A.N. Verma, J. - (1.) AT the instance of the assessee, the following three questions have been referred for our opinion : "(1) Whether, on the facts and in the circumstances of the case and on a correct and true interpretation, the Appellate Tribunal was justified in law in taking the view that the presumption raised under Section 132(4A) of the Income-tax Act, 1961, was limited in its scope and was rebuttable ? (2) Whether, on the facts and in the circumstances of the case and on a correct and true interpretation, the Appellate Tribunal was justified in law in taking the view that the existence of the presumption available under Section 132(4A) of the Income-tax Act, 1961, did not do away with the burden which the assessee had of establishing the requisites of cash credits under Section 68'of the Act ? (3) Whether, on the facts and in the circumstances of the case and in view of the answers to questions Nos. 1 and 2, the Appellate Tribunal was justified in law in confirming the additions sustained by the Appellate Assistant Commissioner of Income-tax in respect of the various creditors for the assessment years 1972-73 to 1976-77 ?"
(2.) THE facts relevant for answering the aforesaid questions are these. THE assessee is an individual who carried on the business of pawning and sarrafa. In addition, he also derived income from house property. THE questions referred for our opinion relate to cash deposits of the petitioners for each of the assessment years in question, namely, 1972-73 to 1976-77. THE assessee voluntarily filed a return on December 20/30, 1972, declaring an income of Rs. 6,000. THE assessment was, accordingly, completed under Section 143(1) on January 15, 1973. He, however, did not file any return for the assessment years 1973-74 to 1975-76 under Section 139 of the Income-tax Act. A search of the business and residential premises of the assessee was, therefore, ordered and it took place on June 22, 1976, as a consequence of which account books, diaries, pawning registers and other documents pertaining to the years 1968 to 1976 were seized. THE seizure was followed by reassessment which took place under Section 147(a) for the assessment years 1972-73 to 1975-76. In respect of the assessment year 1976-77, assessment was made under Section 139(2). In response to the notices issued to the assessee, he filed returns for the assessment years 1973-74 to 1976-77 declaring an income of Rs. 6,000, Rs. 6,000, Rs. 6,500 and Rs. 7,500, respectively. For the assessment year 1972-73, however, the income declared was the same as originally declared. THE account books seized were found to be incomplete. However, the gathond registers showed that some amounts had been advanced by the assessee and that the assessee had repawned ornaments to various individuals for obtaining loans from them at a lower rate of interest. The Income-tax Officer accepted all the credit entries save 20 credits specified in the order of the Appellate Assistant Commissioner. These 20 credit entries were rejected by the Income-tax Officer as unexplained. The details of these 20 entries which were treated by the Income-tax Officer as unexplained have been given in the order of the Income-tax Appellate Tribunal and it is unnecessary to elaborate the same in view of the limited questions which have been referred for our opinion. The amounts represented by these credits were added by the Income-tax Officer to the assessable income of the assessee. Aggrieved by the orders of assessment, the assessee filed an appeal before the Appellate Assistant Commissioner. In appeal, it was contended on behalf of the assessee that the Income-tax Officer should have accepted all the deposits without any exception in view of the presumption arising under Section 132(4A) of the Income-tax Act. It was further contended before the Appellate Assistant Commissioner that the provisions of Section 68 of the Income-tax Act had no application in view of the presumption arising under Section 132(4A). The Appellate Assistant Commissioner rejected these contentions and held that Section 132(4A) merely enacted a rule of evidence and that the presumption arising thereunder was in any case a rebuttable presumption. Consequently, it was open to the Department to examine the deposits and the evidence collected under Section 131 of the Income-tax Act for the purpose of ascertaining whether the cash credits had been duly established by the assessee. The Appellate Assistant Commissioner, however, found that some credits were petty amounts falling below Rs, 1,000 and that benefit should be given to the assessee in regard to such entries as it was highly improbable that such entries were fictitious and did not represent the real state of things. Consequential relief was, accordingly, given by the Appellate Assistant Commissioner to the extent of the amount represented by such credits. The Appellate Assistant Commissioner, accordingly, ordered the deletion of such credits from the income as assessed by the Income-tax Officer.
(3.) THE assessee took the matter by way of further appeal before the Income-tax Appellate Tribunal. THE Tribunal endorsed the view of the Appellate Assistant Commissioner in regard to the extent and nature of the presumption contemplated under Section 132 (4A) as well as the applicability of the provision under Section 68. THE Tribunal observed that the presumption arising under Section 132(4A) was in the first place not irrebuttable, and, secondly, it extends only to the identity of the person making the entries or the correctness of the entries, etc. It, however, did not have the effect of excluding or overriding the application of Section 68 of the Act. It held that the ultimate burden to prove the genuineness of the cash credits in terms of Section 68 was on the assessee and that the same was not affected by Section 132(4A). Taking the first question first, we are clearly of the opinion that the presumption arising under Section 132(4A) is available only in regard to and in the context of search and seizure. Sections 132 to 132B of the Income-tax Act, in our opinion, embody an integrated scheme laying down comprehensively the procedure for search and seizure and the power of the authorities making the search and seizure to order the confiscation of the assets seized under Section 132 of the Act, that is, the presumption arising under Sub-section (4A) of Section 132 applies only in relation to the provisional adjudication which is contemplated under Sub-section (5) of Section 132. Sub-section (5) of Section 132 provides for estimation of the undisclosed income or the calculation of the amount of tax on the income so estimated and the determination of the amount of interest payable or the amount of penalty imposable in a summary manner. For this limited purpose, the Legislature has provided under Section 132(4A) that the books of account, other documents, money, bullion, jewellery or other valuable Articles seized from the possession of the assessee shall be presumed to belong to the assessee if they are found in the possession or control of the assessee in the course of the search. A similar presumption may also be made as to the correctness of the contents of the books of account so seized. So also the signature and every other part of the books of account may be assumed to be in the handwriting of the person by whom it is purported to have been written.;