Pratap Reddy Koppula, Hyd, Hyderabad V. ACIT, Circle-4(1), Hyderabad, Hyderabad

ITA 749/HYD/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0910 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 06-08-2019
• Assessment Year: 2006-2007
• Appeal Filed On: 01-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital Gains
• Section: 271(1)(c); 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 749 /HYD./201 7 ASSESSMENT YEAR: 200 6 - 07 SHRI PRATAP REDDY KOPPULA VS. ACIT, CIRCLE 4(1) 3 - 6 - 218/601, ANVITH AVENUE HYDERABAD. HIMAYATNAGAR HYDERABAD 500 029 PAN: ADOPK7092D (APPELLANT) (RESPONDENT) FOR ASSESSE : SH. S.RAMA RAO, A.R. FOR REVENUE : S H. T.MADHAN, D.R. DATE OF HEARING : 06 /0 8 /19 DATE OF PRONOUNCEMENT : 28 /0 8 /19 O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR A.Y. 200 6 - 07 AGAINST LEVY OF PENALTY U/S 271(1)( C ) OF THE I.T. ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE , AN INDIVIDUAL, FILED HIS R ETURN OF INCOME FOR THE A.Y. 2006 - 07 ON 03.01.2007 DECLARING INCOME OF RS.3,15,000/ - AND AGRICULTURAL INCOME OF RS.1,25,560/ - . INITIALLY , THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT ON 21.5.2007 . S UBSEQUENTLY , THE CASE WAS REOPENED U/S 147 OF THE ACT BY ISSUANCE OF A NOTICE ON 29.12.2009 FOR THE REASON THAT THE ASSESSEE HAD SOLD CERTAIN FLATS RECEIVED ON ACCOUNT OF JOINT DEVELOPMENT AGREEMENT BUT HAS NOT OFFERED LONG TERM CAPITAL GAIN FOR TAX IN THE RELEVANT A.Y. 2.1. DURING THE RE - ASSESSMENT PROCEEDINGS , THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE INCOME WAS NOT ADMITTED TO TAX. THE ASSESSEE ACCEPTED THE ITA NO. 749/HYD./2017 AY: 2006 - 07 PRATAP REDDY KOPPULA, HYD. VS. ACIT, HYD . 2 COMPUTATION OF INCOME AS PROPOSED BY THE A.O. AND AGREED FOR RE - COMPUT ATION OF THE INCOME TAKING CAPITAL GAINS ARISING OUT OF C ONSIDERATION RECEIVED ON TRANSFER OF 60% OF LAND AT DOOR NO.3 - 6 - 218, HIMAYATHNAGAR, HYDERABAD AND THE GAIN O N SALE OF THREE FLATS IN THE APARTMENT COMPLEX TO TAX . 2.2. THEREAFTER , THE A.O. INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE. ASSESSEE SUBMITTED HIS EXPLANATION DT. 21.6.2011 STATING THAT THE ASSESSEE HAD CHALLENGED THE ASSESSMENT ORDER BEFORE THE CIT(A) AND THE ORDER OF TH E CIT(A) WAS SERVED ON HIM ON 13.5.2011 AND ASSESSEE WAS GOING TO FILE FURTHER APPEAL BEFORE THE ITAT AND SOUGHT ABEYANCE OF PENALTY PROCEEDINGS TILL THE COMPLETION OF THE PROCEEDINGS BEFORE THE ITAT. THE AO , HOWEVER , OBSERVED THAT THE ASSESSEE WAS ADMITTEDLY IN RECEIPT OF THE APPEAL ORDER FROM THE CIT(A) WITH REGARD TO THE A.Y. UNDER CONSIDERATION. ON VERIF ICATION DETAILS HE FOUND THAT ASSESSEE HAS NOT FILED ANY APPEAL BEFORE THE CIT (A) AGAINST THE RE - ASSESSMENT ORDER DT. 30.12.2010 FOR A.Y. 20 06 - 07, BUT THE APPEAL FILED WAS FOR THE A.Y. 2007 - 08 BEFORE THE CIT(A) WHERE SIMILAR ISSUES WERE DEALT WITH. THEREFORE, HE HELD THAT THE APPEAL PROPOSED TO BE FILED BY THE ASSESSEE BEFORE ITAT IS NOT FOR THE A.Y. UNDER CONSIDERATION. HE, THEREFORE, HELD THAT THE ASSESSEE HAS NOT OFFERED PROPER EXPLANATION AND FURTHER THAT IT WAS A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C ) FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND FOR FAILURE TO SUB STANTIATE THE CLAIM. HE ACCORDINGLY LEVIED THE MINIMUM PENALTY OF RS.3, 23,784 / - . 3. AGGRIEVED , ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) , WHO CONFIRMED THE ORDER OF THE AO AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US BY RAISING THE FOLLOWING GRO UNDS OF APPEAL. 1. THE ORDER OF THE LD.CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LD.CIT(A) ERRED IN HOLDING THAT THERE IS ANY CONCEALMENT OF INCOME AND FURTHER ERRED IN CONFIRMING THE PENALTY LEVIED U/S 271(1)(C ) OF THE I.T.ACT OF RS.3,23,785/ - MADE BY THE AO. ITA NO. 749/HYD./2017 AY: 2006 - 07 PRATAP REDDY KOPPULA, HYD. VS. ACIT, HYD . 3 3. THE LD.CIT(A) ERRED IN CONFIRMING THE PENALTY WITHOUT CONSIDERING THE FACT THAT THE NOTICE ISSUED IS NOT VALID. 4. ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 4. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT GROUND NO.3 IS AGAINST THE VALIDITY OF PENALTY NOTICE ISSUED BY AO, AND SINCE AO HAS NOT STRUCK OFF INAPPROPRIATE PORTION OF NOTICE, IT IS INVALID AND PENALTY LEVIED IS NULL AND VOID. IN SUPPORT OF HIS CONTENTION THE LD.COUNSEL FOR ASSESSEE PLACED RELI ANCE ON THE DECISION OF HONBLE A.P. HIGH COURT IN THE CASE OF PR.CIT VS. SMT.BAISETTY REVATHI REPORTED IN 398 ITR 88 (AP) (HC) (2017). FURTHER ON MERITS ALSO , HE SUBMITTED THAT THE ASSESSEE HAD DISCLOSED THE DEVELOPMENT AGREEMENT AS WELL AS THE SALE OF 3 FLATS IN HIS RETURN OF INCOME FILED FOR A.Y. 2006 - 07 AND ALSO HAS OFFERED THE INCOME THEREFROM TO TAX IN A.Y. 2007 - 08. HE SUBMITTED THAT THERE WAS TRUE AND FUL L DISCLOSURE OF ALL FACTS BY THE ASSESSEE DURING THE RELEVANT AY, AND THEREFORE, THERE IS NO CASE O F FURNISHING OF INACCURATE PARTICULARS OR CONCEAL MENT OF PARTICULARS AS HELD BY THE A.O. 5. THE LD.DR , ON THE OTHER HAND , SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 6. HAVING REGARD TO RIVAL CONTENTIONS AND MATERIAL PLACED ON RECORD, WE FIND THAT THE ASSESSEE HAD DISCLOSED THE DETAILS OF THE DEVELOPMENT AGREEMENT AS WELL AS SALE OF FLATS IN HIS RETURN OF INCOME FILED FOR T HE RELEVANT A.Y. 2006 - 07, BUT THE AO HAS FAILED TO MAKE ANY SCRUTINY ASSESSMENT O F THE SAME. IT IS ONLY AFTER COMPLETION OF ASSESSMENT FOR AY 200 7 - 08 , WHEREIN THE ASSESSEE HAD OFFERED CAPITAL GAIN TO TAX , THAT THE ASSESSMENT FOR THE A.Y. 2006 - 07 WHICH WAS REOPENED AND ON POINTING OUT TO THE ASSESSEE THAT THE CAPITAL GAINS ON SALE OF THREE FLATS AND ALSO ON TRANSFER OF 60% LAND WAS TO BE BROUGHT TO TAX IN A.Y. 2006 - 07 , IT WAS AGREED TO BE BROUGHT TO TAX. THEREFORE, WE FIND THAT THE ASSESSEE HAS MADE FUL L DISCLOSURE TO THE A.O. AND THERE IS NO CONCEALMENT OR FURNISHING OF ANY INACCURATE PARTICULARS BY ASSESSEE. FURTHER , EVEN I N THE NOTICE , THE AO HAS NOT STRUC K OFF THE IR RELEVANT PORTION OF THE NOTICE . T HEREFORE, AS HELD BY THE JURISDICTIONAL HIGH COURT IN THE CASE ITA NO. 749/HYD./2017 AY: 2006 - 07 PRATAP REDDY KOPPULA, HYD. VS. ACIT, HYD . 4 OF PRCIT VS. SMT.B.REVATHY (SUPRA), THE NOTICE IS INVALID AND PENALTY LEVIED CONSEQUENT TO SUCH NOTICE HAS TO BE HELD AS VOID AB INITIO. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 28 TH AUGUST, 2019. SD/ - SD/ - ( S.RIFAUR RAHMAN ) (P MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28 TH AUGUST, 2019. *GMV COPY FORWARDED TO: 1. SH. K PRATAP REDDY, 3 - 6 - 218/ 601, ANVITH AVENUE, HIMAYATNAGAR, HY DERABAD 500 0 29 . 2. ACIT, CIRCLE 4(1), HYDERABAD. 3. C CIT, HYD. 4. D.R. ITAT HYDERABAD 5. GUARD FILE // C O P Y // ITA NO. 749/HYD./2017 AY: 2006 - 07 PRATAP REDDY KOPPULA, HYD. VS. ACIT, HYD . 5 1. DRAFT DICTATED ON 0 6 /08/19 2. DRAFT PLACED BEFORE THE AUTHOR 1 6 /08/19 19/08/19 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO SRPS 6. KEPT FOR PRONOUNCEMENT 7. FILE SENT TO BENCH CLERK