Pathima Estates Ltd., Hyd, Hyderabad V. ACIT, Central Circle-1. Hyd, Hyderabad

ITA 1147/HYD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6661 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 07-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHAN KUMAR SINGHANIA
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Search and seizure; Additional evidence; Reassessment proceedings
• Section: 143(3); 153A; 80G; 32; 147; 132; 154

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. 1147/HYD/2015 ASSESSMENT YEAR: 2008-09 PRATHIMA ESTATES LTD., HYDERABAD PAN AABCP 2098P VS. ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 1, HYDERABAD. (ASSESSEE) (RESPONDENT) ASSESSEE BY : SHRI V. SIVA KUMAR REVENUE BY : SHRI MOHAN KUMAR SINGHANIA DATE OF HEARING 15-03-2016 DATE OF PRONOUNCEMENT 07-04-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) - X I, HYDERABAD, DATED 04/06/2015 FOR AY 2008-09. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED ITS ORIGINAL RETURN OF INCOME ON 30/09/2008 ADMITTING A N INCOME OF RS. 2,58,92,086/-. A SEARCH AND SEIZURE OPERATION U/S 1 32 WAS CONDUCTED IN THE GROUP OF M/S PRATHIMA EDUCATIONAL SOCIETY. T HE ASSESSEE IS ALSO ONE OF THE RELATED PERSONS WITH THE GROUP. SUB SEQUENT TO THE SEARCH, NOTICE U/S 153A WAS ISSUED AND IN RESPONSE TO THE SAME, THE ASSESSEE FILED ITS RETURN OF INCOME ON 04/11/2010 A DMITTING AN INCOME OF RS. 2,56,42,090/-.THE AO COMPLETED THE ASSESSMEN T IN PURSUANCE TO THE SAID RETURN OF INCOME. 2 ITA NO. 1147 /HYD/2015 PRATHIMA ESTATES LTD. 2.1 THE ASSESSING OFFICER NOTICED FROM THE COMPUTA TION OF INCOME FILED WITH THE RETURN U/S L53A THAT THE APPELLANT H AD CLAIMED DEDUCTION OF RS.3,00,000/- U/S 80GGB AND RS.2,50,000/- U/S 80 G(5) TOTALLING TO RS.5,50,000/- WHICH WAS NOT CLAIMED IN THE ORIGINAL RETURN. HE DID NOT ACCEPT THE REVISED COMPUTATION OF INCOME FILED WITH THE RETURN U/S L53A CLAIMING DEDUCTION U/S 80GGB AND 80G(5) BECAUS E IT WAS NOT CLAIMED IN THE ORIGINAL RETURN. THE ASSESSING OFFIC ER OPINED THAT THE PROCEEDINGS INITIATED U/S L53A WERE CONSEQUENT TO T HE SEARCH U/S 132 AND AS-A NATURAL COROLLARY ENTAILED FILING OF RETUR NS HAVING A BEARING ON THE FINDINGS OF SEARCH AND THE SECTION WAS NOT A TOOL TO REDUCE INCOME WHICH OTHERWISE HAD NOT BEEN DETECTED AS A R ESULT OF SEARCH. 3. ON AN APPEAL BEFORE THE CIT(A), DURING THE COURS E OF APPELLATE PROCEEDINGS, THE APPELLANT HAS SUBMITTED THAT FROM AY 2007-08 ONWARDS, THE RETURN FILING WAS MANDATED TO BE FILLE D IN AN ELECTRONIC FORM ONLY. IT WAS SUBMITTED THAT THE RETURN PREPARA TION REQUIRED SEPARATE SOFTWARE AND THE CONTENT OF THE RETURN AND E-MODE OF FILLING OF INCOME TAX RETURN WAS TECHNICAL AND CERTAINLY NO T A VERY EASY TASK EVEN FOR A PROFESSIONAL. IN ITS CASE ALSO, IT HAD D ULY FILLED THE COLUMNS WITH THE AMOUNTS OF DONATIONS IN THE E-RETURN BUT T HE SOFTWARE DID NOT CAPTURE THESE DONATIONS AT THE POINT OF THE FINAL C OMPUTATION OF INCOME AND TAX. IT WAS FURTHER SUBMITTED THAT THE A SSESSING OFFICER WITHOUT LOOKING INTO ALL THESE TECHNICAL ISSUES DIS ALLOWED THE CLAIM AND LEVIED THE TAX. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) OBSERVED THAT IN THE ORIGINAL RETURN OF INCOME FIL ED ON 30-9-2008, THE APPELLANT HAD SHOWN A TOTAL INCOME OF RS.2,58,92,08 6/-. HE HAD CLAIMED A DEDUCTION OF RS.3,00,000/-. THE RETURN WA S PROCESSED ON 25-7-2009 ON A TOTAL INCOME OF RS.2,61,92,090/- ONL Y, MEANING THEREBY HE WAS NOT ALLOWED ANY DEDUCTION FOR RS.3,0 0,000/-. HE NOTED THAT SUBSEQUENTLY, A SEARCH TOOK PLACE IN THE ASSES SEE GROUP OF CASES ON 10-9-2009 AND IN RESPONSE TO THE NOTICE U/ S 153A, THE 3 ITA NO. 1147 /HYD/2015 PRATHIMA ESTATES LTD. APPELLANT FILED ITS RETURN OF INCOME ADMITTING AN I NCOME OF RS.2,56,42,090/-. HE CLAIMED DEDUCTION UNDER CHAPTE R-VIA FOR RS.5.50 LAKHS (RS.3,00,000/- U/S 80GGB + RS.2,50,00 0/- U/S 80G). ONCE THE INCOME WAS DETERMINED AT RS.2,61,92,090/- U/S 143(1)(A) OF THE IT ACT, IT BECAME FINAL. IF THE APPELLANT HAD A NY GRIEVANCE AGAINST SUCH DETERMINATION, IT HAD THE RECOURSE TO FILE APP EAL OR SEEK RECTIFICATION UNDER THE PROVISIONS OF THE IT ACT. T HAT WAS NOT DONE. THE QUESTION THAT ARISES FOR CONSIDERATION IS WHETH ER SUCH DEDUCTION WHICH HAD NOT BEEN ALLOWED WHILE PROCESSING THE RET URN CAN BE ALLOWED IN THE RETURN FURNISHED IN RESPONSE TO THE NOTICE U/S 153A OF THE IT ACT. THE APPELLANT CANNOT USE THE SEARCH ASS ESSMENT AS A TOOL/OPPORTUNITY FOR GETTING THE BENEFIT WHICH WAS OTHERWISE NOT AVAILABLE TO IT UNDER THE PROVISIONS OF IT ACT. 4.1 THE CIT(A) OBSERVED THAT THE PURPOSE OF ISSUING NOTICE U/S 153A OF THE IT ACT AND MAKING ASSESSMENT UNDER THAT SECTION IS TO BRING TO TAX ADDITIONAL INCOME, IF ANY, COMING TO N OTICE AS A RESULT OF A SEARCH U/S 132 OF THE IT ACT. THUS, THE PROVISION I S FOR THE BENEFIT OF THE REVENUE, NOT FOR THAT OF THE ASSESSEE. IF THE A SSESSEE, HAVING GOT THE INTIMATION U/S143(1) FELT THAT THERE WAS A MIST AKE THEREIN, HE HAD THE OPPORTUNITY TO TAKE RECOURSE TO REMEDIAL ACTION AND CLAIM THAT DEDUCTION. HAVING FAILED TO AVAIL OF THAT OPPORTUNI TY, HE CANNOT USE THE OPPORTUNITY OF FURNISHING THE RETURN IN RESPONS E TO THE NOTICE U/S 153A OF THE IT ACT TO STAKE THAT CLAIM. THAT, OBVIO USLY, IS NOT THE INTENTION OF THE PARLIAMENT BEHIND ENACTING THE PRO VISION OF SECTION 153A OF THE IT ACT. THE PROVISION OF SECTION 147 OF THE IT ACT STANDS ON A SIMILAR FOOTING WHERE THE ASSESSEE IS REQUIRED TO FURNISH A RETURN IN A SITUATION WHERE THE ASSESSING OFFICER HAS REAS ON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMEN T. THE CIT(A) NOTED THAT THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SUN ENGG. WORKS PVT. LTD., 198 ITR 297 HELD THAT THE PR OVISION IS FOR THE BENEFIT T OF THE REVENUE AND THE ASSESSEE CANNOT US E IT FOR STAKING A CLAIM WHICH HE HAD FAILED TO DO IN THE ORIGINAL ASS ESSMENT PROCEEDINGS CANNOT BE PERMITTED TO BE AGITATED IN R EASSESSMENT 4 ITA NO. 1147 /HYD/2015 PRATHIMA ESTATES LTD. PROCEEDINGS UNLESS RELATABLE TO ITEM SOUGHT TO BE T AXED AS 'ESCAPED INCOME'. THEREFORE, IN REASSESSMENT PROCEEDINGS U/S 147, ASSESSEE CANNOT SEEK A REVIEW OF CONCLUDED ITEM, UNCONNECTED WITH ESCAPEMENT OF INCOME FOR PURPOSE OF COMPUTATION OF ESCAPED INCOME. FOLLOWING THE SAME REASONING, THE CIT(A) HELD THAT THE DEDUCTION CLAIMED U/S 8OGGB AND 8OG(5) IS NOT ALLOWABLE AND A CCORDINGLY THE ACTION OF THE ASSESSING OFFICER IS UPHELD. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE I S IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) IS AGAINST LAW, WEIGHT OF EVIDENCE AND PR OBABILITIES OF THE CASE. 2.THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) [ C.I.T (A)] ERRED IN DISMISSING THE APPEAL FILED BY THE ASSESSE E AND IN CONFIRMING THE ASSESSMENT MADE BY THE ASSESSING OFF ICER U/S.153A R.W.S 143(3) OF THE INCOME TAX ACT. 3. THE LEARNED C.I.T (A) ERRED IN HOLDING THAT THE 'DEDUCTION WHICH HAD NOT BEEN ALLOWED WHILE PROCESSING THE RET URN' CANNOT BE ALLOWED IN THE RETURN FURNISHED IN RESPONSE TO N OTICE U/S.153A OF THE I.T ACT, WITHOUT CONSIDERING THE FACTUAL AND LEGAL POSITION THAT NOT ONLY AN APPLICATION DATED 4-9-2009 FILED U NDER SEC.154 OF THE ACT WAS PENDING BEFORE THE A.O EVEN BEFORE T HE DATE OF SEARCH BUT ALSO THAT THE A.O HAD THE INHERENT POWER COUPLED WITH THE DUTY TO RECTIFY THE ERRORS THAT CREPT INTO THE EARLIER ORDER MADE U/S.143(1) WHILE COMPUTING TOTAL INCOME IN THE POST -SEARCH ASSESSMENT. 4. THE LEARNED C.I.T(A) OUGHT TO HAVE DIRECTED ALLO WANCE OF THE CLAIMS FOR DEDUCTION MADE BY THE ASSESSEE IN SUMS O F RS.3,00,000/- AND RS.2,50,000/- 6. BEFORE US, THE LD. AR OF THE ASSESSEE FILED PETI TION SEEKING ADMISSION OF ADDITIONAL EVIDENCE AND STATED THEREIN THAT THE ADDITIONAL EVIDENCES CONSTITUTE VITAL EVIDENCE TO S UPPORT THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80G AS A FACTUALLY C ORRECT CLAIM. THE DESCRIPTION OF THE ADDITIONAL EVIDENCES FILED ARE A S UNDER: 1. COPY OF THE LETTER DATED 16/03/2008 ISSUED BY S RI RAJA RADHA REDDY TO THE ASSESSEE ACKNOWLEDGING THE DONATION. 5 ITA NO. 1147 /HYD/2015 PRATHIMA ESTATES LTD. 2. COPY OF THE RECEIPT ISSUED BY NATYA TARANGINI ACKNOWLEDGING DONATION OF RS. 5,00,000 FROM THE AS SESSEE. 3. COPY OF THE ORDER DATED 07/06/2007 ISSUED U/S 8 0G(5)(VI) OF IT ACT BY THE DIT(E) NEW DELHI GRANTING APPROVAL T O NATYA TARANGINI. 7. SINCE THE SAID ADDITIONAL EVIDENCES ARE CRUCIAL IN DETERMINING THE CASE OF ASSESSEE, WE ADMIT THE SAME. 8. THE LD. AR OF THE ASSESSEE SUBMITTED THAT WHILE FILLING THE COLUMNS WITH THE AMOUNTS OF DONATIONS IN THE E-RETU RN, THE SOFTWARE DID NOT CAPTURE THESE DONATIONS AT THE POINT OF THE FINAL COMPUTATION OF INCOME AND TAX. HE, THEREFORE, SUBMITTED THAT TH E ASSESSEE CLAIMED THE DEDUCTION UNDER CHAPTER VIA FOR RS. 5.50 LAKH S (RS. 3,00,000 U/S 80GGB + RS. 2,50,000 U/S 80G) IN THE REVISED R ETURN OF INCOME FILED IN RESPONSE TO THE NOTICE U/S 153A OF THE ACT . HE SUBMITTED THAT THE ASSESSEE FILED AN APPLICATION DATED 04/09/2009 U/S 154, WHICH WAS PENDING BEFORE THE AO EVEN BEFORE THE DATE OF S EARCH (REFER PAGE 28 OF THE PAPER BOOK. HOWEVER, WITHOUT CONSIDE RING THE SAID APPLICATION AND WITHOUT LOOKING INTO THE TECHNICAL ISSUES THAT OCCURRED WHILE FILLING E-RETURN, THE AO DISALLOWED THE CLAIM AND LEVIED THE TAX, WHICH IS NOT PROPER AS PER LAW. THE AR RELIED ON TH E FOLLOWING DECISIONS IN SUPPORT OF ASSESSEES CASE: 1. MALPANI ESTATES V. ACIT, [2014] 44 TAXMANN.COM 242 (PUNE) 2. DCIT VS. EVERSMILE CONSTRUCTIONS CO. (P) LTD., [2013] 33 TAXMANN.COM 657 (MUM.) 9. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF REVENUE AUTHORITIES. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL FACTS ON RECORD AS WELL AS THE ORDERS OF R EVENUE AUTHORITIES. IT IS OBSERVED THAT THE COMPUTATION OF INCOME FILED WITH THE RETURN U/S 153A, THE ASSESSEE HAD CLAIMED DEDUCTION OF RS. 3,0 0,000/- U/S 80GGB AND RS. 2,50,000/- U/S 80G(5) TOTALING TO RS. 5,50,000/- WHICH WAS NOT CLAIMED IN THE ORIGINAL RETURN FOR THE REAS ON THAT THE SAID 6 ITA NO. 1147 /HYD/2015 PRATHIMA ESTATES LTD. DONATIONS WERE NOT CAPTURED BY THE SOFTWARE FOR CAL CULATION OF DEDUCTIONS WHILE FILLING THE E-RETURN. THE REVENUE AUTHORITIES DID NOT ACCEPT THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE SAME WAS NOT CLAIMED IN THE ORIGINAL RETURN OF INCOME. IT WAS B ROUGHT TO OUR KNOWLEDGE BY THE AR THAT ASSESSEE HAD FILED RECTIFI CATION PETITION U/S 154 BEFORE THE AO TO CLAIM THE CHAPTER VI DEDUCTION OF RS. 3,00,000/- RELATING TO 80GG DEDUCTION, WHICH WAS NOT DISPOSED OFF BY THE AO. THE ABOVE PETITION WAS FILED BEFORE THE INITIATION OF SEARCH & SEIZURE OPERATION. AS PER THE HONBLE RAJASTHAN HIGH COURT DECISION IN THE CASE OF JAI STEEL (INDIA), JODHPUR VS. ACIT, [2013] 219 TAXMAN 223 (RAJ), HELD THAT IT IS NOT OPEN FOR THE ASSESSEE TO SEEK DEDUCTION OR CLAIM EXPENDITURE WHICH HAS NOT BEEN CLAIMED IN ORI GINAL ASSESSMENT, WHERE SUCH ASSESSMENTS ALREADY STAND COMPLETED, ONL Y BECAUSE ASSESSMENT U/S 153A IN PURSUANCE OF SEARCH OR REQUI SITION IS REQUIRED TO BE MADE. IN THE PRESENT CASE, THE ASSESSEE HAD A LREADY CLAIMED THE DEDUCTION OF RS. 3,00,000/- BEFORE COMPLETION O F THE ASSESSMENT AND ALSO FILED RECTIFICATION PETITION BEFORE THE AO MUCH BEFORE INITIATION OF SEARCH AND SEIZURE OPERATION. IN OUR CONSIDERED VIEW, THE ASSESSEE IS ELIGIBLE TO CLAIM THE ABOVE DEDUCTION E VEN IN 153A ASSESSMENT EVEN THOUGH THE SAME WAS NOT CONSIDERED BY THE AO. SINCE THE ABOVE DEDUCTION WAS LEGITIMATELY CLAIMED BY THE ASSESSEE MUCH BEFORE INITIATION OF THE SEARCH AND SEIZURE OP ERATION, THE CLAIM OF RS. 3,00,000/- SHOULD BE ALLOWED AS DEDUCTION IN 153A ASSESSMENT ALSO. ACCORDINGLY, AO IS DIRECTED TO ALLOW THIS DED UCTION. WITH REGARD TO OTHER DEDUCTION OF RS. 2,50,000/- U/S 80G(5), TH E ASSESSEE HAS NOT CLAIMED BEFORE THE AO EVEN THOUGH IT IS THE ASSESSE ES CLAIM THAT THERE WAS SOME HITCH IN CLAIMING THE ABOVE DEDUCTIO N WHILE FILING THE RETURN OF INCOME AND ALSO ASSESSEE HAS VALID DOCUME NTS TO PROVE THAT THE DEDUCTION IS LEGITIMATE. SINCE, ASSESSEE FAILED TO CLAIM THIS DEDUCTION BEFORE COMPLETION OF THE REGULAR ASSESSME NT, ASSESSEE CANNOT CLAIM THE SAME IN ASSESSMENT PROCEEDINGS U/S 153A. ACCORDINGLY, THIS CLAIM OF ASSESSEE IS DISMISSED. 7 ITA NO. 1147 /HYD/2015 PRATHIMA ESTATES LTD. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 7 TH APRIL, 2016 SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 7 TH APRIL, 2016 KV COPY TO:- 1) M/S PRATHIMA ESTATES LTD., PLOT NO. 213, PRATHI MA ROAD NO.1, FILM NAGAR, JUBILEE HILLS, HYDERABAD. 2) ACIT, CIRCLE 1, IT TOWERS, AC GUARDS, HYDERABA D. 3 CIT(A) - XI, HYDERABAD 4) CIT (CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.