Appeal details
Counselvise Citation
[2016] 132 COUNSELVISE.COM (IT) 1226 (ITAT-VISAKHAPATNAM)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 9 month(s) 26 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
19-04-2016
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Next Hearing Date
05-04-2016
Assessment Year
2007-2008
Appeal Filed On
23-06-2014
Judgement Text
ITA NO.415/VIZAG/2014 N. SEETHARAMAIAH, BAPATLA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.415/VIZAG/2014 ( / ASSESSMENT YEAR: 2007-08) N. SEETHA RAMAIAH BAPATLA VS. ACIT, CIRCLE - 1(1), GUNTUR [PAN: AFXPN3712J ] ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI G. GURUSWAMY, DR / DATE OF HEARING : 05.04.2016 / DATE OF PRONOUNCEMENT : 19.04.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF CIT, GUNTUR DATED 19.3.2014 PASSED U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) AND IT PERTAINS TO THE ASSESSMENT YEAR 2007-08. ITA NO.415/VIZAG/2014 N. SEETHARAMAIAH, BAPATLA 2 2. THE BRIEF FACTS OF THE CASE ARE THAT WHILE COMPL ETING THE ASSESSMENT, IN THE CASE OF SRI A. MALLIKARJANA RAO FOR THE ASSESSMENT YEAR 2007-08, IT WAS NOTICED THAT SRI A. MALLIKARJ UNA RAO SOLD THE PROPERTIES SITUATED AT BAPATLA JOINTLY HELD WITH TH E ASSESSEE AND ADMITTED CAPITAL GAIN ON HIS SHARE. SINCE, THE ASSE SSEE HAS NOT FILED RETURN OF INCOME ADMITTING CAPITAL GAINS, A NOTICE U/S 148 OF THE ACT WAS ISSUED. IN RESPONSE TO THE NOTICE U/S 148 OF THE AC T, THE ASSESSEE HAS FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 30.3.2010 DECLARING TOTAL INCOME OF RS.27,270/-, BESIDES AGRI CULTURAL INCOME OF RS.1,97,500/-. THE CASE HAS BEEN SELECTED FOR SCRU TINY AND ACCORDINGLY, NOTICE U/S 143(2) & 142(1) OF THE ACT WERE ISSUED. IN RESPONSE TO NOTICE, THE AUTHORIZED REPRESENTATIVE OF THE ASSESS EE APPEARED FROM TIME TO TIME AND FURNISHED THE DETAILS CALLED FOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE A SSESSEE HAS DECLARED INCOME FROM SALE OF PROPERTY UNDER THE HEA D INCOME FROM BUSINESS AND PROFESSION AND ALSO SHOWN UNSOLD SITES AS STOCK IN TRADE. IT WAS FURTHER OBSERVED THAT THE ASSESSEE HAS MADE CASH PAYMENTS FOR PURCHASE OF PROPERTIES VIOLATING PROVISIONS OF SECT ION 40A(3) OF THE ACT. THEREFORE, THE A.O. AFTER CONSIDERING THE EXPLANATI ONS FURNISHED BY THE ASSESSEE DISALLOWED 20% OF SUCH CASH PAYMENTS AND A DDED TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO.415/VIZAG/2014 N. SEETHARAMAIAH, BAPATLA 3 3. THE CIT, GUNTUR ISSUED A SHOW-CAUSE NOTICE U/S 2 63 OF THE ACT DATED 2.12.2013 AND PROPOSED TO REVISE THE ASSESSME NT ORDER. THE CIT PROPOSED TO REVISE THE ASSESSMENT ORDER FOR THE REA SON THAT ON EXAMINATION OF ASSESSMENT RECORDS, IT WAS NOTICED T HAT THE A.O. HAS NOT EXAMINED CERTAIN ISSUES WHICH RENDER THE ASSESSMENT ORDER ERRONEOUS, IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF T HE REVENUE IN TERMS OF SECTION 263 OF THE ACT. THE CIT FURTHER OBSERVED TH AT THE ASSESSEE HAS DECLARED INCOME FROM SALE OF IMMOVABLE PROPERTY UND ER THE HEAD PROFITS & GAINS ON BUSINESS, WHEREAS THE CORRECT HEAD OF IN COME TO BE CHARGED IS INCOME FROM CAPITAL GAINS. HOWEVER, THE A.O. HAS FAILED TO EXAMINE THE ISSUE AND WITHOUT APPLICATION OF MIND HAS ALLOW ED THE CLAIM OF ASSESSEE AT THE TIME OF COMPLETION OF ASSESSMENT. THEREFORE, THE ASSESSMENT ORDER PASSED BY THE A.O. IS ERRONEOUS, I N SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 4. IN RESPONSE TO NOTICE, THE ASSESSEE HAS SUBMITTE D THAT THE ASSESSMENT ORDER PASSED BY THE A.O. WAS NOT ERRONEO US, IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, AS T HE A.O. HAS VERIFIED THE DETAILS WITH REGARD TO THE INCOME FROM SALE OF PROP ERTIES. AFTER VERIFICATION OF DETAILS FILED BY THE ASSESSEE, THE A.O. HAS ACCEPTED THE CLAIM OF ASSESSEE AND COMPLETED THE ASSESSMENT. TH E ASSESSEE FURTHER ITA NO.415/VIZAG/2014 N. SEETHARAMAIAH, BAPATLA 4 SUBMITTED THAT DURING THE FINANCIAL YEAR UNDER CONS IDERATION, HE ALONG WITH OTHER CO-OWNER HAS DEVELOPED A VACANT PIECE OF LAND AND FORMED RESIDENTIAL SITES AND SOLD. IT WAS FURTHER SUBMITTE D HE HAD CONSIDERED THE INCOME UNDER THE HEAD INCOME FROM BUSINESS AND FILED THE RETURN OF INCOME. THE ASSESSEE FURTHER SUBMITTED THAT THE OT HER CO-OWNERS SRI A. MALLIKARJUNA RAO CASE WAS ALSO SUBJECT TO REVISION U/S 263 OF THE ACT, WHEREIN THE CIT UNDER SIMILAR SET OF FACTS HAS HELD THAT THE INCOME SHOULD BE ASSESSED UNDER THE HEAD PROFITS & GAINS OF BUSINESS OR PROFESSION. THEREFORE, THE A.O. HAS RIGHTLY ASSESS ED THE INCOME UNDER THE HEAD PROFITS & GAINS OF BUSINESS AND HIS ORDE R CANNOT BE CONSIDERED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 5. THE CIT AFTER CONSIDERING THE EXPLANATIONS FURNI SHED BY THE ASSESSEE HELD THAT THE ASSESSMENT ORDER PASSED BY T HE A.O. IS ERRONEOUS, IN SO FAR AS IT IS PREJUDICIAL TO THE IN TEREST OF THE REVENUE AS THE A.O. HAS WRONGLY ASSESSED THE INCOME UNDER THE HEAD INCOME FROM PROFITS AND GAINS OF BUSINESS OR PROFESSION. THE CI T(A) FURTHER HELD THAT, THE A.O. HAS FAILED TO APPLY THE PROVISIONS OF SECT ION 50C OF THE ACT, IN THE ASSESSMENT MADE U/S 143(3) R.W.S. 147 OF THE AC T. THEREFORE, THE ASSESSMENT ORDER PASSED BY THE A.O. IS ERRONEOUS, I N SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. WITH TH ESE OBSERVATIONS, SET ITA NO.415/VIZAG/2014 N. SEETHARAMAIAH, BAPATLA 5 ASIDE THE ASSESSMENT ORDER AND DIRECTED THE A.O. TO MAKE THE ASSESSMENT AS PER THE DIRECTIONS GIVEN. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LD. A.R. OF THE ASSESSEE SUBMITTED THAT THE CIT IS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE AC T, IN AS MUCH AS THE ORDER DATED 19.12.2011 PASSED BY THE A.O. U/S 143(3 ) R.W.S. 147 OF THE ACT IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INT EREST OF THE REVENUE. THE LD. CIT IS NOT JUSTIFIED IN DIRECTING THE ASSES SING OFFICER TO RE- COMPUTE THE INCOME FROM SALE OF PLOTS UNDER THE HEA D INCOME FROM CAPITAL GAINS. THE ASSESSEE HAS RIGHTLY OFFERED TH E INCOME FROM SALE OF PLOTS UNDER THE HEAD PROFITS & GAINS. THE A.R. FU RTHER SUBMITTED THAT WHEN THE INCOME IS COMPUTED UNDER THE HEAD PROFITS & GAINS OF BUSINESS OR PROFESSION, THE PROVISION OF SECTION 5 0C OF THE ACT HAS NO APPLICATION. THEREFORE, THE CIT WAS ERRED IN DIRECT ING THE A.O. TO BRING TO TAX THE SHORT TERM CAPITAL GAIN OF RS.8,46,800/- BY INVOKING THE PROVISION OF SECTION 50C OF THE ACT. THE A.R. FURT HER SUBMITTED THAT THE LD. CIT OUGHT TO HAVE APPRECIATED THAT THE A.O. HAD ALREADY EXAMINED THE ISSUE. MERELY HE IS OF THE VIEW THAT FURTHER E NQUIRIES OUGHT TO HAVE BEEN CONDUCTED, THE ASSESSMENT ORDER CANNOT BE TERM ED AS ERRONEOUS. THEREFORE, THE ASSESSMENT ORDER PASSED BY THE A.O. SHOULD BE UPHELD. ITA NO.415/VIZAG/2014 N. SEETHARAMAIAH, BAPATLA 6 7. ON THE OTHER HAND, THE LD. D.R. STRONGLY SUPPORT ED THE ORDER PASSED BY THE CIT U/S 263 OF THE ACT. THE LD. D.R. FURTHER SUBMITTED THAT THE FACTS OF EACH CASE SHOULD BE CONSIDERED SE PARATELY SO AS TO COME TO THE CONCLUSION THAT WHETHER THE PARTICULAR ASSESSEE IS IN THE ACTIVITY OF BUSINESS OR INVESTMENT. THE D.R. FURTH ER SUBMITTED THAT THE ASSESSEE IS NOT CORRECT IN COMPARING THE FACTS OF A NOTHER ASSESSEE SRI A. MALLIKARJUNA RAO AS THE FACTS OF OTHER ASSESSEE MAY BE DIFFERENT AND THE CIT MIGHT HAVE TAKEN THE DECISION IN THAT CASE BASE D ON THE FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE, TO ASSESS TH E PARTICULAR INCOME WHETHER IT IS ASSESSABLE UNDER THE HEAD INCOME FRO M BUSINESS OR PROFESSION OR INCOME FROM CAPITAL GAINS, THE FAC TS AND CIRCUMSTANCES OF EACH CASE SHOULD BE CONSIDERED SEPARATELY. THE CIT AFTER CONSIDERING THE FACTS OF THE PRESENT CASE, HAS COME TO THE CONC LUSION THAT THE A.O. HAS NOT EXAMINED THE ISSUE OF TAXABILITY OF INCOME FROM SALE OF PLOTS AND WITHOUT APPLICATION OF MIND HAS SIMPLY ACCEPTED THE INCOME DECLARED BY THE ASSESSEE UNDER THE HEAD INCOME FROM BUSINESS O R PROFESSION. THEREFORE, THE ORDER PASSED BY THE CIT SHOULD BE UP HELD. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE CIT ASSUMED JURISDICTION TO REVISE THE ASSESSMENT O RDER, FOR THE REASON THAT THE A.O. HAS NOT CONDUCTED PROPER ENQUIRY WHIL E COMPLETING THE ITA NO.415/VIZAG/2014 N. SEETHARAMAIAH, BAPATLA 7 ASSESSMENT U/S 143(3) OF THE ACT. THEREFORE, THE A SSESSMENT ORDER DATED 19.12.2011 IS ERRONEOUS, IN SO FAR AS IT IS P REJUDICIAL TO THE INTEREST OF THE REVENUE. THE CIT FURTHER HELD THAT THE ASSE SSEE HAS DECLARED INCOME FROM SALE OF PLOTS UNDER THE HEAD INCOME FR OM BUSINESS, WHEREAS THE CORRECT HEAD OF INCOME SHOULD BE INCOM E FROM CAPITAL GAINS. THE A.O. HAS COMPLETELY IGNORED THE FACTS AND SIMPLY ACCEPTED THE INCOME DECLARED BY THE ASSESSEE UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. THEREFORE, THE ORDER PASS ED BY THE A.O. IS ERRONEOUS, IN SO FAR AS IT IS PREJUDICIAL TO THE IN TEREST OF THE REVENUE. IT WAS THE CONTENTION OF THE ASSESSEE THAT THE ORDER P ASSED BY THE A.O. IS NOT ERRONEOUS, IN SO FAR AS IT IS PREJUDICIAL TO TH E INTEREST OF THE REVENUE AS THE A.O. HAS EXAMINED THE ISSUE AT THE TIME OF C OMPLETION OF ASSESSMENT U/S 143(3) OF THE ACT. THE ASSESSEE FUR THER CONTENDED THAT HE HAD RIGHTLY DECLARED THE INCOME UNDER THE HEAD INCOME FROM BUSINESS. IT WAS FURTHER SUBMITTED THAT HE HAD DE VELOPED LAND AND FORMED RESIDENTIAL PLOTS ALONG WITH ANOTHER CO-OWNE R WITH 50% SHARE EACH AND DECLARED THE RESPECTIVE INCOME IN THEIR IN DIVIDUAL RETURNS. THE OTHER CO-OWNER CASE WAS SUBJECTED TO REVISION PROCE EDINGS U/S 263 OF THE ACT, WHEREIN THE CIT HAS DIRECTED TO ASSESS THE INCOME UNDER THE HEAD PROFITS & GAINS OF BUSINESS OR PROFESSION. THEREFORE, THE A.O. HAS RIGHTLY ASSESSED THE INCOME UNDER THE HEAD PROFITS & GAINS OF BUSINESS ITA NO.415/VIZAG/2014 N. SEETHARAMAIAH, BAPATLA 8 OR PROFESSION, HENCE HIS ORDER CANNOT BE TERMED AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IN TERMS OF SECTION 263 OF THE ACT. 9. THE ONLY ISSUE CAME UP FOR OUR CONSIDERATION IS WHETHER THE INCOME DECLARED FROM SALE OF PLOTS IS ASSESSABLE UN DER THE HEAD PROFITS & GAINS OF BUSINESS OR PROFESSION OR UNDER THE HEA D INCOME FROM CAPITAL GAINS. IT WAS THE CONTENTION OF THE ASSES SEE THAT HE IS INTO THE BUSINESS OF DEVELOPMENT OF RESIDENTIAL PLOTS, THERE FORE, INCOME IS ASSESSABLE UNDER THE HEAD PROFITS & GAINS OF BUSIN ESS OR PROFESSION. IT WAS THE CONTENTION OF THE CIT THAT THE INCOME IS AS SESSABLE UNDER THE HEAD CAPITAL GAINS AND THE ASSESSEE HAS DECLARED THE INCOME UNDER THE HEAD PROFITS & GAINS OF BUSINESS OR PROFESSION TO AVOID THE PROVISIONS OF SECTION 50C OF THE ACT. WE HAVE GONE THROUGH THE AS SESSMENT ORDER AND ALSO SHOW CAUSE NOTICE ISSUED BY THE CIT. THE CIT R EVISED THE ASSESSMENT ORDER ON THE SOLE GROUND THAT THE A.O. H AS NOT EXAMINED THE ISSUE OF TAXABILITY OF INCOME FROM SALE OF PLOT S UNDER APPROPRIATE HEAD OF INCOME. ON PERUSAL OF THE ASSESSMENT ORDER , WE FIND THAT THE A.O. AT THE TIME OF COMPLETION OF ASSESSMENT HAS EX AMINED THE ISSUE OF TAXABILITY OF PARTICULAR INCOME AND HAS ACCEPTED TH E INCOME DECLARED BY THE ASSESSEE UNDER THE HEAD INCOME FROM BUSINESS A ND PROFESSION. ONCE, THE A.O. HAS ACCEPTED THE INCOME UNDER PARTIC ULAR HEAD OF ITA NO.415/VIZAG/2014 N. SEETHARAMAIAH, BAPATLA 9 INCOME AFTER FULLY SATISFIED WITH THE EXPLANATION F URNISHED BY THE ASSESSEE, THE CIT HAS NO JURISDICTION TO REVISE THE ASSESSMENT ORDER BY STATING THAT THE A.O. HAS NOT EXAMINED THE ISSUE AN D ALSO NOT APPLIED HIS MIND BEFORE COMPLETION OF ASSESSMENT. WE FURTHER NO TICED THAT THE CIT WAS OF THE OPINION THAT THE A.O. HAS NOT CONSIDERED THE ISSUE OF APPLICABILITY OF THE PROVISION OF SECTION 50C OF TH E ACT. WE FIND THAT WHEN THE INCOME IS ASSESSABLE UNDER THE HEAD PROFIT S & GAINS OF BUSINESS OR PROFESSION, THE PROVISIONS OF SECTION 5 0C OF THE ACT HAS NO APPLICATION, THEREFORE, THE CIT WAS NOT CORRECT IN COMING TO THE CONCLUSION THAT THE A.O. HAS NOT EXAMINED THE ISSUE OF APPLICABILITY OF THE PROVISIONS OF SECTION 50C OF THE ACT. THEREFOR E, WE ARE OF THE OPINION THAT THE ASSESSMENT ORDER PASSED BY THE A.O . DATED 19.12.2011 IS NOT ERRONEOUS, IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE CIT WITHOUT POINTING OUT ANY SPECIFIC DEFECTS IN THE ASSESSMENT ORDER, HAS SIMPLY INVOKED THE PROVISIONS OF SECTION 263 OF THE ACT AND REVISED THE ASSESSMENT ORDER. THEREFOR E, WE SET ASIDE THE ORDER PASSED BY THE CIT U/S 263 OF THE ACT AND REST ORE THE ASSESSMENT ORDER PASSED BY THE A.O. U/S 143(3) OF THE ACT. ITA NO.415/VIZAG/2014 N. SEETHARAMAIAH, BAPATLA 10 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 19 TH APR16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 19.04.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT N. SEETHA RAMAIAH, D.NO.16-7-21/ 5, ISLAM PET, BAPATLA, GUNTUR DIST., BAPATLA 2. / THE RESPONDENT THE ACIT, CIRCLE-1(1), GUNTUR 3. + / THE CIT, GUNTUR 4. + ( ) / THE CIT (A), GUNTUR 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM
