PRAKASH JEWELLERS Vs. ASSISTANT COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE petitioner, a partnership firm, has challenged the notice dated 22nd January, 2002 issued by the respondent under section 148 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') seeking to reopen its assessment for assessment year 1999-2000.

(2.) THE facts of the case as stated in the petition are that on 27th January, 1999, search proceedings were conducted under section 132 of the Act in the case of the petitioner. The authorised officers seized certain ornaments as also registers which were showing the names of parties who had given these ornaments by way of loan or for remaking. Such registers also showed the weight of the ornaments given by the parties. During the course of block assessment proceedings under Chapter XIV-B, the petitioner filed its return on 30th August, 1999 disclosing 'nil' income. The petitioner produced affidavits of various parties who had given these ornaments and also produced such parties before the Assessing Officer who confirmed the fact of lending or giving of ornaments and also replied the questions put by the Assessing Officer about the source, ownership, capacity, identity etc. Pursuant to inquiry made by him, the Assessing Officer did not propose any addition in respect of jewellery. However, when the order was presented for the approval of the Joint Commissioner of Income Tax, he directed such addition. Accordingly, assessment was framed under section 158BC of the Act on 27 th March, 2001 computing the undisclosed income at Rs.48,49,902/- which was the value of the ornaments taken as undisclosed investments of the petitioner. The petitioner carried the matter in appeal before the Commissioner (Appeals), who, by his order dated 9 th May, 2001 allowed the appeal on almost all points except the point of application of section 40A(3) of the Act. Against the order of the Commissioner (Appeals), the Department went in appeal to the Tribunal. In the said appeal, the petitioner preferred cross-objections against the upholding of the addition under section 40A(3) of the Act. By an order dated 19 th September, 2002, the Tribunal disposed of the appeal as well as the cross-objections, wherein it upheld the deletion of addition of Rs.29,77,726/-.

(3.) OPPOSING the petition, Mr. Manav Mehta, learned standing counsel for the respondent reiterated the averments made in the affidavit-in-reply filed by the respondent as well as the reasons recorded by the Assessing Officer for reopening the assessment under section 147 of the Act.