ACIT., Circle-2(3), Hyderabad, Hyderabad V. TGV Projects & Investments (P) Limited, Secunderabad

CO 1/HYD/2015

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0404 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 01-01-2015
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: K K GUPTA
• Keywords: Reopening of assessment; Search and seizure; Difference of opinion; Change of opinion
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 1673/HYD/2014 & C.O. NO. 1/HYD/2015 (IN ITA NO.1683/HYD/2014) ASSESSMENT YEAR: 2007-08 M/S. TGV PROJECTS & INVESTMENTS PVT. LTD., SANATHNAGAR, HYDERABAD [PAN: AAACT8340H] VS THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(3), HYDERABAD (APPELLANT/CROSS-OBJECTOR) (RESPONDENT) I.T.A. NO. 1683/HYD/2014 ASSESSMENT YEAR: 2007-08 THE A SST. C OMMISSIONER OF INCOME TAX, CIRCLE-2(3), HYDERABAD VS M/S. TGV PROJECTS & INVESTMENTS PVT. LTD., SANATHNAGAR, HYDERABAD [PAN: AAACT8340H] (APPELLANT) (RESPONDENT) FOR R E VENUE : SHRI RAMA KRISHNA, BANDI, DR FOR ASSESSEE : S HRI K.K. GUP TA, AR DATE OF HEARING : 1 2 - 0 3 - 201 5 DATE OF PRONOUNCEMENT : 25 - 03 - 2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THESE THREE APPEALS ARE FILED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-III, HYDERABAD DATED 21-08-2014. ITA NOS.1673 & 1683 /HYD/2014 C.O.NO. 1/HYD/2015 M/S.TGV PROJECTS & INVESTMENTS P. LTD., :- 2 -: 2. THESE APPEALS ARISE IN A PECULIAR SITUATION OF D IRECTIONS OF CIT(A) GIVEN U/S.251(1)(C) OF THE INCOME TAX ACT [ACT]. A SSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF HOTEL, LEASING OF PROPER TY AND FRANCHISE OF IDEA CELLULAR. ASSESSING OFFICER COMPLETED THE ASS ESSMENT ON 22-03-2013 U/S.143(3) R.W.S.147 DETERMINED THE TOTA L INCOME AT RS.55,60,740/-. AS SEEN FROM THE ASSESSMENT ORDER, AN ASSESSMENT ORDER U/S.143(3) FOR THE AY.2007-08 WAS PASSED ON 2 5-03-2009 ASSESSING THE INCOME AT RS.7,98,956/- UNDER THE NOR MAL PROVISIONS OF BOOK PROFIT U/S.115JB OF RS.40,30,507/-. SUBSEQUEN TLY, NOTICE U/S.148 WAS ISSUED AFTER RE-OPENING PROCEEDINGS U/S.147 ON 22-03-2012. THE ORDER INDICATES THAT THE ASSESSMENT WAS RE-OPENED W ITHIN FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR, WHEREAS CIT(A) RECORDS IN PARA 4 THAT IT WAS RE-OPENED AFTER FOUR YEARS FROM THE END OF ASSESSMENT YEAR. HOWEVER, WHAT IS PECULIAR IN THE ORDER OF THE CIT(A ) IS THAT WHEN ASSESSEE RELIED ON THE DECISION OF ITAT, HYDERABAD IN THE CASE OF GOWRI GOPAL HOSPITAL VS. ITO IN ITA NO.1330/HYD/2013, AS SIMILAR FACTS ARE APPLICABLE IN THE CASE OF ASSESSEE, LD.CIT(A) GIVEN DECISION AS UNDER: '4.2 IN THE APPEAL THE APPELLANT ONLY PRESSED THE G ROUND OF REOPENING ON THE GROUND THAT IT WAS AN AUDIT OBJEC TION AND HAD RELIED ON THE DECISION OF THE HON'BLE ITAT IN THE CASE OF M/S. GOWRIGOPAL HOSPITAL VS. ITO IN ITA NO.1330/HYD/201 3 AND DID NOT PRESS GROUND NO.2 AND 3 I.E., THE ISSUE OF DEPRECI ATION AND SHARE APPLICATION MONEY. HENCE, THESE ISSUES ARE NOT AD JUDICATED IN THE APPEAL. 5. IN THE LIGHT OF THE ABOVE, THE ASSESSING OFFICE R IS DIRECTED TO EXAMINE CAREFULLY THE FACTS AND CIRCUMSTANCES IN T HE CASE OF TGV PROJECTS AND INVESTMENTS PVT. LTD., AND IN THE CAS E OF M/S.GOWRI GOPAL HOSPITAL AND DECIDE WHETHER THE FACTS AND CI RCUMSTANCES STATED BY THE APPELLANT ARE EXACTLY APPLICABLE TOW ARDS REOPENING OF THE ASSESSMENT IN THE PRESENT CASE. IN CASE, THE F ACTS, CIRCUMSTANCES AND ISSUES OF THE APPELLANT'S CASE A ND THE DECISION OF THE HON'BLE ITAT IN THE CASE OF M/S. GOWRI GOPAL H OSPITAL ARE IDENTICAL, THE ASSESSING OFFICER IS DIRECTED TO AL LOW THE APPEAL OF THE APPELLANT. IN THIS CONTEXT, THE AO IS DIRECTED TO CALL FOR THE RECORDS FROM THE ITO WARD 2(2) AND EXAMINE WHETHER THE ISS UE INVOLVED ARE ITA NOS.1673 & 1683 /HYD/2014 C.O.NO. 1/HYD/2015 M/S.TGV PROJECTS & INVESTMENTS P. LTD., :- 3 -: IDENTICAL AND IF SO ONLY ALLOW THE APPEAL OF THE A PPELLANT. IN CASE, THE FACTS, CIRCUMSTANCES AND ISSUES OF THE TWO CAS ES ARE NOT IDENTICAL THE ORDER OF THE ASSESSING OFFICER IS UP HELD. THIS ORDER IS PASSED UNDER THE PROVISIONS OF SECTION 251(1)(C) O F THE I.T.ACT, 1961'. 3. REVENUE HAS RAISED THE FOLLOWING MATERIAL GROUND S CONTESTING THE ORDER OF CIT(A): '2. THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT CONTROVERTING THE ASSESSEE'S WRONG SUBMISSION THAT THE CASE WAS REOP ENED AFTER FOUR YEARS. 3. THE PROVISIONS OF S.251(1) OF THE INCOME TAX AC T, 1961 EMPOWERS THE CIT(A) TO CONFIRM, REDUCE, ENHANCE OR ANNUL TH E ASSESSMENT BUT THE SAID SECTION DOES NOT EMPOWER THE CIT(A) TO SE T ASIDE ANY ASSESSMENT OR ISSUE ANY DIRECTION FOR FURTHER ENQU IRY AND PASSING OF THE CONSEQUENTIAL ORDER. 4. THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THE FAC T THAT THE ASSESSING OFFICER DOES NOT HAVE THE POWER TO REVIS IT THE ASSESSMENT AGAIN ON THE CONCLUDED ASSESSMENT AND CANNOT GAIN THE POWER FROM THE ORDER OF THE CIT(A) WHICH IS NOT AUTHORIZED BY THE PROVISIONS OF THE INCOME TAX ACT, 1961. 5. IN VIEW OF THE ABOVE, IN THE INSTANT CASE, LD.C IT(A) HAS ERRED ON FACTS AND IN LAW IN DIRECTING THE A.O. TO COMPARE THE FACTS, CIRCUMSTANCES AND ISSUE INVOLVED IN THE CASE OF TH E ASSESSEE WITH THAT OF M/S. GOWRI GOPAL HOSPITAL CASE AND IF THE FACTS, CIRCUMSTANCES AND ISSUE ARE SAME, THEN ALLOW THE A PPEAL OF THE ASSESSEE. 