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Varghese Varghese and ors. Vs. Commissioner of Agricultural Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberIncome-tax Referred Case Nos. 108 to 114, 115 to 124, 125 to 134 and 135 to 140 of 1974
Judge
Reported in[1976]105ITR732(Ker)
ActsKerala Agricultural Income Tax Act, 1950
AppellantVarghese Varghese and ors.
RespondentCommissioner of Agricultural Income-tax
Appellant Advocate K. Velayuthan Nair,; P.R. Parameswaran Nair and; T.D.P.
Respondent AdvocateGovernment Pleader
Cases Referred and Annamalai Chettiar & Co. v. Deputy Commercial Tax Officer
Excerpt:
.....to 311 of 1968 and 136 and 137 of 1969. 2. the assessees are brothers and they were assessed to agricultural income-tax either as individuals or legal representatives of their deceased father in respect of the assessment years 1958-59 to 1967-68. the returns of their income from their rubber estates were rejected by the assessing authority and assessments were completed on best judgment basis. the assessees failed in their appeals before the statutory authorities and hence the following questions have been referred to us by the tribunal at the instance of the assessees :(i) whether, on the facts and in the circumstances of the case, the inspection and seizure of the account books on october 11, 1961, are valid in law and whether the details of crop collected by the officer on the date..........thommen, j.1. these thirty-three income-tax referred cases arise from a common order of the kerala agricultural income-tax appellate tribunal, trivandrum, dated april 30, 1973, in agricultural income-tax appeals nos. 2 to 5 of 1969 and 130 to 135 of 1969 and 300 to 303 of 1968 and 127 to 129 of 1969, 304 to 307 of 1968 and 138 to 143 of 1969 and 308 to 311 of 1968 and 136 and 137 of 1969.2. the assessees are brothers and they were assessed to agricultural income-tax either as individuals or legal representatives of their deceased father in respect of the assessment years 1958-59 to 1967-68. the returns of their income from their rubber estates were rejected by the assessing authority and assessments were completed on best judgment basis. the assessees failed in their appeals before the.....
Judgment:

Kochu Thommen, J.

1. These thirty-three income-tax referred cases arise from a common order of the Kerala Agricultural Income-tax Appellate Tribunal, Trivandrum, dated April 30, 1973, in Agricultural Income-tax Appeals Nos. 2 to 5 of 1969 and 130 to 135 of 1969 and 300 to 303 of 1968 and 127 to 129 of 1969, 304 to 307 of 1968 and 138 to 143 of 1969 and 308 to 311 of 1968 and 136 and 137 of 1969.

2. The assessees are brothers and they were assessed to agricultural income-tax either as individuals or legal representatives of their deceased father in respect of the assessment years 1958-59 to 1967-68. The returns of their income from their rubber estates were rejected by the assessing authority and assessments were completed on best judgment basis. The assessees failed in their appeals before the statutory authorities and hence the following questions have been referred to us by the Tribunal at the instance of the assessees :

'(i) Whether, on the facts and in the circumstances of the case, the inspection and seizure of the account books on October 11, 1961, are valid in law and whether the details of crop collected by the officer on the date of inspection without notice to the assessee can be used against the assessee in his assessment ?

(ii) Whether, on the facts and in the circumstances of the case, the details of crop for one year is applicable to all the years under dispute ?

(iii) Whether, on the facts and in the circumstances of the case, the Tribunal had sufficient justification in disbelieving the report of the Commissioner so far as it relates to the yield under rubber ?''

3. An inspection of the assessees' premises was conducted on October 11, 1961, by the Inspecting Assistant Commissioner, Special, Kottayam, together with the Agricultural Income-tax Officer, Kottayam, and the Agricultural Income-tax Officer, Moovattupuzha, who is the assessing authority. The officers also recovered a book from the premises at the time of the inspection. From the data collected by the officers at the time of the inspection as well as from the figures revealed by the book, they came to the conclusion that the average annual yield of rubber in the estate came to 630 lbs. per acre. The finding of the assessing authority has been challenged by the assessees on various grounds. They contend that the Agricultural Income-tax Act, 1950, does not authorise inspection and seizure, and, therefore, any material gathered by such inspection and seizure is inadmissible as evidence against the assessees. They further contend that the officers relied upon certain statements alleged to have been made by the Superintendent of the Estate and the assessees' representative, Shri K. M. Michael, although copies of these statements were not given to them. They were thus denied a reasonable opportunity for contradicting those statements. The assessees also contended that the total yield of 1,30,375 lbs. shown in the book for the period from May 4, 1960, to February 7, 1961, did not represent the yield from the assessees' estate as it included rubber sheets brought to the estate by 23 persons in the neighbourhood for drying them in the assessees' smoke house. It is contended that this fact was not properly verified by the officers and the estimate made on the basis of this inflated figure not only for that particular year but for the other years also is erroneous and unrelated to the correct position.

4. It is true that the Act does not authorise search and seizure. It is not, however, correct to say that materials gathered as a result of such search and seizure are inadmissible as evidence. As stated by the Supreme Court, 'So far as India is concerned its law of evidence is modelled on the rules of evidence which prevailed in English law, and courts in India and in England have consistently refused to exclude relevant evidence merely on the ground that it is obtained by illegal search or seizure.'--Pooran Mal v. Director of Inspection (Investigation) of Income-tax, : [1974]93ITR505(SC) . See also Kuruma v. Queen, [1955] AC 197, Reg. v. Leatham, [1861] 8 Cox CC 498, and Annamalai Chettiar & Co. v. Deputy Commercial Tax Officer, . In the light of these decisions it can no longer be contended by the assessees that the orders are vitiated because the department relied upon facts and figures collected through unauthorised search and seizure.

5. Incriminating materials and documents discovered in the course of inspection of the assessees' business premises can be relied upon by the department for the purpose of making an estimate provided the assessees are given a reasonable opportunity to inspect them and take notes therefrom or copies thereof. The only evidence that was available to the department for the purpose of making an estimate was the data collected at the time of the inspection on October 11, 1961. The incriminating statements and admissions made by the superintendent and the assessees representative, Shri K. M. Michael, were not put to the assessees, and as such they are not a proper basis for making an estimate. The finding of the Commissioner was rightly rejected by the Tribunal for the reason that the Commissioner had not taken into account relevant facts such as the nature of the growth, girth and variety of the rubber trees, etc. Consequently, it would appear that the only reliable evidence available to the department was the evidence relating to the year in which the inspection was conducted. The necessary facts for drawing an inference as to the years preceding or following the year in which the inspection was conducted do not appear to have been found by the Tribunal. In the light of what is stated above, we answer questions (i) and (iii) in the affirmative, that is, in favour of the department and against the assessee. We would, however, refuse to answer question (ii) and remand the case to the Tribunal for the purpose of finding the necessary facts in relation to all the years in question. We direct the parties tobear their respective costs.


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