ITO, Ward-8(2), Hyderabad V. Sri Enugula Govind Reddy, R.R.Dist

ITA 25/HYD/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6305 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 04-07-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 06-01-2014
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Reopening of assessment; Capital asset; Search and seizure; Advance ruling
• Section: 147; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. ASST YEAR APPELLANT RESPONDENT 25 /HYD/1 4 200 7 - 08 THE INCOME TAX OFFICER, WARD-8(2), HYDERABAD SRI ENUGULA GOVIND A REDDY (HUF), R.R. DISTRICT, HYDERABAD [PAN: AAAHE1806L] 858/HYD/14 2007 - 08 SRI ENUGULA GOVINDA REDDY, R.R. DISTRICT, HYDERABAD [PAN: AAEPE5076E] DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, HYDERABAD 876/HYD/14 2009 - 10 ASS T. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-I, HYDERABAD C.O. NO. 06/HYD/2015 (IN ITA NO. 25/HYD/2014) ASSESSMENT YEAR: 2007-08 SRI ENUGULA GOVINDA REDDY (HUF), R.R. DISTRICT, HYDERABAD [PAN: AAAHE1806L] VS THE INCOME TAX OFFICER, WARD-8(2), HYDERABAD (CROSS-OBJECTOR) (RESPONDENT) FOR REVENUE : SHRI K.J. RAO, DR FOR ASSESSEE : SHRI S. RAMA RAO, AR DATE OF HEARING : 09-08-2016 DATE OF PRONOUNCEMENT : 26-08-2016 O R D E R PER B. RAMAKOTAIAH, A.M. : THESE ARE APPEALS BY ASSESSEE AND REVENUE AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), HYD ERABAD AND CROSS-OBJECTION BY ASSESSEE. IN ITA NO. 25/HYD/2014 , THE SRI ENUGULA GOVINDA REDDY :- 2 -: REVENUE IS AGGRIEVED ON THE DELETION OF PROTECTIVE ADDI TION MADE BY ASSESSING OFFICER (AO) IN HUF STATUS BY CIT(A)-III IN THE ORDER DT. 14-10-2013. ASSESSEE RAISED CROSS-OBJECTION AGAINST THAT ORDER QUESTIONING THE REOPENING U/S. 147 OF THE INCOME TAX A CT [ACT] AND ON OTHER GROUNDS, WHICH ARE NOT ADJUDICATED. ITA NO. 858/HYD/14 AND 876/HYD/14 ARE APPEALS BY ASSESSEE IN INDIVIDUA L STATUS FOR AY. 2007-08 AND 2009-10 AGAINST THE COMMON ORDER OF LD. CIT(A)- I, HYDERABAD DT. 18-02-2014. 2. BRIEFLY STATED, SEARCH AND SEIZURE OPERATION U/S. 132 OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF M/S. B PR INFRASTRUCTURE P. LTD., ON 22-10-2008. DURING THE COU RSE OF SEARCH, DOCUMENT AT PAGE NO. 44 TO 59 OF ANNEXURE A/B PR/L/01 RELATING TO ASSESSEE WAS FOUND AND SEIZED. THE DOCU MENT IS COPY OF THE DEVELOPMENT AGREEMENT ENTERED INTO BY ASSESSEE WITH M/S. BPR INFRASTRUCTURE P. LTD., ON 04-05-2006FOR DEVELOPME NT OF VILLAS AT 50:50 RATIO. THE LAND IN QUESTION IS ADMEASURING AC . 4.36 GTS., IN SURVEY NOS. 78, 79, 80, 81 & 82, SITUATED AT ATTAPUR , RAJENDRA NAGAR MANDAL WHICH WAS ORIGINALLY BELONGED TO SRI B. VENKATARAM REDDY AND SRI E. MADHAVA REDDY, SINCE 16-02-1982. AFTER THE DEMISE OF BOTH THE ORIGINAL LAND OWNERS, THE PROPERTY CAME INTO THE POSSESSION OF ASSESSEE AND ONE SRI B.V. NARAYANA RE DDY. 2.1. THE AGREEMENT BY ASSESSEE AND SRI B.V. NARAYAN A REDDY WITH M/S. BPR INFRASTRUCTURE LTD., SPECIFIES THE SHARE OF THE LAND OWNERS INTER-SE AT 60:40. ASSESSEE WAS THE OWNER OF 60% OF THE LAND OF AC. 4.36 GTS. ACCORDING TO THE MOU, A TO TAL OF 39 VILLAS WERE TO BE CONSTRUCTED ON THE PROPERTY KNOWN AS PEARL COUNTY. 19 VILLAS EACH WERE TO BE TAKEN BY THE OWNERS AND DEVE LOPER AND SRI ENUGULA GOVINDA REDDY :- 3 -: THE 39 TH VILLA WAS TO BE SOLD AND SALE PROCEEDS WERE TO BE DISTRIBUTED. THE 19 VILLAS OF THE OWNERS WERE FURTHER DIVIDED AMONGST THEMSELVES WITH ASSESSEE HAVING 11 VILLAS AND SRI B.V. NARAYAN REDDY HAVING 7 VILLAS. THE 39 TH VILLAS SALE PROCEEDS TO BE DIVIDED AMONGST THEM IN 60:40 RATIO. THUS, ASSESSEE BECAME ENTITLED TO 11 VILLAS AND 60% OF THE SALE PROCEEDS OF 1 VILLA. IN VIEW OF THE RULING OF THE AUTHORITY FOR ADVANCE RULINGS AND THE JUDGMENTS OF ITAT, AO HELD THAT THE SAID AGREEMENT CON STITUTES TRANSFER AND HENCE, ASSESSEE WAS LIABLE FOR CAPITAL GAINS IN THE FINANCIAL YEAR 2006-07, THE YEAR IN WHICH THE DEVELOP MENT AGREEMENT WAS ENTERED INTO. AO HAS ARRIVED AT LONG TER M CAPITAL GAINS AT RS. 5,79,58,800/- IN AY. 2007-08. AFTER COMP LETING THE PROCEEDINGS IN INDIVIDUAL STATUS, PROCEEDINGS U/S. 14 7 WERE INITIATED IN HUF STATUS FOR AY. 2007-08 AND THE AMOUNT O F CAPITAL GAINS WAS BROUGHT TO TAX ON PROTECTIVE BASIS IN THE OTHER STATUS. 3. IN APPEAL, THE LD. CIT(A) DECIDED THE ISSUE FIRST IN HUF STATUS WHEREIN, ON ASSESSEES SUBMISSION THAT THE PROP ERTY WAS OWNED IN INDIVIDUAL STATUS (AS RECORDED BY CIT(A) IN PARA 7.2 OF THE ORDER), HE DELETED THE ADDITION MADE IN THAT STATUS WITHO UT ADJUDICATING OTHER GROUNDS RAISED. HE HOWEVER, UPH ELD THE REOPENING OF ASSESSMENT. REVENUE IS AGGRIEVED AND M AINLY CONTESTING THAT ASSESSEE HAS STATED THAT LANDS BELONG TO H UF STATUS, SO THE DELETION IS NOT PROPER. ASSESSEE PREFERR ED CROSS- OBJECTION ON THE ISSUE OF REOPENING U/S. 147 AND ON O THER GROUNDS ON MERIT WHICH ARE NOT ADJUDICATED. 3.1. AT THE SAME TIME, ASSESSEE PREFERRED APPEALS IN AY. 2007-08 AND 2009-10 IN INDIVIDUAL STATUS. CONSIDERIN G THE ORDER SRI ENUGULA GOVINDA REDDY :- 4 -: OF CIT(A)-III DT. 14-10-2013, LD. CIT(A)-I HAS UPHEL D THE ADDITION IN INDIVIDUAL STATUS WHICH ASSESSEE IS CONTESTING. IN ADD ITION TO THE STATUS, THE OTHER ISSUES CONTESTED ARE: A) NATURE OF AGRICULTURE LAND; B) THE YEAR OF TAXABILITY; C) THE VALUE OF CONSIDERATION; D) WHETHER CAPITAL GAIN IS ELIGIBLE OR NOT? IN AY. 2009-10, THE ONLY ISSUE IS ESTIMATION OF INCOM E AT 8% ON CONTRACT RECEIPTS U/S. 153C. 3.2. IN ADDITION TO THE GROUNDS, ASSESSEE ALSO RAISE D ADDITIONAL GROUNDS IN INDIVIDUAL STATUS ABOUT PROCEED INGS U/S. 153C, STATING THAT THERE IS NO SATISFACTION RECORDED. 4. AT THE OUTSET, LD. COUNSEL FAIRLY ADMITTED THAT ASSESSE E HAS TAKEN CONTRARY STAND ON THE STATUS IN WHICH THE AMO UNT OF CAPITAL GAINS ON TRANSFER OF LANDS IN QUESTION HAS TO B E CONSIDERED. HE HAS MAINLY PLEADED THAT THE ASSESSMENT MAY BE SET ASI DE TO THE FILE OF AO FOR EXAMINING ALL ISSUES, INCLUDING THE ADDITIONAL GROUNDS RAISED. 5. HAVING CONSIDERED THE CONTRARY STAND TAKEN BY ASSES SEE IN THE DIFFERENT PROCEEDINGS BEFORE CIT(A) AND THE R EQUEST MADE BEFORE US IN THESE APPEALS, WE ARE OF THE OPINION THAT THE ISSUE OF STATUS HAS TO BE DETERMINED FIRST AND THEN, THE OTHER CONTE NTIONS ABOUT NATURE, VALUE AND EXTENT OF CAPITAL GAINS, AS RAI SED IN VARIOUS GROUNDS BY ASSESSEE. FURTHER, THE ISSUE OF R EOPENING U/S. 147 AND PROCEEDINGS U/S. 153C ALSO REQUIRE ADJUDICA TION BY AO, AS SRI ENUGULA GOVINDA REDDY :- 5 -: ASSESSEE HAS NOT RAISED OBJECTIONS EARLIER. CONSEQUE NTLY, IN THE INTEREST OF JUSTICE TO BOTH THE PARTIES, THE ORDER OF AO AND CIT(A) IN AY. 2007-08 IN BOTH STATUSES OF ASSESSEE ARE SET ASIDE AND ALL THE ISSUES IN THESE APPEALS ARE RESTORED TO THE FILE OF AO FOR FRESH EXAMINATION AND ADJUDICATION. AS FAR AS AY. 2009-10 IS CONCERNED, THE ONLY ISSUE IS ESTIMATION OF INCOME, WHEN ASSESSEE CONTENDS THAT THE BOOKS OF ACCOUNTS ARE MAINTAINED. IN ADDITIONT O THAT, PROCEEDINGS U/S. 153C WERE ALSO QUESTIONED. CONSEQU ENTLY, WE ARE OF THE OPINION THAT THESE ISSUES ALSO CAN BE RE-EX AMINED BY THE AO, IN AY. 2009-10 ALONG WITH AY. 2007-08. ACCORDIN GLY, THE ORDERS OF AO AND CIT(A) IN AY. 2009-10 ARE ALSO SE T ASIDE, TO BE REDONE AFTER GIVING DUE OPPORTUNITY TO ASSESSEE TO MAK E SUBMISSIONS. AO IS ALSO DIRECTED TO EXAMINE THE STATUS OF OTHER CO- OWNER SRI B.V.N . REDDY ALSO BEFORE ADJUDICATING TH E ISSUE AS THERE CANNOT BE CONTRADICTORY ORDERS ON SIMILAR FACTS. 6. IN THE RESULT, ALL THE APPEALS AND C.O. BY ASSESS EE & APPEAL OF REVENUE ARE CONSIDERED ALLOWED FOR STATISTIC AL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH AUGUST, 2016 SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMB ER HYDERABAD, DATED 26 TH AUGUST, 2016 TNMM SRI ENUGULA GOVINDA REDDY :- 6 -: COPY TO : 1. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-I , HYDERABAD. 2. ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -I, HYDERABAD. 3. THE INCOME TAX OFFICER, WARD-8(2), HYDERABAD. 4. SRI ENUGULA GOVINDA REDDY, C/O. SRI S. RAMA RAO , ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREET NO. 9, HIMAYAT NAGAR, HYDERABAD. 5. CIT(APPEALS)-III, HYDERABAD. 6. CIT(APPEALS)-I, HYDERABAD. 7. CIT-II, HYDERABAD. 8. CIT (CENTRAL), HYDERABAD. 9. D.R. ITAT, HYDERABAD. 10. GUARD FILE.