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2015 (11) TMI 586 - ITAT CHENNAI

2015 (11) TMI 586 - ITAT CHENNAI - TMI - Reopening 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 .....

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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 w .....

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cate PER CHANDRA POOJARI, ACCOUNTANT MEMBER The appeal is filed by the Revenue and the cross objection is filed by the assessee. The appeal and the cross objection are directed against the order of the Commissioner of Income-tax(Appeals) dated 26.12.2014. 2. The grievance of the Revenue is with regard to treatment of income earned from the activity of the nursery as agricultural income and exempt u/s.10(1) of the I.T. Act. In the crossobjection, the assessee is challenging the reopening of asses .....

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ssessment was completed u/s.143(3) of the Act on 11.12.2009 on the assessed income of ₹ 10,47,616/- and agricultural income of ₹ 51,89,480/-. The case was reopened by issue of notice u/s.148 dated 23.9.2011. After hearing the assessee, the assessment was completed u/s.143(3) r.w.s.147 on 22.3.2013 determining taxable income at ₹ 62,37,096/- after making disallowance of agricultural income claimed of ₹ 51,89,480/- from nursery. The assessee went in appeal before the CIT(Ap .....

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on new facts which came to notice subsequently, even though they are already on record. (iii) Gujarat High Court in the case of Praful Chunilal Patel and Vasanth Chunilal Patel v. ACIT (236 ITR 832) (1999) has held that where the AO had overlooked something at the first assessment, there can be no question of any change of opinion, when the income which was chargeable to tax is actually taxed as it ought to have been under the Law but was not taxed due to an error committed at the first assessme .....

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e necessary for Explanation 1 of Sec.147. (v) High Court of Delhi in the case of Honda Siel Power Products Ltd v. DCIT (197 taxman 415) (2011) has held that merely because the material lies embedded in the material evidence which the AO could have uncovered but did not uncover, is not a good reason for striking down reopening. (vi) High Court of Mumbai in the case of Export Credit Guarantee Corporation of India Ltd v. Addl. CIT (30 taxman.com 211) (2013) has held that there is no failure on the .....

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provisions what the AO is supposed to see is whether there is an escapement of income and whether it is within four years or beyond four years, whether it is a case of 143(1) or 143(3) and whether he has taken approval from his senior officers as per the provisions. Once the AO fulfills these requirements then he can reopen the assessment by recording the reasons. The AO will be within his jurisdiction to reopen the assessment and his jurisdiction cannot be challenged per se. Against this, the a .....

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by the Supreme Court in CIT v. P. V.S. Beedies Pvt. Ltd (SC) (237 ITR 13). The head note is quoted as below: Reassessment - Information - Internal Audit Party entitled to point out factual error or omission in assessment - Reopening of case on basis of actual error pointed out by Internal Audit Party is permissible under Law - ITO granting deduction under section 80G on account of donation to Charitable Trust overlooking fact that recognition granted to charitable trust had expired - Reopening w .....

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e AO. The assessee, a landscaping architect was running two business concerns viz.(i)Plants Scape and (ii) Flower and Petals. The business income of the plant scape amounting to ₹ 7,19,626/- was offered and assessed as business income, whereas the income from flowers and petals involving ₹ 51,89,480/- derived from nursery was claimed exempt as agricultural income. The AO treated the income from nursery as business income and denied exemption available u/s.10(1) of the Act as agricult .....

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he nursery is agricultural income and exempt u/s.10(1) of the Act. The CIT(Appeals) observed that from Expalantion-3 to sec.2(1A) of the Act, the income from nursery should be taken as agricultural income, as inserted by the Finance Act, 2008 w.e.f. 1.4.09. The provisions are reproduced as under: 2(1A) "Agriculture Income" means- Explanation 3 - For the purpose of this clause, any income derived from saplings or seedlings grown in a nursery shall be deemed to be agriculture income. 7.1 .....

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ncome from nursery raised on the land owned by the assessee will be treated as agriculture income and he considered the moot question, whether these legal provisions are applicable in assessee s case which pertains to A. Y. 07 -08. 7.2 The CIT(Appeals) observed that similar decisions including the decision in the case of Green Gold Tree Farmers P Ltd (supra), treating the income derived from nursery as agriculture income were delivered even prior to the inclusion of Explanation 3 to s.2(1A). In .....

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Nursery v. ITO (2003) (81 TTJ 714) dated 18.9.03 and High Court of Allahabad in the case of Jugal Kishore Arora v. DCIT (2004) (269 ITR 133) dated 19.5.04. 7.3 According to the CIT(Appeals), similar decisions treating income from nursery as agriculture income were delivered prior to the insertion of Explanation 3 which was brought in from AY. 09-10. It was also observed by the CIT(Appeals) that these decisions were even prior to AY. 07-08, therefore, in the assessee's case they are very muc .....

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