Ita/5/2014 Of Rajan Jewellary v. The Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT 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 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 24-05-2013 APPELLANT/S: RAJAN JEWELLARYKACHERITHAZHAM, MUVATTUPUZHA. RESPONDENT/S: THE COMMISSIONER OF INCOME TAXCENTRAL 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, THECOURT ON THE SAME DAY DELIVERED THE FOLLOWING: ::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 ofI.T.A.TRIBUNAL,COCHIN BENCH APPELLANT/S: RAJAN JEWELLARY KACHERITHAZHAM, MUVATTUPUZHA. BY ADV. SRI.RAMESH CHERIAN JOHN RESPONDENT/S: THE COMMISSIONER OF INCOME TAXCENTRAL 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, THECOURT ON THE SAME DAY DELIVERED THE FOLLOWING: ::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 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 24-05-2013 APPELLANT/S: RAJAN JEWELLERYKACHERITHAZHAM, MUVATTUPUZHA. BY ADV. SRI.RAMESH CHERIAN JOHN RESPONDENT/S: THE COMMISSIONER OF INCOME TAXCENTRAL 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, THECOURT 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 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 24-05-2013 APPELLANT/S: RAJAN JEWELLERYKACHERITHAZHAM, MUVATTUPUZHA. BY ADV. SRI.RAMESH CHERIAN JOHN RESPONDENT/S: THE COMMISSIONER OF INCOME TAXCENTRAL 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, THECOURT ON THE SAME DAY DELIVERED THE FOLLOWING: ::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 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 24-05-2013 APPELLANT/S: RAJAN JEWELLERYKACHERITHAZHAM, MUVATTUPUZHA. BY ADV. SRI.RAMESH CHERIAN JOHN RESPONDENT/S: THE COMMISSIONER OF INCOME TAXCENTRAL 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, THECOURT ON THE SAME DAY DELIVERED THE FOLLOWING: ::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. 289 of 2013 AGAINST THE ORDER/JUDGMENT IN ITA 335/2012 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 24-05-2013 APPELLANT/S: RAJAN JEWELLERYKACHERITHAZHAM, MUVATTUPUZHA. BY ADV. SRI.RAMESH CHERIAN JOHN RESPONDENT/S: THE COMMISSIONER OF INCOME TAXCENTRAL 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, THECOURT ON THE SAME DAY DELIVERED THE FOLLOWING: ::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 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 24-05-2013 APPELLANT/S: RAJAN JEWELLARYKACHERITHAZHAM, MUVATTUPUZHA. BY ADV. SRI.RAMESH CHERIAN JOHN RESPONDENT/S: THE COMMISSIONER OF INCOME TAXCENTRAL 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, THECOURT 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 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 24-05-2013 APPELLANT/S: RAJAN JEWELLERYKACHERITHAZHAM, MUVATTUPUZHA. BY ADV. SRI.RAMESH CHERIAN JOHN RESPONDENT/S: THE COMMISSIONER OF INCOME TAXCENTRAL CIRCLE, COCHIN. BY ADVS.SRI.P.K.R.MENON SR.COUNSEL GOITAXESSRI.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, THECOURT 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 sevenyears, 2003-04 to 2009-10, under Section 153A, andthe appeals arise from the order of the Tribunalwhich disposed of appeals filed by the assessee andrevenue. The questions of law raised by theassessee as available in the memorandum of appealare the following:- 1. Whether on the facts and in the circumstances of the case Income Tax Appellate Tribunal, after admittingthat Appellate authorities are entitled to adjudicate the validity of the ITA Nos.246/2013 & connected cases ::9:: search,wasjustified innot considering the issue, on the groundthat the issue of validity of searchthat the issue of validity of search proceedings, due to non presence of panchas, was not raised before the search party or before the AssessingOfficer?Officer? 2. Whether on the facts and in thecircumstances of the case, theAppellate Tribunal was justified in notcircumstances of the case, theAppellate Tribunal was justified in not cancelling the assessment in the lightof the order of the co-ordinate Benchof the Tribunal which order wasaffirmed by this Hon'ble Court? of the order of the co-ordinate Benchof the Tribunal which order wasaffirmed by this Hon'ble Court? to adjudicate the validity of the ITA Nos.246/2013 & connected cases ::9:: search,wasjustified innot considering the issue, on the groundthat the issue of validity of searchthat the issue of validity of search proceedings, due to non presence of panchas, was not raised before the search party or before the AssessingOfficer?Officer? 2. Whether on the facts and in thecircumstances of the case, theAppellate Tribunal was justified in notcircumstances of the case, theAppellate Tribunal was justified in not cancelling the assessment in the lightof the order of the co-ordinate Benchof the Tribunal which order wasaffirmed by this Hon'ble Court? of the order of the co-ordinate Benchof the Tribunal which order wasaffirmed by this Hon'ble Court? 