Anasuya Mekala, Hyderabad, Hyderabad V. DCIT, Circle-11(1), Hyderabad, Hyderabad

ITA 689/HYD/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2546 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 13-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: K A SAI PRASAD
• Section: 147; 148

Judgement Text

ITA NO 689 OF 2015 ANASUYA MEKALA HYDERABAD PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.689/HYD/2015 (ASSESSMENT YEAR: 2009-10) SMT. ANASUYA MEKALA HYDERABAD PAN: AWAPM 0842 J VS DCIT CIRCLE 11 ( 1 ) HYDERABAD FOR ASSESSEE : SHRI K.A. SAI PRASAD FOR REVENUE : SHRI K.J. RAO, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2009-10. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE LEARNED CIT (A) IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF EVICTION CHARGES IN RESPECT OF THREE PERSONS IN COMPUTING THE CAPITAL GAINS. 2. THE LEARNED CIT (A) IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF THE AMOUNT OF RS.3.00 LAKHS PAID TO VILLAGE ELDERS IN COMPUTING THE CAPITAL GAINS. 2. IN ADDITION THERETO, THE ASSESSEE HAS ALSO FILED THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL: THE PROCEEDINGS U/S 147, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, ARE NOT VALID AND THEREFORE, THE ASSESSMENT BASING ON SUCH INVALID PROCEEDINGS DESERVES TO BE CANCELLED. DATE OF HEARING : 13.04.2017 DATE OF PRONOUNCEMENT : 26.04.2017 ITA NO 689 OF 2015 ANASUYA MEKALA HYDERABAD PAGE 2 OF 7 3. AS THE ADDITIONAL GROUND OF APPEAL IS AGAINST TH E VALIDITY OF THE ASSESSMENT U/S 147 OF THE I.T. ACT AND IS A LEGAL ISSUE, WE DEEM IT FIT AND PROPER TO ADMIT THE SAME AND PROCEED TO ADJUDICATE THE LEGAL ISSUE. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI K.A. S AI PRASAD SUBMITTED THAT THE ASSESSEE HAS FILED HER RE TURN OF INCOME WITH THE DCIT CIRCLE 11(1) HYDERABAD AND AN INTIMAT ION U/S 143(1) OF THE ACT WAS ALSO ISSUED BY THE DCIT CIRCL E 11(1). HE SUBMITTED THAT SUBSEQUENTLY, THE I.T.O WARD 11(2) H AS ISSUED NOTICE U/S 143(2) OF THE ACT REQUIRING THE ASSESSEE TO PRODUCE OR CAUSE TO PRODUCE THE DOCUMENTS AND OTHER EVIDENCE O N WHICH THE ASSESSEE RELIED ON IN SUPPORT OF THE RETURNS FILED BY HER. HE SUBMITTED THAT SUBSEQUENTLY, IT WAS REALIZED THAT T HE ASSESSEES JURISDICTION LIES WITH THE DCIT CIRCLE 11(1) AND IN ACCORDANCE THEREWITH, ANOTHER NOTICE U/S 143(2) DATED, 22.10.2 013 WAS ISSUED TO THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT WHEN THERE IS A TRANSFER OF JURISDIC TION FROM ONE OFFICER TO ANOTHER HAVING JURISDICTION OVER THE ASS ESSEE, THE NEW OFFICER ALSO HAS TO ISSUE A NOTICE U/S 148 OF THE A CT. HE SUBMITTED THAT THE NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE BY AN OFFICER WHO DOES NOT HAVE JURISDICTION OVER HIM AND THE OFF ICER WHO HAD THE JURISDICTION HAD NEVER ISSUED ANY NOTICE U/S 14 8 OF THE ACT. THEREFORE, ACCORDING TO HIM, THE PROCEEDINGS U/S 14 7 IS VOID AB INITIO. IN SUPPORT OF THESE CONTENTIONS, HE PLACED RELIANCE UPON THE FOLLOWING DECISIONS: I) ITO VS. M/S. INDUS VALLEY INVESTMENT & FINANCE P LTD IN ITA NO.4239/DEL/2011 DATED 6.7.2012. II) MEHTA BROTHERS VS. I.T.O IN ITA NO.2822/DEL/200 8 DATED 30 TH JUNE, 2010. III) MOHD. RIZWAN VS. I.T.O REPORTED IN (2015) 62 TAXMANN.COM 160 (LUCKNOW TRIB). ITA NO 689 OF 2015 ANASUYA MEKALA HYDERABAD PAGE 3 OF 7 IV) INDORAM SOFTWARE SOLUTION LTD VS. I.T.O REPORTE D IN (2013) 29 TAXMANN.COM 78 (MUM.) 5. THE LEARNED DR HOWEVER, SUBMITTED THAT THE OFFIC ER WHO HAD ISSUED NOTICE U/S 148 OF THE ACT AND THE OF FICER WHO HAD SUBSEQUENTLY ISSUED NOTICE U/S 143(2) ARE BOTH UNDE R THE SAME CIT AND BOTH WERE HAVING CONCURRENT JURISDICTION OV ER THE ASSESSEE. THEREFORE, ACCORDING TO HIM, THE NOTICE I SSUED BY ONE OF THE OFFICER WAS SUFFICIENT COMPLIANCE OF THE PROVIS IONS OF SECTION 147 OF THE ACT. AS REGARDS THE DECISIONS RELIED UPO N BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE LEARNED DR SU BMITTED THAT IN THESE CASES, 148 NOTICE WAS ISSUED BY AN AUTHORI TY, IN ONE LOCALITY WHEREAS THE CORRECT JURISDICTION WAS WITH THE AO IN A DIFFERENT TERRITORIAL JURISDICTION. THEREFORE, ACCO RDING TO HIM, THESE DECISIONS ARE NOT APPLICABLE TO THE FACTS OF THE CA SE BEFORE US. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT BOTH THE OFFICERS WHO HAVE ISSUED NOTICES U/S 148 AND 143(2) OF THE ACT, ARE IN CIRCLE 11 ONL Y. INITIALLY, THE NOTICE WAS ISSUED BY THE INCOME TAX OFFICER, WARD 1 1(2) AND SUBSEQUENTLY ON REALIZING THAT THE INCOME OF THE AS SESSEE WAS MUCH MORE THAN THE PECUNIARY JURISDICTION OF THE I. T.O, THE CASE WAS TRANSFERRED TO THE DCIT CIRCLE 11(1) AND THE DC IT HAD ISSUED THE NOTICE U/S 143(2) OF THE ACT. THUS, IT IS SEEN THAT BOTH THE OFFICERS ARE IN THE SAME CITY/LOCALITY/PLACE AND BO TH OF THEM HAVE CONCURRENT TERRITORIAL JURISDICTION OVER THE ASSESS EE. IN ALL THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL FOR TH E ASSESSEE, THERE WAS A CHANGE OF TERRITORIAL JURISDICTION AND HENCE ARE DISTINGUISHABLE FROM THE FACTS OF THE CASE BEFORE U S. ITA NO 689 OF 2015 ANASUYA MEKALA HYDERABAD PAGE 4 OF 7 7. WE FIND THAT SECTION 120 OF THE ACT DEALS WITH T HE JURISDICTION OF THE INCOME TAX AUTHORITIES AND SUB- SECTION 3 THEREOF PRESCRIBES CRITERIA FOR ASSIGNING THE JURIS DICTION OVER AN ASSESSEE. THE VARIOUS CRITERIA TO BE CONSIDERED ARE : (A) TERRITORIAL AREA; (B) PERSONS OR CLASSES PERSONS; (C) INCOMES OR CLASSES OF INCOME; AND (D) CASES OR CLASSES OF CASES. IN THE CASE BEFORE US, WE FIND THAT BOTH THE OFFICE RS BELOW HAVE TERRITORIAL JURISDICTION OVER THE ASSESSEE. THE ASS ESSEE HAS FILED THE RETURN OF INCOME BEFORE THE DCIT WHILE NOTICE U /S 148 HAS BEEN ISSUED BY THE INCOME TAX OFFICER. THUS, IT IS SEEN THAT BOTH THE OFFICERS HAVE CONCURRENT JURISDICTION OVER THE ASSESSEE AS FAR AS THE TERRITORIAL JURISDICTION IS CONCERNED. IT IS NOT CLEAR FROM THE RECORDS WHETHER THE INCOME TAX OFFICER WAS AWARE OF THE QUANTUM OF INCOME RETURNED BY THE ASSESSEE AS THE R ETURN OF INCOME WAS FILED WITH THE DCIT. THE COPY OF THE REA SONS RECORDED FOR REOPENING OF THE ASSESSMENT IS NOT FILED BEFORE US AND THEREFORE, WE ARE NOT ABLE TO COME TO ANY CONCLUSIO N AS TO WHETHER THE AO HAS REOPENED THE ASSESSMENT ON THE BASIS OF ANY INFORMATION RECEIVED BY HIM OR IT IS ON THE BASIS O F THE RETURN OF INCOME FILED BY THE ASSESSEE. IF THE RETURN OF INCO ME WAS NOT BEFORE THE AO, IT CANNOT BE PRESUMED THAT HE WAS AW ARE OF THE JURISDICTION OF THE DCIT OVER THE ASSESSEE AND INSP ITE OF THAT HAVE INITIATED PROCEEDINGS U/S 148 OF THE ACT. IT IS ALS O NOT IN DISPUTE THAT AS SOON AS THE INCOME TAX OFFICER REALIZED THA T HE LACKED PECUNIARY JURISDICTION OVER THE ASSESSEE, THE CASE WAS IMMEDIATELY TRANSFERRED TO THE FILE OF THE DCIT WHO AGAIN ISSUED A NOTICE U/S 143 (2) OF THE ACT. SINCE ONE OF THE OFF ICERS WHO HAS CONCURRENT JURISDICTION OVER THE ASSESSEE HAVE ISSU ED NOTICE U/S 148 OF THE ACT, WE ARE SATISFIED THAT THE PROCEEDIN GS U/S 147 HAVE ITA NO 689 OF 2015 ANASUYA MEKALA HYDERABAD PAGE 5 OF 7 BEEN VALIDLY INITIATED. THE ASSESSEES ADDITIONAL G ROUND OF APPEAL IS THUS REJECTED. 8. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE LAND, IN QUESTION, WAS NEAR MUSI RIVER AND IN T HE ILLEGAL OCCUPATION OF FIVE PEOPLE WHO WERE CULTIVATING THE LAND SINCE LONG AND REFUSED TO VACATE THE SAME INSPITE OF THE ASSES SEES HUSBAND AND HIS BROTHERS SELLING THE PROPERTY TO M/S. METRO CASH & CARRY INDIA PVT. LTD. IN ORDER TO HAND OVER THE PEACEFUL POSSESSION OF THE PROPERTY TO THE PURCHASER, THE ASSESSEES HUSBA ND HAD TO PAY CERTAIN AMOUNTS TO THE OCCUPANTS AND THE SAME WAS C LAIMED AS EXPENDITURE. THE LEARNED COUNSEL FOR THE ASSESSEE S UBMITTED THAT AT LEAST THE EXPENDITURE IN SUPPORT OF WHICH, THE A FFIDAVITS HAVE BEEN FILED MAY BE ALLOWED AS AN EXPENDITURE. SIMILA RLY, WITH REGARD TO THE PAYMENT MADE TO THE VILLAGE ELDERS, H E PRAYED THAT IT IS A COMMON PRACTICE THAT THE VILLAGE ELDERS ARE SE TTLING SUCH DISPUTES AND ARE PAID SOME AMOUNTS TOWARDS VILLAGE DEVELOPMENT ACTIVITY. THEREFORE, ACCORDING TO HIM, ALL THESE EX PENDITURE IS FOR TRANSFER OF THE PROPERTY AND IS TO BE ALLOWED AS EX PENDITURE IN RELATION THERETO. 9. THE LEARNED DR HOWEVER, RELIED UPON THE ORDERS O F THE AUTHORITIES BELOW. 10. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE UNDISPUTED FACTS ARE TH AT THE ASSESSEES HUSBAND ALONG WITH HIS BROTHERS HAS SOLD THE LAND TO M/S. METRO CASH & CARRY INDIA PVT. LTD, BANGALORE A ND HAS GAINED LTCG THEREFROM. AS REGARDS THE EXPENDITURE C LAIMED BY THE ASSESSEE FOR GETTING THE ILLEGAL OCCUPANTS EVIC TED FROM THE ITA NO 689 OF 2015 ANASUYA MEKALA HYDERABAD PAGE 6 OF 7 LAND, THE AO HAS ACCEPTED THE PAYMENT TO ONE OF THE OCCUPANTS OF THE LAND, SINCE HE WAS PRODUCED BEFORE HIM. THEREFO RE, IT IS CLEAR THAT THE LAND WAS NOT IN PEACEFUL POSSESSION OF THE ASSESSEES HUSBAND AND AO HAS ACCEPTED THIS FACT. THE ASSESSEE HAS CLAIMED THAT SHE HAS CLAIMED TO HAVE PAID TO 5 PERSONS OUT OF WHICH, PAYMENT TO ONE PERSON HAS BEEN ALLOWED. THE DISALLO WANCE OF PAYMENT TO OTHERS IS ON THE GROUND THAT THE ASSESSE E HAS NOT BEEN ABLE TO PRODUCE THOSE PARTIES FOR CROSS VERIFI CATION. NO DOUBT, THE ONUS IS ON THE ASSESSEE TO PRODUCE THE PARTIES. WE FIND THAT THE ASSESSEE HAS FILED THE AFFIDAVITS OF TWO PERSON S BUT THE AO HAS NOT ACCEPTED THE SAME BUT ALSO HAS NOT HELD THAT TH E PAYMENT IS GENUINE. THEREFORE, TO THE EXTENT OF PAYMENT WHICH IS SUPPORTED BY AFFIDAVITS, WE DIRECT THE AO TO ALLOW THE SAME. SIMILARLY IT IS ALSO NOT UNCOMMON THAT VILLAGE ELDERS INTERVENE AND SETTLE THE LAND DISPUTES TO SAFEGUARD THE LAW AND ORDER AND PR OTECT THE PEACEFUL ATMOSPHERE OF THE VILLAGE. THE ASSESSEE HA S CLAIMED TO HAVE PAID FOR THE VILLAGE DEVELOPMENT. THEREFORE, W E DIRECT THAT 50% OF THE CLAIM I.E. UP TO RS.1.50 LAKHS BE ALLOWED . THE ASSESSEE GETS RELIEF ACCORDINGLY. 11. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH APRIL, 2017. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 26 TH APRIL, 2017. VINODAN/SPS ITA NO 689 OF 2015 ANASUYA MEKALA HYDERABAD PAGE 7 OF 7 COPY TO: 1 SMT. ANASUYA MEKALA, C/O CH. PARTHASARATHY & CO. 1-1- 298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO.1, ASHOKNAGAR, HYDERABAD 500020 2 DCIT CIRCLE 11(1) HYDERABAD 3 CIT (A)-VII HYDERABAD 4 CIT V HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER