BANDI SUDHEER REDDY,HYDERABAD V. ACIT, CENTRAL CIRCLE-1(4), HYDERABAD

MA 20/HYD/2025

AI Insights

The case revolves around a Miscellaneous Application filed by Shri Bandi Sudheer Reddy, seeking rectification of an earlier Tribunal order concerning the assessment year 2016-2017. The application was based on alleged errors in the Tribunal's previous order, which dismissed the assessee's appeal against the income tax assessment and disallowance of development expenses. The Tribunal's earlier decision had not addressed certain arguments and evidence presented by the assessee, leading to the filing of the M.A. The Revenue opposed the M.A., arguing that it was an attempt to review the Tribunal's decision, which is not allowed under the law. The Tribunal, after considering the submissions and relevant legal precedents, dismissed the M.A., affirming that no rectifiable error was present in the original order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126773 (ITAT-HYDERABAD)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-04-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2016-2017
• Other Referred Cases: CIT vs. Balbir Singh Maini, Seshasayee Steels Pvt. Ltd. vs. ACIT, Potla Nageswara Rao vs. DCIT, ACIT vs. Sourashtra Kutch Stock Exchange Ltd., CIT vs. Reliance Telecom Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SRINATH SADANALA
• Assessee Lawyers: MOHD. AFZAL
• Keywords: Capital asset; Cost of acquisition; Capital Gains; Search and seizure; Rectification of order
• Section: 142(1); 143(2); 254(2); 48; 132; 153C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “A” BENCH : HYDERABAD BEFORE SHRI MANJUNATHA G, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER M.A.No.20/Hyd./2025 Arising out of ITA.No.610/Hyd/2022 - Assessment Year 2016-2017 Shri Bandi Sudheer Reddy, Hyderabad-057. PAN BYNPB7159M vs. The ACIT, Central Circle-1(4), Hyderabad. (Applicant) (Respondent) For Assessee : Shri Mohd. Afzal, Advocate For Revenue : Shri Srinath Sadanala, Sr. AR Date of Hearing : 25.04.2025 Date of Pronouncement : 25.04.2025 ORDER PER MANJUNATHA G, A.M. : The above Miscellaneous application has been moved by the assessee requesting to rectify the mistakes crept in the common order of the Tribunal dated 22.10.2024 in ITA.No.610/Hyd./2022 by exercising it’s jurisdiction u/sec.254(2) of the Income Tax Act, 1961. 2 MA.No.20/Hyd./2025 2. Shri Mohd. Afzal, Advocate-Learned Counsel for the Assessee has narrated the facts of the case and mistakes stated by the Assessee on record from the common order of the Tribunal dated 22.10.2024 in ITA.No.610/Hyd./ 2022 for the assessment year 2016-2017 and pleaded that the mistakes pointed-out in the M.A. filed by the assessee may please be rectified in the interest of justice. The relevant contents and the grounds taken by the assessee in the M.A. are reproduced as under : “1. The Applicant respectfully submits that this application is filed for Rectification of Mistake in Order dated 22.10.2024 passed by this Hon'ble Income Tax Appellate Tribunal in Income Tax Appeal No.610/31yd/2022 filed by the Applicant. The Applicant filed the ITA against the order dated 13.09.2022 passed by the Ld. Commissioner of Income Tax (Appeals). 2. The Applicant is an individual having PAN BYNPB7159M. 3. In 2015, a Development Agreement-Cum-General Power of Attorney bearing Document No.8396 of 2015 dated 27.06.2015 (hereinafter referred to as \"DAGPA) was executed between the Applicant & 4 others [Land Owners) and Mis.Giridhari's Vue represented by its Partners Sri K.Indra Sena Reddy and Sri O.Raghupathi Reddy [Developer] in respect of the property in Survey No.46 land admeasuring Ac.0.32 Guntas (Eastern Side Portion) situated at Kismathpur Village & O.P. Rajendranagar Mandal, Ranga Reddy District, Telangana State. The proposed total built-up area is mentioned as 80,000 sq. ft. and the estimated market value of the building is mentioned as Rs.6,48,08,000/-. 4. While the DAGPA was executed on 27.06.2015, the possession of the land was not transferred upon the Developer immediately. The land being vacant, trespassers have been in illegal occupation of the premises. Due to the same, the physical possession of the land could not be handed over to the Developer thereon. After prolonged mediations, the Applicant had taken the possession of the land and handed it over to the Developers in the FY 2020. Thereafter, the Developer had applied for the necessary approvals from the authorities for the construction of Residential Apartment. Subsequently, the GIMC had given permission for erection of property on 05.01.2021. 