Commissioner of Income Tax-II, Hyderabad vs. M/s. Hyderabad Race Club,

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON THURSDAY ,THE 14TH DAY OF FEBRUARY 2019 / 25TH MAGHA, 1940 ITA.No. 246 of 2013 AGAINST THE ORDER/JUDGMENT IN ITA 331/2012 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 24-05-2013 APPELLANT/S: RAJAN JEWELLARY KACHERITHAZHAM, MUVATTUPUZHA. RESPONDENT/S: THE COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, COCHIN. BY ADVS. SRI.P.K.R.MENON,SENIOR COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH SC FOR INCOME TAX OTHER PRESENT: SRI JOSE JOSEPH SC THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 14.02.2019, ALONG WITH ITA.5/2014, ITA.280/2013, ITA.283/2013, ITA.289/2013, ITA.293/2013, ITA.312/2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA Nos.246/2013 & connected cases ::2:: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON THURSDAY ,THE 14TH DAY OF FEBRUARY 2019 / 25TH MAGHA, 1940 ITA.No. 5 of 2014 AGAINST THE ORDER/JUDGMENT IN ITA 332/2012 of I.T.A.TRIBUNAL,COCHIN BENCH APPELLANT/S: RAJAN JEWELLARY KACHERITHAZHAM, MUVATTUPUZHA. BY ADV. SRI.RAMESH CHERIAN JOHN RESPONDENT/S: THE COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, COCHIN. BY ADVS. SRI.P.K.R.MENON,SENIOR COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH SC FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 14.02.2019, ALONG WITH ITA.312/2013, ITA.246/2013, ITA.293/2013, ITA.289/2013, ITA.280/2013, ITA.283/2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA Nos.246/2013 & connected cases ::3:: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON THURSDAY ,THE 14TH DAY OF FEBRUARY 2019 / 25TH MAGHA, 1940 ITA.No. 280 of 2013 AGAINST THE ORDER/JUDGMENT IN ITA 333/2012 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 24-05-2013 APPELLANT/S: RAJAN JEWELLERY KACHERITHAZHAM, MUVATTUPUZHA. BY ADV. SRI.RAMESH CHERIAN JOHN RESPONDENT/S: THE COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, COCHIN. BY ADVS. SRI.P.K.R.MENON,SENIOR COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH SC FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 14.02.2019, ALONG WITH ITA.5/2014, ITA.312/2013, ITA.246/2013, ITA.293/2013, ITA.289/2013, ITA.283/2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA Nos.246/2013 & connected cases ::4:: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON THURSDAY ,THE 14TH DAY OF FEBRUARY 2019 / 25TH MAGHA, 1940 ITA.No. 283 of 2013 AGAINST THE ORDER/JUDGMENT IN ITA 334/2012 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 24-05-2013 APPELLANT/S: RAJAN JEWELLERY KACHERITHAZHAM, MUVATTUPUZHA. BY ADV. SRI.RAMESH CHERIAN JOHN RESPONDENT/S: THE COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, COCHIN. BY ADVS. SRI.P.K.R.MENON,SENIOR COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH SC FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 14.02.2019, ALONG WITH ITA.5/2014, ITA.312/2013, ITA.246/2013, ITA.293/2013, ITA.289/2013, ITA.280/2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA Nos.246/2013 & connected cases ::5:: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON THURSDAY ,THE 14TH DAY OF FEBRUARY 2019 / 25TH MAGHA, 1940 ITA.No. 289 of 2013 AGAINST THE ORDER/JUDGMENT IN ITA 335/2012 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 24-05-2013 APPELLANT/S: RAJAN JEWELLERY KACHERITHAZHAM, MUVATTUPUZHA. BY ADV. SRI.RAMESH CHERIAN JOHN RESPONDENT/S: THE COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, COCHIN. BY ADVS. SRI.P.K.R.MENON,SENIOR COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH SC FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 14.02.2019, ALONG WITH ITA.5/2014, ITA.312/2013, ITA.246/2013, ITA.293/2013, ITA.280/2013, ITA.283/2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA Nos.246/2013 & connected cases ::6:: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON THURSDAY ,THE 14TH DAY OF FEBRUARY 2019 / 25TH MAGHA, 1940 ITA.No. 293 of 2013 AGAINST THE ORDER/JUDGMENT IN ITA 336/2012 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 24-05-2013 APPELLANT/S: RAJAN JEWELLARY KACHERITHAZHAM, MUVATTUPUZHA. BY ADV. SRI.RAMESH CHERIAN JOHN RESPONDENT/S: THE COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, COCHIN . BY ADVS. SRI.P.K.R.MENON,SENIOR COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 14.02.2019, ALONG WITH ITA.5/2014, ITA.312/2013, ITA.246/2013, ITA.289/2013, ITA.280/2013, ITA.283/2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA Nos.246/2013 & connected cases ::7:: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON THURSDAY ,THE 14TH DAY OF FEBRUARY 2019 / 25TH MAGHA, 1940 ITA.No. 312 of 2013 AGAINST THE ORDER/JUDGMENT IN ITA 337/2012 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 24-05-2013 APPELLANT/S: RAJAN JEWELLERY KACHERITHAZHAM, MUVATTUPUZHA. BY ADV. SRI.RAMESH CHERIAN JOHN RESPONDENT/S: THE COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, COCHIN. BY ADVS. SRI.P.K.R.MENON SR.COUNSEL GOITAXES SRI.JOSE JOSEPH SC FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 14.02.2019, ALONG WITH ITA.5/2014, ITA.246/2013, ITA.293/2013, ITA.289/2013, ITA.280/2013, ITA.283/2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA Nos.246/2013 & connected cases ::8:: JUDGMENT [ ITA 246/2013, ITA.5/2014, ITA.280/2013, ITA.283/2013, ITA.289/2013, ITA.293/2013, ITA.312/2013 ] Vinod Chandran, J. Assessments were carried out for seven years, 2003-04 to 2009-10, under Section 153A, and the appeals arise from the order of the Tribunal which disposed of appeals filed by the assessee and revenue. The questions of law raised by the assessee as available in the memorandum of appeal are the following:- 1. Whether on the facts and in the circumstances of the case Income Tax Appellate Tribunal, after admitting that Appellate authorities are entitled to adjudicate the validity of the

