In this appeal assessee challenges jurisdiction of Commissioner in respect of revisional power under section 263 of Income-tax Act, 1961 (' Act '). Objection is also raised that considering merits, order of ITO passed under section 132(5) of Act should not have been set aside with direction to pass fresh order after re-verification of facts and evidence available. 2. In this case, proceedings under section 132 were taken and articles including jewellery and ornaments, silver utensils and fixed deposits were seized on 11-12-1981, and order under section 132(5) was passed on 11-3-19,82 for releasing seized materials and for this, approval of IAC was also obtained on same day. On 19-3-1982, assessee wrote letter to Commissioner for releasing seized materials as per order under section 132(5). On 26-3-1982, Commissioner wrote to IAC, by name and informed that order under section 132(5) was passed and proceedings initiated under section 132 were dropped. Therefore, materials seized should be released immediately. Subsequently, however, Commissioner invoked provisions of section 263 vide notice dated 3-4-1982 on some ground. After considering objections made by assessee, he set aside order of ITO under section 132(5) and directed him to make fresh assessment in accordance with law. He held as follows: 1.Order under section 132(5) passed by ITO has not mentioned any reasons for his decision, though, however, he recorded these reasons in separate note which formed part of record. 2. ITO accepted part of ornaments seized as belonging to Smt. Premlataben C. Khetan, daughter-in-law of assessee, and rest of ornaments were accepted to be belonging to Smt. Savitriben, wife of assessee. In doing so, he did not verify returns filed by two ladies but merely relied upon certificate of chartered accountants to effect that two ladies were being assessed to wealth-tax in Bombay. 3. In case of Smt. Premlataben, he found on verification of records of two ladies at Bombay that returns of wealth for assessment years 1976- 7 7 to 1981-82 were filed on 12-1-1982, i.e., after date of search and, therefore, came to conclusion that jewellery seized had not been disclosed prior to search. Besides in case of Smt. Premlataben, report of approved valuer in respect of jewellery was dated 31-12-1981 and certificate certified that he had personally inspected jewellery, etc., on 31-12-1981 but on that day, ornaments were in possession of income-tax department. 4. In respect of Smt. Savitriben also, ornaments received by her mother- in- law, who died in 1975, were not verified properly inasmuch as in returns for assessment years 1976-77 and 1977-78, these ornaments were not disclosed. He rejected submission of assessee that Commissioner had no power to invoke section 263 in respect of order under section 132(5). H e also rejected submission of assessee on merits of case. He further observed that ITO passed order in pursuance of erroneous direction of IAC, which was obviously prejudicial to interests of revenue. 3. At time of hearing, learned counsel appearing on behalf of assessee submitted paper book containing 75 pages and made lengthy submissions. Briefly, they are as follows: 1. Considering voluminuous inquiries and statements recorded from time to time, it cannot be said that ITO had not applied his mind. Therefore, there was no error in order of ITO. Besides, proceedings under section 132(5) were in respect of summary assessments and not regular assessment. Therefore, there was no question of interests of revenue being prejudiced. This point can be taken up only on regular assessment which was stilt pending. 2. Since order under section 132(5) was passed with previous approval o f IAC, Commissioner had no jurisdiction on basis of ratio laid down in case of East Coast Marine Products (P.) Ltd. v. ITO [1983] 4 ITD 73 (Hyd.)(SB). 3. Even on merits, ITO had recorded reasons in detail in separate sheet forming part of record and order under section 132(5) only in respect of release of seized materials cannot be said to be order without reasons. 4. On merits, in respect of Smt. Premlataben who is assessed to wealth- tax, even if returns were filed after search, ITO had taken various details orally as well as in writing and had also considered evidence including, inter alia, place from which ornaments were found, viz., from bed-room of daughter-in-law and ornaments were claimed by her and accepted as such in wealth-tax returns. In respect of jewellery certificate, dated 31-12-1981, approved valuer had personally inspected in May 1981 when also initially valuation report was obtained. Valuation report dated 31-12- 1981 was only subsequent report because for three years first valuation report was valued as per direction of CBDT. 5. In respect of Smt. Savitriben also, will was verified by ITO. Not only that, even parties who attested will were summoned and their statements recorded. Even return filed under Estate Duty Act, 1953, was also on record. Besides, there was ample material which was considered by ITO. 4. learned departmental representative submitted that not only there w s error, but it was prejudicial to revenue. Since department apprehended that there might be loss of revenue if seized materials were released because if, subsequently, demand is raised, there might be difficulty in collecting same. Reliance was placed on decision of Gujarat High Court in case of Addl. CIT v. Mukur Corpn. [1978] 111 ITR 312. In respect of ornaments found in bed-room of daughter-in-law, it was submitted that premises of assessee were raided and, therefore, it cannot be said that ornaments belonged to daughter-in-law only. Analogy was sought to be drawn from social affinity which is now recognised even under section 64 of Act. Besides, search statements at time of seizure are recorded only in summary manner and, therefore, there cannot be anything sacrosanct about them. However, subsequent evidence and inquiries are more important. Dealing with aspect of finding in stay proceedings given in order of Tribunal in stay proceedings, it was submitted that same cannot be considered final. 5. In reply, learned counsel submitted that he had not advanced other arguments regarding order having been passed out of time, etc. Besides, ITO has passed fresh order under section 132(5) on basis of Commissioner's direction retaining seized materials. However, regular assessment is not yet taken up. 6. We have considered materials to which our attention was drawn. We have also considered anxiously submissions made at Bar. In our opinion, t h e order of Commissioner passed under section 263 requires to be cancelled. Our reasons are as follows: 6.1 Essentially, order passed under section 132(5) is order by IAC and, therefore, Commissioner has no power to revise same. Section 132(5) specifically mentions that order is required to be passed within 90 days of seizure only with previous approval of IAC. Therefore, passing of order by ITO after making necessary inquiries is to be done only with previous approval of IAC. order contemplates releasing or otherwise of material seized and retained in custody after estimating undisclosed income in summary manner to best of judgment, calculating amount of tax on income so estimated, determining amount of interest as also penalty imposable, specifying amount that would be required to satisfy any existing liability or those liabilities specified under section 230A of Act in respect of which assessee is in default and thereafter retaining such assets or part thereof as are in his opinion sufficient to satisfy aggregate of liabilities. proviso to same section also enables ITO, with previous approval of Commissioner, to release assets or such part thereof as he may deem fit. This envisages that decision taken under section 132(5) regarding release or otherwise is always by at least two administrative authorities, usually ITO, whose decision is approved by IAC and secondly, in cases where satisfactory arrangements for payments of taxes is made as per proviso to section 132(5), two authorities would be ITO with previous approval of Commissioner. Under this section, essentially order contemplates wholly decision regarding retention or otherwise, any part or fully assets seized and remaining in custody of department. Therefore, decision taken by ITO for releasing of assets seized with previous approval of IAC, which is condition precedent, is in substance decision by IAC IAC, which is condition precedent, is in substance decision by IAC himself. To put it simply, because of nature of proceedings and extent of inquiry, character of order passed under this section will tantamount to only decision and, therefore, usually order passed under this section would not contain detailed reasons to arrive at particular decision as is usually done in case under appeal. Since approval of IAC is necessary condition and since ITO is conducting inquiries, etc., under direct supervision of IAC, decision initially taken by ITO and approved by IAC acquires some sort of sanctity and finality so far as revenue is concerned. It cannot be denied that IAC is acting in quasi-judicial capacity and exercises judicial functions. Therefore, order passed by ITO under section 132(5), with previous approval of IAC, is order by IAC himself and this order cannot be revised under section 263. reliance placed by learned counsel for assessee in Special Bench decision of Tribunal in case of East Coast Marine Products (P.) Ltd. is rightly placed so as to derive guidance and support though case was decided with reference to section 144B of Act. We are much more fortified in our above view by decision of Allahabad High Court in case of Ramlal Kishore Lal v. CIT [1972] 84 ITR 138. In this case, their Lordships were concerned with revisional powers under section 263, read with section 271(1)(c), of Act. provisions governing penalties for assessment year 1962-63 required previous approval of IAC. Sub-section (6) of section 28 of Indian Income-tax Act, 1922 (' 1922 Act ') provided that: " Income-tax Officer shall not impose any penalty under this section without previous approval of Inspecting Assistant Commissioner." During assessment proceedings for year 1962-63, notice for concealment for which proceedings under section 271(1)(c) of 1961 Act (corresponding to section 28(1)(c) of 1922 Act) were initiated for which approval of IAC was sought for. office of IAC put up note stating as under: " No penalty on account of cash credit added back as income from undisclosed sources is tenable and may be dropped if approved." Below this office note, IAC wrote: " No penalty " and signed his name below it on 25-9-1963. Thereafter, on 3-10-1963, ITO made following entry in order sheet of his records: " Penalty dropped vide IAC-P-e-M.O.A.Alld./63-64 dated 9-9-1963." On same date, ITO wrote to assessee saying: " This is to inform you that your penalty proceedings started under section 271(1)(c) for assessment year 1962-63 have been dropped." On above basis, question arose as to whether words ' no penalty ' written by IAC constituted order made under section 274(2)/271(1)(c) of Act or not. Their Lordships held that it was order. While reversing decision of Tribunal that it was only formal requisite of proceedings before order could be made, their Lordships observed that it was open to IAC and will be desirable that when reference was made to him by ITO he should apply his mind to question, whether or not it was case of penalty or not. They further observed that ITO made entry in order sheet noting that penalty proceedings had been dropped and they referred in that behalf to communication received from IAC and stated that when ITO made such entries, ITO cannot be considered to have made order. [Emphasis supplied]. Similar is position in case under appeal. Indeed, therefore, ITO had no jurisdiction to pass order under section 132(5) because such jurisdiction entirely rested with IAC who took effective decision releasing assets. powers of ITO had no characteristic of independence nor were unfettered; jurisdiction, if any, was administrative one. There was nothing more to be done. ITO could not, by subsequent order, vary decision taken by IAC; it was done so not because law compelled him to do so, but because he thought it to be right decision. We, therefore, hold that Commissioner had no jurisdiction to revise order passed under section 132(5) passed with previous approval of IAC. 6.2 Coming to aspect of merits also, we find that revenue has no case. Two conditions are required to be satisfied for legally invoking provisions of section 263, viz., order of ITO must be erroneous and also prejudicial to interests of revenue. order which cannot be called prejudicial to interests of revenue, cannot be contemplated within scope of section 263. It is admitted fact that section 132(5) deals with releasing or otherwise of assets seized on basis of estimated income, pending regular assessment under section 143 of Act. Therefore, to say that assets are required to be retained to safeguard recovery of anticipated demand, would require good amount of material on record against assessee by bringing on record facts regarding assessee having been found defaulter in payment of taxes or apprehension of revenue that once assets are released, demand to be raised in future are likely to be jeopardised because of present financial position of assessee or such other factors which may justify such apprehension. Nothing is brought on record in this regard. On contrary, on query from Bench, learned counsel for assessee informed that there was no justification for such apprehension. With vide powers, revenue has regarding recovery of tax etc., we do not feel there is any justification for such apprehension. Therefore, submission of learned departmental representative that order of ITO was prejudicial to interests of revenue cannot be accepted. Moreover, order under section 132(5) is basically summary order in sense that no detailed scrutiny of case is required to be done, factual position apart. enquiry only centres round to find whether any income or wealth has escaped assessment. If on broad enquiries it is found that prima facie there is no reason to believe that such position exists, then before releasing assets incidental enquiry regarding advisability or otherwise of retaining assets for outstanding taxes is considered and if no such circumstances exist, decision for releasing of assets is taken and necessary order passed. Hence, this being summary assessment based on power motivated with intention to unearth escaping income or wealth, primarily actions are not taken with purpose to ensure recovery of outstanding dues. Hence, department cannot be allowed to withhold assets without there being case as such. Since this second condition is not fulfilled, we refrain from commenting elaborately upon decision in respect of fulfilling first condition as to whether order of ITO was erroneous. Suffice it to say that one of two conditions necessary for invoking provisions of section 263 is not fulfilled and, therefore, order of Commissioner requires to be set aside on this ground also. 6.3 One more aspect which is required to be considered is that on 26-3- 1982, Commissioner has himself intimated to IAC to release seized materials immediately. Once this decision is taken by Commissioner himself, we fail to understand how notice dated 3-4-1982 for proposed action under section 263 was thought proper. Can it not be said that when Commissioner issued instructions to IAC on 26-3-1982 pursuant to order under section 132(5) dated 11-3-1982, this instruction itself took away right of Commissioner to invoke provisions of section 263 subsequently? After all, Commissioner, exercising judicial and administrative functions, cannot be expected to take decision for releasing seized materials and issue necessary instructions to his subordinates in this behalf and again, subsequently, have course to provisions of section 263 for purpose of revising his own decision. But since this aspect has not been dealt with at Bar, we would refrain from giving our final opinion. 7. In result, order of Commissioner passed under section 263 on 17-4-1982 is set aside and order of ITO dated 11-3-1982 is restored. 8. In result, appeal is allowed. *** BASUDEV MANEKLAL KHETAN v. INCOME TAX OFFICER