Gonuguntla Nirmala Devi, Annatapur V. ACIT, Circle-1, Anantapur

ITA 413/Hyd/2022

AI Insights

The case involves Smt. Gonuguntla Nirmala Devi, a partner in M/s. Nithin Sai Construction and a director in M/s. Nithin Sai Agrotech (P) Ltd, who appealed against the order of the CIT (A) NFAC which dismissed her appeal regarding the assessment year 2016-17. The primary issues in the appeal included the addition of Rs. 49,00,000 as deemed dividend under section 2(22)(e) of the Income Tax Act, the inclusion of Rs. 43,56,000 as income from an unoccupied property, and various disallowances related to interest and deductions under section 80C. The Tribunal found that the CIT (A) NFAC had not provided sufficient opportunity for the assessee to present her case, particularly in response to the remand report from the Assessing Officer, and thus restored the matter for re-evaluation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128898 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 24-04-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 29-08-2022
• Other Referred Cases: CIT vs. Ansal Housing Finance & Leasing Company Ltd
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80C; 2(22)(e); 143(1)

Judgement Text

ITA 413 of 2022 G Nirmala Devi Page 1 of 7 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B‘ Bench, Hyderabad Before Shri R.K. Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member ITA No.413/Hyd/2022 Assessment Year: 2016-17 Smt. Gonuguntla Nirmala Devi, Anantapur PAN:AIPBD2345Q Vs. Asstt. C. I. T. Circle 1 Anantapur (Appellant) (Respondent) Assessee by : Shri R. Venkata Ramana, CA Revenue by: Shri M. Naveen Kumar, DR Date of hearing: 25/04/2023 Date of pronouncement: 27/04/2023 ORDER Per R.K. Panda, A.M This appeal filed by the assessee is directed against the order dated 2.08.2022 of the learned CIT (A)-NFAC Delhi, relating to A.Y.2016-17. 2. Facts of the case, in brief, are that the assessee is a partner in M/s. Nithin Sai Construction. He is also a Director in M/s. Nithin Sai Agrotech (P) Ltd . The assessee filed her return of income declaring total income at Rs.23,89,810/- admitting income from house property, business income and from other sources. The return was processed u/s 143(1) and subsequently ITA 413 of 2022 G Nirmala Devi Page 2 of 7 the case was selected for scrutiny. In response to notice u/s 143(2) and 142(1), the AR of the assessee appeared before the Assessing Officer from time to time and filed the requisite details. 3. During the course of assessment proceedings, the Assessing Officer observed from the balance sheet as on 31.3.2016 for the A.Y 2016-17 filed by the assessee that the assessee has received loan of Rs.49,00,000/- from M/s. Nithin Sai Agrotech (P) Ltd. Since the assessee holds 51% of the share capital of the said company and the company had reserves of Rs.1,44,80,038/-, the Assessing Officer asked the assessee to explain as to why the provisions of section 2(22)(e) of the I.T. Act should not be applied. Since the assessee did not respond to the query raised by the Assessing Officer on this issue, the Assessing Officer made addition of Rs.49,00,000/- to the total income of the assessee u/s 2(22)(e) of the Act. 4. Similarly, from the details furnished by the assessee, the Assessing Officer noted that the assessee is the owner of the building Nithin Sai Complex having constructed area of 24000 sq. ft consisting of four floors. Out of this, the assessee has let out an area of 9000 sq.ft and declared rental income of Rs.36,00,656/-. The balance area of 15000 sq.ft is vacant. Based on the decision of the Hon'ble Delhi High Court in the case of CIT vs. Ansal Housing Finance & Leasing Company Ltd wherein it has been held that the ALV of unoccupied property has to be brought to tax under the head “income from house property”, the ITA 413 of 2022 G Nirmala Devi Page 3 of 7 Assessing Officer made addition of Rs.43,56,000/- to the total income of the assessee. 5. The Assessing Officer also disallowed the amount of Rs.86,200/- claimed as deduction towards interest on the ground that the interest pertains to loan taken for purchase of residential property at Vijayawada during Feb. 2016 and therefore, interest cannot be claimed out of rental income from the Nithin Sai Complex. Further, in absence of any satisfactory explanation regarding the cash deposit of Rs.50,00,000/- in the bank a/c maintained by the assessee, the Assessing Officer after considering the details filed, made addition of Rs.43,80,000/-. Similarly, the Assessing Officer also restricted the claim of deduction u/s 80C to Rs.81,421/- as against Rs.1,50,000/- claimed by the assessee in absence of any satisfactory evidence. Thus, the Assessing Officer completed the assessment determining the total income of the assessee at Rs.1,00,59,504/- as against the returned income of Rs.23,80,800/-. 6. In appeal, the learned CIT (A) NFAC dismissed the appeal filed by the assessee. 5. Aggrieved with such order of the learned CIT (A) the assessee is in appeal before the Tribunal by raising the following grounds: ITA 413 of 2022 G Nirmala Devi Page 4 of 7 7. The learned Counsel for the assessee at the outset submitted that no sufficient opportunity was granted by the CIT (A) NFAC since the notice was issued on 8.1.2021 for furnishing the information on 14.01.2021 on ITB Portal during the covid pandemic. Subsequently, after the 2 nd notice was issued on 20.06.2022 for filing the submissions, if any, on or before ITA 413 of 2022 G Nirmala Devi Page 5 of 7 5.7.2022. The assessee filed the written submission. However, the learned CIT (A) NFAC not only passed the order but enhanced the dividend income on the basis of the remand report, without affording sufficient opportunity to the assessee to submit his rejoinder. He submitted that in the interest of justice, the matter should be restored to the file of the learned CIT (A) NFAC with a direction to grant one more opportunity to the assessee to substantiate his case. 8. The learned DR, on the other hand, strongly supported the order of the learned CIT (A) NFAC. He submitted that the learned CIT (A) NFAC has given sufficient opportunity to the assessee to submit his reply. However, the assessee did not avail of the opportunity. Therefore, in absence of any sufficient reasons or any evidence to take a contrary view than the view taken by the Assessing Officer/ learned CIT (A) NFAC, the request of the assessee should be rejected and the grounds raised by the assessee should be dismissed. 9. We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the AO in in the instant case determined the total income of the assessee at Rs.1,99,03,789/- as against the returned income of Rs.23,89,810/-. We find the learned CIT (A) NFAC not only dismissed the appeal filed by the assessee but enhanced the income on the issue of deemed dividend to Rs.69,00,000/- as against Rs.49,00,000/- made by the Assessing Officer. It is the ITA 413 of 2022 G Nirmala Devi Page 6 of 7 submission of the learned Counsel for the assessee that no sufficient opportunity was granted by the learned CIT (A) NFAC to submit various details especially the rejoinder to the remand report of the Assessing Officer. Therefore, it is his submission that one more opportunity should be granted to the assessee to submit the details. We find the learned CIT (A) NFAC has issued the first notice on 8.1.2021 for furnishing the submission on 14.1.2021 on ITB Portal which was during the then prevailing pandemic. Subsequently, the learned CIT (A) NFAC issued notice on 20.06.2022 to make written submission on or before 5.7.2022 and the assessee in compliance to the same notice, filed written submission which has been reproduced by the learned CIT (A) NFAC in the body of the order. We find the learned CIT (A) NFAC called for a remand report from the Assessing Officer and after obtaining the same from the Assessing Officer asked the assessee to give his submission, the assessee sought adjournment and thereafter there was no response. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the learned CIT (A) NFAC with a direction to grant one more opportunity to the assessee to substantiate his case by filing the requisite details and decide the issue as per fact and law. The assessee is also hereby directed to submit the requisite details before the learned CIT (A) NFAC on the appointed date without seeking any adjournment under any pretext failing which the learned CIT (A) NFAC is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the ass are accordingly allowed for statistical purposes. ITA 413 of 2022 G Nirmala Devi Page 7 of 7 10. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 27 th April, 2023. Sd/- Sd/- (LALIET KUMAR) JUDICIAL MEMBER (R.K. PANDA) ACCOUNTANT MEMBER Hyderabad, dated 27 th April, 2023. Vinodan/sps Copy to: S.No Addresses 1 Smt. G. Nirmala Devi, 12-640-C-15-D-69 Vidyuth Nagar, New Town, Anantapur 515001 2 ACIT, Circle 1 Income Tax Office, 3 rd Road, New Town, Anantapur 515004 A.P 3 NFAC Delhi 4 DR, ITAT Hyderabad Benches 5 Guard File By Order