P. Rama Prasad, Hyd, Hyderabad V. ITO, Ward-13(3), Hyd, Hyderabad

ITA 495/Hyd/2016

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6975 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2010-2011
• Appeal Filed On: 06-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Capital Gains
• Section: 148; 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERAB AD BENCH “B”, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No. 495/Hyd/2016 Assessment Year: 2010-11 P. Rama Prasad, Hyderabad. PAN – AGMPP 8790J vs. Income-tax Officer, W ard – 13(3), Hyderabad (Appellant) (Respondent) SA No. 58/H/2016 (in ITA No. 495/Hyd/2016 Assessment Year: 2010-11) P. Rama Prasad, Hyderabad. PAN – AGMPP 8790J vs. Income-tax Officer, W ard – 13(3), Hyderabad (Applicant) (Respondent) Assessee by : Shri P. Murali Mohan Rao Revenue by : Shri K.J. Rao Date of hearing 27-10-2016 Date of pronouncement 28-10-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: This appeal is preferred by the Assessee against the order of the learned Commissioner of Income-tax(A) - 4, Hyderabad, dated 15/02/2016 for AY 2010-11. 2. Briefly the facts of the case are that the assessee is a retired employee of AP State Government and filed his return of income for the AY 2010-11 on 6/06/2010 admitting total income from pension and income from other sources Rs. 2,48,322/-. Subsequently, a notice 2 ITA No. 495/H/16 P. Rama Prasad was issued u/s 148 of the Act on 03-01-2013 asking the assessee to file the return of income and proposing to reassess the income of the assessee. The assessee filed a letter dated 23-01-2013 requesting the AO to treat the return originally filed on 16-06-2010 as return filed against the order u/s 148 of the Act and further requested the AO to issue the assessee a copy of reasons recorded for reopening the assessment u/s 148 of the Act. However, the reasons recorded for issue of notice u/s 148 were not communicated to the assessee till the completion of assessment. The assessment was completed u/s 143(3) rws 148 of the Act vide order dated 28-03-2014 determining the total taxable income of the assessee at Rs. 92,15,322/- and tax thereon of Rs. 40,56,800/- 3. Against the order of the AO, the assessee preferred an appeal before the CIT(A) contending that the AO has completed the reassessment proceedings u/s 148 of the Act without communicating the reasons for reopening to the assessee, as it is an established position of law that in the proceedings of 147 assessments, when the assessee seeks reasons for reopening of assessment, the AO is bound to communicate the same. He further contended, that when the assessee vide his letter dated 23/01/2013 has specifically sought the reasons for issue of notice u/s 148 of the Act, the AO erred in not issuing the reasons and concluding the assessment. In this connection, he relied on the decision of the Hon’ble Supreme Court in the case of GKN (Driveshafts India) Ltd. Vs. ITO, 125 Taxmann 963) and the decision of the coordinate bench of tribunal in the case of N. Surya Prakash Rao Vs. DCIT 13(1) in ITA Nos. 300-301/H/2013 vide order dated 28/06/2013. 3.1 He also contended that the ld. AO erred in initiating the reassessment proceedings u/s 147 of the Act without there being any new material on record. The AO has to appreciate the fact that it is a settled position of law that no reassessment can be made merely on change of opinion without there being any new tangible material on 3 ITA No. 495/H/16 P. Rama Prasad record. For this proposition, he relied on the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Kelvinator (India) Ltd., 320 ITR 561. 4. The CIT(A) after considering the submissions of the assessee, observed that from the assessment records, it is noticed that the AO has noted the reasons for reopening of the assessment in the order sheet and accordingly issued notice u/s 148, mentioning the same. Since, the assessee has received the notice u/s 148 and very well the assessee appeared before the AO several times, the claim of the assessee that the reasons are not provided is not to be acceptable. Accordingly, he upheld the action of the AO in reopening of assessment. On merits also, confirmed the addition made by the AO on account of short term capital gains. 5. Aggrieved, the assessee is in appeal before us raising the following grounds of appeal: 1. The order of the Ld.CIT(A)-4, Hyderabad is erroneous both on facts and in law. 2. The Ld. CIT(A) ought to have annulled the impugned assessment on the ground that the Assessing Officer failed to supply the reasons for issue of notice u/s 148 inspite of the fact that the reasons were sought for vide assessee's letter dated 23- 01-2013. 3. The Ld. CIT(A) erred in holding that since the appellant has received the notice u/s 148 and appeared before the Assessing Officer several times, the claim of the appellant that the reasons are not provided is not acceptable. 4. The Ld. CIT(A) grossly erred in appreciating the ratio laid down by the Apex Court in the case of GKN Drive Shafts (India) Ltd. vs. ITO (123 Taxmann 963) (SC) with regard to the obligation of the Assessing Officer in supplying the reasons for issue of notice u/s 148 of the Act. 5. The Ld. CIT(A) ought to have appreciated the fact that the property sold is "stock in trade" of the assessee and that the provisions of Section 50C of the Act would not apply to the assessee. 4 ITA No. 495/H/16 P. Rama Prasad 6. The Ld. CIT(A) erred in upholding the addition of Rs.89,67,000/- made under the head "Short Term Capital Gains". 7. The Ld. CIT(A) erred in holding that the land shown as stock in trade is not to be accepted on the ground that the appellant is not in the habit of doing a business in the lands or real estate, that no business profits or losses were disclosed by the appellant for the year under consideration or for earlier years, that the appellant is simply a retired employee and that the impugned land is sold to the same person from whom loan was taken. 6. The ld. AR of the assessee besides reiterating the submissions as made before the CIT(A), submitted that the CIT(A) is wrong in upholding the reassessment made by the AO u/s 147/148, as the AO failed to supply the reasons for issue of notice u/s 148 inspite of the fact that the reasons were sought for vide assessee’s letter dated 23/01/2013. He further submitted that the CIT(A) grossly erred in appreciating the ratio laid down by the Apex Court in the case of GKN Drive Shafts (India) Ltd., (supra) with regard to the obligation of the AO in supplying the reasons for issue of notice u/s 148 of the Act. 7. On the other hand, ld. DR relied on the order of the CIT(A). 8. Considered the rival submission and perused the material facts on record. As submitted by the ld. AR of the assessee, it is settled position of law that in the proceedings of 147 assessments, when the assessee seeks reasons of reopening of assessment, the AO is bound to communicate the same. In this connection, the Hon'ble Supreme Court in the case of GKN Drive Shafts (India) Ltd. (supra). has held as under:- "When a notice under section 148 of the IT Act, 1961, is issued, the proper course of action for the noticee is to file the return and, if he so desires, to seek reasons for issuing the notices. The AO is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the AO is bound to dispose of the same by passing a speaking order." 5 ITA No. 495/H/16 P. Rama Prasad 9. Following the observations of the Hon’ble Surpeme Court, we set aside the order of the CIT(A) and remit the matter back to the file of the AO with a direction to re-do the assessment after supplying the reasons recorded for reopening of the assessment u/s 148 of the Act, since the procedure laid down by the Hon’ble Supreme Court in the case of GKN Drive Shafts is the law of the land and the AO is bound by such direction. Needless to say, assessee may be given proper opportunity of being heard. 10. Since the assessment made u/s 147 is remitted back to the file of the AO, the addition made in such assessment has become infructuous, therefore, we refrain from going on merits of such addition. 11. As the corresponding appeal of assessee was heard and disposed off, the SA filed by the assessee becomes academic in nature, therefore, the same is dismissed as infructuous. 12. In the result, appeal of the assessee is treated as allowed for statistical purposes. Pronounced in the open court on 28 t h October, 2016. Sd/- Sd/- (P. MADHAVI DEVI) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated: 28 t h October, 2016 kv 6 ITA No. 495/H/16 P. Rama Prasad Copy to:- 1) Sri P. Rama Prasad, C/o P. Murali & Co., CAs., 6-3-655/2/3, 1 s t Floor, Somajiguda, Hyderabad – 500 082 2) ITO, Ward – 13(3), Hyd. 3) CIT - 4, Hyderabad 4 Pr. CIT – 4, Hyderabad 5) The Departmental Representative, I.T.A.T., Hyderabad. 6) Guard File