ACIT., CIRCLE-6(1), HYDERABAD V. RAMA DEVI TUMMALA, HYDERABAD

MA 91/HYD/2025

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The case involves a Miscellaneous Application (M.A. No. 91 of 2025) filed by the Revenue against Smt. Rama Devi Tummala concerning the Income Tax Act, 1961. The Revenue sought rectification of an earlier Tribunal order under section 254(2) of the Act, which had not addressed the issue of credit card payments made by M/s. Rachana Television Private Limited for expenses incurred by the assessee. The Tribunal had previously adjudicated only the applicability of section 2(22)(e) of the Act. The Revenue argued that the Tribunal's order was incomplete as it did not address the verification of these payments, which was part of the revisional jurisdiction invoked by the Principal Commissioner of Income Tax under section 263 of the Act. However, the Tribunal found that the issue of credit card payments was intrinsically linked to the applicability of section 2(22)(e) and had been adequately addressed in their previous order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 822660 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 24-12-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2018-2019
• Appeal Filed On: 12-11-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S. ARUNKUMAR
• Assessee Lawyers: T. CHAITANYA KUMAR
• Keywords: Revision of order
• Section: 143(3); 263; 2(22)(e)

Judgement Text

" MA No 91 of 2025 Rama Devi Tummala Page 1 of 6 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad Įी ͪवजय पाल राव, उपाÚ य¢ एवं Įी मधुसूदन सावͫडया, लेखा सदè य क े सम¢ । Before Shri Vijay Pal Rao, Vice-President A N D Shri Madhusudan Sawdia, Accountant Member M.A. No.91/Hyd/2025 आ.अपी.सं /ITA No.778/Hyd/2024 (िनधाŊरण वषŊ/Assessment Year: 2018-19) Assistant Commissioner of Income Tax, Circle 6(1) Hyderabad Vs. Smt. Rama Devi Tummala Hyderabad PAN:ABSPT0378B (Appellant) (Respondent) राज̾ व Ȫारा/Revenue by: Shri S. Arun Kumar, Sr. DR िनधाŊįरती Ȫारा/Assessee by: Advocate T. Chaitanya Kumar सुनवाई की तारीख/Date of hearing: 12/12/2025 घोषणा की तारीख/Pronouncement: 24/12/2025 आदेश/ORDER Per Madhusudan Sawdia, A.M.: This Miscellaneous Application (“M.A.”) has been filed by the Revenue seeking rectification of the order of this Tribunal under section 254(2) of the Income Tax Act, 1961 (“the Act”) passed in ITA No.778/Hyd/2024 dated 05.05.2025. 2. The Learned Departmental Representative (“Ld. DR”) submitted that the Learned Principal Commissioner of Income Tax (“Ld. PCIT”) had invoked the revisional jurisdiction under section 263 of the Act against the assessment order passed under section 143(3) r.w.s. 143(3A) and 143(3B) of the Act dated 09.02.21. It was Printed from counselvise.com MA No 91 of 2025 Rama Devi Tummala Page 2 of 6 submitted that the Ld. PCIT had invoked section 263 of the Act to verify (i) the applicability of section 2(22)(e) of the Act in the case of the assessee, and (ii) to verify the credit card payments made by M/s. Rachana Television Private Limited(“the company”) for the expenses incurred by the assessee. The Ld. DR contended that in the impugned order the Tribunal has adjudicated only the issue relating to applicability of section 2(22)(e) of the Act, but the Tribunal has not adjudicated the issue relating to verification of credit-card payments made by the company. Accordingly, it was argued that there is an apparent mistake in the order of the Tribunal which requires rectification under section 254(2) of the Act to the extent of recalling the order. 3. Per contra, the Learned Authorized Representative (“Ld. AR”) submitted that the core issue for which the Ld. PCIT invoked section 263 of the Act was the applicability of section 2(22)(e) of the Act in the hands of the assessee. It was submitted that the Tribunal, in para nos. 9 to 9.5 of its order, has comprehensively adjudicated the applicability of section 2(22)(e) of the Act, and therefore no mistake arises from the order of the Tribunal. 4. We have carefully considered the rival submissions and perused the material available on record. We have also gone through para no.3 of the revisional order passed by the Ld. PCIT under section 263 of the Act, which is to the following effect: “3. By virtue of the powers, vested with me U/s 263 of the I.T. Act, 1961, the records relating to the assessee for the Asst. Year 2018-19 have been perused and it is noticed from the assessment order, that the credit card payments made by the company for the expenses incurred by Ms. Rama Devi, who is also a shareholder and Director of the company, attracts the provisions of Section 2(22) (e) of the I.T Act 1961. This was not brought to tax by the Faceless Assessing Officer while completing the assessment as mentioned above. Therefore, the assessment order, passed by the Faceless Assessing Officer is Printed from counselvise.com MA No 91 of 2025 Rama Devi Tummala Page 3 of 6 erroneous in so far as it is prejudicial to the interests of the Revenue as per the provisions of section 263 of the I T Act. 5. On perusal of the above, it is evident that the Ld. PCIT specifically recorded that the credit-card payments made by the company towards the personal expenses of the assessee attract the provisions of section 2(22)(e) of the Act, which require verification. Thus, the sole purpose of directing verification of credit-card payments was to examine whether such payments fall within the ambit of section 2(22)(e) of the Act in the hands of the assessee. As such, the issue of verification of credit-card payments was not an independent or separate issue but was intrinsically linked to the applicability of section 2(22)(e) of the Act. In this regard, we have also gone through para no.9 to 9.5 of the impugned order of this Tribunal, which is to the following effect: “9. We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. We have gone through para no.4 of the order of Ld. PCIT which is to the following effect : 9.1 On perusal of above, we found that the assessee had disclosed before the Ld. PCIT that the assessee is having only 4.48% of equity shares in the company. We have also gone through the details of the shareholders holding more than 5% shares in the company which is forming part of financial statements of the company for the F.Y. 2017-18, placed at page no.13 of the paper book, which is to the following effect : Printed from counselvise.com MA No 91 of 2025 Rama Devi Tummala Page 4 of 6 9.2 On perusal of above, we found that the list of shareholders who are holding more than 5% of shares in the company have been given by the company in their financial statement. The name of the assessee is not found in the said list, which indicates that the assessee is not holding more than 5% of shares in the company. Accordingly, there is no dispute on the facts that, the assessee is not holding more than 5% of voting powers in the company. We have also gone through the provisions of section 2(22)(e) of the Act which is to the following effect : “ Section 2. In this Act, unless the context otherwise requires,— (1)…… (2)…… (22) \"dividend\" includes— (a) …….. (b) ………. (c) ……… (d) ……. (e) any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) made after the 31st day of May, 1987, by way Printed from counselvise.com MA No 91 of 2025 Rama Devi Tummala Page 5 of 6 of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern) or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits;” 9.3 On perusal of above, it is abundantly clear that as per the provisions of section 2(22)(e) of the Act, for a payment to be considered as dividend, the recipient must be a shareholder holding not less than 10% of the voting power in the company. In the present case, the assessee is not holding more than 5% of voting power in the company. Accordingly, the threshold condition of holding of 10% of the voting power is not satisfied in the present case. Hence, the very foundation on which the revisionary proceedings u/s.263 of the Act are initiated is not in accordance with law. 9.4 Furthermore, the Ld. PCIT, despite being apprised of the statutory requirement and the factual position of the shareholding failed to render any finding on the applicability of the threshold shareholding limit. Therefore, in our considered view, the invocation of jurisdiction u/s.263 of the Act, by the Ld. PCIT without satisfaction of a condition precedent for application of the section 2(22)(e), renders the impugned order unsustainable in law. 9.5 In view of the above facts and legal position, we hold that, the assessment order passed by the Ld. AO accepting the returned income of the assessee cannot be said to be erroneous in so far as prejudicial to the interest of revenue. Accordingly, the order passed by the Ld. PCIT u/s.263 of the Act is liable to be quashed.” 6. On perusal of the above, we note that the Tribunal has categorically held that the provisions of section 2(22)(e) of the Act are not attracted in the case of the assessee. Once the Tribunal has returned a clear finding that section 2(22)(e) of the Act is not applicable, the consequential issue of verification of credit-card payments, raised only for the purpose of examining the applicability of section 2(22)(e) of the Act, automatically stands resolved. Therefore, we do not find any mistake in the impugned Printed from counselvise.com MA No 91 of 2025 Rama Devi Tummala Page 6 of 6 order of the Tribunal warranting rectification under section 254(2) of the Act. The Tribunal had adjudicated the core issue which formed the very foundation of the revisional proceedings. Therefore, the contention of the Revenue that the Tribunal failed to adjudicate a separate issue is factually and legally untenable. Accordingly, we hold that no mistake apparent from the record exists in the impugned order of the Tribunal. 9. In the result, the M.A. filed by the Revenue is dismissed. Order pronounced in the Open Court on 24th December 2025. Sd/- Sd/- (VIJAY PAL RAO) VICE PRESIDENT (MADHUSUDAN SAWDIA) ACCOUNTANT MEMBER Hyderabad, dated 24th December 2025 Vinodan/sps Copy to: S.No Addresses 1 Assistant Commissioner of Income Tax Circle 6(1) Hyderabad 2 Smt. Rama Devi Tummala, E-101 Aditya Empress Towers, Shaikpet Nala, Tolichowki, Golconda Post, Hyderabad 500008 3 Pr. CIT – Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order Printed from counselvise.com "