ITA Nos.246/2013 & connected cases ::9:: search,

was

justified

not considering the issue, on the ground that the issue of validity of search proceedings, due to non presence of panchas, was not raised before the search party or before the Assessing Officer? 2. Whether on the facts and in the circumstances of the case, the Appellate Tribunal was justified in not cancelling the assessment in the light of the order of the co-ordinate Bench of the Tribunal which order was affirmed by this Hon'ble Court? 3. Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal ought to have found that by virtue of the newly introduced section 153A by Finance Act,

ITA Nos.246/2013 & connected cases ::10:: 2003 and in view of the impact thereto as held in 241 CTR 108 in the case of M.D. Overseas Limited v. Director General of Income Tax, the order passed is illegal and without authority of law in view of the absence of the panchas ? 4. Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessment is not barred by limitation without dealing with the undisputed postal records produced; more so when the onus was on the department to prove the service as held in 166 CTR 461 in the case of Venkat Naicken Trust and another v. Income Tax Officer ? 5. Whether on the facts and in the circumstances of the case, the Tribunal

ITA Nos.246/2013 & connected cases ::11:: was justified in law and on facts in rejecting the books of accounts without any basis or material and without dealing with the judgments cited by the assessee ? 6. Whether on the facts and in the circumstances of the case the Appellate Tribunal was justified in law in holding that the personal investment of the managing partner is the income of the assessee especially in view of the Apex Court judgment reported in 218 ITR 239 in the case of Income Tax Officer v. Ch. Atchaiah ? 7. Whether on the facts and in the circumstances of the case the Tribunal was justified in law and on facts in estimating the turnover at six times of the declared turnover more so when the

ITA Nos.246/2013 & connected cases ::12:: books of accounts maintained by the assessee during the relevant year were not discredited and further there was no material on record to justify such an arbitrary estimation ?” 2. On facts, we have to notice that the assessee was a jewelry carried on in partnership, whose business premises and residences of the partners were subjected to search under Section 132 on 09.04.2008. It was noticed that the assessee had not kept any accounts for the period from 01.04.2008 to 09.04.2008. Huge stock of silver and gold ornaments not disclosed in the books of accounts were also found. The documents recovered showed a consistent practice of sale of ornaments by estimate slips, with the books of accounts reflecting only 10% of actual sales. The assessee disclosed Gross Profit in the range of 36.55% to

ITA Nos.246/2013 & connected cases ::13:: 48.08%; which the Assessing Officer found was to legitimise the profit realised on unaccounted sales. The Assessing Officer also held that the GP would be only at 20% in the line of business. There were additions made on that basis estimating the turnover at ten times from that seen from books of accounts of the relevant years, applying GP at 20%. 3. In first appeal, for the first time, the assessee raised a contention with respect to the search being invalid specifically claiming that the panchas were absent during the search and the recording of statement under Section 132(4). A ground of limitation was also urged based on the period of 21 months provided under Section 153B of the Act. Both these grounds were negatived by the First Appellate Authority, the first one on the ground of the First Appellate Authority not being competent to look into the validity of search and

ITA Nos.246/2013 & connected cases ::14:: the second one on the ground of the order having been dispatched on the last day. With respect to the additions, the First Appellate Authority reduced it to five times of the turnover returned for each year. The assessee and Department were in appeal. The Tribunal interfered with the First Appellate Authority's order insofar as modifying the addition to six times the returned turnover. The Tribunal found that the appellate authorities could examine the validity of a search, but on facts refused to accept the contention of the assessee. The Department appeals were hence allowed partly and assessee's appeals were rejected. The assessee is before us challenging the order of the Tribunal on the questions of law herein above extracted. 4. Sri. Ramesh Cherian John at the outset points out that the Appellate Authorities being not competent to look into the validity of the search proceedings as stated in Pooran Mal v. Director of

ITA Nos.246/2013 & connected cases ::15:: Inspection [(1974) 93 ITR 505] stands substantially altered after the amendment to Finance Act, 1995 by introduction of a block assessment and later introduction of Section 153 A by Finance Act, 2003. It is contended that the validity of the search is the most important issue insofar as examining the sustainability of an assessment order passed pursuant to a search under Section 132. The search has to comply with Section 100 of the Criminal Procedure Code; which makes the presence of panchas an imperative requirement, during the entire process of search and when the mahazar is acknowledged by the persons whose premises are searched. Herein though the grounds of the absence of panchas were not taken at the first instance, the appeal is to be considered as a continuation of the proceedings as is provided under Section 131 and Section 255(6) of the Income Tax Act. The assessee had also produced the affidavits of the

ITA Nos.246/2013 & connected cases ::16:: panchas specifically stating that they were not present at the time of the search. The First Appellate Authority refused to consider the same and so did the Tribunal. The learned Counsel seeks for a remand insofar as examination of the panchas are concerned.

ITA Nos.246/2013 & connected cases ::17:: slips were recovered in the period in which there were no accounts properly maintained by the assessee as also recovery of huge undisclosed stock would be sufficient to reject the books of accounts of the assessee. As to the question of limitation, it is pointed out that though not specifically referred to by the Tribunal, the paper book produced by the assessee produced a postal- item tracking document which indicate that the dispatch was made on 31.12.2010 itself. The contention raised on limitation was for reason of the dispatch having been made after office hours, which cannot be sustained. On the ground of continuation of assessment proceedings in the appeal it is specifically pointed out that unless the absence of panchas which is the specific ground taken up, is raised at the first instance before the search party at the time of acknowledging the mahazar or at least before the Assessing Authority,

ITA Nos.246/2013 & connected cases ::18:: it cannot be taken up later in first appeal. Sri. Jose Joseph does not seriously oppose the contention that the appellate proceedings are a continuation of the assessment proceedings. However, such continuation could be inferred only for the grounds taken up before the Assessing Authority, especially in the context of the absence of panchas who are independent third parties. The decisions relied on by the assessee would not be applicable in the present case; is the argument. The assessee having not taken up the contention at the first stage and having taken up such a contention at the appellate stage for the first time indicates that the assessee had, by then, won over the panchas. If such contentions are allowed to be taken at a later stage in appeals provided under the statute, it would lead to chaos and no proceedings could be sustained since individuals retract at their sweet will. The additions

ITA Nos.246/2013 & connected cases ::19:: according to the learned Standing Counsel has been substantially reduced by the appellate authority and slightly modified by the Tribunal. 6. The learned Counsel for the assessee also relies on the judgment of this Court produced along with the paper book in WP(C) No. 34655/2011 dated 25.01.2012. Reliance is also placed on Jose Cyriac v. Commissioner of Income Tax [(2011) 336 ITR 241], Ajit Jain v. Union of India [(2000) 242 ITR 302(Del)]. Pooran Mal(supra) is relied on to urge that even the said decision of the Hon'ble Supreme Court emphasised the mandate insofar as the safeguards provided with respect to a search to be scrupulously followed, failing which the entire proceedings would be vitiated. The learned Counsel also would argue on the limitation as also the estimations made being not reasonable. It is specifically urged that there was absolutely no

ITA Nos.246/2013 & connected cases ::20:: material to reject the books of accounts of the assessee. 7. The questions 1 to 3 are on the arguments raised, as to the invalidity of search on grounds of absence of panchas. We would first look at the decision in Pooran Mal (supra) which itself specifically spoke of the safeguards insofar as a search under Section 132 of the Income Tax Act. We extract paragraph 11. We are, therefore, to see what are the inbuilt safeguards in Section 132 of the Income Tax Act. In the first place, it must be noted that the power to order search and seizure is vested in the highest officers of the department. Secondly, the exercise of this power can only follow a reasonable belief entertained by such officer that any of the three conditions mentioned in Section 132(1)(a),(b) and (c) exists. In this connection it may be further pointed out that under sub-rule (2) of Rule 112, the Director of Inspection or the Commissioner, as the case may be, has to record his reasons before the authorisation is issued to the officers mentioned in sub-section (1). Thirdly,

