Emu Farms and Real Estates Private Limited, Hyderabad, Hyderabad V. ITO, Ward-2(1), Hyderabad, Hyderabad

ITA 1715/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2380 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 29-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 21-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N RAVI BABU
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Recovery proceedings; Rectification of order; Revised return; Bonafide mistake
• Section: 143(3); 139(5); 154

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. 1715/HYD/2016 ASSESSMENT YEAR: 2010-11 EMU FARMS AND REAL ESTATES PVT. LTD., HYDERABAD. PAN AABCE 4976F VS. INCOME TAX OFFICER, WARD 2(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V. RAGHAVENDRA RAO REVENUE BY : SHRI. N. RAVI BABU DATE OF HEARING : 07-06-2017 DATE OF PRONOUNCEMENT : 21-06-2017 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) 5, HYD ERABAD, DATED 30/09/2016 FOR AY 2010-11. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY ENGAGED IN THE BUSINESS OF REAL ESTATE AND EMU FARM S FILED ITS RETURN OF INCOME FOR THE AY 2010-11 ON 09/10/2011 DECLARIN G TOTAL INCOME OF RS. 3,99,530/-, WHICH WAS PROCESSED U/S 143(1) OF T HE ACT BY RAISING A DEMAND OF RS. 1,28,945/-. ON RECEIPT OF THE DEMAN D, ASSESSEE FILED AN APPLICATION BEFORE THE CPC WITH A REQUEST THAT T HE INCOME FROM HOUSE PROPERTY WAS WRONGLY MENTIONED TWICE AGAINST THE COLUMNS INCOME FROM HOUSE PROPERTY AS WELL AS AGAINST IN COME FROM OTHER SOURCES AND THEREBY RETURNED THE SAME INCOME TWICE IN THE ORIGINAL RETURN OF INCOME FILED. THE CPC FORWARDED THE APPLI CATION TO ITO, 2 ITA NO. 1715/H/16 EMU FARMS AND REAL ESTATES PVT. LTD. WARD 2(1), HYDERABAD. THE ASSESSEE FILED AN APPLI CATION BEFORE THE AO FOR RECTIFICATION OF THE SAID MISTAKE U/S 154, W HEN THE BANK ACCOUNT WAS ATTACHED FOR RECOVERY OF TAX DEMAND, WI TH THE PRAYER THAT THERE WAS A MISTAKE IN FILLING UP THE RENTAL INCOME TWICE IN THE RETURN OF INCOME. HOWEVER, AO REJECTED THE APPLICATION OF THE ASSESSEE FOR RECTIFICATION OF MISTAKE U/S 154 BY OBSERVING THAT THE PROCESS WAS COMPLETED U/S 143(1) BASED ON THE RETURN OF INCOME FILED BY THE ASSESSEE AND IF THE ASSESSEE NOTICED ANY MISTAKE WH ILE COMPUTING THE INCOME IN THE RETURN OF INCOME, THE ASSESSEE OU GHT TO HAVE FILED REVISED RETURN OF INCOME U/S 139(5) OF THE ACT. THE AO, THEREFORE, CONCLUDED THAT UNDER THE GIVEN CIRCUMSTANCES, IT CA NNOT BE SAID THAT THERE IS ANY MISTAKE IN THE ORDER U/S 143(1) OF THE ACT. 3. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERR ED AN APPEAL BEFORE THE CIT. THE ASSESSEE COULD NOT APPEAR BEFOR E THE CIT(A) AND DUE TO NON-APPEARANCE, THE CIT(A) DISMISSED THE APP EAL OF THE ASSESSEE. HOWEVER, THE CIT(A) OBSERVED THAT EVEN O N MERITS, THE CONTENTION MADE BY THE ASSESSEE THAT DUE TO INADVER TENT MISTAKE IN SHOWING THE AMOUNT OF RS. 2,40,000/- AS INCOME FROM OTHER SOURCES IS ALSO RECTIFIABLE MISTAKE U/S 154 IS NOT ACCEPTABLE AS THE INCOME RETURN CANNOT BE ALTERED BY WAY OF APPLICATION U/S 154 UNL ESS THERE IS AN ARITHMETICAL ERROR. 4. AGGRIEVED WITH THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 5 , HYDERABAD [CIT(A)] HAS ERRED ON FACTS AND IN LAW IN DISMISSING THE APPEAL. 2. LEARNED CIT(A) IS NOT JUSTIFIED IN MAKING NON-AP PEARANCE OF THE APPELLANT A GROUND FOR DISMISSING THE APPEAL EV EN THOUGH PERSONAL APPEARANCE WAS NOT ESSENTIAL AS ALL THE RE LEVANT FACTS ARE ON RECORD. 3. LEARNED CIT (A) & ASSESSING OFFICER HAVE ERRED I N HOLDING THAT BECAUSE A REVISED RETURN WAS NOT FILED ASSESSE E IS 3 ITA NO. 1715/H/16 EMU FARMS AND REAL ESTATES PVT. LTD. DISENTITLED TO APPLY FOR RECTIFICATION OF INTIMATIO N ON IX]. 143(1) ISSUED BY CENTRAL PROCESSING CENTRE IN WHICH A MIST AKE OCCURRED ON ACCOUNT OF THE MISTAKE IN THE RETURN FI LED BY THE ASSESSEE. 4. THEY FAILED TO APPRECIATE THAT FOR RECTIFICATION U/S. 154, A PERIOD OF FOUR YEARS IS AVAILABLE UNLIKE FOR A REVI SION OF A RETURN. THE ASSESSEE CANNOT LEGALLY BE COMPELLED TO CHOOSE A PARTICULAR REMEDY IN PREFERENCE TO ANOTHER. 5. LOWER AUTHORITIES ARE NOT AT ALL JUSTIFIED IN HO LDING THAT THE MISTAKE APPARENT FROM RECORD IS CONFINED TO ARITHME TIC ERROR AND NOT TO A SLIP IN THE RETURN MADE BY OVERSIGHT. 6. THE ORDERS OF THE CIT(A) & A.O ARE IN VIOLATION OF THE BOARD CIRCULAR NO. 14(XL)-35 DATED 11.04.1955. 7. LEARNED CIT(A) AND A.O HAVE FAILED TO REALIZE TH AT THEIR ORDERS RESULT IN UNJUST ENRICHMENT OF REVENUE WHICH IS AGAINST THE VERY PRINCIPLES OF TAXATION BY THE GOVERNMENT. 8. HAVING RECTIFIED ONE MISTAKE IN NOT GRANTING CRE DIT ORIGINALLY FOR TDS AS PER FORM 26AS, THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN REJECTING TO RECTIFY THE OTHER MISTAKE . THIS STAND IS ILLOGICAL, INCONSISTENT AND CONTRADICTORY. 9. FOR THESE AND ANY OTHER GROUNDS THAT MAY BE RAIS ED AT/BEFORE THE DATE OF HEARING IT IS PRAYED THAT THE AMOUNT RS . 2,40,0000/- SHOWN UNDER THE HEAD 'OTHER SOURCES' BY OVERSIGHT B E DELETED AND INTIMATION U/S 143(1) BE RECTIFIED. 4.1 ASSESSEE ALSO FILED THE FOLLOWING ADDITIONAL GR OUNDS: 1. INCOME TAX OFFICER (ITO) HAS ERRED IN LAW IN HOL DING THAT BALANCE SHEET AND PROFIT & LOSS AI C. CANNOT BE EXA MINED FOR CONSIDERING THE APPLICATION OF THE ASSESSEE U/S 154 FOR RECTIFICATION. 