Decided on April 13,1982



Anand Prakash, Accountant Member - (1.) THIS appeal is directed against the order under Section 263 of the Income-tax Act, 1961 ("the Act"), passed by the Commissioner in respect of the assessment year 1976-77. The facts of the case may be noted first to appreciate the arguments of the learned counsel whereby he assailed the order of the learned Commissioner as wholly unsupportable in law.
(2.) The assessee was an individual and was carrying on business in the name and style of Arun Steel Industries at 17/1C, Alipore Road. On 9-3-1976 His residential and business premises were searched under an authorisation issued by the Commissioner, West Bengal. In that search jewellery and lockers were discovered. The jewellery discovered was valued at Rs. 4,26,073. In proceedings under Sub-section (5) of Section 132 of the Act, the assessee explained vide his written explanation dated 26-4-1976 that the jewellery in question belonged to his wife, his daughter-in-law, Smt. Uma Devi Agarwalla, and his mother Smt. Manna Devi Agarwalla. The aforesaid three ladies also supported the assessee's claim and asked for the return of their jewelleries. A part of the jewellery valuing Rs. 35,129 was claimed by the assessee as his personal property. The WTO verified the claims lodged by the aforesaid persons with reference to their wealth-tax records and accepted the assessee's explanation to the extent of Rs. 2,74,826. The remaining value of the jewellery amounting to Rs. 1,51,247, rounded up to Rs. 1,51,250, was treated by him an unexplained income of the assessee. The aforesaid order under Sub-section (5) of Section 132 was passed by the ITO on 4-6-1976 with the prior approval of the IAC. Against the aforesaid order, the assessee filed an appeal with the competent authority in terras of Sub-section (11) of Section 132. The said competent authority happened to be the Commissioner himself. We understand that the said appeal is still pending for disposal with the Commissioner.
(3.) IN course of time, the ITO took up the regular assessment of the assessee in respect of the assessment year 1976-77. The proceedings for the regular assessment commenced on 11-1-1978 and ended on 16-2-1978. IN all five hearings were given to the assessee.;

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