The deeming fiction in section 132a(3) makes the requisition of assets equivalent to seizure under section 132, triggering the application of Explanation 5 to section 271(1)(c).

( 1 ) MR B B Naik, learned counsel for the Revenue. None for the respondent assessee, though served.

( 2 ) THE Income Tax Appellate Tribunal, Ahmedabad Bench a has referred the following question under section 256 (1) of the Indian Income Tax Act, 1961 for the opinion of this Court which relates to Assessment Year 1987-88 and arises out of Income Tax Appeal No. 4037/ahd/1990: whether the Appellate Tribunal is right in law and on facts in deleting the penalty levied under section 271 (1) (c) of the Act ??

( 3 ) THE short facts giving rise to the present Reference are that the assessee is an individual, the assessee and one Shri Mohmed Noormohmed were travelling in a car on 18. 6. 1986, they were apprehended by police authorities and cash of Rs. 12,13,850/- was recovered from their possession and the same was handed over to the Enforcement Authorities. The Income Tax authorities requisitioned the same under section 132a of the Income Tax Act, 1961 and took the money in their custody. During the course of the investigation, it was earlier claimed that the cash of Rs. 8,50,000/- belonged to M/s. Belite Founders of which the assessee was a partner and the balance amount of Rs. 3,63,850/- was belonging to M/s. Amrut Sales India of Rakhial, Ahmedabad. The assessee however, agreed to surrender the said amount as income and submitted that the tax thereon will be paid.

( 4 ) ON 21. 6. 1986, he sent a letter to the A. D. I. submitting inter alia, that the amount of Rs. 12,13,850/- be treated as his personal income from the non-disclosed source for the current financial year 1986-87 relevant to Assessment Year 1987-88 with a further prayer that no penalty be imposed and he be not prosecuted, no action be taken against him for the past years. He also showed his readiness and willingness to submit an estimate of advance tax for the Assessment Year 1987-88. He also prayed that some amount be released in his favour enabling him to pay advance tax. Later, on 26. 6. 1986, he submitted a petition for disclosure of income under Voluntary Disclosure Scheme, 1986.

( 5 ) THE income Tax Officer, vide letter dated 12. 9. 1986 informed the assessee that his case would not fall in the Amnesty Scheme and the return would be processed in the normal course. Thereafter a sum of Rs. 5,98,952/- was adjusted by the department towards payment of the advance tax and the receipt was issued in favour of the assessee. The assessment was completed thereafter and subsequent thereto, penalty proceedings under section 271 (1) (c) were also drawn against the assessee.

( 6 ) THE Assessing Officer, after considering the assessee s reply dated 22. 4. 1989, imposed penalty of Rs. 6,00,810/- under section 271 (1) (c ). The CIT confirmed the said order. Therefore, the assessee took up the matter before the Tribunal. The Tribunal observed that explanation 5 appended to Section 271 (1) (c) of the Act would not be applicable to the present case because disclosure of the income was not a result of search or seizure but in fact the amount was already recovered by the police and was thereafter requisitioned by the department under section 132a of the Act. It accordingly held that Explanation 5 would not be applicable and the AO would not be entitled to levy any penalty. As the Revenue is dissatisfied with the said order, it made an application for Reference. The Tribunal, observing that the matter raises a question worth reference, has, therefore, made this Reference.

( 7 ) MR B B Naik, learned counsel for the Revenue submits that the Tribunal went wrong in observing that the amount requisitioned under section 132a cannot be put at par with the amount which is seized in a search. He submits that perusal of section 132a (3) would show that whenever the amount seized by any other authorities is requisitioned by the Income Tax Department, then such requisition is put at par with the seizure and provisions of sub-section (4a) to (14), both inclusive, of section 132 and s