The Income Tax Appellate Tribunal ( ITAT ) Hyderabad bench dismissed the appeal filed by the assessee and held that the production and sale of the tissue culture plant is a business activity, not an agriculture activity.
Assessee-Madhu Velayudhan is engaged in the business of production and sale of Tissue Culture Plants. On 15.08.2015 he filed the income tax return for the assessment year 2015-16. After issuing notice under Section 143(2) of the Income Tax Act, 1961, the Assessing Officer accepted the income return of the assessee. Thereafter, the Principal Commissioner of Income Tax (PCIT) issued a notice under Section 263 of the Income Tax Act and held that the order of the AO was erroneous and prejudicial to the interest of revenue. The assessee filed an appeal against the order of the PCIT.
S. Sandhya for the assessee, contented that the assessing officer has examined all activities done by the assessee along with the documents produced by the assessee thereafter he allowed the claim of the assessee.
For the revenue, K. Madhusudhan submitted that the Assessing Officer did not make any inquiry for concluding that the assessee conducting agricultural business and suggested that it is why the AO did not make any questionnaire in his note sheet to the assessee.
Lalite Kumar (Judicial Member) and R.K. Panda (Accountant Member) disallowed the appeal filed by the assessee and held that, “the order passed by the Assessing Officer was erroneous and prejudicial to the interest of revenue within the meaning of section 263 of the Income Tax Act.”
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