Grandhi Venkata Satya Lakshmi Kantha Rao, Guntur V. THE CIT, (Guntur Charge, Guntur), Guntur

ITA 476/VIZ/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6670 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 05-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R GOVINDARAJAN
• Keywords: Salary income; Deemed to accrue or arise in india
• Section: 143(3); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 4 76 /VIZ/ 201 4 ( / ASSESSMENT YEAR: 2009 - 10 ) G.V.S.L.KANTHA RAO C/O M/S P.NAGESWARA RAO & CO. AUDITORS, ANJUMAN BUILDINGS LALAPET GUNTUR 522 003 [ PAN : A HEPG4370L ] THE COMMISSIONER OF INCOME TAX GUNTUR CHARGE GUNTUR, RAJKAMAL COMPLEX MAIN ROAD, LAKSHMIPURAM GUNTUR 522 007 ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI, AR / RESPONDENT BY : S HRI R.GOVINDARAJAN , DR / DATE OF HEARING : 0 7 .0 9 .2017 / DATE OF PRONOUNCEMENT : 13 . 0 9 .2017 / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX, GUNTUR DATED 25 .0 2 .201 4 FOR THE ASSESSMENT YEAR 2009 - 10 . 2 ITA NO. 4 76 /VIZ/201 4 G.V.S.L.KANTHA RAO, GUNTUR 2. ALL GROUNDS OF APPEAL ARE RELATED TO THE ORDER PASSED BY THE LD. CIT U/S 263 OF I.T.ACT. 3. IN THIS CASE, THE ASSESSEE FILED RETURN OF INCOME ADMITTING TOTAL INCOME OF RS.14,47,090/ - AND THE ASSESSMENT WAS COMPLETED U/S 143(3) ACCEPTING THE RETURNED INCOME BY AN ORDER DATED 29.12.2011 . SUBSEQUENTLY, THE LD. CIT HAS TAKEN UP THE CASE FOR REVISION U/S 263 FOR THE FOLLOWING REASONS : (I) THE ASSESSEE HAS SHOWN CLOSING BALANCE OF DEPOSIT OF RS.4,70,580/ - REPRESENTING POSTAL DEPOSIT WHICH CARRIES INTEREST @8%. BUT THE ASSESSEE HAS NOT ADMITTED THE INTEREST WORKING OUT TO RS.37,6 46/ - . (II) THE CIT HAS OBSERVED THAT THE ASSESSEE MADE INVESTMENT OF RS.55 LAKHS IN SYAMALA A/C WHICH IS SHOWN UNDER THE HEAD LOANS AND ADVANCES IN THE BALANCE SHEET, BUT THE ASSESSING OFFICER HAS NOT EXAMINED THE CORRECTNESS OF INVESTMENT IN THE RESID ENTIAL HOUSE AND THE INVESTMENT MADE FOR ACQUISITION OF SITE DURING THE ASSESSMENT PROCEEDINGS. 3 ITA NO. 4 76 /VIZ/201 4 G.V.S.L.KANTHA RAO, GUNTUR 4. THE LD. CIT OBSERVED THAT THE ASSESSEE HAS TAKEN AGRICULTURAL LOAN WHICH SHOWS BALANCE OF RS.25,66,437/ - UNDER THE HEAD SECURED LOANS IN THE BALANCE SHEET AND THE ASSESSING OFFICER HAS NOT EXAMINED THE INTEREST LIABILITY ON THE AGRICULTURAL LOAN. THE ASSESSEE FILED REPLY TO SHOW CAUSE NOTICE. NOT BEING CONVINCED WITH THE REPLY FILED BY THE ASSESSEE, LD.CIT HELD THAT THE ORDER PASSED U/S 143(3) ON 29.12.2011 WA S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO REDO THE ASSESSMENT AFTER MAKING THE ENQUIRIES IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY THE CIT IN THE REVISION ORDER U/S 263. THE LD.CIT HAS DI RECTED THE ASSESSING OFFICER TO EXAMINE THE POSTAL DEPOSITS MADE RIGHT FROM 1.4.2004 AND THE INTEREST ACCRUED ON THE DEPOSIT WITH THE INCOME TAX RETURN S . I N THE CASE OF SYAMALA A/C, THE LD.CIT HAS DIRECTED THE ASSESSING OFFICER TO EXAMINE THE COST OF CONSTRUCTION , ITS OCCUPAN CY, YIELD OF RE NTAL INCOME , LEASE AGREEMENT WITH LAND OWNER AND WHETHER THE SYAM A LA A/C RELATES TO BUILDING CONSTRUCTED IN SYAMALANAGAR OR IT RELATES TO ANY OTHER TRANSACTION BY THE ASSESSEE. WITH REGARD TO AGRICULTURAL LOAN ACCOU NT, THE LD.CIT HAS DIRECTED THE ASSESSING OFFICER TO EXAMINE THE DEEMED 4 ITA NO. 4 76 /VIZ/201 4 G.V.S.L.KANTHA RAO, GUNTUR INCOME IF ANY THAT HAS ARISEN TO THE ASSESSEE . AGGRIEVED BY THE ORDER OF THE LD.CIT PASSED U/S 263, THE ASSESSEE IS IN APPEAL BEFORE US. 5. APPEARING FOR THE ASSESSEE, THE LD.AR ARGU ED THAT WITH REGARD TO POSTAL DEPOSIT THE ASSESSEE HAD SUBMITTED HI S REPLY BEFORE THE LD.CIT STATING THAT THERE WAS NO POSTAL DEPOSIT WHICH WAS OUTSTANDING AS AT THE E ND OF THE YEAR. THE POSTAL DEPOSITS WERE STATED TO HAVE BEEN WITHDRAWN IN 2003 FOR THE PU RPOSE OF HIS DAUGHTERS MARRIAGE. THE ASSESSEE WAS HAVING INCOME FROM SALARY , PROPERTY, LONG TERM CAPITAL GAINS AND O THER SOURCES AND THE ASSESSEE I S NOT CARRYING ON ANY BUSINESS, HENCE , NO PROPER BOOKS OF ACCOUNTS WE RE MAINTAI NED BY THE ASSESSEE AND FURTHER STATED THAT THERE WAS A MISTAKE IN THE BALANCE SHEET IN RESPECT OF POSTAL DEPOSIT . WITH REGARD TO SYAMALA ACCOUNT AND AGRICULTURAL LOANS, THE LD.CIT HAS DIRECTED THE ASSESSING OFFICER TO VERIFY THE COST OF CONSTRUCTION AND THE DEEMED INCOME WITH S USPICION BUT THERE WAS NO SPECIFIC FINDING GIVEN BY THE LD.CIT WITH REGARD TO THE ERROR AND THE PREJUDICE CAUSED TO THE REVENUE. THE LD.AR FURTHER ARGUED THAT THE ASSESSEE HAS CONSTRUCTED THE BUILDING ON LEASED LAND AND THE ENTIRE CONSTRUCTION EXPENDITU RE WAS ACCOUNTED AS EVIDENT FROM 5 ITA NO. 4 76 /VIZ/201 4 G.V.S.L.KANTHA RAO, GUNTUR THE BALANCE SHEET. SIMILARLY IN THE CASE OF AGRICULTURAL LOANS, NO INTEREST WAS PAID AND CLAIMED AS DEDUCTION IN THE RETURN OF INCOME. ALL THESE FACTS ARE EVIDENT FROM THE RETURN OF INCOME AND ITS ENCLOSURES. DURING THE ASSESSMENT PROCEEDINGS AS WELL AS THE REVISION PROCEEDINGS THE ASSESSEE HAD FURNISHED THE DETAILS TO THE AO AND THE LD.CIT. THEREFORE, THE LD.AR ARGUED THAT THE LD.CIT HAS ACTED UPON MERE SUSPICION AND DID NOT MAKE OUT THE CASE FOR REVISION U/S 263 AND AR GUED THAT THE ORDER PASSED U/S 263 IS REQUIRED TO BE QUASHED. 6. ON THE OTHER HAND, LD.DR REFERRING TO PAGE NO.5 OF PAPER BOOK I.E. BALANCE SHEET OF G.V.S.L.KANTHA RAO ARGUED THAT THE ASSESSEE HAS DECLARED THE POSTAL DEPOSIT OF RS.4,70,580/ - AT THE END OF THE YEAR 31.03.2009 . POSTAL DEPOSIT CARRIES INTEREST @8% AND THE ASSESSEE HAS NOT ADMITTED THE INCOME RELATING TO THE INTEREST ON POSTAL DEPOSIT. THEREFORE, LD.DR ARGUED THAT THE ASSESSMENT IS PREJUDICIAL AND ERRONEOUS TO THE EXTENT OF NON ADMISSION OF INCOME ON POSTAL DEPOSIT, HENCE, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFIC ER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. LD.DR SUBMITTED THAT THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT 6 ITA NO. 4 76 /VIZ/201 4 G.V.S.L.KANTHA RAO, GUNTUR ACCEPTING THE INCOME RETURNED AND THERE WAS NO DISCUSSION IN THE ASSESSMENT ORDER REGARDING THE ISSUES WITH RESPECT TO SYAMALA A/C AND THE AGRICULTURAL LOANS. NON VERIFICATION OF THE ISSUES WHICH REQUIRED TO BE VERIFIED IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HENCE, LD.DR SUBMITTED THAT THE LD.CIT HAS RIGHTLY TAKEN UP THE CASE FOR REVISION U/S 263 AN D HENCE, THE ORDER PASSED U/S 263 IS REQUIRED TO BE UPHELD. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSEE HAS DECLARED THE POSTAL DEPOSIT A/C AS AN ASSET IN THE BALANCE SHEET IN THE FINANCIAL YEAR ENDING 31.03.2009. THE POSTAL D EPOSIT CARRIES INTEREST WHICH WAS NOT ADMITTED BY THE ASSESEE IN THE RETURN OF INCOME. THE ASSESSING OF FICER HAS NOT EXAMINED THE INCOME WITH REGARD TO THE POSTAL DEPOSIT AND INTEREST ACCRUED THEREON. SINCE NON ADMISSION OF INCO ME RELATING TO POSTAL DEPOSIT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, AND THERE IS NO DISCUSSION WITH REGARD TO THE SYAMALA A/C AND THE AGRICULTURAL LOANS , THE ASSESSMENT ORDER PASSED U/S 143(3) IS ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF REVENUE . IT IS EVIDENT THAT THE ASSESSING OFFICER HAS NOT 7 ITA NO. 4 76 /VIZ/201 4 G.V.S.L.KANTHA RAO, GUNTUR EXAMINED THE ISSUES RELATING TO SHYAMALA A/C AND AGRICULTURAL LOANS . NON EXAMINATION OF THE ISSUES WHICH REQUIRED TO BE EXAMINED IS AN ERROR COMMITTED BY THE ASSESSING OFFICER AND THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE . THEREFORE, WE HOLD THAT LD.CIT HAS RIGHTLY TAKEN UP THE CASE OF REVISION U/S 263 AND WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD.CIT. THIS VIEW IS SUPPORTED BY THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT [243 ITR 83]. THEREFORE, WE UPHOLD THE ORDER OF THE LD.CIT AND DISMISS THE APPEAL OF THE ASSESSEE. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSED. T HE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 13 TH SEP 20 17 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 13 . 0 9 .2017 L. RAMA, SPS 8 ITA NO. 4 76 /VIZ/201 4 G.V.S.L.KANTHA RAO, GUNTUR /COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT G.V.S.L.KANTHARAO , C/O M/S P.NAGESWARARAO& CO. AUDITORS, ANJUMAN BUILDINGS , LALAPET , GUNTUR 522 003 2 . / THE RESPONDENT THE COMMISSIONER OF INCOME TAX , GUNTUR CHARGE , GUNTUR, RAJKAMAL COMPLEX , MAIN ROAD, LAKSHMIPURAM , GUNTUR 522 007 3. THE ADDL.COMMISSIONER OF INCOME TAX, RANGE - 1, GUNTUR 4 . , , / DR, ITAT, VISAKHAPATNAM 5 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM