HIMASAGAR KRISHNA MUTHAPPAGARI,TIRUPATI V. ITO., WARD-2(3), TIRUPATI

ITA 687/HYD/2024

AI Insights

The case involves Himasagar Krishna Muthappagari, the assessee, who appealed against the order of the Principal Commissioner of Income Tax, Tirupati, which revised the reassessment order for the assessment year 2016-17. The reassessment was initially completed by the Faceless Assessment Centre, accepting the income assessed under the original assessment. However, the Pr. CIT later found that the Assessing Officer had not properly verified the assessee's claim for exemption under Section 54F during the reassessment, leading to the revision of the assessment order. The Tribunal dismissed the appeal, supporting the Pr. CIT's decision and emphasizing the need for thorough verification of claims under tax laws.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 29988 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-B
• Assessment Year: 2016-2017
• Other Referred Cases: Vidya Shankar Jaiswal Vs. The Income-Tax Officer, Ward 2, Ambikapur, Sh. Sanjeev Lal Vs. Commissioner of Income Tax
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Condonation of delay; Difference of opinion; Change of opinion; Capital asset; Opportunity of being heard; Transfer pricing; Reassessment proceedings; Gift; Period of limitation; Capital Gains; Principle of natural justice; Search and seizure; Audit objection; Assessment record; Revision of order; Deemed Gift on Purchase of immovable Property below Jantri value
• Section: 147; 148; 143(3); 263; 48; 54F; 92CA

Judgement Text

" आयकर अपीलीय न्यायाधिकरण में, हैदराबाद ‘बी’ बेंच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ B ‘ 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 आयकरअपीलसं./I.T.A.No.687/Hyd/2024 (निर्धारण वर्ा/ Assessment Year:2016-17) Himasagar Krishna Muthappagari, Tirupati. PAN : ACHPH8330D. Income Tax Officer Ward-2(3) Tirupati (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Shri M. Uday Teja, C.A. राजस्व का प्रतततितित्व/ Department Represented by : Ms. M. Narmada, CIT-DR सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 05.03.2025 घोर्णध की तधरीख/Date of Pronouncement : 12.03.2025 O R D E R प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The present appeal filed by the assessee is directed against the order passed by the Principal Commissioner of Income Tax (for 2 Himsagar Krishna Vs. Pr. CIT, Tirupati ITA No. 687/Hyd/2024 short “Pr. CIT”) under Section 263 of the Income-tax Act, 1961, dated 25.03.2024, which in turn arises from the order passed by the Assessing Officer u/s 147 r.w.s. 144B of the Act dated 22.03.2022 for the assessment year 2016-17. The assessee has assailed the impugned order on the following grounds of appeal before us. “1. The Hon'ble Principal Commissioner of Income Tax, Tirupati is not justified in revising the Assessment Order for AY2016-17 passed by the Faceless Assessment Centre U/s 147 r.w.s 144B and ordering for Re- Assessment, both in Law, Facts of the case, Equity and Natural Justice. 2. The Assessee filed Return of Income (ROI) on 31/03/2018 and selected for scrutiny in CASS and the assessment was completed U/s 143(3) on 24/12/2018 with some additions. The Assessee filed an Appeal on the Assessment Order before the CIT(Appeals) but withdrawn later on by opting to pay tax under V.V.S Scheme and paid taxes thereon. Later on the case was re-opened U/s 148 on 29/03/2021 and completed on 22/03/2022 by Faceless Assessment Centre by accepting the income assessed U/s 143(3). After 2 years i.e on 25/03/2024 Hon'ble Principal Commissioner of Income Tax, Tirupati revised the Assessment Order U/s 263, on the Assessment Order passed by NFAC on 22/03/2022, for Re-adjudication, which is highly arbitrary and change of opinion. 3. The revision of assessment without any fresh/new evidence showing escapement of income for tax, is totally wrong and it is merely change of opinion.” 2. Shri M. Uday Teja, Ld. Authorized Representative (for short ‘AR’) for the assessee, at the threshold of hearing, submitted that the captioned appeal involves a delay of 54 days. Elaborating on the reasons leading to the delay, the Ld. AR submitted that the same was caused due to ill-health of the assessee for a period of 4 3 Himsagar Krishna Vs. Pr. CIT, Tirupati ITA No. 687/Hyd/2024 months. The Ld. A.R to fortify his aforesaid claim had drawn our attention to the application filed by the assessee seeking condonation of delay a/w a supporting “affidavit”, dated 17.07.2024. Also the Ld. AR had pressed into service the medical certificates/prescriptions of the assessee in support of the aforesaid factual position. 3. Ms. M. Narmada, Ld. Departmental Representative (for short ‘DR’), objected to the seeking of the condonation of delay involved in filing of the present appeal by the assessee appellant. 4. We have heard the Ld. Authorized Representatives of both the parties qua the issue of delay involved in filing of the present appeal. The assessee has filed an “affidavit”, dated 17.07.2024, wherein it is deposed by him that though he had received the order passed by the Pr. CIT, Tirupati u/s 263 of the Act on 25.03.2024, but the filing of the present appeal was delayed by 54 days due to his ill health. The assessee to fortify his claim has filed before us medical certificates/prescriptions. Considering the aforesaid facts, we are of the view that as there were justifiable reasons leading to the delay of 54 days involved in filing of the present appeal, therefore, the same in all fairness merits to be condoned. 4 Himsagar Krishna Vs. Pr. CIT, Tirupati ITA No. 687/Hyd/2024 Our aforesaid view is fortified by the recent judgment of the Hon’ble Supreme Court in the case of Vidya Shankar Jaiswal Vs. The Income-Tax Officer, Ward 2, Ambikapur, SLP (Civil) Nos. 26310-26311/3024, dated 31.01.2025. The Hon’ble Apex Court while setting aside the order of the Hon’ble High court of Chattisgarh, which had approved the declining of the condonation of delay of 166 days by the Income-Tax Appellate Tribunal, Raipur, observed that a justice oriented and liberal approach should be adopted while considering the appellants request for condonation of delay involved in filing of an appeal. 5. Succinctly stated, the assessee had filed his return of income for A.Y 2016-17 on 31.03.2018 disclosing an income of Rs.6,43,030/-. Thereafter, the original assessment was framed by the Assessing Officer vide his order passed under Section 143(3) of the Act, dated 24-12-2018, determining the income of the assessee at Rs.26,23,490/-. 6. As discernible from the record, the AO, based on the fact that the Long-Term Capital Gains (for short “LTCG”) was computed short while framing the original assessment, initiated the reassessment proceedings u/s 147 of the Act. Reassessment 5 Himsagar Krishna Vs. Pr. CIT, Tirupati ITA No. 687/Hyd/2024 order u/s 147 r.w.s. 144B of the Act, dated 22.03.2022 was thereafter passed by the A.O, wherein the income of the assessee as was originally assessed was accepted as such. 7. The Principal Commissioner of Income Tax (for short, “Pr. CIT”) after culmination of the assessment proceedings, called for the assessment record. The Pr. CIT observing that the AO, while framing the reassessment, had failed to properly verify the assessee’s claim for exemption under Section 54 of the Act, thus, vide his “Show-Cause Notice” (SCN), dated 20.02.2024 called upon him to put forth an explanation that as to why the order of reassessment passed by the AO u/s 147 r.w.s. 144B of the Act, dated 22.03.2022 may not be set-aside under Section 263 of the Act. 8. Although the assessee objected to the exercise of the revisional jurisdiction by the Pr. CIT for two-fold reasons, viz. (i) that the capital gain disclosed by the assessee was examined twice by the Assessing Officer; and (ii) that the purported revision of the assessment order based on an audit objection was not permitted under law; but neither of the same found favor with the revisional authority. Apart from that, it was the assessee's claim that as he 6 Himsagar Krishna Vs. Pr. CIT, Tirupati ITA No. 687/Hyd/2024 had against the sale proceeds/relinquishment of rights amounting to Rs.1,04,82,000/-, vide an “agreement” executed with a builder made a payment of Rs.98.34 lacs for purchase of a residential house, therefore, no adverse inferences were liable to be drawn as regards his claim of exemption raised u/s 54F of the Act. Elaborating further, it was the assessee's claim that though as per the terms of the original “agreement to purchase” a Villa No. 48 was allotted to him by the builder, but thereafter due to some internal problems it was decided to allot Villa No.4. The assessee further stated that the builder had finally handed over to him the possession of Villa No.4 (supra) on 07-08-2019. It was further stated by him that though he was put into the possession of the subject residential property in the financial year 2019, but the registration of the said transfer truncation remained pending due to some litigation. Although, the assessee to impress upon the Pr. CIT that the transfer of the subject property purchased by him, i.e., Villa No.4 (supra), had culminated based on the “agreement to purchase”, dated 18-04-2016, but the same did not find favor with him. Ostensibly, the assessee in order to buttress his aforesaid claim pressed into service the judgment of the Hon'ble 7 Himsagar Krishna Vs. Pr. CIT, Tirupati ITA No. 687/Hyd/2024 Supreme Court in the case of Sh. Sanjeev Lal Vs. Commissioner of Income Tax, AIR 2014 3589 (SC) a/w certain other judicial pronouncements. 9. The Pr. CIT, after deliberating on the facts involved in the case, observed that the AO, while framing assessment, has failed to verify the assessee's claim for exemption under Section 54F of the Act. Elaborating on his observation, the Pr. CIT observed that though the assessee had initially stated to have executed an “agreement” to purchase a Villa No.48 (supra), but thereafter, in the proceedings before him, he had shifted his stand and claimed that Villa No. 4 (supra) was allotted to him. The Pr. CIT, taking cognizance of the fact that the assessee was apparently in possession of Villa No.4 (supra) without a valid registration deed, thus, held a firm conviction that the AO while framing the reassessment vide his order passed under Section 147 r.w.s. 144B of the Act, dated 22-03-2022 had failed to examine the assessee's claim for exemption under Section 54F of the Act. Thereafter, the Pr. CIT, referring to the scope and domain of Section 263 of the Act, read with Clause (a) of \"Explanation 2\" to Sec.263(1) of the Act, observed that the failure on the part of the AO to make any 8 Himsagar Krishna Vs. Pr. CIT, Tirupati ITA No. 687/Hyd/2024 examination/verification/enquiries, which were required to have been made qua the assessee's claim for exemption under Section 54F of the Act, had rendered his order as erroneous insofar as it was prejudicial to the interest of the revenue under Section 263 of the Act. Accordingly, the Pr. CIT, based on his aforesaid observations set-aside the reassessment order passed by the AO under Section 147 r.w.s. 144B of the Act, dated 22-03-2022 with a direction to him to redo the same afresh after affording a reasonable opportunity of being heard to the assessee. 10. The assessee being aggrieved with the order passed by the Pr. CIT under Section 263 of the Act, dated 25-03-2022 has carried the matter in appeal before us. 11. We have heard the learned Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 12. As discernible from the record, we find that the assessee's claim for exemption under Section 54F of the Act was not verified 9 Himsagar Krishna Vs. Pr. CIT, Tirupati ITA No. 687/Hyd/2024 by the AO while framing the reassessment vide his order passed u/s 147 r.w.s. 144B of the Act, dated 22-03-2022. 13. Before proceeding any further, we deem it fit to cull out the provisions of Section 263 of the Act, which reads as under: “263. Revision of orders prejudicial to revenue. (1)The [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner] or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, [including,— (i) an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment; or (ii) an order modifying the order under section 92CA; or (iii) an order cancelling the order under section 92CA and directing a fresh order under the said section]. Explanation 1.—For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,— (a) an order passed on or before or after the 1st day of June, 1988] by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] shall include— (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer [or the Transfer Pricing Officer, as the case may be,] conferred on, or assigned to, him under the orders or directions issued by the Board or by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or 10 Himsagar Krishna Vs. Pr. CIT, Tirupati ITA No. 687/Hyd/2024 Commissioner authorised by the Board in this behalf under section 120; [(iii) an order under section 92CA by the Transfer Pricing Officer;] (b) \"record\" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal [Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer 92[or the Transfer Pricing Officer, as the case may be,] had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the* Principal Commissioner or Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. Explanation 2.—For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal [Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner,— (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. [Explanation 3.—For the purposes of this section, \"Transfer Pricing Officer\" shall have the same meaning as assigned to it in the Explanation to section 92CA.] (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any 11 Himsagar Krishna Vs. Pr. CIT, Tirupati ITA No. 687/Hyd/2024 finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation.—In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded.” (emphasis supplied by us) 14. As per the “Explanation 2(a)” of Section 263 of the Act, in a case where the order is passed by the AO without making inquiries or verification which should have been made, then the same, as observed by the Pr. CIT, and rightly so, would render the order so passed as deemed to be erroneous insofar as it is prejudicial to the interest of the revenue under Section 263 of the Act. 15. We shall, in the backdrop of the scope of Section 263 of the Act, deal with the issue in hand before us. 16. Admittedly, it is a matter of fact that the AO, while framing the reassessment, had failed to verify the assessee's claim of exemption under Section 54F of the Act by making enquiries or verifications which should have been made. We, say so, for the reason that as observed by Pr. CIT that though it was the claim of the assessee that he had purchased Villa No.48 (supra) vide an ”agreement to purchase”, dated 18-04-2016, but thereafter, he 12 Himsagar Krishna Vs. Pr. CIT, Tirupati ITA No. 687/Hyd/2024 had in the course of the revisional proceedings come up with a new claim, i.e due to certain internal problems he was allotted Villa No.4 (supra). Also, it transpires that Villa No.4 (supra) that was allotted to the assessee and claimed to be in his possession was not backed by any registered deed/agreement. Although it was, inter alia, the assessee's claim that as pursuant to the “agreement to purchase”, dated 18-04-2016, he was put into possession of the subject property i.e Villa No. 4 (supra), therefore, the said purchase transaction would fall within the meaning of “transfer” as contemplated under Section 2(47) of the Act, but we concur with the Pr. CIT that the same is not supported by the mandate of law. Although Section 2(47)(v) of the Act, contemplates that any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Section 53A of the Transfer of Property Act, 1882, (Act No. IV OF 1882) will fall within the meaning of “transfer”, but the same, we are afraid, does not come to the rescue of the assessee before us. We, say so, for the reason that, as per the post-amended Section 17(1-A) of the Registration Act, 1908, any document containing contracts to 13 Himsagar Krishna Vs. Pr. CIT, Tirupati ITA No. 687/Hyd/2024 transfer for consideration, any immovable property for the purpose of Section 53A of the Transfer of Property Act, 1882, shall be registered if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2001, and if such documents are not registered on or after such commencement, they shall have no effect for the purpose of Section 53A of the Act. For the sake of clarity, Section 17 of the Registration Act, 1908, is culled out as under: Section 17(1) in The Registration Act, 1908 (1) The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act XVI of 1864, or the Indian Registration Act, 1866, or the Indian Registration Act, 1871, or the Indian Registration Act, 1877, or this Act came or comes into force, namely, (a) instruments of gift of immovable property; (b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property; (c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; and (d) leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent (e)[ non-testamentary instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether 14 Himsagar Krishna Vs. Pr. CIT, Tirupati ITA No. 687/Hyd/2024 vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property:] [Inserted by Act 21 of 1929, Section 10.] Provided that the [State Government] [Substituted by A.O.1950, for \"Provincial Government\".] may, by order published in the [Official Gazette] [Substituted by A.O.1937, for \"Local Official Gazette\" .], exempt from the operation of this sub-section any leases executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rents reserved by which do not exceed fifty rupees. [(1-A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53-A of the Transfer of Property Act, 1882, shall be registered if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2001, and if such documents are not registered on or after such commencement then, they shall have no effect for the purposes of the said section 53-A.] [Inserted by Act 48 of 2001, Section 3 (w.e.f. 24.9.2001).] (emphasis supplied by us) 17. As the “agreement to purchase”, dated 18-04-2016 (supra) is an unregistered document, therefore, as observed by the Pr. CIT, and rightly so, the assessee cannot claim to have purchased the subject property i.e Villa No. 4 (supra) as required per the mandate of law. 18. Be that as it may, as the AO had failed to carry out necessary verifications, which he was required to make while framing the reassessment vide his order passed under Section 147 r.w.s. 144B of the Act, dated 22-03-2022, therefore, we are of a firm conviction that no infirmity emerges from the order of Pr. CIT, who in exercise of his revisionary jurisdiction under Section 263 of the Act had 15 Himsagar Krishna Vs. Pr. CIT, Tirupati ITA No. 687/Hyd/2024 rightly held the order so passed by the Assessing Officer as erroneous in so far it is prejudicial to the interest of the revenue,. 19. Accordingly, finding no reason to dislodge the well-reasoned order passed by the Pr. CIT under Section 263 of the Act, dated 25-03-2022, we herein approve the same. 20. Resultantly, the appeal filed by the assessee, being devoid and bereft of any substance, is dismissed. 12 मार्च, 2025 को खुली अदालत में सुनाया गया आदेश। Order pronounced in the Open Court on 12th March, 2025. Sd/- Sd/- (मंजूनाथ जी) (MANJUNATHA G.) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- Sd/- (रवीश सूद) (RAVISH SOOD) न्यायिक सदस्य/JUDICIAL MEMBER Sd/- Hyderabad, dated 12.03.2025. **TYNM/sps 16 Himsagar Krishna Vs. Pr. CIT, Tirupati ITA No. 687/Hyd/2024 आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : Himasagar Krishna Muthappagari, Tirupati, 19-7-125/A, Flat No.202, Krishna Apartment, Gopalraju Colony, R.C. Road, Tirupati - 517501, Andhra Pradesh. 2. रधजस्व/ The Revenue : Income Tax Officer, Ward-2(3), Tirupati 3. The Principal Commissioner of Income Tax, Tirupati 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Hyderabad By Order "