Late Pratap Reddy Perati Representative assesse Smt. P Rama Devi, Hyd, Hyderabad V. ITO, Ward-5(2), Hyd, Hyderabad

ITA 774/HYD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6443 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-07-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 04-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Condonation of delay
• Section: 143(3); 5(2); 148; 263; 139

Judgement Text

ITA NO 774 OF 2017 P RAMA DEVI HYDERABAD. PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.774/HYD/2017 (ASSESSMENT YEAR: 2007-08) LATE SHRI PRATAP REDDY PERATI (REP.BY SM T. P. RAMA DEVI), HYDERABAD PAN: AEJPP6272J VS INCOME TAX OFFICER WARD 5(2) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.C. DEVDAS FOR REVENUE : SHRI J. SIRI KUMAR, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2007-08 AGAIN ST THE ORDER OF LEARNED PR.CIT-4, HYDERABAD, DATED, 22 .03.2016 PASSED U/S 263 OF THE ACT. 2. AT THE OUTSET, IT IS NOTICED THAT THERE IS A DEL AY OF 299 DAYS IN FILING OF THE APPEAL BEFORE THE TRIBUNAL. T HE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY STATI NG THAT THE ASSESSEE IS BEING REPRESENTED BY THE LEGAL HEIR WHO IS 79 YEARS OLD AND THAT HER ONLY SON IS STAYING IN USA AND THAT SH E WAS DEPENDING ON HER RELATIVES FOR PURSUING OF I.T. MAT TERS. IT WAS SUBMITTED THAT THE ORDER U/S 263 WAS RECEIVED IN TH E MONTH OF DATE OF HEARING: 16. 07. 201 8 DATE OF PRONOUNCEMENT: 27.07.2018 ITA NO 774 OF 2017 P RAMA DEVI HYDERABAD. PAGE 2 OF 7 FEBRUARY, 2016, WHICH WAS SHOWN TO HER RELATIVE WHO WAS LOOKING AFTER HER BANK A/C AND PROPERTY MATTERS AND THAT HE HAD ADVISED HER THAT THERE WAS NO NEED OF ANY FURTHER ACTION IN THE SAID MATTER, AS THE AO WOULD PASS A FRESH ORDER IN THE L IGHT OF THE DIRECTIONS OF THE HON'BLE CIT(4), HYDERABAD BUT WHE N THE PAPERS WERE SENT TO THE AUDITOR, MR. B. NARSING RAO, HE AD VISED THE ASSESSEE TO FILE AN APPEAL AGAINST THE ORDER U/S 26 3 AND THEREFORE, THE SAME WAS FILED WITH A DELAY ON 299 DAYS BEFORE THE TRIBUNAL AND PRAYED FOR CONDONATION OF DELAY. 3. THE LEARNED DR, HOWEVER, OPPOSED THE CONDONATION STATING THAT THE ASSESSEE HAS FAILED TO GIVE REASON ABLE CAUSE FOR FILING OF THE APPEAL WITH THE DELAY. 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE IS BEING REPRE SENTED BY HIS WIFE, THE LEGAL HEIR WHO IS RESIDING IN HYDERABAD A ND IS ALSO AGED ABOUT 79 YEARS. LOOKING AT HER AGE AND ALSO CONSIDE RING THE FACT THAT THE CIT IN THE ORDER U/S 263 HAD REMANDED THE ISSUE TO THE FILE OF THE AO, WE ARE SATISFIED WITH THE REASON GI VEN BY THE ASSESSEE, THAT HER RELATIVE HAD ADVISED HER THAT TH E AO WOULD PASS A FRESH ASSESSMENT ORDER AND THEREFORE, THERE WAS NOTHING TO BE DONE FURTHER SEEMS TO BE A PLAUSIBLE EXPLANATION . THEREFORE, WE ARE INCLINED TO CONDONE THE DELAY OF 299 DAYS AND A CCORDINGLY PROCEED TO DISPOSE OF THE APPEAL AS UNDER. 5. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: ITA NO 774 OF 2017 P RAMA DEVI HYDERABAD. PAGE 3 OF 7 1. THE ORDER OF THE HON'BLE PR.CIT-4, HYDERABAD IS ERRONEOUS IN LAW AS WELL AS FACTS OF THE CASE. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HON'BLE PR.CIT-4, HYDERABAD OUGHT NOT TO HAVE INVOK ED THE PROVISIONS OF SECTION 263 OF THE IT ACT AND THE REFORE THE ACTION OF THE HON'BLE PR.CIT-4, HYDERABAD IS NO T SUSTAINABLE. 3. THE HON'BLE PR.CIT-4, HYDERABAD OUGHT TO HAVE OBSERVED THAT THE ORDER WAS PASSED BY THE ASSESSING OFFICER/S 143(3) RWS 147 AFTER CONSIDERING ALL FACT S AND THEREFORE THERE WAS NO SCOPE FOR INVOKING PROVISION S OF SECTION 263 OF THE IT ACT. 4. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT T HERE WAS NO MATERIAL ON RECORD TO ESTABLISH THAT THE ASS ESSE WAS IN RECEIPT OF THE AMOUNT OF RS.16 LAKHS EVEN AS TDS AS THERE WAS NO SUCH LIABILITY FOR THE PAYER TO MAKE SUCH DEDUCTION UNDER THE TDS PROVISIONS OF THE IT A CT. 5. THE HON'BLE PR.CRR-4, HYDERABAD OUGHT TO HAVE TA KEN INTO CONSIDERATION THE AFFIDAVIT FILED BY THE SMT S HARADA DEVI (PAYER OF THE AMOUNT) CONFIRMING THAT THE FINA L SETTLEMENT WAS FOR RS.64 LAKHS ONLY AND THEREFORE OUGHT TO HAVE DROPPED THE PROCEEDINGS UJS.263 OF TH E IT ACT. 6. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, THOUGH HAD TAXABLE INCOME DID NOT FILE THE RETURN OF INCOME FOR THE A.Y 2007-08. THE AO HAD INFORMATION THAT THE ASSESSEE RECEIVED AN AMOUNT OF RS.64.00 LAKHS BY CH EQUE TOWARDS COMPENSATION FOR BREACH OF AN AGREEMENT OF SALE, BUT HAS FAILED TO DISCLOSE IT TO THE DEPARTMENT BY FILING T HE RETURN OF INCOME. THEREFORE, THE CASE WAS REOPENED U/S 148 BY ISSUANCE OF A NOTICE U/S 148 OF THE ACT AND THE ASSESSEE FILED A RETURN OF INCOME ON 9.1.2014 ADMITTING A TOTAL INCOME OF RS.3 2.00 LAKHS. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE EXP LAINED THAT HE HAD RECEIVED COMPENSATION FOR BREACH OF CONTRACT AS PER THE SETTLEMENT BETWEEN HIMSELF AND SMT. B. SARADA DEVI AT RS.80.00 ITA NO 774 OF 2017 P RAMA DEVI HYDERABAD. PAGE 4 OF 7 LAKHS, OUT OF WHICH TDS WAS CLAIMED TO HAVE BEEN DE DUCTED AT RS.16.00 LAKHS AND THE BALANCE OF RS.64.00 LAKHS ON LY WAS PAID TO THE ASSESSEE VIDE CHEQUE NO.348876 DATED 17.04.2 006 DRAWN ON SBH HIMAYATHNAGAR BRANCH. THE ASSESSEE ALSO CLAI MED THAT HE HAD PAID RS.32.00 LAKHS FOR PROTECTING THE LAND FOR A PERIOD OF 11 YEARS FROM THE YEAR 1995 TO 2006 BY EMPLOYING NU MBER OF PEOPLE AND CLAIMED IT AS EXPENDITURE FROM THE ABOVE COMPENSATION. THE AO WAS HOWEVER, NOT CONVINCED WIT H THE ASSESSEES CONTENTIONS. HE OBSERVED THAT THE ASSESS EE HAD RECEIVED A SUM OF RS.64,00,000 AND THE SUM OF RS.32 .00 LAKHS CLAIMED BY THE ASSESSEE IS NOT ALLOWABLE BECAUSE TH E COMPENSATION WAS FOR BREACH OF CONTRACT AND NOT FOR PROTECTING THE LAND. THEREFORE, HE HELD THAT THE ENTIRE RECEIP T WAS CHARGEABLE TO TAX. HE OBSERVED THAT THE ASSESSEE HAD NOT FILED THE RETURN OF INCOME VOLUNTARILY U/S 139 (1) OR BELATEDLY U/S 139 (4) OF THE ACT. AND THEREFORE, THE ASSESSEE HAS WILFULLY EVADED THE FILING OF THE RETURN OF INCOME. 7. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE T HE CIT (A) WHO DELETED THE DISALLOWANCE AGAINST WHICH, THE DEPARTMENT PREFERRED AN APPEAL BEFORE THE TRIBUNAL WHICH WAS D ISMISSED BY THE ITAT ON 28.02.2017. MEANWHILE, THE CIT INITIATE D PROCEEDINGS U/S 263 ON THE GROUND THAT THE ASSESSEE HAS ACTUALL Y RECEIVED RS.80.00 LAKHS AND NOT RS.64.00 LAKHS FROM SMT. B. SARADA DEVI AND THEREFORE, THE AMOUNT OUGHT TO HAVE BEEN BROUGH T TO TAX IS RS.80.00 LAKHS. THEREFORE, HE HELD THAT THE ASSESSM ENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE TO THE EXTENT OF RS.16.00 LAKHS. HE THEREFORE, ISSUED A SH OW CAUSE NOTICE ON 28.2.2015. THE ASSESSEE REITERATED THE SUBMISSIO NS MADE BY ITA NO 774 OF 2017 P RAMA DEVI HYDERABAD. PAGE 5 OF 7 HIM DURING THE ASSESSMENT PROCEEDINGS BUT THE CIT S ET ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO THE AO TO CONS IDER CHARGEABILITY OF THE ENTIRE COMPENSATION OF RS.80.0 0 LAKHS AND NOT ONLY RS.64.00 LAKHS. AGGRIEVED BY THIS ORDER OF THE CIT, THE ASSESSEE IS IN APPEAL BEFORE US. 8. THE LEARNED COUNSEL FOR THE ASSESSEE, WHILE REIT ERATING THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE CIT , SUBMITTED THAT THE AO DURING THE ASSESSMENT PROCEEDINGS U/S 1 43(3) R.W.S. 147 HAD INQUIRED ABOUT THE PAYMENT MADE BY SMT. B. SARADA DEVI TO THE ASSESSEE AND AFTER TAKING INTO CONSIDER ATION THE ACTUAL AMOUNT OF RS.64.00 LAKHS ONLY WHICH WAS RECEIVED BY THE ASSESSEE HAS BROUGHT RS.64.00 LAKHS TO TAX AFTER DI SALLOWING PART OF THE EXPENDITURE CLAIMED BY THE ASSESSEE. THEREFO RE, ACCORDING TO HIM, THE AO HAS APPLIED HIS MIND TO THE FACTS OF THE CASE AND HENCE THE ASSESSMENT ORDER CANNOT BE TERMED AS ERRO NEOUS. ACCORDING TO HIM, FOR INITIATING PROCEEDINGS U/S 26 3, BOTH THE CONDITIONS I.E. ASSESSMENT ORDER BEING ERRONEOUS AN D ALSO PREJUDICIAL TO THE INTERESTS OF THE REVENUE ARE TO BE SATISFIED AND SINCE SUCH A CONDITION IS NOT SATISFIED, THE REVISI ON ORDER IS NOT SUSTAINABLE. 9. FURTHER, EVEN ON MERITS, HE EXPLAINED THAT THE ASSESSEE HAS ACTUALLY RECEIVED RS.64.00 LAKHS ONLY AFTER MAKING TDS OF RS.16.00 LAKHS AND THEREFORE, THE ASSESSEE H AS OFFERED RS.64.00 LAKHS ONLY TO TAX. HE HAS ALSO DRAWN OUR A TTENTION TO THE ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE F OR THE A.Y 2007- 08 IN ITA NO.1566/HYD/2014 DATED 28.02.2017 IN THE ASSESSEES ITA NO 774 OF 2017 P RAMA DEVI HYDERABAD. PAGE 6 OF 7 APPEAL AGAINST THE AS ORDER U/S 143 R.W.S. 147 WHER EIN THE TRIBUNAL HAS ACCEPTED THAT IT IS ONLY A SUM OF RS.6 4.00 LAKHS WHICH WAS RECEIVED BY THE ASSESSEE FROM SMT. B. SAR ADA REDDY TO SETTLE THE DISPUTE OVER THE LAND. HE HAS ALSO DRAWN OUR ATTENTION TO THE TRIBUNALS DECISION IN THE CASE OF SMT. B. S ARADA REDDY IN ITA NO.1618/HYD/2011 DATED 9.1.2013 WHEREIN THE TRI BUNAL HAS REPRODUCED THE REMAND REPORT OF THE AO WHEREIN THE AO HAS CONFIRMED THAT TO THE PAYEE SMT. B. SARADA REDDY HA S RECEIVED RS.64.00 LAKHS ONLY. THUS, ACCORDING TO THE LEARNED COUNSEL, THE ORDER U/S 263 HAS TO BE SET ASIDE. 10. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAS FAILED TO PROVE THAT HE HAS RECEIVED RS.64.00 L AKHS ONLY AS AGAINST THE AGREEMENT TO RECEIVE RS.80.00 LAKHS TOW ARDS COMPENSATION FOR BREACH OF CONTRACT. 11. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT DUE TO BREACH OF CONTRACT, THE ASSESSEE HAD ENTERED INTO A SETTLEMENT AGREEMENT WITH SMT. B . SARADA REDDY AND IT HAD BEEN AGREED TO PAY RS.80.00 LAKHS TO THE ASSESSEE. HOWEVER, AFTER MAKING THE TDS OF RS.16.00 LAKHS, THE ASSESSEE HAS BEEN PAID ONLY RS.64.00 LAKHS AS ADMIT TED BY THE ASSESSEE AND ALSO CONFIRMED BY SMT. B. SARADA REDDY AND AS RECORDED BY THE ITAT IN THE CASE OF B.SARADA REDDY (SUPRA). WE FIND THAT THE DETAILS OF THE PAYMENT AND ALSO THE D ETAILS OF THE EXPENDITURE WERE CALLED FOR BY THE AO DURING THE AS SESSMENT PROCEEDINGS U/S 143(3) R.W.S. 147 OF THE ACT AND AF TER ITA NO 774 OF 2017 P RAMA DEVI HYDERABAD. PAGE 7 OF 7 EXAMINATION OF THE SAME, THE AO HAD MADE THE DISALL OWANCE OF RS.32.00 LAKHS. THEREFORE, THE AO HAS CLEARLY APPLI ED HIS MIND TO THE FACTS OF THE CASE AND HENCE THE ASSESSMENT ORDE R CANNOT BE SAID TO BE ERRONEOUS. SINCE ONE OF THE CONDITION FO R INVOKING AND EXERCISING THE POWER U/S 263 IS NOT SATISFIED, THE REVISION ORDER IS, NOT SUSTAINABLE AND IS ACCORDINGLY SET ASIDE. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY, 2018. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 27 TH JULY 2018. VINODAN/SPS COPY TO: 1 B.NARSING RAO & CO. CAS, PLOT NO.554, ROAD NO.92, JUBILLEE HILLS, HYDERABAD 500096 2 ITO WARD 5(2) HYDERABAD 3 PR. CIT - 4 HYDERABAD 4 ADDL. COMMISSIONER OF INCOME TAX, RANGE - 5 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER