Rajasthan High Court - Jaipur
Ashok Kumar Soni vs Deputy Cit on 31 May, 2001
Equivalent citations: (2001)72TTJ(NULL)323
ORDER
S.R. Chauhan, J.M. This appeal by assessee for the block period 1987-88 to 1997-98 (upto 3-1-1997) is directed against the order of learned Commissioner (Appeals), Jodhpur, dated 3-8-1999.
2. The facts in brief, as alleged and revealed from record are that a search under section 32(1) was conducted on 3-1-1997, at the residential premises and business premises of Shri Shree Chand Soni, assessees father. Shri Shree Chand Soni is residence is in the house named "Kailash Bhawan", belonging to his elder son Ashok Kumar Soni. Shri Shree Chand Soni's residing in that house along with both his sons including Shri Ashok Kumar Soni, the assessee, the eldest son and family. The warrant of search was issued by Director (Inv.) under section 132(1) of the Income Tax Act, 1961 authorising search in the case of Shri Shree Chand Soni and family residing in Kailash Bhawan. During the course of search, statement of Shri Shree Chand Soni (Annexure 1/1 to 1/4 and 2/1 to 2/5) as also of Shri Ashok Kumar Soni, the assessee (pp 1 to 4 of revenues PB) were recorded. The statement of Shri Shree Chand Soni was ratified by Shri Ashok Kumar Soni. During search, some incriminating documents/materials were also found including Annexure A-1/5 which contained bills, in the name of assessee, relating to purchase of building material, Shri Shree Chand Soni disclosed, in his statement, an additional income of Rs. 26,74,720 in respect of various assets and investments. This disclosure of Rs. 26,74,720 as income from undisclosed sources, included income of Rs. 14,40,000 on account of unexplained investment in construction of house, which related to his son Shri Ashok Kumar Soni, the present assessee. The assessing officer issued notice to assessee under section 158BC read with section section 158BC on 16-10-1998 (Annexure 7), calling for return and the same was served on assessee the same day. In compliance thereof, the assessee filed return for the block period on 2-11-1998, showing undisclosed income of Rs. 7,50,000. But this return was filed under protest objecting/protesting because the notice issued and served on the assessee was under section section 158BC read with section section 158BC . Thereafter, another notice under section section 158BC was issued on 5-11-1998, which was served on assessee on 14-11-1998, and in response thereto, the assessee filed return for the block period on 20-11-1998, showing undisclosed income of Rs. 7,50,000 and again the assessee mentioned the same to be under protest. The assessing officer completed the block assessment under section section 158BC /143(3) of Income Tax Act, 1961, on 28-1-1999, wherein the assessing officer computed the undisclosed income of assessee for the block period at Rs. 14,50,000 and this was in respect of unexplained investment in construction of the house. The assessee preferred appeal before the learned Commissioner (Appeals), who, vide his impugned appellate order dated 3-8-1999, dismissed the assessees appeal. Hence the assessee is in appeal before the Tribunal.
3. We have heard the arguments of both the sides and also perused the records.
4. The assessee-appellant has raised as many as 16 grounds of appeal before the Tribunal.
5. Ground No. 1 is general as has also been submitted by the learned authorised representative of assessee during the arguments that this ground is general, and calls for no specific decision on the part of the Tribunal.
6.1. Ground No. 2.1 disputes the learned Commissioner (Appeals)s finding (para 3.1 on p. 9 of his order) that the search and seizure was valid under section 132(1) of the Income Tax Act in the case of assessee-appellant.
6.2. Ground No. 2.2 disputes the learned Commissioner (Appeals)s finding that the search warrant issued in the name of assessees father, Shri Shree Chand Soni and family was a valid search warrant, with respect to assessee under section 132(1) and consequential assessment under Chapter XIV-B. 6.3. Ground No. 2.3 disputes the learned Commissioner (Appeals)s finding to the effect that search is not justiciable.
6.4. Ground No. 2.4 disputes the learned Commissioner (Appeals)s finding that the assessing officer has jurisdiction to assess assessee under Chapter XIV-B and to assessee his undisclosed income thereunder.
6.5. Ground No. 2.5 disputes the learned Commissioner (Appeals)s finding that the notices issued by assessing officer under section section 158BC read with section 158BD dated 17-9-1998, not served on assessee but served on assessees brother Shri Satya Prakash, notice issued under section section 158BC read with section 158BD dated 16-10-1998, served on assessee and the notice issued under section section 158BC dated 5-11-1998, served on assessee were valid notices conferring jurisdiction on assessing officer to make assessment under section section 158BC /143(3).
7. As all the sub-parts of ground No. 2 are inter-related and assail the legality/validity of search, search warrant notices issued and assessing officers jurisdiction to assess with respect to assessee-appellant, so we may preferably and for convenience as well, take them up all together for discussion/decision.
8. The learned authorised representative of assessee has contended that section 132(1)(c) refers to "any person" and so the search would be in the case of any person. He has contended that the term person has been defined in section 2(31). He has contended that no independent search could be authorised in the case of assessee. He has contended that section section 158BC can be invoked only when an independent search is initiated. He has contended that residential house is not a hidden asset. He has contended that this construction of house was also discussed and assessed also in the hands of assessee in assessment years 1991-92 upto 1996-97. He has contended that the issue was raised before the learned Commissioner (Appeals) also but the learned Commissioner (Appeals) instead of going into the merits of the issue of legality/validity of search warrant only held that it was not justiciable. The learned authorised representative of assessee has referred to his w/s furnished before learned Commissioner (Appeals) as placed on pp. 36 to 47 of assessees PB, as also on pp 49 to 58 of assessees PB. In his support, he has cited the following decisions :
1. Dr. A.K. Bansal v. Asstt. CIT (2000) 73 ITD 49 (All-Trib) (TM);
2. Microland Ltd. v. Asstt. CIT (1999) 67 ITD 446 (Bang-Trib);
3. CIT v. Tarsem Kumar (1986) 161 ITR 505 (SC);
4. Sardar Parduman Singh v. Union of India (1987) 62 CTR (Del) 59 : (1987) 166 ITR 115 (Del);
5. M.K. Gabriel Babu v. ADI, IT (1990) 186 ITR 437 (Ker); and
6. L.R. Gupta v. Union of India (1992) 194 ITR 32 (Del).
He has contended that authorisation for search could not have been made in this case, that is in the name of assessee, so when there is no initiation of search against assessee there could not have been any application of section section 158BC nor even of Chapter XIV-B and all this will not apply in the case of present assessee. He has contended that this Chapter XIV-B could apply only when either there was search under section 132 or requisition under section 132A whereas in the instant case in the case of present assessee, there is neither of the two.
9. Regarding point of argument No. 2 to the effect that no such warrant was issued in the name of assessee, the learned authorised representative of assessee has cited Urmila Chandak & Ors. v. Assistant Commissioner (1998) 60 TTJ (Mad-Trib) 758, Smt. Jatan Bai Baid v. Assistant Commissioner (1998) 96 Taxman (Magazine section) 24 (Nag). He has contended that no such search warrant had been issued in the name of assessee, Shri Ashok Kumar.
10. Regarding point of argument No. 3 that issuance of notice under section section 158BC was unlawful in this case, the learned authorised representative of assessee has contended that if assessing officer wants to proceed under section 158BD then it is mandatory, that there should be satisfaction of assessing officer and that satisfaction should be recorded in writing. But the record shows the departments case is not of section 158BD and rather it is of section section 158BC . He has contended that the learned Commissioner (Appeals) has also simply referred to section 158BD on p. 10 of his order and the assessing officer has also simply made a reference to section 158BD on pp. 2 and 3 of assessment order. But the mere mention of section 158BD in the notice read with does not make the notice to be under section 158BD.
He has cited 27 ITC 73, 11 ITR 290 (sic), Ajit Jain v. Union of India (2000) 242 ITR 302 (Del).
11. He has contended that non-striking off/cutting the non-applicable portion of search warrant results in non-application of mind and renders the search invalid. He has cited Dwarka Prosad Agarwalla v. Director of Inspection (1982) 137 ITR 456 (Cal), Jagmohan Mahajan & Anr. v. CIT & Ors. (1976) 103 ITR 579 (P&H). He has contended that even if the search warrant contains mention of "and family", but even then it cannot be a valid search warrant.
12. The learned authorised representative of assessee has referred to section section 158BC and contended that this section provides for assessment of undisclosed income as a result of search under section 132 or requisition under section 132A and that, unless search or requisition is there, there can be no assessment of undisclosed income. He has contended that the accrual of jurisdiction should be specified as to whether it is under section section 158BC or to under section 158BD. He has cited, Premlata Kedia v. Deputy CIT 22 Tax World 481 (Jp) and has also filed copies of a number of other citations on this count. He has contended that the defect in notice pertains to substantive requirement and so it is not curable under section 292B. He has cited Monga Metals (P) Ltd. v. Assistant Commissioner (2000) 67 TTJ (All-Trib) 247.
