M/S.MANNARKKAD WINES, HOTEL HIGHWAY V. THE COMMISSIONER OF INCOME TAX, TRICHUR

ITA/1128/2009

AI Insights

The case involves M/s Mannarghat Wines appealing against the Commissioner of Income Tax, Trichur, concerning an income tax assessment. The primary issue was the amount of addition to the income that was agreed upon during the assessment. The assessee contended that the addition should be limited to Rs. 6 lakhs, whereas the Tribunal sustained an addition of Rs. 15 lakhs. The assessee had initially agreed to a lumpsum addition of Rs. 15 lakhs, which included Rs. 9 lakhs under miscellaneous income in the Profit and Loss Account. The department's counsel argued that the addition of Rs. 15 lakhs was correct and that no penalties under Sections 271(1)(c) or 271B were to be levied as per the agreement. The High Court upheld the Tribunal's decision, dismissing the appeal and suggesting that the assessee could seek a waiver for the interest levied under Sections 234B and 234C of the Act.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 765991 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 17-12-2009
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: T M SREEDHARAN; V P NARAYANAN; C K SHERIN
• Keywords: Assessment; Gross Profit; Income tax appeal; Interest Waiver; Lumpsum addition; Miscellaneous income; Penalty proceedings
• Section: 271(1)(c); 234B; 271B; 234C

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN THURSDAY, THE 17TH DECEMBER 2009 / 26TH AGRAHAYANA 1931 ITA.No. 1128 of 2009() ---------------------- ITA.473/COCH/2008 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT: -------------------- M/S MANNARGHAT WINES, HOTEL HIGHWAY, MANNARGHAT, PALAKKAD DISTRICT. BY ADV. SRI.T.M.SREEDHARAN SRI.V.P.NARAYANAN SMT.C.K.SHERIN RESPONDENT(S): --------------- THE COMMISSIONER OF INCOME TAX, TRICHUR. ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 17/12/2009 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & V.K. MOHANAN, JJ. -------------------------------------------- I. T. A. No. 1128 OF 2009 -------------------------------------------- Dated this the 17th day of December, 2009 JUDGMENT Ramachandran Nair, J. Heard Sri. T.M. Sreedharan, counsel appearing for the appellant, and standing counsel appearing for the department. The question raised is whether the Tribunal was justified in sustaining addition of Rs. 15 lakhs as against Rs. 6 lakhs sustained by the first appellate authority. The case of the assessee is that when in the course of assessment, the assessing officer noticed gross profit returned at below the rate returned for the previous year, the assessee agreed for a total addition of Rs. 15 lakhs which includes Rs. 9 lakhs shown in the Profit and Loss Account under miscellaneous income. Therefore assessee's contention is that addition should have been limited to only Rs. 6 lakhs. However, standing counsel for the department brought to our notice the proposal in the assessment order which is as follows: Sri. S. Ramachandran, Chartered Accountant, has agreed to the proposal of lumpsum addition, but requested that no penalty proceedings under section 271(1)(c) or 271B are 2 initiated in the circumstances of the case. These requests are accepted and the assessment is completed making a lumpsum addition of rs. 15,00,000/- to the income disclosed, as proposed above. From the above, it is clear that addition of Rs. 15 lakhs is not including miscellaneous income credited by the assessee in the Profit and Loss Account which is Rs. 9 lakhs. On the other hand, condition was that no penalty should be levied either under Section 271(1)(c) or under Section 271B of the I.T. Act for the agreed addition. In fact the assessee has no case that the assessing officer has in violation of the commitment levied any penalty. In our view, the Tribunal rightly held that the assessment is an agreed assessment and the amount of addition agreed was Rs. 15 lakhs and not Rs. 6 lakhs as claimed by the assessee. We do not find any merit in the appeal and the same is dismissed. Counsel appearing for the appellant brought to our notice the huge amount of interest levied under Sections 234B and 234C of the Act which is essentially attributable to additions. In our view, it is for the assessee to seek for remedy against interest by filing waiver application before the Chief Commissioner stating the circumstances 3 which led to the default for him to consider waiver under the norms prescribed by CBDT. (C.N.RAMACHANDRAN NAIR) Judge. (V.K. MOHANAN) Judge. kk 4 "