Ita/451/2009 Of The Commissioner Of Income Tax,Calicut v. V.p.ahammed Kutty Haji,Malappuram Dist

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 15TH NOVEMBER 2010 / 24TH KARTHIKA 1932 ITA.No. 451 of 2009() --------------------- AGAINST THE ORDER DATED 09/05/2006 IN IT(S & S) 37/COCH/2004 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/RESPONDENT ---------------------------------------- THE COMMISSIONER OF INCOME TAX, CALICUT. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/APPELLANT ------------------------ SHRI.V.P.AHAMMED KUTTY HAJI, VALLA PEEDIAKKAL HOUSE, P.O.PANTARANGADI, MALAPPURAM DISTRICT. ADV. DR.K.B.MUHAMED KUTTY, SENIOR ADVOCATE FOR R SRI.K.M.FIROZ FOR R THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 15/11/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR &BHABANI PRASAD RAY, JJ. .................................................................... I.T. Appeal No.451 of 2009 .................................................................... Dated this the 15th day of November, 2010. JUDGMENT Ramachandran Nair, J. Question raised is whether the Tribunal was justified incancelling the assessment made under Section 158BC on therespondent-assessee pursuant to search made in the premises of anotherassessee by name K.T.Moosa. We have heard Standing Counsel for theappellant and Senior counsel Dr.K.B.Mohammedkutty appearing forthe respondent-assessee. 2. After hearing both sides and after going through the Tribunal's order, we notice that the Tribunal has not considered even the facts thatled to the issue of notice and assessment against the respondent underSection 158BC of the Income Tax Act. In fact, the matter isconsidered in detail by the C.I.T.(Appeals) wherein he held thatassessment has to be treated as one made under Section 158BC read with Section 158BD. In fact, it is the admitted position thatrespondent-assessee could be proceeded with for assessment under ITA No.451/2009 Section 158BD which authorises assessment of a person about whommaterials are seized while searching the premises of another personagainst whom warrant was issued under Section 132 of the Income TaxAct. In fact, Section 158BD does not provide for issue of separatenotice. Of course the proceeding for assessment authorised underSection 158BD is possible only after the Assessing Officer who assessthe person searched records his satisfaction and transfers the file to theAssessing Officer of the person to be assessed under Section 158BD.In this case, the peculiar feature of the case is that the Assessing Officerwho is the Assistant Commissioner, Central Circle, Kozhikode,happens to be the same for both the assessees namely, Sri.K.T.Moosaand the respondent-assessee. One another matter brought to our noticeis the letter addressed by Sri.K.T.Moosa to the Assistant Director,Investigation, Kozhikode, on 30.11.1998 wherein respondent-assesseeis described as the power of attorney holder of Sri.K.T.Moosa. Infact, both the assessees were simultaneously searched, though thesearch in the assessee's premises led to no recovery of materials.However, from the materials gathered from the premises of ITA No.451/2009 ITA No.451/2009 Sri.K.T.Moosa, the department noticed undisclosed income earned bythe respondent-assessee. When notice was issued under Section158BC against the respondent-assessee, the assessee did not raise anyobjection about want of jurisdiction on account of non-mentioning ofSection 158BD in the notice, but respondent-assessee filed return inForm 2B and even returned an undisclosed income of Rs.3,77,870/-. Itis very pertinent to note the finding of the first appellate authority thatthe notice and the proceeding initiated should be treated as one underSection 158BC read with Section 158BD, more so when the AssessingOfficer is one and the same for the assessee searched and therespondent-assessee. We do not want to conclude anything from thefacts stated above. However, we feel the Tribunal has just decided thematter following a Larger Bench decision of the Tribunal in Delhi. Infact, there are ever so many judgments rendered even by this court onthe validity of block assessment. In the first place, what is to be notedis that Section 158BD adopts the same procedure for block assessmentin respect of the assessee other than the searched assessee. Since theTribunal has not considered the validity of block assessment with ITA No.451/2009 reference to the peculiar facts of this case, we feel the Tribunal shouldreconsider the matter and for the sake of completeness, we direct theTribunal to decide the jurisdictional question as well as the case onmerits after hearing both sides. We specifically make it clear that ourobservations above should not be treated as findings of this court.Since it is a very old case and since the assessee itself has offeredsubstantial amount of undisclosed income, we feel department canshow some leniency and go for settlement, for which the assessee isdirected to approach the Commissioner of Income Tax. C.N.RAMACHANDRAN NAIRJudge BHABANI PRASAD RAYJudge pms