2011 (11) TMI 432 - HC - Income Tax

Kerala High Court overturns Tribunal's decision on block assessment, emphasizes evidence review and settlement

The High Court of Kerala set aside the Tribunal's common order in connected appeals related to block assessment under Section 158BC of the Income Tax Act. ... Block assessment - Tribunal did not bother to read the assessment order or the statement recorded during search which is admissible as evidence under Section 132(4) of the Act - It is seen from the statement recorded from the assessee, though retracted after two years, and even in the objections filed by the assessee that assessee has partly conceded the case of suppression of income detected - the Tribunal has not considered the appeal or cross-appeal in detail with reference to the findings in the assessment order and in the appellate authority's order and the statements recorded and objections filed by the assessee - Decided in favor of the assessee by way of remand to Tribunal Issues:Appeal against common order of Tribunal in block assessment under Section 158BC of the Income Tax Act - Tribunal's failure to consider relevant evidence and assessment order - Granting of partial relief without proper reference to materials - Directions to Tribunal for reconsideration within three months - Possibility of settlement between parties.Analysis:The judgment by the High Court of Kerala pertains to connected appeals arising from a common order of the Tribunal in the context of block assessment conducted under Section 158BC of the Income Tax Act. The Tribunal's decision was challenged through appeals, one by the assessee and the other by the Revenue. While the Tribunal dismissed the Revenue's appeal, it substantially allowed the assessee's appeal, leading to the filing of appeals by the Revenue against the common order of the Tribunal.Upon reviewing the case, the Court observed that the Tribunal had failed to adequately consider crucial aspects such as the assessment order and the statement recorded during the search, which holds evidentiary value under Section 132(4) of the Act. The Court highlighted that despite the retraction of the statement by the assessee after two years, there was partial concession regarding the suppression of income detected. Referring to a previous judgment, the Court emphasized the significance of statements recorded during searches for assessments under Section 158BC of the Act.The Court expressed dissatisfaction with the Tribunal's handling of the appeals, noting the lack of detailed consideration of the materials forming the basis of the assessment, including the assessment order, appellate authority's order, and statements recorded along with objections filed by the assessee. Consequently, the Court set aside the Tribunal's common order and directed the Tribunal to rehear the parties, thoroughly consider the evidence, and make a decision within three months, emphasizing the importance of the Court's previous judgment on the matter.Furthermore, while remanding the matter to the Tribunal, the Court suggested that due to the case's age, the assessee could opt to approach the department for assessment on agreed additions. In such a scenario, the Court urged the department to adopt a realistic approach and offer a reasonable settlement if the assessee proposes any. This aspect highlights the Court's consideration for the practical resolution of the matter through mutual agreement between the parties, underscoring the importance of cooperation and fair dealings in tax assessments and disputes.