THE COMMISSIONER OF INCOME TAX vs. SRI.A.V.MADHAVAN

PDF · subscribers
ITA/42/2010HC KeralaKLHC01026734201030 June 2011Author: HONOURABLE MR.JUSTICE B.P.RAY,HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR6 pages
AI SummaryRemanded

What did the High Court hold?

The Tribunal held that the income derived by the assessee from astrological services is not liable to be taxed as income from business or profession. Instead, it should be treated as income from other sources. The reasoning behind this decision is not detailed in the provided text. The operative direction of the Tribunal was to treat the income as 'income from other sources'. The judgment does not indicate any issue being left undecided. The ratio decidendi would likely be that income from services rendered by an astrologer, without further evidence of a structured business operation, falls under the head 'income from other sources' rather than 'profits and gains of business or profession'.

What were the facts?

This appeal by the Revenue challenges an order dated July 23, 2009, passed by the Income Tax Appellate Tribunal (ITAT), Cochin Bench, in IT(S&S)A.42/Coch/2005. The assessee is Sri. A.V. Madhavan, an astrologer, operating from Sruthi, P.O. Annur, Payyannur. The assessment year(s) are not explicitly stated in the provided text. The dispute pertains to the assessment of the assessee's income. The procedural history indicates that the ITAT's order is under challenge before the High Court. The judgment also mentions that this appeal was heard along with ITA Nos. 63, 125 & 126 of 2010 on June 30, 2011.

What were the issues?

1. Whether the Tribunal was justified in holding that the income derived by the assessee from astrological services is not liable to be taxed as income from business or profession, and instead should be treated as income from other sources, in light of the provisions of the Income Tax Act, 1961? Assessee's Contentions: The assessee argued that the income earned from astrological services should not be taxed as business income. The judgment does not explicitly record the assessee's specific arguments or any authorities relied upon. Revenue's Contentions: The Revenue contended that the income derived from astrological services should be taxed as income from business or profession. The judgment does not explicitly record the Revenue's specific arguments or any authorities relied upon.

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 THURSDAY, THE 30TH JUNE 2011 / 9TH ASHADHA 1933 ITA.No. 42 of 2010() -------------------- AGAINST THE ORDER DATED 23/07/2009 IN IT(S& S)A.42/COCH/2005 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT --------------------------------------- THE COMMISSIONER OF INCOME TAX, KANNUR. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): RESPONDENT ------------------------- SRI.A.V.MADHAVAN, AST ROLOGER, SRUTHI, P.O.ANNUR, PAYYANNUR. ADV. SRI.T.M.SREEDHARAN FOR R SRI.V.P.NARAYANAN FOR R SMT.C.K.SHERIN FOR R THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 30/06/2011, ALONG WITH ITA NOS. 63, 125 & 126 OF 2010 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA NO.42/2010 APPENDIX APPELLANT'S EXHIBITS ANNEXURE A : COPY OF ORDER UNDER SECTION 158BC(c) READ WITH SECTION 143(3) DATED 30/07/2001. ANNEXURE B : COPY OF ORDER OF THE CIT(A) IN ITA 46/CNR/CIT(A)-III/04-05 DATED 09/11/2004. ANNEXURE C : COPY OF ORDER OF THE TRIBUNAL IN ITA NO.42/COCH/2005 DATED 23/07/2009. ANNEXURE D : COPY OF SWORN STATEMENT (IN MALAYALAM) ANNEXURE E : FREE ENGLISH TRANSLATION OF MALAYALAM SWORN STATEMENT. //TRUE COPY// PA TO JUDGE. jg C.N.RAMACHANDRAN NAIR & BHABANI PRASAD RAY, JJ. ---------------------------------- I.T.A. Nos.42, 63, 125 & 126 of 2010 --------------------------------- Dated, this the 30th day of June, 2011

J U D G M E N T Ramachandran Nair, J. The connected appeals filed by the Revenue relate to the very same assessee, who is an Astrologer by profession. During the search conducted in the residence of the respondent assessee on 06/07/1999 the Department seized cash, Fixed Deposit receipts and particulars of Savings Bank accounts relating to undisclosed income of the assessee. The assessee had given a detailed statement admitting that the investments are from professional income received from practice of Astrology. However, in the course of assessment, the assessee put forward a case that substantial amount of deposit though held in the name of himself, wife and children belongs to a Trust by name Jyothi Sadanam engaged in running coaching centre for teaching Astrology and Sanskrit.

-2- In the statement recorded at the time of search, the assessee never had such a case. However the assessee's explanation that funds belonged to the Trust was accepted in first appeal, even though the Trust itself was registered nearly two years after the search i.e. on 01/01/2001. This order was confirmed in second appeal by the Tribunal against which the Revenue has come up with these appeals.

2.

During hearing of the appeal filed against block assessment, we felt there is a strong case for the Department because the subsequent case built up by the assessee by introducing the Trust, namely Jyothi Sadanam, does not have any reference in any of the documents seized or the sworn statement recorded by the assessee which was not retracted. We, therefore, suggested the learned counsel whether the assessee is willing to come forward with some kind of settlement so that unnecessary remand and repeated appeals could be avoided. Learned counsel after taking instructions informed us that the assessee is willing to agree for a further -3- addition of Rs.10,00,000/- (Rupees ten lakhs only), which is a sacrifice from the relief granted by the first appellate authority as well as the Tribunal. Learned Standing Counsel left the matter for our decision i.e. whether to accept the assessee's offer for settlement or not. Considering the partial relief granted in the assessment itself and the offer made by the assessee, we feel the offer made by the assessee is reasonable. Further, if at all we accept the argument of the Department, we have to only remand the matter to the first appellate authority, which will lead to another round of litigation. We, therefore, accept the offer made by the assessee and allow ITA No.42/2010 filed by the Department in part by modifying the orders of the Income Tax Appellate Tribunal and the first appellate authority by making a further addition of Rs.10,00,000/- (Rupees ten lakhs only) in the block assessment. The Assessing Officer will modify the revised orders issued by limiting the relief granted by the CIT (Appeals), which is confirmed by the Tribunal in respect of -4- investment in FD receipts as relatable to Trusts from Rs.30,18,092/- to Rs.20,18,092/-. All other reliefs granted by the first appellate authority and the Tribunal in revised orders will stand confirmed. Revised orders will be issued at the earliest after notice to the assessee. ITA Nos.63, 125 and 126 of 2010 pertain to follow up assessments based on interest and other income in respect of investments assessed in block assessment. In view of the above, these appeals are allowed by vacating the orders of the Tribunal and that of the first appellate authority and by remanding the matter to the Assessing Officer for making revised assessment based on the revision in block assessment completed by him based on our directions above. These Appeals are allowed as above. (C.N.RAMACHANDRAN NAIR, JUDGE) (BHABANI PRASAD RAY, JUDGE) jg

Recent GST High Court judgments

Search GST case law →