Ita/1616/2009 Of The Commissioner Of Income Tax v. Shri.g.p.josekuttan

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE MONDAY, THE 16TH DAY OF DECEMBER 2013/25TH AGRAHAYANA, 1935 ITA.No. 1616 of 2009 ----------------------------- AGAINST THE ORDER IN ITA 671/COCH/2007 of INCOME TAX APPELLATETRIBUNAL,COCHIN BENCH ------------- APPELLANT(S)/APPELLANT: ----------------------------------------- THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S)/RESPONDENT: ----------------------------------------------- SHRI.G.P.JOSEKUTTAN, 9B LINK HEIGHTS, PANAMPILLY NAGAR AVENUE, KOCHI-36. BY ADVS. SRI.JOSEPH MARKOSE (SR.) SRI.V.ABRAHAM MARKOS SRI.MATHEWS K.UTHUPPACHAN SRI.BINU MATHEW SRI.TERRY V.JAMES SRI.TOM THOMAS THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 16-12-2013, ALONG WITH ITA. 1632/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: PJ ITA.No. 1616 of 2009 ----------------------------- APPENDIX PETITIONERS' ANNEXURES ---------------------------------------- ANNEXURE A: COPY OF REASSESSMENT ORDER DATED 28/12/2006 FOR THE ASSESSMENT YEAR 2001-2002 ANNEXURE B: COPY OF ORDER DATED 17/4/2007 OF THE COMMISSIONER OF INCOME TAX (APPEALS). ANNEXURE C: COPY OF THE ORDER DATED 12/12/2008 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH IN ITA NO.671/COCH/2007. RESPONDENTS' ANNEXURE ----------------------------------------- NIL. / TRUE COPY / P.S. TO JUDGE PJ MANJULA CHELLUR, CJ & A.M.SHAFFIQUE, J. * * * * * * * * * * * * * I.T.A.Nos.1616 of 2009 &1632 of 2009 ---------------------------------------- Dated this the 16[th] day of December 2013 J U D G M E N T SHAFFIQUE,J These appeals are filed by the revenue against thecommon assessee in respect of assessment years 2001-02and 2002-2003 respectively. The common order passed bythe Income Tax Appellate Tribunal in I.T.A.No.671 of 2007and 672 of 2007 are under challenge. 2.The assessee is a Commission Agent and he filedreturn of income for the assessment year 2001-2002declaring a total income of ` 1,58,000/- and agriculturalincome of ` 1 lakh. The return was filed on 06/05/2005belatedly and notice under Section 148 of the Income TaxAct 1961 (hereinafter referred to as ‘the Act’) was issued on13/05/2006. He did not respond to the notice and hencenotice under Section 142(1) of the Act was issued on I.T.A.No.1616 & 1632 of 2009 15/09/2006 calling upon him to file returns. The assessee filed return of income on 23/11/2006 declaring the same income. Hence the assessment was completed underSection 144 of the Act, fixing the total income at` 16,08,000/-. In the appeal filed by the assessee theCommissioner of Income Tax (Appeals) decided the appealin favour of the assessee. On an appeal filed by the Revenuethe said orders came to be confirmed. 3.In respect of the assessment year 2002-03 also, onsimilar set of facts, assessment was made by the AssessingOfficer fixing the total income at ` 12,08,000/-. In respect of the assessment year 2002-03 also, on 4.While challenging the aforesaid appellate orders,the Revenue has raised the following questions of law : While challenging the aforesaid appellate orders, i)whether the appellate authorities were justified ininterfering with the estimated assessment of professionalincome of the assessee for the assessment year 2001-02and 2002-03. ii)Whether the treatment of agricultural income asincome from undisclosed sources is reasonable and is inaccordance with law. 3.In respect of the assessment year 2002-03 also, onsimilar set of facts, assessment was made by the AssessingOfficer fixing the total income at ` 12,08,000/-. In respect of the assessment year 2002-03 also, on 4.While challenging the aforesaid appellate orders,the Revenue has raised the following questions of law : While challenging the aforesaid appellate orders, i)whether the appellate authorities were justified ininterfering with the estimated assessment of professionalincome of the assessee for the assessment year 2001-02and 2002-03. ii)Whether the treatment of agricultural income asincome from undisclosed sources is reasonable and is inaccordance with law. 5.The facts involved in the above case would showthat in the assessment year 2001-02 the assessing officerproceeded on the basis that the assessee had declaredincome of ` 1,58,000/- under the head income from businessnamely commission agency business. According to theassessing officer he had declared his business income at` 4,00,000/- during the assessment year 2000-01. Since nodetails were furnished regarding the income fromcommission agency business and since he did not maintainany books of accounts, penalty proceedings were initiated.Therefore the sole basis for calculating business income isbased on the previous year’s assessment. Hence whileadding ` 5,00,000/- to the income already declared and` 10,00,000/- as unexplained investment, tax was levied byassessing the total income at ` 16,08,000/-. I.T.A.No.1616 & 1632 of 2009 6.The appellate authority, however, found that therewas no basis for estimation of ` 5 lakhs during theassessment year 2001-02 and ` 6 lakhs for the assessmentyear 2002-03. Similarly, addition relating to presumptiveinvestment in purchase of land at ` 10 lakhs for theassessment year 2001-02 and ` 5 lakhs for assessment year2002-03 was also deleted. It is found that no evidence wasavailable for making such presumptive investments. 7.The Appellate Tribunal concurred with the viewexpressed by the first appellate authority. It is found that nomaterial was collected to arrive at the additions made by theassessing officer and the assessing officer had based hisdecision only on presumption. 8.On verification of the impugned orders as well, weare of the view that the assessing officer did not rely uponany material to come to a conclusion about the possiblecommission the assessee could have obtained during theassessment year 2001-02 and 2002-03. True that the I.T.A.No.1616 & 1632 of 2009 assessee had declared agency commission of ` 4 lakhsduring the assessment year 2000-01. But agencycommission is always a fluctuated matter and depends uponthe commission on receipts for arranging a particularcontract. In the absence of any material to indicate that theassessee had derived such commission and it wasconcealed, it is not open for the assessing officer to make anassessment based on notional figures. 9.Under such circumstances, we do not think thatthe questions of law raised in the present appeal require tobe considered on factual basis itself. The appellateauthorities have arrived at a conclusion that the additionwas improper. Both the additions have been made by theAssessing Officer on presumptive basis and without anysupporting materials. In the said circumstances, since thereis justification on the part of the Tribunal, we confirm theappellate order. We find no reason to interfere with the orders passedby the Tribunal. Accordingly the appeals are dismissed. (sd/-) (MANJULA CHELLUR, CHIEF JUSTICE) (sd/-) (A.M.SHAFFIQUE, JUDGE) jsr