Jyothi Kotha, Hyderabad V. Asst.Commissioner of Income Tax, Circle-15(1), Hyderabad

ITA 1867/Hyd/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1529 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-11-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 15-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Keywords: Period of limitation; Reassessment proceedings
• Section: 143(3); 147

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.1867/HYD/2017 ASSESSMENT YEAR: 2009 - 2010 SMT. JYOTHI KOTHA, PLOT NO.42, ELECTRONIC COMPLEX EXTENSION, KUSHAIGUDA, HYDERABAD. PAN: AFNPK 3926 K VS. ACIT, CIRCLE - 15(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI K.C. DEVDAS REVENUE BY: SRI NILANJAN DEY DATE OF HEARING: 05.11.2018 DATE OF PRONOUNCEMENT: 28 .11.2018 ORDER PER SMT. P. MADHAVI DEVI, J.M.: THIS IS ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2009 - 10 AGAINST THE ORDER OF THE CIT(A) - 7, HYDERABAD DATED 24.10.2017, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LD. CIT(A) - 7, HYDERABAD OUGHT TO HAVE CLEARLY HELD THAT THE ENTIRE REASSESSMENT PROCEEDINGS ARE WITHOUT JURISDICTION, BAD IN LAW AND INVALID AND THEREFORE ERRED IN HOLDING THAT THE REASSESSMENT PROCEEDINGS WERE VALID. 2. THE LD. CIT(A) FAILED TO NOT E THAT THE EARLIER ASSESSMENT WAS COMPLETED U/S 143(3) ON 30.11.2011 AND THERE WAS NO OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS AND THEREFORE OUGHT TO HAVE CLEARLY HELD THAT HE ENTIRE REASSESSMENT PROCEEDINGS ARE WITHOU T JURISDICTION, BAD IN LAW AND INVALID. 3. THE LD. CIT(A) FAILED TO NOTE THAT IN AN APPEAL FLED FOR THE A.Y. 2009 - 10 NO DIRECTION COULD BE GIVE N TO RE - OPEN THE ASSESSMENT FOR A.Y. 2007 - 08 AND THAT THE DIRECTION GIVEN 2 WAS NOT NECESSARY FOR THE DISPOSAL OF T HE APPEAL AND THEREFORE CIT(A) ERRED IN GIVING A DIRECTION TO REOPEN THE ASSESSMENT FOR 2007 - 08 U/S 150(1) OF THE ACT. 4. THE CIT(A) FAILED TO NOTE THAT UNDER THE PROVISIONS OF SECTION 150(2) OF THE IT ACT, THE ASSESSMENT FOR 2007 - 08 COULD NOT BE RE - OPENED AS ON THE DATE OF PASSING THE APPELLATE ORDER ON 24.10.2017 THE PERIOD OF LIMITATION TO REOPEN THE ASSESSMENT FOR A.Y. 20 07 - 08 HAD RUN OUT OR WAS BEYOND THE PERIOD OF LIMITATION. 2. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE DOES NOT WISH TO PRESS THE GROUNDS NO.1 AND 2. THEY ARE ACCORDINGLY REJECTED AS NOT PRESSED. 3 . AS REGARDS GROUNDS NO. 3 AND 4, LEARNED COUNSEL FOR THE ASSESSEE, SRI K.C. DEVDAS, SUBMITTED THAT THE ASSESSEE ALONG WITH TWO OTHERS I.E., HER HUSBAND AND SON, BEING THE LAND OWNERS, ENTERED INTO A DEVELOPMENT AGREEMENT WITH M/S. JMR PROMOTERS AND BUILDERS ON 12.03.2007 AND POSSESSION WAS ALSO GIVEN TO THE BUILDER ON THE SAID DATE . SUBSEQUENTLY, VIDE THE REGISTERED DEVELOPMENT AGREEMENT - CUM - GENERAL POWER OF ATTORNEY , DATED 17.04.2008, THE DEVELOPMENT RIGHTS WERE ALLOCATED AND TAKING THE SAME INTO CONSIDERAT ION , THE A.O HAS HELD THAT THE CAPITAL GAINS HAS ARISEN TO THE ASSESSEE DURING THE ASSESSMENT YEAR 2009 - 10 AND BROUGHT IT TO TAX. ON APPEAL, THE CIT(A) FOLLOWED THE ORDER OF THE ITAT IN THE CASE OF THE ASSESSEES HUSBAND , SRI Y. MOHAN RAO , AND HELD THAT T HE CAPITAL GAINS IS NOT TAXABLE IN THE ASSESSMENT YEAR 2009 - 10. HE FURTHER HELD THAT THE CAPITAL GAINS IS LIABLE TO BE TAXED IN THE A.Y. 2007 - 08 AND DIRECTED THE A.O. TO RE - OPEN THE ASSESSMENT FOR THE ASSESSMENT YEAR 2007 - 08 TO BRING THE SAID CAPITAL GAIN S TO TAX. AGAINST THIS FINDING OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US BY RAISING THE GROUNDS NO.3 AND 4. 4 . ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE ONLY QUESTION BEFORE THE CIT(A) WAS WHETHER THE CAPITAL GAINS WAS TAXABLE IN TH E A.Y. 2009 - 10 AND WHETHER THE DIRECTION GIVEN BY THE CIT(A) TO THE 3 A.O TO REOPEN THE ASSESSMENT FOR THE A.Y. 2007 - 08 , WAS A NECESSARY DIRECTION FOR DISPOSAL OF THE APPEAL BEFORE HIM . ACCORDINGLY TO HIM , THE PROVISIONS OF SECTION 150(1) OF THE ACT ARE NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US. IN SUPPORT OF TH IS CONTENTION, HE PLACED RELIANCE ON THE DECISION S OF THE HONBLE SUPREME COURT IN THE CASE S OF ITO VS. MURLIDHAR BHAGWAN DAS (52 ITR 335) (SC) ; RA JINDER NATH VS. CIT (120 ITR 014)(SC) ; AND N.K.T. SIVALINGAM CHETTIYAR VS. CIT (66 ITR 586)(SC). 5. WITHOUT PREJUDICE TO THE ABOVE ARGUMENTS, LEARNED COUNSEL FOR THE ASSESSEE ALSO ARGUED THAT EVEN UNDER THE PROVISIONS OF SECTION 150(2) OF THE ACT, THE TIME LIMIT FOR PASSING AN ORDER U/S 150( 1) HAD LAPSED IN THIS CASE AND THEREFORE, THE CIT(A) COULD NOT HAVE GIVEN SUCH DIRECTIONS. HE SUBMITTED THAT THE CIT(A) PASSED THE ORDER ON 24.10.2017 I.E., AFTER THE LAPSE OF 6 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AFTER WHICH PERIOD , A.O. C OULD NOT HAVE REOPENED THE ASSESSMENT U/S 147 OF THE ACT AND THEREFORE, THE DIRECTION OF THE CIT(A) IS INVALID AND UNSUSTAINABLE IN LAW. IN FAVOUR OF TH IS CONTENTION, LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE UPON THE DECISION OF THE HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF CIT VS. G. VISWANATHAM (172 ITR 401). 6 . LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE CIT(A) AND SUBMITTED THAT WHEN THE CIT(A) HAS GIVEN A FINDING THAT THE CAPITAL GAINS IS NOT TAX ABLE IN THE ASSESSMENT YEAR 2009 - 10, THE FINDING AS TO THE YEAR IN WHICH IT IS TAXABLE IS ALSO NECESSARY FOR THE DISPOSAL OF THE APPEAL A ND ACCORDINGLY THE DIRECTION OF THE CIT(A) TO REOPEN THE ASSESSMENT FOR THE A.Y. 2007 - 08 IS A DIRECTION U/S 150(1) OF T HE ACT AND MAY NOT BE INTERFERED WITH. 7 . HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE HONBLE SUPREME COURT IN THE CASE OF ITO VS. MURLIDHAR 4 BHAGWAN DAS (SUPRA) HAS CONSIDERED THE MEANING OF THE FINDING IN PROVISO (II) TO SECTION 34(3) TO HOLD THAT FINDING CAN ONLY BE THAT WHICH IS NECESSARY FOR THE DISPOSAL OF AN APPEAL IN RESPECT OF A PARTICULAR YEAR AND THAT THE INCIDENTAL FINDING THAT THE INCOME BELONGED TO ANOTHER YEAR IS NOT A FINDING FOR THE PURPOSE OF SE COND PROVISO TO SECTION 34(3) OF 1922 ACT. THE HONBLE SUPREME COURT ALSO HELD THAT AAC MAY HOLD THAT THE INCOME SHOWN BY THE ASSESSEE IS NOT THE INCOME FOR THE RELEVANT YEAR AND THEREBY EXCLUDE THAT INCOME FROM THE ASSESSMENT OF THE YEAR UNDER APPEAL, B UT AAC HAS NO JURISDICTION TO MAKE THE ORDER OR ISSUE DIRECTION FOR THE ASSESSMENT YEAR NOT IN APPEAL BEFORE THEM. IN THE CASE OF RAJINDER NATH VS. CIT (SUPRA), THE HONBLE SUPREME COURT HAS FOLLOWED THE ABOVE DECISION. FURTHER, IN THE CASE OF N.K.T. SI VALINGAM CHETTIYAR VS. CIT (SUPRA), THE HONBLE SUPREME COURT HAS REAFFIRMED THE ABOVE DECISIONS. HONBLE BOMBAY HIGH COURT IN THE CASE OF KALA NIKETAN VS. UNION OF INDIA & ORS (148 DTR 121)(BOM) HAS CONSIDERED THE PROVISIONS OF SECTION 150(3) OF THE ACT AND HELD THAT THE OBSERVATION OF THE AUTHORITY THAT THE INCOME MAY HAVE ACCRUED DURING ANOTHER YEAR WAS NOT A FINDING REQUIRED FOR DISPOSAL OF APPEAL, HENCE IT FELL BEYOND SCOPE OF SECTION 150 READ WITH THE EXPLANATION (2) TO SECTION 153(3). THUS, IT CA N BE SEEN FROM THE FINDING OF THE CIT(A) THAT THE CAPITAL GAINS HAS NOT ARISEN IN THE A.Y. 2009 - 10 IS A FINDING NECESSARY FOR THE DISPOSAL OF THE APPEAL BUT , NOT THE FINDING THAT THE SAME IS TAXABLE IN THE A.Y. 2007 - 08 IS NOT A FINDING NECESSARY FOR DISPOS AL OF THE APPEAL BEFORE HIM . SUCH FINDING IS NOT A FINDING U/S 150(1) OF THE ACT AND THEREFORE, THE PROVISIONS OF SECTION 150 ARE CLEARLY NOT APPLICABLE. THEREFORE, THE ASSESSEES GROUND NO.3 IS ALLOWED. 8 . SINCE, WE HAVE GIVEN RELIEF IN GROUND NO.3, TH E GROUND NO.4 NEEDS NO ADJUDICATION AS IT WOULD ONLY RESULT IN AN ACADEMIC EXERCISE AT THIS STAGE. 5 9 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED PRONOUNCED IN THE OPEN COURT ON 28 TH NOVEMBER, 2018. SD/ - SD/ - (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 28 TH NOVEMBER, 2018 OKK COPY TO: - 1) SMT. JYOTHI KOTA, PLOT NO.42, ELECTRONIC COMPLEX EXTENSION, KUSHAIGUDA, HYDERABAD. 2) ACIT, CIRCLE 15(1), 5 TH FLOOR, D - BLOCK, IT TOWERS, AC GUARDS, HYDERABAD. 3) TH E CIT (A) - 7 , HYDERABAD 4) THE PR. CIT - 7 , HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE