2014 (8) TMI 634 - HC - Income Tax

Demand made by revenue through ex-parte order u/s 144 Failure to produce documentary evidence Held that - The AO framed an ex parte assessment u/s 144 of the Act as the assessee had failed to respond in spite of repeated notices the AO disallowed the agricultural income for want of proof and assessed the income from business - in spite of numerous opportunities having been provided to the assessee by the AO, the assessee had failed to produce any documentary evidence with regard to proof of agricultural land and sale of agricultural produce in order to substantiate his claim that the income was agricultural income - the claim of the assessee cannot be accepted. Doctrine of merger - Revision petition u/s 264 and appeal u/s 250 Held that - CIT(A) dismissed the appeal as not maintainable - once the petitioner had taken recourse to revisional remedy u/s 264 of the Act and after the rejection of the petition, it was not open to have fallen back on statutory remedy of appeal under the Act Relying upon Orissa Rural Housing Development Corporation Ltd. v. Asst. CIT 2011 (12) TMI 230 - ORISSA HIGH COURT - Applying the doctrine of merger, it was held that the assessee was precluded from approaching the appellate court u/s 246/246A of the Act against the assessment order assessee was unable to justify that when the assessee has already invoked the revisional jurisdiction u/s 264 of the Act as the order of the AO had merged into the order of the revisional authority, how appeal u/s 250(6) was maintainable before the CIT(A) Decided against Assessee.

Summary

Issues:
Challenge to order under section 264 of the Income Tax Act and quashing of order by Commissioner of Income-tax (Appeals).

Analysis:
The petitioner filed writ petitions to challenge orders dated March 30, 2009, and December 3, 2013, passed by the Commissioner of Income-tax (CIT) and Commissioner of Income-tax (Appeals) respectively. The primary issue revolved around the assessment year 2005-06, where the petitioner's agricultural income was disallowed, and an addition of Rs. 5,50,000 was made to the income. The petitioner, being an agriculturist, claimed negligence on part of the chartered accountant for the unfavorable outcome. The Assessing Officer framed an ex parte assessment under section 144 of the Act due to the petitioner's failure to respond to notices. The Commissioner of Income-tax dismissed the revision petition under section 264 of the Act, leading to an appeal before the Commissioner of Income-tax (Appeals). However, the appeal was dismissed as not maintainable due to the doctrine of merger, as the order of revision had merged with the assessment order.

The Assessing Officer's observations highlighted the lack of cooperation from the petitioner in providing evidence for the agricultural income claimed. The Commissioner of Income-tax's order under section 264 of the Act upheld the assessment, emphasizing the petitioner's failure to substantiate the agricultural income. The delay in challenging the revisional order and subsequent appeal, coupled with the failure to produce documentary evidence, weakened the petitioner's case. The judgment cited by the petitioner did not support their argument, as the doctrine of merger prevented them from pursuing an appeal after invoking the revisional jurisdiction under section 264 of the Act.

In conclusion, the High Court dismissed the petitions, finding no merit in the petitioner's arguments. The delay in challenging the revisional order, lack of documentary evidence, and the doctrine of merger precluding the appeal under section 250(6) before the Commissioner of Income-tax (Appeals) were key factors leading to the dismissal of the petitions.