V Vijay Lakshmi, Hyderabad V. ITO, Ward 7(1), Hyderabad

ITA 449/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74671 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 03-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: P BALAKRISHNA
• Keywords: Opportunity of being heard
• Section: 143(3); 54F; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 449/HYD/2013 ASSESSMENT YEAR : 2003-04 SMT. V. VIJAYA LAKSHMI HYDERABAD PAN: ABVPL7827N VS. THE ITO WARD-7(1) HYDERABAD [APPELLANT] [RESPONDENT] APPELLANT BY: SRI P. BALA KRISHNA RESPONDENT BY: SRI D. SUDHAKAR RAO DATE OF HEARING: 03.03.2014 DATE OF PRONOUNCEMENT: 03.03.2014 ORDER PER CHANDRA POOJARI, AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT-VI, HYDERABAD DATED 13.3.2013 FOR THE ASSESSMENT YEAR 2003-04. 2. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WIT H REGARD TO ASSUMPTION OF JURISDICTION BY THE CIT U/S. 263 AND DIRECTION OF THE CIT TO THE AO TO REDO THE ASSESSME NT DE NOVO BY EXAMINING ALL THE DETAILS WITH REFERENCE TO THE RECEIPT OF RS. 10 LAKHS BY THE ASSESSEE ON 16.4.2003. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FOR A .Y. 2003-04, FILED RETURN OF INCOME OF RS. 4,24,130 REP RESENTING LONG TERM CAPITAL GAINS ON SALE OF PROPERTY. THE C ASE TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED ON ITA NO. 449/HYD/2013 SMT. V. VIJAYA LAKSHMI ===================== 2 28.02.2006 BY DETERMINING TOTAL INCOME AT RS. 14,24 ,130. WHILE DOING SO, THE AO ADDED A SUM OF RS. 10,00,000 AS INCOME FROM OTHER SOURCES BY REJECTING CLAIM OF THE ASSESSEE THAT THE SAME DOES NOT REPRESENT SALE PROCEEDS. ON APPEAL, THE CIT(A) HELD THAT THE CAPITAL GAINS SHOULD BE AS SESSED FOR A.Y. 2004-05, BUT NOT IN A.Y. 2003-04 AND ALSO DELE TED THE ADDITION OF RS. 10,00,000 ADDED BY THE AO AS INCOME FROM OTHER SOURCES. BOTH THE DEPARTMENT AS WELL AS THE ASSESSEE PREFERRED AN APPEAL AGAINST THE ORDER OF CIT(A) AND THE TRIBUNAL, HYDERABAD BENCH SET ASIDE THE ORDER OF TH E CIT(A) TO THE FILE OF THE AO FOR FRESH CONSIDERATION AND R E- DETERMINATION OF THE TOTAL INCOME BY HOLDING A VIEW THAT THE CIT(A) HAS NOT GIVEN DUE OPPORTUNITY TO THE AO. CO NSEQUENT TO THE DIRECTIONS OF THE TRIBUNAL, THE AO MADE A FR ESH ORDER ON 30.12.2010, ADMITTING RETURNED INCOME FILED BY T HE ASSESSEE AS THE TOTAL INCOME. 4. IN THIS CASE, THE ASSESSEE ENTERED INTO A DEVELOPME NT CUM GPA ON 25/05/2000 WITH SMT. USHA RANI TO DEVELOP 936 SQUARE YARDS (SQY) OF LAND AND TO SHARE THE CONSTRU CTED AREA EQUALLY BETWEEN THEM. SINCE THE WORK COULD NOT BE TAKEN UP, THE BUILDER ACQUIRED THE ENTIRE PROPERTY IN THE MON TH OF MARCH, 2003 RELEVANT TO THE AY 2003-04. THE ASSESS EE RECEIVED FROM THE BUILDER A SUM OF RS. 3 LAKHS ON 2 2/06/2000 ITA NO. 449/HYD/2013 SMT. V. VIJAYA LAKSHMI ===================== 3 AND RS. 10 LAKHS ON 05/03/2003. SUBSEQUENTLY, THE SA LE DEED WAS REGISTERED ON 03/05/2003. IN THE MEANWHILE, THE ASSESSEE ALSO RECEIVED A SUM OF RS. 10 LAKHS ON 16/0 4/2003. AT THE TIME OF REGISTRATION OF THE SALE DEED, I.E. ON 03/05/2003, THE ASSESSEE RECEIVED A SUM OF RS. 40,42, 000/- VIDE DEMAND DRAFT DRAWN ON HSBC BANK. IN THE A.Y. 2 003-04, THE ASSESSEE DISCLOSED LONG TERM CAPITAL GAINS BY D ECLARING SALE CONSIDERATION OF RS. 63,42,000/ - AND CLAIMED EXPENDITURE AND EXEMPTION U/S. 54F AND THEREBY DETER MINED THE LONG TERM CAPITAL GAIN AT RS. 4,24,130/-. 5. WHILE COMPLETING THE ORIGINAL ASSESSMENT U/S. 143(3) ON 28/02/2006, THE AO HAS MADE ADDITION OF RS. 10,00, 000/- RECEIVED ON 05/03/2003, AS INCOME FROM OTHER SOURCES SINCE THE SAME DOES NOT REPRESENT SALE CONSIDERATION AS P ER THE SALE DEED. THE ASSESSEE ALSO COULD NOT SUBSTANTIAT E WITH ANY REASONABLE EVIDENCES TO THE POINT OF SUCH SUM IS PA RT AND PARCEL OF THE SALE CONSIDERATION. CONSEQUENT TO TH E DIRECTIONS OF THE TRIBUNAL, THE AO MADE FRESH ASSES SMENT ON 30/12/2010 ACCEPTING THE TOTAL INCOME RETURNED BY THE ASSESSEE. IN THE ASSESSMENT ORDER, THE AO SIMPLY S TATED THAT IN THE A.Y. 2004-05, THE DEPARTMENT HAS CONSIDERED THE FULL VALUE AS SALE CONSIDERATION FOR THE PURPOSE OF COMP UTING THE CAPITAL GAINS AND HELD THE VIEW THAT THE CAPITAL GA INS ARE ITA NO. 449/HYD/2013 SMT. V. VIJAYA LAKSHMI ===================== 4 RIGHTLY ASSESSED IN THE AY. 2004-05. HE HAS NOT CO NSIDERED THE AMOUNT OF RS. 10 LAKHS AS INCOME FROM OTHER SOU RCES. THE AO IS UNDER THE IMPRESSION THAT SINCE THE TOTAL VALUE OF RS. 63,42,000/- WAS CONSIDERED IN THE AY 2004-05 TH ERE IS NO OCCASION TO ASSESS THE PART OF SUCH AMOUNT AGAIN IN THE CURRENT ASSESSMENT YEAR. 6. ON PROCEEDINGS U/S. 263, THE CIT OBSERVED THAT THE A O FAILED TO UNDERSTAND THE SOURCE OF THE TOTAL INCOME RETURNED BY THE ASSESSEE FOR THE AY 2003-04. THE TOTAL INCOM E OF RS. 4,24,130 IS NOTHING BUT LONG TERM CAPITAL GAIN DETE RMINED BY THE ASSESSEE ON A TOTAL CONSIDERATION OF RS. 63,42, 000. THERE IS A TOTAL LACK OF APPLICATION OF MIND AND APPRECIA TION OF FACTS BY THE AO WHILE RE-COMPUTING THE TOTAL INCOME AS PE R THE DIRECTIONS OF THE TRIBUNAL. IT IS HIS DUTY TO ASCER TAIN FULL FACTS AND AFTER EXAMINATION OF THE SAME VIS-A-VIS APPROPR IATE WITH THE LAW TO FRAME THE ASSESSMENT AND TO DETERMINE TH E TOTAL INCOME. IT IS VERY CLEAR FROM THE FACTS AS WELL AS FROM THE PERUSAL OF THE SALE DEED THAT THE PROPERTY UNDER CONSIDERATION HAS BEEN SOLD TO THE VENDEE FOR A CON SIDERATION OF RS. 40,42,000 AND THE VENDOR ACKNOWLEDGED THE RE CEIPT OF SAID CONSIDERATION THROUGH DD NO. 913174 DRAWN ON H SBC BANK, PUNJAGUTTA