D.S. Karunakar Reddy, Hyderabad, Chennai V. DCIT, Central Circle-6, Hyd, Hyderabad

ITA 4/HYD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2531 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-01-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 04-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J SIRI KUMAR
• Assessee Lawyers: A V RAGHURAM
• Keywords: Search and seizure
• Section: 143(3); 153A; 234B; 148; 132; 90; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 4/HYD/2016 ASSESSMENT YEAR: 2008-09 D.S. KARUNAKAR REDDY, HYDERABAD [PAN: AHCPC0573C] VS ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-13, HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A.V. RAGHU RAM, AR FOR REVENUE : SHRI J. SIRI KUMAR, DR DATE OF HEARING : 25-01-2018 DATE OF PRONOUNCEMENT : 14-02-2018 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-4, HYDERABAD, DATED 29-09-2015. THE APPEAL WAS FILED WITH A DELAY OF 19 DAYS. AFTER CONSIDERING THE AFFIDAVIT OF ASSESSEE, AND THE A RGUMENTS OF LD.DR, THE DELAY IN FILING THE APPEAL IS HEREBY CONDONED AS ASSESSEE HAS SUFFICIENT CAUSE IN FILING THE APPEAL BE LATEDLY. THE APPEAL IS ADMITTED. I.T.A. NO. 4/HYD/2016 :- 2 -: 2. BRIEFLY STATED, THERE WAS SEARCH AND SEIZURE OPERATIONS U/S. 132 OF THE INCOME TAX ACT [ACT] CONDUCTE D ON THE RESIDENTIAL PREMISES OF ASSESSEE ON 17-10-2007. F OR THE AY. 2008-09, ASSESSEE FILED RETURN OF INCOME DISCLOS ING TOTAL INCOME AT RS. 61,38,410/-. IN THE ASSESSMENT COMPLETE D U/S. 143(3) DT. 31-12-2009, AO DISALLOWED THE EXPENDITURE C LAIMS TO AN EXTENT OF RS. 28,20,847/- AND ALSO BROUGHT TO TAX TH E SHARE OF CONSIDERATION RECEIVED FROM M/S. DEMI REALTOS TO AN EXTENT OF RS. 68,31,25,000/-. ON APPEAL BEFORE THE LD.CIT(A )-1, HYDERABAD, ASSESSEES CONTENTIONS WERE NOT CONSIDERED AND APPEAL WAS DISMISSED IN LIMINE INVOKING THE PROVISIONS OF SECTION 249(4)(A) OF THE ACT BY THE LD.CIT(A)-1 VIDE OR DER DT. 07- 03-2011. ON FURTHER APPEAL, ASSESSEE CONTENDED THAT HE HAS PAID THE NECESSARY TAXES BEFORE THE DATE OF FILING OF APPEAL AND WHAT WAS REMAINING WAS ONLY INTEREST AND SUCH INTEREST W AS ALSO PAID ON 30-04-2010 I.E., BEFORE THE APPEAL WAS DISMISSED BY THE CIT(A) AND LD.CIT(A) SHOULD HAVE CONDONED THE DELAY IF IT WAS TREATED AS DELAY IN FILING THE APPEAL. 3. THE ITAT VIDE ITS ORDER DT. 16-09-2011 HAS DIRECT ED THE CIT(A) TO CONSIDER THE ISSUE AS UNDER: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND MERIT IN THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE FIRST APP ELLATE AUTHORITY OUGHT TO HAVE SEEN THAT THE ASSESSEE ALREADY PAID T AX BEFORE THE DATE OF FILING OF APPEAL AND WHAT WAS REMAINING WAS ONLY INTEREST AND SUCH INTEREST WAS ALSO PAID ON 30-4-2010. WE FIND T HAT THE PROVISIONS OF SECTION 249(4) OF THE ACT CATEGORICALLY STIPULAT E PAYMENT OF ADMITTED TAX ON THE RETURNED INCOME AS A PRE-REQUISITE AND M ANDATORY CONDITION FOR ADMISSION OF AN APPEAL. THIS PRE-COND ITION WAS MADE APPLICABLE TO ALL THE APPELLATE AUTHORITIES. THE PR OVISIONS OF SECTION 249(4) OF THE ACT, AS THEY STAND SUBSEQUENT TO 1.4. 1989 DO NOT LEAVE ANY DISCRETION IN THE APPELLATE AUTHORITY, SINCE SU CH A DISCRETION I.T.A. NO. 4/HYD/2016 :- 3 -: EARLIER VESTED IN THE APPELLATE AUTHORITIES WAS WIT HDRAWN BY DIRECT TAX LAWS (AMENDMENT) ACT, 1989 WITH EFFECT FROM 1.4 .1989. THE UNDISPUTED FACT THAT THE ASSESSEE HAD PAID ENTIRE T AX AND INTEREST AS ON 30-4-2010 AND THE FIRST APPELLATE AUTHORITY, IN OUR CONSIDERED VIEW, SHOULD HAVE CONDONED THE DELAY IN PAYMENT AND DISPO SED OFF THE APPEAL ON MERIT. AFTER CONSIDERING THE TOTALITY OF FACTS AND THE CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ISSUE BEFORE THE CIT (A) SHOULD BE DECIDED ON MERITS THEREOF AND ACC ORDINGLY, THE IMPUGNED ORDER OF THE CIT (A) IS SET ASIDE AND MATT ER IS RESTORED TO HIS FILE WITH A DIRECTION TO ADMIT THE APPEAL OF THE AS SESSEE, AFTER TAKING ON RECORD THE EVIDENCES OF TDS (CORRECTED TO TAX VIDE M.A. NO. 113/HYD/15 ORDER BEING ISSUED SEPARATELY) DEPOSIT ED BY THE ASSESSEE AND THEN TO DECIDE THE APPEAL BEFORE HIM I N ACCORDANCE WITH LAW ON MERITS THEREOF, AFTER ALLOWING REASONABLE OP PORTUNITY OF HEARING TO BOTH THE PARTIES. WE DIRECT ACCORDINGLY . 4. IN THE CONSEQUENTIAL PROCEEDINGS, LD.CIT(A) AGAIN DISMISSED THE APPEAL BY STATING AS UNDER: 6. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDE R, GROUNDS OF APPEAL, STATEMENT OF FACTS, SUBMISSIONS MADE BY THE APPELLANT DURING THE COURSE OF APPEAL PROCEEDINGS, THE COPIES OF CIT(A) ORDER AND ALSO THE ORDER OF THE HON'BLE TRIBUNAL. IN THIS CASE, A SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON 17/10/2007 AT TH E RESIDENTIAL PREMISES OF THE APPELLANT, CONSEQUENT TO WHICH THE APPELLANT FILED HIS RETURN OF INCOME BY DECLARING A TOTAL INCOME OF RS. 61,38,410/- ON 16/10/2009 BUT WITHOUT PAYMENT OF TAXES. AS PER THE COPY OF THE RETURN OF INCOME FILED, THERE IS NIL ADVANCE TAX PA YMENT, AND NIL SELF ASSESSMENT TAXES PAID BY THE APPELLANT AND THE SO T HE TAXES PAYABLE WERE OF RS.27,52,870/-. THIS AMOUNT INCLUDES NET TA X OF RS.20,28,663/- AND INTEREST OF RS.7,24,206/-. THE A SSESSMENT U/S. 143(3) WAS COMPLETED BY THE AO ON 31/12/2009 BY ARR IVING TOTAL TAX OF RS.31,71,21,580/-. WHILE TAKING THE INCOME AS AD MITTED IN RETURN, THE AO WRONGLY ADOPTED RS.1,79,790/- INSTEAD OF RS. 61,38,410/- AS DISCLOSED BY THE APPELLANT. IF THIS RETURN OF INCOM E IS ADOPTED, THE TAXES WILL WORK OUT STILL MORE, THAN AS PER THE RET URN OF INCOME ADOPTED BY THE AO IN THE ASSESSMENT ORDER. TILL THE DATE OF ASSESSMENT ORDER I.E. 31/12/009, THE TAXES WERE NOT PAID BY THE APPELLANT. THE TAXES WERE PAID BY THE APPELLANT AFT ER THE DATE OF ASSESSMENT ORDER, I.E. ON 29/01/2010 OF RS. 20.28 L AKHS AND RS.7.24 ON 30/04/2010. THE APPEALS WERE FILED ON 01/02/2010 , THAT MEANS AN AMOUNT OF RS.20.28 LAKHS PAID BEFORE FILING OF T HE APPEALS LEAVING STILL A BALANCE OF RS.7.24 LAKHS. AS ON THE DATE OF ASSESSMENT I.E. 31/12/2009, THE INTEREST WILL WORK OUT MORE THAN TH E INTEREST OF RS.7.24 LAKHS WHICH IS AS ON THE DATE OF FILING OF RETURN. THEREFORE, IF I.T.A. NO. 4/HYD/2016 :- 4 -: WE CONSIDER THAT THE APPELLANT PAID THE TAXES AND I NTEREST ALSO AS ON 30/04/2010, THEN ALSO STILL BALANCE INTEREST PAYABL E WILL REMAIN BY THE APPELLANT. THEREFORE, THE APPELLANT HAS TAILED TO PAY THE TAXES AS PER SECTION 140A BEFORE FILING OF RETURN AND ALSO F AILED TO PAY EXACT AMOUNT OF TAXES ALONG WITH INTEREST BEFORE FILING T HE APPEALS. THEREFORE, THE APPELLANT HAS DEFERRED AS PER SECTIO N 140A(3) AND THEREBY THE PROVISIONS OF SECTION 249(4)A CLEARLY A TTRACTS. AS PER THE DIRECTIONS OF THE HON'BLE ITAT, IT WAS VERIFIED AND FOUND THAT THERE IS NO EVIDENCE OF TDS TO ADMIT THE APPEALS OF THE APPE LLANT. ALL THE AMOUNTS WERE EITHER ADVANCE TAX OR SELF ASSESSMENT TAXES INCLUDING INTEREST WHICH WERE NOT PAID BY THE APPELLANT. STIL L AS ON DATE THERE WORKS OUT CERTAIN INTEREST PORTION WHICH HAS TO BE PAID BY THE APPELLANT BY TAKING THE COMPLETION OF THE ASSESSMEN T DATE, I.E. 31/12/2009. HENCE, THE APPEAL FILED BY THE APPELLAN T WERE NOT ADMITTED. 5. IT WAS THE CONTENTION OF LD. COUNSEL THAT ASSESSEE HAS CORRECTLY PAID THE TAXES AND ALSO INTEREST THOUGH NOT REQUIRED BY THE TIME THE APPEAL WAS CONSIDERED FOR DIS MISSAL BY THE CIT(A)-1 EARLIER. IT WAS FURTHER SUBMITTED THAT ASS ESSEE IS NOT AWARE HOW FURTHER TAXES WERE TO BE PAID AS CAL CULATED BY THE LD.CIT(A). IT WAS SUBMITTED THAT AS PER THE PROVISION S OF SECTION 249(4)(A), ONLY ADMITTED TAX IS TO BE PAID AND THE ADMITTED TAX WAS ALREADY REMITTED, HENCE, CIT(A) SHOULD HAVE CONSIDERED THE ISSUE ON MERITS. 6. LD.DR, HOWEVER, RELIED ON THE PROVISIONS OF SECTI ON 140A(3) TO SUBMIT THAT ADMITTED TAX INCLUDES INTEREST ALSO UNDER THE PROVISIONS OF SECTION 140A AND THEREFORE, THE ORDER OF CIT(A) IS TO BE UPHELD. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE DOCUMENTS PLACED ON RECORD. AS ALREADY CONSIDERED BY THE ITAT VIDE ITS ORDER DT. 16-09-2011, THE PROVISIONS OF SECTION 249(4) OF THE ACT CATEGORICALLY STIPULATE I.T.A. NO. 4/HYD/2016 :- 5 -: THE PAYMENT OF ADMITTED TAX ON THE RETURNED INCOME AS A PR E- REQUISITE AND MANDATORY CONDITION FOR ADMISSION OF AN APPEAL. IT IS ALSO ON RECORD THAT ASSESSEE HAS PAID ENTIRE ADMI TTED TAX AND ALSO INTEREST AS ON 30-04-2010. THE ITAT ALSO OP INED THAT THE FIRST APPELLATE AUTHORITY SHOULD HAVE CONDONED THE DELAY AND SHOULD HAVE DISPOSED OF APPEAL ON MERITS. INSP ITE OF CLEAR DIRECTIONS ON THE ISSUE, WE ARE OF THE OPINION THAT THE CIT(A) HAS EXCEEDED THE JURISDICTION AND DISMISSED THE APPEA L AGAIN IN LIMINE CONSIDERING THAT ASSESSEE HAS NOT PAID FURTHER INTEREST, THE CALCULATION OF WHICH WAS NOT PLACED ON REC ORD, NOR ASSESSEE IS AWARE ABOUT IT. 7.1. THE ISSUE WHETHER ADMITTED TAX INCLUDES INTEREST ALSO IS NO LONGER IN DISPUTE. AS PER THE PROVISIONS OF SECTION 249(4), ADMITTED TAX MEANS ONLY THE TAX COMPONENT, WHI CH DOES NOT INCLUDE INTEREST. THE HON'BLE BOMBAY HIGH C OURT IN THE CASE OF CIT VS. MANOJ KUMAR BERIWAL [316 ITR 218 ] (BOM) HAS HELD AS UNDER: THE EXPRESSION 'TAX' HAS BEEN DEFINED IN SECTION 2 (43) OF THE INCOME-TAX ACT, 1961 AND UNDER THE DEFINITION 'TAX' DOES NOT INCLUDE INTEREST WHICH HAS BEEN INDEPENDENTLY REFERRED TO U NDER SECTION 2(28)(A) OF THE ACT. WHILE CONSIDERING THE LANGUAGE OF A SECTION, THE COURTS ARE BOUND TO LOOK AT THE DEFINITIONS IN THE LEGISLATION FOR THE PURPOSE OF INTERPRETING AND CONSTRUING THE EXPRESSI ONS AND WORDS UNDER THE ACT, THE OBJECT BEING TO AVOID CONFLICT A ND HAVE A HARMONIOUS INTERPRETATION UNLESS THE CONTEXT OTHERW ISE REQUIRES. FOR THE PURPOSE OF SECTION 249(4) OF THE ACT, THE DEPOS IT OF TAX, WHICH IS A CONDITION PRECEDENT, DOES NOT INCLUDE INTEREST UNDE R SECTIONS 234B AND 234C OF THE ACT. 7.2. THE HON'BLE BOMBAY HIGH COURT HAS CONSIDERED TH E DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF HARSHAD I.T.A. NO. 4/HYD/2016 :- 6 -: SHANTILAL MEHTA VS. CUSTODIAN & ORS., [231 ITR 871] TO TAKE SUPPORT IN ARRIVING AT THE ABOVE DECISION. THERE WAS N O CONTRARY DECISION TO THE ABOVE AND ACCORDINGLY, IT I S TO BE HELD THAT WHAT IS REQUISITE U/S. 249(4) IS ONLY THE PAYMENT O F ADMITTED TAX, WHICH OBVIOUSLY DOES NOT INCLUDE INTEREST. EVEN THOUGH ASSESSEE HAS PAID INTEREST ALSO BY 30-04-2010, NON- PAYMENT OF SO CALLED FURTHER INTEREST DOES NOT DISENTITLE ASSESSEE CONTENDING THAT APPEAL IS MAINTAINABLE. WE AR E OF THE OPINION THAT LD.CIT(A), INSTEAD OF DECIDING THE APPEAL ON MERITS AS DIRECTED BY THE ITAT, TOOK UP A WRONG ISSUE IN DI SMISSING THE APPEAL IN LIMINE AGAIN . 7.3. IN THE COURSE OF ARGUMENTS, LD.DR, RELIED ON THE PROVISIONS OF SECTION 140A. THE PROVISIONS OF SECTIO N 140A ARE AS UNDER: SELF-ASSESSMENT SECTION 140A (1) WHERE ANY TAX IS PAYABLE ON THE BASIS OF ANY RETURN REQUIRED TO BE FURNISHED UNDER [ [SECTION 115WD OR SECTION 115W H OR] SECTION 139 OR SECTION 142 [OR SECTION 148 OR [SECT ION 153A OR], AS THE CASE MAY BE, SECTION 158BC]], [AFTER TAKING INTO ACCOUNT, - (I) THE AMOUNT OF TAX, IF ANY, ALREADY PAID UNDER ANY PROVISION OF THIS ACT; (II) ANY TAX DEDUCTED OR COLLECTED AT SOURCE; (III) ANY RELIEF OF TAX OR DEDUCTION OF TAX CLAIMED UNDER SECTION 90 OR SECTION 91 ON ACCOUNT OF TAX PAID IN A COUNTR Y OUTSIDE INDIA; (IV) ANY RELIEF OF TAX CLAIMED UNDER SECTION 90A ON ACCO UNT OF TAX PAID IN ANY SPECIFIED TERRITORY OUTSIDE INDIA R EFERRED TO IN THAT SECTION; AND I.T.A. NO. 4/HYD/2016 :- 7 -: (V) ANY TAX CREDIT CLAIMED TO BE SET OFF IN ACCORDANCE WITH THE PROVISIONS OF SECTION 115JAA [OR SECTION 115JD]] [THE ASSESSEE SHALL BE LIABLE TO PAY SUCH TAX TOGE THER WITH INTEREST [AND FEE] PAYABLE UNDER ANY PROVISION OF T HIS ACT FOR ANY DELAY IN FURNISHING THE RETURN OR ANY DEFAULT O R DELAY IN PAYMENT OF ADVANCE TAX, BEFORE FURNISHING THE RETUR N AND THE RETURN SHALL BE ACCOMPANIED BY PROOF OF PAYMENT OF SUCH TAX [AND INTEREST]]. [EXPLANATION WHERE THE AMOUNT PAID BY THE ASSESSE E UNDER THIS SUB-SECTION FALLS SHORT OF THE AGGREGATE OF TH E TAX [AND INTEREST AS AFORESAID, THE AMOUNT SO PAID SHALL FIR ST BE ADJUSTED TOWARDS] THE INTEREST PAYABLE AS AFORESAID AND THE BALANCE, IF ANY, SHALL BE ADJUSTED TOWARDS THE TAX PAYABLE.] EVEN IN THIS SECTION, THE DEFINITION OF TAX AND INTEREST A RE SEPARATELY CONSIDERED. THE EXPLANATION OF ASSESSED TAX AS PER THE PROVISIONS OF SECTION 140(1B) DOES NOT INCLUDE THE COMPONENT OF INTEREST AT ALL. THE PROVISIONS OF SUB-S ECTION 1B ALSO SPECIFICALLY SAYS THAT INTEREST PAYABLE U/S. 234B SHALL BE COMPUTED ON AN AMOUNT EQUAL TO THE ASSESSED TAX OR AS THE CASE MAY BE ON THE AMOUNT BY WHICH THE ADVANCE TAX PAID FALLS SHORT OF THE ASSESSED TAX. THE WORDS ADMITTED TAX A ND ASSESSED TAX IN THE CONTEXT OF INCOME TAX ACT ALWAYS R EFERS TO THE TAX COMPONENT AND DOES NOT INCLUDE ANY INTEREST OR PE NALTY WHICH ARE LEVIED SEPARATELY AND ALSO SPECIFICALLY S TATED WHEREVER THEY OCCUR. IN VIEW OF THAT, RESPECTFULLY FOL LOWING THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MANOJ KUMAR BERIWAL (SUPRA), WE HOLD THAT THE ORDER OF CIT(A) CANNOT BE SUSTAINED. AS ASSESSEE HAS PAID THE A DMITTED TAX, THE APPEAL IS MAINTAINABLE BEFORE THE CIT(A). ACCO RDINGLY, I.T.A. NO. 4/HYD/2016 :- 8 -: THE ORDER OF CIT(A) IS SET ASIDE AND APPEAL IS RESTORE D TO THE FILE OF CIT(A) TO CONSIDER THAT APPEAL ON MERITS OF GROUNDS RAISED. 8. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH FEBRUARY, 2018 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 14 TH FEBRUARY, 2018 TNMM I.T.A. NO. 4/HYD/2016 :- 9 -: COPY TO : 1. D.S. KARUNAKAR REDDY, C/O. J. PRABHAKAR, CHARTER ED ACCOUNTANT, RESIDENCY APARTMENTS, 245, T.T.K. ROAD, ALWAR PET, CHENNAI. 2. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE-13, HYDERABAD. 3. CIT(APPEALS)-4, HYDERABAD 4. CIT-4, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.