9911796707
TMI Blog2015 (8) TMI 1480X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and against the Revenue. Rejection of books of accounts - calculation of agricultural income as had been done in the case of N.G. Pai, by the same AO for the same assessment year, which was calculated at the yield of 14 Quintal per acre and the price of arecanut at ₹ 10,000/- per quintal, in which case the income of the assessee would be over ₹ 25 lacs, which is much higher than claimed by him - HELD THAT:- The Tribunal has, without giving any cogent reason, set aside the order of the Appellate Commissioner and restored the order of the AO, even though the Tribunal has noticed that the agricultural income for a closer assessment year 2001-02 was ₹ 20,41,000/- which has been affirmed by it, yet the same has not been taken to be a material basis for arriving at an income of the assessee for the assessment year in question i.e., 2003-04, where the assessee had disclosed his agricultural income of ₹ 21,93,569/- which was merely ₹ 1.5 lacs more than the income accepted two years earlier in 2001-02. In view of the aforesaid, we are of the opinion that the Tribunal was not right in reversing the finding of the Appellate Commissioner, and resto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e/appellant had declared agricultural income of ₹ 23,72,050/- and ₹ 25,32,820/- respectively. Declaring the aforementioned agricultural income, the returns for the aforesaid two assessment years were filed on 31.12.1999 and 31.10.2000 respectively, which returns were accepted under Section 143(1) of the Act. However, thereafter two separate notices, both dated 21.10.2005, were issued under Section 148 of the Act for assessing/reassessing the income of the assessee for the said two assessment years. In response to the said notices dated 21.10.2005, the assessee filed respective returns of incomes, which were the same as had been filed on 31.12.1999 and 31.10.2000. The assessee then asked for the reason on which the notices for reopening of assessment had been issued. Consequently, by common communication dated 12.12.2005, only the synopsis of the reason for reopening the assessment for the assessment years 1999-2000 and 2000-2001, was furnished by the Assistant Commissioner of Income Tax, but the actual reasons recorded by the Assessing Officer prior to issuance of notice dated 21.10.2005 were not furnished to the assessee. The relevant extract of synopsis of reasons fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as challenged by the assessee in an appeal before the Appellate Commissioner, which was dismissed. But in the further appeal filed by the assessee, the Tribunal, by its order dated 02.03.2005 allowed the appeal and set aside the additions made by the Assessing Officer who had reduced the agricultural income of the assessee for the relevant assessment year 2001-2002. The said order of the Tribunal has become final as it was not challenged further. Such being the position, it is contended by the learned counsel for the appellant that once the assessment for the assessment year 2001-2002 itself had been set aside, the same could not have been the basis for issuance of notice dated 21.10.2005 under Section 148 of the Act, which was seven months after passing of the order dated 20.03.2005 by the Tribunal setting aside the assessment order for assessment year 2001-02. It is thus contended that in fact, there existed no reason for issuing of the notice dated 21.10.2005 and as such, the same was liable to be quashed. 8. Per contra, Sri K V Aravind, learned counsel for the Revenue has submitted that it is not sufficiency or correctness of the material which is to be seen while judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year, so as to establish the vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The Apex Court in the case of Indian Oil Corporation v. ITO [1986] 159 ITR 956/26 Taxman 336 has observed that 'reason to believe' is not the same thing as 'reason to suspect'. 11. From the aforesaid decisions it is clear that there are sufficient safeguards for a concluded assessment to be re-opened. This is to prevent arbitrariness in the action of the Assessing Officer while issuing notice under Section 148 of the Act. 12. In the present case, the sole reason given by the Assessing Officer in its communication to the assessee on 12.12.2005, is the reason given in the assessment order for the assessment year 2001-2002. The question now is whether the reason given in the assessment order for the assessment year 2001-2002 could constitute to be a valid reason for reopening, even when the said order itself has been set aside on 20.03.2005 by the Tribunal, which was seven months prior to the issuance of the notice under Section 148 of the Act. 13. Learned counsel for the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e year 2001-02, in our considered opinion, there existed no reason for issuance of the notice under Section 148 of the Act. In our view, in the aforesaid facts, the reopening of assessment for the assessment years 1999-2000 and 2000-2001 in the case of assessee, cannot be justified in law. Question No.1 is thus answered in favour of the assessee and against the Revenue. Question No.2 17. The second question relates to the Tribunal reversing the finding of the CIT appeals and restoring the estimation of the Assessing Officer in respect of quantum of agricultural income of the assessee for the three assessment years in question i.e., 1999-2000, 2000-01 and 2003-04. Since the answer to the first question, which is with regard to the re-opening of the assessment for the assessment years 1999-2000 and 2000-01, is in favour of the assessee, and the re-opening has been held to be against the law, the question which now remains to be answered is with regard to the quantum of agricultural income of the assessee only for the assessment year 2003-04. 18. For the said assessment year 2003-04, the assessee had, besides other income from business, declared an agricul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction of 1/3rd expenses was made, and the balance was taken as the total agricultural income of the said assessee-N.G. Pai. By such calculation, the income per acre would come to ₹ 93,200/-. According to Sri Shankar, if the books of account of the assessee had to be rejected, then the yield per acre should have been estimated by the Assessing Officer for the total area at the same rate of ₹ 93,200/- per acre, as had been done in the case of N.G. Pai by the same Assessing Officer for the same assessment year 2003-04 around the same time when the assessment order in the case of the present assessee had been passed. Accordingly, if such method of calculation was also adopted in the case of the appellant, the agricultural income would come over ₹ 25 lacs, whereas the assessee has claimed agriculture income of only about ₹ 22 lacs as per the books of account maintained by him. In the alternative, it is submitted by learned counsel for the appellant that even if ₹ 12 lacs and odd as income declared by the assessee for certain parcels of land was not to be accepted and ₹ 7,93,350/- was to be assessed as agricultural income for the relevant assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal increase of about ₹ 1.5 lacs only and was an assessment year which was closer to the assessment year in question, than the year 1998-99. 23. After rejecting the books of account of the assessee, taking up one method of calculation from one particular assessment year and then accepting a part of the own accounts of the assessee, cannot be accepted to be a method of calculating the income of the assessee. After the books of account are to be rejected for valid reasons, a consistent method of estimation of income is then to be adopted by the Assessing Officer, which has not been done in the present case. An Assessing Officer cannot be permitted to choose one method for assessing one part of income on the basis of any one particular earlier assessment year, and another part on the basis of some other estimation and the third part as per the books of account as maintained by the assessee. After rejecting the account books, the Assessing Officer may have the freedom to choose a method for estimating the income of the assessee, but there has to be consistency of such method maintained for calculation of the entire income of the assessee. 24. As we have already ..... X X X X Extracts X X X X X X X X Extracts X X X X
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