M/s. Jayathi Properties (P). Ltd., Vijayawada V. The Deputy Commissioner of Income Tax , Circle-2(1), Vijayawada

ITA 550/VIZ/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 1141 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 15-09-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 263; 143(3)

Judgement Text

आयकर अपीलीयअधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य एिं श्री एस बालाकृ ष्णन, लेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./ I.T.A. No.550/Viz/2019 (ननधधारण वर्ा / Assessment Year: 2010-11) Jayathi Properties (Pvt) Ltd., Viajayawada. PAN: AABCJ 5079 Q Vs. The Dy. Commissioner of Income Tax, Circle-2(1), Vijayawada. (अपीलधथी/ Appellant) (प्रत्यथी/ Respondent) अपीलधथी की ओर से/ Appellant by : No Representation प्रत्यधथी की ओर से / Respondent by : Sri SPG Mudaliar, Sr. AR सुनवधई की तधरीख / Date of Hearing : 27/04/2022 घोर्णध की तधरीख/Date of Pronouncement : 26/05/2022 O R D E R PER S. BALAKRISHNAN, Accountant Member : This appeal is filed by the assessee against the order of the Ld. CIT(A), Vijayawada in appeal No.40/CIT(A)/VJA/16-17, dated 27/06/2019 passed U/s. 143(3) r.w.s 263 and U/s. 250(6) of the Act for the AY 2010-11. 2. The assessee has raised the following grounds in its appeal: 2 “1. The order of the Ld. CIT (A) is contrary to law, weight of evidence and probabilities of the case. 2. Under the f acts and circumstances of the case since the impugned order of the Ld. AO being a consequential order in pursuance of order of the Revision Authority U/s. 263 and since order U/s. 263 was no longer in existence due to its merger with the order of the Hon’ble ITAT in ITA No.209/Viz/2015 and 25/07/2018, the order of the Ld. CIT(A) in implementing the order of the Revision Authority U/s. 263 is illegal and bad in law. 3. Under the f acts and circumstances of the case since the Revision Order passed by the Ld. CIT U/s. 263 insof ar as addition of Rs. 19,00,600/- is concerned as void-ab-initio being not proposed in the pre-revision show cause notice dated 28/01/2015 and also not given any opportunity f or rebuttal by the assessee at any stage during the course of revisions proceedings, the action of the Ld. CIT(A) in his impugned order making addition of the above amount to accord with 263 order is illegal and bad in law. 4. Under the f acts and circumstances of the case since the Hon’ble Tribunal while upholding revision order passed U/s. 263, gave a f inding that the Ld. CIT wanted the AO to re-do the assessment af ter affording an opportunity of hearing to the assessee on the issues involved in the revision, which inter-alia included the issue relating to addition of Rs. 19,00,600/- in this appeal, the Ld. CIT(A) has wrongly held the said amount of Rs. 19,00,600/- as covered under specif ic direction without any discretion of rehearing on the matter to the AO. 5. Under the f acts and circumstances of the case since on merits, the addition of Rs. 19,00,600/- is unsustainable, being partly expenditure of revenue nature to the extent of disallowance of Rs. 6,62,145/- and being partly not accounted or claimed by the assessee either as capital expenditure or revenue expenditure as having been incurred by the vendors to the assessee, the disallowance of the same by the Ld. CIT(A) by enhancement of assessment without considering the merits of the addition is in gross violation of principles of natural justice and f air play. 6. Under the f acts and circumstances of the case since the revision direction required the AO to do a denovo assessment, the Ld. CIT(A) ought to have considered the merits with the leave of Rs. 19,00,600/- as submitted by the assessee. 3 7. Any other ground(s) that may be raised at the time of hearing with the leave of the Hon’ble Tribunal.” 3. Brief facts of the case are that the assessee is a company engaged in the business of real estate and filed its return of income on 10/10/2010 admitting total income of Rs. 83,152/-. The assessment U/s. 143(3) was completed vide order dated 26/03/2013 determining the total income at Rs. 12,85,740/-. Subsequently, the Commissioner of Income Tax, Vijayawada vide order passed U/s. 263 of the Act on 27/03/2015 has set aside the assessment order passed U/s. 143(3) dated 26/03/2013 and directed the AO to re-do the assessment on all the issues dealt with in his order on the lines specified therein, in accordance with law and established procedure after affording an opportunity of being heard to the assessee. As per the directions of CIT, Vijayawada, the Assessing Officer passed the order U/s. 143(3) r.w.s 263 on 24/03/2016 by disallowing a sum of Rs. 9,43,640/- and determined the total income at Rs. 22,29,380/-. Aggrieved by the order of the Ld. AO passed U/s. 143(3) r.w.s 263 of the Act, the assessee filed an appeal before the Ld. CIT(A), Vijayawada. The assessee submitted its written submissions on 2/11/2018 before the Ld. CIT(A). The assessee further submitted another written submission on 16/11/2018. After considering 4 the written submissions, the Ld. CIT(A) Vijayawada stated that there is a specific direction by the Ld. CIT in the first round with a direction to the Ld. AO to disallow the registration expenditure of Rs. 19,00,600/- by treating the same as capital expenditure. The Ld. CIT (A), Vijayawada stated that the Hon’ble Tribunal during the first round of litigation before the Tribunal, the appeal of the assessee was dismissed by stating that the CIT has rightly exercised his jurisdiction U/s. 263 of the Act to set-aside the assessment order and directed the Ld. AO to re-do the assessment in accordance with law after providing a reasonable opportunity to the assessee. The Ld. CIT(A) also observed that the Hon’ble Tribunal while dismissing the appeal of the assessee held as under: “8. We have gone through the assessment order. We f ind that there is no observation of the Assessing Off icer in respect of the issues identif ied by the Ld. Commissioner, which are examined by the Assessing Officer. When we pointed out Ld. Counsel for the assessee that during the course of assessment proceedings whether Assessing Off icer has asked any question or any enquiry or called any details in respect of the issues pointed out by the Ld. Commissioner, he is not able to answer the same. We f ind that Ld. Commissioner rightly exercised his jurisdiction under section 263 of the Act and set aside the assessment order and directed the Assessing Off icer to re-do the assessment in accordance with law af ter giving reasonable opportunity of hearing to the assessee. We f ind no inf irmity in the order passed by the Ld. CIT(A). Thus, this appeal f iled by the assessee is dismissed. 9. In the result, appeal filed by the assesee is dismissed.” 5 4. The Ld. CIT(A) also observed that the contentions of the asessee based on the direction of the Hon’ble Tribunal to disallow the registration charges has been modified or diluted by the Hon’ble Tribunal is not valid. The Ld. CIT(A), Vijayawada also observed that the contentions of the assessee regarding the merger of the revision order with the order of the Tribunal is devoid of any merits. The Ld. CIT(A) observed that the directions given by the CIT in the revision order in respect of the issues discussed in the said order is conspicuous by its absence in the specific direction given by the CIT in the revision order to disallow the registration expenditure of Rs. 19,00,600/- and therefore, the said specific direction is binding on the AO and the AO is left with no option to follow the directions of the Ld. CIT in the revision order. The Ld. CIT(A) enhanced the disallowance to Rs. 19,00,600/- and upheld the order passed U/s. 263 of the Act. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us. 5. Before us, at the time of hearing neither the assessee nor any representative of the assessee appeared before the Tribunal irrespective of the opportunities provided to the assessee on various occasions. 6. Ld. DR relied on the orders of the authorities below. 6 7. Since there was no representation on behalf of the assessee, the case being adjudicated on merits based on the material available on record. It is noted as per the orders of the Authorities below that there was a specific direction by the CIT in his revisions order to disallow the registration expenditure of Rs. 19,00,600/-. However, the Ld. AO without following the directions of the CIT in his revision order has passed assessment order U/s. 143(3) r.w.s 263 by disallowing the expenses of Rs. 9,43,640/-. We have also noted that the Assessing Officer has wrongly mentioned the disallowance as Rs. 9,43,640/- instead of Rs. 9,40,640/- in his assessment order. The Ground No.3 raised by the assessee is also not valid because the CIT while passing the order U/s. 263 has provided a reasonable opportunity to the assessee which is evident from the order of CIT. The directions of the CIT is binding on the AO and the AO has no freedom to examine the issue and take appropriate action, in accordance with law. We therefore find that there is no ambiguity in the order of the Ld. CIT(A) in enhancing the assessment in accordance with order passed U/s. 263 instead of Rs. 9,43,640/- disallowed by the Ld. AO. Therefore, we are of the view that there is no infirmity in the order of the Ld. CIT(A) and no interference is required and accordingly, we uphold the order of 7 the Ld. CIT(A) in this regard and the ground raised by the assessee is dismissed. 8. Since there is no representation on behalf of the assessee before us, the additional grounds raised by the assessee are not allowed. 9. In the result, appeal of the assessee is dismissed. Pronounced in the open Court on the 26 th May, 2022. Sd/- Sd/- (द ु व्वूरु आर.एल रेड्डी) (एस बालाकृ ष्णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) न्याधयकसदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER Dated : 26.05.2022 OKK - SPS आदेश की प्रनतनलनप अग्रेनर्त/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee – M/s. Jayathi Properties (P) Ltd., D.No.36- 11-7, Santhinagar, 1 st Lane, Moghalrajpuram, Vijayawada-520 010. 2. रधजस्व/The Revenue – DCIT, O/o. DCIT, Circle-2(1), MG Road, Ayakar Bhawan, Vijayawada-520002. 3. The Principal Commissioner of Income Tax, Vijayawada. 4. आयकर आयुक्त (अपील)/ The Commissioner of Income Tax (Appeals), Vijayawada. 5. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम/ DR, ITAT, Visakhapatnam 6. गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam