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 MONDAY, THE 21ST JANUARY 2008 / 1ST MAGHA 1929 ITA.No. 133 of 2001() --------------------- ITA.87/1997 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/RESPONDENT : ----------------- THE COMMISSIONER OF INCOME TAX, CHENNAI. BY ADV. SRI.P.K.R.MENON(SR.),SC FOR IT SRI.GEORGE K. GEORGE, SC FOR IT RESPONDENTS/RESPONDENT: ------------- M/S.QUILON AGRI AGENCIES, KOLLAM. BY ADV. SRI.K.G.ANIL BABU THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 21/01/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & T.R.RAMACHANDRAN NAIR, JJ. ------------------------- I.T.A. No. 133 of 2001 --------------------------------- Dated, this the 21st day of January, 2008 J U D G M E N T C.N.Ramachandran Nair Heard learned standing counsel appearing for the Income Tax Department and learned counsel appearing for respondent assessee. 2. Pursuant to search, block assessment was made for the period from 01/04/1986 to 06/11/1996. The assessee contested only addition made for the assessment year 1997-98. While one item of addition i.e. income from lorry is sustained, the Tribunal deleted the addition pertaining estimation of profit from timber business. Learned standing counsel referred to the assessment order and submitted that immediately during the preceding year, ie. 1996-97, the Assessing Officer estimated profit at 15% of the net cost as against 12.05% returned by the assessee. He submitted that the Assessing Officer has just followed same pattern of estimation for the next year also. However, the Tribunal found that no estimation could be made in a block assessment. We find force in the order of the Tribunal because the date of search was on 06/11/1996 i.e. during the middle of the previous year that neither ITA 133/2001 -2- the previous year was not over nor the time for filing return for 1997-98 was over when estimation of income was made. Even though higher rate of estimation of profit may be justified, the Department cannot estimate profit by taking into account the business transactions up to middle of the financial year. It was open to them to test the genuineness of income while considering the regular assessment for the year 1997-98 i.e. beyond the period of the block assessment. We, therefore, do not find any ground to interfere with the order of the Tribunal. The appeal is, therefore, dismissed. (C.N.RAMACHANDRAN NAIR, JUDGE) (T.R.RAMACHANDRAN NAIR, JUDGE) jg