ITAT rejects Virbhadra's appeal; HP CM alleges political vendetta

In a setback to Himachal Pradesh Chief Minister Virbhadra Singh, the Income Tax Appellate Tribunal (ITAT) has dismissed the appeal filed by him against the order of the Income Tax department, which had sought fresh assessment of his tax returns related to the financial year of 2009-10 to 2011-12.
The veteran Congress leader termed the development as "politically motivated" and said that he would contest the orders and file an appeal in the High Court or in the Supreme court, if the need arose.
"The Income tax Tribunal had been set up by Union Finance minister Arun Jaitley and in spite of four judges in the tribunal, two special judges were sent from Delhi to hear my case, thus the matter is politically motivated," Singh alleged.

"It is like the order of a kangaroo court and we will challenge it," he added.
The order was passed by the Chandigarh bench of ITAT chaired by Judicial Member I C Sudhir and Accountant Member R S Syal on December 8.
"We fail to comprehend as to how the assessment order accepting the genuineness of carrying out the agricultural operations and earning a huge income in such circumstances can be considered as an order made after proper inquiry, as has been canvassed by the assessee.

"It is a case of a patent non-application of mind by the assessing officer (AO) to the facts, which were loudly calling for in-depth investigation. In our considered opinion, the Commissioner of Income Tax (CIT) was fully justified in setting aside the assessment order and directing the AO to frame a fresh assessment," said the order.

"We have elaborately dealt with such issues in our order of Virbhadra Singh (HUF), which mutatis mutandis apply to the assessee also. In the result, all the appeals are dismissed," it said.
The Himachal Chief Minister and his LIC agent Anand Chauhan had filed appeal against the order of the Income Tax department for reopening his tax returns.
As per the brief facts of the case, the assessee had filed original return of income on July 29, 2010 declaring total income of Rs 44,67,584 plus agricultural income of Rs 15 lakhs.
The assessee filed revised return on March 2, 2012 declaring total income of Rs 44,67,584 plus agricultural income of Rs 2,80,92,500.

Assessment in this case was completed on March 28, 2013.
The CIT, on perusal of records, observed that the assessment was completed in a routine and casual manner without making any effective inquiry.
After entertaining objections and replies from the assessee, the CIT came to hold that the assessing officer passed an erroneous order prejudicial to the interests of the revenue, inter alia, on the ground that the revision of return was wrongly accepted, accounting principles were wrongly considered and accepted in as much as the agricultural income was not declared on the basis of mercantile system of accounting.
The income tax department had contended that assessee had invested Rs 3,84,92,500 in LIC policies, whereas additional income declared in the revised return was only Rs 2,65,92,500.

So, AO had further failed to enquire from the assessee about the source of Rs 1.19 crores invested in LIC policies over and above the additional income declared in the revised return, the department had said.
The CIT had then directed the assessing officer to frame a fresh assessment in accordance with the law and after making due inquiries.