2009 (4) TMI 27 - HC - Income Tax

Tribunal upheld the order of the CIT (Appeals) on the ground that the assessee had suppressed not only his non-agricultural income, but also his agricultural income. Therefore, when the undisclosed part of the non-agricultural income is worked out, it is incumbent upon the Commissioner of Income Tax (Appeals) to give credit for the undisclosed part of the agricultural income and dismissed the appeal filed by the revenue - Whether Tribunal was right in confirming the CIT(A) order Held, yes

Summary

Issues:
1. Appeal against the order of the Income Tax Appellate Tribunal, Madras 'D' Bench
2. Determination of undisclosed income based on search and assessment
3. Estimation of agricultural and non-agricultural income
4. Discrepancy in disclosing agricultural income in the regular return of income
5. Question of law regarding confirmation of CIT(A) order by the Tribunal

Analysis:

1. The appeal was made against the order of the Income Tax Appellate Tribunal, Madras 'D' Bench, Chennai, dated 30.06.2008, following a search conducted in the residential and business premises of Late Shri.C.Sudalaimani Nadar, Eral on 07.07.1999 under section 132 of the Income Tax Act, 1961. The assessing Officer initiated proceedings under section 158 BC and determined the undisclosed income at Rs.30,50,630. On appeal, the Commissioner of Income Tax (Appeals) estimated the agricultural and non-agricultural income, leading to a revised undisclosed income of Rs.9,15,490. Both the revenue and the assessee filed appeals and cross-appeals before the Tribunal, which upheld the CIT(A) order based on the suppression of agricultural and non-agricultural income by the assessee.

2. The main issue revolved around the estimation of agricultural income by the Commissioner of Income Tax (Appeals) and the subsequent confirmation of this order by the Tribunal. The Tribunal held that the assessee had concealed both non-agricultural and agricultural income. The Tribunal reasoned that when determining the undisclosed portion of non-agricultural income, it was necessary to account for the undisclosed part of agricultural income as well. The question of law raised was whether the Tribunal was correct in affirming the CIT(A) order without estimating the agricultural income of the assessee based on the lands and agricultural income disclosed in the regular return of income.

3. The High Court examined the arguments presented by the revenue and reviewed the available evidence. It emphasized that agricultural income is exempted for Income Tax purposes. The Court acknowledged that the CIT(A) had established that the assessee had concealed both non-agricultural and agricultural income. Therefore, the Court concluded that it was legally required to consider the undisclosed agricultural income when calculating the undisclosed non-agricultural income. The Court found no merit in the appeal and dismissed it accordingly.

In conclusion, the High Court upheld the Tribunal's decision to confirm the CIT(A) order, emphasizing the necessity to consider undisclosed agricultural income when determining undisclosed non-agricultural income.