ITA Nos.246/2013 & connected cases ::21:: the authorisation for the search cannot be in favour of any officer below the rank of an Income Tax Officer. Fourthly, the authorisation is for specific purposes enumerated in (i) to (v) in sub-section (1) all of which are strictly limited to the object of the search. Fifthly when money, bullion, etc. is seized the Income Tax Officer is to make a summary enquiry with a view to determine how much of what is seized will be retained by him to cover the estimated tax liability and how much will have to be returned forthwith. The object of the enquiry under sub- section (5) is to reduce the inconvenience to the assessee as much as possible so that within a reasonable time what is estimated due to the Government may be retained and what should be returned to the assessee may be immediately returned to him. Even with regard to the books of account and documents seized, their return is guaranteed after a reasonable time. In the meantime the person from whose custody they are seized is permitted to make copies and take extracts. Sixthly, where money, bullion, etc. is seized, it can also be immediately returned to the person concerned after he makes appropriate provision for the payment of the estimated tax dues under sub-section (5) and lastly, and this is most important, the provisions of the Criminal Procedure Code relating to search and seizure

ITA Nos.246/2013 & connected cases ::22:: apply, as far as they may be, to all searches and seizures under Section 132. Rule 112 provides for the actual search and seizure being made after observing normal decencies of behaviour. The person in charge of the premises searched is immediately given a copy of the list of articles seized. One copy is forwarded to the authorising officer. Provision for the safe custody of the articles after seizure is also made in Rule 112. In our opinion, the safeguards are adequate to render the provisions of search and seizure as less onerous and restrictive as is possible under the circumstances. The provisions, therefore, relating to search and seizure in Section 132 and Rule 112 cannot be regarded as violative of Article 19(f) and (g). The Hon'ble Supreme Court has held that compliance with the provisions of the CrPC, with respect to search and seizure is the most important safeguard insofar as the acceptability of the search is concerned. If there is no compliance with the most important safeguard, definitely it should fail. 8. Ajith Jain(Supra) is again a case in which the safeguards were held to be sacrosanct ;

ITA Nos.246/2013 & connected cases ::23:: which if not followed vitiate the entire proceedings. The decision of the Delhi High Court has merged with the order of the Supreme Court which dismissed a civil appeal filed against the said judgment. The Division Bench of this Court also in Jose Cyriac (supra) found that the appellate proceedings being a continuation of the assessment proceedings, the validity of a search could be urged in any of such appellate proceedings. We have no quarrel with the proposition as laid down in the cited decisions. But however, the contention raised here is with respect to the absence of panchas; which we are of the firm opinion, should have been raised at the first instance. 9. We first look at the judgment of the learned Single Judge in WP(C) No. 34655/2011, produced along with the paper book placed before the Tribunal. There, in pursuance to a search

ITA Nos.246/2013 & connected cases ::24:: conducted under Section 132, the assessee had first raised a plea of requirement of examination of a Department Officer before the First Appellate Authority. The learned Single Judge found that the request of the assessee for cross-examining the authorised officer of the Department is in accordance with the provisions of law. We cannot but distinguish the decision when the claim is of absence of panchas; independent persons called by the department to evidence the search and the preparation of mahazar. This cannot be equated with the request made for cross-examination of an officer of the Department. Jose Cyriac (supra)was a case where the validity of an authorisation issued under Section 132 was first challenged in appeal before the High Court. The High Court while negativing the plea raised for the first time under Section 260A of the Act, however, held that if it had been raised before the Appellate

ITA Nos.246/2013 & connected cases ::25:: Authorities, it ought to have have been considered. The authorisation issued for conducting a search under Section 132 is one sourced to the Department and the chances of it being manipulated, in favour of the assessee, are remote. Likewise the department official's cross examination could be taken up at any stage as there can be no assumption that the officer would be won over to depose in favour of the assessee. The decisions cited does not at all contemplate, the fact situation as arising in this case; of the absence of panchas during the search proceedings, preparation of mahazar and its acknowledgment, which contention was not taken up at the first instance. 10. The search itself was conducted on 09.04.2008. The assessee is not a new dealer and had been carrying on the business for long. The argument of the learned Counsel for the assessee before us, is that the search proceedings,

ITA Nos.246/2013 & connected cases ::26:: preparation of mahazar as also recording of statements under oath, were carried out in the presence of Police and without any panchas. After such proceedings were carried out two persons were called from the outside and forced to sign the mahazar. If that was the case, we agree with the Counsel that probably, the assessee could not have raised objections before the search party itself, especially when it is averred that the search was in the presence of Police. However, that does not preclude the assessee from raising a contention before the Assessing Officer when notice is issued in the proceedings under Section 153A. If that had been raised at the first instance and cross-examination was not allowed by the Assessing Officer, definitely, it could have been considered by any of the Appellate Authorities. The fact that even then, the assessee could have won over the panchas would be irrelevant insofar as the passage of time having occasioned

ITA Nos.246/2013 & connected cases ::27:: only by reason of the Assessing Officer having not followed the requirement of law, of examining the panchas when it was first sought for. Having not raised the contention before the Assessing Officer we perfectly agree with the Standing Counsel that if it is permitted at the appellate stage, it could only lead to chaos. 11. The assessee could with passage of time, have won over the panchas, to make statements retracting their attestation in the mahazar; of having witnessed the search from its commencement to its conclusion. The mahazar which the assessee had acknowledged contains the signatures of the panchas and they had specifically stated that they were present during the search, recording of statement,

preparation

mahazar

and acknowledgment of mahazar. The same was relied on by the A.O and at that time there was no objection raised to the same. We do not think that any of the

ITA Nos.246/2013 & connected cases ::28:: decisions cited, help the assessee, since the question is a mixed one of facts and law. On facts we find that the question of presence of panchas cannot be questioned in appeal, unless it is first raised at least before the Assessing Officer. 12. We also notice that MD Overseas Ltd. dealt with only the change in procedure after introduction of Section 153A. The sanctity of the search and safeguards being sacrosanct remained the same before and after amendment. We do not think the decision in any way aids the assessee's case. The non-presence of panchas raised for the first time before the First appellate authority after a period of three years from the search conducted, cannot at all be countenanced. There was no valid ground for the Tribunal to cancel the assessment in the light of the order of the co-ordinate Bench which the Tribunal has specifically referred to and found to be distinguishable. The decision of the

ITA Nos.246/2013 & connected cases ::29:: Tribunal was in the case of ACIT v. George Philip Modayil (ITA No.389(Coch)/98 & others)which the Tribunal noticed was a case in which at the first stage itself the plea of absence of panchas was raised. The questions numbered as 1 to 3 are answered in favour of the revenue and against the assessee. 13. The next question is on limitation. Admittedly, the order was dispatched on 31.12.2010 which was the last date of limitation under Section 153B. The only contention taken up is that the order was dispatched after the office hours. The requirement as noticed by the Tribunal from the judgment of this Court in Cochin Plantations Ltd. v. State of Kerala. (1997) 227 ITR 38 is to ensure that by the last day of limitation, the order is beyond the control of the authority concerned; ensuring that no changes or modifications are made after the expiry of limitation period. Hence if a

ITA Nos.246/2013 & connected cases ::30:: conscientious officer passed the order on the last day of limitation and dispatched it after office hours, it cannot be said to be a factor vitiating the order or enabling the limitation period to be applied to find a bar for issuing the said order. The question of law raised at 4 is hence answered against the assessee and in favour of the revenue; on the clear facts coming out here. 14. The estimation made is challenged by question Nos.5 and 7 alleging

that

there

is absolutely no material to reject the books of accounts and the estimation made at six times of the turnover by the Tribunal, is without any basis. On the question of rejection of accounts as already noticed by us, on search, there was found excess stock of gold of 2032 gms of gold and 7901 gms of silver ornaments. This was not recorded in the books of accounts. It was also found that between the period 01.04.2008 to 09.04.2008 there was no

ITA Nos.246/2013 & connected cases ::31:: proper maintenance of accounts, obviously to manipulate the accounts and record sales far lower to that actually occasioned. A pre-search enquiry had revealed sale of 2.02 gms of gold locket on the basis of an estimate slip which did not find a place in the accounts of the assessee. Further, the search revealed estimate slips issued for a period of 15 days which totalled a sale of 175.174 gms; whereas the sale accounted for the said 15 days was only 17 gms. This is the basis on which the Assessing Officer rejected the accounts and estimated the turnover. The materials as revealed in the search in our opinion, was sufficient to reject the books of accounts of the assessee. 15. On the question of estimation we have to notice that the Assessing Officer had found that the assessee disclosed Gross Profit of 36.55% to 48.08% in its accounts. In fact, when estimating the turnover, the assessee could have

ITA Nos.246/2013 & connected cases ::32:: adopted the Gross Profit as disclosed in the books of accounts. However, a reasonable computation was made considering the Gross Profit available in that line of business and a far lower gross profit of 20% was adopted for all the years. The estimation was made at ten times the returned turnover, finding that only 10% of the sales are accounted. The addition of ten times turnover was reduced by the First Appellate Authority to five times. The Tribunal modified it slightly to make it six times. There is absolutely no question of law arising from the estimation and we decline to answer the question raised as 5 and 6 being on facts and not on law. We also do not find any perversity in the determination of facts by the Tribunal. 16. The last question is on the personal investment of the Managing Partner. The Tribunal's order indicates that the assessee had a contention before the Tribunal that the undisclosed stock

ITA Nos.246/2013 & connected cases ::33:: recovered was belonging to one of the Partners. The Tribunal rightly refused to accept such contention. There was no separate business carried on by the Partner and the business premises which was searched was that of the firm. At the time of search, the Partner was present in the premises and he had cooperated with the search proceedings. Taking all these circumstances into account, the Tribunal had rejected the contention of personal investment of the Managing Partner having been included in the stock determined in the name of the assessee. We find again that there is no question of law arising from the aforesaid facts. However, we notice the submission of the learned Counsel for the assessee Sri. Ramesh Cherian John that there was an addition made with respect to the property transactions in the personal name of the Managing Partner one G.Venkatesh. That was not an issue which was raised or argued before the

ITA Nos.246/2013 & connected cases ::34:: Tribunal. The learned Standing Counsel Sri.Jose Joseph also points out that there was no separate addition made on that count and the addition made is only on the turnover at ten times, reduced later to six times, with gross profit @ of 20%. We also find that such a ground was not taken up before any of the appellate authorities. Hence we do not think that such a ground can be raised at the stage of appeal under Section 260A. We hence reject all the appeals, without any order as to costs.

Sd/- K.VINOD CHANDRAN Judge Sd/- ASHOK MENON Judge jma

ITA Nos.246/2013 & connected cases ::35:: APPENDIX OF ITA 246/2013 PETITIONER'S/S EXHIBITS: ANNEXURE-A TRUE COPY OF THE NOTICE UNDER SECTION 142(1) DATED 24/09/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-B TRUE COPY OF THE REPLY DATED 13/10/2010 TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-C TRUE COPY OF THE ORDER DATED 31/12/2010 ISSUED TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-D TRUE COPY OF THE FORM OF APPEAL, STATEMENT OF FACTS AND GROUNDS OF APPEAL FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), COCHIN. ANNEXURE-E TRUE COPY OF THE SUMMARY OF ARGUMENTS FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). ANNEXURE-F TRUE COPY OF THE REPRESENTATION DATED 09/04/2012 FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) KOCHI. ANNEXURE-G TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) III, COCHIN, DATED 12/10/2012. ANNEXURE-H TRUE COPY OF THE FORM OF APPEAL AND GROUNDS OF APPEAL DATED 20/11/2012 FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL.

ITA Nos.246/2013 & connected cases ::36:: ANNEXURE-I TRUE COPY OF THE ARGUMENT NOTE FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL. ANNEXURE-J TRUE COPY OF THE INPUGNED ORDER DATED 24/05/2013 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN. ANNEXURE-K TRUE COPY OF THE NOTICE DATED 21/01/2013 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-L TRUE COPY OF THE ORDER OF STAY DATED 01/03/2013 GRANTED BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN. ANNEXURE-M TRUE COPY OF THE CHALLAN DATED 11/03/2013. ANNEXURE-N TRUE COPY OF THE CHALLAN DATED 11/03/2013. ANNEXURE-O TRUE COPY OF THE AUDITED STATEMENT FOR THE FINANCIAL YEAR 2008-09.

ITA Nos.246/2013 & connected cases ::37:: APPENDIX OF ITA 5/2014 PETITIONER'S/S EXHIBITS: ANNEXURE-A TRUE COPY OF THE NOTICE UNDER SECTION 142(1) DATED 24/09/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-B TRUE COPY OF THE REPLY DATED 13/10/2010 TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-C TRUE COPY OF THE ORDER DATED 31/12/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-D TRUE COPY OF THE FORM OF APPEAL, STATEMENT OF ACTS AND GROUNDS OF APPEAL FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), COCHIN. ANNEXURE-E TRUE COPY OF THE SUMMARY OF ARGUMENTS FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) WITHOUT ANNEXURES. ANNEXURE-F TRUE COPY OF THE REPRESENTATION DATED 09/04/2012 FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), KOCHI. ANNEXURE-G TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) III, COCHIN DATED 12/10/2012. ANNEXURE-H TRUE COPY OF THE FORM OF APPEAL AND GROUNDS OF APPEAL DATED 20/11/2012 FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL. ANNEXURE-I TRUE COPY OF THE ARGUMENT NOTE FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL WITHOUT ANNEXURES.

ITA Nos.246/2013 & connected cases ::38:: ANNEXURE-J TRUE COPY OF THE IMPUGNED ORDER DATED 24/05/2013 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN. ANNEXURE-K TRUE COPY OF THE NOTICE DATED 21/01/2013 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-L TRUE COPY OF THE ORDER OF STAY DATED 01/03/2013 GRANTED BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN. ANNEXURE-M TRUE COPY OF THE CHALLAN DATED 11/03/2013. ANNEXURE-N TRUE COPY OF THE CHALLAN DATED 11/03/2013. ANNEXURE-O TRUE COPY OF THE AUDITED STATEMENT FOR THE FINANCIAL YEAR 2008-09.

ITA Nos.246/2013 & connected cases ::39:: APPENDIX OF ITA 280/2013 PETITIONER'S/S EXHIBITS: ANNEXURE-A TRUE COPY OF THE NOTICE UNDER SECTION 142(1) DATED 24/09/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-B TRUE COPY OF THE REPLY DATED 13/10/2010 TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-C TRUE COPY OF THE ORDER DATED 31/12/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-D TRUE COPY OF THE FORM OF APPEAL, STATEMENT OF ACTS AND GROUNDS OF APPEAL FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), COCHIN. ANNEXURE-E TRUE COPY OF THE SUMMARY OF ARGUMENTS FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). ANNEXURE-F TRUE COPY OF THE REPRESENTATION DATED 09/04/2012 FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), KOCHI. ANNEXURE-G TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) III, COCHIN DATED 12/10/2012. ANNEXURE-H TRUE COPY OF THE FORM OF APPEAL AND GROUNDS OF APPEAL DATED 20/11/2012 FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL. ANNEXURE-I TRUE COPY OF THE ARGUMENT NOTE FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL.

ITA Nos.246/2013 & connected cases ::40:: ANNEXURE-J TRUE COPY OF THE IMPUGNED ORDER DATED 24/05/2013 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN. ANNEXURE-K TRUE COPY OF THE NOTICE DATED 21/01/2013 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-L TRUE COPY OF THE ORDER OF STAY DATED 01/03/2013 GRANTED BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN. ANNEXURE-M TRUE COPY OF THE CHALLAN DATED 11/03/2013. ANNEXURE-N TRUE COPY OF THE CHALLAN DATED 11/03/2013. ANNEXURE-O TRUE COPY OF THE AUDITED STATEMENT FOR THE FINANCIAL YEAR 2008-09.

ITA Nos.246/2013 & connected cases ::41:: APPENDIX OF ITA 283/2013 PETITIONER'S/S EXHIBITS: ANNEXURE-A TRUE COPY OF THE NOTICE UNDER SECTION 142(1) DATED 24/09/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-B TRUE COPY OF THE REPLY DATED 13/10/2010 TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-C TRUE COPY OF THE ORDER DATED 31/12/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-D TRUE COPY OF THE FORM OF APPEAL, STATEMENT OF ACTS AND GROUNDS OF APPEAL FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), COCHIN. ANNEXURE-E TRUE COPY OF THE SUMMARY OF ARGUMENTS FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). ANNEXURE-F TRUE COPY OF THE REPRESENTATION DATED 09/04/2012 FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), KOCHI. ANNEXURE-G TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) III, COCHIN DATED 12/10/2012. ANNEXURE-H TRUE COPY OF THE FORM OF APPEAL AND GROUNDS OF APPEAL DATED 20/11/2012 FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL. ANNEXURE-I TRUE COPY OF THE ARGUMENT NOTE FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL.

ITA Nos.246/2013 & connected cases ::42:: ANNEXURE-J TRUE COPY OF THE IMPUGNED ORDER DATED 24/05/2013 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN. ANNEXURE-K TRUE COPY OF THE NOTICE DATED 21/01/2013 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-L TRUE COPY OF THE ORDER OF STAY DATED 01/03/2013 GRANTED BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN. ANNEXURE-M TRUE COPY OF THE CHALLAN DATED 11/03/2013. ANNEXURE-N TRUE COPY OF THE CHALLAN DATED 11/03/2013. ANNEXURE-O TRUE COPY OF THE AUDITED STATEMENT FOR THE FINANCIAL YEAR 2008-09.

ITA Nos.246/2013 & connected cases ::43:: APPENDIX OF ITA 289/2013 PETITIONER'S/S EXHIBITS: ANNEXURE-A TRUE COPY OF THE NOTICE UNDER SECTION 142(1) DATED 24/09/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-B TRUE COPY OF THE REPLY DATED 13/10/2010 TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-C TRUE COPY OF THE ORDER DATED 31/12/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-D TRUE COPY OF THE FORM OF APPEAL, STATEMENT OF ACTS AND GROUNDS OF APPEAL FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), COCHIN. ANNEXURE-E TRUE COPY OF THE SUMMARY OF ARGUMENTS FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) ADOPTING ARGUMENTS FOR THE CURRENT YEAR 2004-05. ANNEXURE-F TRUE COPY OF THE REPRESENTATION DATED 09/04/2012 FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), KOCHI WITHOUT ANNEXURES. ANNEXURE-G TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) III, COCHIN DATED 12/10/2012 WITHOUT ANNEXURES. ANNEXURE-H TRUE COPY OF THE FORM OF APPEAL AND GROUNDS OF APPEAL DATED 20/11/2012 FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL.

ITA Nos.246/2013 & connected cases ::44:: ANNEXURE-I TRUE COPY OF THE ARGUMENT NOTE FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL. ANNEXURE-J TRUE COPY OF THE IMPUGNED ORDER DATED 24/05/2013 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN. ANNEXURE-K TRUE COPY OF THE NOTICE DATED 21/01/2013 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-L TRUE COPY OF THE ORDER OF STAY DATED 01/03/2013 GRANTED BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN. ANNEXURE-M TRUE COPY OF THE CHALLAN DATED 11/03/2013. ANNEXURE-N TRUE COPY OF THE CHALLAN DATED 11/03/2013. ANNEXURE-O TRUE COPY OF THE AUDITED STATEMENT FOR THE FINANCIAL YEAR 2008-09.

ITA Nos.246/2013 & connected cases ::45:: APPENDIX OF ITA 293/2013 PETITIONER'S/S EXHIBITS: ANNEXURE-A TRUE COPY OF THE NOTICE UNDER SECTION 142(1) DATED 24/09/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-B TRUE COPY OF THE REPLY DATED 13/10/2010 TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-C TRUE COPY OF THE ORDER DATED 31/12/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-D TRUE COPY OF THE FORM OF APPEAL, STATEMENT OF ACTS AND GROUNDS OF APPEAL FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), COCHIN. ANNEXURE-E TRUE COPY OF THE SUMMARY OF ARGUMENTS FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) ADOPTING ARGUMENT FOR THE YEAR 2008-09. ANNEXURE-F TRUE COPY OF THE REPRESENTATION DATED 09/04/2012 FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), KOCHI WITHOUT ANNEXURES. ANNEXURE-G TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) III, COCHIN DATED 12/10/2012. ANNEXURE-H TRUE COPY OF THE FORM OF APPEAL AND GROUNDS OF APPEAL DATED 20/11/2012 FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL. ANNEXURE-I TRUE COPY OF THE ARGUMENT NOTE FILED BEFORE THE INCOME TAX APPELLATE

ITA Nos.246/2013 & connected cases ::46:: TRIBUNAL. ANNEXURE-J TRUE COPY OF THE IMPUGNED ORDER DATED 24/05/2013 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN. ANNEXURE-K TRUE COPY OF THE NOTICE DATED 21/01/2013 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-L TRUE COPY OF THE ORDER OF STAY DATED 01/03/2013 GRANTED BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN. ANNEXURE-M TRUE COPY OF THE CHALLAN DATED 11/03/2013. ANNEXURE-N TRUE COPY OF THE CHALLAN DATED 11/03/2013. ANNEXURE-O TRUE COPY OF THE AUDITED STATEMENT FOR THE FINANCIAL YEAR 2008-09.

ITA Nos.246/2013 & connected cases ::47:: APPENDIX OF ITA 312/2013 PETITIONER'S/S EXHIBITS: ANNEXURE-A TRUE COPY OF THE NOTICE UNDER SECTION 142(1) DATED 24/09/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-B TRUE COPY OF THE REPLY DATED 13/10/2010 TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-C TRUE COPY OF THE ORDER DATED 31/12/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM ALONG WITH ANNEXURES. ANNEXURE-D TRUE COPY OF THE FORM OF APPEAL, STATEMENT OF ACTS AND GROUNDS OF APPEAL FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), COCHIN. ANNEXURE-E TRUE COPY OF THE SUMMARY OF ARGUMENTS FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). ANNEXURE-F TRUE COPY OF THE REPRESENTATION DATED 09/04/2012 FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), KOCHI. ANNEXURE-G TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) III, COCHIN DATED 12/10/2012. ANNEXURE-H TRUE COPY OF THE FORM OF APPEAL AND GROUNDS OF APPEAL DATED 20/11/2012 FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL. ANNEXURE-I TRUE COPY OF THE ARGUMENT NOTE FILED BEFORE THE INCOME TAX APPELLATE

ITA Nos.246/2013 & connected cases ::48:: TRIBUNAL. ANNEXURE-J TRUE COPY OF THE IMPUGNED ORDER DATED 24/05/2013 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN. ANNEXURE-K TRUE COPY OF THE NOTICE DATED 21/01/2013 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-L TRUE COPY OF THE ORDER OF STAY DATED 01/03/2013 GRANTED BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN. ANNEXURE-M TRUE COPY OF THE CHALLAN DATED 11/03/2013. ANNEXURE-N TRUE COPY OF THE CHALLAN DATED 11/03/2013. ANNEXURE-O TRUE COPY OF THE AUDITED STATEMENT FOR THE FINANCIAL YEAR 2008-09.