13. The learned Departmental Representative of revenue has contended that search was duly authorised by Director. Investigation, Jaipur under section 132(1) of Income Tax Act, 1961. He has contended that the exercise of power under section 132(1) is administrative and not judicial or quasi-judicial and so not justiciable. In support, he has cited Income Tax Officer v. Seth Bros. & Ors. (1969) 74 ITR 836 (SC) 845. He has contended that if administrative power is wrongly exercised then that can be challenged in writ in High Court and not justiciable before Tribunal. He has contended that as regards "reasons to believe" appearing in section 132(1), the Director had information with him which formed basis for reasons to believe and it was that information which is collected by Investigation Wing and it was on that basis that the search warrant was issued. He has referred to p. 20 of revenues PB containing Panchnama and has contended that it is revealed from this Panchnama that the search warrant was issued against "Shri Shree Chand Soni and Family" mentioning the specific place, that is. Kailash Bhawan and the term "family" conveys all members of his family residing in that house. He has contended that the department does not know the names of all the members of his family and that the secrecy is also to be maintained. He has contended that the term "family" includes parents and children living together. He has contended that in the instant case, in the Kailash Bhawan, the entire family was residing together and the statement of Shri Shree Chand Soni was recorded at the commencement of search wherein he has specifically stated that both of his sons are residing with him and so assessee also falls within the search legally. He has contended that thus there was a legal search against assessee also. He has contended that the statement was recorded on oath, the oath was administered and no abnormal delay in recording the statement was there and no duress/question was there. He has contended that section 132(4) provides that the authorised officer may examine any person in possession of any article or thing and that the statement so recorded may be used in evidence. He has contended that after 1-4-1989, the scope has been further enlarged by Explanation appended below sub-section (4) of section 132. He has also contended that the statement of Shri Shree Chand Soni was recorded regarding this house in which the entire family has been residing. He has contended that the search party recorded the statement of almost all the persons residing in that house and in the presence of all the family members. He has contended that as the search against assessee is legally valid so Chapter XIV-B will apply. He has also contended that the names of all the members of family are generally not known so normally the search warrant is issued in the name of head of family along with "and family" and so there is nothing wrong in this regard. He has also contended that the assessee filed two returns. He has contended that the notice was originally issued under section section 158BC read with section 158BD and his return of income was filed by assessee on 2-11-1998, mentioning therein the date of notice as 16-10-1998, and thus the assessee made compliance of the said notice. He has contended that the assessee then filed second return on 20-11-1998, which was in compliance of notice dated 5-11-1998, served on assessee on 14-11-1998, and the assessee has paid tax also. He has contended that in both the returns the assessee showed the cost of consideration at Rs. 14.50 lakhs and Rs, 8 lakhs having been recorded in the books. The balance was surrendered in the return and tax was also paid. He has contended that once the assessee has filed the return, that shows the assessee has submitted to the jurisdiction of assessing officer. The learned Departmental Representative has referred to section 124(3)(a) and contended that the challenge to jurisdiction of assessing officer could have been made only up to one month from the date of service of notice. He has contended that the assessee having not challenged the jurisdiction of assessing officer within one month from the service of notice, the assessee now has no right to challenge the same. He has contended that as regards putting of a note that the return is being filed in protest, the return becomes of two parts, one being in compliance giving various details as required, and the other part, containing the protest. He has contended that there is no provision in the Act to file return under protest. He has contended that since the assessee has made compliance of notice and compliance thereafter also and tax has also been paid, so the endorsement of protest on return be ignored and it becomes meaningless. Regarding jurisdiction, he has referred to decision of State of Karnataka v. Krishna G. Srinivasa Kulkarni 2 SCC 558 as mentioned in the Commentary of Chaturvedi and Pittisaria Vol. III. He has also cited K.P. Paulose & Co. v. CIT (1998) 230 ITR 798 (Ker). He has also contended that even if there be any mistake in mentioning relevant section, that does not invalidate the assessment. He has contended that section section 158BC is the relevant section applicable in assessees case. He has contended that during search, various books were seized and Annexure A-1 is a long list wherein A-1/5 relates to Ashok Kumar Soni, the assessee, and on the basis of the documents seized, the statement of assessees father Shri Shree Chand Soni was recorded (p. 6 of revenues PB). He has contended that due to the admission and surrender, the department has ignored enquiry into the facts relating to the seized papers. He has contended that assessees father also stated that he will get the sonss signature also and that the statement of Shri Shree Chand Soni containing admission and surrender has also been ratified by assessee. He has contended that there is material available with the department on the basis of which the department has proceeded against the assessee. He has contended that the statement of Shri Shree Chand Soni was recorded on oath and the same is accordingly binding. He has cited 1 SCC 508 and Assistant Commissioner v. Yerra Nagabhushanam (1998)226 ITR 843 (AP). He has contended that most of the cases cited by the learned authorised representative of assessee before the Tribunal was also before the Commissioner (Appeals) and have been considered and discussed in the report (p. 6 of revenues PB) submitted by assessing officer to Commissioner (Appeals). He has also contended that most of the cited cases are decided on Evidence Act and they are not applicable in cases under Income Tax Act, 1961. He has contended that the cases are distinguishable on facts also.
14. We have considered the rival contentions, the relevant material on record as also the cited decisions furnished/produced before us.
15. As quite lengthy and elaborate contentions have been raised before us by both the sides, we may, in order to be precise and to concentrate on the exact issues raised before us, as contained in the grounds, proceed to decide the matter ground-wise.
16. First we take up ground No. 2.3. The relevant discussion by the learned Commissioner (Appeals) on this count is in para No. 3.1 on pp. 9 and 10 of his order. On a conscious and careful perusal of the record, we find that the learned Commissioner (Appeals) has nowhere in his order held the search to be not justiciable. What the learned Commissioner (Appeals) has held in his order impugned herein is that the satisfaction of the authority authorising search is not justiciable which, in our new, in its (sic) in as much as the sufficiency of satisfaction/belief is not justiciable though the factum of the very existence of satisfaction/belief is justiciable, We may note that the Honble Rajasthan High Court has held in Kusum Lata v. CIT (1989) 180 ITR 365 (Raj) that court cannot go into sufficiency or information of material, but it has only to see as to whether some material existed or not for coming to opinion and to have reason to believe that any person is in possession of any undisclosed income or property. In I Devarajan v. T.N. Farmers Service Co-op-federation (1981) 131 ITR 506 (Mad) the Honble Madras High Court has held that existence of belief can be challenged but not sufficiency of reasons therefor. In Col. Subir Roy v. S.K. Chattopadhyay (1986) 158 ITR 472 (Cal) Honble Calcutta High Court has held that existence of belief is necessary but not sufficiency of belief. In (1969) 74 ITR 836 (SC) (supra) the Honble Supreme Court has held that where power under section 132 is exercised bona fide and in furtherance of statutory duties of tax officers, any error of judgment will not vitiate the exercise of power. We, therefore, find no impact bearing fault with the learned Commissioners observation regarding satisfaction particularly when the same, with our directions is read as "sufficiency of satisfaction".
17. As regards the justiciability of the search is concerned, the learned Commissioner (Appeals), though not expressly pronouncing on this count, but treating the search to be justiciable, has specifically given a positive finding in the said para 3.1 on p. 9 of his order to the effect that "search and seizure operations were validly and legally carried out in the case of the appellant". Obvious as it is, from the finding of the learned Commissioner (Appeals), the ground Nos. 2, 3, framed as it stands, does not arise from the impugned order of learned Commissioner (Appeals). However, as far as the merits of validity and legality of search are concerned, we will deal with the same elsewhere in the relevant ground. Be that as it may, we agree with the learned counsel for assessee that the legality/validity of the search is very much justiciable and subject to judicial scrutiny as has also held in 73 ITD 49 (supra) and 67 ITD 446 (supra) cited by the learned counsel for assessee.
18. Now we take up ground No. 2.2 In (1998) 60 ITJ (Mad-Trib) 758 (supra), the Tribunal, Madras held that when the search warrants were issued in the name of B and M, father and uncle, respectively of U, the appellant, but not in the name of appellant (U), the assessing officer did not derive jurisdiction/power to issue notice to appellant under section section 158BC . In (1998) 96 Taxman-Magazine 24 (supra), the search and seizure operation was conducted at the premises of assessees husband, the assessing officer issued notice under section section 158BC to assessee who filed return showing undisclosed income at nil. While assets were not found to be assessees undisclosed income, assessing officer treated rental and interest income declared in block return as undisclosed income as assessee had not filed return for assessment year 1995-96. In these circumstances, Tribunal, Nagpur held that when there was no search in assessees own case, the issue of notice under section section 158BC was unlawful and invalid. In 27 ITC 73 (supra) search warrant was issued in the name of directors and the search was conducted in the residential premises of directors. In the circumstances the Nagpur Bench of Tribunal held that the assessment under section section 158BC of company was void for want of jurisdiction. In our considered opinion, all the above three cases are distinguishable on facts, in as much as in those cases no search was conducted in the case of assessee appellant, but the search was conducted in the case of persons other than appellant, whereas in the instant case the search was conducted at the residential premises of assessees father Shri S.C. Soni being Kailash Bhawan, where Shri S.C. Soni, as also his eldest son assessee, Shri Ashok Kumar Soni, and the other son of Shri S.C. Soni and family were residing. The search warrant was also issued not in the sole/exclusive name of Shri S.C. Soni but in the name of "Shri Shree Chand Soni and family". It cannot therefore, be said that no search warrant was issued with respect to Ashok Kumar Soni, the present assessee. In CIT v. Tarsem Kumar (1986) 161 ITR 505 (SC), to which our attention has been specifically drawn during arguments, it has been held by the Honble Supreme Court that where exact location of the property was known and certain, there was nothing to search or look for.
In Sardar Praduman Singh v. Union of India & Ors. (1987) 166 ITR 115 (Del) (supra), headnote I to which our attention was specifically drawn, the Honble Delhi High Court has held that the scope of section 132 is limited to the articles and things mentioned in clauses (a), (b) and (c) to section 132(1), and the section does not include, within its ambit, immovable property because of the reason that the location of an immovable property was known and no search had to be made for it. Similarly, in (1990) 186 ITR 435 (Ker) (supra), the Hon'ble Kerala High Court has held that section 132 could not be said to include in its ambit immovable properties also. Immovable properties cannot be seized under section 132 of the Income Tax Act, 1961. As seen above, it is clear from the aforesaid three citations that under section 132(1), no search can be made for an immovable property or for that matter, in the instant case for a house. In this regard, we may observe that in the instant case, the search has not been made for the house or to search for the house but what has been searched with respect to assessee is the material or evidence as contained in Annexure A-1/5 containing bills in the name of assessee, relating to purchase of the raw material, reflecting investment in the construction of the house.
