2011 (6) TMI 957 - AT - Income Tax

Summary

Issues Involved:
The judgment involves issues related to the invoking of jurisdiction under section 147/148 of the Income-tax Act and the treatment of income from growing mushrooms as agricultural income or business income.

Issue 1: Invoking of Jurisdiction under Section 147/148 of the Income-tax Act

The assessee's appeal was against the order of the Commissioner of Income-tax (A) concerning the assessment year 2003-04 under section 143(3) of the Income-tax Act. The Assessing Officer reopened the assessment under section 147, contending that income from growing mushrooms does not qualify as agricultural income. The assessee argued that the reopening was based on a mere difference of opinion. The Hon'ble Supreme Court's rulings in Raymond Woolen Mills Vs. ITO and CIT Vs. Kelvinator of India Ltd. emphasized the need for tangible material to support the belief of income escapement for invoking section 147. The court held that the Assessing Officer's reasons for reopening lacked merit as the mushrooms farming was recognized as an agricultural activity by the Ministry of Agriculture. Consequently, the reopening of assessment under section 147 was deemed invalid, and the assessment proceedings were canceled.

Conclusion:
The Appellate Tribunal ITAT Chandigarh allowed the assessee's appeal, quashing the reopening of assessment under section 147 and subsequent notice under section 148. The judgment highlighted the importance of tangible material for invoking section 147 and upheld the recognition of mushroom cultivation as an agricultural activity.