T.C. EAPEN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This appeal is preferred by the assessee against the order of the Tribunal, Cochin Bench in ITA No. 34/Coch/1997 dt. 23rd April, 1999. Assessee had filed the return of income for the first time on 13th Dec., 1995 declaring a total income of Rs. 38,830 for the asst. yr. 1995-96. For the asst. yr. 1996-97, he had filed a return declaring an income of Rs. 1,44,834 being interest on bank deposits alone on 17th April, 1996. In the said return, he had shown a sum of Rs. 7,03,000 as the capital gain on the sale of 33 cents of agricultural land in survey No. 3195 of Kawdiar Village. Exemption under Section 54B was claimed in respect of the capital gains disclosed since there were purchases of three items of properties by him for an aggregate consideration of Rs. 20,25,000 before and subsequent to the sale of the property mentioned above.

(2.) Search and seizure operations were carried out at the residence of the assessee on 19th March, 1996 under Section 132 of the IT Act. During the course of search, FDRs with Alappat Fashion Jewellery, Trivandrum, for an amount of Rs. 11.5 lakhs were found out and seized. Notice under Section 158BC was issued to the assessee on 12th Aug., 1996. In response to the notice, the assessee filed a return in Form No. 2B on 12th Sept., 1996. In this return, assessee had shown undisclosed income of Rs. 54,940. In response to notices under Sections 142(1) and 142(1)(i) and (ii) the assessee had filed cash flow statements for the period 11th April, 1985 to 19th March, 1996 and a statement showing his assets and liabilities as on 31st of March every year commencing from 31st March, 1986 to 31st March, 1995 and also as on 19th March, 1996. Proceedings were initiated under Section 158BC for the purpose of assessment of the undisclosed income of the period from 1st April, 1985 to 19th March, 1996. After considering the cash flow statements filed by the assessee and the source for the investments and the outgoings, the AO determined the undisclosed income at Rs. 18,72,890. Aggrieved by the assessment of the undisclosed income for the block period at Rs. 18,72,890 assessee filed appeal before the Tribunal. Tribunal rejected the appeal, against which this appeal has been preferred.

(3.) Assessee has raised the following questions of law for our consideration: