IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR WEDNESDAY, THE 27TH FEBRUARY 2008 / 8TH PHALGUNA 1929 ITA.No. 169 of 2002() --------------------- AGAINST THE ORDER DATED 31/12/2001 IN I.T.(S&S) A.16/COCH/2000 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/RESPONDENT ------------------------------------- THE COMMISSIONER OF INCOME TAX,TRICHUR. BY ADV. SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT SRI.GEORGE K. GEORGE, SC FOR IT RESPONDENTS: APPELLANT ---------------------- M/S.KALLADA OIL MILLS, THANISSERY, IRINJALAKUDA. BY ADV. SRI.P.BALACHANDRAN SMT.PREETHA S.NAIR THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 27/02/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & T.R.RAMACHANDRAN NAIR, JJ. .................................................................... I.T. Appeal No.169 of 2002 .................................................................... Dated this the 27th day of February, 2008. JUDGMENT C.N.Ramachandran Nair, J. Heard Standing Counsel for the Income Tax department for the appellant and Senior counsel Sri.P.Balachandran for the respondent. Consequent upon search in the business premises of the respondent-firm and the partners, certain documents pertaining to unaccounted transactions were noticed. Among the items found on search, the department found unexplained investment of Rs.2,42,749/- made by one of the partners of the firm. While estimating the income of the firm in the block assessment, the Assessing Officer made addition of four times unexplained investment seen in the hands of one partner. The Tribunal found that in the absence of any evidence of firm earning and suppressing four times unexplained investment noticed in the hands of one partner, addition cannot be made in the assessment of the firm. Section 69 of the Income Tax Act authorises unexplained investment as income of the assessee who is seen to have made the investment. There is no justification to assume that the other partners of the firm have earned in proportion to the unexplained investment made 2 by one partner. In the absence of any statutory provision authorising it and in the absence of evidence about such income having earned by the firm, the addition was rightly cancelled by the Tribunal. We, therefore, dismiss the department's appeal. C.N.RAMACHANDRAN NAIR Judge T.R.RAMACHANDRAN NAIR Judge pms