19. The issuance of search warrant has, no doubt, been held to be not a judicial or a quasi-judicial act, but an administrative act by the Honble Supreme Court in (1969) 74 ITR 836 (SC) cited by the learned Departmental Representative of revenue, but we do not find merit in the contention of the learned Departmental Representative of revenue that if administrative power is wrongly used, then that can be challenged in writ proceedings in High Court and not justiciable before the Tribunal. The irregularity or impropriety of the exercise of the power for issuance of search warrant may, no doubt, is challengeable in writ proceedings before the Honble High Court but at the same time the same can also be scrutinised and examined judicially by the Tribunal in appeal. It has not been held by the Honble Supreme Court in the said cited decision that it is not justiciable before the Tribunal. In fact, the issue as to whether the propriety/regularity of the issuance of a search warrant under section 132 is or is not justiciable before a Tribunal was not under consideration before the Honble Supreme Court. The matter that was under consideration there was the writ proceeding in the Honble High Court. It was in that context that it was held within the competence of the court to examine the regularity of action of the officer issuing the authorisation or of the designated officer. In the said decision, the Honble Supreme Court also held that "but where power exercised is bona fide, and in furtherance of the statutory duties of the tax officers, any error of judgment on the part of the officers will not vitiate the exercise of the power, The Honble Supreme Court further observed as under :
"Where a warrant is issued in relation to a firm, the officer authorised thereunder is not restricted to searching for and taking possession of only those books of account and other documents which directly relate to the business carried on by the partners in the name of the firm. The books of account and other documents in respect of other businesses carried on by the partners would certainly be relevant because they would tend to show inter-relation between the dealings and supply materials having a bearing on the case of evasion of income-tax by the firm."
As such, considering the facts as well as the law on the point, we hold that the issuance of search warrant under section 132(1) is quite justiciable before the Tribunal though in a qualified manner as we have already discussed and held above while dealing with ground No. 2.3.
20. In (1992) 194 ITR 32 (Del) (supra), the Honble Delhi High Court has held as under :
"The basis of the exercise of jurisdiction under section 132(1) has to be the information of the belief and the belief is to be found on the basis of receipt of information by the authorising officer. The expression "information" must be something more than a mere rumour or a gossip of a hunch."
The learned authorised representative of assessee has, no doubt, referred this citation as well but we feel that the ratio decidendi of this citation is on an issue slightly differing from the issues contained in the specific grounds raised before us as also from the line of arguments exactly taken up and elaborated before (sic) challenging the information and the consequential belief has been raised before us. The validity of the search warrant has, no doubt, been challenged in the grounds raised before us, but that is on distinct specific basis expressly contained in the grounds. Still, to deal with the point enunciated in the citation, suffice it to observe, in the fact-situation of the case in hand, that the key person, in this search and seizure operation, Shri Shree Chand Soni (father of present assessee), who is not the subject of the present appeal under consideration before us, and the present assessee, Shri Ashok Kumar Soni, has been subject to search for being member of family of Shri Shree Chand Soni and residing with him in the very same premises known as Kailash Bhawan, and the search warrant being in the name of Shri Shree Chand Soni and family.
20.1. We may note that the definition of the term person and section 2(31) is inclusive only and is not exclusionary, nor is worded restrictively. This term, vide above provision, also includes an HUF as also an assessing officer P and thus does embrace, within the its fold, plurality wherein the names of all the members of family of the key person for search are not known. In such a situation, to cover various odds in the way and in order that the process needs be purposeful and objective-oriented, a search warrant may, in some genuinely needful situations, be issued in the name of key person with and family residing in the specified premises with the key person. As such a search warrant issued in the name of a particular individual, being the key person for the purpose of search, together with "and family" authorising search at a specified place, cannot be said to be offending the provisions of law contained in Income Tax Act, 1961. In that view of the matter, in the instant case, the search warrant issued in the name of "Shri Shree Chand Soni and family" at Kailash Bhawn, cannot be said to be not in accordance with law or invalid.
21. In 11 ITR REP 290 (2000) 242 ITR 302 (Del) (supra)l headnote C given on p. 291 of the report, to which our attention was drawn during arguments, it has been held by the Honble Delhi High Court that a search under section 132 is a prerequisite for invoking the provisions of Chapter XIV-B, and that the search has to be a valid search and not illegal search. As regards this contention of the learned Departmental Representative of assessee, we quite agree with him. However, we are of the view that the assessee does not get any benefit from this citation inasmuch as we hold, as has already been held above, the search warrant in the fact-situation of the case in hand to be quite valid and not invalid or illegal.
22. Now we take up ground No. 2.1 disputing the validity of search and seizure operation under section 132(1) in the case of the assessee-appellant. The learned authorised representative of assessee has drawn our attention to headnote D of his Index of Case Laws and Decision Relied Upon which contains the capation "Non-Striking Off/Cutting-Non-applicable portion of search warrant results in non-application of mind-invalid search" and mentioned (1982) 137 ITR 456 (Cal) and (1976) 103 ITR 579 (P&H) (supra) and has also referred, to p. 52 of his PB containing the written submission furnished by him before the learned Commissioner (Appeals). On pp. 52 and 53 of assessees PB, the legality of search has been discussed along with these two citations. The learned Departmental Representative of revenue has referred to pp. 10 to 18 or revenues PB being the assessing officers report/written submission regarding assessees appeal wherein in paras 7 and 8, the citations have been dealt with and distinguished. As regards (1976) 103 ITR 579 (P&H) (supra) the same is distinguishable on facts inasmuch as the search warrant was issued for conducting search of the house of M by authorised officer also started to search the portion of that house in the possession of the petitioners son and sons wife. On the objection of the petitioner, a telephone call was made to Inspecting Assistant Commissioner, Chandigarh and within 15 minutes, the requisite search warrant was sent to the authorised officer, although the Commissioner was stationed at Patiala, at a distance of about 40 miles. It also became clear that blank search warrants had been issued with fact was not denied by the respondents. It was in these circumstances that the search warrant utilised for making a search of the premises in possession of the petitioners was held illegal and the search warrant was quashed. As regards (1982) 137 ITR 456 (470) (Cal) (supra) in second para, it has been held that in the authorisation, the irrelevant portions having not been struck out indicated non-application of mind but the same is distinguishable on facts inasmuch as in the instant case the notice issued on 16-10-1998, on doubt mentioned along with section section 158BC also "read with section 158BD and this latter portion "read with section 158BD was not struck out, no doubt, but the assessing officer did not initiate proceedings on that basis and subsequently issued another notice on 2-11-1998, specifically mentioning under section section 158BC and it was on the basis of this specific notice that the assessing officer took the action. The learned Departmental Representative of revenue also very clearly contended during arguments that, in fact, the proceedings had been taken against the assessee under section section 158BC . Similarly the words "and family" were consciously written on search warrant.
So the situation of non-application of mind hardly has any relevance in the matter in hand. Besides, in (1994) 2 SCC 558, 563 (SC) quoted in the bottom para on p. 4353 of Commentary of Income Tax Law by Chaturvedi and Pittisaria Vth Edn. Vol. III, it has been held that where the authority concerned has jurisdiction under a particular provision of law, quotation of a wrong provision does not take away such jurisdiction. So the mentioning of section section 158BC read with section 158BD in the earlier notice dated 16-10-1998, if alleged to be a mistake, the same has hardly any crucial impact of the proceedings for the reason that subsequently on 5-11-1998, another notice under section section 158BC was issued.
23. As regards the jurisdictional objection of the learned counsel for assessee, we agree with him that in case the concerned authority lacks jurisdiction that is, lacks basic jurisdiction or for that matter we may say that the concerned authority lacks inherent jurisdiction, then, even though the assessee might have submitted to his jurisdiction, the concerned authority will not get vested with the valid jurisdiction merely by assessees submission to his jurisdiction. The learned Departmental Representative contention regarding the jurisdictional objection becoming untenable, as above, may well apply when the concerned authority does inhere the basic jurisdiction and the objection may be pertaining to some of the technical or procedural aspect of jurisdiction, say, for example, the territorial jurisdictional aspect.
24. In view of the discussions made above, we are of the view that the search and seizure operation as conducted with respect to present assessee to be valid under section 132(1) and the learned Commissioner (Appeals)s impugned order in this regard to be quite proper and justified and in noway to be laconic or infirm.
25. Ground No. 2-4 disputes the assessing officers jurisdiction to assess the assessee-appellant under Chapter XIV-B. In view of our findings rendered above, on ground Nos. 2.1 to 2.3 wherein we have held the search warrant issued to be valid and the search conducted to be valid, we hold that in the facts and circumstances of the case, the assessing officer did have valid and proper jurisdiction to assess the assessee-appellant under Chapter XIV-B of the Income Tax Act, 1961.
26. Ground No. 2.5 disputes the learned Commissioner (Appeals)s impugned order in holding the notice to be issued under section section 158BC read with section 158BD on 16-10-1998, and subsequently the notice issued under section section 158BC on 5-11-1998, to be valid and conferring jurisdiction on assessing officer to make assessment under section section 158BC /143/(3) of Income Tax Act, 1961. We need not repeatedly enter into a discussion here and suffice it to say that we have already held above that the notice issued under section section 158BC on 5-11-1998, was a valid notice and that the assessing officer did have jurisdiction and a valid jurisdiction to assess the assessee-appellant under Chapter XIV-B. This ground thus gets disposed of as having no merits.
27. Ground Nos. 15 and 16 are general and call for no specific decision on our part as has also been submitted by the learned authorised representative of assessee during arguments, and so the same are dismissed accordingly.
28. Ground Nos. 3 to 14 constitute single issue disputing the quantum of addition, as has been submitted by the learned authorised representative of assessee. The learned authorised representative of assessee has contended that the entire addition has been made on the basis of the statement of assessees father Shri Shree Chand Soni and ratification of the same by the assessee. He has contended that other than this, there is no evidence on record. He has contended that the statement of father and assessee cannot be termed as statement under section 132(4). He has contended that the statement of assessee does not fall within the parameters of section 132(4). He has contended that oath is essential, but here no oath has been administered on father and assessee as is evident from the fact that the administering of oath has not been recorded in the statements and that mere printing of "On oath" is not enough for the purpose. He has contended that at the end of the statement "RDAAU is necessary to be recorded which is not recorded here. He has also contended that in ratification there is no oath and so surrender aspect is not valid. He has referred to his citations mentioned in head G of his index (of case laws) under the caption "Statements recorded must be valid and should be under section 132(4) invalid statement not binding". He has contended that the citations mentioned at SI. Nos. 1 and 2 of Head G are regarding sales-tax matters and citations at SI. Nos. 3, 4 and 5 under Head G are regarding searches under Income Tax Act. He has contended that section 22 of Rajasthan ST Act (hereinafter referred to as the RST Act) deals with search and survey, etc. and that section 24 of RST Act is corresponding to section 131 of Income Tax Act 1961. He has also contended that section 22(8), RST Act is corresponding to section 132B Income Tax Act. He has contended that the block assessment in search matters is a special assessment and not a normal assessment. Regarding the statement of assessees father. Shri Shree Chand Soni and ratification of the same by the assessee, he has contended that this evidence does not have binding force, admission. He has contended that the statement is quite ambiguous and does not contain any clear-cut admission. He has also contended that duress was also there at the time of making of this statement. He has also contended that even otherwise, an admission is not conclusive. In support of his above contentions, he has referred to various decisions mentioned under head h (having caption "Binding nature of admission") of his "Index of case laws and decisions relied upon". He has contended that now there are three valuation reports before the Tribunal, one by registered valuer, making the valuation at Rs. 14.50 lakhs, another of DVO making the valuation at Rs. 15.97 lakhs and the. third one of Land and Building Tax Department valued at Rs. 17.57 lakhs. He has contended that the DVO has made the valuation on CPWD rates, and the supervision allowance has not been allowed. He has contended that the architectural charges have also been included at the rate of 2 per cent rejecting the assessees plea that the assessees uncle was a civil engineer and assessees father provided supervision. He has also contended that if valuation is made as per CPWD rates, then valuation is to be reduced by 15 to 20 per cent because rates in Rajasthan are low and so Basic Schedule Rates (BSR) should be applied. In his support, he has cited 22 TW 245 (Jaipur). He has contended that if the DVOs valuation based on CPWD rates is reduced by 15 per cent then the same will amount to Rs. 13.50 lakhs and further if supervision allowance is allowed at 10 per cent and architectural fee at the rate of 2 per cent, then the DVOs valuation will come down to around Rs. 12 lakhs. He has contended that in these circumstances, there cannot be a surrender of Rs 14,50 lakhs nor can there be an admission like that if the sub-sequent happenings are examined which makes the matter clear. He has contended that this construction is spread over six years and the assessee purchased goods from time to time during this period. Whereas the valuer has applied fixed mean rate and so variation in assessees figures of cost of construction and the figure of valuer has occurred. He has also referred to the citations under the Head T of his Index of case laws. He has also contended that sending of matter to DVO for valuation is illegal because at the time of making reference, no proceeding against assessee was pending. He has contended that the reference was made on 5-10-1998, and the notice under section section 158BC was issued in November, 1998. In this regard, he has also referred to the citations under the Head K of his Index of case laws. Regarding allowing of supervision charges, he has referred to Income Tax Officer v. Prakash Chand Surana (1979) 7 TTJ (Jp) 29. He has contended that the assessee maintains books on monthly basis and not on day-to-day basis. He has contended that it is for the department to show that these books are proper, but in fact the view of the department is not correct and the books of accounts of assessee are proper. In this regard, he has cited 21 TW 393 (Jaipur), 21 TW 471. He has accordingly, contended that the books of accounts of assessee should not have been rejected. He has contended that local BSR should be taken as against CPWD rates and for this he has cited Income Tax Officer v. Tek Chand (1995) 52 ITD 197 (Jp-Trib). He has also contended that this assessment was made by invoking provisions of section 68B, that is, the assessment is made under deeming provisions. He has contended that in such a situation, heavy onus lies on the department, whereas in this case, there is no material on record in support of the departments stand and that the department has failed. He has contended that the department has not relied on any valuation report and has based solely on statement of assessee which is not binding on assessee. He has contended that either the assessment be quashed or in the alternative, the assessees declared income in the return be accepted. As against this, the learned Departmental Representative of revenue has contended that assessees father Shri Shree Chand Soni has made the statement at the time of search and therein he stated that there was an unexplained investment of Rs. 14.50 lakhs in the construction of the house and the said statement stands ratified by assessee. He has also contended that they know Hindi and Marwadi and they are aware of all things in the house and they cannot plead ignorance. Both the father and the husband (sic-son) had complete information regarding recorded investment as also the unrecorded investment. He has contended that the surrender was inconsequence to the seized papers, Annexure A-1/5. He has contended that in the statement of Shri Shree Chand Soni, it is not that the value of investment in property alone was surrendered but total surrender of Rs. 27.75 lakhs was made which included surrender in respect of jewellery, etc. also. He has contended that the statement of Shri Shree Chand Soni is valid according to section 132(4) and explanation appended thereto and so the same is binding. He has also contended that assessee has not been able to prove any duress or coercion, etc. Regarding valuation of property, he has contended that there are eleven manners of valuation of house property and valuation by each method will give a different amount and thus there can be no uniformity in values according to different methods. He has also contended that Building Tax Departments valuation is for levy of tax on market value, but here, we are concerned with the cost of asset. He has also contended that registered valuers valuation has no worth in the face of valuation by assessee in the statement/admission and DVOs valuation report. He has contended that as reference to DVO was not valid, so they have ignored it for the reason of the same having not been validly obtained under law. He has contended that the orders of assessing officer and learned Commissioner (Appeals) are quite elaborate in this regard and he relied on them. Alternatively, he has also contended that 75 papers were seized and those have not been utilised in the assessment by assessing officer and so there is a case for re-examination of the addition beyond the amount surrendered in the return, that is, beyond Rs. 7.50 lakhs. He has also contended that if at all necessary, then let assessing officer reexamine regarding the addition part, that is, Rs. 7 lakhs with reference to seized papers.
29. In rejoinder, the learned authorised representative of assessee has contended that there is no specific provision in Income Tax Act to the effect that technical provisions of Evidence Act will not apply in proceedings under Income Tax Act, but the contention of the learned Departmental Representative of revenue that citation on Evidence Act will not apply in Income Tax Act proceedings, is not correct. He has contended that it is judge-made law. He has also contended that learned Departmental Representatives contention that the statements of assessee and of assessees father and other members of family were recorded in the presence of the members of the family is not borne out from record and that there is no such fact-situation available on record. Regarding duress and threat, etc. he has contended that assessing officer should have asked assessee as to what was the duress/threat on them the assessee would have explained and that letter dated 10-4-1997, on p. 19 of revenues PB is on different fact and is by Shri Shree Chand Soni. He has contended that Departmental Representatives contention that after seizing 75 papers contained in Annexure A-1/5, the surrender was made, is not correct because the entire total of Annexure A-1/5 is much less as it is roundabout Rs. 2 lakhs. He has, by and large, reiterated the contentions made in his arguments in chief.
30. We have considered the rival contentions, the material on record, as also the cited decisions. As regards the reference to the DVO and considering the DVOs report, the learned Departmental Representative of revenue himself has disowned the valuation report of DVO contending that the department has not relied upon it. We may, without inconvenience, drop this matter here itself and need not go any further about it as the same will only be an academic exercise and for no fruitful purpose. As regards the contention of the learned authorised representative of assessee that the statement recorded during search under section 132(4) is rebuttable and though best evidence, but not conclusive, if it is explained later on, we agree with the learned authorised representative of assessee on this count. We also find substance in the contention of the learned authorised representative of assessee to the effect that at the time of search, some pressure does prevail in the minds of the inhabitants of the house, but, we are of the view that any exercise of coercion or duress or threat by the search officials on assessee or assessees father has not been established or proved in the instant case. Although some stress or mental strain being present in the minds of assessee as also his father may not be ruled out as the statement, or for that matter, the admission made in the statement of Shri S.C. Soni and ratified by assessee has obviously been retracted by assessee. Therefore, it cannot be said to have the same value as an admission without retraction would have had. Now on the one hand there is assessees ratification to the statement of Shri Shree Chand Soni wherein he stated an unexplained investment of Rs. 14.50 lakhs in the construction of the house apart from Rs. 8 lakhs as recorded in the books and on the other hand, there is a statement of assessee made on that very day that he invested only a sum of Rs. 8.50 lakhs in the construction of the house. We also find it, as revealed from record, that the assessee himself has shown an unexplained investment of Rs. 7.50 lakhs in the construction of the house in the block return. In the face of such a situation, we do not accept the plea of the assessee that the total investment in the construction of the house was of Rs. 8.50 lakhs only as recorded in the books. However, at the same time, we do not find that assessee to be bound by the admission contained in the statement of Shri Shree Chand Soni for the reason that the admission stands retracted and there is no supportive evidence to establish the cost of construction of the house, or for that matter, the investment in the construction to be about Rs. 23 lakhs (Rs. 8 lakhs recorded in the books and Rs. 14.50 lakhs as contained in the admission in the statement of Shri Shree Chand Soni. Besides, the valuation or the cost of construction as per the valuation made by registered valuer is Rs. 14.50 lakhs and by the Building and Tax Department valuer, the cost of construction is Rs. 14.10 lakhs and the cost of land being Rs. 3.50 lakhs, total value aggregating to Rs. 17.57 lakhs. We may not consider the valuation by DVO as the reference to DVO is stated to have been wrongly made and not legally made and, in turn, the revenue itself has also discarded and disowned the valuation by DVO and we need not, therefore, enter into a discussion as to the validity or otherwise of the reference to DVO and the valuation made by DVO. We also find substance in the argument of the learned authorised representative of assessee to the effect that when the valuation of the house property comes to round about 14 to 15 lakhs, then no one or for that matter, the present assessee will make an admission of an unexplained investment of about Rs. 14 or 15 lakhs in addition to the recorded investment of amount Rs. 8 lakhs but the revenue has not brought any material on record to establish or convincingly suggest that the total cost of construction, in fact, is about Rs. 23 lakhs, so as to persuade the judicial conscience to agree to an additional investment of Rs. 14.50 lakhs by way of unexplained investment in addition to the recorded investment of Rs. 8 lakhs. As such, considering all the facts and circumstances of the case in their totality and perspective as also the position of law as emanates from the cited decisions, we are of the view that the addition of Rs. 14.50 lakhs is not justified and unreasonably excessive, which in our considered opinion, should be restricted to Rs. 7.50 lakhs as declared by assessee in the block return. We modify the orders of the authorities below accordingly.
31. In the result, this appeal of the assessee is allowed in part as indicated above.