R. Venkataramaiah, Hyd, Hyderabad V. ACIT, Circle-6(1), Hyderabad, Hyderabad

ITA 1073/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6129 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 08-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Assessee Lawyers: D V ANJANEYULU; P PRAVALLIKA
• Keywords: Revised return
• Section: 143(3); 133A; 147; 148

Judgement Text

ITA NOS 1070 TO 1073 OF 2016 R VENKATARAMAIAH HYD ERABAD PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NOS.1070 TO 1073/HYD/2016 (ASSESSMENT YEARS: 2001-02 TO 204-05) SHRI R. VENKATARAMAIAH HYDERABAD PAN: ACKPR 1937 R VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 6(1), HYDERABAD FOR ASSESSEE : SHRI D.V. ANJANEYULU & MS. P. PRAVALLIKA FOR REVENUE : SMT. U. MINI CHANDRAN, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. ALL ARE ASSESSEES APPEALS FOR THE A.YS 2001-02 TO 2004-05. FOR ALL THE A.YS, THE ASSESSEE HAS RAISED T HE FOLLOWING CONCISE GROUND OF APPEAL: WHETHER, ON FACTS AND LAW, REOPENING THE ASSESSMENT IS VALID IN LAW INVOKING THE PROVISIONS U/S 147 READ WITH 150(1) RELYING ON HON'BLE INCOME TAX APPELLATE TRIBUNALS ORDER IN THE ASSESSEES CASE FOR THE A.Y 2006-07 IN ITA NO.390/HYD/10 DT. 8.10.2010 TO TAX ONLY 1/6 TH OF THE AMOUNT OF INTEREST FOR A.Y 2006-07, TANTAMOUNT TO FINDING OR DIRECTION WHERE NO RIGHT TO RECEIVE INCOME VESTS WITH ASSESSEE AND ALSO BARRED BY LIMITATION U/S 148 OF THE I.T. ACT. DATE OF HEARING : 09.02.2017 DATE OF PRONOUNCEMENT : 17.02.2017 ITA NOS 1070 TO 1073 OF 2016 R VENKATARAMAIAH HYD ERABAD PAGE 2 OF 7 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, ENGAGED IN THE BUSINESS OF EXECUTING CI VIL CONTRACTS, FILED HIS RETURN OF INCOME FOR THE A.Y 2001-02 DECLA RING TAXABLE INCOME OF RS.9,38,131 AND AGRICULTURAL INCOME OF RS .7,57,106. THERE WAS A SURVEY U/S 133A OF THE ACT ON THE ASSES SEES PREMISES ON 27.12.2001. CONSEQUENT TO THE SURVEY OP ERATION, THE ASSESSEE FILED A REVISED RETURN ON 3.5.2002 ADMITTI NG TOTAL INCOME AT RS.25,13,390 AND AGRICULTURAL INCOME AT RS.7,57, 106. THE ORIGINAL ASSESSMENT WAS COMPLETED ON 16.12.2003 U/S 143(3) DETERMINING THE TAXABLE INCOME AT RS.26,14,590 AND AGRICULTURAL INCOME AT RS.6,57,106. 3. SUBSEQUENTLY, THE ASSESSMENT FOR THE A.Y 2006-07 WAS COMPLETED U/S 143(3) ON 23.12.2008 WHEREIN AN ADDIT ION OF RS.25,69,962 WAS MADE ON ACCOUNT OF INTEREST RECEIV ED. THE ADDITION WAS SUSTAINED IN FIRST APPEAL, AGAINST WHI CH, THE ASSESSEE FILED AN APPEAL BEFORE THE ITAT. THE ITAT HYDERABAD, VIDE ITS ORDER IN ITA NO.390/HYD/2010 DATED 8.10.20 10, HELD THAT ONLY 1/6 TH OF THE AMOUNT OF INTEREST CREDITED IN THE P&L A/C WHICH PERTAINS TO THE RELEVANT A.Y BEFORE IT, IS TO BE TAX ED. IT WAS OBSERVED THAT THE BALANCE AMOUNT OF INTEREST PERTAI NING TO OTHER A.YS, CREDITED IN THE BOOKS OF ACCOUNT, CANNOT BE BR OUGHT TO TAX. BASING ON THE SAID FINDING OF THE TRIBUNAL, THE AO WAS OF THE OPINION THAT THE ASSESSMENTS FOR THE A.YS 2001-02 TO 2005-06 ARE TO BE REOPENED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 150(1) OF THE ACT. THEREFORE, THE NOTICES U/S 148 WERE ISS UED FOR ALL THE A.YS ON 25.03.2011. IN RESPONSE TO THE SAID NOTICES, THE ASSESSEE FILED A LETTER DATED 4.7.2011 CONTENDING THAT THE V ERY ISSUANCE OF NOTICE IS ILLEGAL SINCE THE INCOME TAX APPELLATE TR IBUNAL NEVER ITA NOS 1070 TO 1073 OF 2016 R VENKATARAMAIAH HYD ERABAD PAGE 3 OF 7 GAVE SUCH A FINDING TO ASSESS THE INTEREST IN THE E ARLIER YEARS. THE ASSESSEE ALSO CONTENDED THAT SINCE THE REOPENING IS SOUGHT TO BE MADE AFTER EXPIRY OF 4 YEARS, THE PRIMARY CONDITION S FOR ISSUANCE OF NOTICE U/S 148 I.E. FURNISHING OF INACCURATE PAR TICULARS OR UNDER STATEMENT OF INCOME DID NOT EXIST. THE ASSESS EE PLACED RELIANCE UPON THE VARIOUS CASE LAWS IN SUPPORT OF T HIS CONTENTION. HOWEVER, THE AO WAS NOT CONVINCED WITH THE ASSESSEE S CONTENTIONS AND OBSERVED THAT THE INCOME TAX APPELL ATE TRIBUNAL HAD OBSERVED THAT OUT OF THE TOTAL INTEREST OF RS.2 6,75,912, ONLY 1/6 TH IS TAXABLE IN THE A.Y 2006-07 AND THE BALANCE AMOUN T PERTAINS TO THE EARLIER YEARS. HE PROCEEDED TO COMP LETE THE ASSESSMENTS AND COMPLETED THE ASSESSMENTS BY BRINGI NG TO TAX THE 1/6 TH OF THE INTEREST RECEIVED IN THE RELEVANT A.Y. AGGRI EVED, THE ASSESSEE PREFERRED APPEALS BEFORE THE CIT (A), WHO CONFIRMED THE ORDERS OF THE AO AND THE ASSESSEE IS IN 2 ND APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE TRIBUNAL FOR THE A.Y 2006-07, HAS ONLY HELD THAT FOR THE RELEVANT A.Y, I.E. A.Y 2006-07, ONLY 1/6 TH OF THE INTEREST IS TAXABLE AND THAT THE TRIBUNAL NEVER DIRECTED THAT THE BALAN CE OF INTEREST SHOULD BE BROUGHT TO TAX IN THE OTHER A.YS. HE SUBM ITTED THAT EVEN IF IT IS TO BE CONSIDERED THAT THE TRIBUNAL HA S GIVEN SUCH A FINDING, HE SUBMITTED THAT THE TRIBUNAL DOES NOT HA VE THE POWER TO GIVE DIRECTIONS FOR ANY OTHER A.YS NOT BEFORE IT. IN SUPPORT OF THESE CONTENTIONS, THE LEARNED COUNSEL FOR THE ASSE SSEE HAS PLACED RELIANCE UPON THE FOLLOWING DECISIONS: I) ITAT HYDERABAD IN ITA NO.390/HYD/2010 FOR THE A.Y 2006-07 DATED 8.10.2010. ITA NOS 1070 TO 1073 OF 2016 R VENKATARAMAIAH HYD ERABAD PAGE 4 OF 7 II) ARBITRATION AWARD DATED 6.1.2009 III) HON'BLE SUPREME COURT IN THE CASE OF P.G. & W.SAWOO PVT. LTD AND ANOTHER VS. ACIT & OTHERS REPORTED IN (2016) 385 ITR 60 (S.C) IV) CIT KERALA VS.MANICK SONS REPORTED IN (1969) 74 ITR 1 V) EMGEEYAR PICTURES P LTD VS. DCIT REPORTED IN (2016) 179 TTJ (CHENNAI)(TM) 393 5. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE AO HAS RIGHTLY BROUGHT TO TAX 1/6 TH OF THE AMOUNT OF INTEREST IN EACH OF THE ASSESSMENT YEARS IN WHICH INTEREST HAS BEEN HEL D TO BE TAXABLE BY THE TRIBUNAL IN ITA NO.390/HYD/2010. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE TRIBUNAL FOR THE A.Y 200 6-07 IN ITA NO.390/HYD/2010 HAS HELD AS UNDER: IN THE FACTS OF THE CASE, WE ARE OF THE VIEW THA T THE AMOUNT OF INTEREST AS PER THE ACCOUNTING ENTRIES OF THE ASSESSEE WAS RIGHTLY TAXED BY THE DEPTT. HOWEVER, WE FIND THAT THE REVENUE COULD NOT CONTRADICT THE CASE OF THE ASSESSEE THAT THE AMOUNT OF INTEREST CREDITED IN THE BOOKS PERTAINS TO SIX YEARS AND THEREFORE, COULD NOT BE TAXED IN THE RELEVANT A.Y ALONE. WE FIND FORCE IN THIS ALTERNATIVE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT INTEREST AMOUNT PERTAINING TO THE RELEVANT A.Y ALONE COULD BE TAXED IN THIS YEAR. ACCORDINGLY, WE DIRECT THE AO TO TAX ONLY 1/6 TH OF THE AMOUNT OF INTEREST CREDITED IN THE PROFIT & LOSS ACCOUNT, WHICH PERTAINS TO THE RELEVANT A.Y UNDER APPEAL BEFORE US AND NOT TO TAX THE BALANCE ITA NOS 1070 TO 1073 OF 2016 R VENKATARAMAIAH HYD ERABAD PAGE 5 OF 7 AMOUNT OF INTEREST PERTAINING TO OTHER YEARS, CREDITED IN THE BOOKS OF ACCOUNT. 7. FROM A LITERAL READING OF THE ABOVE OBSERVATION O F THE ITAT, WE FIND THAT THE TRIBUNAL HAS HELD THAT THE E NTIRE INTEREST HAS NOT ACCRUED TO THE ASSESSEE IN A.Y 2006-07 BUT T HAT IT PERTAINS TO SIX YEARS AND THEREFORE, ONLY 1/6 TH OF THE AMOUNT CAN BE BROUGHT TO TAX IN THE RELEVANT A.Y. WE DO NOT FIN D ANY DIRECTION TO BRING THE BALANCE OF THE INTEREST RECEIVED TO TA X IN THE EARLIER A.YS. THEREFORE, THE AO INVOKING THE PROVISIONS OF S ECTION 150(1) AND REOPENING THE ASSESSMENTS U/S 147 OF THE ACT FO R THE A.YS BEFORE US IS NOT SUSTAINABLE. THE JUDGMENTS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUPPORTS THIS VIEW. IN THE CASE OF P.G. AND W.SAWOO PVT LTD (CITED SUPRA), THE HON'BLE SUPREME COURT HAS HELD THAT INCOME TO BE CHARGED TO TAX MUST ACCRUE OR ARISE AT ANY POINT OF TIME DURING THE PRE VIOUS YEAR AND IT CAN BE SAID TO HAVE ACCRUED OR ARISEN ONLY WHEN A RIGHT TO RECEIVE THE AMOUNT IN QUESTION IS VESTED IN THE ASS ESSEE. IT WAS HELD IN THAT CASE THAT NO SUCH RIGHT TO RECEIVE REN T ACCRUED TO THE ASSESSEE AT ANY POINT OF TIME DURING THE A.Y IN QUES TION, IN AS MUCH AS ENHANCEMENT OF RENT THOUGH WITH RETROSPECTI VE EFFECT, WAS MADE ONLY IN THE YEAR 1994. IT WAS HELD THAT NO TICE SEEKING TO REOPEN THE ASSESSMENT FOR THE A.Y 1989-1990 WAS WITH OUT JURISDICTION OR AUTHORITY OF LAW. 8. IN THE CASE OF CIT VS. MANICK SONS (CITED SUPRA) , THE HON'BLE SUPREME COURT HAS HELD THAT THE TRIBUNAL IN THE APPEAL FOR THE A.Y 1953-54 HAD NO JURISDICTION TO REOPEN TH E ASSESSMENT FOR THE YEAR 1952-53 AS THERE WAS NO SANCTION IN LA W TO ENFORCE THE UNDERTAKING GIVEN BY THE RESPONDENT TO MAKE A V OLUNTARY ITA NOS 1070 TO 1073 OF 2016 R VENKATARAMAIAH HYD ERABAD PAGE 6 OF 7 RETURN FOR THE YEAR 1952-53 WHEN ARGUING ITS APPEAL FOR THE YEAR 1953-54. IT WAS HELD THAT EVEN IF THE RESPONDENT H AD CARRIED OUT THAT UNDERTAKING, THE ASSESSMENT FOR THE YEAR 1952- 53 SHOULD NOT BE RE-OPENED OTHERWISE THAN IN THE MANNER PRESCRIBE D BY LAW. 9. IN THE CASE OF EMGEEYAR PICTURES PVT. LTD (CITED SUPRA), THE THIRD MEMBER OF THE TRIBUNAL AT CHENNAI HAS HEL D THAT WHEN THERE IS NO SPECIFIC FINDING OR DIRECTION IN THE OR DER OF THE TRIBUNAL FOR THE A.YS 2003-04 AND 2004-05 THAT THE IMPUGNED C APITAL GAIN IS ASSESSABLE TO TAX IN THE A.Y 2001-02, ASSESSMENT FOR THE SAID A.Y COULD NOT BE REOPENED ON THE BASIS OF THE ORDER OF THE TRIBUNAL, EVEN OTHERWISE THE REOPENING OF THE ASSES SMENT FOR THE A.Y 2001-02 BY ISSUANCE OF A NOTICE ON 10.06.2011 IS BAD IN LAW AS THE LIMITATION FOR ISSUE U/S 148 HAD EXPIRED IN THE YEAR 2008 WELL BEFORE THE TRIBUNAL HAD PASSED THE SAID ORDER IN THE YEAR. THUS, IT CAN BE SEEN THAT THE TRIBUNAL CANNOT GIVE A DIRECTION FOR THE A.YS NOT BEFORE IT AND EVEN IF IT IS SO GIVEN, T HAT CANNOT BE A REASON FOR REOPENING OF THE ASSESSMENT FOR THE OTHE R A.YS WITHOUT SATISFYING THE REQUIRED CONDITIONS U/S 148 OF THE A CT. FURTHER, IT IS ALSO SEEN THAT DUE DATE FOR ISSUANCE OF NOTICE U/S 148 HAD ALREADY EXPIRED FOR ALL THE A.YS BEFORE US, WELL BEFORE 31.0 3.2010, WHILE THE NOTICES ISSUED U/S 148 WERE DATED 25.03.2011. T HEREFORE, THE REOPENING OF THE ASSESSMENT IS BARRED BY LIMITATION AND IS THEREFORE, NOT SUSTAINABLE. IN VIEW OF THE SAME, WE ARE INCLINED TO ALLOW THE GROUND OF APPEAL RAISED BY THE ASSESSEE F OR ALL THE A.YS. ITA NOS 1070 TO 1073 OF 2016 R VENKATARAMAIAH HYD ERABAD PAGE 7 OF 7 10. IN THE RESULT, ASSESSEES APPEALS FOR ALL THE A .YS ARE ALLOWED AND THE ASSESSMENT ORDERS ARE SET ASIDE. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH FEBRUARY, 2017. SD/- SD/- (INTURI RAM A RAO) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 17 TH FEBRUARY, 2017. VINODAN/SPS COPY TO: 1 M/S. ANJANEYULU & CO. CAS, 30 BHAGYALAKSHMI NAGAR , GANDHINAGAR, HYDERABAD 500080 2 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 6(1), H YDERABAD 3 CIT (A)-9 HYDERABAD 4 PR. CIT 6 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER