1. The assessee has preferred this appeal against the order dated 24-9-1980 of the Commissioner, passed under Section 263 of the Income-tax Act, 1961 ('the Act'), who set aside the assessment made by the ITO and thereby directed him to pass a fresh order determining the amount as laid down in clauses (i), (ii), (iia) and (iii) of Sub-section (5) of Section 132 of the Act and to retain the assets seized to the extent that they were sufficient to satisfy the aggregate of the amount referred to in Section 132(5)(ii), (iia) and (iii).
2. The relevant facts in brief are that in a search of the assessee's premises at Khar on 11-7-1978, diamonds of the value of Rs. 50,750 was seized along with other jewellery valued at Rs. 36,504. In the proceedings under Section 132(5), the ITO considered the evidence and heard the assessee's representative and came to a conclusion that no undisclosed income was involved in the possession of the diamonds and jewellery and, therefore, no tax attached to the assessee in respect of the ownership of these assets. Thus, in terms of clauses (i), (iia) and (iii) of Sub-section 5 of Section 132, he held that there was no need to retain any portion of the seized assets under this section and ordered for the release of the same.
However, the Commissioner in exercising his powers under Section 263 found that the order of the ITO was apparently not in conformity with the provisions and the intention of Section 132(5), since he has determined the issue on the basis of possibilities and not on the basis of findings ; that it was represented before the ITO that the assessee's wife Smt. Shoba had received diamonds and jewellery and gold ornaments at the time of her marriage ; that without considering any evidence in the matter, the ITO held that it was quite possible that the lady might own jewellery looking to the 'well-known status of the assessee's family in society' and nothing had been brought on record regarding the social standing of the assessee's family ; that as pointed out in the notice, the lady had given a statement at the time of seizure in which there was no claim that the ornaments were received at the time of marriage ; and the statement at that time was that she had received gold ornaments and diamonds from different relatives, without being able to pinpoint the exact years ; that the ITO did not attempt to resolve the contradictions in the statements and the various facts indicate that the ornaments were received much after the marriage. The ITO did not even examine the lady and enquire as to which relatives gifted the diamonds and in which years ; that in para 4 of the ITO's order, he considered the old ornaments worth Rs. 10,860 which was said to belong to the assessee's daughter Kumari Dhuru, aged 14 and the ITO accepted at face value the claim that she received these ornaments on occasions like birthdays and festivals. That, as remarked earlier, the receipt of gold ornaments by the daughter appeared to be a one way traffic with no corresponding gifts of gold ornaments by the assessee to other relatives ; and the ITO had not called for the particulars of the gifts.
Thus, on the basis of the aforesaid reasons, the Commissioner issued show-cause notice on the assessee that why the order of the ITO under Section 132(5) is not erroneous insofar as it is prejudicial to the interests of the revenue.
The assessee challenged the show cause notice on the ground that the proceedings under Section 263 were without jurisdiction in view of the fact that the approval of the IAC had been obtained for passing the order under Section 132(5) by the ITO and as such his order is virtually an order passed by the IAC and since Section 263 does not empower the Commissioner to revise the order of the IAC, the action is misconceived and should be dropped. If the order passed by the ITO under Section 132(5) is cancelled or set aside there would be no order subsisting under which the department would be entitled to retain the seized assets.
Commissioner did not accept the aforesaid contention of the assessee and as such, he rejected these observing as under : (6). consider the objection of the assessee to be without merit.
Section 132(5) merely provides for approval of the draft order by the IAC but does not require that the IAC should himself pass the order. It is ultimately the ITO who passes the order and signs it.
As such, the Commissioner is competent to revise the order under Section 132(5). As regards the second limb of the assessee's objection, the same has been met by the Supreme Court in the case of Director of Inspection of Income-tax v. Pooran Mall & Sons  96 ITR 390. At para 2 on page 396 of the report, this contention was dealt with. So also Vasani & Co. v. CIT  112 ITR 819 (Guj.).
The ratio of these decisions is that the statutory limit of 90 days applies only to the initial order and not to any subsequent order which may be required to give effect to orders passed by superior authorities. Thus, the ITO can now pass a fresh order under Section 132(5) ordering the retention of the assets which will give legal effect to the proceedings.
(7). merits, it is argued that the assessee had established the status of his family and the ITO was justified in assuming that the lady would have ornaments of the value claimed. In support of this a copy of the assessment order in the estate duty case of the wife's mother dated 2-9-1960 is produced in which it is shown that she had gifted property worth Rs. 60,000 to her relations. This also appears to be a new argument and can be mainly disposed of. The estate duty order does not indicate the nature of the amount gifted and to whom it was gifted. It is noticed that jewellery of the lady had been separately assessed. No evidence is also available regarding the social standing of the assessee's wife.
(8). consider, therefore, that the ITO did not pass the order under Section 132(5) as required by the Section. The section requires that the ITO should exercise his best judgment in a summary fashion, on the basis of materials available. Now, apparently no materials were furnished to the ITO from which he could form a conclusion that the ownership of the diamonds and jewellery were explained satisfactorily. On the other hand, the ITO proceeded entirely on the basis of his imagination and on possibilities instead of on sound findings. The order of the ITO is, therefore, considered erroneous and prejudicial to the interests of revenue as in my opinion, the value of the diamonds, jewellery and gold ornaments said to belong to the assessee's wife and daughter as referred to ante represents undisclosed income in the hands of the assessee and there is no justification for release of the seized assets on the basis of the evidence which was produced before the ITO. The assessment is, therefore, set aside and the ITO is directed to pass a fresh order determining the amounts as laid down in clauses (i), (ii), (iia) and (iii) of Sub-section (5) of Section 132 and to retain the assets seized to the extent that they are sufficient to satisfy the aggregate of the amounts referred to in Section 132(5)(ii), (iia) and (iii).
3. The assessee, being aggrieved with the order of the Commissioner, has preferred his appeal.
Shri V.H. Patil, the learned counsel for the assessee, contends that an order passed by the ITO under Section 132(5) cannot be revised under Section 263, as it is not an order of assessment ; that an order passed under Section 132(5) by the ITO is not his order, rather it is the order of the IAC, since for passing the order under Section 132(5), the ITO has to take previous approval of the IAC ; that the order under Section 132(5) is a summary order and as such, it is not an assessment order, so much so, that the same is not a final order ; that an order under Section 132(5) is to be passed within 90 days from the seizure of the assets by the ITO on obtaining the approval of the IAC and the time taken for such approval cannot be excluded from the limit of 90 days and being so, if the Commissioner set aside the order of the ITO under Section 263, then the ITO gets more time than prescribed under Section 132(5) for passing the order, which is not within the jurisdiction of the Commissioner to extend the limitation under Section 132(5) for passing the order. Hence, an order under Section 132(5) cannot be revised by the Commissioner under Section 263.
On merits, Shri Patil contends that according to the status of the family, the ITO was justified in assuming that the lady would have ornaments of the value claimed and the reliance is placed on the assessment order in the estate duty case of the wife's mother dated 2-9-1960 as well as on the paper book containing pages 1 to 8 and that of the order of the ITO under Section 132(5).
On the other hand, Shri Gupta, the learned departmental representative, contends that the impugned order is justified and called for no interference. He relies on the order of the Commissioner and the decisions in the cases of Smt. Mukundkumari v. K.V.S. Namoondari, 17th ITO  118 ITR 433 (Bom.), (sic)  112 ITR 81. He further contends that the order under Section 132(5) is an appealable order and as such, the Commissioner is also having the powers under Section 263 to revise this order. On merits, he contends that the ITO is not justified in arriving at his conclusion, since the status of the family is not established by the assessee ; much more the decision on merits by the ITO is on surmises and conjectures. He relies on the order of the Commissioner.
4. We have heard the rival contentions and gone through the record before us. Since the order under Section 132(5) is an appealable order, as is evident to us from the provisions of Section 132(11) and (12), then it is also a subject-matter for the purpose of Section 263.
Therefore, we reject the first contention of Shri Patil as stated above.
Secondly, the bare reading of Section 263 shows that the Commissioner is having power under Section 263 for examining the record of any proceedings under the Act, provided that he considers that any order passed therein by the ITO is erroneous insofar as it is prejudicial to the interests of the revenue. Thus, it is clear to us that for exercising the powers under Section 263, the Commissioner is having jurisdiction in any proceedings provided that he is of the view that any order passed in such proceedings is erroneous insofar as it is prejudicial to the interests of the revenue and as such, we hold that his powers under Section 263 are not limited only to the order of assessment made by the ITO. Accordingly, we reject the second contention of Shri Patil, as stated above. Moreover, Section 132(5)(iii) clearly shows that an order under Section 132(5) is an order of regular assessment.
We also do not see any force in the contention of Shri Patil when he contends that an order under Section 132(5) is a summary order and the same is not final in view of the fact that when such order is an appealable order then it cannot be held that such order is not subject-matter of Section 263 as Section 263 is applicable to an order passed in any proceedings which does not mean that it should be only assessment proceedings and these can be summary proceedings also.
No doubt, Shri Patil contends that in passing the order under Section 132(5), the ITO has to take the prior approval of the IAC and as such, the Commissioner has no jurisdiction under Section 263 to revise the order under Section 132(5) ; since he can revise the order of the ITO and not that of the IAC. Reliance is placed on the decision of the Tribunal in the case of N.M. Virwani [IT Appeal No. 2227 (Bom.) of 1978-79, (assessment year 1973-74] decided on 4-8-1979. We do not see any substance in this contention of Shri Patil because the Tribunal in the aforesaid case did not consider the order under Section 144B of the Act, where the Tribunal held that the order passed by the ITO on the direction of the IAC under Section 144B is the order of the IAC and as such (sic) the jurisdiction of the Commissioner under Section 263 is ousted to revise such order ; because in passing the order under Section 144B, the ITO is bound to follow the directions "issued by the IAC whereas in passing the order under Section 132(5), he has to make the order with the previous approval of the IAC within 90 days, which means that the ITO is to pass the order within 90 days subject to the approval of the IAC, but the section does not say that he should do so according to the directions of the IAC and there is no material on the record to show that the ITO passed the order under Section 132(5) on the directions of the IAC.The very reading of Section 132(5) shows that it is merely a procedural section for the purpose of the previous approval of the IAC and being so, we hold that if the procedure is followed by the ITO for making the order under Section 132(5) then, it does not mean that the order under Section 132(5) is not that of the ITO but rather it is that of the IAC.Rex Cinema Co-owners, v. Sixth. ITO in CO. No. 134 (Bom.) of 1978-79 (arising out of IT Appeal No. 1154 (Bom.) of 1978-79), dated 13-7-1981) [since reported in  3 ITD 633], that even the provisions of Section 144B are procedural and when this is the latest position, then the order of the ITO even under Section 144B cannot be said to be that of the IAC.An approval of the IAC has to be obtained for levy of capital gains under Section 52(2) of the Act. Can it be said that such a levy is the order of the IAC, then there is no appeal under Section 246 of the Act against such levy. This is an anomalous position. Moreover, under Section 144B, the ITO sends the draft assessment to the IAC and the IAC on giving proper opportunity of being heard to the assessee, either accepts or rejects his objections raised in the draft assessment and thereby directs the ITO to act, accordingly. This is nowhere the position under Section 132(5). And the ITO in passing the order under Section 132(5), has to take the previous approval of the IAC.Therefore, on account of this distinguishing feature of the provisions of Section 144B and Section 132(5), we hold that an order under Section 132(5) is that of the ITO and not that of the IAC as in passing the order, the ITO is merely following the procedure laid down under Section 132.
We also do not see any force in the contention of Shri Patil when he says that the Commissioner in exercising the powers under Section 263 is extending the period of limitation of 90 days as stated above on account of the fact that when he set aside the order of the ITO and thereby directs him to make a fresh order according to his directions.
The reason is that he is within his powers to do so and reliance can be placed on the decision of the Hon'ble Supreme Court in the case of Director of Inspection of Income-tax v. Pooran Mall & Sons  96 ITR 390 where their Lordships held that an order made in pursuance of a direction given under Section 132(12) or by a Court in writ proceedings was not subject to the limitations prescribed under Section 132(5).
Similarly, their Lordships of the Gujarat High Court in Vasani & Co. v.CIT  112 ITR 819, held : When there is an order of remand passed by the higher authorities in appeal or revision or because of the answer given in reference or by the High Court in exercise of its original jurisdiction the time limit laid down in Section 275 of the Act will not apply ; that if Section 275 were literally construed as applying the time limit of two years in all cases, full effect cannot be given to the hierarchical scheme for the correction of penalty orders ; that a construction which accords with reason and justice, must be preferred to one which would completely defeat the intention of the Legislature without advancing the object of the provision.
Thus, in view of our above discussions and reasons thereto, we hold that the legal contentions of Shri Patil as reproduced above are having no substance. Hence, we reject these holding further that the Commissioner has jurisdiction under Section 263 in revising the order of the ITO passed under Section 132(5) if he, on the scrutiny of the record, comes to the conclusion that the order passed by the ITO under Section 132(5) is erroneous insofar as it is prejudicial to the interests of the revenue.
5. Now, we have to consider whether the order of the Commissioner is justified on merits of the case. We also hold that the Commissioner is justified in arriving at his conclusion on the merits of the case. The reason is that before the ITO, it was contended that the diamonds and jewellery seized belonged to the assessee's wife Smt. Suli (Shoba) Jethwani. The ITO accepted it observing as under : ...This jewellery represents only four items as narrated in the departmental valuer's report dated July 11, 1978. These ornaments were said to have been received by his wife at the time of their marriage in 1955 and they are said to be with her. Looking at the description mentioned in the valuer's report, it is quite possible that these articles were received by the assessee's wife at the time of marriage. Though the present value of these items is Rs. 58,750, its cost in 1955 could not have exceeded Rs. 10,000 considering the phenomenal rise to prices since then. And for the family of the assessee which was having a well known status in society. The likelihood of the possession of these articles can be accepted.
Apart from this, this lady also possesses gold ornaments of the value of Rs. 19,569 as on 1-8-1978. The weight of these ornaments is 326 gms.
and looking at the description of these articles, it is quite possible that she would have got these at the time of marriage. It is particularly noteworthy that the value of these ornaments at the time of marriage could have been, at the most, Rs. 3,000.
Gold ornaments worth Rs. 10,861 are said to belong to the assessee's daughter, Kumari Dhuru, aged 14 years. She is said to have received these at the time of birth, birthdays and festivals from relations. The description of the articles goes to prove that these are the usual type of articles as are worn by girls in Hindu families. As the amount is small and the ornaments, apparently, accumulated over the last fourteen years, these items can be taken as proved.
As regards the remaining items valued at Rs. 6,075, the articles are said to belong to the assessee himself which have been in his possession for a long time, i.e., at the time of birth and on subsequent occasions. The father of the assessee is a businessman who is regularly assessed to income-tax and wealth-tax and so was his grandfather. As such, there is every possibility of the possession of these articles by the assessee, particularly when these are simple articles usually worn by the male members of a Hindu family. From the aforesaid finding of the ITO, there is no doubt in our mind that he has not come to his conclusion on the material on record ; rather same is arrived at on inferences and surmises and conjectures, which cannot take a place of proof. The onus is on the assessee to prove that the assets seized belonged to the assessee and he is coming from a family of status, which onus is not discharged by the assessee.
Moreover, the Commissioner in deciding the case on merits, has assigned cogent and relevant reasons with which we agree and there is no material on record at this stage, on the basis of which we may be in a position to differ with him.