THE COMMISSIONER OF INCOME TAX vs. SHRI.G.P.JOSEKUTTAN

The assessee is a Commission Agent and he filed return of income for the assessment year 2001-2002 declaring a total income of ` 1,58,000/- and agricultural income of ` 1 lakh. The return was filed on 06/05/2005 belatedly and notice under Section 148 of the Income Tax Act 1961 (hereinafter referred to as ‘the Act’) was issued on 13/05/2006. He did not respond to the notice and hence notice under Section 142(1) of the Act was issued on 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 under Section 144 of the Act, fixing the total income at ` 16,08,000/-. In the appeal filed by the assessee the Commissioner of Income Tax (Appeals) decided the appeal in favour of the assessee. On an appeal filed by the Revenue the said orders came to be confirmed.

In respect of the assessment year 2002-03 also, on similar set of facts, assessment was made by the Assessing Officer fixing the total income at ` 12,08,000/-.

While challenging the aforesaid appellate orders, the Revenue has raised the following questions of law : i) whether the appellate authorities were justified in interfering with the estimated assessment of professional income of the assessee for the assessment year 2001-02 and 2002-03. ii) Whether the treatment of agricultural income as income from undisclosed sources is reasonable and is in accordance with law.

The facts involved in the above case would show that in the assessment year 2001-02 the assessing officer proceeded on the basis that the assessee had declared income of ` 1,58,000/- under the head income from business namely commission agency business. According to the assessing officer he had declared his business income at ` 4,00,000/- during the assessment year 2000-01. Since no details were furnished regarding the income from commission agency business and since he did not maintain any books of accounts, penalty proceedings were initiated.

The appellate authority, however, found that there was no basis for estimation of ` 5 lakhs during the assessment year 2001-02 and ` 6 lakhs for the assessment year 2002-03. Similarly, addition relating to presumptive investment in purchase of land at ` 10 lakhs for the assessment year 2001-02 and ` 5 lakhs for assessment year 2002-03 was also deleted. It is found that no evidence was available for making such presumptive investments.

The Appellate Tribunal concurred with the view expressed by the first appellate authority. It is found that no material was collected to arrive at the additions made by the assessing officer and the assessing officer had based his decision only on presumption.

On verification of the impugned orders as well, we are of the view that the assessing officer did not rely upon any material to come to a conclusion about the possible commission the assessee could have obtained during the assessment year 2001-02 and 2002-03. True that the assessee had declared agency commission of ` 4 lakhs during the assessment year 2000-01. But agency commission is always a fluctuated matter and depends upon the commission on receipts for arranging a particular contract. In the absence of any material to indicate that the assessee had derived such commission and it was concealed, it is not open for the assessing officer to make an assessment based on notional figures.

Under such circumstances, we do not think that the questions of law raised in the present appeal require to be considered on factual basis itself. The appellate authorities have arrived at a conclusion that the addition was improper. Both the additions have been made by the Assessing Officer on presumptive basis and without any supporting materials. In the said circumstances, since there is justification on the part of the Tribunal, we confirm the appellate order.