THE COMMISIONER OF INCOME TAX, KOTTAYAM vs. M/S. C.C.VARGHESE & CO. ALAPPUZHA.

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ITA/202/2009HC KeralaKLHC01024963200912 November 2010Author: HONOURABLE MR.JUSTICE B.P.RAY,HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeals filed by the Revenue. The Court found no merit in the appeals, agreeing with the concurrent findings of the CIT(Appeals) and the ITAT. The primary reasoning was that the Department had reopened the assessment under Section 148 without first making a regular assessment under Section 143(3). The reopening was based solely on the premise that the returned income was less than the income assessable under Section 44AE. The Court affirmed the lower authorities' view that Section 44AE has no application unless the Department proves that the assessee's accounts are not correct and complete. Therefore, the reopening was deemed invalid. The operative direction was the dismissal of the appeals.

What were the facts?

The appeals were filed by the Commissioner of Income Tax, Kottayam, against the orders of the Income Tax Appellate Tribunal (ITAT), Cochin Bench. The respondent assessee is M/s. C.C. Varghese & Co, Alappuzha. The appeals challenge the ITAT's confirmation of the CIT(Appeals)'s order. The core issue revolves around the reopening of assessment under Section 148 of the Income Tax Act, 1961, by the Department. The Department reopened the assessment because the income returned by the assessee was less than the income assessable under Section 44AE. The CIT(Appeals) held that Section 44AE was not applicable unless the Department proved the assessee's accounts were incorrect and incomplete. The Tribunal upheld this view.

What were the issues?

1. Whether the reopening of assessment under Section 148 of the Income Tax Act, 1961, was valid when the Department's sole basis was that the income returned by the assessee was less than the income assessable under Section 44AE, without first establishing that the assessee's accounts were incorrect or incomplete. Contentions: Assessee: No arguments were recorded for the respondent assessee as there was no appearance. Revenue: The Revenue contended that the assessment was validly reopened under Section 148 because the income returned by the assessee was less than the income assessable under Section 44AE. The Revenue implicitly argued that this discrepancy alone warranted reopening.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 148,Section 44AE

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE B.P.RAY FRIDAY, THE 12TH NOVEMBER 2010 / 21ST KARTHIKA 1932 ITA.No. 202 of 2009() --------------------- AGAINST THE ORDER IN ITA.401/COCH/2002 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT / APPELLANT -------------------- THE COMMISSIONER OF INCOME TAX, KOTTAYAM. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): . RESPONDENT --------------- M/S.C.C.VARGHESE & CO, ALAPPUZHA. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 12/11/2010 , ALONG WITH ITA NO. 206 OF 2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & BHABANI PRASAD RAY, JJ. ---------------------------------- ITA Nos.202 & 206 of 2009 --------------------------------- Dated, this the 12th day of November, 2010

J U D G M E N T Ramachandran Nair, J. Even though notice was served, there is no appearance on behalf of the respondent assessee.

2.

However, after hearing learned counsel for the Revenue, we do not find any merit in these appeals filed by the Revenue because without making regular assessment under Section 143(3), the Department reopened the assessment under Section 148 merely because income returned by the assessee is less than the income asssessable under Section 44AE of the Income Tax Act. The first appellate authority held that Section 44AE has no application unless the Department proves that the assessee's accounts are not correct and complete. This order of the CIT (Appeals) is confirmed by the Tribunal. We do not find any ground to interfere with the orders of the Tribunal. Consequently, these appeals are dismissed.

(C.N.RAMACHANDRAN NAIR, JUDGE) (BHABANI PRASAD RAY, JUDGE) jg

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