ACIT, Central Circle-3(1), Hyd, Hyderabad V. Musaddilal Constructions & Real Estate Pvt.Ltd., Hyd, Hyderabad

ITA 1250/HYD/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5849 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 26-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Assessee Lawyers: P MURALI MOHANA RAO
• Keywords: Business income; Search and seizure
• Section: 143(3); 260A; 263; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1250/HYD/2016 ASSESSMENT YEAR: 2010-11 ASST. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE 3(1), HYDERABAD. VS. M/S MUSADDILAL CONSTRUCTION & REAL ESTATE (P) LTD., HYDERABAD. PAN AACCM 4185H (APPELLANT) (RESPONDENT) REVENUE BY : SMT. U. MINI CHANDRAN ASSESSEE BY : SHRI P. MURALI MOHANA RAO DATE OF HEARING 28-12-2016 DATE OF PRONOUNCEMENT 30-12-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-11, HYDERABAD, DATED 14/06/2016 FOR AY 20 10-11 WHEREIN THE REVENUE HAS RAISED THE FOLLOWING GROUND OF APPE AL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE CIT(A) WAS CORRECT IN SETTING ASIDE THE ORDER PASSE D BY THE AO U/S 143(3) RWS 263 AND TREATING IT AS INFRUCTUOUS, WHEN REVENUE HAS PREFERRED AN APPEAL U/S 260A BEFORE THE HONBLE HIGH COURT AGAINST THE ORDER OF THE HONBLE ITAT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT CONSEQUEN T UPON SEARCH AND SEIZURE OPERATION CONDUCTED IN THE MBS JEWELLER S GROUP CERTAIN INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE WA S FOUND AND SEIZED BASING ON WHICH A NOTICE U/S 153C WAS ISSUED . IN RESPONSE TO THE NOTICE ISSUED, THE ASSESSEE FILED ITS RETURN OF INCOME ON 14/10/2011 DECLARING INCOME AT RS.9,29,960/- AND TH E ASSESSMENT U/S 2 ITA NO. 1250/H/16 MUSADDILAL CONSTRUCTIONS & REAL ESTATE (P) LTD. 143(3) R.W.S. 153C WAS COMPLETED ON 27/12/2011 BY A CCEPTING THE INCOME RETURNED. 2.1 SUBSEQUENTLY, THE PRINCIPAL COMMISSIONER OF IN COME TAX(CENTRAL), HYDERABAD PASSED AN ORDER U/S 263 OF THE ACT SETTING ASIDE THE ASSESSMENT WITH DIRECTIONS TO VERIFY WHET HER TREATMENT OF RENTAL INCOME BY THE ASSESSEE AS 'BUSINESS INCOME' SHOULD HAVE BEEN CONSIDERED AS RENTAL INCOME. CONSEQUENT TO THE ORDE R U/S 263, THE DCIT, CENTRAL CIRCLE-3(1), HYDERABAD, COMPLETED THE ASSESSMENT U/S 143(3) R.W.S. 263 OF THE ACT ON 26/02/2015, AFTER D UE PROCESS TREATING THE RENTAL INCOME AS 'INCOME FROM HOUSE PROPERTY' A ND DETERMINED THE INCOME FROM HOUSE PROPERTY AT RS.16,24,832/-. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A) AND BROUGHT TO THE NOTICE OF THE CIT(A) THAT THE AS SESSEE PREFERRED APPEAL BEFORE THE ITAT AGAINST THE ORDER PASSED U/S 263 AND THE ITAT QUASHED THE SAID ORDER VIDE ITS ORDER DATED 17 /07/2015 IN ITA NO. 1088/HYD/2014. HE THEREFORE, SUBMITTED THAT THE CONSEQUENTIAL ORDER PASSED BY THE AO U/S 143(3) RWS 263 OF THE AC T BECOMES NULL AND VOID. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) OBSERVED THAT IN VIEW OF THE FACT THAT THE ASSESSME NT IS CANCELLED ON THE THRESHOLD ISSUE OF VALIDITY OF THE REVISION ORD ER U/S 263, THE CONSEQUENTIAL ORDER OF ASSESSMENT BECOMES BAD IN LA W. HE, THEREFORE, CONCLUDED THAT THERE IS NO OCCASION OR N ECESSITY TO ADJUDICATE THE ORDER ON FACTUAL ISSUES. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 6. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. AS THE ITAT QUASHED THE ORDER OF PRINCIP AL CIT PASSED U/S 3 ITA NO. 1250/H/16 MUSADDILAL CONSTRUCTIONS & REAL ESTATE (P) LTD. 263 OF THE ACT, THE CONSEQUENTIAL ORDER PASSED BY T HE AO U/S 143(3) R.W.S. 263 OF THE ACT BECOMES NON-EXISTENT. THEREFO RE, WE DO NOT FIND ANY INFIRMITY IN THE ACTION OF THE CIT(A) IN QUASHI NG THE CONSEQUENTIAL ORDER PASSED BY THE AO U/S 143(3) RWS 263 OF THE AC T. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) AND THE GROUND RA ISED BY THE REVENUE ON THIS ISSUE IS DISMISSED. 7. AS PER THE GROUND RAISED, THE REVENUE PREFERRED APPEAL BEFORE THE HONBLE HIGH COURT, IN SUCH CASE, THE RESULT/OU TCOME OF THE APPEAL IN FUTURE MAY BE ADOPTED BY APPLYING PRINCIPLE OF M ERGER. AT THIS POINT OF TIME, THE ORDER OF THE COORDINATE BENCH WILL BIN D ON THE AO. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 30 TH DECEMBER, 2016. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 30 TH DECEMBER, 2016 KV COPY TO:- 1) ACIT, CENTRAL CIRCLE 3(1), 7 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 500 004 2) M/S MUSADDILAL CONSTRUCTIONS & REAL ESTATES PVT. LTD., 1 ST FLOOR, ELITE PLAZA, PUNJAGUTTA, HYDERABAD. 3 CIT(A) 11, HYD. 4) PR. CIT (CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE 4 ITA NO. 1250/H/16 MUSADDILAL CONSTRUCTIONS & REAL ESTATE (P) LTD. S.NO. DESCRIPTION DATE INTLS 1. 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