3. Whether on the facts and in thecircumstances of the case the IncomeTax Appellate Tribunal ought to havecircumstances of the case the IncomeTax Appellate Tribunal ought to have found that by virtue of the newlyintroduced section 153A by Finance Act,introduced section 153A by Finance Act, ITA Nos.246/2013 & connected cases ::10:: 2003 and in view of the impact theretoas held in 241 CTR 108 in the case ofM.D. Overseas Limited v. DirectorGeneral of Income Tax, the order passedis illegal and without authority of lawin view of the absence of the panchas ?as held in 241 CTR 108 in the case ofM.D. Overseas Limited v. DirectorGeneral of Income Tax, the order passedis illegal and without authority of lawin view of the absence of the panchas ? 4. Whether on the facts and in thecircumstances of the case, the Tribunalcircumstances of the case, the Tribunal was justified in law in holding thatthe assessment is not barred bylimitation without dealing with theundisputed postal records produced;more so when the onus was on thedepartment to prove the service as heldin 166 CTR 461 in the case of VenkatNaicken Trust and another v. Income TaxOfficer?the assessment is not barred bylimitation without dealing with theundisputed postal records produced;more so when the onus was on thedepartment to prove the service as heldin 166 CTR 461 in the case of VenkatNaicken Trust and another v. Income TaxOfficer? 5. Whether on the facts and in thecircumstances of the case, the Tribunalcircumstances of the case, the Tribunal ITA Nos.246/2013 & connected cases ::11:: was justified in law and on facts inrejecting the books of accounts withoutany basis or material and withoutdealing with the judgments cited by theassessee ? 6. Whether on the facts and in thecircumstances of the case the Appellatecircumstances of the case the Appellate Tribunal was justified in law inholding that the personal investment ofthe managing partner is the income ofthe assessee especially in view of theApex Court judgment reported in 218 ITR239in the case of Income Tax Officerv. Ch. Atchaiah?holding that the personal investment ofthe managing partner is the income ofthe assessee especially in view of theApex Court judgment reported in 218 ITR239in the case of Income Tax Officerv. Ch. Atchaiah? 7. Whether on the facts and in thecircumstances of the case the Tribunalwas justified in law and on facts inestimating the turnover at six times ofthe declared turnover more so when thecircumstances of the case the Tribunalwas justified in law and on facts inestimating the turnover at six times ofthe declared turnover more so when the ITA Nos.246/2013 & connected cases ::12:: books of accounts maintained by theassessee during the relevant year werenot discredited and further there wasno material on record to justify suchan arbitrary estimation ?” 7. Whether on the facts and in thecircumstances of the case the Tribunalwas justified in law and on facts inestimating the turnover at six times ofthe declared turnover more so when thecircumstances of the case the Tribunalwas justified in law and on facts inestimating the turnover at six times ofthe declared turnover more so when the ITA Nos.246/2013 & connected cases ::12:: books of accounts maintained by theassessee during the relevant year werenot discredited and further there wasno material on record to justify suchan arbitrary estimation ?” 2. On facts, we have to notice that theassessee was a jewelry carried on in partnership,whose business premises and residences of thepartners were subjected to search under Section 132on 09.04.2008. It was noticed that the assessee hadnot kept any accounts for the period from01.04.2008 to 09.04.2008. Huge stock of silver andgold ornaments not disclosed in the books ofaccounts were also found. The documents recoveredshowed a consistent practice of sale of ornamentsby estimate slips, with the books of accountsreflecting only 10% of actual sales. The assesseedisclosed Gross Profit in the range of 36.55% to ITA Nos.246/2013 & connected cases ::13:: 48.08%; which the Assessing Officer found was tolegitimise the profit realised on unaccountedsales. The Assessing Officer also held that the GPwould be only at 20% in the line of business.There were additions made on that basis estimatingthe turnover at ten times from that seen from booksof accounts of the relevant years, applying GP at20%. 