the orders which were issuedunder s. 132(3) were not validly issued and thegoods which were found at the premises couldhave been seized by actually seizing the articles orby making an order of restraint under the secondproviso to s. 132(1) of the Act. This was not donein the present case. Whenever there is a seizure of articles under s.132(1) including a deemed seizure, an order undersub-s. (5) has to be passed within 120 days of theseizure. Where on such order is passed, the goodshave to be released. The period of 120 days cameto an end on or about 8[th] June, 1991. As no orderunder s. 132(5) has been passed, the said goodsare liable to be released. 11.There is another reason for ordering therelease of the said goods even on the assumptionthat a valid order under s. 132(3) was passed.Firstly, when an order under s. 132(3) is issued, itmust, in our opinion, be recorded as to why it isnot practicable to effect seizure. This is for thereason 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 20[th]June, 1991, reasons were recorded by the CITwhile granting extension. Be that as it may, wefind that, just prior to the expiry of 60 days of theorder, dt. 11[th] Feb., 1991, the order under s.132(3) was revoked on 9[th] April, 1991, and a freshorder in respect of the same goods was again passed on 9[th] April, 1991. This exercise wasrepeated on 6[th] June, 1991.In our opinion, it is not permissible to do so. Theorders which are passed under s. 132(3) mayhave a very far-reaching effect on the business ofan assessee. The order of restraint may adverselyaffect the business and, therefore, adequatesafeguards are sought to be provided in the Act bythe insertion of the provisions of sub-s. (8A) in s.132. In order that the restraint order must not becontinued indefinitely, sub-s. (8A) of s. 132provides that the restraint order can be continuedonly if, before the expiry of 60 days, and forreasons to be recorded the CIT grants anextension. The provisions of sub-s. (8A) cannot beby-passed or rendered nugatory by revoking anorder under s. 132(3) and thereafter passinganother order on the same date. On 11[th] Feb.,1991, an order under s. 132(3) has been passed.The 60 days would expire on or about 10[th] April,1991. If the order under s. 132(3) was to becontinued, then the CIT should have grantedapproval under sub-s. (8A). What was done in thepresent case was to cancel the order dt. 11[th] Feb.,1991, on 9[th] April, 1991, and then to pass a freshorder under s. 132(3) on that very date. Noapproval of the CIT was sought. The same thinghappened on 6[th] June, 1991. The order under s.132(3) was, in effect, extended twice without anyconcurrence from the CIT and merely on the Asstt.Director of Income-tax deciding to revoke theorder and passing a fresh order. The provisions ofsub-s. (8A) of s. 132 were thereby circumvented.In our opinion, once an order under s. 132(3) hasbeen passed, then the limitation periodcommences and such order cannot be continuedunless and until the provisions of s. 132(8A) aresatisfied. 12.It has been contended by learned counsel forthe respondents that, on 9[th] April, 1991, and 6[th]June, 1991, the earlier orders of restraint wererevoked because the Department officials alongwith the officials of the Archaeology Departmentwanted to inspect the goods. In our opinion, evenwhen an order under s. 132(3) has been passed,the Department officials are not restrained fromexamining the goods. An order under s. 132(3)restrains the owner or the person in possession ofthe goods from removing, parting with possessionor dealing with them. The order of restraint is 12.It has been contended by learned counsel forthe respondents that, on 9[th] April, 1991, and 6[th]June, 1991, the earlier orders of restraint wererevoked because the Department officials alongwith the officials of the Archaeology Departmentwanted to inspect the goods. In our opinion, evenwhen an order under s. 132(3) has been passed,the Department officials are not restrained fromexamining the goods. An order under s. 132(3)restrains the owner or the person in possession ofthe goods from removing, parting with possessionor dealing with them. The order of restraint is effective against the owner or the person inpossession thereof and is not aimed at theDepartment itself. By issuing an order under s.132(3), the Department is not restrained fromexamining the goods in respect of which arestraint order has been passed. There was novalid reason, therefore, for seeking to revoke theorders on 9[th] April, 1991, and 6[th] June, 1991.Seeing the dates when such auction was taken, wefind considerable force in the contention of learnedcounsel for the petitioner that this device wasresorted to solely with a view to circumvent theprovisions of s. 132(8A). The first revocationeffected on 9[th] April, 1991, only about one or twodays before the expiry of 60 days. Similarly, thesecond revocation of 6[th] June, 1991, was alsoeffected only about one or two days before theexpiry of 60 days from 9[th] April, 1991.We are, therefore, of the opinion that the approvalof the CIT not having been obtained under s.132(8A), the continuation of the restraint orderunder 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 FinanceLtd. & ors. vs. Commissioner of Income Tax & ors. reportedin (2016)384 ITR 1 (SC) and contended that in view of therecent decision of Supreme Court, the issue is now decidedin favour of the Department. 10.In view of the concurrent finding of the Authority, thesearch 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 ourspecific attention to the paragraph no. 27, 29 & 30 of ITATholding as under:- 27. Rival submissions have been head in the lightof material placed on record. The assessee's wife 9.Counsel for the respondent Mr. Mehta has taken us to the decision of Supreme Court in the case of VLS FinanceLtd. & ors. vs. Commissioner of Income Tax & ors. reportedin (2016)384 ITR 1 (SC) and contended that in view of therecent decision of Supreme Court, the issue is now decidedin favour of the Department. 10.In view of the concurrent finding of the Authority, thesearch 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 ourspecific attention to the paragraph no. 27, 29 & 30 of ITATholding as under:- 27. Rival submissions have been head in the lightof material placed on record. The assessee's wife Smt. Rehmat Bano gave a statement that monthlyhouse hold expenses of family are Rs. 15,000/-.She is not merely a Pardanshin lady but is found tohave income from business. Contributions havealso been claimed by her towards house holdexpenses. Under such circumstances, thestatement given by her constitutes informationavailable with the assessing officer for the purposeof computation of undisclosed income of the blockperiod of the assessee. However, the contributionsfor house hold expenses have not beensubstantiated with any cogent material. Returnswere also not filed before date of search. Findingsof AO and CIT(A) on this aspect cannot be lightlydisturbed. Assessee's wife in her statement alsostated that the amount for house hold expenses ispaid as per needs by her husband. Expensesadmitted are at Rs. 15,000/-p.m. She did not saythat this was for the entire block period. Assessee'svisits to foreign countries, acquisition of house holdgoods esteem car and marriages are only recentincidents and cannot be said to be referable to alonger period, nor it could be said that theassessee had been enjoying a stylish life over theentire block period so as to form any good basis forestimation of house hold expenses. The assessee infact had been running a cycle repair shop in theblock period itself and known as Yasin Cyclewala.This has also not been denied by the department.However, the statement of assessee's wife isindicative of the current expenditure of Rs.15,000/- per month and the AO could, therefore,estimate the expenditure in the immediatelypreceding year i.e. preceding year 1996-97 and tothe date of search. Mere payment of school feescannot be said to constitute sufficient materialmore particularly when the assessing officerhimself has made the statement of the lady as thebase and not the material and no estimation ispermissible dehors material. Accordingly, weuphold the estimation of house hold expenses forthe previous year 1996-97 to the date of search @Rs. 15,000/- per month and accordingly theaddition of Rs. 1,48,500/- for this period as workedout by the assessing officer at internal page 29 ofhis order is confirmed. The assessing officer hasalso given a chart at internal page 29 of its orderfor claim of withdrawals for house-hold expensesby the assessee himself during the block period outof which Rs. 3,68,850/- are relatable to the previous year 1987-88 to 1995-96 and the samecould be considered as house hold expensesincurred by the assessee. Since the assesseehimself has disclosed only Rs. 2,53,850/- for theprevious years 91-92 to 95-96 for which, the AO isfound to have given credit, the balance of Rs.1,14,800/- shall also constitute undisclosed incomeof the block period. With this out of the totalundisclosed income of Rs. 9,74,650/- sustained bythe CIT(A) only Rs. 2,63,300/- is confirmed andbalance is directed to be deleted. previous year 1987-88 to 1995-96 and the samecould be considered as house hold expensesincurred by the assessee. Since the assesseehimself has disclosed only Rs. 2,53,850/- for theprevious years 91-92 to 95-96 for which, the AO isfound to have given credit, the balance of Rs.1,14,800/- shall also constitute undisclosed incomeof the block period. With this out of the totalundisclosed income of Rs. 9,74,650/- sustained bythe CIT(A) only Rs. 2,63,300/- is confirmed andbalance is directed to be deleted. 29.On the other hand, the ld. DR has opposedthe submissions of the assessee and has also filedwritten submissions. He has relied upon thedetailed findings given by the assessing officer aswell as the CIT(A) and contends that the factsmentioned in the orer may be considered in detail.The ld. DR also contends that there was sufficientmaterial found as a result of search on the basis ofwhich the assessing officer could have madeestimation. Reliance has been placed on thedecision or Rajendra Pd. Gupta v/s CIT, 25 TaxWorld 87 and certain other decisions, referred inthe written submissions filed by him. 30.Rival submissions have been heard withreference to the case laws relied upon. During thecourse of search, evidence with respect ofexpenditure incurred on celebration of marriage oftwo children namely, Yasmeen, daughter and Arif,son, during the block period has been foundrecorded in the seized