COMMISSIONER OF INCOME TAX Vs. NAVAS M MEERAN
HIGH COURT OF KERALA
COMMISSIONER OF INCOME TAX
Navas M Meeran
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G.SIVARAJAN, J. -
(1.) THE matter arises under the Income Tax Act, 1961 (hereinafter referred to as the Act'). The revenue is aggrieved by the order of the Income Tax Appellate Tribunal (for short 'the Tribunal') passed in I.T. (S & S) A.24/Coch/98 filed by the respondent -assessee in respect of the block assessment for the period 1 -4 -1986 to 17 -6 -1996. There was a search operation conducted in the business premises of Eastern Group of Companies and in the residence of Shri M.E. Meeran, who is the father of the assessee. Based on the books and other documents seized in the search, proceedings were initiated, inter alia, against the assessee under section 158BD read with section 158BC of the Act. Pursuant to the notice issued under section 158BD, the assessee filed returns for the block period on 9 -6 -1997, showing a total undisclosed income of Rs. 10 lakhs. The assessing officer, while completing the block assessment, determined the total unaccounted investment at Rs. 14,49,127. The assessee, being aggrieved by the said order, filed appeal before the Tribunal, which, by the impugned order deleted the addition. Similarly, the assessing officer had denied standard deduction claimed by the assessee against the salary received from M/s. Eastern Condiments (P) Ltd. The Tribunal, without any discussion, held that there is no justification in denying the standard deduction on the salary received by the assessee, by observing that there is no bar in receiving salary from the company, in which the assessee is said to be a director.
(2.) THIS court, while admitting the appeal, ordered notice on the following questions of law :
'1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in deleting the addition of Rs. 14,49,127 made as un accounted investment of the assessee in the firm M/s. Eastern Retreads (P) Ltd. 2. Whether, on the facts and in the circumstances of the case should not the Tribunal have remitted the case to the assessing officer for a fresh consideration of the addition ? 3. Whether on the facts and in the circumstances of the case, the assessee is entitled to standard deduction under section 16(1) of the Income Tax Act 4. Whether, on the facts and in the circumstances of the case and without determining as to whether the assessee -director is an employee, the Tribunal is right in law in allowing deduction under section 16(1) of the Income Tax Act 5. Whether on the facts and in the circumstances of the case should not the Tribunal have remitted the case for a fresh consideration of the issue ?'
These questions, it must be noted, relate to the deletion of the addition of Rs. 14,49,127 and the direction regarding the entitlement of standard deduction.
(3.) SHRI P.K.R. Menon, Senior Central Government Standing counsel for Taxes appearing for the appellant submitted that the Tribunal failed to consider all the relevant matters, particularly, the seized documents RM -1 and A -28, in the proper perspective. The senior counsel also submitted that the Tribunal had observed that though the assessee had filed explanation with regard to the two seized slips, the assessing officer was silent about the reply, but the Tribunal also failed to consider the said explanation before entering a finding that the seized material does not reflect any unaccounted transaction by the assessee. The senior counsel also produced copies of A -28 and RM -1 documents along with C.M.P. 2339 of 2003. He had also filed a statement explaining the contents and correlation of those two documents. The senior counsel, based on these materials, submits that either the Tribunal or the assessing officer must be directed to consider the matter afresh with reference to the explanation offered by the assessee as well as the statements filed for correlating the two documents mentioned above. The senior counsel further submitted that before grant of standard deduction, the Tribunal should have entered a finding as to whether there is employer -employee relationship between the assessee and the company in which the assessee is a director. He submitted that the Tribunal did not enter any finding on this question, and, therefore, this issue also has to be remitted to the Tribunal or the assessing officer. Senior counsel also pointed out that the Tribunal itself has remanded the assessment to the assessing officer in respect of certain other matters.;
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