ITO WARD 1(1), SALEM vs. P.RAMESH, SALEM

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ITA 376/CHNY/2019Status: DisposedITAT Chennai07 February 2020AY 2009-105 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the reopening of assessment was invalid due to a change of opinion by the Assessing Officer, as no new material was presented. The Tribunal also confirmed the CIT(A)'s finding that income tax cannot be levied solely on the basis of an economic survey.

What were the facts?

The Revenue appealed against the CIT(A)'s orders regarding reopening of assessments for the assessment year 2009-2010. The assessees were commission agents dealing in grapes, and the Assessing Officer had reopened assessments based on large cash deposits.

What were the issues?

Whether the reopening of assessment by the Assessing Officer was valid, and if income can be taxed based on an economic survey without specific material.

Which sections of the Income-tax Act were involved?

Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH : CHENNAI, CAMP AT COIMBATORE

Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN

For Respondent: Shri. T. Vasudevan &, Shri. S. Sudarshan, Advocates

Heard together (3 matters)

I.T.A. No.376/CHNY/2019
I.T.A. No.377/CHNY/2019
I.T.A. No. 378/CHNY/2019

Read from the judgment's own cause title. This page is filed under one of them.

आदेश / O R D E R

PER BENCH:-

1.

These appeals of the Revenue are directed against the respective orders of the Commissioner of Income Tax (A), Salem dated 15.11.2018 in respect of different assessees and pertains to the assessment year 2009-2010. Since common issues arise for consideration in all these appeals, we heard the same together and disposing off the same by this common order.

Shri. Pavithran, ld. Departmental Representative submitted that 2. the CIT (A) found that reopening of the assessment is not valid due to change of opinion. According to the ld. Departmental Representative, the Assessing Officer has rightly reopened the assessment. Even though the tax effect involved in these appeals are less than the monetary limit prescribed by the Central Board of Direct Taxes, due to audit objections, the appeals are filed before this Tribunal.

ITA Nos.376-378-2019 :- 3 -:

3.

Referring to the merit of the appeals, the ld. Departmental Representative submitted that there was large cash deposits in the bank account of the assessees. Therefore, the Assessing Officer had rightly taken the peak credit for assessing the income.

4.

On the contrary, Shri. T. Vasudevan, the ld. Representative for the assessees submitted that assessees are commission agents dealing in grapes. The assessees earned the income only through commissions on sale of grapes. Referring to the order of the Commissioner of Income Tax (A), the ld. Representative for the assessees submitted that assessees has filed all the materials in the regular assessment before the Assessing Officer. Therefore, the Commissioner of Income Tax (A) rightly found that due to change of opinion, the Assessing Officer reopened the assessments. Moreover referring to the order of this Tribunal in the case of Shri. P. Ramesh in for assessment year 2009-2010, dated 27.10.2017, the ld. Representative submitted that this Tribunal directed the Assessing Officer to take 4% of the turnover as commission and deleted the addition made in the hands of one of the assessee namely Shri P. Ramesh (supra). Therefore, there is no justification in the contention of the ld. Departmental Representative.

ITA Nos.376-378-2019 :- 4 -:

5.

We have considered the rival submission on either side and perused the material on record. It is not in dispute that the assessees are only commission agent. The Department apart from the reopening of assessments has also raised a ground with regard to commission on the basis of the agricultural economic survey. Income Tax cannot be levied on the basis of economic survey, unless and until the Department has specific material with regard to earning of income.

The main objections on merits in the grounds of appeal raised by the Revenue is only on the basis of economic survey. There is no other material available on record. This Tribunal in the case of one of the assessee Shri. P. Ramesh, (supra) found that at the best 4% of the total receipt can be taken as commission, accordingly deleted the similar addition made for the very same assessment year in the case of Ramesh (supra). Moreover it is not in dispute that assessees have filed the entire material before the Assessing Officer in the course of the original assessment proceedings. The Assessing Officer without any further material has reopened the assessment by issuing notice u/s.148 of the Act. Therefore, as rightly found by the CIT(A), it is only a change of opinion. In view of the above, this Tribunal do not find any reason to interfere with the orders of the Commissioner of Income Tax (Appeals). Accordingly, we confirm the order of the ITA Nos.376-378-2019 :- 5 -:

Commissioner of Income Tax (Appeals) and dismiss the appeals filed by the Revenue.

6.

In the result, all the appeals filed by the Revenue in 377 & 378/CHNY/2019 for assessment year 2009-2010 stand dismissed.

Order pronounced in the court on 7th February, 2020 at Camp at Coimbatore.

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