Ramachandran Nair, J v. Ita

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HON'BLE MR. JUSTICE BABU MATHEW P.JOSEPH MONDAY, THE 5TH DAY OF MARCH 2012/15TH PHALGUNA 1933 ITA.No. 1806 of 2009 ( ) ----------------------------- ITA.91/2008 of I.T.A.TRIBUNAL,COCHIN BENCH ------------- APAPPELLANT/RESPONDENT.: ---------------------------------- THE COMMISSIONER OF INCOME TAX, THRISSUR BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S)/APPELLANT.: ------------------------------------ SHRI.C.S.AJAYAKUMAR, CHITTIKAPPIL HOUSE, KURIACHIRA, THRISSUR. BY ADV. SRI.ANIL D. NAIR svs THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 05-03-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: I.T.A. NO. 1806/2009 APPENDIX PETITIONER'S ANNEXURES: ANNEXURE A:COPY OF ORDER U/S.158 BC R.W.S143(3) OF THE INCOME TAX ACT, 1961 DATED 28/11/2003. ANNEXURE B:COPY OF THE ORDER CIT(APPEALS) IN APPEAL NO.R088/03-04 DATED 06/01/2005. ANNEXURE C:COPY OF THE ORDER OF INCOME TAX APPELLATE TRIBUNALDATED 27/04/2009 (IT (SS)A NO.91/(COCH)/2005). ANNEXURE D:COPY CTR ENCYLOPAEDIA ON INDIAN TAX LAWS. RESPONDENT'S ANNEXURES:NIL /TRUE COPY/ svs P.A. TO JUDGE. C.R. C.N.RAMACHANDRAN NAIR & BABU MATHEW P.JOSEPH, JJ. ....................................................................I.T.A. No.1806 of 2009 .................................................................... Dated this the 5[th] day of March, 2012. J U D G M E N T Ramachandran Nair, J. Heard learned Senior Standing Counsel for the Revenueand Shri.Anil D.Nair, learned counsel for the respondentassessee. 2.The question raised is whether the Tribunal wasjustified in cancelling assessment of undisclosed income forthe broken period for which, time for filing return was not overas on date of search. Learned Senior Standing Counsel for theRevenue has relied on the decision of the Division Bench ofthis Court in CITv. Binoy Mathai, reported in 311 ITR 226.However, we find that the facts in this case are different in asmuch as the assessee has paid at least one installment ofadvance tax of Rs.5.80 lakhs in respect of the income of theprevious year in which search took place, even before date of ITA No.1806/2009 search. The further finding is that the assessee remitted totaladvance tax of Rs.16.90 lakhs for the income assessed,namely Rs.36 lakhs, as undisclosed income of the assessee.Section 158BB(1)(d) provides for exclusion of only income forthe block period up to date of search, if the assessee hasrecorded in the books of accounts details of such income. Inthis case, even though accounts are irregular, assesseeremitted advance tax on estimated income from business,which is the very same income assessed as undisclosedincome for the block period up to the date of search. In ourview, payment of advance tax on estimated income frombusiness itself is admission of income, though estimation ofincome in regular assessment made by the Assessing Officermay not be in tune with the estimation of income made by theassessee. Since advance tax is paid in respect of an item ofincome, it cannot be said that the assessee intended tosuppress it's income merely because accounts are not writtenup. So much so, payment of advance tax on estimated income ITA No.1806/2009 -3- is sufficient to exclude such income from the scope ofundisclosed income for the broken period of the previous yearfor which, time for filing of return was not over as on the dateof search. We, therefore, do not find any merit in the DepartmentAppeal. It is accordingly dismissed. (C.N.RAMACHANDRAN NAIR, JUDGE) (BABU MATHEW P.JOSEPH, JUDGE) jg