3. In first appeal, for the first time, theassessee raised a contention with respect to thesearch being invalid specifically claiming that thepanchas were absent during the search and therecording of statement under Section 132(4). Aground of limitation was also urged based on theperiod of 21 months provided under Section 153B ofthe Act. Both these grounds were negatived by theFirst Appellate Authority, the first one on theground of the First Appellate Authority not beingcompetent 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 beendispatched on the last day. With respect to theadditions, the First Appellate Authority reduced itto five times of the turnover returned for each year.The assessee and Department were in appeal. TheTribunal interfered with the First AppellateAuthority's order insofar as modifying the additionto six times the returned turnover. The Tribunalfound that the appellate authorities could examinethe validity of a search, but on facts refused toaccept the contention of the assessee. TheDepartment appeals were hence allowed partly andassessee's appeals were rejected. The assessee isbefore us challenging the order of the Tribunal onthe questions of law herein above extracted. 4. Sri. Ramesh Cherian John at the outsetpoints out that the Appellate Authorities being notcompetent to look into the validity of the searchproceedings as stated inPooran Mal v. Director of ITA Nos.246/2013 & connected cases ::15:: 4. Sri. Ramesh Cherian John at the outsetpoints out that the Appellate Authorities being notcompetent to look into the validity of the searchproceedings as stated inPooran Mal v. Director of ITA Nos.246/2013 & connected cases ::15:: Inspection [(1974) 93 ITR 505] stands substantiallyaltered after the amendment to Finance Act, 1995 byintroduction of a block assessment and laterintroduction of Section 153 A by Finance Act, 2003.It is contended that the validity of the search isthe most important issue insofar as examining thesustainability of an assessment order passedpursuant to a search under Section 132. Thesearch has to comply with Section 100 of theCriminal Procedure Code; which makes the presenceof panchas an imperative requirement, during theentire process of search and when the mahazar isacknowledged by the persons whose premises aresearched. Herein though the grounds of the absenceof panchas were not taken at the first instance,the appeal is to be considered as a continuation ofthe proceedings as is provided under Section 131and Section 255(6) of the Income Tax Act. Theassessee had also produced the affidavits of the ITA Nos.246/2013 & connected cases ::16:: panchas specifically stating that they were notpresent at the time of the search. The FirstAppellate Authority refused to consider the sameand so did the Tribunal. The learned Counsel seeksfor a remand insofar as examination of the panchasare concerned. 5. The learned Standing Counsel, Governmentof India (Taxes), Sri. Jose Joseph seeks to sustainthe order of the Tribunal pointing out that therewas sufficient material to reject the books ofaccounts as recovered on search. Reliance is placedon the judgment of this Court in ITA No.19 of 2011dated 10.01.2019 [Commissioner of Income Tax Iv.Orma Marble Palace (P)Ltd.] to contend that adishonest dealer cannot be expected to keep theevidence revealing dishonesty for the prior earlieryears which is permissible of being reopened underSection 153A, in pursuance to a search underSection 132. The fact that a number of estimate ITA Nos.246/2013 & connected cases ::17:: slips were recovered in the period in which therewere no accounts properly maintained by theassessee as also recovery of huge undisclosedstock would be sufficient to reject the books ofaccounts of the assessee. As to the question oflimitation, it is pointed out that though notspecifically referred to by the Tribunal, the paperbook produced by the assessee produced a postal-item tracking document which indicate that thedispatch was made on 31.12.2010 itself. Thecontention raised on limitation was for reason ofthe dispatch having been made after office hours,which cannot be sustained. On the ground ofcontinuation of assessment proceedings in theappeal it is specifically pointed out that unlessthe absence of panchas which is the specific groundtaken up, is raised at the first instance beforethe search party at the time of acknowledging themahazar or at least before the Assessing Authority, ITA Nos.246/2013 & connected cases ::18:: ITA Nos.246/2013 & connected cases ::18:: it cannot be taken up later in first appeal.Sri. Jose Joseph does not seriously oppose thecontention that the appellate proceedings are acontinuation of the assessment proceedings.However, such continuation could be inferred onlyfor the grounds taken up before the AssessingAuthority, especially in the context of the absenceof panchas who are independent third parties. Thedecisions relied on by the assessee would not beapplicable in the present case; is the argument.The assessee having not taken up the contention atthe first stage and having taken up such acontention at the appellate stage for the firsttime indicates that the assessee had, by then, wonover the panchas. If such contentions are allowedto be taken at a later stage in appeals providedunder the statute, it would lead to chaos and noproceedings could be sustained since individualsretract at their sweet will. The additions ITA Nos.246/2013 & connected cases ::19:: according to the learned Standing Counsel has beensubstantially reduced by the appellate authorityand slightly modified by the Tribunal. 6. The learned Counsel for the assessee alsorelies on the judgment of this Court produced alongwith the paper book in WP(C) No. 34655/2011 dated25.01.2012. Reliance is also placed on Jose Cyriacv. Commissioner of Income Tax [(2011) 336 ITR 241],Ajit Jain v. Union of India [(2000) 242 ITR302(Del)].Pooran Mal(supra)is relied on to urgethat even the said decision of the Hon'ble SupremeCourt emphasised the mandate insofar as thesafeguards provided with respect to a search to bescrupulously followed, failing which the entireproceedings would be vitiated. The learned Counselalso would argue on the limitation as also theestimations made being not reasonable. It isspecifically urged that there was absolutely no ITA Nos.246/2013 & connected cases ::20:: material to reject the books of accounts of theassessee. 7. The questions 1 to 3 are on thearguments raised, as to the invalidity of searchon grounds of absence of panchas. We would firstlook at the decision in Pooran Mal (supra)whichitself specifically spoke of the safeguards insofaras a search under Section 132 of the Income TaxAct. We extract paragraph 11. We are, therefore, to see what are theinbuilt safeguards in Section 132 of the IncomeTax Act. In the first place, it must be notedthat the power to order search and seizure isvested in the highest officers of the department.Secondly, the exercise of this power can onlyfollow a reasonable belief entertained by suchofficer that any of the three conditionsmentioned in Section 132(1)(a),(b) and (c)exists. In this connection it may be furtherpointed 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 reasonsbefore the authorisation is issued to theofficers mentioned in sub-section (1). Thirdly, 11. We are, therefore, to see what are theinbuilt safeguards in Section 132 of the IncomeTax Act. In the first place, it must be notedthat the power to order search and seizure isvested in the highest officers of the department.Secondly, the exercise of this power can onlyfollow a reasonable belief entertained by suchofficer that any of the three conditionsmentioned in Section 132(1)(a),(b) and (c)exists. In this connection it may be furtherpointed 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 reasonsbefore the authorisation is issued to theofficers mentioned in sub-section (1). Thirdly, the authorisation for the search cannot be infavour of any officer below the rank of an IncomeTax Officer. Fourthly, the authorisation is forspecific purposes enumerated in (i) to (v) insub-section (1) all of which are strictly limitedto the object of the search. Fifthly when money,bullion, etc. is seized the Income Tax Officer isto make a summary enquiry with a view todetermine how much of what is seized will beretained by him to cover the estimated taxliability and how much will have to be returnedforthwith. The object of the enquiry under sub-section (5) is to reduce the inconvenience to theassessee as much as possible so that within areasonable time what is estimated due to theGovernment may be retained and what should bereturned to the assessee may be immediatelyreturned to him. Even with regard to the books ofaccount and documents seized, their return isguaranteed after a reasonable time. In themeantime the person from whose custody they areseized is permitted to make copies and takeextracts. Sixthly, where money, bullion, etc. isseized, it can also be immediately returned tothe person concerned after he makes appropriateprovision for the payment of the estimated taxdues under sub-section (5) and lastly, and thisis most important, the provisions of the CriminalProcedure Code relating to search and seizure apply, as far as they may be, to all searches andseizures under Section 132. Rule 112 provides forthe actual search and seizure being made afterobserving normal decencies of behaviour. Theperson in charge of the premises searched isimmediately given a copy of the list of articlesseized. One copy is forwarded to the authorisingofficer. Provision for the safe custody of thearticles after seizure is also made in Rule 112.In our opinion, the safeguards are adequate torender the provisions of search and seizure asless onerous and restrictive as is possible underthe circumstances. The provisions, therefore,relating to search and seizure in Section 132 andRule 112 cannot be regarded as violative ofArticle 19(f) and (g). The Hon'ble Supreme Court has held that compliancewith the provisions of the CrPC, with respect tosearch and seizure is the most important safeguardinsofar as the acceptability of the search isconcerned. If there is no compliance with the mostimportant safeguard, definitely it should fail. 8. Ajith Jain(Supra)is again a case inwhich the safeguards were held to be sacrosanct ; ITA Nos.246/2013 & connected cases ::23:: The Hon'ble Supreme Court has held that compliancewith the provisions of the CrPC, with respect tosearch and seizure is the most important safeguardinsofar as the acceptability of the search isconcerned. If there is no compliance with the mostimportant safeguard, definitely it should fail. 8. Ajith Jain(Supra)is again a case inwhich the safeguards were held to be sacrosanct ; ITA Nos.246/2013 & connected cases ::23:: which if not followed vitiate the entireproceedings. The decision of the Delhi High Courthas merged with the order of the Supreme Courtwhich dismissed a civil appeal filed against thesaid judgment. The Division Bench of this Courtalso inJose Cyriac(supra) found that theappellate proceedings being a continuation of theassessment proceedings, the validity of a searchcould be urged in any of such appellateproceedings. We have no quarrel with theproposition as laid down in the cited decisions.But however, the contention raised here is withrespect to the absence of panchas; which we are ofthe firm opinion, should have been raised at thefirst instance. 9. We first look at the judgment of thelearned Single Judge in WP(C) No. 34655/2011,produced along with the paper book placed beforethe Tribunal. There, in pursuance to a search ITA Nos.246/2013 & connected cases ::24:: conducted under Section 132, the assessee had firstraised a plea of requirement of examination of aDepartment Officer before the First AppellateAuthority. The learned Single Judge found that therequest of the assessee for cross-examining theauthorised officer of the Department is inaccordance with the provisions of law. We cannotbut distinguish the decision when the claim is ofabsence of panchas; independent persons called bythe department to evidence the search and thepreparation of mahazar. This cannot be equated withthe request made for cross-examination of anofficer of the Department. Jose Cyriac(supra)wasa case where the validity of an authorisationissued under Section 132 was first challenged inappeal before the High Court. The High Court whilenegativing the plea raised for the first timeunder Section 260A of the Act, however, held thatif 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 searchunder Section 132 is one sourced to the Departmentand the chances of it being manipulated, in favourof the assessee, are remote. Likewise thedepartment official's cross examination could betaken up at any stage as there can be no assumptionthat the officer would be won over to depose infavour of the assessee. The decisions cited doesnot at all contemplate, the fact situation asarising in this case; of the absence of panchasduring the search proceedings, preparation ofmahazar and its acknowledgment, which contentionwas not taken up at the first instance. 10. The search itself was conducted on09.04.2008. The assessee is not a new dealer andhad been carrying on the business for long. Theargument of the learned Counsel for the assesseebefore us, is that the search proceedings, ITA Nos.246/2013 & connected cases ::26:: 10. The search itself was conducted on09.04.2008. The assessee is not a new dealer andhad been carrying on the business for long. Theargument of the learned Counsel for the assesseebefore us, is that the search proceedings, ITA Nos.246/2013 & connected cases ::26:: preparation of mahazar as also recording ofstatements under oath, were carried out in thepresence of Police and without any panchas. Aftersuch proceedings were carried out two persons werecalled from the outside and forced to sign themahazar. If that was the case, we agree with theCounsel that probably, the assessee could not haveraised objections before the search party itself,especially when it is averred that the search was inthe presence of Police. However, that does notpreclude the assessee from raising a contentionbefore the Assessing Officer when notice is issued inthe proceedings under Section 153A. If that had beenraised at the first instance and cross-examinationwas not allowed by the Assessing Officer, definitely,it could have been considered by any of the AppellateAuthorities. The fact that even then, the assesseecould have won over the panchas would be irrelevantinsofar as the passageof time having occasioned ITA Nos.246/2013 & connected cases only by reason of the Assessing Officer having notfollowed the requirement of law, of examining thepanchas when it was first sought for. Having notraised the contention before the Assessing Officerwe perfectly agree with the Standing Counsel thatif it is permitted at the appellate stage, it couldonly lead to chaos. 11. The assessee could with passage of time,have won over the panchas, to make statementsretracting their attestation in the mahazar; ofhaving witnessed the search from its commencementto its conclusion. The mahazar which the assesseehad acknowledged contains the signatures of thepanchas and they had specifically stated that theywere present during the search, recording ofstatement,preparationofmahazarand acknowledgment of mahazar. The same was relied onby the A.O and at that time there was no objectionraised to the same. We do not think that any of the ITA Nos.246/2013 & connected cases ::28:: decisions cited, help the assessee, since thequestion is a mixed one of facts and law. On factswe find that the question of presence of panchascannot be questioned in appeal, unless it is firstraised at least before the Assessing Officer. 12. We also notice that MD Overseas Ltd.dealt with only the change in procedure afterintroduction of Section 153A. The sanctity of thesearch and safeguards being sacrosanct remained thesame before and after amendment. We do not thinkthe decision in any way aids the assessee's case.The non-presence of panchas raised for the firsttime before the First appellate authority after aperiod of three years from the search conducted,cannot at all be countenanced. There was no validground for the Tribunal to cancel the assessment inthe light of the order of the co-ordinate Benchwhich the Tribunal has specifically referred to andfound to be distinguishable. The decision of the ITA Nos.246/2013 & connected cases ::29:: Tribunal was in the case of ACIT v. George PhilipModayil (ITA No.389(Coch)/98 & others)which theTribunal noticed was a case in which at the firststage itself the plea of absence of panchas wasraised. The questions numbered as 1 to 3 areanswered in favour of the revenue and against theassessee. ITA Nos.246/2013 & connected cases ::29:: Tribunal was in the case of ACIT v. George PhilipModayil (ITA No.389(Coch)/98 & others)which theTribunal noticed was a case in which at the firststage itself the plea of absence of panchas wasraised. The questions numbered as 1 to 3 areanswered in favour of the revenue and against theassessee. 13. The next question is on limitation.Admittedly, the order was dispatched on 31.12.2010which was the last date of limitation under Section153B. The only contention taken up is that theorder was dispatched after the office hours. Therequirement as noticed by the Tribunal from thejudgment of this Court in Cochin Plantations Ltd.v. State of Kerala. (1997) 227 ITR 38 is to ensurethat by the last day of limitation, the order isbeyond the control of the authority concerned;ensuring that no changes or modifications are madeafter the expiry of limitation period. Hence if a conscientious officer passed the order on the lastday of limitation and dispatched it after officehours, it cannot be said to be a factor vitiatingthe order or enabling the limitation period to beapplied to find a bar for issuing the said order.The question of law raised at 4 is hence answeredagainst the assessee and in favour of the revenue;on the clear facts coming out here. 14. The estimation made is challenged byquestion Nos.5 and 7 allegingthatthereisabsolutely no material to reject the books ofaccounts and the estimation made at six times ofthe turnover by the Tribunal, is without any basis.On the question of rejection of accounts as alreadynoticed by us, on search, there was found excessstock of gold of 2032 gms of gold and 7901 gms ofsilver ornaments. This was not recorded in thebooks of accounts. It was also found that betweenthe period 01.04.2008 to 09.04.2008 there was no ITA Nos.246/2013 & connected cases ::31:: proper maintenance of accounts, obviously tomanipulate the accounts and record sales far lowerto that actually occasioned. A pre-search enquiryhad revealed sale of 2.02 gms of gold locket on thebasis of an estimate slip which did not find aplace in the accounts of the assessee. Further, thesearch revealed estimate slips issued for a periodof 15 days which totalled a sale of 175.174 gms;whereas the sale accounted for the said 15 days wasonly 17 gms. This is the basis on which theAssessing Officer rejected the accounts andestimated the turnover. The materials as revealedin the search in our opinion, was sufficient toreject the books of accounts of the assessee. 15. On the question of estimation we haveto notice that the Assessing Officer had foundthat the assessee disclosed Gross Profit of 36.55%to 48.08% in its accounts. In fact, whenestimating the turnover, the assessee could have ITA Nos.246/2013 & connected cases adopted the Gross Profit as disclosed in the booksof accounts. However, a reasonable computation wasmade considering the Gross Profit available in thatline of business and a far lower gross profit of20% was adopted for all the years. The estimationwas made at ten times the returned turnover,finding that only 10% of the sales are accounted.The addition of ten times turnover was reduced bythe First Appellate Authority to five times. TheTribunal modified it slightly to make it six times.There is absolutely no question of law arising fromthe estimation and we decline to answer thequestion raised as 5 and 6 being on facts and noton law. We also do not find any perversity in thedetermination of facts by the Tribunal. 16. The last question is on the personalinvestment of the Managing Partner. The Tribunal'sorder indicates that the assessee had a contentionbefore the Tribunal that the undisclosed stock ITA Nos.246/2013 & connected cases ::33:: 16. The last question is on the personalinvestment of the Managing Partner. The Tribunal'sorder indicates that the assessee had a contentionbefore 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 suchcontention. There was no separate business carriedon by the Partner and the business premises whichwas searched was that of the firm. At the time ofsearch, the Partner was present in the premises andhe had cooperated with the search proceedings.Taking all these circumstances into account, theTribunal had rejected the contention of personalinvestment of the Managing Partner having beenincluded in the stock determined in the name ofthe assessee. We find again that there is noquestion of law arising from the aforesaid facts.However, we notice the submission of the learnedCounsel for the assessee Sri. Ramesh Cherian Johnthat there was an addition made with respect to theproperty transactions in the personal name of theManaging Partner one G.Venkatesh. That was not anissue which was raised or argued before the ITA Nos.246/2013 & connected cases ::34:: Tribunal. The learned Standing Counsel Sri.JoseJoseph also points out that there was no separateaddition made on that count and the addition madeis only on the turnover at ten times, reduced laterto six times, with gross profit @ of 20%. We alsofind that such a ground was not taken up beforeany of the appellate authorities. Hence we do notthink that such a ground can be raised at the stageof appeal under Section 260A. We hence reject all the appeals, withoutany order as to costs. Sd/-K.VINOD CHANDRANJudge Sd/-ASHOK MENONJudge jma ITA Nos.246/2013 & connected cases 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.142(1) DATED 24/09/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-BTRUE COPY OF THE REPLY DATED 13/10/2010TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM.TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-CTRUE COPY OF THE ORDER DATED 31/12/2010ISSUED TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM.ISSUED TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-DTRUE COPY OF THE FORM OF APPEAL, STATEMENT OF FACTS AND GROUNDS OF APPEAL FILED BEFORE THE COMMISSIONER OFINCOME TAX (APPEALS), COCHIN.STATEMENT OF FACTS AND GROUNDS OF APPEAL FILED BEFORE THE COMMISSIONER OFINCOME TAX (APPEALS), COCHIN. ANNEXURE-ETRUE COPY OF THE SUMMARY OF ARGUMENTS FILED BEFORE THE COMMISSIONER OF INCOMETAX (APPEALS).FILED BEFORE THE COMMISSIONER OF INCOMETAX (APPEALS). ANNEXURE-FTRUE COPY OF THE REPRESENTATION DATED 09/04/2012 FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) KOCHI.09/04/2012 FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) KOCHI. ANNEXURE-GTRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) III, COCHIN, DATED 12/10/2012.COMMISSIONER OF INCOME TAX (APPEALS) III, COCHIN, DATED 12/10/2012. ANNEXURE-HTRUE COPY OF THE FORM OF APPEAL AND GROUNDS OF APPEAL DATED 20/11/2012 FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL.GROUNDS OF APPEAL DATED 20/11/2012 FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL. ::37:: APPENDIX OF ITA 5/2014 PETITIONER'S/S EXHIBITS: ANNEXURE-ATRUE COPY OF THE NOTICE UNDER SECTION 142(1) DATED 24/09/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-BTRUE COPY OF THE REPLY DATED 13/10/2010TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM.TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-GTRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) III, COCHIN, DATED 12/10/2012.COMMISSIONER OF INCOME TAX (APPEALS) III, COCHIN, DATED 12/10/2012. ANNEXURE-HTRUE COPY OF THE FORM OF APPEAL AND GROUNDS OF APPEAL DATED 20/11/2012 FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL.GROUNDS OF APPEAL DATED 20/11/2012 FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL. ::37:: APPENDIX OF ITA 5/2014 PETITIONER'S/S EXHIBITS: ANNEXURE-ATRUE COPY OF THE NOTICE UNDER SECTION 142(1) DATED 24/09/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-BTRUE COPY OF THE REPLY DATED 13/10/2010TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM.TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-CTRUE COPY OF THE ORDER DATED 31/12/2010ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM.ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-DTRUE COPY OF THE FORM OF APPEAL, STATEMENT OF ACTS AND GROUNDS OF APPEALFILED BEFORE THE COMMISSIONER OF INCOMETAX (APPEALS), COCHIN.STATEMENT OF ACTS AND GROUNDS OF APPEALFILED BEFORE THE COMMISSIONER OF INCOMETAX (APPEALS), COCHIN. ANNEXURE-ETRUE COPY OF THE SUMMARY OF ARGUMENTS FILED BEFORE THE COMMISSIONER OF INCOMETAX (APPEALS) WITHOUT ANNEXURES.FILED BEFORE THE COMMISSIONER OF INCOMETAX (APPEALS) WITHOUT ANNEXURES. ANNEXURE-FTRUE COPY OF THE REPRESENTATION DATED 09/04/2012 FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), KOCHI.09/04/2012 FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), KOCHI. ANNEXURE-GTRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) III, COCHIN DATED 12/10/2012.COMMISSIONER OF INCOME TAX (APPEALS) III, COCHIN DATED 12/10/2012. ANNEXURE-HTRUE COPY OF THE FORM OF APPEAL AND GROUNDS OF APPEAL DATED 20/11/2012 FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL.GROUNDS OF APPEAL DATED 20/11/2012 FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL. ANNEXURE-ITRUE COPY OF THE ARGUMENT NOTE FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL WITHOUT ANNEXURES.BEFORE THE INCOME TAX APPELLATE TRIBUNAL WITHOUT ANNEXURES. ANNEXURE-JTRUE COPY OF THE IMPUGNED ORDER DATED 24/05/2013 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN. ANNEXURE-KTRUE COPY OF THE NOTICE DATED 21/01/2013 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM.ANNEXURE-LTRUE COPY OF THE ORDER OF STAY DATED 01/03/2013 GRANTED BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN.ANNEXURE-MTRUE COPY OF THE CHALLAN DATED 11/03/2013.ANNEXURE-NTRUE COPY OF THE CHALLAN DATED 11/03/2013.ANNEXURE-OTRUE 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-ATRUE COPY OF THE NOTICE UNDER SECTION 142(1) DATED 24/09/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM.142(1) DATED 24/09/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-BTRUE COPY OF THE REPLY DATED 13/10/2010TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM.TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-CTRUE COPY OF THE ORDER DATED 31/12/2010ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM.ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-DTRUE COPY OF THE FORM OF APPEAL, STATEMENT OF ACTS AND GROUNDS OF APPEALFILED BEFORE THE COMMISSIONER OF INCOMETAX (APPEALS), COCHIN.STATEMENT OF ACTS AND GROUNDS OF APPEALFILED BEFORE THE COMMISSIONER OF INCOMETAX (APPEALS), COCHIN. ANNEXURE-ETRUE COPY OF THE SUMMARY OF ARGUMENTS FILED BEFORE THE COMMISSIONER OF INCOMETAX (APPEALS).FILED BEFORE THE COMMISSIONER OF INCOMETAX (APPEALS). ANNEXURE-FTRUE COPY OF THE REPRESENTATION DATED 09/04/2012 FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), KOCHI.09/04/2012 FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), KOCHI. ANNEXURE-CTRUE COPY OF THE ORDER DATED 31/12/2010ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM.ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-DTRUE COPY OF THE FORM OF APPEAL, STATEMENT OF ACTS AND GROUNDS OF APPEALFILED BEFORE THE COMMISSIONER OF INCOMETAX (APPEALS), COCHIN.STATEMENT OF ACTS AND GROUNDS OF APPEALFILED BEFORE THE COMMISSIONER OF INCOMETAX (APPEALS), COCHIN. ANNEXURE-ETRUE COPY OF THE SUMMARY OF ARGUMENTS FILED BEFORE THE COMMISSIONER OF INCOMETAX (APPEALS).FILED BEFORE THE COMMISSIONER OF INCOMETAX (APPEALS). ANNEXURE-FTRUE COPY OF THE REPRESENTATION DATED 09/04/2012 FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), KOCHI.09/04/2012 FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), KOCHI. ANNEXURE-GTRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) III, COCHIN DATED 12/10/2012.COMMISSIONER OF INCOME TAX (APPEALS) III, COCHIN DATED 12/10/2012. ANNEXURE-HTRUE COPY OF THE FORM OF APPEAL AND GROUNDS OF APPEAL DATED 20/11/2012 FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL.GROUNDS OF APPEAL DATED 20/11/2012 FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL. ANNEXURE-ITRUE COPY OF THE ARGUMENT NOTE FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL.BEFORE THE INCOME TAX APPELLATE TRIBUNAL. ANNEXURE-JTRUE COPY OF THE IMPUGNED ORDER DATED 24/05/2013 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN. ANNEXURE-KTRUE COPY OF THE NOTICE DATED 21/01/2013 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM.ANNEXURE-LTRUE COPY OF THE ORDER OF STAY DATED 01/03/2013 GRANTED BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN.ANNEXURE-MTRUE COPY OF THE CHALLAN DATED 11/03/2013.ANNEXURE-NTRUE COPY OF THE CHALLAN DATED 11/03/2013.ANNEXURE-OTRUE COPY OF THE AUDITED STATEMENT FOR THE FINANCIAL YEAR 2008-09. ::41:: APPENDIX OF ITA 283/2013 PETITIONER'S/S EXHIBITS: ANNEXURE-ATRUE COPY OF THE NOTICE UNDER SECTION 142(1) DATED 24/09/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM.142(1) DATED 24/09/2010 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM. ANNEXURE-BTRUE COPY OF THE REPLY DATED 13/10/2010TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTTAYAM.TO THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL C