Income Tax Officer, Ward-15(2), Hyderabad V. K.Venkat Reddy , Hyderabad

ITA 1764/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0872 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2007-2008
• Appeal Filed On: 05-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL KUMAR PANDEY
• Assessee Lawyers: SURYA RAVI
• Keywords: Business income; Cost of acquisition
• Section: 271(1)(c); 292BB; 274; 73; 13; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE S MT. P. MADHAVI DEVI , JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER IT A NO. 1764 /H/20 1 9 AND CO NO. 01/HYD/2020 ASSESSMENT YEAR: 2 0 07 - 08 INCOME - TAX OFFICER , WARD 15 (2), HYDERABAD. VS. K. VENKAT REDDY, HYDERABAD. PAN ALPPK1480N (APPELLANT) (RESPONDENT) REVENUE BY: SHRI SUNIL KUMAR PANDEY ASSESSEE BY: S HRI SURYA RAVI DATE OF HEARING: 06 /0 5 /2021 DATE OF PRONOUNCEMENT: 13 /0 7 /2021 O R D E R PER L.P. SAHU, A.M. : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST CIT(A) - 7 , HYDERABAD S ORDER DATED 26 / 09 /201 9 FOR AY 20 07 - 89 INVOLVING PROCEEDINGS U/S 271(1)(C) OF THE INCOME - TAX ACT, 1961; IN SHORT THE ACT ON THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE HON BLE CIT(A) IS ERRONEOUS BOTH ON FACTS AND AS WELL AS ON LAW. I TA NO. 1764 /HYD /20 1 9 AND CO NO. 01/H/2020 K. VENKAT REDDY, HYD. : - 2 - : 2. THE HONBLE CIT(A) ERRED IN DELETING THE PENALTY DESPITE THE FACT THAT THE QUANTUM ADDITION LEADING TO THE LEVY OF PENALTY WAS SUSTAINED AT 1 ST APPEAL STAGE AND IS ALIVE. 3. THE DECISION OF THE CIT(A) IS NOT ACCEPTABLE IN VIEW OF SECTION 292BB WHEREIN THE ASSESSEE HAS NOT RAISED ANY OBJECTION DURING THE COURSE OF PENALTY PROCEEDINGS AND CLAIM LATER THAT THE NOTICE WAS IMPROPER AND DEFECTIVE. 4. THE APPELLANT CRAVES TO ADD, AMEND, ALTER ANY OF THE GROUNDS OF APPEAL DURING THE PROCEEDINGS WITH PRIOR PERMISSION OF THE HONBLE ITAT. 2. THE ASSESSEE ALSO FILED CO AGAINST THE VERY SAME ORDER OF THE CIT(A). 3. BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE, SRI K.VENKAT REDDY ALONG WITH 3 OTHE RS ENTERED INTO AN AGREEMENT OF SALE FOR PURCHASE OF 6 ACRES OF LAND, MADE INTO 104 PLOTS, SITUATED IN SY.NO.151(PART)&169(PART) OF BODUPPAL VILLAGE, WITH ONE SRI GULABCHAND FOR RS.2.15 CRORES PER ACRE AND PAID RS.6,45,00,000/ - AND GOT REGISTERED 3 ACRES O F LAND ON 16 - 112006. ON 27 - 12 - 2006 A FURTHER SUM OF RS.L.00 CRORE WAS ALSO PAID. THUS, EACH PURCHASER HAS PAID RS 1,86,25,000/ - AS HIS SHARE. ON 27 - 12 - 2006, A MEMORANDUM OF UNDERSTANDING WAS ENTERED INTO BETWEEN THE ASSESSEE AND TWO OTHERS ON ONE SIDE AND SRI T. JANGAIAH YADAV, ONE OF THE PURCHASERS, ON THE OTHER, ACCORDING TO WHICH THE ASSESSEE AND TWO OTHERS WILL TRANSFER THE LAND THAT IS REGISTERED AND WILL BE REGISTERED TO I TA NO. 1764 /HYD /20 1 9 AND CO NO. 01/H/2020 K. VENKAT REDDY, HYD. : - 3 - : SRI . J ANGAIAH YADAV AND IN RETU RN SRI J ANGAIAH YADAV WILL PAY TO THEM A SUM OF RS.5,58,75,000/ - TOWARDS PURCHASE COST MET BY THEM AND RS.2,62,OO,000/ - TOWARDS GOODWILL. THUS, THE ASSESSEE RECEIVED RS.87,50,000/ - OVER AND ABOVE THE PURCHASE COST. THE ASSESSEE DID NOT FILE HIS RETURN OFF ERING THESE AMOUNTS. 3.1 A NOTICE U/S.148 WAS ISSUED ON 18 - 4 - 2013 WHICH WAS SERVED BY AFFIXTURE. THERE WAS NO RESPONSE FROM THE ASSESSEE. EVEN FOR THE SUBSEQUENT NOTICES, WHICH WERE ALSO SERVED BY AFFIXTURE, THE ASSESSEE DID NOT RESPOND. THEREFORE, A SHO W CAUSE NOTICE WAS ISSUED ON 6 - 2 - 2015 REQUIRING THE ASSESSEE TO FILE HIS OBJECTIONS, IF ANY, FOR THE PROPOSED ASSESSMENT, BY 20 - 2 - 2015. THIS WAS ALSO SERVED BY AFFIXTURE. THERE IS NO RESPONSE. IN THE ABSENCE OF ANY CO - OPERATION FROM THE ASSESSEE, THE ASSES SMENT WAS COMPLETED UNDER SECTION 144 R.W.S. 147 ON 30 - 3 - 2015, BASING ON THE MATERIAL AVAILABLE ON RECORD, DETERMINING THE INCOME AT RS.2,73,75,000/ - (WHICH INCLUDED INVESTMENT IN PURCHASE OF LANDED PROPERTY OF RS. 1,86,25,000/ - AND GOOD WILL AMOUNT OF RS. 87,50,000 - , WHICH IS TREATED AS BUSINESS INCOME. 3.2 THEREAFTER, AO ISSUED A PENALTY NOTICE UNDER SECTION 271 (1), AGAINST WHICH THERE WAS NO RESPONSE FROM THE ASSESSEE AND ACCORDINGLY, THE AO INFERRED THAT THE ASSESSEE HAD NO EXPLANATION TO OFFER. HE, THEREFORE LEVIED A MINIMUM PENALTY OF RS. 91,58,325/ - U/S 271(1)(C) ON THE I TA NO. 1764 /HYD /20 1 9 AND CO NO. 01/H/2020 K. VENKAT REDDY, HYD. : - 4 - : GROUND THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME AND WAS CAUGHT WITHIN THE PROVISIONS OF SECTION 271(1)(C) AND EXPLANATION 3 TO THAT SECTION. 4. AGGRIEVED BY THE PENALTY LEVIED BY THE AO , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AND CONTENDED THAT THE ASSESSING OFFICER WAS NOT SPECIFIC ABOUT WHETHER THE ASSESSING OFFICER INITIATED THE PROCEEDINGS FOR LEVY OF PENALTY FOR CONCEALMENT OF INCOME / FURNIS HING INACCURATE PARTICULARS OF INCOME. THE AR OF THE ASSESSEE FURNISHED A COPY OF THE SHOW - CAUSE NOTICE DATED 30 - 03 - 2015 ISSUED BY THE ASSESSING OFFICER BEFORE LEVY OF PENALTY DRAWING TO ATTENTION ABOUT THE NON - STRIKING OF THE RELEVANT PARAS. 5. THE CIT( A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, REPRODUCED THE NOTICE ISSUED BY THE AO U /S 274 RWS 271 DATED 30/03/2015 AT PAGE NO. 6 OF HIS ORDER AND RELYING ON THE DECISIONS OF ITAT AS WELL AS DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE O F MANJUNATHA COTTON AND GINNING FACTORY, 359 ITR 565, DIRECTED THE AO TO DELETE THE PENALTY LEVIED ON THE GROUND THAT THE NOTICE DOES NOT SPECIFY FOR WHAT OFF ENCE THE PROCEEDINGS WERE INITIATED. 6. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE THE ITAT. I TA NO. 1764 /HYD /20 1 9 AND CO NO. 01/H/2020 K. VENKAT REDDY, HYD. : - 5 - : 7. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE 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. SSAS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC) WHEREIN THE APEX COURT UPHELD THE DECISION OF THE HONBLE HIGH COURT, IN WHICH, THE HONBLE HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL AND DISMISSED THE APPEAL OF THE REVENUE, WHO CAME IN AP PEAL AGAINST THE ORDER OF THE TRIBUNAL. THE TRIBUNAL RELYING ON A DECISION OF KARNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY, [2013] 359 ITR 565/210 ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT NOTICE ISSUED BY ASSESSING OF FICER U/S 274 READ WITH SECTION 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. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. 9.1 IN THE CASE UNDER CONSIDERATION, ON PERUSAL OF THE SHOW CAUSE NOTICES ISSUED BY THE ASSESSING OFFICER U/S 274 R.W.S. 271 OF THE IT ACT, 1961, DATED 30/03/2015, IT IS SEEN THAT THE ASSESSING OFFICER DID NOT MENTION WHETHER THE NOTICE IS ISSUED FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, AS PER THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF SSAS EMERALD MEADOWS, THE NOTICE ISSUED BY THE ASSESSING OFFICER IS NOT VALID AND CONSEQUEN TLY, THE ORDER I TA NO. 1764 /HYD /20 1 9 AND CO NO. 01/H/2020 K. VENKAT REDDY, HYD. : - 6 - : PASSED U/S 271(1)(C) IS ALSO NOT VALID. HENCE, WE UPHOLD THE ORDER OF THE CIT(A) IN DIRECTING THE AO TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 10. AS THE CO FILED BY THE AS SESSEE IS IN SUPPORT OF ORDER OF CIT(A), WHICH IS UPHELD BY US BY DISMISSING THE APPEAL OF THE REVENUE, THE CO BECOMES INFRUCTUOUS AND THE SAME IS DISMISSED AS INFRUCTUOUS. 11. IN THE RESULT APPEAL OF THE REVENUE AND THE CO OF THE ASSESSEE ARE DISMISSED IN ABOVE TERMS. PRONOUNCED IN THE OPEN COURT ON 13 TH JU LY , 2021 . SD/ - SD/ - ( P. MADHAVI DEVI ) (L . P . SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDE RABAD, DATED : 13 TH JU LY , 20 2 1 . KV I TA NO. 1764 /HYD /20 1 9 AND CO NO. 01/H/2020 K. VENKAT REDDY, HYD. : - 7 - : C OPY TO : 1 IT O, WARD 15 (2), 5 TH FLOOR, D BLOCK, IT TOWERS, AC GUARDS, MASAB TANK, HYDERABAD . 2 SHRI K. VENKAT REDDY, D.NO. 2 - 4 - 123/38/3, UPPAL, HYDERABAD . 3 C I T(A) 7 , HYDERABAD. 4 PR. CIT - 7 , HYDERABAD. 5 ITAT, DR, HYDERABAD. 6 GUARD FILE.