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Varghese Varghese, Kochukudiyil House, Kaloor, Thodupuzha Vs. the Comm. of Agricultural Income-tax, Kerala, Trivandrum. (i.T.R. Case Nos. 108 to 114 of 1974). Varghese Thomas, Kochukudiyil House, Kaloor, Thodupuzha V. the Comm. of Agricultural Income-tax, Kerala, Trivandrum. (i.T.R. Case Nos. 115 to 124 of 1974). Varghese Joseph, Kochukudiyil House, Kaloor, Thodupuzha V. the Comm. of Agricultural Income-tax, Kerala, Trivandrum. (i.T.R. Case Nos. 125 to 134 of 1974). Varghese Joseph and ors., Koc - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberI.T.R. Case Nos. 108 to 140 of 1974
Reported in(1976)5CTR(Ker)247
AppellantVarghese Varghese, Kochukudiyil House, Kaloor, Thodupuzha
RespondentThe Comm. of Agricultural Income-tax, Kerala, Trivandrum. (i.T.R. Case Nos. 108 to 114 of 1974). Var
Cases ReferredAnnamalai Chettiar & Co. vs. Deputy Commercial Tax Officer
Excerpt:
.....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 11-10-1961 are valid in law and whether the details or 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 11-10-1961 by the inspecting assistant commissioner,..........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 11-10-1961 are valid in law and whether the details or 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 11-10-1961 by the inspecting assistant commissioner,.....
Judgment:

Kochu Thommen, J. - These thirty-three Income-tax Referred Cases arise from a common order of the Kerala Agricultural Income-tax Appellate Tribunal, Trivandrum, dated 30-4-1973 in Agrl. Income-tax Appeal Nos. 2 to 5 of 1969 and 130 to 35 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 & 137 of 1969.

2. The assessee 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 assessee 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 11-10-1961 are valid in law and whether the details or 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 11-10-1961 by the Inspecting Assistant Commissioner, Special, Kottayam, together with 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 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 4-5-1960 to 7-2-1961 did not represent the yield from 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 for not only that particular year but for the other year 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 vs. Director of Inspection (Investigation) of Income-tax, New Delhi A.I.R. 1974 S.C. 348 at 361 para 25 : 1974 CTR (SC) 25. See also Kuruma vs. The Queen, (1955) A.C. 197); Reg. vs. Leatham (1861) 8 Cox C.C. 498; Annamalai Chettiar & Co. vs. Deputy Commercial Tax Officer, Perundurai (16 S.T.C. 68). In the light of these decision sit 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 that 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 date collected at the time of the inspection on 11-10-1961. 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 as 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 question (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 to bear their respective costs.

6. A carbon copy of this judgment under the seal of the High Court and the signature of the Registrar will be forwarded to the Kerala Agricultural Income-tax appellate Tribunal, Trivandrum.


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