3 MA.No.20/Hyd./2025 5. Further, the Applicant sold a property bearing Plot Nos. 30, 31 32 at Kismatpur Village, Rajendra Nagar Mandal, R.R. District vide Document No. 5624/2015 dated 25.07.2015 for an amount of Rs.15,15,000/- and claimed Indexed cost of acquisition Rs.2,85,080/- and development charges of Rs. 6,90,400/-, 6. On 03.12.2016, the Applicant filed the return of income for A.Y. 2016- 17 declaring total income of Rs. 5,46,030/-, A search and seizure operation under Section 132 of the Act was conducted on 26.04.2018 in the case of Sri Allam Raja Reddy of M/s. Gandhari Constructions group. During the course of search, certain documents were found and seized in the residential premises of said Allam Raja Reddy, including the copy of Development Agreement cum General Power of Attorney dated 27.06.2015 entered into by the assessee and 4 others. 7. Subsequently, a notice was issued to the Applicant on 09.02.2021 calling for return of income for the AY 2016-17. The Applicant filed the return of income for A.Y. 2016-17 on 22.02.2021 declaring an income of Rs. 5,39,520/- from long term capital gains [arising out of sale of land vide Doc No. 5624/2015 dated 25.07.2015] and an income of Rs. 1,80,308/- as income from other sources. 8. Subsequently, statutory notices dated 30.06.2021 u/s 143(2) and notice dated 18.11.2021 u/s 142(1) were issued to the Applicant. Thereafter a Show Cause Notice dated 10.12.2021 was issued, for which the Applicant furnished information. However, the submissions of the Applicant were not accepted by the Assessing Officer. During the verification, Assessing Officer observed that the income arising out of the above development agreement was not offered to tax either in the original return of income on return filed in response to notice u/s 153C of the Act. Assessing Officer also observed that out of sale consideration of Rs.15,15,000/-, the Applicant had claimed cost of acquisition at Rs.2.85,080/- and development charges at Rs.6,90,400/- but not provided supporting documents. Subsequently, Assessing Officer completed the assessment by making addition of Rs.32,14,995/- being capital gains on account of development agreement cum GPA and Rs.6.90,400/- being disallowance of improvement expenses, thereby assessed the income of the Applicant at Rs.44,51,425/-and passed Assessment Onder on 18.02.2022 u/s 153C of the Act. 9. Feeling aggrieved by the order dated 18.02.2022 passed by the Assessing Officer, the Applicant filed an Appeal before the 1.d. Commissioner of Income Tax (Appeals). The Applicant also submitted Written Submissions before the Ld. Commissioner of Income Tax (Appeals). However, the L.d. Commissioner of Income Tax (Appeals) dismissed the Appeal of Applicant through order dated 13.09.2022. 10. Feeling aggrieved with the order dated 13.09.2022 of Ld. Commissioner of Income Tax (Appeals), the Applicant filed an Appeal bearing L.T.A. No. 610/Hyd/2022 before this Income Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad on the following grounds, (a) that the Ld. CIT(A) has failed to appreciate that the physical possession could not be delivered due to problems in handing over of the physical possession, (b) that the Ld. CIT(A) has failed to appreciate the contents of the 'affidavit' given by the developer, completely ignored it, and had failed to appreciate the fact that the contents of the affidavit were not enquired into by the AO and that has not been proved incorrect, (c) that the Ld. CIT(A) has erred in sustaining the 4 MA.No.20/Hyd./2025 disallowance of claim of Applicant for development expenditure of Rs.6.90,400/-, alleging that such expenditure is not supported by any evidence ignoring the fact that the development expenditure is paid to the contractor and such agreement entered into with the contractor is produced before the AO. 11. The Hon'ble ITAT had passed the impugned order dated 22.10.2024, dismissing the appeal of the Applicant while observing that the Hon'ble Tribunal does not find any reason to interfere with the orders passed by the Ld. Lower authorities. Further, it went on to hold that CIT v. Balbir Singh Maini and Seshasayee Steels Pvt. Ltd. v. ACIT are not relevant for the purpose of deciding the issue. There was no mention whatsoever of the issue of disallowance of development changes in the impugned order passed by the Hon'ble ITAT. Additionally, the submissions made relying upon the judgements CTT v. Balbir Singh Maini and Seshasayee Steels Pvt. Ltd. v. ACIT were not considered. Therefore, the Applicants are of the view that the impugned order without considering the grounds in the Appeal was an error apparent on the face of the record. Hence, this application is filed for kind consideration and rectification of mistake. GROUNDS A. The Applicant respectfully submits that the order dated 22.10.2024 passed by the Hon'ble Tribunal deserved to be recalled and consider on the issue of disallowance of claim of Applicant towards development expenses amounting to Rs.6,90,400/-, It is submitted that the Applicant in its Appeal before the Hon'ble Tribunal raised a ground that the Ld. CTT(A) has erred in sustaining the disallowance of claim of Applicant for development expenditure of Rs. 6,90,400/-, holding that such expenditure is not supported by any evidence ignoring the fact that the development expenditure is paid to the contractor and such agreement entered into with the contractor is produced before the AO. However, the impugned order dated 22.10.2024 does not discuss or provide any finding on this issue of disallowance of claim of development expenses. Therefore, the Applicant is of the view that there is an error apparent on the face of the record and therefore the impugned order is liable to be rectified. B. Further, it is submitted that the Hon'ble Tribunal held that the decisions in CIT v. Balbir Singh Maini and Seshasayee Steels Pvt. Ltd. v. ACIT were not relevant in the present case. In this regard, it is submitted that there is an error apparent on the face of the record because, the Hon'ble Tribunal failed to observe that the Hon'ble Supreme Court in CIT v. Balbir Singh Maini at para 31 has clearly held that \"in the present case, the assessee did not acquire any right to received income, inasmuch as such alleged right was dependent upon the necessary permissions being obtained. This being the case, in the circumstances, there was no debt owed to the assesses by the developers and therefore, the assesses have not acquired any right to receive income under the JDA. This being so, no profits or gains \"arose\" from the transfer of a capital asset so as to attract Sectio 45 and 48 of the Income Tax Act Additionally, The Hon'ble Tribunal failed to observe that the Hon'ble Supreme Court in Seshasayce Steels Pvt. Ltd. v. ACIT has clearly held that 'given the test stated in Paragraph 25 of the aforesaid judgement [CIT v. Balbir Singh Maini], it is clear that the expression \"enabling the enjoyment of\" must take colour from the expression \"transferring\", so that it can be stated on the facts of the case, that a de facto transfer of immovable property has, in fact, taken place making it clear that the de facto owner's rights stand extinguished. 5 MA.No.20/Hyd./2025 It is clear as on the date of the agreement to sell, the owner's rights were completely intact both as to ownership and to possession even de facto, so that this section equally, cannot be said to be attracted. It is submitted that, the non-consideration of the binding Supreme Court decisions in CIT v. Balbir Singh Maini and Seshasayce Steels Pvt. Ltd. v. ACIT is a mistake apparent on the face of the record, and therefore, the impugned order is liable to be rectified. C. Additionally, it is submitted that the issue at hand is covered by the judgement of the Telangana High Court [Jurisdictional High Court) in the case of Smt. Shantha Vidyasagar Annam v. Income Tax Officer, 2025 (1) TMI 460, wherein it was held that in pursuance of the development agreement which provides that the development agreement has been entered for the limited purpose of carrying out development work, the possession of the immovable property has not been handed over to the developer as contemplated under Section 53A of the Transfer of the Property Act, 1882. Therefore, the same does not fall within the definition of 'transfer under Section 2 (47) of the Act. It is submitted that the above-mentioned case is similar to that of the present case and therefore the ratio of the above-mentioned case is squarely applicable to the present case at hand. It is submitted that the Hon'ble ITAT passed the impugned order on 22.10.2024 and the decision of the Hon'ble Telangana High Court in the case of Smt. Shantha Vidyasagar Annam v. Income Tax Officer (supra) was delivered on 07.01.2025, subsequently. It is submitted that the present issue finally settled by the Jurisdictional Hon'ble Telangana High Court in the case of Smt. Shantha Vidyasagar Annam v. Income Tax Officer (supra) and therefore, the impugned order of the ITAT deserves to be rectified as mistake has crept on the face of record by the above subsequent decision of the Hon'ble Telangana High Court. It is well settled law that if the point is covered by a decision of the Jurisdictional Court rendered prior or even subsequent to the order of rectification, it could be said to be \"mistake apparent from the record\" under Section 254(2) of the Income Tax Act and could be corrected by the Tribunal. In view of the aforesaid submissions and the above-referred cases, the Applicant prays that the Order dated 22.10.2024 passed by the Hon'ble Income Tax Appellate Tribunal may be rectified accordingly, and pass such order or orders as the Hon'ble Court may deem fit.” 3. Shri Srinath Sadanala, learned Sr. AR for the Revenue, on the other hand, strongly relied on the order of the Tribunal dated 22.10.2024 passed in ITA.No.610/Hyd./ 2024. He submitted that, the assessee seeks to review the orders of the Tribunal dated 22.10.2024 under the garb of rectification and that, the Tribunal has no power to review 6 MA.No.20/Hyd./2025 it’s own order in light of decisions of Hon’ble Supreme Court in the case of ACIT vs., Sourashtra Kutch Stock Exchange Ltd., [2008] 305 ITR 227 (SC). He, accordingly submitted that, there are no merits in the M.A. filed by the assessee and, therefore, the M.A. filed by the assessee deserves to be dismissed. 4. We have heard both the parties and considered relevant contents of the M.A. filed by the assessee u/sec.1254(2) of the Act in light of the common order of the Tribunal dated 22.10.2024 passed in ITA.No.610/Hyd./ 2024 and more particularly, paras 8 to 8.2 where the Tribunal has considered the arguments of the assessee in light of the decision of Hon’ble Supreme Court in the case of M/s. Sheshasayee Steels Pvt. Ltd., vs., ACIT 421 ITR 421 (SC) and after considering relevants and also by following decision of the Hon’ble High Court of Andhra Pradesh in the case of Potla Nageswara Rao vs., DCIT [2014] 8-TMI-636- AP-HC held that, the year of taxability of transfer in pursuance to JDA is the year in which such Development Agreement [in short “JD”] cum General Power of Attorney [in 7 MA.No.20/Hyd./2025 short “GPA] is registered. In the present case, going by the facts available on record, since the DA cum GPA was registered on 27.06.2015, the year of taxation would be assessment year 2016-2017. Therefore, in our considered view, the findings of fact recorded by the Tribunal in the given facts of the case is in accordance with the decision of Hon’ble High Court of Andhra Pradesh in the case of Potla Nageswara Rao vs., DCIT (supra) and the decision of Hon’ble Supreme Court in the case of CIT vs., Balbir Singh Maini [2018] 12 SCC 354 (SC). Further, the Tribunal has also considered the ratio of the Hon’ble Supreme Court in the case of M/s. Sheshasayee Steels Pvt. Ltd., vs., ACIT (supra). Therefore, in our considered view, there is no merit in the application filed by the assessee u/sec.254(2) of the Act to recall the common order of the Tribunal dated 22.10.2024 in ITA.No.610/Hyd./2024. Further, the applicant-assessee fails to make-out a prima facie mistake apparent on record as contemplated u/sec.254(2) of the Act, but, what is canvassed through the present M.A. is to review the order of the Tribunal dated 22.10.2024 in ITA.No.610/Hyd./2024 in 8 MA.No.20/Hyd./2025 the guise of rectification which is not permissible in law in light of decisions of Hon’ble Supreme Court in the case of ACIT vs., Sourashtra Kutch Stock Exchange Ltd., [2008] 305 ITR 227 (SC) and CIT vs., Reliance Telecom Ltd,., [2021] 133 taxmann.com 41 (SC). Thus, we dismiss the M.A. filed by the assessee. 5. In the result, M.A. of the Assessee is dismissed. Order pronounced in the open court on 25.04.2025. Sd/- Sd/- [RAVISH SOOD] [MANJUNATHA G] JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated 25th April, 2025 VBP Copy to 1. Shri Bandi Sudheer Reddy, 290/SRT, Flat No.102, Classic Residency, Vijaynagar Colony, Hyderabad-057. 2. The ACIT, Central Circle-1(4), Hyderabad. 3. The Pr. CIT (Central), Hyderabad 4. The DR ITAT “A” Bench, Hyderabad. 5. Guard File. //By Order// //True Copy// "