6. THE LD.CIT(A) ERRED IN PASSING THE APPELLATE OR DER U/S.251(1)(C) OF THE INCOME TAX ACT WHEREAS THE ORDER APPEALED AGAI NST WAS AN ASSESSMENT ORDER'. 4. ASSESSEE IN ITS APPEAL RAISED THE FOLLOWING GROU NDS: '1. THE ORDER PASSED BY THE CIT(APPEALS) WHILE ALLO WING THE APPEAL, CONTAINS INSTRUCTIONS TO THE ASSESSING OFFICER TO COMPARE THE FACTS IN THE CASE OF THE APPELLANT, WITH THE FACTS IN THE R ULING RELIED UPON I.E., ITAT ORDER IN THE CASE OF GOWRI GOPAL HOSPITAL PVT . LTD., V. ITO (ITA NO.1330/HYD/2013). ITA NOS.1673 & 1683 /HYD/2014 C.O.NO. 1/HYD/2015 M/S.TGV PROJECTS & INVESTMENTS P. LTD., :- 4 -: THE MODIFICATION ORDER DELETING THE ADDITION WAS N OT PASSED YET. THE APPELLANT PREFERS THIS APPEAL BEFORE THE HON'B LE TRIBUNAL TO HOLD THAT THE APPEAL IS ALLOWED AND IN FAVOUR OF THE AP PELLANT. 2. ON THE FACTS OF THE CASE THE REOPENING OF ASSES SMENT IS NOT VALID IN LAW. 3. THE APPELLANT REQUESTS FOR PASSING AN APPROPRIA TE ORDER'. 5. IN THE CROSS-OBJECTION, ASSESSEE RAISED THE FOLL OWING GROUNDS: '1. THE ASSESSMENT WAS COMPLETED U/S.143(3) AND AL L THE ASPECTS WERE EXAMINED. ASSESSMENT WAS REOPENED U/S.147. IT IS TO BE STATED THAT THE DECISION OF ITAT IN THE CASE OF GO WRI GOPAL HOSPITALS (P) LTD., (APPEAL NO.ITA NO.1330/HYD/2013) SQUAREL Y APPLIES TO THE ASSESSEE'S CASE. 2. THE HONOURABLE TRIBUNAL HAS HELD THAT WHEN AN A SSESSMENT WAS MADE U/S.143(3) AFTER EXAMINATION A FURTHER EXAMIN ATION U/S.147 IS NOT VALID AND LIABLE TO BE QUASHED, RELIANCE IS PL ACE ON THE DECISION IN THE CASE OF VISWANATH ENGINEERING VS. ACIT (354 ITR 0211) WHEREIN IT WAS HELD THAT HAVING PREVIOUSLY EXAMINE D THE NATURE OF EXPENDITURE AND HAVING ACCEPTED DURING THE ORIGINA L ASSESSMENT, WHEN A SCRUTINY HAS TAKEN PLACE IT WAS NOT OPEN TO THE ASSESSING OFFICER TO RE-EXAMINE. ANY SUCH ATTEMPT ON THE PA RT OF THE ASSESSING OFFICER WOULD BE BASED ON ONLY A CHANGE OF OPINION . IT WAS HELD THAT REOPENING OF ASSESSMENT EVEN WITHIN FOUR YEARS WOU LD NOT BE PERMISSIBLE. 3. THE RESPONDENT REQUESTS THE HONOURABLE TRIBUNAL TO DISMISS THE APPEAL FILED BY THE DEPARTMENT'. 6. AFTER CONSIDERING THE DETAILED OBJECTIONS OF THE REVENUE AND ASSESSEE, WE ARE UNABLE TO UPHOLD THE ORDER OF CIT( A). PROVISIONS OF SECTION 251(1) ARE TO BE EXAMINED IN ORDER TO CONSI DER WHETHER THE ORDER OF CIT(A) IS CORRECT OR NOT. PROVISIONS OF 251(1) ARE AS UNDER: 'SECTION 251. (1) IN DISPOSING OF AN APPEAL, THE [ COMMISSIONER (APPEALS)] SHALL HAVE THE FOLLOWING POWERS ITA NOS.1673 & 1683 /HYD/2014 C.O.NO. 1/HYD/2015 M/S.TGV PROJECTS & INVESTMENTS P. LTD., :- 5 -: (A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT; [(AA) IN AN APPEAL AGAINST THE ORDER OF ASSESSMEN T IN RESPECT OF WHICH THE PROCEEDING BEFORE THE SETTLEMENT COMMISS ION ABATES UNDER SECTION 245HA, HE MAY, AFTER TAKING INTO CONSIDERATION ALL THE MATERIAL AND OTHER INFORMATION PRODUCED BY THE ASS ESSEE BEFORE, OR THE RESULTS OF THE INQUIRY HELD OR EVIDENCE RECORD ED BY, THE SETTLEMENT COMMISSION, IN THE COURSE OF THE PROCEE DING BEFORE IT AND SUCH OTHER MATERIAL AS MAY BE BROUGHT ON HIS RECOR D, CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT;] (B) IN AN APPEAL AGAINST AN ORDER IMPOSING A PENA LTY, HE MAY CONFIRM OR CANCEL SUCH ORDER OR VARY IT SO AS EITH ER TO ENHANCE OR TO REDUCE THE PENALTY; (C) IN ANY OTHER CASE, HE MAY PASS SUCH ORDERS IN THE APPEAL AS HE THINKS FIT'. 7. THEREFORE, AS CAN BE SEEN, THE CIT(A) HAS TO DEC IDE THE APPEAL U/S.251(1)(A) AS CONTESTED BY THE REVENUE IN GROUND NO.3 EITHER TO CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. IT DOES NOT EMPOWER THE CIT(A) TO SET ASIDE ANY ASSESSMENT OR DELEGATIN G THE SAME TO THE FILE OF ASSESSING OFFICER. AS CAN BE SEEN FROM THE DIRE CTION OF THE CIT(A), HE DIRECTS THE ASSESSING OFFICER TO EXAMINE ANOTHER FI LE AND HOLD THAT APPEAL IS ALLOWABLE OR NOT. SINCE APPEAL IS ON AN ORDER OF AN ASSESSMENT, CIT(A) SHOULD HAVE EXAMINED AND DECIDED THE ISSUE BY VIRTUE OF POWERS CONFERRED UNDER SECTION 251(1)(A) ONLY. HE CAN NOT DELEGATE THE SAME TO AO. WE ARE AFRAID THAT IF THIS ORDER OF CIT(A) DELEGATING HIS JURISDICTION TO AO IS ALLOWED, THEN IN THE GUISE OF DECIDING ISSUES, THE MATTERS WILL BE SET ASIDE TO AO, WHICH IS NOT PERMITTED UNDER THE PROVISIONS. 8. MOREOVER, CIT(A)'S ORDER INDICATES THAT HE PASSE D THE ORDER U/S.251(1)(C). AS CAN BE SEEN FROM THE PROVISIONS , IN THE CASE OF APPEAL AGAINST THE ORDER OF ASSESSMENT, HE HAS TO INVOKE T HE POWERS U/S.251(1)(A) AND AGAINST PENALTY U/S.251(1)(B) AND IN ANY OTHER CASE IE. ANY MISCELLANEOUS PROCEEDINGS U/S.154 ETC., HE CAN INVOKE POWERS ITA NOS.1673 & 1683 /HYD/2014 C.O.NO. 1/HYD/2015 M/S.TGV PROJECTS & INVESTMENTS P. LTD., :- 6 -: U/S.251(1)(C). THE APPEAL PREFERRED BEFORE THE CIT (A) IS AGAINST THE ORDER OF ASSESSMENT I.E., RE-ASSESSMENT U/S.147. THEREFO RE, HE SHOULD HAVE PASSED THE ORDERS INVOKING 251(1)(A). HAD HE RESTR ICTED HIMSELF TO 251(1), THE ISSUE WOULD NOT HAVE ARISEN. HOWEVER, CIT(A) IN HIS WISDOM SPECIFICALLY MENTIONED CLAUSE 251(1)(C), WHICH DOES NOT APPLY TO THE PROCEEDINGS PENDING BEFORE HIM. 9. AS SEEN FROM THE GROUNDS RAISED BY THE REVENUE, AS WELL AS BY ASSESSEE, CIT(A) HAS NOT ADJUDICATED THE ISSUE AT A LL IN ITS CORRECT PERSPECTIVE. WHILE ADJUDICATING THE ISSUE, IT IS H IS DUTY TO EXAMINE THE FACTS, VERIFY THE APPLICABLE LAW AND GIVE A DECISIO N BASED ON FACTS AND PROVISIONS OF LAW. HE CANNOT SHIRK HIS RESPONSIBIL ITY AND DIRECT THE ASSESSING OFFICER TO EXAMINE THE ISSUES AND DECIDE APPEAL ACCORDINGLY. AS RIGHTLY CONTENDED BY THE REVENUE, THE ASSESSING OFFICER DOES NOT HAVE THE POWER TO RE-VISIT THE ASSESSMENT AGAIN AND CANN OT GAIN THE POWER FROM THE ORDER OF CIT(A), WHICH IS NOT ACCORDING TO THE PROVISIONS OF INCOME TAX ACT, 1961. IN VIEW OF THIS, WE HAVE NO HESITATION IN SETTING ASIDE THE ORDER OF CIT(A) AND RESTORE THE APPEAL TO THE FILE OF CIT(A) TO CONSIDER IT AFRESH AND PASS APPROPRIATE ORDER ON ME RITS AFTER EXAMINING ASSESSEE'S CONTENTIONS. HE SHOULD ALSO GIVE A FIND ING WHETHER THE ASSESSMENT WAS RE-OPENED WITHIN FOUR YEARS OR AFTER FOUR YEARS AND IF SO, SHOULD ANALYZE THE APPLICABLE CASE LAW AND THE PROV ISIONS OF THE ACT TO GIVE A FINDING WHETHER ASSESSMENT ORDER CAN BE UPHE LD OR NOT? IF REQUIRED, HE SHOULD ALSO GIVE A FINDING IN THE MERI TS ON THE ADDITIONS MADE BY ASSESSING OFFICER. WITH THESE OBSERVATIONS , APPEAL BEFORE THE CIT(A) IS RESTORED BY SETTING ASIDE THE IMPUGNED OR DER OF THE CIT(A). 10. ASSESSEE'S APPEAL BY WAY OF CROSS OBJECTION, IS MORE OR LESS ON THE ISSUE OF RE-OPENING U/S.147. SINCE THE ORDER OF CI T(A) IS SET ASIDE FOR ITA NOS.1673 & 1683 /HYD/2014 C.O.NO. 1/HYD/2015 M/S.TGV PROJECTS & INVESTMENTS P. LTD., :- 7 -: FRESH ADJUDICATION ON ALL ISSUES, THERE IS NO NEED TO ADJUDICATE THESE GROUNDS BY US AT PRESENT. 11. IN THE RESULT, REVENUE'S APPEAL AS WELL AS ASSE SSEE'S APPEAL AND CROSS-OBJECTION ARE CONSIDERED ALLOWED FOR STATISTI CAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 25 TH MARCH, 2015. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUN TANT MEMBER HYDERABAD, DATED 25 TH MARCH, 2015. TNMM COPY TO : 1. M/S. TGV PROJECTS & INVESTMENTS PVT. LTD., C - 4, INDUSTRIAL ESTATE, SANATHNAGAR, HYDERABAD. C/O. SRI K.K. GUPT A, CHARTERED ACCOUNTANT, 3464, DUNDOO VIHAR, R.P. ROAD , SECUNDERABAD. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2( 3), B- BLOCK, 8 TH FLOOR, IT TOWERS, AC GUARDS, HYDERABAD. 3. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2(3 ), 8 TH FLOOR, B-BLOCK, ROOM NO.824, IT TOWERS, AC GUARDS, HYDERABAD. 4. CIT(APPEALS)-III, HYDERABAD 5. CIT-II, HYDERABAD 6. D.R. ITAT, HYDERABAD