M.Harinitha Reddy, Hyderabad V. CIT, Hyderabad

ITA 651/HYD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3183 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-06-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 29-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VASUNDHARA SINHA
• Assessee Lawyers: P MURALI MOHAN RAO
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMEBR ITA NO.650 & 651/HYD/2010 ASSTT. YEAR 2002-03 & 2003-04 SMT. M HARINITHA REDDY, HYDERABAD (PAN NO.AATPM 6617 N) V/S. CIT, CENTRAL, HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P. MURALI MOHAN RAO RESPONDENT BY : SMT. VASUNDHARA SINHA, DR O R D E R PER SHRI G.C. GUPTA, VICE PRESIDENT: THESE TWO APPEALS BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04 ARE DIRECTED AGAINST THE ORDER OF THE CIT. SINCE IDENTICAL ISSUE IS INVOLVED IN BOTH THESE APPEALS, THESE ARE BEING DISPOSED OFF WITH THIS CONSOLIDATED ORDER. 2. THE ONLY ISSUE IN THESE APPEALS OF THE ASSESSEE IS REGAR DING VALIDITY OF THE ORDER PASSED U/S 263 OF THE ACT BY THE CIT. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT IN EXERCI SE OF HIS POWERS U/S 263 OF THE ACT SET ASIDE THE ASSESSMENTS FOR THE RELEVANT ASSESSMENT YEARS 2002-03 AND 2003-04 AND HAS DIRECTED THE ASSESSING OFFICER TO REFRAME THE ASSESSMENT ORDER AFTER MAK ING INQUIRIES. HE SUBMITTED THAT THE ONLY REASON GIVEN BY T HE CIT FOR SETTING ASIDE THE ASSESSMENT WAS THAT NO INTEREST FROM THE INVESTMENT MADE BY THE ASSESSEE IN M/S PALACE HEIGHTS HOTELS (P) LTD., WAS ITA NOS650 & 651.11/HYD/2010 SMT. M. HARINITHA REDDY, HYDERABAD. 2 DECLARED IN THE RETURN OF INCOME FILED BY THE ASSESSEE FO R THE RELEVANT ASSESSMENT YEARS. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMIT TED THAT THE ASSESSEE HAS FILED A WRITTEN REPLY TO THE CIT IN PROCEEDINGS U/S 263 STATING THAT THE AMOUNT ADVANCED TO M/S PALACE HE IGHTS HOTELS (P) LTD WAS TRANSFERRED TO M/S PARVATH INVESTMEN TS PVT. LTD., ON 16-03-2001 AND HAS DISCLOSED THE INTEREST INCOME FROM M/S PARVATH INVESTMENT (P) LTD., FOR THE RELEVANT ASSESSMENT YEAR 2002- 03 AND 2003-04. HE SUBMITTED THAT THE CIT HAS SET ASIDE THE ASSESSMENTS IN THIS CASE PURELY ON CONJECTURES AND SURMISES. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS OPPOSED THE SU BMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. SHE SUBMITTED THA T THE ASSESSEE COULD NOT PROVE THAT THE AMOUNT INVESTED WITH M /S. PALACE HEIGHTS HOTELS (P) LTD WAS TRANSFERRED TO M/S PARVATH INVE STMENT (P) LTD., ON 16/03/2001. SHE RELIED ON THE ORDER OF THE CIT. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY. WE FIND THAT THE ASSESSEE HAS FILED WRITTEN REPLY TO THE NOTICE ISSUED B Y THE CIT U/S 263 OF THE ACT AND THE RELEVANT PORTIONS THEREOF HAS B EEN REPRODUCED BY THE CIT IN HIS ORDER PASSED U/S 263 OF THE ACT. IN TH IS REPLY IN RESPONSE TO NOTICE U/S 263 OF THE ACT, THE ASSESSEE HAS EXPLA INED ALL THE FACTS AND HAS STATED THAT THE AMOUNT INVESTED WITH M/S PALACE HEIGHTS HOTELS (P) LTD WAS TRANSFERRED TO M/S PARVATH INVE STMENTS (P) LTD., ON 16-03-2001 AND THAT THE INTEREST INCOME WAS D ECLARED FROM M/S. PARVATH INVESTMENT (P) LTD., FOR THE RELEVANT ASSE SSMENT YEARS 2002-03 AND 2003-04 IN THE RETURN OF INCOME FILED. T HE COPIES OF THE LEDGER ACCOUNT IN THE BOOKS OF ACCOUNTS OF M/S. PARVATH I NVESTMENT (P) LTD., WERE ALSO FILED WITH THE CIT. WE FIND THAT THE CIT IN HIS ORDER PASSED U/S 263 HAS NOT DISPUTED THE FACT THAT THE ASSESSEE H AS DECLARED THE INTEREST INCOME FROM M/S. PARVATH INVESTMEN T (P) LTD., IN THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE RELE VANT ASSESSMENT ITA NOS650 & 651.11/HYD/2010 SMT. M. HARINITHA REDDY, HYDERABAD. 3 YEARS. HIS ONLY SUSPICION IS WHETHER THE LOAN GIVEN TO M/S. PALACE HEIGHTS HOTELS (P) LTD WAS ACTUALLY TRANSFERRED TO M/S. PAR VATH INVESTMENTS (P) LTD., OR NOT. WE FIND THAT IN THE FACT S OF THE CASE OF THE ASSESSEE THERE IS NO REVENUE LOSS INVOLVED AND THEREFO RE, THE ORDER OF ASSESSMENT PASSED BY THE ASSESSING OFFICER COULD NOT BE SAID TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE INTE REST INCOME FROM M/S. PARVATH INVESTMENTS (P) LTD., WAS SHOWN AND ASSESSED T O TAX AND THIS FACT HAS NOT BEEN DOUBTED BY THE REVENUE AUTHORI TIES. IN THESE FACTS OF THE CASE WE HOLD THAT PRE-CONDITIONS OF INVOKING OF SEC.263 OF THE ACT IS NOT SATISFIED IN THIS CASE AND ACCORDINGLY THE OR DER OF THE CIT PASSED U/S 263 FOR BOTH THE ASSESSMENT YEAR 2002-03 AND 20 03-04 IS CANCELLED AND THE GROUNDS OF THE APPEAL OF THE ASSESSEE AR E ALLOWED. 4. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 11-06-2010. SD/- SD/- (CHANDRA POOJARI) (G.C. GUPTA) ACCOUNTANT MEMBER VICE-PRESIDENT PVV/SPS DATE: 11TH JUNE, 2010. COPY FORWARDED TO: 1. SMT. M. HARINITHA REDDY, C/O P. MURALI & CO. CHAR TERED ACCOUNTANTS, 6-3-655/2/3 1ST FLOOR, SOMAJIGUDA, HYDERABAD 2. THE COMMISSIONER OF INCOME TAX, (CENTRAL), HYDERABAD 3. THE DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE- 2, HYDERABAD. 4 THE DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD.