The ITO, Vijayawada V. Sri M.N.S.Venkateswara Rao, Vijayawada

ITA 19/VIZ/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8740 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 16-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S MURTHY
• Keywords: Business income; Rectification of order; Tax effect; Revised return
• Section: 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 1 9 /VIZ/ 201 7 ( / ASSESSMENT YEAR: 20 06 - 07) THE ITO, WARD - 3(1) CENTRAL REVENUE BUILDING M.G.ROAD VIJAYAWADA VS. SRI M.N.S.VENKATESWARA RAO D.NO.28 - 17 - 17, 1 ST FLOOR RAMA MANDIRAM STREET ARUNDALPET VIJAYAWADA [PAN :A TAPM2301L ] ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI P.S.MURTHY, DR / RESPONDENT BY : SHRI D.L.NARASIMHA RAO, AR / DATE OF HEARING : 23 . 02 .201 8 / DATE OF PRONOUNCEMENT : 2 8 . 0 2 .201 8 / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) [CIT(A)], VIJAYAWADA VIDE ITA 2 ITA NO . 1 9 /VIZ/201 7 SRI M.N.S.VENKATESWARA RAO, VIJAYAWADA NO. 143 / CIT(A)/ VJA /201 2 - 1 3 DATED 22 . 09 .201 6 FOR THE ASSESSMENT YEAR 20 06 - 07 . 2. THE ASSESSEE FILED RETURN OF INCOME ON 30.10.2006, DECLARING TOTAL LOSS OF RS.1,34,528/ - . SUBSEQUENTLY, THE ASSESSEE FILED REVISED RETURN ON 23.03.2007 DECLARING REVISED LOSS OF RS.4,10,529/ - . THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COM PLETED ON TOTAL INCOME OF RS.7,94,960/ - . IN THE ASSESSMENT, THE ASSESSING OFFICER (AO) ALLOWED THE REBATE OF RS.1,20,510/ - U/S 88E OF I.T.ACT . SUBSEQUENTLY, THE AO ISSUED NOTICE U/S 154 TO WITHDRAW THE REBATE ALLOWED U/S 88E OF I.T.ACT. THE ASSESSEE FILED REPLY OBJECTING FOR RECTIFICATION . NOT BEING SATISFIED WITH THE REPLY FILED BY THE ASSESSEE, THE AO HAS WITHDRAWN THE REBATE GRANTED U/S 88E AND PASSED THE RECTIFICATION ORDERS U/S 154 AS UNDER : IN THIS CASE THE ASSESSEE FILED HIS ORIGINAL RETURN OF INCOME AN 30.10.2006 DECLARING A LOSS OF RS.1,34,528/ - AND REVISED RETURN ON 23.03.2007 DECLARING THE REVISED LOSS OF RS. 4,10,529/ - . LATER THIS CASE WAS SELECTED FOR SCRUTINY. DURING THE SCRUTINY PROCEEDINGS IT WAS FOUND A RECEIPT OF RS. 10,00.000/ - IN HIS CAPITAL ACCOUNT. THIS WAS EXPLAINED IN THE BOOKS OF ACCOUNTS AS CASH RECEIVED ON 02.12.2005 FROM SMT.DURGA, ASSESSEES WIFE. ON BEING CALLED T O EXPLAIN THE SOURCE AND THE NATURE OF RECEIPT, THE ASSESSEE EXPRESSED HIS INABILITY TO SUBSTANTIATE THIS CLAIM AND OFFERED THE SAME AS BUSINESS INCOME. WHILE OFFERING RS. 10,00,000/ - TO TAX, THE ASSESS E E MENTIONED THE SAME AS BUSINESS INCOME ONLY AND NOT MENTIONED THE SAME AS INCOME FROM . TAXABLE SECURITIES TRANSACTIONS . REBATE U /S 88E IS AVAILABLE ON I NCOME CH ARGEABLE UNDER THE HEAD PROFITS AND G AINS OF BUSINESS OR PROFESSION ARISING FROM TAXABLE SECURI TIES TRANSACTIONS ONLY. HERE, IN THIS CASE THE INCOME OFFERED IS BUSINESS INCOME ONLY AND NOT THE INCOME FROM TAXABLE SECURIT I ES TRANSACTIONS. HENCE REBATE U/S 88E IS NOT ALLOWABLE. IN 3 ITA NO . 1 9 /VIZ/201 7 SRI M.N.S.VENKATESWARA RAO, VIJAYAWADA THESE CIRCUMSTANCES, THE CLAIM FOR REBATE U /S 88E IS DISALLOWED . 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT THE ASSESSMENT MADE BY THE AO IS OUTSIDE THE SCOPE OF SECTION 154 OF I.T.ACT. FOR THE SAKE OF CLARITY AND CON VENIENCE, WE EXTRACT RELEVANT PARAGRAPHS OF THE CIT(A) ORDER WHICH READS AS UNDER : 5. IN THE REVISED RETURN OF INCOME, CREDIT IN APPELLANT'S CAPITAL ACCOUNT OF RS10LAKH (BEING SHARE PROFIT) WAS OFFERED FOR TAX AND APPELLANT CLAIMED REBATE U/S88E OF THE ACT AS APPELLANT PAID STT TO THE TUNE OF RS. 3,05,488/ - . APPELLANT ENCLOSED FORM 10DB IN THIS REGARD. ASSESSING OFFICER WHILE PASSING SCRUTINY ASSESSMENT ORDER EXAMINED ALL RELEVANT DETAILS AND ALLOWED THE REBATE. 5 .1 . RECTIFICATION ORDER WAS SUBSEQUENTLY PASSED FOR THE REASON THAT THE PROFIT DID NOT ARISE FROM TAXABLE SECURITIES TRANSACTION S AND HENCE APPELLANT IS NOT ENTITLED FOR REBATE U/S88E OF THE ACT . IN THE CASE OF T.S. BA L RAM, ITO VS. VDKART BROS (1971) 82 ITR 50 (SC), HONBLE APEX COURT HELD THAT A MISTAKE WHICH CAN BE RECTIFIED U/S. 154 IS ONE WHICH IS PATENT, WHICH IS OBVIOUS AND W HOSE DISCOVERY IS NOT DEPENDENT ON ARGUMENT OR ELABORATION (I.E.) DEBATABLE POINT OF VIEW. COURTS HAVE HELD IN SEVERAL DECISIONS THAT WHERE T HE CONT ROVERSY CAN BE RESOLVED ONLY BY WAY OF A COMPLICATED PROCESS OF INVESTIGATION, RECOURSE CANNOT BE TAKEN TO S EC.154 OF THE ACT. CIT VS. DELHI CEMENT STOCKISTS (1971)81 ITR 515 (DE L ). 5.2. WITHOUT DETAILED EXAMINATION OF SECURITIES TRANSACTIONS, ASSESSING OFFICERCANNOT HOLD THAT THE CLAIM OF APPELLANT FOR REBATE U/S.88E OF THE ACT IS AN AFTER THOUGHT WHEN APPELLANT ENCLOSED FORM 10 DB AND THE SAME WAS ACCEPTED IN TH E SCRUTINY ASSESSMENT ORDER DATED 30.12.2008, ASSESSING OFFICER DID NOT FIND AN Y DEFECT IN SUCH FORM IN RECTIFICATION PROCEEDINGS ALSO. IN THE REVISED COMPUTATION IT IS CLEARLY MENTIONED THAT PROFITS OF RS .5,08,484/ - ARE FROM SHARE BUSINESS ON LY. ASSESSING OFFICER IN HIS ORDER U/S154 OF THE ACT DID NOT BRING IN ANY EVIDENCE TO CONTROVERT THIS CLAIM OF APPELLANT. 5.3. HENCE I HOLD THAT RECTIFICATION ORDER PASSED FOR DISALLOWANCE U/S.88E OF THEACT IS OUTSIDE THE SCOPE OF SEC.154 OF THE ACT. CONSEQUENTLY, RECTIFICATION ORDER PASSED IS NOT IN ACCORDANCE WITH LAW . 4 ITA NO . 1 9 /VIZ/201 7 SRI M.N.S.VENKATESWARA RAO, VIJAYAWADA 4. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD.DR ARGUED THAT WITHDRAW ING OF REBATE U/S 88E IS A MISTAKE APPARENT FROM RECORD WHICH CAN BE RECTIFIED U/S 154. 5. ON THE OTHER HAND, LD.AR SUPPORTED THE ORDER OF THE LD.CIT(A). 6. WE HAVE HEARD BOTH THE CASES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE AS OBSERVED FROM THE LD.CIT(A) ORDER, THE ASSESSEE FILED FORM 10DB WHICH WAS ACCEPTED BY THE AO IN THE ASSESSMENT ORDER. THE ASSESSEE ALSO SUBMITTED REVISED COMPUTATION OF INCOME STATING THAT THE PROFITS ARE FROM SHARE BUSINESS. ONCE THE ASSESSEE ADMITTED PROFIT FROM SHARE TRANSACTIONS, THE ISSUE WITH REGARD TO THE ALLOWING REBATE U/S 88E IS SUBJECT TO VERIFICATION OF THE MATERIAL AND DEBATABLE ISSUE WHICH IS NOT MISTAKE APPARENT FROM RECORD FOR RECTIFICATION U/S 154 . WE HOLD THAT THE LD.CIT(A) RIGHTLY HELD THE RECTIFICATION ORDER PASSED BY THE AO FOR DISALLOWANCE OF REBATE U/S 88E IS OUTSIDE THE SCOPE OF SECT I ON 154 OF I.T.ACT. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 5 ITA NO . 1 9 /VIZ/201 7 SRI M.N.S.VENKATESWARA RAO, VIJAYAWADA 6.1. EVEN OTHERWISE ALSO, THE TAX EFFECT IN THIS CASE IS LESS THAN 10 LAKHS AND THE APPEAL IS SQUARELY COVERED BY THE BOARD CIRCULAR NO. 21/2015 DATED 10.12.2015 AND ACCORDINGLY THE APPEAL IS NOT MAINTAINABLE AND THE LD.DR DID NOT MAKE OUT A CASE FOR EXCEPTION. 7 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28 TH FEB 20 1 8 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 28 .02.2018 L.RAMA, SPS 6 ITA NO . 1 9 /VIZ/201 7 SRI M.N.S.VENKATESWARA RAO, VIJAYAWADA / COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT - THE ITO, WARD - 3(1), CENTRAL REVENUE BUILDING M.G.ROAD, VIJAYAWADA 2 . / THE RESPONDENT SRI M.N.S.VENKATESWARARAO , D.NO.28 - 17 - 17, 1 ST FLOOR , RAMA MANDIRAM STREET , ARUNDALPET , VIJAYAWADA 3 . THE PR. COMMISSIONER OF INCOME TAX , VIJAYAWADA 4.THE COMMISSIONER OF INCOME TAX(APPEALS), VIJAYAWADA 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM