Shri V. Rajeswara Rao, Hyderabad V. ITO,Ward - 2, Kothagudem

ITA 707/HYD/2014

• Counselvise Citation: 70722514 RSA 2014
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 17-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G APPA RAO
• Assessee Lawyers: M CHANDRAMOULESWARA RAOCA
• Keywords: Opportunity of being heard; Difference of opinion; Change of opinion
• Section: 263; 143(3); 142(1)

Judgement Text

ITA NO.707 OF 2014 V RAJESHWARA RAO HYDERABAD PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD ABENCH, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.707/HYD/2014 (ASSESSMENT YEAR: 2009-10) SHRI V. RAJESHWARA RAO , FLAT NO.401, DEEKSHITHA RESIDENCY, KTR ROAD NO.1 BALAJI NAGAR, NIZAMPET, HYDERABAD 500090 PAN: ACPPV 6551 N VS. INCOME TAX OFFICER WARD-2 KOTHAGUDEM (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI M.CHANDRAMOULESWARA RAO,CA DEPARTMENT BY: SMT. G. APPA RAO, (DR) DATE OF HEARING: 11/12/2014 DATE OF PRONOUNCEMENT: 24/12/2014 O R D E R PER ASHA VIJAYARAGHAVAN, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF THE CIT, VIJAYAWADA, DATED 14.02.2014 U/S 263 OF THE ACT FOR THE A.Y 2009-10. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SH RI VEMULAPALLI RAJESWARA RAO, IS AN EMPLOYEE OF NAVABH ARAT VENTURES LTD, FILED HIS RETURN OF INCOME IN THE STA TUS OF AN INDIVIDUAL ON 24.07.2009 ADMITTING A TOTAL INCOME O F ` .1,59,360/- FOR A.Y 2009-10. THE INCOME TAX OFFICER , WARD-2 KOTHAGUDEM PICKED UP THE CASE FOR SCRUTINY FOR EXAM INING THE CASH TRANSACTIONS IN THE BANK ACCOUNT AND COMPLETED ITA NO.707 OF 2014 V RAJESHWARA RAO HYDERABAD PAGE 2 OF 8 ASSESSMENT U/S 143(3) ON 25.5.2011 BY DETERMINING T HE INCOME AT ` RS.1,79,160/-. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE CLAIMED THAT THE CASH DEPOSITS MADE IN THE BANK A/C WAS BY WAY OF SALE OF AGRICULTURAL LAND AND CERTAIN OTHER CASH DEPOSITS MADE IN THE BANK A/C WERE EXPLAINED AS REC EIPT OF LOANS ADVANCED IN THE EARLIER YEARS. THE CIT ASSUMED JURI SDICTION U/S 263 OF THE I.T. ACT AND HELD THAT NO PROPER SALE DE ED OR REGISTERED COPY OF THE SALE DEED WAS OBTAINED BY THE AO WITH R ESPECT TO AGRICULTURAL LAND. FURTHER, THE AO HAD NOT CALLED F OR EVIDENCE IN RESPECT OF THE AGRICULTURAL LAND CLAIMED TO HAVE BE EN SOLD BY THE ASSESSEE, NOR PROVED THE OWNERSHIP TO THE AGRICULTU RAL LAND. THE CIT ALSO WAS OF THE OPINION THAT THE AO HAD NOT OBT AINED CONFIRMATION LETTERS FROM THE ALLEGED DEBTORS, NOR EXAMINED THE ASPECTS OF LOANS GIVEN TO DEBTORS OR REPAID BY THEM IN CASH WITH REFERENCE TO THE APPLICABILITY OF PROVISIONS OF SEC TION 269SS AND 269T OF THE ACT. HENCE, THE CIT CONSIDERED THE ORDE R PASSED BY THE AO AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, WITHIN THE SCOPE OF SECTION 263 OF THE ACT. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEES A R APPEARED AND FURNISHED THE WRITTEN SUBMISSIONS. IT WAS STATE D IN THE SUBMISSIONS THAT THE ASSESSEE IS A RETIRED EMPLOYEE OF M/S NAVABHARAT LTD, PALONCHA AND HIS SON MR.VEMULAPALLY SANDEED IS STUDYING MS IN CENTRAL QUEENLAND UNIVERSITY AT A USTRALIA. THE ASSESSEE HAD GIVEN AN AMOUNT OF ` RS.3,30,000/- AS LOAN TO HIS FRIENDS/RELATIVES I.E. MR. D RAMESH, N. SURESH, M. PICHESWARA RAO, HUSSAIN, N. GANDHI, JDL SHARMA AND R.JYOTHI IN DIFFERENT DATES OUT OF HNIS SALARY SAVINGS. ON 10/10/2008 THE ASSESSEE ITA NO.707 OF 2014 V RAJESHWARA RAO HYDERABAD PAGE 3 OF 8 HAD RECEIVED ABOVE SAID AMOUNT, DEPOSITED IN HIS BA NK ACCOUNT AND TRANSFERRED ` .3,30,000/- TOWARDS FEE FOR HIS SON BUT NOT COLLATED (SIC) ANY INTEREST FROM THEM. HOWEVER, THE AO HAS CALCULATED INTEREST @ 12% ON THE ABOVE SAID AMOUNT AND ADDED TO THE INCOME OF THE ASSESSEE. SINCE THE ASSESSEE H AS NEITHER DEPOSITED NOR TAKEN ANY LOAN FROM THE ABOVE RELATIV ES AND FRIENDS, SECTION 269SS OR 269T IS NOT APPLICABLE. 4. IT IS FURTHER STATED THAT THE ASSESSEE IS HAVING 8 ACRES OF AGRICULTURAL LAND SITUATED AT PALONCHA VILLAGE. THE LAND IS SITUATED IN SCHEDULE AREA AND THERE IS NO REGISTRAT ION UNDER THE A.P. REGISTRATION ACT. IN GENERAL, THE PEOPLE WHO L IVE IN THIS AREA, MADE AGREEMENTS ON NON-JUDICIAL STAMPS. THE ASSESSE E SOLD THE AGRICULTURAL LAND TO AN EXTENT OF 8 ACRES WORTH ` .13,90,000/- FOR HIS SONS EDUCATION EXPENSES. THE ASSESSEE HAS SUBM ITED THAT NOTARIZED AGREEMENTS COPIES ENTERED WITH THE PARTIE S WERE PRODUCED BEFORE THE AO IN SCRUTINY PROCEEDINGS. THE AO CONSIDERED ABOVE SAID FACTS OF LOCAL SITUATIONS AND ACCEPTED THE SAME. 5. THE CIT AFTER GOING THROUGH THE SUBMISSIONS OF T HE ASSESSEE HELD THAT THE AO HAS NEITHER CALLED FOR AN Y PARTICULARS, NOR EXAMINED ANY ALLEGED DEBTORS. HE ALSO POINTED O UT THAT IT IS NOT KNOWN WHEN THE LOANS AMOUNTING TO ` .3,30,000/- WERE GIVEN AND IN WHICH LOCATION THE ALLEGED DEBTORS ARE RESID ING WHEN AND HOW SUCH LOANS WERE RETURNED ETC. WITH REGARD TO TH E CASH DEPOSITS ON 10.01.2009 AND 6.3.2009, THE ASSESSEE E XPLAINED THAT THE ASSESSEE HAD 8 ACRES OF AGRICULTURAL LAND BEARING NO.444 SITUATED AT PALONCHA KHAMMAM AND ON 9.1.2009, THE A SSESSEE ITA NO.707 OF 2014 V RAJESHWARA RAO HYDERABAD PAGE 4 OF 8 SOLD 4.40 ACRES AND ON 5.3.09 THE ASSESSEE SOLD 3 A CRES OF AGRICULTURAL LAND. THE AMOUNTS WERE DEPOSITED IN HI S S/B A/C OF STATE BANK OF HYDERABAD, PALONCHA. IT WAS ALSO EXPL AINED BY THE ASSESSEE THAT HE HAD DECIDED TO RESIDE IN HIS NATIV E PLACE OF ONGOLE AFTER HIS RETIREMENT AND THEREFORE, THE ASSE SSEE SOLD AGRICULTURAL LANDS IN ORDER TO FUND HIS SONS STUDY ABROAD IN AUSTRALIA. 6. IT WAS CLARIFIED BY THE ASSESSEE THAT THE LANDS ARE SITUATED IN THE SCHEDULE AREA, WHERE THERE ARE NO REGISTRATI ON UNDER THE A.P. REGISTRATION ACT AND AGREEMENTS ARE ENTERED ON ` .100/- JUDICIAL STAMP PAPER BEFORE THE NOTARY ADVOCATE. TH E CIT HELD AS FOLLOWS: 6.4 THOUGH, THE ASSESSEE PRODUCED CERTAIN AFFIDAVITS TO THE EFFECT OF SALE OF AGRICULTURAL LA ND, WHEN THERE IS NO REGISTERED SALE DEED TO INDICATE OWNERSHIP OF THE IMPUGNED LAND OR TRANSFER OF OWNERSHIP OF THE IMPUGNED LAND AND THE ALLEGED TRANSACTIONS ARE CLAIMED TO HAVE BEEN MADE ON CASH, THE AO NEITEHR REQUIRED THE ASSESSEE TO PRODUCE THE ALLEGED PURCHASERS AND EXAMINED THEM TO ASCERTAIN THE GENUINENESS OF THE TRANSACTIONS NOR THE AO CONDUCTED ANY INDEPENDENT ENQUIRY TO SATISFY THE GENUINENESS OF THE ABOVE TRANSACTIONS. 6.5 IT IS SETTLED LAW THAT AN ASSESSMENT ORDER COUL D BE CONSIDERED AS ERRONEOUS NOT ONLY IF IT CONTAINS SOME APPARENT ERROR OF REASONING OR OF LAW OR OF TH E FACT ON THE FACE OF IT, BUT ALSO FOR THE REASON THA T IT IS AN ORDER WHICH SIMPLY ACCEPTED WHAT THE ASSESSEE HAS STATED IN HIS RETURN &/OR IN THE OTHER PARTICUL ARS FURNISHED BY HIM AND FAILED TO MAKE EXAMINATION/VERIFICATION/ENQUIRIES WHICH ARE CALED FOR ON THE FACTS AND CIRCUMSTANCES OF THE CASE. IN THIS CASE, THE AO HAS NOT EXAMINED THE ABOVE ISSUES IN ACCORDANCE WITH THE LAW AS WELL AS ON THE ITA NO.707 OF 2014 V RAJESHWARA RAO HYDERABAD PAGE 5 OF 8 ESTABLISHED PROCEDURES AND HENCE THE ASSESSMENT ORDER MADE BY THE AO U/S 143(3) DATED 25.05.2011 IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. HENCE, IT IS SET ASIDE FOR REDOING THE ASSESSMENT IN ACCORDANCE WITH THE LAW AS WELL AS ON THE ESTABLISHED PROCEDURE AND AFTER GIVING ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 7. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. THE LD COUNSEL FOR THE ASSESSEE SHRI M.CHANDRAMOULESWARA R AO REITERATED THE EXPLANATIONS GIVEN BEFORE THE CIT. T HE LD COUNSEL ALSO GAVE DETAILS OF THE AMOUNT REPAID BY VARIOUS P EOPLE WHO HAD TAKEN LOANS ON EARLIER DATES FROM THE ASSESSEE ARE AS FOLLOWS: S.NO NAME AMOUNT ( ` .) 1 D. RAMESH, R/O KOTHAGUDEM 50,000/ - 2 N. SURESH, S/O RAMAKRISHNA 50,000/ - 3 M. PICHESWARA RAO, S/O SUBBA RAO, R/O NAVANAGAR, PALONCHA 50,000/ - 4 HUSSAIN, R/O NAVANAGAR, PALONCHA 40,000/ - 5 N. GANDHI, S/O VENKATAIAH R/O NAVANAGAR, R/O PALONCHA 50,000/ - 6 J.D.L. SHARMA, S/O THRIPURANTHAM R/O OLD PALONCHA 50,000/ - 7 R. JYOTHI, W/O R. KOTESWARA RAO, R/O BODHAN, NIZAMABAD 40,000/ - TOTAL 3,30,000/ - 8. THE LD COUNSEL ALSO EXPLAINED THAT IN THE SCHEDU LE AREA, THERE ARE NO REGISTRATION UNDER THE A.P. REGISTRATI ON ACT AND IT IS COMMON PRACTICE TO ENTER INTO AGREEMENTS ON RS.100/ - JUDICIAL STAMP PAPER BEFORE THE NOTARY ADVOCATE. HE ALSO POI NTED OUT THAT AFFIDAVITS WERE ALSO GIVEN WITH RESPECT TO SALE OF AGRICULTURAL LAND ITA NO.707 OF 2014 V RAJESHWARA RAO HYDERABAD PAGE 6 OF 8 AND HENCE THE GENUINENESS OF THE SAME SHOULD NOT BE DOUBTED. IT WAS STRESSED BY THE LD COUNSEL THAT A THOROUGH EXAM INATION WAS MADE BY THE AO WHILE IN THE SCRUTINY ASSESSMENT AND THE AO COMPLETED THE ASSESSMENT ONLY AFTER SUCH VERIFICATI ON AND DETERMINATION OF INCOME AT ` .1,79,160/-. IT WAS PLEADED THAT A MERE CHANGE OF OPINION BY THE CIT CANNOT BE THE REA SON FOR ASSUMPTION OF JURISDICTION U/S 263. 9. THE LD DR ON THE OTHER HAND POINTED OUT THAT THE AO HAD NOT PRODUCED THE ALLEGED PURCHASERS AND EXAMINED TH EM TO ASCERTAIN THE GENUINENESS OF THE TRANSACTIONS AND H ENCE INQUIRY MADE BY THE AO WAS DEFICIENT. THE DR ALSO POINTED O UT THAT IN CASE OF RETURN OF LOANS, DETAILS WITH RESPECT TO TH E AREA, PURPOSE OF TAKING THE LOAN AND THE MODE OF TAKING THE LOAN WERE ALL MISSING AND HENCE THE PARTICULARS HAVE NOT BEEN EXA MINED BY INTERROGATING THE ALLEGED DEBTORS. 10. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE ORDERS OF THE AO AND THE LD CIT. IN THE CASE OF SCR UTINY ASSESSMENT, NOTICES HAVE BEEN ISSUED U/S 143(2) AND 142(1). THE INFORMATION FURNISHED HAS BEEN EXAMINED AND ON VERI FICATION OF THE SAME, THE ASSESSMENT HAS BEEN COMPLETED. THE AS SESSEE HAS GIVEN THE NAMES AND THE PEOPLE WHO HAVE REPAID THE AMOUNTS TO HIM AND ALL THE INFORMATION WAS AVAILABLE WITH THE AO. IN CASE OF SCHEDULE LAND, THE REGISTRATION OF SALE DEED OF AGR ICULTURAL LAND DOES NOT TAKE PLACE AND THE ASSESSEE HAS FURNISHED THE NOTARIZED COPIES OF THE SALE AGREEMENT BEFORE THE AO AND THE CIT. MERE NOTARIZATION OF THE SALE AGREEMENT SEEMS TO BE THE PRACTICE IN ITA NO.707 OF 2014 V RAJESHWARA RAO HYDERABAD PAGE 7 OF 8 THAT AREA BEING SCHEDULE LAND. HENCE IN OUR OPINION , THE CIT, ON A MERE CHANGE OF OPINION INITIATED THE PROCEEDINGS U/S 263. THE ORDER OF AO CANNOT BE REVISED IF IT HAS BEEN PASSED AFTER APPLICATION OF MIND. MERELY BECAUSE THE OPINION OF THE CIT IS DIFFERENT FROM AO THIS SECTION CANNOT BE RESORTED T O. 11. IN THE CASE OF CIT VS. ARVIND JEWELLER, 259 ITR 502 (GUJ.), THE COURT HELD THAT THE ASSESSEE HAD PRODUCED RELEV ANT MATERIAL AND OFFERED EXPLANATION IN PURSUANCE OF THE ARTICLE S ISSUED U/S 142(1) AND U/S 143(2) OF THE ACT AND AFTER CONSIDER ING THE MATERIAL AND EXPLANATION, THE INCOME TAX OFFICER HA D COME TO A DEFINITE CONCLUSION. THE GUJARAT HIGH COURT APPLIED THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT I N THE CASE OF MALABAR INDUSTRIAL CO. LTD AND DECIDED THE CASE IN FAVOUR OF THE ASSESSEE. CIT VS. GABRIEL INDIA LTD, 203 ITR 108 WH ERE THE ASSESSEE HAD CLAIMED CERTAIN EXPENSES AS REVENUE EX P. THE INCOME TAX OFFICER SOUGHT DETAILS OF THE SAME AND T HE ASSESSEE GAVE HIS DETAILS AND EXPLANATIONS AND THE NATURE OF EXPENDITURE. THE INCOME TAX OFFICER CONSIDERED THE EXPLANATION A ND ALLOWED THE SAME BUT DID NOT INCLUDE THE DISCUSSION IN THIS REGARD IN THE ASSESSMENT ORDER. 12. IN THE PRESENT CASE THE AO HAS GATHERED DETAILS WITH RESPECT TO REPAYMENT OF HAND LOANS BY RELATIVES AND FRIENDS AND ALSO SALE OF AGRICULTURAL LAND I.E. THE AO HAS CONS IDERED THE EXPLANATION GIVEN BY THE ASSESSEE AND PASSED AN ORD ER AFTER APPLYING HIS MIND. HENCE, FOLLOWING THE RATIO OF TH E DECISION IN ITA NO.707 OF 2014 V RAJESHWARA RAO HYDERABAD PAGE 8 OF 8 CIT VS. GABRIEL INDIA, 203 ITR 108, WE ALLOW THE AS SESSEES APPEAL. 13. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH DECEMBER, 2014. S D/ - S D/ - (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 24 TH DECEMBER, 2014. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER