{"id":187787,"date":"2006-11-15T00:00:00","date_gmt":"2006-11-14T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/p-r-metrani-vs-commissioner-of-income-tax-on-15-november-2006"},"modified":"2015-06-05T02:18:47","modified_gmt":"2015-06-04T20:48:47","slug":"p-r-metrani-vs-commissioner-of-income-tax-on-15-november-2006","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/p-r-metrani-vs-commissioner-of-income-tax-on-15-november-2006","title":{"rendered":"P.R. Metrani vs Commissioner Of Income Tax, … on 15 November, 2006"},"content":{"rendered":"
Supreme Court of India<\/div>\n
P.R. Metrani vs Commissioner Of Income Tax, … on 15 November, 2006<\/div>\n
Author: Bhan<\/div>\n
Bench: Ashok Bhan, Dalveer Bhandari<\/div>\n
           CASE NO.:\nAppeal (civil)  5673-5675 of 2002\n\nPETITIONER:\nP.R. Metrani\n\nRESPONDENT:\nCommissioner of Income Tax, Bangalore\n\nDATE OF JUDGMENT: 15\/11\/2006\n\nBENCH:\nASHOK BHAN & DALVEER BHANDARI\n\nJUDGMENT:\n<\/pre>\n
J U D G M E N T<\/p>\n
BHAN, J.\n<\/p>\n
These appeals are directed against the judgment and
\norder dated 9.7.2001 passed by the High Court of Karnataka
\nat Bangalore in ITRC Nos. 38, 39 & 40 of 1996 vide which the
\nHigh Court has allowed the reference cases 39 and 40 of 1996
\nthereby answering the questions in favour of the Revenue and
\nagainst the assessee.  ITRC No. 38 of 1996 filed by the
\nassessee has been dismissed by the High Court.  Since these
\nappeals arise from the common order passed by the High
\nCourt, we also propose to dispose them of by a common order.\n<\/p>\n
FACTS<\/p>\n
\tThe facts relevant for disposing of these references in
\nshort are.\n<\/p>\n
P.R. Metrani and Y.R. Metrani were two brothers and are
\nthe members of the Joint Hindu Family.  P.R. Metrani (HUF)
\nassessee was a partner in a firm called M\/s. R.N. Metrani and
\nSons.  Y.R. Metrani was also a partner in this firm.  P.R.
\nMetrani as well as Y.R. Metrani have died during the pendency
\nof these cases.\n<\/p>\n
A search of the residential premises Ranganatha Nilaya
\nwas conducted by the Income Tax, Central Excise and
\nCustoms Departments on 30.06.1982 and 01.07.1982 and as
\nwell as the business premises where the business of the firm
\nwas being conducted.  The residential premises of J.J. Bakale,
\nnephew of P.R. Metrani were also searched.  The search
\nbrought to surface unaccounted money, gold biscuits, gold
\njewellery, silver etc.  besides some important documents. For
\nthe purpose of assessment for the assessment years 1981-82
\nand 1982-83 three documents were found to be relevant by
\nthe Assessing Officer and they were marked as PRM-1, PRM-7
\nand PRM-13 at the time of search and seizure, which were
\nseized from the residential premises namely, ‘Ranganatha
\nNilaya’.  Statement of J.J. Bakale was recorded at the time of
\nsearch.  P.R. Metrani was away to Rajasthan on a business
\ntour.  He was examined after his return to Hubli on 13.7.1982.
\nHe denied the possession of PRM-1, PRM-13 and PRM-14.  He
\nalso denied that these papers contain any writing made by
\nhim.   The Assessing Authority made a summary adjudication
\norder under Section 132(5) of the Income Tax Act, 1961 (for
\nshort “The Act”).  He made certain additions and retained the
\nassets seized.\n<\/p>\n
\tNotice under Section 139(2) dated 17.9.1982 for the
\nassessment year 1982-83 was served on the assessee on
\n21.9.1982.  The appellant declared a total income of
\nRs.46,200\/- and a net agricultural income of Rs.6,000\/-.
\nNotices under Section 143(2) and 142(1) were issued on
\nseveral dates.  Appellant appeared before the authorities on
\nseveral dates and assessment came to be completed.  The
\nfollowing additions were made in respect of the assessment
\nyear 1982-83:-\n<\/p>\n
i.\n<\/p>\n
Income from undisclosed sources as
\ndiscussed in para 3.2 as per PRM-1
\nand PRM-7<\/p>\n
Rs. 28,67,920
\nii.\n<\/p>\n
Income from undisclosed sources as
\ndiscussed in para 3.3 i.e., PRM-13<\/p>\n
Rs.  6,66,690
\niii
\nInvestent in Durgadabail building at
\nHubli as per para 5 being 50% of Rs.\n<\/p>\n
5,24,200\/-\n<\/p>\n
Rs.  2,62,100
\niv
\nUnexplained expenditure U\/s. 69C<\/p>\n
Rs.  8,33,525<\/p>\n
\tThe assessment for the years 1981-82 was completed
\nafter making an addition of Rs.19,93,117\/-.\n<\/p>\n
Assessing Authority made an assessment for the
\nconstruction of a commercial complex in Durgadabailu, the
\ninvestment for which was declared at Rs. 5,55,000\/- for the
\nentire building.  Half of the building belonged to P.R. Metrani
\nand other half to Y.R. Metrani.  The department had sent the
\nValuation Officer for enquiry regarding the cost of building and
\nit was fixed by the Department Valuation Officer at Rs.
\n5,83,000\/-.  The assessing authority however did not accept
\nthe valuation made by the Valuation Officer and held that the
\ntotal investment on the building was Rs. 6,45,809\/-.  A source
\nto the extent of Rs. 1,21,627\/- was accepted.  The balance was
\nrounded off to Rs. 5,24,200\/-.  Half of this was added to the
\nassessment of P.R. Metrani (HUF) and other half were added in
\nthe assessment of Y.R. Metrani.\n<\/p>\n
\tThe appellant being aggrieved filed appeals before the
\nCommissioner (Appeals).  The Commissioner (Appeals) by
\nseparate order disposed of the appeals relating to assessment
\nyears 1981-82 and 1982-83.  He examined the issue including
\ncertain credits, and, on 19.9.1988 confirmed the additions
\nbarring the sum of Rs. 36,000\/- for the assessment year
\n1982-83.  The orders of the Assessing Authority as well as the
\nCommissioner (Appeals) are based on the presumptions in
\nterms of Section 132 (4A) of the Act.  It was held that
\npresumptions under Section 132 (4A) were not confined to the
\norders passed under Section 132 only, but, were available for
\nframing the regular assessments as well.
\n\tThe assessee being aggrieved filed a further appeal before
\nthe Income Tax Appellate Tribunal, Bangalore (for short “The
\nTribunal”).  The Tribunal relying upon the judgment of the
\nAllahabad High Court in the case of Pushkar Narain Sarraf
\nVs. CIT, (1990) 183 ITR 388,  on the scope of Section 132 (4A)
\nheld that the presumptions under Section 132 (4A) are
\nconfined to the framing of the order under Section 132 (5) only
\nand are not available for framing the regular assessment.  The
\nTribunal accepted the appeals,  set aside the orders passed by
\nthe Commissioner (Appeals) as well as assessing authority
\nexcept to the extent of addition of Rs. 2,62,100\/-.  At the
\ninstance of the Revenue, the Tribunal referred the following
\ntwo questions for both the assessment years 1982-83 for the
\nopinion of the High Court:-\n<\/p>\n
“(1) \t\tWhether the Income-tax Appellate
\nTribunal was correct in law in holding that
\nthe presumption under Sub-section (4A) of
\nSection 132 of the Income-tax Act, 1961, is
\nonly for the limited purpose of passing an
\norder under Sub-section (5) of the said
\nsection ?\n<\/p>\n
(2) \t\tWhether, on the facts and in the
\ncircumstances of the case, the Income-tax
\nAppellate Tribunal was right in law in holding
\nthat the documents seized from the
\nresidential premises of the assessee-Hindu
\nundivided family were not of the said Hindu
\nundivided family and the entries therein did
\nnot pertain to it, particularly when the
\nIncome-tax Appellate Tribunal itself has
\naccepted that the entries in the said
\ndocuments culminating in addition of Rs.
\n2,62,100 in the assessment for the
\nassessment year 1982-83 pertained to the
\nassessee-Hindu undivided family and upheld
\nthe said addition ?”\n<\/p>\n
\tAt the instance of the assessee, the Tribunal referred the
\nfollowing two questions for the opinion of the High Court:\n<\/p>\n
“(1) Whether on the facts the Tribunal was
\njustified in holding that the applicant HUF was
\nliable to be taxed in respect of Rs. 2,62,100\/-
\nbeing alleged unexplained investment in the
\nproperty invoking the provisions of sec. 69 of
\nthe Act?\n<\/p>\n
(2) On the facts whether the Tribunal was
\njustified in holding that the part of the entries
\nin the seized documents could be attributed to
\nthe applicant HUF when the applicant had
\ndenied the knowledge or ownership of the
\ndocument?”\n<\/p>\n
\tThe High Court answered all the four questions in favour
\nof the Revenue and against the assessee.  On question No.1
\nregarding presumption under sub-section (4A) of Section 132
\nof the Act, it has been held that the same is not limited to the
\npassing of an order under sub-section (5) of Section 132 only;
\nthe same presumption can be raised for framing the regular
\nassessment as well.   The Bench has recorded its dissent with
\nthe view taken by the Allahabad High Court in Pushkar
\nNarain Sarraf (supra).\n<\/p>\n
Being aggrieved, the appellant has filed these appeals.
\nLearned counsels for the parties have been heard at
\nlength.\n<\/p>\n
 The Allahabad High Court in Pushkar Narain Sarraf’s
\ncase has held that the presumption arising under Section 132
\n(4A) is available only in regard to and in the context of search
\nand seizure and the same was not available for framing the
\nregular assessment.  That Sections 132 to 132B of the Act
\nembody an integrated scheme laying down comprehensively
\nthe procedure for search and seizure and the power of the
\nauthorities making the search and seizure to order the
\nconfiscation of the assets seized under Section 132 of the Act.
\nThe presumption arising under sub-section (4A) of Section 132
\napplies only in relation to the provisional adjudication which is
\ncontemplated under Section 132 (5) and the same was not
\navailable for framing the regular assessment.\n<\/p>\n
\tSubsequently the High Court of Delhi in Daya Chand Vs.
\nCIT, (2001) 250 ITR 327, has taken a somewhat similar view
\nand has held “that presumption arising under Section 132
\n(4A) must be held to be applicable only in relation to the
\nprovisional adjudication as contemplated under sub-section
\n(5) of Section 132 and the presumption cannot be said to have
\nthe effect of excluding the application of Section 68.”\n<\/p>\n
\tThe Karnataka High Court in the impugned judgment
\nhas taken the following view :\n<\/p>\n
The Tribunal holds that looking to the
\nscheme it appears that the presumption of
\nSub-section (4A) is only for the limited
\npurpose of passing an order under Sub-\n<\/p>\n
section (5). According to the Tribunal the
\nassessing authority was wrong in drawing an
\ninference under Section 132(4A) in the
\nproceedings. In that view of the matter, the
\nTribunal rejected the case of the Department.
\nThis finding in our view is not correct. The
\nentire object of this Chapter is to levy tax with
\nregard to an undisclosed income of an
\nassessee. Search and seizure is one accepted
\nmethod adopted by the Revenue authority
\nwith regard to digging out undisclosed income
\nby an assessee. If the intention of the
\nLegislature is only to give a limited
\npresumption, under Section 132(4A) they
\nwould have said so in so many words. Even
\notherwise a reading of the entire Chapter
\nwould show that it was never the intention of
\nthe Legislature to restrict the presumption
\nonly to an order under Section 132(5) of the
\nAct. In fact as we mentioned earlier, Sub-
\nsection (1) provides for entering, searching,
\nbreaking open, seizing, placing marks on the
\ndocuments and Sub-section (2) provides for
\npolice help and Sub-section (3) provides for
\nretention by the owner subject to an order.
\nSub-section (4) which is a crucial provision
\ncategorically states that any books,
\ndocuments, money, bullion, jewellery or any
\nstatement made by an assessee in the course
\nof search or seizure can be made by use of as
\nevidence in any proceeding under the Income-
\ntax Act. If Sub-section (4A) is read with
\nSubsection (4) it is clear to us that there
\ncannot be any restriction with regard to the
\npresumptive value that can be attached to
\nSection 132(4A) of the Act. Section 132(5) only
\nprovides for an order being made in the case
\non hand. That, by itself, does not take away
\nthe presumptive value attached to Section
\n132(4A) for other proceedings as held by the
\nTribunal. In fact Section 132(5) provides for
\nan order being passed as a result of search
\ninitiated or requisition made before July 1,
\n1995. Even after this date the section is still
\navailable in the statute. Therefore, an
\ninference can safely be drawn in the light of
\nSub-sections (4) and (5) of Section 132 itself
\nthat no limited presumption can be attached
\nto Section 132(4A). At the same time we must
\nalso point out that the presumptive value is
\ntotal in so far as Section 132(5) is concerned,
\nbut in so far as other proceeding’s are
\nconcerned it is only a rebuttable presumption.
\nTherefore, the finding of the Tribunal in this
\nregard in our view requires our interference.\n<\/p>\n
\t\t\t\t\t\t\t[ Emphasis supplied ]
\n\tIt has been further held at page 254 as under:
\n“Therefore, it is clear to us that the
\npresumptive value to the documents is
\navailable in respect of an order to be passed
\nunder the Act including an order under
\nSection 132(5) of the Act. Therefore, a reading
\nof the provision with regard to the seized
\ndocuments clearly indicates that its
\npresumptive value cannot by any stretch of
\nimagination be restricted only to Section
\n132(5) as held by the Tribunal. It is a “non-
\nrebuttable presumption” under section 132(5)
\nof the Act and in other cases it is a
\n“rebuttable presumption”.\n<\/p>\n
Mr. G. Sarangan, further has placed
\nbefore us a judgment of the Allahabad High
\nCourt in the case of Pushkar Narain Sarraf v.
\nCIT, (1990) 183 ITR 388. With respect we are
\nunable to subscribe to the view of the decision
\nof the Allahabad High Court. We have
\ncarefully gone through the said judgment. We
\nfind in the said case that no reasons are
\nforthcoming as to why the said presumption
\nis to be restricted to Section 132(5) only. In
\nfact that judgment on the other hand states
\nthat Section 68 cannot said to have been
\nexcluded for regular assessments.”\n<\/p>\n
[ Emphasis supplied ]
\n\tSections 132 to 132B of the Act embody an integrated
\nscheme laying down the procedure comprehensively for search
\nand seizure and the power of the authorities making the
\nsearch and seizure to order the confiscation of the assets
\nseized.  Section 132A gives power to the authorities to
\nrequisition books of account in consequence of the information
\nin its possession.  Section 132B provides the manner in which
\nthe assets retained under sub-section (5) of Section 132 can
\nbe dealt with.\n<\/p>\n
\tSection 132 is a Code in itself.  It provides for the
\nconditions upon which and the circumstances in which the
\nwarrants of authorization can be issued.  Sub-section (2)
\nauthorizes the authorized officer to requisition the services of
\nany police officer or of any officer of the Central Government or
\nof both to \tassist him for all or any of the purposes for which
\nthe search is conducted.   Under sub-section (4) the
\nauthorized officer can during the course of search or seizure
\nexamine on oath any person who is found to be in possession
\nor control of any books of account, documents, money,
\nbullion, jewellery or other valuable article or thing and any
\nstatement made by such persons during such examination
\nmay thereafter be used in evidence in any proceeding under
\nthe Act.   Sub-sections (4A) and 5 are set out in detail as it
\nexisted at the relevant time.\n<\/p>\n
“(4A) Where any books of account, other
\ndocuments, money, bullion, jewellery or other
\nvaluable article or thing are or is found in the
\npossession or control of any person in the
\ncourse of a search, it may be presumed-\n<\/p>\n
(i) that such books of account, other
\ndocuments, money, bullion, jewellery or other
\nvaluable article or thing belong or belongs to
\nsuch person ;\n<\/p>\n
(ii) that the contents of such books of account
\nand other documents are true ; and\n<\/p>\n
(iii) that the signature and every other part of
\nsuch books of account and other documents
\nwhich purport to be in the handwriting of any
\nparticular person or which may reasonably be
\nassumed to have been signed by, or to be in the
\nhandwriting of, any particular person, are in
\nthat person’s handwriting, and in the case of a
\ndocument stamped, executed or attested, that
\nit was duly stamped and executed or attested
\nby the person by whom it purports to have
\nbeen so executed or attested.”\n<\/p>\n
“(5) Where any money, bullion, jewellery or
\nother valuable article or thing (hereafter in
\nthis section and in sections 132A and 132B
\nreferred to as the assets) is seized under sub-
\nsection (1) or sub-section (1A), the Assessing
\nOfficer, after affording a reasonable
\nopportunity to the person concerned of being
\nheard and making such enquiry as may be
\nprescribed, shall, within one hundred and
\ntwenty days of the seizure, make an order,
\nwith the previous approval of the  Deputy
\nCommissioner],–\n<\/p>\n
(i) estimating the undisclosed income
\n(including the income from the
\nundisclosed property) in a summary
\nmanner to the best of his judgment on
\nthe basis of such materials as are
\navailable with him ;\n<\/p>\n
(ii) calculating the amount of tax on the
\nincome so estimated in accordance with
\nthe provisions of the Indian Income-tax
\nAct, 1922 (11 of 1922), or this Act;\n<\/p>\n
(iia) determining the amount of interest
\npayable and the amount of penalty
\nimposable in accordance with the
\nprovisions of the Indian Income-tax Act,
\n1922 (11 of 1922), or this Act, as if the
\norder had been the order of regular
\nassessment;\n<\/p>\n
(iii) specifying the amount that will be
\nrequired to satisfy any existing liability
\nunder this Act and any one or more of
\nthe Acts specified in clause (a) of sub-
\nsection (1) of section 230A in respect of
\nwhich such person is in default or is
\ndeemed to be in default,
\nand retain in his custody such assets\/or part
\nthereof as are in his opinion sufficient to
\nsatisfy the aggregate of the amounts referred
\nto in clauses (ii), [ (iia)] and (iii) and forthwith
\nrelease the remaining portion, if any, of the
\nassets to the person from whose custody they
\nwere seized :\n<\/p>\n
Provided that if, after taking into account the
\nmaterials available with him, the Assessing
\nOfficer is of the view that it is not possible to
\nascertain to which particular previous year or
\nyears such income or any part thereof relates,
\nhe may calculate the tax on such income or
\npart, as the case may be, as if such income or
\npart were the total income chargeable to tax at
\nthe rates in force in the financial year in which
\nthe assets were seized and may also determine
\nthe interest or penalty, if any, payable or
\nimposable accordingly:\n<\/p>\n
Provided further that where a person has
\npaid or made satisfactory arrangements for
\npayment of all the amounts referred to in
\nclauses (ii), (iia) and (iii) or any part thereof,
\nthe Assessing Officer may, with the previous
\napproval of the Chief Commissioner or
\nCommissioner, release the assets or such part
\nthereof as he may deem fit in the
\ncircumstances of the case.\n<\/p>\n
\tSub-section (6) provides that assets retained under sub-
\nsection (5) may be dealt with in accordance with the provisions
\nof Section 132B.  Sub-section (7) provides that if the assessing
\nofficer is satisfied that the seized assets or any part thereof
\nwere held by such person for or on behalf of other person, the
\nassessing officer may proceed under sub-section (5) against
\nsuch other person and the provisions of Section 132 shall
\napply to such other persons as well.  Sub-section (8) provides
\nthat the books of account or other documents seized under
\nsub-section (1) and (1A) shall not be retained by the
\nauthorized officer for a period exceeding 180 days from the
\ndate of the seizure without recording reasons for retaining the
\nsame in writing and taking approval of the Chief
\nCommissioner or Commissioner for such retention.  Chief
\nCommissioner is mandated not to authorize the retention of
\nbooks of account and other documents under the proviso to
\nsub-section (8) and not to retain the books of account and
\nother items for a period exceeding 30 days after all the
\nproceedings under the Act in respect of the years for which the
\nbooks of account, other documents, money, bullions, jewellery
\nor other valuable articles or things are relevant.  Under sub-
\nsection (9) the persons from whose custody the books of
\naccount and other documents are seized is entitled to make
\nnotes thereof and take extracts therefrom in the presence of
\nthe authorized officer.  Sub-sections (9) and (10) are of the
\nsame nature.  Sub-section (11) provides that if any person
\nobjects for any reason to an order made under sub-section (5),
\nhe can within 30 days of the date of such order make an
\napplication to the Chief Commissioner stating the reasons
\ntherein for such objections and requesting for appropriate
\nrelief in the matter.  Further, sub-section provides for
\napplicability of Code of Criminal Procedure and making of
\nrules by the board in search or seizure etc.  <\/p>\n
The section considered as a whole, shows that it has its
\nown procedure for the search, seizure, determination of the
\npoint in dispute, quantum to be retained and also the
\nquantum of the tax and interest on the undisclosed income.
\nUnder sub-section (11) as it existed till 31.5.2002, the person
\naggrieved has been given the right to file an application (in
\nplace of appeal) objecting to the order passed under sub-
\nsection (5) and request for appropriate relief in the matter.  It
\nhas all the fortifications of a code.  This provision exists in
\ncomplete isolation of the other provisions of the Act.   It has
\nthe trappings of small code in itself.\n<\/p>\n
The proceedings under Section 132(5) as it existed till
\n31.5.2002 are of a quasi-judicial nature as it provided
\naffording of reasonable opportunity to the person concerned of
\nbeing heard and pass an order after making an enquiry as
\nmight be prescribed.  Enquiries under sub-section 132(5) is to
\nenable the assessing officer to determine the tax liability of the
\nassessee in a summary manner and determine the
\nundisclosed income in relation to the money, bullion,
\njewellery  etc. seized under Section 132 and retain the assets
\nseized till the regular assessment is framed.  The order passed
\nunder Section 132 (5) is for the purpose of retaining the assets
\nseized and it is subject to the framing of the regular
\nassessment.  Whatever portion of the money or other articles
\nseized is explained in a satisfactory and reasonable manner by
\nthe person from whom the same was seized, are returned to
\nhim and the rest are to be retained.   As stated earlier, no
\nappeal lies against the order passed under Section 132, only
\nan application lies to the Chief Commissioner or
\nCommissioner as permitted by Section 132(11).\n<\/p>\n
Search and seizure under Section 132 is a serious
\ninvasion into the privacy of a citizen, therefore, it has to be
\nconstrued strictly.  \tSub-section (4A) was inserted by Taxation
\nLaw (Amendment) Act, 1975 with effect from 1.10.1075 to
\npermit a presumption to be raised in the circumstances
\nmentioned therein.  Before the insertion of sub-section (4A)
\nthe onus of proving that the books of account, other
\ndocuments, money bullion, jewellery etc. found in possession
\nor control of a person in the course of a search belonged to
\nthat person was on the Income Tax Department.  Sub-section
\n(4A) enables an assessing authority to raise a rebuttable
\npresumption that such books of account, money, bullion etc.
\nbelonged to such person; that the contents of such books of
\naccount and other documents are true, and, that the
\nsignatures and every other part of such books of account and
\nother documents are signed by such person or are in the
\nhandwriting of that particular person.
\nRaising of such presumption has been enacted by the
\nLegislature to enable the assessing authority to make a
\nprovisional adjudication within the time frame prescribed
\nunder Section 132.  Otherwise it may not be possible to do so.
\nThe object of introduction of Section 132 is to prevent the
\nevasion of tax, i.e., to unearth the hidden or undisclosed
\nincome or property and bring it to assessment.  It is not
\nmerely an information of undisclosed income but also to seize
\nmoney, bullion etc. representing the undisclosed income and
\nto retain them for the purposes of realization of taxes,
\npenalties etc.  Search and seizure is a serious invasion in the
\nprivacy of the person.  Section 132 which is a complete code
\nby itself provides that the money, bullion or the books of
\naccount etc. should not be retained unnecessarily and that the
\nprovisional assessment made under Section 132 for the
\npurpose of retention of the books is passed within a specified
\ntime in accordance with law.  It provides that the books of
\naccount, money and bullion which are not required are not
\nretained unnecessarily thereby causing harassment to the
\nperson concerned.  In order to see that the assessment order
\nis framed within the time frame provided under Section 132,
\nlegislature provided for a rebuttable presumption to be raised
\nagainst the person from whose possession and control the
\nbooks of account, money, bullions etc. are seized so that the
\norder can be passed within the time frame provided under
\nSection 132.\n<\/p>\n
A presumption is an inference of fact drawn from other
\nknown or proved facts.  It is a rule of law under which courts
\nare authorized to draw a particular inference from a particular
\nfact.  It is of three types, (i) “may presume”, (ii) “shall presume”
\nand (iii) “conclusive proof”.  “May presume” leaves it to the
\ndiscretion of the Court to make the presumption according to
\nthe circumstances of the case.  “Shall presume” leaves no
\noption with the Court not to make the presumption.  The
\nCourt is bound to take the fact as proved until evidence is
\ngiven to disprove it.   In this sense such presumption is also
\nrebuttable.  “Conclusive proof” gives an artificial probative
\neffect by the law to certain facts.  No evidence is allowed to be
\nproduced with a view to combating that effect.  In this sense,
\nthis is  irrebuttable presumption.\n<\/p>\n
The words in sub-section (4) are “may be presumed”.
\nThe presumption under sub-section (4A) therefore, is a
\nrebuttable presumption.  The finding recorded by the High
\nCourt in the impugned judgment that the presumption under
\nsub-section (4A) is a irrebuttable presumption in so far as it
\nrelates to the passing of an order under sub-section (5) of
\nSection 132 and rebuttable presumption for the purpose of
\nframing a regular assessment is not correct.  There is nothing
\neither in Section 132 or any other provisions of the Act which
\ncould warrant such an inference or finding.\n<\/p>\n
Presumption under sub-section (4A) would not be
\navailable for the purpose of framing a regular assessment.
\nThere is nothing either in Section 132 or any other provision of
\nthe Act to indicate that the presumption provided under
\nSection 132 which is a self contained code for search and
\nseizure and retention of books etc. can be raised for the
\npurposes of framing of the regular assessment as well.
\nWherever the legislature intended the presumption to
\ncontinue, it has provided so.  Reference may made to Section
\n278D of the Act which provides that where during the course
\nof any search under Section 132, any money, bullion, jewellery
\nor other valuable articles or things or any books of account
\netc. are tendered by the prosecution in evidence against the
\nperson concerned, then the provisions of sub-section (4A) of
\nSection 132 shall, so far as may be, apply in relation to such
\nassets or books of account or other documents.  This clearly
\nspells out the intention of legislature that wherever the
\nlegislature intended to continue the presumption under sub-
\nsection (4A) of Section 132, it has provided so.  It has not been
\nprovided that the presumption available under Section 132
\n(4A) would be available for framing the regular assessment
\nunder Section 143 as well.\n<\/p>\n
This is also evident from the fact that whereas the
\nlegislature under Section 132 (4) has provided that the books
\nof account, money, bullion, jewellery and other valuable
\narticles or things and any statement made by such person
\nduring examination may thereafter be used as evidence in any
\nother proceedings under the Act but has not provided so
\nunder sub-section (4A) of Section 132.  It does not provide that
\nthe presumption under Section 134A would be available while
\nframing the regular assessment or for that matter under any
\nother proceeding under the Act except under Section 378D.\n<\/p>\n
Section 132 being a complete code in itself cannot
\nintrude into any other provision of the Act.  Similarly, other
\nprovisions of the Act cannot interfere with the scheme or the
\nworking of Section 132 or its provisions.\n<\/p>\n
Presumption under Section 132 (4A) is available only in
\nregard to the proceedings for search and seizure and for the
\npurpose of retaining the assets under Section 132(5) and their
\napplication under Section 132B.  It is not available for any
\nother proceeding. except where it is provided that the
\npresumption under Section 132 (4A) would be available.\n<\/p>\n
\tIn our considered view, the High Court of Allahabad in
\nPushkar Narain Sarraf (supra) and the High Court of Delhi in
\nDaya Chand (supra) have taken the correct view in holding
\nthat the presumption under Section 132(4A) is available only
\nin regard to the proceedings for search and seizure under
\nSection 132.  Such presumption shall not be available for
\nframing the regular assessment.  The High Court of Karnataka
\nin the impugned judgment has clearly erred in holding to the
\ncontrary.  Consequently, question No.1 of the Revenue is
\nanswered in the affirmative, i.e. against the Revenue and in
\nfavour of the assessee.\n<\/p>\n
It may be clarified that though presumption under
\nSection 132(4A) is not available to authorities while framing
\nthe regular assessment but the material seized can be used as
\na piece of evidence in any other proceedings under the Act, all
\ncontentions are left open.\n<\/p>\n
For the reasons stated above, appeals are accepted and
\nthe order passed by the High Court is set aside. The orders
\npassed by the assessing authorities as well as the CIT
\n(Appeals) are vitiated as they have proceeded to frame the
\nassessment raising the presumption under sub-section (4A) of
\nSection 132.  The same are set aside and the case is remitted
\nback to the assessing authority for framing the assessment
\nafresh in accordance with law.  Question No. 2 claimed by the
\nRevenue and the question No. 2 claimed by the assessee are
\nreturned unanswered as the case is being remitted back to the
\nassessing authority for framing a fresh assessment.\n<\/p>\n
We are not recording any opinion as to the merits of the
\ncase.  The assessing authority shall now frame the assessment
\nin accordance with law, without being influenced by any of the
\nobservations made in the previous orders or this order.\n<\/p>\n
Accordingly, appeals are allowed.  There will be no order
\nas to costs.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India P.R. Metrani vs Commissioner Of Income Tax, … on 15 November, 2006 Author: Bhan Bench: Ashok Bhan, Dalveer Bhandari CASE NO.: Appeal (civil) 5673-5675 of 2002 PETITIONER: P.R. Metrani RESPONDENT: Commissioner of Income Tax, Bangalore DATE OF JUDGMENT: 15\/11\/2006 BENCH: ASHOK BHAN & DALVEER BHANDARI JUDGMENT: J U D G M […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-187787","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nP.R. 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