Sri Koyilada Rammurthy Naidu, Visakhapatnam V. THE ACIT, CENTRAL CIRLE - 1, Visakhapatnam

ITA 62/VIZ/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8888 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 06-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S R S NARAYAN
• Keywords: Search and seizure; Capital receipt; Reassessment proceedings
• Section: 143(3); 147; 148; 132; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, HONBLE ACCOUNTANT MEMBER ITA NO. 62/VIZ/2013 (ASST. YEAR : 2008-09) SRI KOYILADA RAMMURTHY NAIDU, D.NO. 53-20-30, CHAITANYA NAGAR, MADDILAPALEM, VISAKHAPATNAM. V. ACIT, CENTRAL CIRCLE-1, VISAKHAPATNAM. PAN NO. ALKPK 5754 C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADVOCATE. DEPARTMENT BY : SHRI S.R.S. NARAYAN SR.DR DATE OF HEARING : 29/05/2017. DATE OF PRONOUNCEMENT : 31/05/2017. O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), VISAKHAPATNAM, DATED 29/11/2012 FOR THE ASSESSMENT YEAR 2008-09. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS IN THE RETAIL CLOTH BUSINESS. THERE WAS A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE 'ACT') CONDUCTED IN THE CASE OF M/S. M.V.V. BUILDERS, VISAKHAPATNAM ON 12/09/2007. DURING THE COURSE OF SEARCH, IT WAS FOUND THAT PAYMENTS TO THE TUNE OF 60 LAKHS HAVE BEEN PAID TO THE ASSESSEE DURING THE ASSESSMENT YEAR 2008-09 BY M/S. M.V.V. BUILDERS THROUGH ONE DATLA 2 ITA NO.62/VIZ/2013 (KOYILADA RAMMURTHY NAIDU) SUBBA RAJU @ ULC SUBBA RAJU IN ORDER TO SETTLE THE OWNERSHIP DISPUTE OF THE SITE. BASED ON THE ABOVE INFORMATION, THE ASSESSING OFFICER ISSUED A NOTICE UNDER SECTION 148 OF THE ACT ON 08/08/2008 AND AFTER FOLLOWING DUE PROCESS, ASSESSMENT IS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT ON 01/12/2009. 3 . BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) BY RAISING THE FOLLOWING GROUNDS:- 1. THE LEARNED ACIT, CENTRAL CIRCLE, VISAKHAPATNAM ERRED IN MAKING AN ADDITION OF 50,00,000/- 2. ANY OTHER GROUNDS THAT MAY BE SUBMITTED AT THE TIME OF HEARING. 4. THE LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 5. AGGRIEVED, THE ASSESSEE PREFERRED THIS APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS:- GROUND NO.1: THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), VISAKHAPATNAM IS CONTRARY TO THE FACTS AND LAW APPLICABLE TO THE CASE AND CIRCUMSTANCES THE APPELLANT. GROUND NO.2: THE LEARNED CIT(A), VISAKHAPATNAM IS NOT JUSTIFIED IN NOT ADJUDICATING THE ADDITIONAL GROUNDS OF APPEAL FILED DURING THE COURSE OF APPELLATE PROCEEDINGS. GROUND NO.3: THE LEARNED CIT(A), VISAKHAPATNAM OUGHT TO HAVE HELD THAT THE NOTICE ISSUED UNDER THE PROVISIONS OF SECTION 148 OF THE INCOME TAX ACT, 1961 IS INVALID AND CONSEQUENTLY THE ENTIRE REASSESSMENT PROCEEDINGS ARE VOID-AB-INITIO. GROUND NO.4: THE LEARNED CIT(A), VISAKHAPATNAM OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO TREAT THE AMOUNT OF RS. 10,00,000 RECEIVED BY THE APPELLANT AS CAPITAL RECEIPT AND THUS NOT TAXABLE. GROUND NO.4: THE LEARNED CIT(A), VISAKHAPATNAM IS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO MAKE AN ADDITION OF RS.39,00,000/- AS CONSIDERATION FOR PERFORMING THE CONTRACT. GROUND NO.5: ANY OTHER GROUND THAT MAY BE URGED DURING THE COURSE OF HEARING OF THE APPEAL BEFORE YOUR HONOUR'S. 3 ITA NO.62/VIZ/2013 (KOYILADA RAMMURTHY NAIDU) 6 . LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THOUGH THE ASSESSEE HAS NOT RAISED ANY SPECIFIC GROUND CHALLENGING THE REOPENING, HOWEVER, IN THE WRITTEN SUBMISSIONS, THE ASSESSEE HAS RAISED AN OBJECTION THAT THE NOTICE ISSUED UNDER SECTION 148 IS NOT A VALID (THIS FACT IS POINTED OUT FROM THE PAPER BOOK AT PAGE NOS. 31 TO 34) AND SUBMITTED THAT LD. CIT(A) OUGHT TO HAVE CONSIDERED THE VALIDITY OF NOTICE UNDER SECTION 148 ISSUED BY THE ASSESSING OFFICER AND PRAYED THAT THE ISSUE BEING A LEGAL ISSUE GOES TO THE ROOT OF THE MATTER, THE ORDER PASSED BY THE LD. CIT(A) MAY BE SET ASIDE AND REMITTED MATTER BACK TO THE LD. CIT(A) TO ADJUDICATE THE ISSUE OF REOPENING. 7 . ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE ASSESSEE HAS NOT RAISED THE VALIDITY OF REOPENING OF NOTICE UNDER SECTION 148 BEFORE THE LD. CIT(A). THEREFORE, LD. CIT(A) CORRECTLY ADJUDICATED THE GROUNDS RAISED BEFORE HIM. 8 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 9. THERE IS A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 WAS CONDUCTED IN THE CASE OF M/S. M.V.V. BUILDERS ON 12/09/2007. DURING THE COURSE OF SEARCH, IT WAS FOUND THAT M/S. M.V.V. BUILDERS PURCHASED A SITE FROM THE ASSESSEE AND PAID AN AMOUNT OF 60 LAKHS FOR THE ASSESSMENT YEAR 2008-09 AND THE ASSESSING OFFICER IS OF THE OPINION THAT AS THE SAID INCOME WAS NOT ADMITTED BY THE ASSESSEE, THE SAME HAS ESCAPED INCOME AND NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED 4 ITA NO.62/VIZ/2013 (KOYILADA RAMMURTHY NAIDU) TO THE ASSESSEE ON 08/08/2008 AND ACCORDINGLY ASSESSMENT IS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT ON 01/12/2009. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE HAS NOT RAISED ANY SPECIFIC GROUND IN RESPECT OF VALIDITY OF REOPENING, HOWEVER, FILED A DETAILED WRITTEN SUBMISSIONS (PAGE NOS. 31 TO 34 OF THE PAPER BOOK) WHEREIN HE SPECIFICALLY RAISED AN OBJECTION THAT NOTICE ISSUED UNDER SECTION 148 IS INVALID. THE LD. CIT(A) HAS CONSIDERED THE REMAINING PART OF THE WRITTEN STATEMENT EXCEPT VALIDITY OF NOTICE. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT VALIDITY OF NOTICE UNDER SECTION 148 HAS NOT SPECIFICALLY BEEN RAISED BEFORE THE LD.CIT(A), BUT IN THE WRITTEN SUBMISSIONS FILED BEFORE THE LD. CIT(A), VALIDITY OF REOPENING IS CHALLENGED. WE FIND THAT ASSESSEE HAS RAISED AN OBJECTION IN RESPECT OF VALIDITY OF NOTICE. THOUGH, ASSESSEE HAS NOT RAISED ANY SPECIFIC GROUND, ONCE WRITTEN STATEMENT IS FILED AND OBJECTED FOR REOPENING BY QUESTION THE VALIDITY OF 148, THE LD. CIT(A) OUGHT TO HAVE ADJUDICATED THE SAME BEFORE DECIDING THE CASE ON MERITS. WE FIND THAT IN THE INTEREST OF JUSTICE, THE LEGAL ISSUE RAISED BY THE ASSESSEE IN RESPECT OF VALIDITY OF NOTICE UNDER SECTION 148 IS GOES TO THE ROOT OF THE MATTER, THEREFORE, IT IS NECESSARILY BE ADJUDICATED BEFORE DECIDING THE MERITS OF THE CASE. THUS, WE SET ASIDE THE ORDER PASSED BY THE LD.CIT(A) AND DIRECT HIM TO ADJUDICATE THE VALIDITY OF NOTICE UNDER SECTION 148 OF THE ACT AND DECIDE THE CASE IN ACCORDANCE WITH LAW. 5 ITA NO.62/VIZ/2013 (KOYILADA RAMMURTHY NAIDU) 10 . SO FAR AS GROUND NOS. 4 & 5 RAISED BY THE ASSESSEE ARE CONCERNED, IN VIEW OF OUR DECISION ABOVE, WE ARE OF THE OPINION THAT IT IS NOT NECESSARY TO ADJUDICATE AT THIS JUNCTURE AND THEREFORE, THE ABOVE GROUNDS RAISED BY THE ASSESSEE ARE REJECTED. 11 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF MAY, 2017. SD/- SD/- (D.S. SUNDER SINGH) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 31 ST MAY, 2017. VR/- COPY TO: 1. THE ASSESSEE - SRI KOYILADA RAMMURTHY NAIDU, D.NO. 53-20- 30, CHAITANYA NAGAR, MADDILAPALEM, VISAKHAPATNAM. 2. THE REVENUE - ACIT, CENTRAL CIRCLE-1, VISAKHAPATNAM. 3. THE CIT (CENTRAL), HYDERABAD. 4. THE CIT(A), VISAKHAPATNAM. 5. THE D.R., VISAKHAPATNAM. 6. GUARD FILE. BY ORDER 6 ITA NO.62/VIZ/2013 (KOYILADA RAMMURTHY NAIDU)