HARIPRIYA TEKUPALLY,HYDERABAD V. INCOME TAX OFFICER, INT TXN - 2, HYDERABAD

ITA 787/HYD/2024

AI Insights

The case involves appeals by Gangaram Reddy Tekulapalli and Smt. Haripriya Tekulapalli against the Final Assessment orders issued by the Assessing Officer for the Assessment Year 2014-2015. The assessments were reopened under section 147 of the Income Tax Act due to non-disclosure of income from capital gains on property sales. The assessee's objections to the Draft Assessment Order were dismissed by the Dispute Resolution Panel (DRP) due to being filed late. The Tribunal found no merit in the assessee's arguments, including the challenge to the timing of the Final Assessment order and the substantive issues regarding capital gains and property valuations.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 38775 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2014-2015
• Other Referred Cases: Collector, Land Acquisition vs. MST Katiji [1987] 167 ITR 471 (SC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAINATH SADANALA
• Assessee Lawyers: P R SURESH
• Keywords: Capital asset; Opportunity of being heard; Sale consideration of property below Jantri Value; Period of limitation; Capital Gains

Judgement Text

"1 ITA.Nos.786 & 787/Hyd./2024 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “A” BENCH : HYDERABAD BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA.No.786 & 787/Hyd/2024 Assessment Year 2014-2015 Gangaram Reddy Tekulapalli, PAN ADUPT2645K Smt. Haripriya Tekulapalli PAN ADUPT2644J Plot No.56, Street No.7, Telecom Nagar, Gachibowli, Hyderabad – 500 032 State of Telangana vs. The Income Tax Officer, (Int. Taxn)-2, Hyderabad. Telangana. (Appellants) (Respondent) For Assessees : CA P R Suresh (Through Hybrid Mode) For Respondent : Shri Sainath Sadanala Date of Hearing : 11.02.2025 Date of Pronouncement : .02.2025 ORDER PER LALIET KUMAR, J.M. The above appeals are filed by the two different assessee’s viz., Gangaram Reddy Tekulapalli and Smt. Haripriya Tekulapalli who were husband and wife against the Final Assessment order passed by the Assessing Officer 3 ITA.Nos.786 & 787/Hyd./2024 Ranga Reddy District, for a total consideration of Rs.29,50,000/- and Rs.75,00,000/-. Since the assessee failed to disclose any income from capital gains on sale of the above mentioned properties, the assessment was reopened u/sec.147 of the Act by the Assessing Officer and notice u/sec.148 of the Act was issued and served upon the assessee on 26.03.2021. Since, there were no response from the side of the assessee, the Assessing Officer issued statutory notice u/sec.142(1) of the Act on 08.03.2022 calling the assessee to furnish his explanation. In response to the said notice, the assessee submitted computation of income, sale deed and passport copy. In case of assessee’s wife Smt. Haripriya Reddy also assessment proceedings u/sec.147 of the Act are pending. The Assessing Officer noted that she along with her husband had purchased a property i.e., Flat No.603, 6th Floor, Tower-2LH admeasuring 3141 sft. in Survey No.201 of Manikonda Jagir Village, Rajendra Nagar Mandal, Ranga Reddy District for a total consideration of Rs.1,07,23,955/- along with registration charges, stamp duty, transfer duty, user 5 ITA.Nos.786 & 787/Hyd./2024 application dated 26.04.2023. The DRP after hearing the objections of the assessee, was of the opinion that the assessee ought to have file his objections against each such proposed variations in the Draft Assessment order within 30 days in prescribed Form-35A before it and the assessee had furnished Form-35A on 26.04.2023 after the prescribed time limit of 30 days and accordingly dismissed the objections of the assessee vide it’s directions dated 01.11.2023 u/sec.144C(5) of the Act. 4. Since the DRP is a superior authority, the Assessing Officer has given effect to the directions of DRP and passed his Final Assessment order by making addition of Rs.68,06,390/- being ½ share in each hands of these two assessee’s vide Final Assessment Order dated 02.11.2023 passedu/sec.147 r.w.s.144C(13) of the Act. 5. Aggrieved by the Final Assessment order of the Assessing Officer, the assessee carried the matter in appeal before the learned CIT(A) and the learned CIT(A) dismissed the appeal of the assessee vide order dated 26.06.2024 on the ground that against the directions of DRP the appeal lies 7 ITA.Nos.786 & 787/Hyd./2024 8. We are satisfied with the reasons explained by the assessee for condontion of delay. Accordingly, the delay of 232 days in filing the appeal before the Tribunal is condoned in light of Judgment of Hon’ble Supreme Court in the case of Collector, Land Acquisition vs., MST Katiji [1987] 167 ITR 471 (SC) admit the appeals for adjudication. 9. It is the submission of the Learned Counsel for the Assessee during the course of hearing that the Assessing Officer passed the Draft Assessment Order on 15.03.2022 u/sec.144C(1) of the Act. In the said Draft Assessment Order the has proposed to make assessee’s ½ share long term capital gains addition of Rs.68,06,390/-. 9.1. It is the submission of the Learned Counsel for the Assessee that as per provisions of sec.144C(2), the assessee was required to file objection before the DRP or accept the Draft Assessment order within a period of 30 days from the date of receipt of the Draft Assessment order. Section 144C(2) provides as under : 9 ITA.Nos.786 & 787/Hyd./2024 not in the nature of furniture. Hence we had to undertake construction of Modular Kitchen, Gas connection, pooja room, false ceiling and lightings, wall cupboards in bedrooms & Drawings rooms, the electricity connections etc., to the tune of Rs.25,22,000/- in all the total cost of the HOUSE PROPERTY is Rs.1,40,50,452/-., thus the entire RESIDENTIAL HOUSE PROPERTY came into existence only in March, 2013. Thereafter I have made other small works and house warming ceremony is made on 25th May, 2013 and thereon house is put to use effectively. In this regard few expenditure bills, which we traced are enclosed as annexure - I, II, III & IV. The Assessee is a Non Resident, and there was significant delay in the date on which the flat was to be handed over by the builder developer which happened finally in November 2012, thus even though the Flat was not fully ready the registration of the Flat was made, to secure the asset and the payments made. Thus the house property purchase completed in full aspect only on 25 May, 2013, notwithstanding the date of registration, the actual date on which the flat was transferred on 01.06.2012, which is less than 12 months from the date of sale effected by the assessee. We also object to the addition Under section 500 being the difference between the actual sale value of Rs.29,50,000 and Stamp duty value of Rs.31,25,000/- resulting in a difference of Rs.1,75,000/- into 2 units of Rs.3,50,000 being proposed to be added to income, as the difference between the transaction value and the stamp duty value is less than ten percent. Besides the purchase of New Asset including improvements aggregates to Rs.1,40,50,452/-(i.e., Rs.70,25,276/- each) and hence full capital gains gets exemption. Notwithstanding our objection to section 50C, the total cost incurred on the purchase of the Residential House being Rs.1,40,50,000 (i.e., Rs.70,25,276 for each, ½ 11 ITA.Nos.786 & 787/Hyd./2024 “2. Having considered the submissions, the Panel gets jurisdiction over a case when an 'eligible assessee' files objection within the time prescribed u/s.144C(2) of the Act. As per Section 144C(2) the assessee has to file objections before the DRP within 30 days of receipt of the Draft order. The said section (i.e., 144(C)(1) & 144C(5) is reproduced hereunder : \"(2) On receipt of the draft order, the eligible assessee shall, within thirty days of the receipt by him of the draft order, - (a) file his acceptance of the variations to the Assessing Officer, or (b) file his objections, if any, to such variation with (i) the Dispute Resolution Panel and (ii) the Assessing Officer. ………. (5) The Dispute Resolution Panel shall, in a case where any objection is received under sub-section (2), issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment. [Emphasis supplied] 2.1. Though the assesse has submitted Draft Assessment Order and other submissions vide email dated 13.04.2023, it is seen that the objections against each such proposed variations in the Draft Assessment Order, was not filed in the prescribed Form 35A. The prescribed due date to file objection in Form 35A before Dispute Resolution Panel is within 30 days from the date of passing the Draft Assessment Order. However, the Form 35A was not enclosed with the aforementioned email. The Form 35A was subsequently furnished on 26.04.2023. The date of submission of Form 35A shall be considered as date of filing of objections as per Rule 4 13 ITA.Nos.786 & 787/Hyd./2024 9.6. The learned Assessing Officer based on the directions of DRP dated 01.11.2023 had passed the Final Assessment order on 02.11.2023. The submissions of the assessee are as under : (i) That the Final assessment order passed by the Assessing Officer on 02.11.2023 was time barred as it was to be passed within one month from the date of passing of the Draft Assessment order dated 15.03.2023. Hence, the Final Assessment order passed by the Assessing Officer on 02.11.2023 is not tenable in the eye of law. For the above purpose, the learned Authorised Representative of the assessee drew the attention of the Bench to the provisions of sec.144C(3) and 144C(4) of the Act He submitted that since the limitation provided under the Act are binding in nature, therefore, the Final Assessment order passed by the Assessing Officer beyond 30 days from date of passing of order is not tenable and consequently, the assessment made in the hands of the assessee and confirmed by the DRP also devoid of any merit. 15 ITA.Nos.786 & 787/Hyd./2024 (b) no objections are received within the period specified in sub-section (2). (4). The Assessing Officer shall, notwithstanding anything contained in section-153 or section-153B, pass the assessment order under sub-section (3) within one month from the end of the month in which,— (a) the acceptance is received; or (b) the period of filing of objections under sub-section (2) expires. (13) Upon receipt of the directions issued under sub- section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section-153 or section-153B, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received.” 11.1. From the reading of sec.144C(2) it is clear that an assessee who is an “eligible assessee” is required to file objection before the DRP or accept the Draft Assessment order within 30 days from the date of receipt of the Draft Assessment order. 11.2. In the present case, admittedly, the assessee has not filed objection to the draft assessment order in accordance with law within 30 days and has only filed Form 17 ITA.Nos.786 & 787/Hyd./2024 passed by the Assessing Officer on 02.11.2023, is beyond the period of limitation. In our considered opinion, the argument of the assessee, seems to be attractive and impressive. However, we have to see whether an assessee can challenge the Draft Assessment order/Final Assessment order having failed to file the objection within a period of 30 days. In our opinion, the assessee cannot do indirectly what he cannot do directly. The assessee cannot be permitted to raise this objection having failed in raising objection within 30 days before the Assessing Officer/DRP. The assessee cannot take benefit of latches/lapses and raise an objection now for not passing the order within 30 days by the Assessing Officer after passing of the draft assessment order. Further, in a case where an assessee though belatedly filed the objection before the DRP and the proceedings are pending adjudication before the DRP, can an Assessing Officer who happens to be the subordinate authority of the DRP can still pass an order during the pendency of the appeal before the DRP. In our view, the law of precedency and hierarchy commands, the Assessing 19 ITA.Nos.786 & 787/Hyd./2024 has been filed within a period of 30 days before the DRP and thereafter, passing of a Final Assessment order is merely a ritual and technical requirement. However, in the present case, the DRP has disposed of objection filed by the assessee on the ground of delay in filing the objection before it vide order dated 01.11.2023 and the Assessing Officer, immediately after receipt of the DRP direction has passed the Final Assessment order without wasting any time. We do not find any reason to take a contrary view against the Final Assessment order of the Assessing Officer. On merit also, we do not find any reason to interfere with the order passed by the DRP on account of delay in filing objection before it. In the present case, the assessee has sold long term capital asset on 09.10.2013 for a consideration of Rs.1,37,50,000/- and claimed exemption u/sec.54F of the Act under the pretext that assessee has purchased the property registered by it agreement dated 01.06.2012. For the purpose of claiming exemption u/sec.54F of the Act, it is essential that the assessee should have purchase the property within one year from the date when the long term 21 ITA.Nos.786 & 787/Hyd./2024 Order pronounced in the open Court on 12.02.2025. Sd/- Sd/- [G.MANJUNATHA] [LALIET KUMAR] ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Date 12th February, 2025 VBP Copy to 1. The appellant 2. The respondent 3. The DRP, Bangalore 4. The DR ITAT ‘A” Bench, Hyderabad 5. Guard File //By Order// //True Copy// Sr. Private Secretary : ITAT : Hyderabad Benches, Hyderabad. "