2. ITO OUGHT TO HAVE APPRECIATED THAT BALANCE SHEET & PROFIT & LOSS A/C FROM PART OF THE RETURN, IN ACCORDANCE WIT H THE STATUTORY PROCEDURE FOR FILING OF RETURN ONLINE. TH EY SHOULD HAVE BEEN CONSIDERED BY THE ITO, IN DECIDING ON THE APPL ICATION FOR RECTIFICATION. 3. LEARNED CIT(A) HAS ERRED IN LAW IN HOLDING THAT AN ADMISSION OF HIGHER INCOME COULD BE WITHDRAWN ONLY BY FILING A REVISED RETURN AND NOT BY FILING AN APPLICATION II], 154 O F THE LT. ACT. 4 ITA NO. 1715/H/16 EMU FARMS AND REAL ESTATES PVT. LTD. 4. LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT HE HAS POWER TO CONSIDER A CLAIM EVEN THOUGH A REVISED RETUM HAS NO T BEEN FILED. 5. LEARNED CIT(A) HAS POWER AND DUTY TO ASCERTAIN T HE CORRECT TAX LIABILITY AS HE HAS PLENARY POWERS TO DECIDE AN Y ISSUE IN APPEAL. 4.2 AS THE ADDITIONAL GROUNDS ON THE ABOVE ISSUES A RE LEGAL IN NATURE AND DO NOT REQUIRE ANY FRESH FACTS OR ANY IN VESTIGATION FOR CONSIDERING THEM AS WELL AS THE ADDITIONAL GROUNDS GO TO THE ROOT OF THE MATTER, WE ADMIT THE SAME. 5. LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESS EE FILED RETURN OF INCOME AS PER THE PROFIT & LOSS AND BALANCE SHEE T, WHICH WERE DULY AUDITED. WHILE FILING RETURN OF INCOME, BY OVERSIGH T, RENTAL INCOME WAS FILLED IN THE RESPECTIVE COLUMN I.E. INCOME FROM H OUSE PROPERTY AND ALSO IN THE COLUMN INCOME FROM OTHER SOURCES. HE SUBMITTED THAT THIS MISTAKE WAS BROUGHT TO THE NOTICE OF THE ASSESSEE O NLY WHEN THE ASSESSEE HAS RECEIVED 143(1) ASSESSMENT ORDER FROM CPC. HE SUBMITTED THAT THE ASSESSEE WAS IN BONAFIDE VIEW TH AT THIS MISTAKE CAN BE RECTIFIED BY WRITING TO CPC AND ACCORDINGLY THE CPC WAS CONTACTED AND, IN TURN, THE CPC HAS DIRECTED THE AS SESSEE TO CONTACT AO FOR BONAFIDE MISTAKE COMMITTED BY ASSESSEE. ACCO RDINGLY, THE ASSESSEE HAS FILED RECTIFICATION APPLICATION BEFORE THE AO U/S 154 ALONG WITH AUDITED FINANCIAL STATEMENT AND THE AO H AS NOT ENTERTAINED PLEA OF THE ASSESSEE AND REJECTED THE RECTIFICATION APPLICATION. HE SUBMITTED THAT ASSESSEE HAS COMMITTED GENUINE MISTA KE, WHICH COULD HAVE BEEN RECTIFIED BY THE AO. HE BROUGHT TO OUR NO TICE THE RETURN OF INCOME AND BALANCE SHEET. 6. THE LD. DR, ON THE OTHER HAND, SUBMITTED THAT TH E ASSESSEE COULD HAVE ACTED WELL IN ADVANCE WHEN IT RECEIVED 1 43(1) ASSESSMENT ORDER AND RECTIFIED THE MISTAKE BY FILING REVISED R ETURN OF INCOME, BUT, ASSESSEE CHOSE TO REACT ONLY WHEN ITS BANK ACCOUNTS WERE ATTACHED. 5 ITA NO. 1715/H/16 EMU FARMS AND REAL ESTATES PVT. LTD. HE SUBMITTED THAT IN THIS CASE, THIS MISTAKE CANNOT BE RECTIFIED U/S 154. 7. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. THE AR OF THE ASSESSEE BROUGHT TO OUR NO TICE THE BALANCE SHEET AND P&L A/C, WHICH WERE DULY AUDITED AND ALSO RETURN OF INCOME FILED BY THE ASSESSEE. IT IS CLEAR THAT IN THE RETU RN OF INCOME FILED, THE ASSESSEE FILLED THE RENTAL INCOME TWICE, IN THE RES PECTIVE COLUMN INCOME FROM HOUSE PROPERTY AND ALSO IN THE COLUMN INCOME FROM OTHER SOURCES BY WHICH, THE TOTAL INCOME OF THE AS SESSEE WAS DOUBLED. SINCE THE ASSESSMENT WAS COMPLETED U/S 143 (1) BY CPC, THE ASSESSEE APPROACHED CPC FOR THE RECTIFICATION O F THE ABOVE MISTAKE IN STEAD OF FILING REVISED RETURN OF INCOME , WHICH COULD HAVE SOLVED THE PROBLEM OF THE ASSESSEE. HOWEVER, BY THE TIME THE ASSESSEE REALIZED THIS MISTAKE, THE TIME FOR FILING OF REVISED RETURN INCOME WAS OVER. SINCE THE CPC DIRECTED THE ASSESS EE TO APPROACH RESPECTIVE AO, THE ASSESSEE FILED AN APPLICATION U/ S 154 BEFORE AO TO RECTIFY THE MISTAKE COMMITTED BY IT IN THE RETURN O F INCOME. IN OUR CONSIDERED VIEW, THE AO SHOULD HAVE ENTERTAINED THE RECTIFICATION APPLICATION OF THE ASSESSEE SINCE THE DETAILS IN T HE BALANCE SHEET AND P&L A/C FILED BY THE ASSESSEE ARE NOT MATCHING WITH THE DETAILS FILLED IN THE RETURN OF INCOME. THEREFORE, THE MIST AKE COMMITTED BY THE ASSESSEE IS VERY MUCH APPARENT ON RECORD, IF THE AO TOOK LITTLE TIME TO COMPARE THE BALANCE SHEET AND RETURN OF INCOME. IT IS THE DUTY OF THE AO TO ASSESS THE CORRECT INCOME OF THE ASSESSEE AND COLLECT THE DUE TAX. IT IS A SETTLED LAW THAT REVENUE CANNOT COLLEC T ANY TAX ON ANY FICTITIOUS INCOME. IN THE GIVEN CASE, ASSESSEE HAS BY OVERSIGHT FILLED THE RENTAL INCOME TWICE IN THE RESPECTIVE COLUMN I NCOME FROM HOUSE PROPERTY AND ALSO IN THE COLUMN INCOME FROM OTHER SOURCES IN THE RETURN OF INCOME, DUE TO WHICH, THE INCOME WAS DOUB LED, WHICH IS FICTITIOUS INCOME. AS THE MISTAKE WAS APPARENT ON R ECORD, WE FIND IT APPROPRIATE TO REMAND BACK THE FILE TO THE AO TO RE CTIFY THE ABOVE 6 ITA NO. 1715/H/16 EMU FARMS AND REAL ESTATES PVT. LTD. MISTAKE AND COMPLETE THE ASSESSMENT U/S 143(3) IN A CCORDANCE WITH LAW. WE ORDER ACCORDINGLY. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 21 ST JUNE, 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RA HMAN) JUDICIAL MEMBER AC COUNTANT MEMBER HYDERABAD, DATED: 21 ST JUNE, 2017. KV COPY TO:- 1) EMU FARMS AND REAL ESTATES PVT. LTD., SURVEY NO. 157, MALAXMI COURT YARD,GOLKONDA POST, KHAJAGUDA VILLAGE, HY DERABAD - 500008 2) ITO, WARD 2(1), SIGNATURE TOWERS, KONDAPUR, OP P. BOTANICAL GARDENS, HYDERABAD 500 084. 3) CIT(A) - 5, HYDERABAD 4) PR. CIT - 5, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE