TMI Blog1996 (3) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and in the circumstances of the case, the Tribunal is right in law in coming to the conclusion that the seized profit and loss account belongs to the assessee's firm and that the cancellation of the registration and estimated income solely based on the said profit and loss account is justified ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in coming to the conclusion that the profit and loss account seized from the premises of Bhaskaran relates to the assessee's firm ? " However, it would appear from the statement of case that questions Nos. 2 and 3, it is considered by the assessee, would not arise with regard to the assessment year 1978-79. In other words, as far as Income-tax References Nos. 93 and 94 of 1991 only question No. 1 would be required to be considered. It would also be necessary to state that the Income-tax Appellate Tribunal, Cochin Bench, also has referred accordingly only question No. 1 out of the above three questions. However, the other two questions would be the subject-matter of Original Petitions Nos. 3558 of 1992 and 12726 of 1992, whereby with regard to the said questions, there is a prayer for a dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 7, 1987, was issued to the remaining partners, by way of an opportunity as they did not respond to the notice under section 148. To this notice also none replied. Sri Venugopala Menon, chartered accountant, represented the firm and communicated by the letter, dated August 13, 1987, reiterating that the accounts maintained and submitted for and on behalf of the assessee-firm are the correct ones and it was further contended that the seized documents purported to be the profit and loss accounts are not signed by any one and might have been prepared for some personal purpose of the late Sri Bhaskaran. With regard to the year in question, the Income-tax Officer found identity of figures seen from the seized documents as compared with the profit and loss account filed by the assessee. The Income-tax Officer with regard to the year in question found 11 items showing identical figures in regard thereto which would be available in the following Table in the order of the Income-tax Officer,----- -------------------------------------------------------------------------------------------------------------------------------------------------- Particulars Figures as per Figures as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roposal dated September 16, 1987, recorded that there was no response to this further step also. Therefore, the Income-tax Officer with regard to the year 1978-79 by the order (annexure "A") made a demand for Rs. 1,49,102. In the same process by the order (annexure "B") with regard to the subsequent assessment year 1979-80, the demand is for Rs. 2,71,900. Needless to state that the Income-tax Officer initiated penalty action under section 271(1)(c) and section 273(1)(a) which were already initiated. Thus, up to this stage, it would be clear that there was no participation in pursuance of the proceedings of notice under section 148 of the Act and proceedings thereafter under section 147(a) of the said Act. It is already stated that after the search of May 27, 1983, there was no attempt to participate in the consequential proceedings and what is found is a representation on behalf of the firm to contend by way of reiteration that the accounts already filed along with the returns are correct ones and the document seized does not appear to have been signed by anybody and a further contention that the statement might have been prepared for some personal purpose of the late Sri Bhaskar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he subsequent year is a replica. The paper book contains orders under section 186 of the Act cancelling the registration as a matter of consequence of the conclusions reached earlier. The matter arrived at the second appellate stage before the Income-tax Appellate Tribunal, Cochin Bench. The Tribunal has considered the aspect in paragraph 3.6 of its order and dealt with the contention of the assessee that the Department was not justified to take into cognizance the profit and loss account seized from the premises of Sri Bhaskaran. It is observed that Sri Bhaskaran was the managing partner of the assessee-firm at the time in question and it was during the course of the search that the documents exhibiting the characteristics of profit and loss account and balance-sheet were taken charge of. The Tribunal also likewise observed 19 aspects of identities referred to in the earlier part of this judgment and on the basis a reinforcing conclusion is recorded that it becomes obvious that the profit and loss account seized from the premises of Sri Bhaskaran who was then the managing partner of the assessee would have to be understood as belonging to the assessee-firm. The Tribunal emphasis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income-tax (Appeals) as well as by the second appellate authority---the Income-tax Appellate Tribunal. The petitioner's application under section 256(1) of the Income-tax Act, 1961, praying for reference of only two questions (questions Nos. 2 and 3) spelt out at the outset of this judgment which was rejected by the impugned order in the said petition annexed at annexure "E". Hearing learned counsel in all these proceedings, it will have to be clearly seen that the answers to the questions would depend on the answer to the basic question. The basic question is whether the profit and loss account filed by the assessee along with his return could be said to be genuine and acceptable leading to the resulting situation as to whether the firm registered with the Department would have to be considered as genuine or otherwise. The answer to the questions again in turn would depend on the examination of the conclusions reached by the three authorities in regard thereto. It is for this reason that the reasoning has been elaborately discussed and placed on the fabric of this judgment. The staring feature is that the documents with regard to the years of assessment in question are fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the word "may" will have to be understood in the context of the provision itself which is in the nature of an invasion of the normal situation that the house and the place is the castle of the man. Learned counsel sought an aid to the above submission by referring to the provisions of section 278D of the Act relating to the importance of the proceedings under section 122 of the Act. It was urged by learned counsel that section 132(4A) speaks of the consequences of the finding of the documents on seizure in possession and control of the person raising presumption at once, that the documents belonged to such person who has control over the premises and that the contents of the documents are true, and learned counsel contended that this floats on the surface of the provisions of section 132(4A) of the Act by reason of the two clauses which are necessary for discussion in the context. Learned counsel urges that the importance of section 132(4) of the Act has to be appreciated and in regard thereto the provisions of section 278D of the Act would be of much help in the process. Learned counsel referring to the said provision of section 278D contends that the provisions of sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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