Ita/359/2010 Of The Commissioner Of Income Tax, Kannur v. Shri.k.v.damodharan, Payyannur, Kannur

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE B.P.RAY MONDAY, THE 1ST NOVEMBER 2010 / 10TH KARTHIKA 1932 ITA.No. 359 of 2010() --------------------- IT(S & S) A.136/COCH/2005 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT ----------------------------- THE COMMISSIONER OF INCOME TAX, KANNUR. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): --------------- SHRI.K.V.DAMODARAN, CLOTH MERCHANT, MAIN ROAD, PAYYANNUR, KANNUR. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 01/11/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR, &BHABANI PRASAD RAY, JJ. -------------------------------------------- I.T. A. No. 359 of 2010 -------------------------------------------- Dated this the 1st day of November, 2010 JUDGMENT Ramachandran Nair, J. The question raised is whether the Tribunal was justified inupholding the order of the CIT (Appeals) cancelling the addition madein block assessment after search. The deletions pertain to incomeassessed for several years prior to the year of search. The departmenthas heavily relied on the statement recorded from the assessee and oneSri. Muraleedharan about the suppression practised in the turnover andin the income. However, admittedly assessee destroyed all the recordsand department has not seized any records. Therefore the Tribunalconsidered the issue and found the addition as one solely based on thestatement of the assessee recorded under Section 132(4) of the I.T. Actwhich of course has evidentiary value. Standing counsel appearing forthe revenue relied on the judgment of this Court, to which one of us(C.N.R. (J)) was a party, in another case and submitted that thestatement recorded from the assessee during the course of search can be the basis for assessment. However, we find from the Tribunal's orderthat they noticed that the statements recorded from the assessee and Sri.Muraleedharan during the course of search were not consistent andhence unreliable. So much so, we do not think there is any justificationfor us to interfere with the order of the Tribunal because unreliablestatement cannot be the sole basis for making addition in blockassessment. Standing counsel appearing for the revenue furthersubmitted that besides the statement, department has found out in thecourse of search several investments in buildings and thereforestatements are only used for corroborative purposes. In principle weagree with the contention of standing counsel because if materials aregathered on investments and if the department is able to establish thatthese are unexplained investment or expenditure justifying additionbased on materials gathered on search, certainly they can do so andstatements can be relied on for corroboration. However, we do not findsuch an issue raised or decided by the Tribunal, and so much so thisissue does not arise for our consideration in an appeal filed underSection 260A of the Act. Since we do not find any ground to entertain I.T.A. 359/2010 the appeal, as there is no substantial question of law arising from theorder of the Tribunal, we dismiss the appeal. However, we make itclear that if the search had yielded materials pertaining to investmentsin buildings, or expenditure, and the assessee could not explain, then itis open to the revenue to file an application for rectification before theTribunal. (C.N.RAMACHANDRAN NAIR)Judge. (BHABANI PRASAD RAY) Judge. kk