Madeti Neelaveni, Anakapalle V. ITO (International Taxation), Visakhapatnam

ITA 550/VIZ/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4181 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 04-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V RAMA MOHAN
• Keywords: Sale consideration of property below Jantri Value; Gift; Residential status; Period of limitation; Cost of acquisition; Time period of passing order
• Section: 143(3); 201(1); 147; 263; 144; 2; 11

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. 547 - 550 /VIZ/ 201 7 ( / A . Y: 20 08 - 20 09 ) SRI MALLA APPALA NAIDU 7 - 17, NAGUALAPALLI MUNAGAPAKA MANDAL VISAKHAPATNAM DIST. [PAN :AAGPN0090B] VS. INCOME TAX OFFICER (INTERNATIONAL TAXATION) VISAKHAPATNAM SMT. MALLA RAJESWARI 7 - 17, NAGUALAPALLI MUNAGAPAKA MANDAL VISAKHAPATNAM DIST. [PAN :ARWPM2962J] SRI MADETI ESWARA RAO 5 - 9 - 30, LAKSHMIDEVIPETA ANAKAPALLE [PAN :AATPM1884H] SMT. MADETI NEELAVENI 5 - 9 - 30, LAKSHMIDEVIPETA ANAKAPALLE [PAN :AAGPN0088H] ( / APPELLANT S ) ( / RESPONDENT) / ASSESSEE S BY : SRI I KAMA SASTRY, AR / REVENUE BY : SRI V.RAM A MOHAN, DR / DATE OF HEARING : 0 5 . 10 .2018 / DATE OF PRONOUNCEMENT : 12 . 10 .2018 2 I.T.A. NO S . 547 - 550 /VIZ/201 7 SR I MALLA APPALA NAIDU, MALLA RAJESWARI VISAKHAPATNAM & SRI MADETI ESWARA RAO, SMT.MADETI NEELAVENI, ANAKAPALLE / O R D E R PER BENCH : THESE APPEALS ARE FILED BY THE ASSESSEES AGAINST THE ORDER S OF THE COMMISSIONER OF INCOME TAX(APPEALS) [CIT(A)] - 1 0 ,HYDERABAD VIDE I.T.A NO. 0037 - 0040 / CIT(A) - 10 /201 5 - 1 6 DATED 07 .0 8 .201 7.SINCE THE GROUNDS RAISED IN THE APPEALS ARE COMMON, THESE APPEALS ARE CLUBBED, HEARD TOGETHER AND DISPOSED IN A COMMON ORDER FOR THE SAKE OF CONVENIENCE AS UNDER. 2. THE IDENTICAL GROUNDS ARE RAISED BY THE ASSESSEES IN ALL THE APPEALS AS UNDER : 1. THE LD . CIT(A) IS NOT CORRECT IN REJECTING THE PLEA OF THE ASSESSEE THAT THE ORDER PASSED BY THE LD. AO UNDER SECTION 201(1)/(1A) DATE D 30.03.2015'S BARRED BY LIMITATION. 2. THE LD. AO IS NOT AT ALL CORRECT AND THE ID. CIT (APPEALS) IS NOT CORRECT IN TREATING THE ASSESSEE AS AN ASSESSEE IN DEFAULT FOR NON DEDUCTION OF TAX AT SOURCE UNDER SECTION 195 WHEN THE NON - RESIDENT VENDOR HAS FIL ED HIS RETURN OF INCOME IN INDIA FOR THE RELEVANT ASSESSMENT YEAR DECLARING LONG TERM CAPITAL GAINS FROM THE TRANSFER OF IMMOVABLE PROPERTY TO THE ASSESSEE. THIS IS CONTRARY TO THE DECISION OF THE HONOURABLE SUPREME COURT. 3. THE LIABILITY TO TAX IF ANY H AS TO BE DETERMINED IN THE HANDS OF THE NON - RESIDENT SELLERS AND COLLECTED FROM THEM ONCE THEY HAVE FILED THEIR RETURNS OF INCOME. 4. THE LD AO IS NOT AT ALL CORRECT IN TREATING THE ASSESSEE AS AN ASSESSEE IN DEFAULT FOR NON DEDUCTION OF TAX AT SOURCE UND ER SECTION 195 FOR THE PRINCIPAL AMOUNT OF TAX OF RS.3,20,330/ - IN VIEW OF THE CLEAR MANDATE OF SUB - SECTION (2) OF SECTION 201 THAT SUCH A 3 I.T.A. NO S . 547 - 550 /VIZ/201 7 SR I MALLA APPALA NAIDU, MALLA RAJESWARI VISAKHAPATNAM & SRI MADETI ESWARA RAO, SMT.MADETI NEELAVENI, ANAKAPALLE CHARGE CAN BE CREATED ONLY WHEN TAX WAS DEDUCTED AND NOT PAID TO THE GOVERNMENT AND NOT WHEN TAX WAS NOT DEDUCTED. 5 . THE LD. AO IS NOT AT ALL CORRECT IN THE COMPUTATION OF LONG TERM CAPITAL GAINS BY ADOPTING AN ESTIMATED VALUE OF THE PROPERTY - WITHOUT REFERENCE TO ANY COMPARABLE CASES. 6. THE LD. AO IS NOT CORRECT IN CHARGING INTEREST UNDER SECTION 201(IA) UPTO THE D ATE OF PASSING OF THE ORDER UNDER SECTION 201(1) INSTEAD OF UPTO THE DATE ON WHICH THE NON RESIDENT VENDOR OUGHT TO HAVE FILED HIS RETURN OF INCOME UNDER SECTION 139(1). 7. ALL THE ABOVE GROUNDS ARE MUTUALLY EXCLUSIVE AND WITHOUT PREJUDICE TO ONE ANOTHER. 8. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND, ALTER ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 3. DURING THE APPEAL HEARING, THE LD.AR DID NOT PRESS GROUND NOS. 4 TO 6, THEREFORE, GROUND NOS.4 TO 6 ARE DISMISSED AS NOT PRESSED. 4. GROUND NOS. 7 AND 8 ARE GENERAL IN NATURE WHICH DOES NOT REQUIRE SPECIFIC ADJUDICATION. 5. GROUND NOS.1 TO 3 ARE RELATED TO THE LIMITATION FOR ISSUE OF NOTICE U/S 201(1)/201(1A) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS ACT). IN THIS CASE, THE ASSESSEES HAVE PU RCHASED THE PROPERTY JOINTLY FROM SRI JAMISETTY SUBRAHMANYAM, A NON - RESIDENT AS PER THE DETAILS GIVEN BELOW FOR A CONSIDERATION OF RS.31,10,000/ - EACH: 4 I.T.A. NO S . 547 - 550 /VIZ/201 7 SR I MALLA APPALA NAIDU, MALLA RAJESWARI VISAKHAPATNAM & SRI MADETI ESWARA RAO, SMT.MADETI NEELAVENI, ANAKAPALLE DOCUMENT NO. DATE OF REGISTRATION EXTENT & LOCATION OF PROPERTY AMOUNT REMITTED (RS.) NAME OF THE BUYER 109/2008 09.01.2008 RCC BUILDING ADMEASURING 2,820 SFT AND 130.16 SQ.YARDS SITE AT D.NO.13 - 25 - 9/1 &2, MAHARANIPETA, VISAKHAPATNAM 31,10,000 (M.V.55,58,000) SHRI MALLA APPALANAIDU AND 3 OTHERS, VISAKHAPATNAM 110/2008 09.01.2008 RCC BUILDING ADMEASURING 3 ,510 SFT AND 130.16 SQ.YARDS SITE AT D.NO.13 - 25 - 9/1 & 2, MAHARANIPETA, VISAKHAPATNAM 31,10,000 (M.V.60,17,000) SHRI MALLA APPALANAIDU AND 3 OTHERS, VISAKHAPATNAM 6. SRI JAMISETTY SUBRAHMANYAM BEING NON RESIDENT, THE ASSESSEES ARE REQUIRED TO DEDUCT TAX AT SOURCE U/S 195 OF THE ACT FOR THE PAYMENTS MADE TO NON - RESIDENTS. BUT THE ASSESSEES HAVE FAILED TO DEDUCT THE TAX AT SOURCE AND REMIT TO THE GOVERNMENT ACCOUNT. THEREFORE, THE ASSESSING OFFICER (AO) HAS ISSUED THE NOTICE U/S 195 OF THE ACT ON 02.03.20 15 DIRECTING THE ASSESSEES TO FILE EXPLANATION AS TO WHY THE ASSESSEES SHOULD NOT BE TREATED AS ASSESSEES IN DEFAULT FOR THEIR FAILURE TO DEDUCT THE TAX AT SOURCE AS REQUIRED U/S 195 OF THE ACT. THE ASSESSES HAVE FILED EXPLANATION STATING THAT THEY WERE U NDER THE IMPRESSION THAT THAT THE VENDOR IS A RESIDENT, HENCE, THEY DID NOT DEDUCT THE TAX AT SOURCE , T HEY FURTHER STATED THAT THE 5 I.T.A. NO S . 547 - 550 /VIZ/201 7 SR I MALLA APPALA NAIDU, MALLA RAJESWARI VISAKHAPATNAM & SRI MADETI ESWARA RAO, SMT.MADETI NEELAVENI, ANAKAPALLE VENDOR HAS VALID PAN AND WOULD FILE THE RETURN OF INCOME . THEY ALSO STATED THAT THEY WERE NOT AWARE OF THE PROVISIONS OF THE ACT AND REQUESTED TO DROP THE PROCEEDINGS INITIATED U/S 201(1) AND 201(1A) OF THE ACT. 7. NOT BEING CONVINCED WITH THE EXPLANATION OF THE ASSESSEES, THE AO TREATED THE ASSESSEES AS ASSESSEES IN DEFAULT AND COMPUTED THE CAPITAL GAINS AT RS.82,87,762/ - AS UNDER. IN RESPECT OF LAND : DOC NO. PROPERTY DESCRIPTION DATE OF SALE/DATE OF PURCHASE COST OF ACQUISITION (RS.) INDEXED COST OF ACQUISITION (RS.) SALE PRICE AS PER SEC.50C (RS.) LONG TERM CAPITAL GAINS (RS.) 109/2008 LAND OF 130.16 SQ.YARDS PURCHASED IN FY 1996 - 97 AND RECD. AS GIFT IN F.Y.2001 - 02 09.01.2008/ 26.06.1996 2,33,000 (APPROX.) 4,15,510 (2,33,000 * 551/305) 40,34,960 36,19,450 110/2008 LAND OF 130.16 SQ.YARDS RECEIVED AS GIFT IN 2001 - 02 09.01.2008/ 26.06.1996 2,33,000 (APPROX) 4,15,510 (2,33,000* 551/305) 40,34,960 36,19,450 IN RESPECT OF BUILDING : DOC NO. PROPERTY DESCRIPTION DATE OF SALE/DATE OF CONSTRUCTION COST OF CONSTRUCTION (RS.) INDEXED COST OF CONSTRUCTION (RS.) SALE PRICE AS PER SEC.50C (RS.) LONG TERM CAPITAL GAINS (RS.) 109/2008 BUILDING ADMEASURING 2,820 SFT 09.01.2008 F.Y.2001 - 02 8,46,000 (APPROX @ RS.300/SFT 10,94,239 (8,46,000*551/426) 15,23,040 4,28,801 6 I.T.A. NO S . 547 - 550 /VIZ/201 7 SR I MALLA APPALA NAIDU, MALLA RAJESWARI VISAKHAPATNAM & SRI MADETI ESWARA RAO, SMT.MADETI NEELAVENI, ANAKAPALLE IN FY 2001 - 02 110/2008 BUILDING ADMEASURING 3,510 SFT 09.01.2008 F.Y.2001 - 01 10,53,000 (APPROX @ RS.300/SFT IN F.Y.2001 - 02 13,61,979 (10,53,000*551/426) 19,82,040 6,20,061 TOTAL LTCG ON BUILDING 10,48,862 TOTAL LTCG ON SITE AND BUILDING : A. FROM SALE OF LAND : RS.72,38,900 B. FROM SALE OF BUILDING : RS.10,48,862 TOTAL LTCG RS.82,87,762 SINCE THE ASSESSEES HAVE PAID THE SUM OF RS.62,20,000/ - , THE AO TREATED ASSESSES AS ASSESSEE IN DEFAULT FOR THEIR SHARE OF CAPITAL GAINS TAX OF OF A SUM OF RS. 62,20,000/ - AND ACCORDINGLY RAISED THE DEMAND OF RS.5,99,017 PER HEAD AS UNDER : CHARGEABLE PORTION OF CAPITAL GAINS ( RS.) TAX U/S 201(1) @ 20.6% (RS.) DATE OF TRANSACTION DATE UPTO WHICH INTEREST U/S 201(1A) IS CALCULATED NO.OF MONTHS OF DELAY INTEREST U/S 201(1A) (RS.) TOTAL PAYABLE (RS.) 15,55,000 3,20,330 09.01.2008 30.03.2015 87 2,78,687 5,99,017 8. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) CONFIRMED THE ORDER OF THE AO. THE ASSESSEES CHALLENG ED THE VALIDITY OF ISSUE OF NOTICE U/S 201(1)/ 201(1A) BEYOND THE REASONABLE TIME OF 4 YEARS WHICH WAS REJECTED BY THE LD.CIT(A). THE LD.CIT(A) RELIED ON THE DECISION OF HONBLE HIGH COURT OF ALLAHABAD IN THE 7 I.T.A. NO S . 547 - 550 /VIZ/201 7 SR I MALLA APPALA NAIDU, MALLA RAJESWARI VISAKHAPATNAM & SRI MADETI ESWARA RAO, SMT.MADETI NEELAVENI, ANAKAPALLE CASE OF NIDHIRAMAN, LUCKNOW BENCH AND HELD THAT I N THIS CASE, THE AO CONDUCTED ENQUIRIES, VENDOR HAS FILED THE RETURN OF INCOME DISCLOSING THE TRANSACTION OF IMMOVABLE PROPERTY . THE ASSESSING OFFICER OF THE VENDOR WAS ALSO CONDUCTING ENQUIRIES DURING THE YEAR AND THERE IS NO INACTION ON THE PART OF THE A O. THEREFORE, HELD THAT THE LIMITATION PERIOD OF 4 YEARS IS NOT APPLICABLE IN THE ASSESSEES CASE. ACCORDINGLY, THE APPEALS OF THE ASSESSEES ARE DISMISSED ON THE ISSUE OF LIMITATION. 9. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEES ARE IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD.AR SUBMITTED THAT AT THE TIME OF PURCHASE OF THE PROPERTY, THE ASSESSEES WERE NOT AWARE OF THE PROVISION OF INCOME TAX FOR DEDUCTION OF TAX AT SOURCE . IN THE CASE OF THE VENDOR, THE AO HAD ISSUED N OTICE U/S 147 FOR WHICH THE NON - RESIDENT HAD RESPONDED TO THE NOTICE AND FILED THE RETURN OF INCOME AND THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 147 OF THE ACT. FURTHER, THE LD.AR SUBMITTED THAT ALL THE ASSESSEES WERE TREATED AS REPRESENTATIVE ASSES SEES OF THE NON RESIDENT U/S 163(1)(C) OF THE ACT AND COMPLETED THE ASSESSMENT U/S 144 R.W.S. 147 BY ORDERS DATED 31.03.2016 WITH NIL DEMAND. SUBSEQUENTLY, THE LD.CIT(A) HAS TAKEN UP THE CASE FOR REVISION U/S 263 AND CANCELLED THE ASSESSMENTS MADE IN THE HANDS OF THE REPRESENTATIVE 8 I.T.A. NO S . 547 - 550 /VIZ/201 7 SR I MALLA APPALA NAIDU, MALLA RAJESWARI VISAKHAPATNAM & SRI MADETI ESWARA RAO, SMT.MADETI NEELAVENI, ANAKAPALLE ASSESSEES. THE ASSESSEES FURTHER SUBMITTED THAT THE NOTICE U/S 147 WAS ISSUED TO SRI JAMISETTY SUBRAHMANYAM, THE NON RESIDENT AND THE BUYERS ON 30.03.2015 SIMULTANEOUSLY. THE LD.AR SUBMITTED THAT THE AO HAS TAKEN SIMULTANEOUS A CTION U/S 147 AS WELL AS U/S 201(1)/201(1A) IN MAR 2015, THEREFORE, THE OBSERVATION OF THE LD.CIT(A) THAT THE AO OF THE VENDOR WAS CONDUCTING THE ENQUIRIES AND THERE WAS NO INACTION ON THE PART OF THE AO IS FAR FROM THE TRUTH. THE LD.AR ARGUED THAT IN THE INSTANT CASE TILL SUCH TIME, THE NOTICE WAS ISSUED U/S 201 / 201(1A), NEITHER THE AO OF THE VENDOR NOR THE AO OF THE ASSESSEE HAVE INITIATED ANY ACTION, THUS, THE DECISION OF HONBLE ALLAHABAD HIGH COURT IS DISTINGUISHABLE AND HAS NO APPLICATION IN THE ASSE SSEES CASE. THE LD.AR SUBMITTED THAT THE NOTICE WAS ISSUED BY THE AO ON 02.03.2015 AND THE ASSESSMENT YEAR INVOLVED WAS 2008 - 09 RELEVANT TO THE FINANCIAL YEAR 2007 - 08. THE NOTICE WAS ISSUED BEYOND THE 4 YEARS OF TIME LIMIT, HENCE ARGUED THAT THE NOTICE I SSUED BY THE AO IS INVALID. THUS REQUESTED TO CANCEL THE ORDERS PASSED BY THE AO U/S 201(1)/201(1A) OF THE ACT. THE LD.AR RELIED ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF BHEEMARASETTY SUNITHA IN I.T.A.NO.119/VIZ/2016 DATED 23.06.2017 AND ALSO A.P.H IGH COURT JUDGEMENT IN THE CASE OF CIT - II, HYDERABAD VS. U.B.ELECTRONIC INSTRUMENTS LTD. IN I.T.T.A.NO.331 OF 2003 DATED 12.11.2014 9 I.T.A. NO S . 547 - 550 /VIZ/201 7 SR I MALLA APPALA NAIDU, MALLA RAJESWARI VISAKHAPATNAM & SRI MADETI ESWARA RAO, SMT.MADETI NEELAVENI, ANAKAPALLE AND ARGUED THAT WHEN THERE WAS NO TIME LIMIT FOR INITIATING ACTION U/S 201(1)/201(1A) THE REASONABLE PERIOD IS FOUR YEARS A S PER THE SETTLED CASE LAWS AS HELD BY THE HONBLE ITAT VISAKHAPATNAM AND THE HONBLE JURISDICTIONAL HIGH COURT SUPRA AND ACCORDINGLY SUBMITTED THAT BOTH THE DECISIONS OF ITAT VISAKHAPATNAM AS WELL AS THE JUDGEMENT OF HONBLE ANDHRA PRADESH HIGH COURT ARE SQUARELY APPLICABLE IN THE ASSESSEES CASE. 10. ON THE OTHER HAND, THE LD.DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND ARGUED THAT THERE IS NO TIME LIMIT IN THE CASE OF NON - RESIDENTS FOR INITIATING ACTION AND THE ASSESSEES CASE IS SQUARELY COVERE D BY THE DECISION OF HONBLE ALLAHABAD HIGH COURT, HENCE ARGUED THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD.CIT(A). 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE, THE ASSESSEES HAVE PURCHASED THE PROPERTY DURING THE FINANCIAL YEAR 2007 - 08 RELEVANT TO ASSESSMENT YEAR 2008 - 09 ON 09.01.2008. THE ASSESSEES HAVE PAID THE SUMS OF RS.6 2,20,000/ - @RS.31,10,000/ - VIDE DOCUMENT NO.109/2008 DATED 09.01.2008, FOR PURCHASE OF RCC BUILDING ADMEASURING 2820 SQ.FT AND 130.16 SQ.YARDS SITE AT D.NO.13 - 25 - 9/1&2, MAHARANIPETA, VISAKHAPATNAM AND VIDE DOCUMENT NO.110/2008 DATED 10 I.T.A. NO S . 547 - 550 /VIZ/201 7 SR I MALLA APPALA NAIDU, MALLA RAJESWARI VISAKHAPATNAM & SRI MADETI ESWARA RAO, SMT.MADETI NEELAVENI, ANAKAPALLE 09.01.2008 THE RCC BUIL DING ADMEASURING 3,510 SFT AND 130.16 SQ.YARDS SITE TO THE VENDOR SRI JAMISETTY SUBRAHMANYAM, A NON RESIDENT. AS PER THE PROVISIONS OF SECTION 195 OF THE ACT, THE ASSESSEE IS REQUIRED TO DEDUCT TAX AT SOURCE ON PAYMENTS MADE TO NON RESIDENTS. IN THE INST ANT CASE, THE ASSESSEES REQUIRED TO DEDUCT THE TAX AT SOURCE ON THE SUMS CHARGEABLE TO CAPITAL GAINS. THE ASSESSEES HAVE FAILED TO DEDUCT THE TAX AT SOURCE, THEREFORE THE ASSESSEES ARE HIT BY THE PROVISIONS OF SECTION 201(1)/201(1A) OF THE ACT AND THEY A RE LIABLE FOR PAYMENT OF TAX AND INTEREST U/S 201(1)/201(1A) OF THE ACT. IN THE INSTANT CASES THE AO HAS PASSED THE ORDERS UNDER SECTION 144 R.W.S 147 TREATING THE ASSESSEE AS REPR ESENTATIVE ASSESSEE U/S 163(1)(C) DETERMINING THE TAX LIABILITY AT RS.NIL IN ALL THE CASES. THE AO ISSUED THE NOTICE INITIATING THE PROCEEDINGS U/S 201(1)/201(1A) OF THE ACT ON 02.03.2015 I.E. AFTER LAPSE OF 5 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THERE IS NO TIME LIMIT PROVIDED IN THE ACT FOR TREATING THE ASSESSEES IN DEFAULT FOR PAYMENTS MADE TO NON - RESIDENTS. AS PER SUB SECTION 3 OF THE SECTION 201, THE TIME LIMIT IS PROVIDED FOR TAKING ACTION IN RESPECT OF RESIDENTS IN INDIA, BUT THERE IS NO TIME LIMIT FOR NON - RESIDENTS. THE IDENTICAL ISSUE HAS COME UP BEFORE TH IS TRIBUNAL IN THE CASE OF BHEEMA RA SETTY SUNITHA CITED SUPRA AND THIS TRIBUNAL AFTER CONSIDERING THE 11 I.T.A. NO S . 547 - 550 /VIZ/201 7 SR I MALLA APPALA NAIDU, MALLA RAJESWARI VISAKHAPATNAM & SRI MADETI ESWARA RAO, SMT.MADETI NEELAVENI, ANAKAPALLE DECISIONS OF HONBLE DELHI HIGH COURT IN THE CASE OF BHARTI AIRTEL LIMITED &ANR VS. UNION OF INDIA &ANR AND THE DECISION OF NHK JAPAN BROADCASTING CORPORAT ION [305 ITR 0137], THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GE INDIA TECHNOLOGY CENTRE AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF MAHINDRA & MAHINDRA LTD. [365 ITR 0560 (BOM)] HELD THAT THE REA S ONABLE TIME LIMIT FOR ISSUE OF NOTICE U/S 201(1)/201(1A) IS 4 YEARS. IN CASE, THE NOTICE IS ISSUED BEYOND 4 YEARS, THE COORDINATE BENCH OF ITAT HELD THAT THE SAME IS BARRED BY LIMITATION. FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRACT RELEVANT PART OF THE ORDER OF THIS TRIBUNAL IN PARA NO.6 TO 7 WHICH READS AS UNDER : 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS PLACED ON RECORD. THE RELEVANT PROVISIONS OF SECTION 201(1A) OF THE ACT IS REPRODUCED AS UNDER: 201(1A) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB - SEC TION (1), IF ANY SUCH PERSON, PRINCIPAL OFFICER OR COMPANY AS IS REFERRED TO IN THAT SUBSECTION DOES NOT DEDUCT OR AFTER DEDUCTING FAILS TO PAY THE TAX AS REQUIRED BY OR UNDER THIS ACT, HE OR IT SHALL BE LIABLE TO PAY SIMPLE INTEREST AT 2 FIFTEEN] PER CENT PER ANNUM ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PAID.] 7. THE HONBLE DELHI HIGH COURT WHILE DECIDING THE WRIT PETITION IN THE CASE OF BHARTI AIRTEL& ANOTHER RENDERED THE JUDGEMENT CONSIDERING THE STATEMENT OF OBJECTS AND REASONS OF THE FINANCE (NO.2) BILL, 2009. IN RESPECT OF TIME LIMIT, HONBLE BOMBAY HIGH COURT HAS CONSIDERED THE ISSUE IN DETAIL AND HELD THAT 6 YEARS IS REASONABLE PERIOD FOR INITI ATING THE ACTION U/S 201 AND 201(1A). THE HONBLE DELHI HIGH COURT IN THE DECISION RELIED UPON BY THE ASSESSEE CONSIDERED THE ISSUE WITH REGARD TO THE LIMITATION OF TIME FOR INITIATING THE PROCEEDINGS U/S 201/201(1A) AND HELD THAT 4 YEARS IS THE REASONABLE TIME FOR 12 I.T.A. NO S . 547 - 550 /VIZ/201 7 SR I MALLA APPALA NAIDU, MALLA RAJESWARI VISAKHAPATNAM & SRI MADETI ESWARA RAO, SMT.MADETI NEELAVENI, ANAKAPALLE INITIATING PROCEEDINGS U/S 201/201(1A). WHILE HOLDING SO, THE HONBLE HIGH COURT HAS RELIED ON THE DECISION OF CIT VS. NHK JAPAN BROADCASTING LIMITED [305 ITR 137] AND THE CIT VS . HUTCHISON ESSAR TELECOM. LIMITED [ 323 ITR 330], FURTHER , HONBLE DELHI HIGH COURT HAS CONSIDERED AMENDMENT MADE TO SECTION 201 OF THE ACT VIDE FINANCE BILL, 2009 AND VIEWED THAT THE PARLIAMENT DID NOT MAKE ANY AMENDMENT TO THE TIME LIMITS FOR THE NON RESIDENTS WHICH INDICATES THAT THE PARLIAMENT HAS ACCEPTE D THE JUDICIAL PRONOUNCEMENTS FOR THE LIMITATION PERIOD ALREADY SET OUT BY THE COURTS. THE HONBLE DELHI HIGH COURT ALSO CONSIDERED THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GE INDIA TECHNOLOGY CENTRE VS. CIT (2010) (10) SCC 29, WHEREIN, THE HO NBLE SUPREME COURT HELD THAT THE PROCEEDINGS SHOULD BE INITIATED U/S 201/201(1A) WITHIN REASONABLE PERIOD AND IT CANNOT EXTEND WITHOUT LIMITATION. AFTER CONSIDERING THE DECISION OF THE HONBLE SUPREME COURT IN GE INDIA TECHNOLOGY AND THE VODAFONE ESSAR MO BILES LTD. THE HONBLE DELHI HIGH COURT FOLLOWED ITS OWN DECISION IN THE CASE OF CIT VS. NHK JAPAN BROADCASTING LIMITED (SUPRA) AND HELD THAT 4 YEARS IS THE REASONABLE PERIOD FOR INITIATING THE PROCEEDINGS U/S 201/201(1A) OF IT ACT. THE LD. DR RELIED ON T HE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF MAHINDRA & MAHINDRA LTD. CONSIDERING THE HONBLE SUPREME COURT DECISION IN CIT VS.VEGETABLE PRODUCTS LTD., 88 ITR 192 (SC) AND CIT VS. KARAMCHAND PREMCHAND LTD (1960) 40 ITR 106, WE ARE ALSO OF THE VIEW THAT THE DECISION FAVOURABLE TO THE ASSESSEE IS REQUIRED TO BE TAKEN. ACCORDINGLY FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT WE HOLD THAT REASONABLE PERIOD IS 4 YEARS FOR INITIATING OF PROCEEDINGS U/S 201/201(1A). IN THE INSTANT CASE THE PROP ERTY WAS REGISTERED ON 18.7.2007 AND THE ASSESSEE IS LIABLE TO DEDUCT THE TDS DURING THE F.Y.2007 - 08 AND THE 4 YEARS TIME LIMIT FOR INITIATING ACTION U/S 201/201A EXPIRES BEFORE MARCH 2012. IN THE INSTANT CASE, NOTICE U/S 195 TREATING THE ASSESSEE AS ASSESSEE IN DEFAULT WAS ISSUED ON 11.08.2013 BEYOND THE 4 YEARS OF THE FINANCIAL YEAR IN WHICH THE ASSESSEE REQUIRED TO DEDUCT TAX AT SOURCE. AS HELD BY HONBLE DELHI HIGH COURT, THE TIME LIMIT FOR INITIATING THE PROCEEDINGS U/S 201 AND 201(1A) IS 4 YEARS AND IT IS BARRED BY LIMITATION. THEREFORE, FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT, WE ARE UNABLE TO SUSTAIN THE ORDERS OF THE LOWER AUTHORITIES. ACCORDINGLY, THE ORDER PASSED U/S 201 / 201(1A) IS SET ASIDE AND THE APPEAL OF THE ASSESSEE IS AL LOWED. 11.1. SIMILARLY, THE HONBLE AP HIGH COURT IN THE CASE OF M/ S U.B.ELECTRONIC INSTRUMENTS LIMITED CITED SUPRA HELD THAT THE 4 YEARS IS REASONABLE TIME. FOR READY REFERENCE, WE EXTRACT RELEVANT PART OF THE ORDER OF THE AP HIGH COURT WHICH READS AS UNDER : 13 I.T.A. NO S . 547 - 550 /VIZ/201 7 SR I MALLA APPALA NAIDU, MALLA RAJESWARI VISAKHAPATNAM & SRI MADETI ESWARA RAO, SMT.MADETI NEELAVENI, ANAKAPALLE BY AND LARGE, FOUR YEARS IS TREATED AS THE PERIOD WITHIN WHICH ANY PENAL ACTION CAT - BE INITIATED AGAINST AN ASSESSEE. FAILURE TO INITIATE STEPS WITHIN THAT PERIOD WOULD DISABLE THE DEPARTMENT TO PROCEED AGAINST THE ASSESSEE. THE REASON IS NOT DIFF ICULT TO BE DISCERNED. WITH EACH PASSING YEAR, THE ASSESSEE IS REQUIRED TO ADJUST HIS OR HER OWN AFFAIRS IN SUCH A WAY THAT THE ACTIVITY UNDERTAKEN BY IT GOES ON SMOOTHLY. INCASE, LIABILITY FOR THE PRECEDING ONE OR TWO YEARS IS FASTENED, THERE CAN BE SCOPE FOR MAKING ADJUSTMENT THEREOF I N THE ACTIVITIES OF THE SUBSEQUENT YEARS. HOWEVER, IF FAIRLY LONG GAP I NTERVENES, IT BECOMES DIFFICULT FOR MAKING SUCH ADJUSTMENTS, PARTICULARLY WHEN THE ACTIVITY IS COMMERCIAL IN NATURE. IN THE INSTANT CASE, THE ASSESSMENT YEARS ARE 1989 - 90, 1990 - 91 AND 1991 - 92. IT WAS NEARLY SEVEN YEARS THEREAFTER THAT A NOTICE WAS ISSUED. FOR AN ASSESSEE TO BE REQUIRED TO PAY THE AMOUNT, EVEN IF DUE FIVE OR SIX YEARS PRECEDING THE DEMAND, WOULD BE A SERIOUS PROBLEM. SEVERAL DEVELOPMENTS TA KE PLACE OVER THE PERIOD, AND THE NATURE OF RELATIONS UNDERGOES CHANGE. 12. THE LD.CIT(A) RELIED ON THE DECISION OF HONBLE HIGH COURT OF ALLAHABAD, LUCKNOW BENCH (CITATION NOT FURNISHED) DECISION REFERRED TO IN PAGE 15, PARA NO.11.4 OF THE CIT(A) ORDER AND THE FACTS OF THE CITED CASE ARE AS UNDER : 69. IN THE PRESENT CASE, PAYMENT OF CONSIDERATION OF PROPERTY IN DISPUTE W AS MADE BETWEEN JUNE 2003 TO JUNE 2005. THE ADDRESS OF ALL CO - OWNERS OF PROPERTY WERE SHOWN AS IN INDIA I.E. LUCKNOW, JAIPUR AND ALLAHABAD, RESPECTIVELY. THERE WAS NO INDICATION AT ALL THAT ONE OF THE SELLERS WAS N.R.I. SALE DEED WAS REGISTERED ON 14.06.2005. RETURN OF INCOME OF A.Y. 2006 - 07 WAS FILED DISCLOSING FACTUM OF PW - CHASE OF PROPERTY VIDE SALE DEED DATED 14.06.2005. ASSESSM ENT ORDER WAS PASSED ON 30.12.2008. IN THE AFORESAID RETURN ALSO, IT IS NOT THE CASE OF PETITIONER THAT THERE WAS ANY INDICATION DISCLOSING TO REVENUE AUTHORITY THAT ONE OF THE SELLERS WAS N.R.I. CASE OF REVENUE IS THAT THEY CAME TO KNOW DURING THE COURSE OF PROCESSING OF RETURN OF PETITIONER FOR A. V. 2006 - 07 THAT ONE OF CO - SELLERS, SMT. NIDHI RAMAN, IS AN NRI. AND LIABLE TO PAY CAPITAL GAIN TAX AS LAND SOLD WAS AN URBAN LAND, WHICH WAS ALSO SUPPORTED BY RETURN OF INCOME FOR A.Y. 2006 - 07. IN THE INSTAN T CASE THE FACT THAT THE VENDOR IS NRI WAS RECORDED IN THE SALE DEED ITSELF , AS EVIDENT FROM THE LD.CIT(A) S ORDER AND HE IS THE RESIDENT 14 I.T.A. NO S . 547 - 550 /VIZ/201 7 SR I MALLA APPALA NAIDU, MALLA RAJESWARI VISAKHAPATNAM & SRI MADETI ESWARA RAO, SMT.MADETI NEELAVENI, ANAKAPALLE OF 7690A, GREEN MEADOW, USA. HAVING RECORDED THE RESIDENTIAL STATUS IN SALE DEED NO EXTRA TIME IS REQUIRED TO PROSECUT E THE MATTER AGAINST THE PAYEE AND THE PAYER. IN THE CASE OF THE DECISION OF HONBLE ALLAHABAD HIGH COURT RELIED UPON BY THE LD.CIT(A), IT WAS INDICATED THAT ALL THE VENDORS ARE SHOWN AS RESIDENTS OF INDIA. THE ASSESSING OFFICER WAS UNDER THE IMPRESSION TH AT THE VENDOR WAS RESIDENT OF INDIA, THUS TAKEN THE TIME FOR INITIATING THE PROCEEDINGS U/S 201(1)(1A) OF THE ACT. WHERE AS IN THE INSTANT CASE RESIDENTIAL STATUS WAS RECORDED IN THE SALE DEED AND THE AO DETERMINED THE NIL DEMAND IN THE ASSESSMENT IN REPRE SENTATIVE CAPACITY. THE DEPARTMENT COULD NOT DEMONSTRATE THE REASONS FOR DELAY. IT IS ALSO OBSERVED FROM THE FACTS THAT THE DEPARTMENT HAS INITIATED SIMULTANEOUS PROCEEDINGS AGAINST THE ASSESSEE AS WELL AS THE VENDOR. THEREFORE, THE FACTS OF THE CASE LAW RELIED UPON BY THE LD.CIT(A) ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE ASSESSEES CASE. 13. SINCE, THE FACTS OF THE ASSESSEES CASE ARE IDENTICAL TO THE DECISION OF THE TRIBUNAL IN THE CASE OF BHEEMARASETTY SUNITHA SUPRA, RESPECTFULLY FOLLOWING THE VIEW TAKEN BY THIS TRIBUNAL, WE HOLD THAT THE NOTICE ISSUED BY THE AO IN THIS CASE IS BEYOND 4 YEARS AND THE SAME IS BARRED BY LIMITATION. THEREFORE, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND QUASH THE ORDERS 15 I.T.A. NO S . 547 - 550 /VIZ/201 7 SR I MALLA APPALA NAIDU, MALLA RAJESWARI VISAKHAPATNAM & SRI MADETI ESWARA RAO, SMT.MADETI NEELAVENI, ANAKAPALLE PASSED U/S 201(1)/201(1A) OF THE ACT BY THE AO AND ALLOW THE APPEAL OF THE ASSESSEES. 14. IN THE RESULT, APPEALS OF THE ASSESSEES ARE ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 12 TH OCTOBER, 2018. S D/ - S D/ - ( . . ) ( . ) ( D.S. SUNDER SINGH) ( V. DURGA RAO) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / VISAKHAPATNAM /DATED : 12 .10.2018 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE S - ( I & II ) SRI MALLA APPALA NAIDU AND SMT. MALLA RAJESWARI, 7 - 17, NAGUALAPALLI , MUNAGAPAKA MANDAL , VISAKHAPATNAM DIST. (III & IV ) SRI MADETI ESWARA RAO AND SMT. MADETI NEELAVENI , 5 - 9 - 30, LAKSHMIDEVIPETA , ANAKAPALLE 2. / THE REVENUE INCOME TAX OFFICER (INTERNATIONAL TAXATION) , VISAKHAPATNAM 3. THE PR. COMMISSIONER OF INCOME TAX ( IT &TP ) , HYDERABAD 4. THE COMMISSIONER OF INCOME - TAX (APPEALS) - 1 0 , HYDERABAD 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM