JAMES JOSEPH PALACKAN,PALACKAL vs. ITO, WARD-2, KOTTAYAM

Brief facts of the case are that the appellant is an individual engaged in the business of executing civil contracts. The return of income for AY 2016-17 was filed on 29.06.2016 declaring income of Rs. 2,97,440/- and also agricultural income of Rs. 30,00,000/-. The same was revised on 24.01.2018 showing agricultural income of Rs. 1,00,000/- only. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-2, Kottayam (hereinafter called "the AO") vide order dated 31.12.2018 James Joseph Palackan passed u/s. 143(3) of the Income Tax Act, 1961 (the Act) at a total income of Rs. 32,90,310/- disbelieving the agricultural income of Rs. 30,00,000/- by holding that the appellant had failed to substantiate deriving of agricultural income of Rs. 30,00.000/-.

Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.

Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.

The learned counsel for the assessee submits that the AO had completed the assessment ignoring the revised return of income filed by the appellant. Similarly, the CIT(A) ought not have held that the appellant had not filed the revised return of income.

On the other hand, the learned Sr. DR, submits that the revised return of income filed by the appellant is not valid in law in the absence of any valid reasoning for revising the return of income.

I heard the rival contentions and perused the material available on record. The solitary issue that arises for my consideration is whether the CIT(A) was justified in confirming the addition of Rs. 30,00,000/- disbelieving the agricultural income. The made the addition of Rs 30,00,000/- by holding that the appellant had failed to substantiate deriving of agricultural income of Rs. 30,00,000/-. However, the appellant had revised the return of income showing agricultural income of Rs. 1,00,000/- only. The AO had totally James Joseph Palackan ignored the revised return of income. However, the CIT(A) held that the revised return of income is not valid in law in the absence of valid reasons for revising the return of income. Mere disbelieving agricultural income does not result in taxable income, inasmuch as, the agricultural income was not shown as application of income. The very fact that the appellant had revised the return of income showing agricultural income of only Rs. 1,00,000/- would demonstrate the fact that this agricultural income of Rs. 30,00,000/- was not shown as application of income. In any event, the assessing authority ought not have ignored the revised return of income filed by the appellant. Therefore, I am of the considered opinion that the matter requires remand for de novo assessment taking into consideration the revised return of income as filed by the appellant. Accordingly, I remand the matter back to the file of the AO for de novo adjudication in accordance with law after affording reasonable opportunity of hearing to the appellant.-

In the result, the appeal filed by the assessee stands partly allowed for statistical purposes.