VENUGOPAL NIMMAGADDA, Vijayawada V. INCOME TAX OFFICER, WARD-3(3), Vijayawada

ITA 212/VIZ/2022

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 2483 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-04-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 24-10-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA VILLURI
• Assessee Lawyers: N.MADHUSUDHAN
• Keywords: Reassessment proceedings
• Section: 148; 143(3); 142(1)

Judgement Text

आयकरअपीलीयअधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM (through Hybrid Hearing) श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य एिं श्री एस बालाकृ ष्णन, लेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./I.T.A.No.212/Viz/2022 (ननधधारण वर्ा / Assessment Year : 2012-13) Venugopal Nimmagadda D.No.21-10-29, Flat No.101 Anu Heights, 2 nd Lane Srinagar Colony Satyanarayanapuram Vijayawada [PAN : ADAPN2791A] Vs. Income Tax Officer Ward-3(3) Vijayawada (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : Shri N.Madhusudhan, AR प्रत्यधथी की ओर से / Respondent by : Dr.Aparna Villuri, DR सुनवधई की तधरीख / Date of Hearing : 03.04.2024 घोर्णध की तधरीख/Date of Pronouncement : 08.05.2024 आदेश /O R D E R Per Shri Duvvuru RL Reddy, Judicial Member : This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi in DIN & Order No.ITBA/NFAC/S/250/2022-23/1044930469(1) dated 25.08.2022, arising out of order passed u/s 143(3) r.w.s.147 of the Income Tax Act, 2 I.T.A. No.212/Viz/2022, A.Y.2012-13 Venugopal Nimmagadda, Vijayawada 1961 (in short ‘Act’) dated 13.12.2019 for the Assessment Year (A.Y.) 2012-13. 2. Brief facts of the case are that the assessee an individual, engaged in the pisiculture activity, filed his return of income for the A.Y.2012-13 originally on 27.12.2012, declaring an income of Rs.15,61,420/-. Regular assessment was completed u/s 143(3) of the Act on 30.03.2012, determining the total income at Rs.4,13,59,600/-. Later on, proceedings u/s 147 were initiated by Ld.AO on the observation that the assessee took loan from Andhra Bank, Gudiwada branch towards excavation of fish tanks and pisi culture etc., which were not utilised for the business purposes for which it was taken and claimed an expenditure of Rs.6,29,129/- towards interest on Andhra Bank fish tank loan and thereby notice u/s 148 of the Act was issued on 30.03.2019. Later on, a letter was issued on 31.10.2019, calling for return of income and information. A notice u/s 142(1) of the Act was also issued on 13.11.2019, requiring the assessee to furnish the details of bank loans obtained for the business purposes on which expenditure towards interest payment was claimed during the F.Y.2011-12 along with documentary evidence. In response, the assessee filed the return of income for the A.Y.2012-13 on 22.11.2019 and also furnished the 3 I.T.A. No.212/Viz/2022, A.Y.2012-13 Venugopal Nimmagadda, Vijayawada information on the observation that the assessee furnished only basic information, the Ld.AO issued a notice u/s 142(1) on 05.12.2019, requiring the assessee to furnish detailed information. He issued a show cause notice on 09.12.2019, directing him to furnish the information called for earlier. The assessment was completed u/s 143(3) r.w.s 147 on 13.12.2019, disallowing the interest on fish tank loans of Rs.6,29,129/- holding that the same was not an allowable expenditure and assessed the total income at Rs.4,19,88,729/-. 3. On being aggrieved, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) upheld the addition made by the AO and dismissed the appeal of the assessee. 4. On being aggrieved, the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal : 1. The Order under sec.250 dated 25.08.2022 DIN & ORDER No.ITAT/NFAC/S/250/2022-23/1044930469(1) passed by the Ld.CIT(A), NFAC for the A.Y.2012-13 may be erroneous both in Law and also on facts of the case. 2. Taking cognizance of the fact that the issue pertaining to the claim of INTEREST on the loans raised from Andhra Bank, Gudivada to t he tune of Rs.6,29,129/- was already verified by the Ld.A.O while completing the Original Asst. Order Under Sec.143(3) DT.30.03.2015, whereby, the appellants income was estimated at Rs.35,000/- per Acre from “PISI CULTURE ACTIVITY”, the Reassessment proceedings initiated and concluded under sec.143(3) 4 I.T.A. No.212/Viz/2022, A.Y.2012-13 Venugopal Nimmagadda, Vijayawada r.w.s. 147 of the Act for the A.Y.2012-13 and confirmation by the CIT(A) may be VOID AB INITIO as per the enacted law and also judge made law. 3. Taking cognizance of the fact that the income was estimated by the Ld.A.O., while completing the original asst.proceedings at Rs.35,000/- per acre from pisiculture activity, the expenditure debited to revenue account, viz., Trading and Profit & Loss account for the year under review is deemed to have been considered and there by the formulation of the addition while completing the re- assessment proceedings and confirming by the CIT(A) may be DEVOID OF ANY MERIT AND MAY NOT BE SUSTAINABLE IN LAW. 4. Also taking cognizance of the fact that the loan raised from the bank, viz, Andhra Bank, Gudivada was UTILISED FOR THE PURPOSE for which the same was sanctioned (viz., towards WORKING CAPITAL) only; the disallowance of interest attributable to such loan as confirmed by the CIT(A) may not appear to be justifiable and not LAWFUL. 5. That in the facts and circumstances vis-a-vis the legal position established by the asst.record, a synopsis of which is reiterated in the accompanying STATEMENT OF FACTS, the confirmation of ADDITION of Rs.6,29,129/- by the Ld.CIT(A) may not appear to be valid in the eyes of law. 6. That in the facts and circumstances of the case recorded in the statement of facts annexed herewith, the ISSUANCE OF RE- ASST.PROCEEDINGS BY THE Ld.A.O. under section 147 of the Act have formulation and addition of Rs.6,29,129/- and as confirmed by the CIT(A) NFAC, DELHI may be VOID and hence the IMPUGNED ORDER under Sec.250 may be NONEST IN LAW. 7. For the above reasons and other reasons which may be advanced during the course of hearing of the appeal, it is humbly requested that the RELIEFS SOUGHT FOR MAY BE ALLOWED IN CONFORMITY WITH THE PROVISIONS OF LAW. 5 I.T.A. No.212/Viz/2022, A.Y.2012-13 Venugopal Nimmagadda, Vijayawada 5. The only contention of the Ld.AR is that the assessment was originally completed u/s 143(3) of the Act, estimating the income at Rs.4,13,59,600/- as against the income declared at Rs.15,61,420/-. Taking our attention to page No.65 and 66 of the paper book filed before us, the Ld.AR submitted that the assessee was sanctioned loan of Rs.20.80 lakhs on 11.06.2009 and Rs.20.50 lakhs on 10.08.2009 by Andhra Bank for the purpose of working capital for rearing of fish in 21.69 cents in leased fish tanks at Balliparru village, Pedana mandal and in 31.97 cents in Nandamuru Village, Pedana Mandal. The AO initiated reassessment proceedings u/s 147 of the Act on the observation that the assessee took loan from Andhra Bank, Gudiwada Branch for excavation of fish tanks and pisiculture etc. which is not utilised for the business purpose for which it was taken and disallowed the interest claimed u/s 36 of the Act. The Ld.AR submitted that no properties were acquired by the assessee during the impugned assessment year and there was no diversion of funds to non business purposes. The Ld.AR further submitted that the reassessment proceedings initiated by the Ld.AO tantamount to change of opinion, which was mechanically upheld by the Ld.CIT(A). He, therefore, submitted that the orders passed by the revenue authorities are not warranted and liable to be deleted. 6 I.T.A. No.212/Viz/2022, A.Y.2012-13 Venugopal Nimmagadda, Vijayawada 6. Per contra, the Ld.DR relied on the order passed by the Ld.CIT(A) and pleaded to uphold the order passed and dismiss the appeal of the assessee. 7. We have heard both the parties and perused the material available on record. It is undisputed fact that the assessee had taken loan from Andhra Bank for the purpose of raising working capital for fish rearing on 53.66 acres of fish tanks taken on lease. Reassessment proceedings were initiated by the Ld.AO on the observation that the assessee took loan from Andhra Bank, Gudiwada Branch for excavation of fish tanks and pisiculture etc. which is not utilised for the business purpose for which it was taken and disallowed the interest claimed u/s 36 of the Act and upheld by the Ld.CIT(A). The only contention of the Ld.AR is that the Ld.AO is not justified in invoking the reassessment proceedings as the AO applied mind while completing the original assessment proceedings u/s 143(3), estimating the income at Rs.35,000/- per acre for the total tank area of about 53.69 acres and the loan taken was utilised only for the purpose for which it was taken. In view of the foregoing facts and circumstances of the case, we are inclined to remit the matter back to the file of the AO to examine the sanction letters and the purpose for which loan was taken and whether it was utilised for the same purpose or not 7 I.T.A. No.212/Viz/2022, A.Y.2012-13 Venugopal Nimmagadda, Vijayawada and pass order accordingly. Accordingly, the grounds raised by the assessee are allowed for statistical purpose. 8. In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 8 th May, 2024. Sd/- Sd/- (एस बालाकृ ष्णन) (द ु व्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयक सदस्य/JUDICIAL MEMBER Dated : 08 .05.2024 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– Venugopal Nimmagadda, D.No.21-10-29, Flat No.101, Anu Heights, 2 nd Lane, Srinagar Colony, Satyanarayanapuram Vijayawada 2. रधजस्व/The Revenue – The Income Tax Officer, Ward-3(3), Vijayawada 3. The Principal Commissioner of Income Tax, Vijayawada 4. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम / DR,ITAT, Visakhapatnam 5..गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam