P.R. Metrani vs Commissioner Of Income Tax, Bangalore

FACTS The facts relevant for disposing of these references in short are.

P.R. Metrani and Y.R. Metrani were two brothers and are the members of the Joint Hindu Family. P.R. Metrani (HUF) assessee was a partner in a firm called M/s. R.N. Metrani and Sons. Y.R. Metrani was also a partner in this firm. P.R. Metrani as well as Y.R. Metrani have died during the pendency of these cases.

A search of the residential premises Ranganatha Nilaya was conducted by the Income Tax, Central Excise and Customs Departments on 30.06.1982 and 01.07.1982 and as well as the business premises where the business of the firm was being conducted. The residential premises of J.J. Bakale, nephew of P.R. Metrani were also searched. The search brought to surface unaccounted money, gold biscuits, gold jewellery, silver etc. besides some important documents. For the purpose of assessment for the assessment years 1981-82 and 1982-83 three documents were found to be relevant by the Assessing Officer and they were marked as PRM-1, PRM-7 and PRM-13 at the time of search and seizure, which were seized from the residential premises namely, 'Ranganatha Nilaya'. Statement of J.J. Bakale was recorded at the time of search. P.R. Metrani was away to Rajasthan on a business tour. He was examined after his return to Hubli on 13.7.1982. He denied the possession of PRM-1, PRM-13 and PRM-14. He also denied that these papers contain any writing made by him. The Assessing Authority made a summary adjudication order under Section 132(5) of the Income Tax Act, 1961 (for short "The Act"). He made certain additions and retained the assets seized.

Notice under Section 139(2) dated 17.9.1982 for the assessment year 1982-83 was served on the assessee on 21.9.1982. The appellant declared a total income of Rs.46,200/- and a net agricultural income of Rs.6,000/-. Notices under Section 143(2) and 142(1) were issued on several dates. Appellant appeared before the authorities on several dates and assessment came to be completed. The following additions were made in respect of the assessment year 1982-83:-

(i) estimating the undisclosed income (including the income from the undisclosed property) in a summary manner to the best of his judgment on the basis of such materials as are available with him ;

A presumption is an inference of fact drawn from other known or proved facts. It is a rule of law under which courts are authorized to draw a particular inference from a particular fact. It is of three types, (i) "may presume", (ii) "shall presume"

For the reasons stated above, appeals are accepted and the order passed by the High Court is set aside. The orders passed by the assessing authorities as well as the CIT (Appeals) are vitiated as they have proceeded to frame the assessment raising the presumption under sub-section (4A) of Section 132. The same are set aside and the case is remitted back to the assessing authority for framing the assessment afresh in accordance with law. Question No. 2 claimed by the Revenue and the question No. 2 claimed by the assessee are returned unanswered as the case is being remitted back to the assessing authority for framing a fresh assessment.

We are not recording any opinion as to the merits of the case. The assessing authority shall now frame the assessment in accordance with law, without being influenced by any of the observations made in the previous orders or this order.

Accordingly, appeals are allowed. There will be no order as to costs.