Annex. A-6 and A-5. Nothingwas disclosed in the regular returns. However, theassessee disclosed Rs. 4,00,000/- as undisclosedincome in the block return filed by him on estimatebasis as the expenditure found through seizedannexure A-6 for the marriage of daughter on29.3.94 and was calculated by the assessee atRs.2,26,124/- and through seized Annex. A-5 forthe marriage of his son on 2.5.97 the expenditurewas calculated at Rs. 1,53,019/- as per detailsgiven at assessee's written submissions 9 & 10.However, in the block return filed, the assessee hadappended a note mentioning therein that not morethan 300 persons attended the ceremony, whichwas one of the basis of the total estimate ofexpenditure of Rs. 4,00,000/- on both themarriages. No split up for this amount was givenby the appellant though the function comprised oftwo different previous years in the block period.From the loose papers so found and seized, the assessing officer noticed that the assessee hasomitted to consider some of the seized papers andin some cases estimated the expenditure on lowerside besides not including any expenditure oncertain essential items which are compulsorilyincurred in the marriage but notincluded by theassessee in the estimates given. The assessingofficer also found that the assessee has paidservice charges for ice cream to 900 persons whilethe assessee has claimed attendance of only 300persons. Further more, consumption of mawaweighing 1,010 kg. Curd 265 kg. and milk 500 kgand their purchase 3-4 times on different dates onthis occasion and consumption of 250 kg. milk forcoffee alone was sufficient material to show thestay of guest for 2-3 days and incurring of higherexpenditure by the assessee than his ownestimates. For the material available on record andreasons given, the assessing officer was competentto make estimate of expenditure. From the order ofthe CIT(A) it is evident that the invitation card forthe marriage of daughter indicates that themarriage of these girls and one boy wasceremonised together and this was not at theinvitation of appellant alone. The assessee did notshow any contribution from any other person nordid he place any material that it was a jointmarriage for which expenditure can be said to havebeen met by any other person. The CIT(A) tooknote of all such glaring facts for holding that theassessing officer has made a bonafide estimate onthe basis of seized documents, statements andsurrounding circumstances. He has, however,observed that by its very nature estimate may beunder estimate or over estimate. The assessee'scounsel also has contended that certain expensesviz. on milk, electricity, tent and decoration, list ofdowry items etc. have already been considered bythe assessee in his estimates. Such a claim doessupport his plea to some extent that the estimatesare excessive we, therefore, keeping in view thetotality of the facts and circumstances as broughtbefore us, consider the estimate of expenditure atRs. 5,50,000/- to be reasonable as against theestimates of Rs. 7,00,000/- in the marriage ofassessee's daughter and Rs. 2,50,000/- in themarriage of assessee's son as against Rs.3,00,000/- confirmed by the ld. CIT(A). Theassessee gets a total relief on Rs. 2,00,000/-.” 19 12.He further contended that in view of the specificaverments, the search concluded and therefore, this case isdistinguishable in view of the decision of the Delhi HighCourt in VLS Finance Ltd. and South Asain Enterprises Ltd.Vs. The Commissioner of Income Tax and Dy. Commissionerof Income Tax reported in 289 ITR 286 (Delhi) which hasspecifically considered the decision of Bombay High Court inCommissioner of Income Tax vs. MRS. Sandhya P. Naikreported in (2002) 253 ITR 0534 and held as under: 19 12.He further contended that in view of the specificaverments, the search concluded and therefore, this case isdistinguishable in view of the decision of the Delhi HighCourt in VLS Finance Ltd. and South Asain Enterprises Ltd.Vs. The Commissioner of Income Tax and Dy. Commissionerof Income Tax reported in 289 ITR 286 (Delhi) which hasspecifically considered the decision of Bombay High Court inCommissioner of Income Tax vs. MRS. Sandhya P. Naikreported in (2002) 253 ITR 0534 and held as under: “The respondents could have, on the very first dayof the search, seized all relevant and irrelevantdocuments and books of the petitioners, but theydid not do so. We are of the view that theirdecision on this (in favour of the petitioners)cannot be used against them. We have also keptin mind two facts, namely, that even by adoptingthis procedure, the Respondents did not exceedthe 60 day limit as provided by Section 132 (8A)of the Act and that for making the assessmentorder the Respondents had still more thanadequate time available, making it unnecessaryfor them to resort to any subterfuge so early on.Consequently, we are of the opinion that theRespondents did not complete the search on 22[nd]June, 1998 as alleged by the Petitioners, nor didthey unduly prolong it. The search concluded on5[th] August, 1998 and so in terms of Explanation 2to Section 158BE of the Act the period oflimitation would being from the end of August,1998, that is, 31[st] August, 1998 onwards. TheSecond issue raised by learned counsel for thePetitioners would stand answered accordingly.” 13.W