Usha Rani Kalidindi, Hyd, Hyderabad V. DCIT, Circle-6(1), Hyd, Hyderabad

ITA 824/HYD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2633 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 17-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: S RAMA RAO
• Keywords: Cost of acquisition; Wrong claim; Revised return
• Section: 143(3); 142(1); 54; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 824/HYD/2015 ASSESSMENT YEAR: 2007-08 USHA RANI KALIDINDI, HYD. PAN AFBPK 4176M VS. DY. COMMISSIONER OF INCOME-TAX, CIRCLE 6(1) HYD. APPELLANT RESPONDENT ITA NO. 825/HYD/2015 ASSESSMENT YEAR: 2007-08 K. BALA VISHNU RAJU, HYD. PAN AFBPK 4177M VS. DY. COMMISSIONER OF INCOME-TAX, CIRCLE 6(1) HYD. APPELLANT RESPONDENT ASSESSEE BY: SHRI S. RAMA RAO REVENUE BY: SMT. SUMAN MALIK DATE OF HEARING: 20/12/2017 DATE OF PRONOUNCEMENT: 24/01/2018 O R D E R PER S. RIFAUR RAHMAN, AM: BOTH THESE APPEALS ARE FILED BY TWO ASSESSEES AGA INST SEPARATE ORDERS OF CIT(A) - 4, HYDERABAD, BOTH, DA TED 27/03/2015 WHEREBY CIT(A) CONFIRMED THE PENALTY LEV IED BY THE AO U/S 271(1)(C) OF THE ACT. ITA NO. 824/HYD/2015 IN THE CASE OF USHA RANI K. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE FILED HER RETURN OF INCOME FOR THE AY 2007-08 ON 28/07/2007 A DMITTING INCOME OF RS. 17,54,250/- INCLUDING LONG TERM CAPIT AL GAINS OF I.T.A. NOS. 824 & 825/HYD/2015 USHA RANI K & K. BALA VISHNU RAJU 2 RS. 1,86,085 AND AGRICULTURAL INCOME OF RS. 4,52,00 0/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE AO PASSED AN ORDER U/S 143(3) ON 30/12/2009 DENYING THE ASSESSEES CLAIM O F DEDUCTION U/S 54 OF RS. 1,96,40,000/- AFTER EXAMINI NG THE DETAILS OF LONG TERM CAPITAL GAINS. 2.1 WHEN THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) AS WELL AS ITAT, THE APPEAL OF THE ASSE SSEE WAS DISMISSED. 3. THEREAFTER, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) ON THE GROUND THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS LEADING TO CONCEALMENT OF TA XABLE INCOME AND LEVIED A PENALTY U/S 271(1)(C) OF THE A CT. 4. THE BRIEF FACTS LEADING TO LEVY OF PENALTY ARE, DURING THE RELEVANT FY 2006-07, ASSESSEE SOLD A HOUSE PROPERTY FOR A CONSIDERATION OF RS. 2,30,00,000/-. AFTER REDUCING COST OF ACQUISITION, COST OF IMPROVEMENT AND EXPENSES IN CO NNECTION WITH TRANSFER, CAPITAL GAINS WORKED OUT TO RS. 1,98 ,26,085/-. OUT OF THIS, AN AMOUNT OF RS. 1,96,40,000 WAS CLAIM ED AS DEDUCTION U/S 54, COMPRISING OF RS. 90,40,000/- TOW ARDS PURCHASE OF HOUSE PROPERTY AND RS. 1,06,00,000/- TO WARDS COST OF ADDITION WORKS UNDERTAKEN. 4.1 TO FIND THE VERACITY OF THE CLAIM OF THE ASSESS EE, THE AO MADE FIELD ENQUIRIES THROUGH AN INSPECTOR AND FOUND THAT THE CLAIM OF THE ASSESSEE IS NOT PROPER AND DECLINED TO ALLOW THE DEDUCTION U/S 54 OF THE ACT. THE ACTION OF THE AO W AS CONFIRMED BY THE CIT(A) AND ITAT IN THE QUANTUM PROCEEDINGS. ACCORDINGLY, AO PROCEEDED TO INITIATE PENALTY PROCEEDINGS U/S 271(1)(C) AND LEVIED PENALTY. I.T.A. NOS. 824 & 825/HYD/2015 USHA RANI K & K. BALA VISHNU RAJU 3 5. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE CIT(A), WHO CONFIRMED THE PENA LTY LEVIED. 6. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE I S IN APPEAL BEFORE US RAISING REGULAR GROUNDS OF APPEAL AND FILED A PETITION FOR ADMISSION OF FOLLOWING ADDITIONAL GRO UNDS: A) WHILE ISSUING THE SAID NOTICE, THE ASSESSING OFF ICER DID NOT MENTION WHETHER THE NOTICE WAS ISSUED FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURA TE PARTICULARS OF INCOME. B) THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS AFTER COMPLETION OF THE ASSESSMENT AS C AN BE SEEN FROM THE DATE OF ORDER OF ASSESSMENT I.E., 30.12.2009 AND DATE OF SHOW-CAUSE NOTICE ISSUED U/S 274 RWS 274(1)(C) OF THE LT. ACT IS 30.12.2009. 7. AS THE SAID ADDITIONAL GROUNDS ARE LEGAL GROUNDS , WHEREIN, THE FACTS ARE ON RECORD AND FACTS DO NOT R EQUIRE FRESH INVESTIGATION, FOLLOWING THE DECISION OF HONBLE SU PREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO., LIMITED VS. CIT 229 ITR 383 (SC), WE ADMIT THE SAID ADDITIONAL GROU ND OF ASSESSEE. 8. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS BY ISSUE OF A NOTICE U/S 274 R.W.S. 271(1)(C) ON 30.12.2009. HE SUBMITTED THAT WHILE ISSUING THE SAID NOTICE, THE ASSESSING O FFICER DID NOT MENTION WHETHER THE NOTICE IS ISSUED FOR CONCEA LMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, THE NOTICE IS NOT VALIDLY ISSUED. CONSEQ UENTLY, THE ORDER PASSED U/S 271(1)(C) ALSO IS NOT VALID. FOR T HIS PROPOSITION, HE RELIED ON THE DECISION OF THE HONB LE SUPREME COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC). I.T.A. NOS. 824 & 825/HYD/2015 USHA RANI K & K. BALA VISHNU RAJU 4 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 10. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL FACTS ON RECORD. THE ISSUE IN DISPUTE IS S QUARELY COVERED BY THE DECISION OF THE HONBLE SUPREME COUR T IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC) WHEREIN THE APEX COURT UPHELD THE DECISION OF THE HONBLE HIGH COURT, IN WHICH, THE H ONBLE HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL AND DISMI SSED THE APPEAL OF THE REVENUE, WHO CAME IN APPEAL AGAINST T HE ORDER OF THE TRIBUNAL. THE TRIBUNAL RELYING ON A DECISIO N OF KARNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY, [2013] 359 ITR 565/210 ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT NOTICE ISSUED BY ASSES SING OFFICER U/S 274 READ WITH SECTION 271(1)(C) WAS BAD IN LAW, AS IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271( 1)(C) PENALTY PROCEEDINGS HAD BEEN INITIATED, I.E. WHETHER FOR CO NCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF INCOME. 10.1 IN THE CASE UNDER CONSIDERATION, ON PERUSAL OF THE SHOW CAUSE NOTICES ISSUED BY THE ASSESSING OFFICER U/S 2 74 R.W.S. 271 OF THE IT ACT, 1961, DATED 30/12/2009, WHICH IS PLACED ON RECORD, IT IS SEEN THAT THE ASSESSING OFFICER DID NOT MENTION WHETHER THE NOTICE IS ISSUED FOR CONCEALMENT OF INC OME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE REFORE, AS PER THE RATIO LAID DOWN BY THE HONBLE SUPREME COUR T IN THE CASE OF SSAS EMERALD MEADOWS, THE NOTICE ISSUED BY THE ASSESSING OFFICER IS NOT VALID AND CONSEQUENTLY, TH E ORDER PASSED U/S 271(1)(C) IS ALSO NOT VALID. HENCE, WE S ET ASIDE THE ORDER OF THE CIT(A) AND QUASH THE ORDER PASSED BY T HE I.T.A. NOS. 824 & 825/HYD/2015 USHA RANI K & K. BALA VISHNU RAJU 5 ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. ACCORDI NGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 825/HYD/2015 IN THE CASE OF K. BALA VISHNU RAJU 11. ASSESSEE FILED HIS RETURN OF INCOME FOR THE AY 2007-08 ON 28.07.2007, ADMITTING INCOME OF RS. 5,41,49,287/ - WHICH INCLUDED INCOME FROM LONG TERM CAPITAL GAINS OF RS. 5,29,09,619/-. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, ON THE BASIS OF SRO DATA, A LETTER WAS ISSUED TO AS SESSEE ON 07.08.2008 CALLING FOR INFORMATION ABOUT TRANSACTIO NS OF PROPERTIES SITUATED AT BANJARA HILLS, FOLLOWED TO Q UESTIONNAIRE U/S 142(1) WHICH WAS ISSUED ON 28.08.2008. SUBSEQUE NTLY, ASSESSEE FILED REVISED RETURN ON 18.11.2008 ADMITTI NG SALE CONSIDERATION AS PER MARKET VALUE U/S 5OC. ASSESSEE ALSO CLAIMED DEDUCTIONS U/S 54 IN REVISED RETURN, WHICH WAS NOT CLAIMED IN ORIGINAL RETURN. ASSESSMENT WAS COMPLETE D U/S 143(3) ON 24.12.2009, DISALLOWING THE COST OF IMPRO VEMENT OF RS. 5,10,66,500/-, DEDUCTION U/S 54 OF RS. 1,48,85, 000/- UNSECURED CASH LOANS OF RS. 47,00,000/ AND BROUGHT FORWARD LOSSES OF RS. 11,34,939/-. 11.1 WHEN THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) AND THE ITAT, THE ASSESSEES APPEAL WAS DISMISSED BY BOTH THE AUTHORITIES. 11.2 THEREAFTER, THE AO INITIATED PENALTY PROCEEDIN GS U/S 271(1)(C) AND A NOTICE WAS ISSUED FOR FURNISHING IN ACCURATE PARTICULARS OF INCOME WITH REGARD TO BOGUS CLAIM OF IMPROVEMENT IN HOUSE PROPERTIES AND INCORRECT CLAIM OF DEDUCTION U/S 54. I.T.A. NOS. 824 & 825/HYD/2015 USHA RANI K & K. BALA VISHNU RAJU 6 11.3 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSES SEE, THE AO OBSERVED THAT IT IS PROVED BEYOND DOUBT IN THE A SSESSMENT ORDER THAT THE INFORMATION SUBMITTED BY THE ASSESSE E IS INACCURATE AND THE ASSESSEE COULD NOT CLEAR THE INA CCURACY EITHER IN THE ASSESSMENT OR IN THE APPELLATE STAGES . FURTHER, HE OBSERVED THAT IT IS ALSO PERTINENT AT THIS STAG E TO POINT OUT THAT SINCE THE ASSESSMENT ORDER ITSELF CONTAINS DET AILS FACTS, WHICH JUSTIFY INFERENCE OF CONCEALMENT, NO FURTHER EVIDENCE OR EXAMINATION THEREOF IS NECESSARY DURING PENALTY PRO CEEDINGS. FOR THIS PROPOSITION, HE RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF RAJ KUMAR CHAURASIA VS . CIT [2007] 288 ITR 329. HE ACCORDINGLY, LEVIED A PENAL TY U/S 271(1)(C). WHEN THE ASSESSEE PREFERRED AN APPEAL BE FORE THE CIT(A) AGAINST THE SAID PENALTY, THE CIT(A) CONFIRM ED THE PENALTY. 132 AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 13. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL FACTS ON RECORD. SINCE THE ISSUE IN DISPUT E AND THE GROUNDS RAISED ARE MATERIALLY IDENTICAL TO THAT OF ITA NO. 824/HYD/2015 (SUPRA), FOLLOWING THE CONCLUSIONS DRA WN THEREIN, WE SET ASIDE THE ORDER OF CIT(A) AND QUASH THE PENALTY ORDER PASSED BY THE AO U/S 271(1)(C) OF THE ACT. 14. IN THE RESULT, BOTH THE APPEALS UNDER CONSIDERA TION ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2018. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER SD/- (S. RIFAUR RAHMAN) ACCOUNTANT MEMBER HYDERABAD, DATED 24 TH JANUARY, 2018 I.T.A. NOS. 824 & 825/HYD/2015 USHA RANI K & K. BALA VISHNU RAJU 7 KV COPY FORWARDED TO: 1. 2. USHA RANI KALIDINDI K. BALA VISHNU RAJU, C/O SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREE T NO. 9, HIMAYATNAGAR, HYDERABAD 500 029. 3. DCIT, CIRCLE 6(1), INCOME-TAX TOWERS, AC GUARD S, HYDERABAD 4. CIT(A) - 4, HYDERABAD 5 CIT - 6, , HYDERABAD 6 THE DR, ITAT, HYDERABAD 7 GUARD FILE