DCIT, CIRCLE-6(1), HYDERABAD V. DEMI REALTORS, HYDERABAD

MA 31/HYD/2024

AI Insights

The case involves a Miscellaneous Application filed by the Revenue against the Tribunal's earlier decision in ITA No.156/Hyd/2023, where certain disallowances and additions were contested. The Revenue pointed out two mistakes in the Tribunal's order: an incorrect disallowance amount under Section 40A(3) and a failure to consider certain facts related to unrecorded cash payments totaling Rs. 13.81 crores. The Tribunal acknowledged the clerical error in the disallowance amount but denied the request for a re-evaluation of the facts concerning the cash payments, emphasizing that such a re-appreciation would amount to a review of the order, which is not permissible under Section 254(2) of the Income Tax Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 398000 (ITAT-HYDERABAD)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-06-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Assessment Year: 2008-2009
• Other Referred Cases: Sri V. Rama Chandra Rao vs. DCIT, T.S. Balaram, ITO v. Volkart Bros., Commissioner of Income Tax (IT-4) Vs. Reliance Telecom Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 143(3); 40A(3)

Judgement Text

"आयरअपीलीय न्यायाधिकरण में, हैदराबाद ‘ए’ बेंच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad श्री मंजूनाथ जी, माननीय लेखा सदस्य एवं श्री रवीश सूद, माननीय न्याययक सदस्य SHRI G. MANJUNATHA, HON’BLE ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER MA No. 31/Hyd/2024 (In आयकरअपीलसं./I.T.A.No.156/Hyd/2023) (यनर्ाारण वर्ा/ Assessment Year: 2008-09) DCIT, Circle-6(1), Hyderabad. Vs. Demi Realtors, Hyderabad. PAN: AAFFD9401P (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Sri A.V. Raghuram, Advocate राजस्व का प्रतततितित्व/ Department Represented by : Sri Srinath Sadanala, Sr. AR सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 21.03.2025 घोर्णा की तारीख/ Date of Pronouncement : 02.06.2025 O R D E R प्रयत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The present Miscellaneous Application filed by the Revenue on 26/07/2024 arises out of the order passed by the Tribunal while 2 MA 31/HYD/2024 DCIT Vs. Demi Realtors disposing of the appeal filed by the assessee in ITA No.156/Hyd/2023, dated 05/02/2024. 2. The Revenue in the present application has claimed that the order passed by the Tribunal suffers from two-fold mistakes which being apparent from record had rendered it amenable for rectification under Section 254(2) of the Act. 3. Ostensibly, the Department in its application has pointed out two mistakes in the order passed by the Tribunal, viz., (i). the Tribunal while confirming the disallowance under Section 40A(3) of the Act, had though observed that the disallowance of Rs. 70 lacs was being confirmed, while for the aggregate of the disallowance worked out at Rs. 74.50 lacs; and (ii). the Tribunal had failed to appreciate the facts in the right perspective and vacated the addition of Rs. 13.81 crores made by the AO. 4. Sri Srinath Sadanala, Learned Departmental Representative (in short, “Ld. DR”) at the threshold of hearing took us through the miscellaneous application filed by the Department. 5. Elaborating on the disallowance under Section 40A(3) of Rs. 70 lacs confirmed by the Tribunal, the Ld. DR submitted that though the aggregate of the 8 (Eight) disallowances referred by the Tribunal at Para 14.39 (Sl. No. 3) amounted to Rs. 74.50 lacs, but it had while confirming the said disallowance inadvertently mentioned the amount as Rs. 70 3 MA 31/HYD/2024 DCIT Vs. Demi Realtors lacs. The Ld. DR to buttress his aforesaid claim had taken us through Para 14.39 (Sl. No. 3) of the order passed by the Tribunal. 6. Apart from that, the Ld. DR submitted that the Tribunal while vacating the addition of unrecorded cash payments of Rs. 13.81 crore that were made by the assessee to Sri V. Ramachandra Rao and M/s. Radha Realty Corporation (India) Pvt Ltd., had failed to appreciate the facts involved in the right perspective. 7. Elaborating on his contention, the Ld. DR submitted that the Tribunal had in its order reproduced Para Nos. 73 and 74 of its order passed in the case of Sri V. Rama Chandra Rao, ITA No. 914/Hyd/2011d, dated 22/11/2013, wherein it was, inter alia, observed that Sri D.S. Karunakar Reddy, i.e partner of M/s. Demi Realtor (the assessee firm before us) had acknowledged having paid an amount of Rs. 8.50 crores to Sri V. Rama Chandra Rao (supra). Carrying his contention further, the Ld. DR submitted that the Tribunal while vacating the addition of Rs. 13.81 crores [including Rs. 8.50 crores paid to Sri V. Rama Chandra Rao (supra)] had lost sight of the aforesaid material aspect. 8. Per contra, Sri A.V. Raghuram, Learned Authorized Representative for the assessee (“Ld. AR”) objected to the application filed by the revenue. Elaborating on his contention, the Ld. AR submitted that no mistake was apparent from the record regarding 4 MA 31/HYD/2024 DCIT Vs. Demi Realtors confirmation by the Tribunal of the disallowance under Section 40A(3) of Rs. 70 lac. Apropos the claim of the Department that the Tribunal while vacating the addition of Rs. 13.81 crores (supra) had failed to appreciate the facts in the right perspective insofar the same pertained to the impugned payment of Rs. 8.50 crore made by the assessee firm to Sri V. Rama Chandra Rao (supra); the Ld. AR submitted that the Revenue in the garb of the present application is seeking the recall of the order passed by the Tribunal while disposing off the appeal. 9. We have heard the Learned Authorized Representatives of both parties and perused the record. 10. Apropos the claim of the Ld. AR that the though the aggregate of the 8 (Eight) disallowances referred by the Tribunal at Para 14.39 (Sl. No. 3) amounts to Rs. 74.50 lacs, but it had while confirming the said disallowance inadvertently mentioned the amount as Rs. 70 lacs, we find substance in the same. On close scrutiny of the observations of the Tribunal at Para 14.39 (Sl.No.3) read along with Page 4 of the assessment order passed by the A.O under Section 143(3) of the Act, dated 29/12/2009, we find that though the Tribunal while confirming the addition under Section 40A(3) of the Act had referred to 8 payments, but inadvertently it had omitted to mention the name of one of the party viz., “Parveen Begum (Agent)” to whom a payment of Rs. 9.50 lac was made (as mentioned in the assessment order at Page 4). We, thus, 5 MA 31/HYD/2024 DCIT Vs. Demi Realtors considering the fact that the aggregate of the 8 payments mentioned by the A.O. at Para 14.39 (supra) works out at Rs. 74.50 lac (supra), concur with the Ld. DR that the order passed by the Tribunal to the said extent suffers from a mistake apparent from the record rendering it amenable for rectification under Section 254(2) of the Act. Accordingly, the disallowance under Section 40A(3) of the Act of Rs. 70 lac (supra) confirmed by the Tribunal, the mention of which can be traced in Para 14.34, Para 14.39, Para 15.71 and Para 15.8 of the order passed by the Tribunal shall hereinafter be read as “Rs. 74.50 lac”. 11. Apropos the claim of the Department that the Tribunal while deleting the addition of the unrecorded cash payment of Rs. 13.81 crore (supra) made by the assessee to Sri V. Rama Chandra Rao and M/s. Radha Realty Corporation (India) Pvt Ltd, had lost sight of certain material facts, we are of the view that before dealing with the said issue the observations of the Department recorded in the present application need to be culled out, as under: 6 MA 31/HYD/2024 DCIT Vs. Demi Realtors 7 MA 31/HYD/2024 DCIT Vs. Demi Realtors 8 MA 31/HYD/2024 DCIT Vs. Demi Realtors 12. On a perusal of the aforesaid claim of the Department, we are of the firm conviction that it is seeking a re-appreciation of the material to arrive at a different view. In our view, the re-appreciation of the material on which a plausible view had been arrived while disposing off the appeal will be nothing short of seeking of review of the order passed by the Tribunal. We may herein observe, that the Tribunal while concluding that the addition of Rs. 13.81 crore was not called for in the hands of the assessee, had drawn support from the order that was passed in the case of V. Rama Chandra Rao vs. DCIT in ITA No. 914/Hyd/2011, dated 22/11/2013, wherein it was observed that the “Memorandum of Understanding” (MoU) based on which the impugned addition was made was a dumb document having no evidentiary value. The observations of the Tribunal on the aforesaid issue are spread over Para Nos. 19 to 19.7 of its order. 13. As the Tribunal is divested of the power to review its order, which also takes within its realm re-appreciation of the material for arriving at a different view as against that which was earlier arrived at while disposing of the appeal, therefore, we refrain our indulgence on the aforesaid issue. 14. Our aforesaid view that the Tribunal cannot review its order is supported by the judgment of the Hon'ble Supreme Court in the case 9 MA 31/HYD/2024 DCIT Vs. Demi Realtors of T.S. Balaram, ITO v. Volkart Bros., (1971) 82 ITR 50 (SC), wherein it was held as under: \" ....A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may conceivably be two opinions. As seen earlier, the High Court of Bombay opined that the original assessments were in accordance with law though in our opinion the High Court was not justified in going into that question.......an error which has to be established by a long-drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on debatable point of law is not a mistake apparent from the record........\" 14. Also, a similar view had been taken by the Hon'ble Supreme Court in the case of Commissioner of Income Tax (IT-4) Vs. Reliance Telecom Ltd., (2021) 133 taxmann.com 41 (SC), wherein it was held as under: \"From the impugned judgment and order passed by the High Court, it appears that the High Court has dismissed the writ petitions by observing that (i) the Revenue itself had in detail gone into merits of the case before the ITAT and the parties filed detailed submissions based on which the ITAT passed its order recalling its earlier order; (ii) the Revenue had not contended that the ITAT had become functus officio after delivering its original order and that if it had to relook/revisit the order, it must be for limited purpose as permitted by Section 254(2) of the Act; and (iii) that the merits might have been decided erroneously but ITAT had the jurisdiction and within its powers it may pass an erroneous order and that such objections had not been raised before ITAT. 6. None of the aforesaid grounds are tenable in law. Merely because the Revenue might have in detail gone into the merits of the case before the ITAT and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors Section 254(2) of the Act. As observed hereinabove, the powers under Section 254(2) of the 10 MA 31/HYD/2024 DCIT Vs. Demi Realtors Act are only to correct and/or rectify the mistake apparent from the record and not beyond that. Even the observations that the merits might have been decided erroneously and the ITAT had jurisdiction and within its powers it may pass an order recalling its earlier order which is an erroneous order, cannot be accepted. As observed hereinabove, if the order passed by the ITAT was erroneous on merits, in that case, the remedy available to the Assessee was to prefer an appeal before the High Court, which in fact was filed by the Assessee before the High Court, but later on the Assessee withdrew the same in the instant case.\" 15. We, thus, in terms of our aforesaid observations, are of a firm conviction that as the Revenue in the garb of the present application filed under Section. 254(2) of the Act has sought for a review of our earlier order dated 05/02/2024 that was passed while disposing of the appeal, insofar as the same pertains to the deletion of the addition of Rs. 13.81 crore (supra), which, as observed by us hereinabove, does not fall within the scope and gamut of the powers vested with us under Section 254(2) of the Act, therefore, the application filed by the Revenue to the said extent fails. 16. Resultantly, the miscellaneous application filed by the Revenue is partly allowed in terms of our aforesaid observations. Order pronounced in the open court on 2nd June, 2025. Sd/- Sd/- (मंजूनाथ जी) (MANJUNATHA G.) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- (श्री रवीश सूद) (RAVISH SOOD) न्यायिक सदस्य/JUDICIAL MEMBER 11 MA 31/HYD/2024 DCIT Vs. Demi Realtors Sd/- Hyderabad, dated 02.06.2025. *OKK/SPS आदेशकी प्रयतयलयप अग्रेयर्त/ Copy of the order forwarded to:- 1. यनर्ााररती/The Assessee : Demi Realtors, Flat No. 610, 6th Floor, Babukhan Estate, Basheerbagh, Hyderabad-500001. 2. राजस्व/ The Revenue : The Deputy Commissioner of Income Tax, Circle-6(1), IT Towers, Hyderabad. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. यवभागीयप्रयतयनयर्, आयकर अपीलीय अयर्करण, हैदराबाद / DR, ITAT, Hyderabad 5. The Commissioner of Income Tax 6. गार्ाफ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Hyderabad "