BRANCH, HYDERABAD. THE AO DID MENT ION ABOUT THE SALE DEED THAT WAS REGISTERED ON 3 RD MAY, 2003 IN ITA NO. 449/HYD/2013 SMT. V. VIJAYA LAKSHMI ===================== 5 THE ASSESSMENT ORDER BUT TOTALLY IGNORED THE CONTEN TS OF THE SAID SALE DEED FOR THE PURPOSE OF ASSESSMENT. THER EBY THERE IS AN ERROR CREPT IN THE SAID ASSESSMENT ORDER WHIC H IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ACCOR DINGLY A SHOW CAUSE NOTICE U/S. 263 OF THE ACT WAS ISSUED TO THE ASSESSEE TO EXPLAIN WHY THE SAID ASSESSMENT SHOULD NOT BE SET ASIDE WITH A DIRECTION TO REDO AFRESH, AFTER CO NSIDERING THE ABOVE ISSUES. 7. THE CIT OBSERVED THAT IT IS THE ARGUMENT OF THE ASS ESSEE THAT THE TOTAL AMOUNT RECEIVED FROM SMT. C. USHA RA NI, AT RS. 63,42,000/ - REPRESENTS SALE CONSIDERATION ON TRANSF ER OF PROPERTY BY THE ASSESSEE. IF THE SAID AMOUNT REPRES ENTS SALE CONSIDERATION BOTH PARTIES I.E., VENDOR & VENDEE WO ULD HAVE DECLARED THE SAME IN THE SALE DEED WHICH WAS REGIST ERED ON 03/05/2003 AS SALE CONSIDERATION. ON THE CONTRARY IN THE SALE DEED A SUM OF RS. 40,42,000/ - WAS ONLY MENTIONED AN D TO THE EXTENT CONSIDERATION WAS PAID BY DEMAND DRAFT ON HS BC BANK AND THE VENDOR ADMITTED AND ACKNOWLEDGED THE RECEIP T OF THE SAME TOWARDS SALE CONSIDERATION OF THE PROPERTY TRA NSFERRED VIDE THE ABOVE REFERRED DOCUMENT. THE ASSESSEE CANN OT TAKE DIFFERENT PLEAS BEFORE DIFFERENT AUTHORITIES. FOR THE PURPOSE OF COMPUTATION OF STAMP DUTY BOTH SELLER AND BUYER DECLARED SALE CONSIDERATION AT RS. 40,42,000/- AND FOR THE P URPOSE OF ITA NO. 449/HYD/2013 SMT. V. VIJAYA LAKSHMI ===================== 6 COMPUTATION OF CAPITAL GAINS, THE SALE VALUE IS BEI NG SHOWN AT RS. 62,42,000/-. TRANSFER OF PROPERTIES IS RECOGNI ZED BY WAY OF REGISTERED SALE DEED. FULL VALUE OF CONSIDERATIO N FOR TRANSFER OF PROPERTY IS TO BE TAKEN INTO ACCOUNT ON THE BASIS OF VALUE DECLARED IN THE SALE DEED OR THE VALUE AS PER THE STAMP REGISTRATION AUTHORITY. THE ASSESSEE CANNOT CONTEND THAT OTHER AMOUNTS RECEIVED FROM THE BUILDER AS PAR T OF THE CONSIDERATION TOWARDS TRANSFER OF PROPERTY. MERE E NTRY IN THE BOOKS OF THE ASSESSEE AS WELL AS THE BUILDER DOES N OT SUBSTANTIATE THE CLAIM THAT TOTAL CONSIDERATION ON THIS SALE OF PROPERTY IS AT RS. 63,42,000/-. IN THE ORIGINAL ASS ESSMENT THE AO ASSESSED THE AMOUNT RECEIVED AS INCOME FROM OTHE R SOURCES IN THE ABSENCE OF ANY EXPLANATION FROM THE ASSESSEE. EVEN PERUSAL OF THE ORIGINAL SALE AGREEMENT BETWEEN THE ASSESSEE AND MRS. USHA RANI, ENTERED ON 24/05/2000 AL SO DOES NOT REFLECT THE CONSIDERATION AS CONTENDED BY THE ASSESSEE NOW. AS PER THE AGREEMENT BOTH THE ASSESS EE AND DEVELOPER SHOULD GET 50% OF THE BUILT UP AREA, NO V ALUES HAVE BEEN MENTIONED. THEREFORE, THE SUBSEQUENT ARGUMENT OF THE ASSESSEE HAS NO BASIS TO HOLD THE VIEW THAT A SUM O F RS. 10 LAKHS RECEIVED ON 5'' MARCH, 2003 AS PART OF THE SA LE CONSIDERATION. IT IS A CLEAR CASE OF NON EXAMINATIO N OF ISSUE AS WELL AS NON APPLICATION OF MIND BY THE AO WHILE FRA MING THE SET ASIDE ASSESSMENT ORDER CONSEQUENT TO THE DIRECT IONS OF ITA NO. 449/HYD/2013 SMT. V. VIJAYA LAKSHMI ===================== 7 THE TRIBUNAL. HE SIMPLY HELD THE VIEW THAT SINCE TH E CAPITAL GAINS ARE ASSESSED IN A.Y. 2004-05 RIGHTLY AND COMP LETED THE ASSESSMENT ACCEPTING THE TOTAL INCOME IGNORING THE FACT THAT THE ASSESSEE HAS DECLARED CAPITAL GAINS IN THIS ASS ESSMENT YEAR. THE AO TOTALLY IGNORED THE SUM OF RS. 10 LAKH S RECEIVED ON 05/03/2003 FOR INCLUDING IN THE TOTAL INCOME OF TH E ASSESSEE. THEREFORE, SUCH AN ASSESSMENT ORDER IS NO T ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF T HE REVENUE. 8. THE CIT OBSERVED THAT THE ASSESSMENT SO MADE BY THE AO IS IN A VERY CASUAL AND MECHANICAL MANNER, DESER VES TO BE SET-ASIDE FOR MAKING A FRESH ASSESSMENT. ASSESSMEN T MADE WITHOUT PROPER ENQUIRY IS HELD AS ERRONEOUS AND PRE JUDICIAL TO THE INTERESTS OF THE REVENUE AND THE COMMISSIONE R IS EMPOWERED TO REVISE SUCH ASSESSMENT BY INVOKING PRO VISIONS OF SECTION 263. HE RELIED ON THE FOLLOWING DECISIO NS IN SUPPORT OF SUCH PROPOSITION WHICH ARE AS UNDER: (1) RAMPYARI DEVI SAROGI VS CIT, 67 ITR 84 (SC) (2) MALABAR INDUSTRIAL CO. LTD VS CIT, 243 ITR 83 (SC) (3) SWARUP VEGETABLE PRODUCTS INDUSTRIES LTD VS CIT, 18 7 ITR 412 (ALL) (4) GEE VEE ENTERPRISES VS ADDL. CIT & ORS 99 ITR 375 ( DEL) (5) RAJALAKSHMI MILLS LTD VS ITO, 121 ITD 343 (SB) (CHE NNAI) SRM SYSTEMS & SOFTWARE PVT. LTD VS ACIT, 2010-TIOL- 646- HC-MAD-IT. 9. THE CIT HELD IN VIEW OF THE ABOVE DECISION THAT IT IS VERY CLEAR THAT THE ASSESSMENT FRAMED BY THE AO U/S. 143(3) R.W.S. 254 ON 30/12/2010 IS ERRONEOUS AND THEREBY ITA NO. 449/HYD/2013 SMT. V. VIJAYA LAKSHMI ===================== 8 PREJUDICIAL TO THE INTERESTS OF THE REVENUE. CONSEQ UENTLY, THE SAID ASSESSMENT ORDER DESERVES TO BE SET ASIDE WITH A DIRECTION TO REDO THE SAME DE NOVO BY EXAMINING ALL THE DETAILS DISCUSSED AS PER LAW. WHILE DOING SO, THE ASSESSEE SHOULD BE GIVEN PROPER OPPORTUNITY OF BEING HEARD B EFORE FINALISING THE SET ASIDE ASSESSMENT. AGAINST THIS , THE ASSESSEE IS IN APPEAL BEFORE US. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MATERIAL ON RECORD. IN OUR OPINION, THE AO WHILE PASSING CONSE QUENTIAL ORDER TO TRIBUNAL ORDER DATED 16.12.2009 IN ITA NO. 1037/ HYD/2006 CARRIED ON DETAILED ENQUIRY WITH REFERENCE TO THE RECEIPT OF RS. 10 LAKHS BY THE ASSESSEE ON 16.4.200 3. HE HAS GONE THROUGH THE REPLIES FILED BY THE ASSESSEE AND ALSO GONE THROUGH THE IMPUGNED SALE DEED COPY WHICH WAS REGIS TERED ON 3 RD MAY, 2003 (FY 2003-04 RELEVANT A.Y. 2004-05) AND A LSO GIVEN FINDING THAT THE LIABILITY OF CAPITAL GAIN IS ASSESSABLE IN THE A.Y. 2004-05 AND THE SAME WAS ASSESSED IN THE A .Y. 2004- 05 VIDE ASSESSMENT ORDER PASSED U/S. 143(3) DATED 29.11.2006 SO THAT HE OPTED NOT TO MAKE ANY ADDITIO N FOR A.Y. 2003-04. THE ORDER PASSED BY THE AO IS IN CONFORMI TY WITH THE ORDER OF THE TRIBUNAL DATED 16.12.2009. THE AO CAME TO THIS CONCLUSION AFTER DETAILED EXAMINATION OF THE F ACTS AND CIRCUMSTANCES OF THE CASE AND DIRECTION OF THE TRIB UNAL. THE ITA NO. 449/HYD/2013 SMT. V. VIJAYA LAKSHMI ===================== 9 OBSERVATION OF THE CIT IN THE PROCEEDINGS U/S. 263 O F THE ACT IS UNWARRANTED. THE AO HAVING APPLIED HIS MIND CAM E TO THE CONCLUSION THAT THERE IS NO NECESSITY OF ADDITION R ELATING TO THE ISSUE RAISED BY THE CIT. 11. AS THERE WAS ENQUIRY BY THE AO, EVEN ASSUMING THAT IT IS INADEQUATE, THAT WOULD NOT GIVE AN OCCASION TO E XERCISE JURISDICTION BY THE CIT U/S. 263 OF THE ACT. ASSESS MENT ORDER CANNOT BE REVISED ON THE GROUND THAT A DEEPER ENQUI RY SHOULD HAVE BEEN MADE OR PROPER EXERCISE WAS NOT DONE WHIL E MAKING THE ASSESSMENT. MORE SO, IN THE PRESENT CAS E, THERE IS NO FINDING BY THE CIT THAT THERE IS ANY LOSS OF REV ENUE AND THE IMPUGNED RECEIPT WAS SUBJECT TO TAX IN A.Y. 200 4-05. THE AO AFTER TAKING INTO ACCOUNT SUBMISSIONS BY THE ASS ESSEE AS WELL AS THE EVIDENCE, HE CAME TO THE CONCLUSION THA T NO ADDITION IS WARRANTED IN A.Y. 2003-04. THEREFORE, IT CANNOT BE SAID THAT THE AO PASSED THE ASSESSMENT ORDER IN A C ASUAL MANNER OR WITHOUT APPLICATION OF MIND. THE CIT DID NOT BRING ON RECORD THAT THERE WAS ANY DISCREPANCY OR F ALSITY IN EVIDENCE. THEREFORE, THE ORDER PASSED BY THE AO CA NNOT BE TERMED AS ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF REVENUE SO AS TO ASSUME JURISDICTION BY THE CIT U/S. 263 OF THE ACT. THE CIT HAVING NOT BROUGHT ON RECORD ANY ERROR OR O MISSION OR FAILURE ON THE PART OF THE AO SO AS TO MAKE THE ASSESSMENT ITA NO. 449/HYD/2013 SMT. V. VIJAYA LAKSHMI ===================== 10 ORDER ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF REVENUE, THE ORDER OF THE CIT PASSED U/S. 263 OF THE ACT HAS NO L EGS TO STAND. ACCORDINGLY, WE ARE INCLINED TO CANCEL THE ORDER OF THE CIT AND CONFIRM THE ORDER OF THE AO. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD MARCH, 2014. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 3 RD MARCH, 2014 TPRAO COPY FORWARDED TO: 1. SMT. V. VIJAYA LAKSHMI, H. NO. 10-3-789/3/A. VIJAY NAGAR COLONY, HYDERABAD. 2. THE ITO, WARD-7(1), 2 ND FLOOR, IT TOWERS, AC GUARDS, HYDERABAD. 3. THE CIT-VI, HYDERABAD. 4. THE ADDL. CIT, RANGE 7, HYDERABAD. 5. THE DR BENCH 'B', ITAT, HYDERABAD