M/s. Incredible India Projects Private Limited V. The ACIT Central Circle 2(4) Hyderabad

ITTA/22/2025

AI Insights

The case involves M/s. Incredible India Projects Private Limited, which faced penalties and legal challenges following a search and seizure operation under Section 132 of the Income Tax Act, 1961. The company had reported substantial cash payments and later disclosed additional income. Disputes arose over the legality of notices issued under Sections 274 and 270AAB for penalty proceedings. The Income Tax Appellate Tribunal initially remanded the matter back to the CIT(A) for reconsideration of these legal issues. However, the High Court found that the Tribunal should have directly addressed these issues and decided the appeals in favor of the appellant, setting aside the Tribunal's order of remand.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 756133 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 06-02-2025
• Assessment Year: misc
• Other Referred Cases: Commissioner of Customers, Kandlo vs. M/s Lucky Steel Industries, O. Anusandhan vs. Commissioner of Income Tax, Indian Bank v. K. S. Govindan Nair, Gowrammani v. V. V Patil (D), Mohd. Ayyub and Sons Agency's case
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K MAMATA
• Assessee Lawyers: SANDEEP GOEL
• Keywords: Income Tax; Legal Issue; Penalty; Remand; Search and seizure
• Section: 143(3); 132; 260A; 270A; 271AAB

Judgement Text

"134471 IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA INCOME TAX TRIBUNAL APPEAL Nos. 21 AND 22 OF 2025 INCOME TAX TRIBUNAL APPEAL NO:21 OF 2025 lncome Tax Tribunal Appeal Under Section 260A of the lncome Tax Act,1g61 against the Order dated 14-11-2024 passed in ITA No.604/Hydl2022 for the Assessment Year 2017 -2018 on the file of the lncome Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad preferred against the Order dated 30-08-2022 passed in Appeal No.1044612016-17 on the file of the Commissioner of lncome Tax (Appeals) - 12, Hyderabad preferred against the Order dated 27-12-2019 passed in PAN.No AABC19355A on the file of the Assistant Commissioner of lncome Tax, Circle - 2(4), Hyderabad. Between: AND 1 M/s. lncredible lndia Projects Private Limited, 3-6-98, 2nd, 3rd and 4th Floor, Vasavi Towers, West lvlaredpally, Secunderabad-SOO 026 Represented by its Director, Mr. Nedun Gadi Praveen Kumar, ...Appellant The ACIT Central, Circle 2(4) Hyderabad, Aayakar Bhawan Opposite L B Stadium, Basheer Bagh ,Hyderabad , Telangana - 500 004. lncome Tax Appellate Tribunal Hyderabad, Devi Nagar Colony, Bansilalpet, Bhoiguda, Hyderabad, Secunderabad, Telangana. - ...Respondents 2 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to grant Stay of operation of the impugned order of the Tribunal in ITA No. 604 lHydlZ 22 dated 14-11-2024 for the assessment year 2017-18 and further proceedings pursuant to the impugned order pending disposal of the above ITTA. I THURSDAY, THE SIXTH DAY OF FEBRUARY TWO THOUSAND AND TWENTY FIVE lA NO: 1 OF 2025 INCOME TAX TRIBUNAL APPEAL NO: 22 OF 2025 lncome Tax Tribunal Appeal Under Section 2604 of the lncome Tax Act, i g61 against the Order dated 14-11-2024 passed in ITA No.605/Hydl2022 for the Assessment Year 2018-2019 on the file of the lncome Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad preferred against the Order dated 30-08-2022 passed in Appeal No 1061612017-18 on the file of the Commissioner of lncome Tax (Appeals) - 12. Hyderabad preferred against the Order dated 27-12-2019 passed in PAN.No: AABC193554 on the file of the Assistant Commissioner of lncome Tax, Circle - 2(4), Hyderabad. Between: M/s. lncredible lndia Projects Private Limited, 3-6-98, 2nd,3rd and 4th Floor, Vasavi Towers, West Maredpally, Secunderabad-SO0 026 Represented by its Director, Mr. Nedun Gadi Praveen Kumar. AND 1 The ACIT Central Circle 2(4) Hyderabad, Aayakar Bhawan Opposite L B Stadium. Basheer Bagh ,Hyderabad , Telanjana - 500 004. lncome Tax Appellate Tribunal Hyderabad, Devi Nagar Colony, Bansilalpet, Bhoiguda, Hyderabad, Secunderabad, Telangana. - ...Respondents lA NO: 2 OF 2025 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to grant Stay of operation of the impugned order of the Tribunal in lrA No. 6OSlHydt2O2Z dated 14-1 1-2024 for the assessment year 2018-19 and further proceedings pursuant to the impugned order pending disposal of the above ITTA. Counsel for the Appellant in both tTTAs : Sri Sandeep Goefrepresenting Ms. Shraddha Gupta Counsel for the Respondents in both ITTAs : Ms. K Mamata The Court delivered the following: Common Judgment :': 2 ...Appellant ,r) THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NAI DIKONDA ITTA Nos.21 AND 22 OF 2025 COMMONJUDGMENT (per Hon'ble Sri Juslice P.Sam Koshy) Heard Mr. Sandeep Goel, leamed counsel representing Ms. Shraddha Gupta, leamed counsel for the appellant and Ms. K.Mamata, leamed Senior Standing Counsel for the Income Tax Department for the respondent. Perused the record. 2. Upon hearing the learned counsel for the appellant as also the leamed Standing Counsel for Revenue, we find that the appellants have made out a case for admission on the following substantial question of law in both the appeals on of the facts and in the the case, the lncome Tax Appellate Tribunal was right in law in remanding the matter back to the file of Commissioner of lncome Tax Appeals to decide the purely legal issue even after admitting the additional ground as purely legal ground under Rule 27 itself? 3. The facts of the case, in brief, is that the appellant which is a private limited company engaged in the business of real estate was 'Whether circumstances 2 subjected to search and seizure under Section 132 of the Income 1'ax Act, 1961 (Ibr short 'the Act'). The appellant-assessee had proceedings. it ra'as reflected that cash payments to the tune of Rs.3,358,5 1.191/- and Rs.1,25,00,000/- were debited to the profit and loss account under the head \"development e):penses and site salaries'. I-ater on, the Department found that such expenses are Subsequentll,. the assessee disclosed the additional income admitting a total income of Rs.6,84,95,860/-. The case was taken up for scruliny and notice under Section l43tl.2) of the Act was issued and served on the assessee. Subsequently, penalty proceedings under Section 270,4 was initiated separately for the alleged rnisrepresenting of income and the order of penalty was passed on 30.03.2022. The appellant aggrieved by the penalty order prcferred an appeal before the Commissioner of Income Tax tAppeals) [fbr short 'the CIT(A)]' and challenged the same. In the course of challenge to the penalty proceedings it was also assailed that notice dated 31.12.2019 issued under Section I E I originally llled the retum of income on 01.012.2018 showing their income at Rs.2.0l ,44,670/-. However, during the search not allowablc rvithin the provisions of Section 40A (3) of the Act. I 4. The leamed Income Tax Appellate Tribunal, after considering the submissions of the Revenue, remanded the matter back to the CIT(A), by making the following observations: \"Having admitted the application filed by the assessee under Rule 27 of ffAT Rules, 1963, we find that the assessee has challenged the issue of legality of notice issued uls 274 r.w.s. 27ON271AAB for both the assessment years for the first time before the Tribunal and the facts with regard to said legal issue are not on record. Further, the assessee had also raised the above issue before the Ld. CIT(A) by way of written submission for both the assessment years and challenged the validity of order passed by the Assessing Officer, imposing penalty uls 27011271AA8 of the Act. Since the Ld. CIT(A) has not discussed the 3 (-) l 274 read with Section 270A of the Act for the assessment year 2017-18 was being vague and without specihc details being provided. However, the CIT(A) allowed the appeal of the assessee without dealing with the aspect whether the notice issued under Section 270A being vague or not, vide order dated 31.12.2019. Aggrieved by the said order of the CIT(A), the Revenue preferred two appeals before the Income Tax Appellate Tribunal in ITA Nos.604 and605 of2022. I v 4 issue or decided the issue raised by the assessee and further the assessee has raised the issue for the first time before the Tribunal, in our considered view, first appellate authority should get an opportunity to consider the legal issue raised by the assessee from his perspective and thus, we are of the considered view that, the issue needs to go back to the file of the Ld CIT(A) for considering the preliminary legal issue raised by the assessee on validity of penalty proceedings initiated on the basis of vague notice issued uis 274 r.w.s.270N271AAB of the Act. Thus, we set aside the orders passed by the Ld. CIT(A) for both the assessment years and restore the issue 1.o the file of the Ld CIT(A) and also direct the Ld. CIT(A) to decide the preliminary issue raised by the assessee by way of application under Rule 27 of ITAT Rules 1963 and also written submissions filed before the first appellate authority as reproduced in para 6.1 of the order of the Ld CIT(A). Ld. CIT(A) is also drrected to consider the issue on merits after deciding the preliminary legal issue raised by the assessee for both the assessment years\". 5. lt is this order which is under challenged by the assessee so far as the Tribunal having remanded the matter back to the CIT(A) 6. It is the contention of the leamed counsel for the appellant that the Appellate Tribunal since had the jurisdiction of entering into the lacts while deciding the appeal and the grounds and 5 .l facts being explicit before the Appellate Tribunal' should not have remanded the matter beck to the CIT(A) rather should have decided the matter on its own, including the question of the applicability of Rule 27 of the Income Tax (Appellate Tribunal) Rules' 1963 (for short 'the Rules'). 7 . Though the leamed counsel for the Revenue contended that no prejudice would be caused to the interest of the appellant and that these grounds which have been raised and left to be agitated and adjudicated upon would still be decided by the CIT (A) and either of the parties would still have the remedy of preferring appeal against such order' The impugned order does not warrant interference and prayed for rejection of the same' 8. Having considered the contentions put-forth on either side and on perusal of the record, what is reflected from the findings given by the Appellate Tribunal is that the Tribunal itself has reached to the conclusion that there does not seem to be any dispute so far as the legal issues raised before the CIT(A) are concemed. There is also no dispute so far as the assessee having raised the ground of applicability olRule 27 of the Rules' rl 6 of the appellant that they had, in fact, raised the ground of Rule 27 bclbre the Tribunal and which has been left undecided, assessee. that rather than again remitting the matter back to the CIT (A) for fresh adjudication of the matter and thereafter again facing another round ol- appeals by either of the parties, it would have been more appropriate if thc Tribunal itself would had decided the said issue rather than remitting the matter back to the Tribunal. 10. The view of the Court stands fortified in the teeth of the Appeal No(s).3237-3238 of 2019 in the case of Oommissioner of Customers, Kandlo vs. M/s Lucky Steel Industries wherein the Honb'le Supreme dealing with the powers of the Appellate l'ribunal has made the following observations: \"The Appellate Tribunal is a final faclfinding body and therefore, should have examined the facts as well as the legal position before pronouncing the final outcome\". The Tribunal also does not seem to be in quarrel to the contention though the CIl' (A) had decided the matter in favour of the 9. In the given factual matrix, we are the considered opinion judgment of the Hon'ble Supreme Court in a decision in Civil 7 ( l I case of ,srksra \"O' Anusandhan vs. Commissionet of Income Tax \"Admittedly, the Tribunal after being satisfied that the additional ground taken by the appellant before it to be a question of law and gdes to the root of the matter vide order dated May 5, 2009 (annexure 8) directed the learned Departmental representative to produce the records of search to examine as to whether a search warrant was issued in the name of the assessee or not and adjourned the case to May 6, 2009. At this stage, there is no reason as to why the Tribunal being the final fact finding authority could not have recorded its finding on the aforesaid vital jurisdictional issue when consciously the Tribunal called for the record of search. This action of the learned Tribunal, in our view, seems to be unjust. xxxxxxxx xxxxxxxx Law is well-settled that once the materials are available on record, the appellate court should have disposed of the case on the merits taking those materials into consideration and there is no need to direct remand. I 201 10 336 ITR I 12 (Orissa) 1 1. Similar view has been taken by the Orissa High Court in the and otherst wherein in paragraph 2l held as under: The apex court in lndian Bank v. K. S. Govindan Nair [2004] 13 SCC 697, held that once the materials are available on record, it was for the High Court to have decided the matter on the basis of that materials after appreciation of evidence, and there was no need for directing remand. The apex court in Gowrammanni v. V. V Patil (D) [200S] (ll) OLR SC 465, held that the appellate court should have itself disposed of the case on the merits taking into consideration the evidence adduced before the trial court as on the question of identity of disputed land the parties have adduced evidence, the court commissioner was appointed and submitted a report, and he was examined as a witness and duly cross- examined and thereupon the suit was disposecl of by the trial court. The Allahabad High Court in Mohd. Ayyub and Sons Agency's case [1992] 197 ITR 637 (All), held that the power of the Tribunal to permit any party to the appeal to raise the question of jurisdiction, which goes to the root of the matter and does not involve further investigation into facts, cannot be disputed on the plain readrng of rule 11 of the lncome-tax (Appellate Tribunal) Rules, 1963. lndeed, on such a plea being taken, the Tribunal is under a statutory obligation not only to entertain the plea but also to decide the same after providing sufficient opportunity of being heard to the other side\". 12. Taking into consideration the aforesaid legal precedents on the power vested with the fact-finding Appellate Tribunal, we are r-I l 9 Appellate Tribunal in the instant case does not seem to be proper, said matter on merits in accordance with law. Hence, the order of remand by the impugned order deserves to be and is, accordingly, set aside and the matter stands remitted back to the Income Tax Appellate Tribunal for the Tribunal itself to decide the grounds on which the matter has been remanded by the Tribunal to the CIT(A). In addition, the Tribunal would also decide the other grounds Consequently, miscellaneous petitions pending, if any, shall stand closed. Sd/. K. SRINIVASA RAO JOINT REGISTRAR //TRUE COPY// 1. The lncome Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad 2. The Commissioner of lncome Tax (Appeals) - 12, Hyderabad 3. The Assistant Commissioner of lncome Tax, Circle - 2(4), Hyderabad. 4. One CC to Ms. Shraddha Gupta, Advocate [OPUC] 5. One CC to Ms. K Mamata, Advocate [OPUC] 6. Two CD Copies ADK/gh To, w of the considered opinion that the view taken by the Income Tax legal and justified. The Tribunal should have itself decided the raised by the Revenue in its appeal. 13. The appeals are allowed as stated above. There shall be no order as to costs. SECIION OFFICER I I : I , I i 1 , I I I I I I ! ! I I I ! I i I i i I i DATED:0610212025 JUDGMENT ITTA.Nos.21 AND 22 of 2025 ALLOWING THE BOTH ITTAs WITHOUT COSTS ,) ?1 f 2u5 a,t:sPA-tc . * I HIGH COURT @ W I t i "