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TMI Blog2005 (12) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... e of income-tax applicable to the income of the appellant. In the result, the appeal is partly allowed and the matter is remanded to the Income-tax Appellate Tribunal to decide the issue on the first question of law - - - - - Dated:- 13-12-2005 - Judge(s) : A. K. PATNAIK., A. M. SAPRE. JUDGMENT This is an appeal under section 260A of the Income-tax Act, 1961. The relevant facts briefly are that the appellant carries on, inter alia, the business of purchase and sale of silver and gold ornaments at Mandsaur in the State of Madhya Pradesh. For the assessment year 1996-97, the appellant filed a return on September 2, 1996, declaring an income of Rs. 3,94,558. A survey under section 133A of the Income-tax Act (for short "the Act"), was conducted on November 23,1999, and in the course of survey, the appellant made a declaration that there was a shortage of Rs. 2,28,000 in the difference of ornaments and cash. A questionnaire dated August 11, 1997, was served on the appellant requiring him to specify the basis of the valuation of the closing stock as per trading. The appellant answered the said questionnaire and thereafter the Assessing Officer came to the conclusion that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id order dated April 29, 1999, passed by the Commissioner of Income-tax (Appeals), the appellant filed a second appeal before the Income-tax Appellate Tribunal, Indore, numbered as ITAT Appeal No. 668/Ind/1999 contending, inter alia, that the books of account of the appellant were correctly maintained and the proviso to section 145 of the Act was not applicable and that the agricultural income of the minor son of the appellant could not be taken into consideration for the purpose of determining the rate of tax applicable to the income of the appellant. By order dated March 26, 2002, the Income-tax Appellate Tribunal held that no sales have been found outside the books by the Assessing Officer and accordingly set aside the order passed by the Commissioner of Income-tax (Appeals) and directed the Assessing Officer to accept the sales declared by the assessee and apply the G.P. rate of 20 per cent, for gold ornaments and 32 per cent, for silver ornaments. Regarding the agricultural income of the minor son of the appellant the Tribunal observed that the issue had been decided against the appellant by the earlier order of the Tribunal in the case of the appellant in Appeal No. 668/Ind/9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorities below. We find some force in the contention of the learned Authorised Representative. From the records, it is clear that the assessee had surrendered a sum of Rs. 2,28,000 during the survey, so whatever discrepancies were there are covered by this surrender to some extent. We also find that no sales have been found outside the books by the Assessing Officer, therefore, we set aside the order of the Commissioner of Income-tax (Appeals) and direct the Assessing Officer to accept the sales declared by the assessee and apply the G.P. rate of 20 per cent, for gold ornaments and 32 per cent, for silver ornaments." It is clear from the aforesaid finding of the Tribunal that the Tribunal has found that the Assessing Officer has not found any sales outside the books of account of the appellant but the Tribunal has not given any clear finding as to whether the accounts of the appellant were correct and complete or from the method of accounting followed by the appellant the income of the appellant could not be properly deduced. Section 145 of the Act would be attracted only to a case where either the accounts are not correct or complete to the satisfaction of the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income for the previous year of a person his agricultural income shall not be included and, therefore, such agricultural income of the minor cannot be included in the income of the appellant under section 64(1A) of the Act. He cited the decision of the Madras High Court in the case of V. Devaki Ammal v. Asst. CED [1973] 91 ITR 24 wherein it has been held that the Legislature cannot overlook the definition of "estate duty" occurring in article 366(9) of the Constitution and the charging section as well as the deeming provisions contained in sections 6 to 16 of the Estate Duty Act cannot be interpreted so as to subject an item specifically exempted from tax for the purpose of determining the rate of tax. He referred to the provisions of section 4 of the Act to show that income-tax is to be charged on the income of a person in accordance with and subject to the provisions of the Act. According to Mr. Saxena, section 10 of the Act provided that the agricultural income was not to be included in the income for the purpose of levying income-tax and accordingly agricultural income of the minor of the appellant cannot be included under section 64(1A) of the Act even for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 10 of the Act on which great reliance has been placed by Mr. Saxena makes it clear that agricultural income is income but by express provision therein agricultural income has been excluded from the total income of an assessee for the purpose of levy of income-tax. Section 4 of the Act, which is titled as charge of income-tax, provides in sub-section (1) as follows: "4.(1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions (including provisions for the levy of additional income-tax) of, this Act in respect of the total income of the previous year of every person." The aforesaid charging section thus provides that where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with and subject to the provisions of the Act in respect of the total income of the previous year of any person. Section 4(1) thus means that while the total income of a person is to be determined in acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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