M. Harinitha Reddy, Hyd, Hyderabad V. DCIT, Central Circle-2, Hyderabad, Hyderabad

ITA 554/HYD/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6337 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-06-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 21-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E SUNIL BABU
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Opportunity of being heard; Difference of opinion; Change of opinion
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 554/HYD/2016 ASSESSMENT YEAR: 2004-05 M. HARINITHA REDDY, HYDERABAD. PAN AATPM 6617 N VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P. MURALI MOHAN RAO REVENUE BY : SHRI K.E. SUNIL BABU DATE OF HEARING 26-07-2016 DATE OF PRONOUNCEMENT 10-08-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - 9, HYDE RABAD FOR AY 2004-05. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE FILED HIS RETURN OF INCOME FOR THE AY. 2004-05 ON 28/04/2006 DECLARING TOTAL INCOME AT RS.2,48,230/-, WHICH INCLUDED THE INTERES T INCOME OF RS. 70,000/- FROM M/S PARVATH INVESTMENTS P. LTD. AND I NTEREST RECEIVED FROM PPF ACCOUNT OF RS. 22,015/-. DURING THE COURSE OF SEARCH, IT WAS OBSERVED THAT THE ASSESSEE HAD NOT DISCLOSED CHIT D IVIDEND OF RS. 2,94,275/-. HOWEVER, HE HAD SHOWN RS. 92,081/-, WHI CH WAS OFFERED TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. FU RTHER, THE ASSESSEE HAD INVESTED RS. 7,00,000/- IN PALACE HEIG HTS P. LTD. NO INTEREST INCOME WAS OFFERED. AS THE INCOME HAD ESCA PED THE 2 ITA NO. 554/H/16 M. HARINITHA REDDY ASSESSMENT, THE AO REOPENED THE CASE BY ISSUING NOT ICE U/S 148 OF THE ACT ON 25/03/2010 WITH THE PRIOR APPROVAL OF CI T(CENTRAL), HYDERABAD AND COMPLETED THE ASSESSMENT BY MAKING TH E FOLLOWING ADDITIONS: 1. ADDITION TOWARDS CHIT DIVIDEND: THE AO OBSERVED THAT THE ASSESSEE HAD NOT DISCLOSED RS. 2,94,275/-. HOWEVER, HE HAD SHOWN AN AMOUNT OF RS. 92,081/- UNDER THE HEAD INCOME FRO M OTHER SOURCES, WHICH WAS OFFERED TO TAX. A SHOW CAUSE NOTICE U/S 1 48 OF THE ACT WAS ISSUED ON 22/10/2010 TO THE ASSESSEE AS TO WHY THE BALANCE AMOUNT OF RS. 2,02,194 SHALL NOT BE ADDED. SINCE, THE ASS ESSEE HAS NOT SHOWN THE CHIT DIVIDEND OF RS. 2,10,100/- IN THE RE TURN OF INCOME, THE SAME WAS ADDED TO THE TOTAL INCOME. 2. ADDITION TOWARDS INTEREST INCOME FROM PALACE HEI GHTS P. LTD.: AS VERIFIED FROM THE APPRAISAL REPORT, THE AO OBSE RVED THAT THE ASSESSEE HAD INVESTED RS. 7,00,000/- IN PALACE HEIG HTS P. LTD. NO INTEREST INCOME WAS OFFERED. THEREFORE, THE AO ISSU ED A SHOW CAUSE NOTICE U/S 148 ON 22/10/2010 AS TO WHY THE INTEREST AT 12% SHALL NOT BE CHARGED ON THE INVESTMENT OF RS. 7,00,000/-. AS THERE WAS NO RESPONSE FROM THE ASSESSEE, THE AO CALCULATED THE I NTEREST @ 12% ON THE SAID AMOUNT, WHICH COMES TO RS. 84,000/- AND THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A), THE ASSESSEE FILED ADDITIONAL GROUNDS OF APPEAL WITH REGARD TO THE ISSUE OF NOTICE U/S 148 O F THE ACT. AFTER DISCUSSING THE ISSUE ELABORATELY, THE CIT(A) HELD T HAT THE AO IS JUSTIFIED IN REOPENING THE ASSESSMENT U/S 147 OF TH E IT ACT. 5. AS REGARDS THE ADDITION OF INTEREST INCOME OF RS . 84,000/-, THE CIT(A) FOLLOWING THE DECISION OF THE COORDINATE BEN CH OF THIS TRIBUNAL 3 ITA NO. 554/H/16 M. HARINITHA REDDY IN ASSESSEES OWN CASE IN RELATION TO THE ORDER OF CIT U/S 263, IN WHICH THE ISSUE WAS ALREADY ADDRESSED AND DELETED T HE ADDITIONS. ACCORDINGLY, CIT(A) HAS DELETED THE SAID ADDITION. 6. AS REGARDS THE ADDITION TOWARDS CHIT DIVIDEND OF RS. 2,10,000/-, THE CIT(A) CONFIRMED THE ADDITION MADE BY THE AO ON THE GROUND THAT NO PROOF OR DOCUMENTARY EVIDENCE HAD BEEN FILED IN SUPPORT OF CONTENTIONS OF ASSESSEE. 7. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US R AISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD. CIT (A)-9, HYDERABAD IS ERR ONEOUS BOTH ON FACTS AND IN LAW. 2. THE HON'BLE CIT (A)-9 ERRED IN UPHOLDING THE RE- OPENING OF ASSESSMENT BY INVOKING THE PROVISIONS U/S 147 BY TH E AO WITHOUT THERE BEING ANY TANGIBLE NEW MATERIAL ON RECORD. 3. THE LD. CIT (A)-9 OUGHT TO HAVE APPRECIATED THE FACT THAT THE AO HAS NOT FOUND ANY NEW MATERIAL EXCEPT THE MATERI AL WHICH WAS ALREADY AVAILABLE AT THE TIME OF ASSESSMENT MAD E U/S 143 (3) ON 24-12-2010. 4. THE LD. CIT (A)-9 OUGHT TO HAVE APPRECIATED THE FACT THAT THE AO .HAS INITIATED THE PROCEEDING U/S 147 BY ISSUING NOTICE U/S 148 ON JUST A CHANGE OF OPINION. 5. THE LD. CIT (A)-9 ERRED IN UPHOLDING THE ADDITIO N OF RS. 2,10,000/- TOWARDS NON DISCLOSURE OF CHIT DIVIDEND WHICH IS NOT CORRECT AND BAD IN LAW. 6. THE LD. CIT (A)-9 OUGHT TO HAVE APPRECIATED THE FACT THAT THE ASSESSEE HAS FURNISHED ALL THE INFORMATION REGARDIN G LOSS ACCRUED ON CHIT FUND. 7. THE ASSESSEE MAY ADD, ALTER OR MODIFY OR SUBSTIT UTE ANY OTHER POINT TO THE GROUNDS OF APPEAL AT ANY TIME BEFORE O R AT THE TIME OF HEARING OF THE APPEAL. 8. AS REGARDS GROUND NOS. 1 TO 4 REGARDING REOPENI NG OF ASSESSMENT U/S 147 OF THE ACT, THE ASSESSEE HAS NOT PRESSED THE SAME BEFORE US, THEREFORE, DISMISSED AS NOT PRESSED . 9. AS REGARDS GROUND NOS. 5 & 6 REGARDING THE ADDIT ION OF RS. 2,10,000/- TOWARDS NON DISCLOSURE OF CHIT DIVIDEND, LD. AR SUBMITTED 4 ITA NO. 554/H/16 M. HARINITHA REDDY THAT THE ASSESSEE HAD INCURRED LOSS IN THE CHIT FUN D TRANSACTIONS AND IT WAS DECLARED IN THE RETURN OF INCOME SUBMITTED B EFORE THE TAX AUTHORITIES. SINCE, IT IS LOSS, ASSESSEE HAS NOT CL AIMED THE SAME IN THE CURRENT AY. SINCE, IT IS ALREADY DECLARED (IN P AGE 2 OF PAPER BOOK), THERE IS NO DEFAULT ON THE PART OF THE ASSES SEE, THE ADDITION SHOULD NOT BE SUSTAINED. 10. THE LD. DR RELIED ON THE ORDERS OF REVENUE AUTH ORITIES. 11. CONSIDERED THE SUBMISSIONS OF BOTH THE COUNSEL S, AND MATERIAL FACTS ON RECORD. AS THE ASSESSEE HAS ALREADY DECLAR ED THE CHIT FUND TRANSACTIONS BEFORE THE TAX AUTHORITIES, IT IS NOTI CED THAT THE CHIT TRANSACTION LOSS WAS HAND WRITTEN IN THE RETURN OF INCOME, WHICH HAVE MISSED THE ATTENTION OF THE TAX AUTHORITIES. WE FIN D IT APPROPRIATE TO REMIT THIS ISSUE BACK TO THE FILE OF THE AO TO VERI FY THE TRANSACTIONS OF THE ASSESSEE AND DIRECT THE AO TO VERIFY THE SAME A ND FOUND TO BE PROPER, THE ADDITION MAY BE DELETED. IT IS NEEDLESS TO SAY, ASSESSEE MAY BE GIVEN PROPER OPPORTUNITY OF BEING HEARD. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATE D AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2016. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 10 TH AUGUST, 2016. KV COPY TO:- 1) SMT. HARINITHA REDDY, C/O P. MURALI & CO., CAS. , 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 500 082 2)DCIT, CENTRAL CIRCLE 2, HYDERABAD. 3) CIT(A) - 9, HYDERABAD 4)PR. CIT - 6 , HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 5 ITA NO. 554/H/16 M. HARINITHA REDDY S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./ P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER