K. Bala Vishnu Raju, Hyd, Hyderabad V. DCIT, Circle 6(1), Hyderabad, Hyderabad

ITA 1037/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6172 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 18-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: S RAMA RAO
• Keywords: Capital asset; Cost of acquisition
• Section: 143(3); 148; 54; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1037/HYD/2016 ASSESSMENT YEAR: 2004-05 K. BALA VISHNU RAJU, HYDERABAD. PAN AFBPK 4177L VS. DY. COMMISSIONER OF INCOME- TAX, CIRCLE 6(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : SMT. SUMAN MALIK DATE OF HEARING : 30-01-2017 DATE OF PRONOUNCEMENT : 03-02-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS IS AN APPEAL OF THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - 9, HYDE RABAD, DATED 29/02/2016, FOR AY 2004-05, CONFIRMING THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT A SSESSEE FILED HIS RETURN OF INCOME FOR THE AY 2004-05 ON 18.10.2004, ADMITTING INCOME OF RS. 27,43,680/- AND AGRICULTURAL INCOME OF RS. 75,000/- . ASSESSMENT U/S 143(3) R.W.S 147 WAS COMPLETED ON 20.12.2010. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, ISSUE OF LONG TERM CAPITAL GAINS WERE EXAMINED AND ASSESSEE'S CLAIM OF DEDUCTION U/S 54 W AS REJECTED. 2.1 ASSESSEE SOLD PROPERTY AT 8-2-293/82/A/139, RO AD NO. 25, JUBILEE HILLS, HYDERABAD, FOR A CONSIDERATION OF RS . 50,00,000/- ON 04.02.2004, WHICH WAS PURCHASED ON 29.12.1993 FOR R S. 5,28,000/-. 2 ITA NO. 1037/H/16 SRI K. BALA VISHNU RAJU AFTER DEDUCTING THE INDEXED COST OF ACQUISITION OF RS. 10,01,902/-, THE CAPITAL GAIN WORKED OUT TO RS. 39,98,098/-. ASSESSE E CLAIMED DEDUCTION U/S 54 ON INVESTMENT OF RS. 75,55,000/- I N A PROPERTY AT PLOT NO. 854, JUBILEE HILLS, HYDERABAD. THE RESULTA NT TAXABLE LONG TERM CAPITAL GAIN ADMITTED WAS NIL. THE RETURN WAS PROCESSED U/S 143(1). 2.2 THE AO OBSERVED THAT ASSESSEE FAILED TO QUALIF Y FOR DEDUCTION U/S 54, ON BOTH THE COUNTS OF SALE AND PURCHASE: I) SALE: DEDUCTION U/S 54 IS AVAILABLE ON TRANSFER OF CAPITAL ASSET THE INCOME OF WHICH IS CHARGEABLE UNDER THE HEAD 'INCOM E FROM HOUSE PROPERTY. BUT NEITHER IN EARLIER YEARS NOR FOR TH E PERIOD IN THE CURRENT YEAR TILL THE DATE OF SALE, ASSESSEE DID NOT OFFER ANY INCOME FROM THE SAID PROPERTY. II) PURCHASE: NEW PROPERTY WHICH WAS PURCHASED FOR CLAIMING DEDUCTION U/S 54 IS NOT A 'RESIDENTIAL HOUSE'. THE AO, THEREFORE, ISSUED NOTICE U/S 148 ON 29.03. 2010, REOPENING THE CASE U/S 147. REASONS FOR REOPENING WERE DULY C OMMUNICATED TO ASSESSEE VIDE LETTER DT. 24.02.2010. IN ASSESSMENT ORDER THE FOLLOWING FINDINGS WERE MADE: I) REGARDING PROPERTY SOLD: AS PER THE SALE-CUM-GPA REGD VIDE DOCUMENT NO. 420/ 04, THE PROPERTY SOLD CONSISTS OF LAND OF 980 SQ.YDS WITH B UILT UP AREA OF 350 SQ FT, COMPRISING OF 3 ROOMS OF 10 FT X 10 FT. THE STRUCTURE DOES NOT HAVE BARE MINIMUM AMENITIES WHICH CAN MAKE IT A LIVEABLE UNIT. II) REGARDING PROPERTY PURCHASED : AS PER DOCUMENT NO. 1119/2004, DT. 25.03.2004, PROP ERTY PURCHASED WAS A VACANT PLOT OF LAND WITH INSIGNIFIC ANT STRUCTURE OF 100 SQ. FT. ( ONE ROOM WITH DIMENSIONS OF 10 X 1 0 FT). THIS INSIGNIFICANT STRUCTURE CANNOT BE TREATED AS A 'RES IDENTIAL HOUSE' FOR THE PURPOSE OF DEDUCTION U/S 54. 3 ITA NO. 1037/H/16 SRI K. BALA VISHNU RAJU IN VIEW OF THE ABOVE, ASSESSING OFFICER REJECTED C LAIM OF DEDUCTION U/S 54. 2.3 ON APPEAL BEFORE THE CIT(A), THE CIT(A) CONFIRM ED THE ACTION OF THE AO. 3. THEREAFTER, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) ON THE GROUND THAT THE ASSESSEE CLAIMED DEDUCTION U /S 54 BY FURNISHING INACCURATE PARTICULARS AND ACCORDINGLY I SSUED NOTICE ON 13/05/2013. THE ASSESSEE FILED HIS REPLY ON 27/09/2 013 WHEREIN HE SUBMITTED AS UNDER: A. ASSESSEE COMPUTED THE QUANTUM OF CAPITAL GAIN C ORRECTLY. AMOUNT INVESTED IN NEW PROPERTY EXCEEDS NOT ONLY TH E AMOUNT OF CAPITAL GAIN BUT EVEN THE SALE CONSIDERATION. B. RESIDENTIAL PROPERTY EXISTING ON THE DATE OF SAL E COULD NOT BE SHOWN IN SALE DEED OF PROPERTY SOLD BECAUSE BUILDIN G CONSTRUCTION PERMISSIONS WERE NOT BEING ISSUED BY M CH FOR PLOTS IN THE LAYOUT UNTIL 2007 BECAUSE IT WAS IN THE HATC HED ZONE (GREEN BELT). C. ASSESSEE HAS CLAIMED DEDUCTION WHICH WAS NOT ACC EPTABLE TO THE DEPARTMENT, AND THIS BEING DIFFERENCE OF OPINIO N, CANNOT LEAD TO THE ASSERTION THAT ASSESSEE HAS INTENTION TO CON CEAL INCOME. 4. THE AO REJECTING THE ABOVE SUBMISSIONS OF THE AS SESSEE, LEVIED A MINIMUM PENALTY U/S 271(1)(C) OF THE ACT OF RS. 8 ,80,000/-. 5. AGGRIEVED BY THE SAID PENALTY ORDER, THE ASSESSE E PREFERRED AN APPEAL BEFORE THE CIT(A), WHO UPHELD THE ORDER OF A O. 6. AGGRIEVED WITH THE ABOVE ORDER OF CIT(A), THE AS SESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF A PPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT THE APPELLANT FURNISHED INACCURATE PAR TICULARS OF INCOME AND THAT THERE IS CONCEALMENT OF INCOME WITH IN THE MEANING OF SEC.271(1)(C) OF THE I.T. ACT. 4 ITA NO. 1037/H/16 SRI K. BALA VISHNU RAJU 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING IMPOSITION OF PENALTY U/S 271(1)(C) OF T HE LT. ACT OF RS.8,80,000/-. 6.1 THE ASSESSEE FILED A PETITION REQUESTING FOR A DMISSION OF THE ADDITIONAL GROUND, WHICH IS AS UNDER: 1. THE INITIATION OF PROCEEDINGS U/S 271(1)(C) OF THE INCOME- TAX ACT, IS NOT VALID AS THE AO DID NOT STRIKE OFF THE INAPPROPRIATE PORTION OF THE NOTICE. THE AO OUGHT T O HAVE STRUCK OFF THE INAPPROPRIATE PORTION AND INDICATED TO THE APPELLANT THE APPLICABLE PORTION IN THE NOTICE. 2. THE NOTICE IS ISSUED AFTER COMPLETION OF THE ASS ESSMENT PROCEEDINGS AND THE ASSESSMENT YEAR MENTIONED IN TH E NOTICE IS 2008-09 AND, THEREFORE THE NOTICE IS INVALID 7. AS THE SAID ADDITIONAL GROUNDS ARE LEGAL GROUNDS , WHEREIN, THE FACTS ARE ON RECORD AND FACTS DO NOT REQUIRE FRESH INVESTIGATION, FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO., LIMITED VS. CIT 229 ITR 383 (SC), WE ADMIT THE SAID ADDITIONAL GROUND OF ASSESSEE. 8. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS BY ISSUE OF A NOTICE U/S 274 R.W.S. 271(1)(C) ON 21.12.2010. HE SUBMITTED THAT W HILE ISSUING THE SAID NOTICE, THE ASSESSING OFFICER DID NOT MENTION WHETHER THE NOTICE IS ISSUED FOR CONCEALMENT OF INCOME OR FOR FURNISHI NG OF INACCURATE PARTICULARS OF INCOME AND THE ASSESSMENT YEAR MENTI ONED AS 2008-09 AND NOT 2004-05. THEREFORE, THE NOTICE IS NOT VALID LY ISSUED. CONSEQUENTLY, THE ORDER PASSED U/S 271(1)(C) ALSO I S NOT VALID. FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC). 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 5 ITA NO. 1037/H/16 SRI K. BALA VISHNU RAJU 10. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL FACTS ON RECORD. THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SS AS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC) WHEREIN THE APEX COURT UPHELD THE DECISION OF THE HONBLE HIGH COURT, IN W HICH, THE HONBLE HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL AND DISMISSED THE APPEAL OF THE REVENUE, WHO CAME IN APPEAL AGAINST T HE ORDER OF THE TRIBUNAL. THE TRIBUNAL RELYING ON A DECISION OF KA RNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACT ORY, [2013] 359 ITR 565/210 ALLOWED THE APPEAL OF THE ASSESSEE HOLD ING THAT NOTICE ISSUED BY ASSESSING OFFICER U/S 274 READ WITH SECTI ON 271(1)(C) WAS BAD IN LAW, AS IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) PENALTY PROCEEDINGS HAD BEEN INITIATED, I.E. WHETHE R FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF INCOME. 10.1 IN THE CASE UNDER CONSIDERATION, ON PERUSAL OF THE SHOW CAUSE NOTICES ISSUED BY THE ASSESSING OFFICER U/S 274 R.W .S. 271(1)(C) OF THE IT ACT, 1961, DATED 21/12/2010 IT IS SEEN THAT THE ASSESSING OFFICER DID NOT MENTION WHETHER THE NOTICE IS ISSUED FOR CO NCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND ALSO THE AY MENTIONED AS 2008-09 INSTEAD OF 2004-05. THE REFORE, AS PER THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF SSAS EMERALD MEADOWS, THE NOTICE ISSUED BY THE ASS ESSING OFFICER IS NOT VALID AND CONSEQUENTLY, THE ORDER PASSED U/S 271(1)(C) IS ALSO NOT VALID. HENCE, WE SET ASIDE THE ORDER OF THE CIT (A) AND QUASH THE ORDER PASSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 6 ITA NO. 1037/H/16 SRI K. BALA VISHNU RAJU 11. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 03 FEBRUARY, 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER AC COUNTANT MEMBER HYDERABAD, DATED: 3 RD FEBRUARY, 2017. KV COPY TO:- 1) SHRI K. BALA VISHNU RAJU, C/O S. RAMA RAO, FLAT NO. 102, SHRIYAS ELEGANCE, H. NO. 3-6-643, ST. NO. 9, H IMAYATNAGAR, HYDERABAD 500 029. 2) DCIT, CIRCLE 6(1), IT TOWERS, MASAB TANK, HYD . 3) CIT(A) - 9, HYDERABAD 4 PR. CIT - 6, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE S.NO. DESCRIPTION DATE INTLS DS1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./ P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER