THE COMMISSIONER OF INCOME TAX, COCHIN vs. SMT.M.THANKAMMA, KOCHI-35

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN THURSDAY, THE 26TH NOVEMBER 2009 / 5TH AGRAHAYANA 1931 ITA.No. 48 of 2009() -------------------- IT(S&S)A.151/COCH/2004 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/RESPONDENT ---------------------------------------- THE COMMISSIONER OF INCOME TAX, COCHIN BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): --------------- SMT.M.THANKAMMA, 40/7634, LAKSHMI VIHAT, DORAISAMY IYER ROAD KOCHI-35. ADV. SRI.A.KUMAR THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 26/11/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

C .N. RAMACHANDRAN NAIR & V.K. MOHANAN, JJ. -------------------------------------------- I. T. A. No. 48 OF 2009 -------------------------------------------- Dated this the 26th day of November, 2009 JUDGMENT Ramachandran Nair, J. Appeal is filed by the revenue against the order of the Income-tax Appellate Tribunal cancelling block assessment completed against the respondent-assessee for the period from 1.4.1989 to 17.9.1998, pursuant to search made on 17/9/1998 and 30.9.1998. Search was conducted not only in the premises of the respondent-assessee but also in the premises of purchaser of two storied building from the respondent-assessee. Assessment is based on documents seized, which included a rough paper with noting pertaining to sale transaction, receipt of amounts, etc. stated to be containing the signature of the assessee, and sworn statements recorded under Section 132(4) of the Act. Even though assessment was confirmed in first appeal, the Tribunal on second appeal just relying on the decision of the Supreme Court in CIT V. P.V. KALYANASUNDARAM, 294 I.T.R. 49 (SC) allowed the appeal by quashing the block assessment confirmed in first

2 appeal. 2. During hearing, senior counsel for the revenue referred to the assessment order and the first appellate order and submitted that assessment is not based solely on one document, namely, Annexure E seized from the assessee. Counsel for the assessee on the other hand submitted that Annexure E does not contain sufficient materials to make assessment against the assessee. However, we find from the order of the assessing authority and that of the first appellate authority that block assessment against the assessee is not made solely on the basis of Annexure E document seized from her. On the other hand, accounts seized from the purchaser, valuation of property, and other materials are relied on by the first appellate authority in sustaining the assessment. The Tribunal assumed that assessment is solely based on one item of seized paper which is produced as Annexure E here and the Tribunal therefore cancelled the assessment stating that noting in such rough paper cannot be the sole basis for block assessment. In the first place, the Supreme Court does not state in so many words that notings in the scrap of paper seized in the course of raid are inadmissible in evidence. Secondly, we notice that the Tribunal has not even gone

3 through the assessment order and first appellate order against which second appeal was filed before it. Had the Tribunal gone through those orders, they would have come to the conclusion that the assessment was not merely based on one single document, but several other corroborative materials allegedly seized from the purchaser. Above all, the sworn statements recorded under Section 132(4) constitute evidence for the purpose of assessment. Since the Tribunal has not exercised jurisdiction properly, we allow the appeal by setting aisde the order of the Tribunal and remand the matter back to the Tribunal to call for records and decide the matter after giving opportunity to both sides. Since the assessment pertains to 1989-90 to 1997-98 we direct the Tribunal to dispose of the appeal within a period of three months from the date of receipt of a copy of this judgment by it. (C.N.RAMACHANDRAN NAIR) Judge. (V.K. MOHANAN) Judge. kk