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2015 (11) TMI 586 - AT - Income TaxReopening of assessment - reopening as based on audit objection - Held that - AO has reopened the assessment within four years from the end of the relevant assessment year. The Id.AR has primarily questioned the reopening of the assessment based on audit objection. We disagree with this contention of the ld. AR. Reopening on the basis of audit objection was upheld as valid by the Supreme Court in CIT v. P. V.S. Beedies Pvt. Ltd (1997 (10) TMI 5 - SUPREME Court). - Decided against assessee. Disallowance of agricultural income - treatment of income earned from the activity of the nursery as agricultural income and exempt u/s.10(1) - CIT(A) allowed claim - Held that - The decision taken by the CIT(Appeals) treating the income from nursery as agriculture income is justified and as in similar circumstances in the case of CIT v. Soundarya Nursery (1998 (8) TMI 37 - MADRAS High Court)as held that the income from the sale of plants grown in pots and the sale of seeds derived on account of cultivation by the assessee was agricultural income. The facts of the present case are similar to that of the Jurisdictional High Court we have no hesitation in following the same. Further it is noticed that the Ahmedabad Bench of the Tribunal in the case of CIT v. Best Roses Biotech (P) Ltd. 2011 (11) TMI 373 - ITAT AHMEDABAD held that the income earned from floriculture activity of growing rose plants on leasehold agricultural land falls within the definition of agricultural income as per sec.2(1A) of the Act. In view of all these decisions we are inclined to uphold the order of the CIT(Appeals) and dismiss the appeal of the Revenue. - Decided in favour of assessee.
Issues:
1. Treatment of income from nursery as agricultural income under section 10(1) of the Income Tax Act. 2. Validity of reopening assessment based on audit objection. Issue 1: Treatment of income from nursery as agricultural income under section 10(1) of the Income Tax Act: The case involved a dispute regarding the classification of income derived from a nursery as agricultural income. The appellant, an individual, owned agricultural land and operated a nursery, deriving income from the sale of plants. The appellant claimed exemption under section 10(1) of the Act for the income from the nursery. The Assessing Officer treated the income as business income, denying the claimed exemption. The CIT(Appeals) examined the legal provisions and precedents, including Explanation 3 to section 2(1A) of the Act inserted by the Finance Act, 2008. The CIT(Appeals) held that income from the nursery should be considered agricultural income, based on various judicial decisions supporting such classification even before the insertion of Explanation 3. The appellate tribunal agreed with the CIT(Appeals), citing relevant case laws such as CIT v. Soundarya Nursery and CIT v. Best Roses Biotech, and upheld the treatment of nursery income as agricultural income under section 10(1) of the Act. Issue 2: Validity of reopening assessment based on audit objection: The Revenue challenged the reopening of assessment, which was based on an audit objection. The appellant contended that the reopening was invalid as it relied on audit findings. However, the tribunal disagreed with this argument, citing the Supreme Court decision in CIT v. P. V.S. Beedies Pvt. Ltd, which upheld the validity of reopening assessments based on factual errors or omissions identified by internal audit parties. The tribunal supported the lower authorities' decision on this issue, emphasizing the permissibility of reopening assessments on the basis of factual information provided by internal audit parties. Consequently, the tribunal rejected the appellant's challenge to the reopening of assessment. In conclusion, the appellate tribunal affirmed the treatment of income from the nursery as agricultural income under section 10(1) of the Income Tax Act and upheld the validity of reopening the assessment based on an audit objection. The tribunal's decision was based on a thorough analysis of legal provisions, judicial precedents, and relevant case laws, ensuring a comprehensive resolution of the issues raised in the appeal.
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