Secunderabad Club, Secunderabad V. ITO, Ward 10(2), Hyderabad

ITA 842/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69791 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1998-1999
• Appeal Filed On: 24-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E SUNIL BASU
• Assessee Lawyers: S RAMA RAO
• Keywords: Right to appeal
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.841,842,843,844,845,846 AND 847/HYD/2013 ASSESSMENT YEARS 1996-97, 1998-99 TO 2003-2004 S ECUNDERABAD CLUB CONTONMENT SECUNDERABAD 500 026 PAN AAAAT2543E VS I.T.O. WARD 10(2) HYDERABAD APPELLANT RESPONDENT APPELLANT BY : SHRI S. RAMA RAO (A.R.) RESPONDENT BY : SHRI K.E. SUNIL BASU (D.R.) DATE OF HEARING : 05.09.2013 DATE OF PRONOUNCEMENT : 05.09.2013 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M. : THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-VI, HYDERABAD DATED 27.02.2013 FOR THE ASSESSMENT YEAR 1996-97 AND 1998-98 TO 2003-2004. SINCE, COMMON ISSUES ARE INVOLVED IN THESE APPEALS, THE APPEALS WERE CLU BBED AND HEARD TOGETHER AND ARE BEING DISPOSED OF BY THE CONS OLIDATED ORDER FOR THE SAKE OF CONVENIENCE. FOR THE SAKE OF BREVITY, WE ARE TAKING FACTS IN ITA.NO.841/HYD/2013. 2. ITA.NO.841/HYD/2013 A.Y. 1996-97 : BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A SOCIAL CLUB, SHOWN TO HAVE ENGAGED IN THE SOCIAL ACTIVITIES ALONG WITH VARIOUS OTHER ACTIVITIES SUCH AS SPORTS AND RECREATIONAL. THE SAI D CLUB IS ASSESSED TO TAX IN THE STATUS OF SAID CLUB IS ASSES SED TO TAX IN THE STATUS OF AOP, ON THE INCOMES ADMITTED AFTER EX CLUDING THE RECEIPTS/INCOMES, ON THE PRINCIPLE OF MUTUALITY . FOR THE YEAR UNDER REFERENCE, THE ASSESSEE CLUB, SHOWN TO H AVE 2 EARNED INTEREST FROM CERTAIN BANKS, IT'S CORPORATE MEMBERS AND SUCH INCOME WAS QUANTIFIED AT RS. 6,31,771/- AND THE SAME WAS CLAIMED AS EXEMPTED-INCOME, ON THE PRINCIP LES OF MUTUALITY HOLDING THAT THE SAID INTEREST WAS RECEIV ED FROM BANKS AND THE CORPORATE MEMBERS. 3. THE TOTAL INCOME FOR THE YEAR UNDER REFERENCE WAS AD MITTED AT RS. 1,22,700/- (INCLUDING INCOME FROM LTCG OF RS. 37,587/) WHILE FURNISHING THE RETURN OF INCOME ORIGINALLY ON 27.09.1996. THE RETURN OF INCOME WAS PROCESSED U/S. 143(1) AND SUBSEQUENTLY THE ASSESSMENT WAS REOPENED AND ORDER U /S. 143(3) READ WITH SECTION WAS PASSED ON 26.03.2004, ASSESSING THE TOTAL INCOME AT RS. 7,16,880/-, TREATING THE INTEREST INCOME OF RS. 6,31,771/-, RECEIVED FROM THE CORPORATE MEMBERS, AS TAXABLE INCOME. ON APPEAL, CIT(A) HAS CONFIRMED THE ORDER A.O BUT THE HON'BLE ITAT, ON FURTHER APPEAL, HAS HELD AG AINST THE DEPARTMENT AND THE A.O PASSED THE CONSEQUENTIAL ORD ER, DATED 14.11.2005, FOR GIVING EFFECT TO THE ORDER OF ITAT AND ACCORDINGLY THE TOTAL INCOME WAS REVERTED BACK TO RS . 85,110/-. HOWEVER, ON ACCOUNT OF GIVING EFFECT TO THE ORDER O F HON'BLE HIGH COURT OF A.P., DATED 27.08.2011, WHICH HAS REVERSED THE ORDER OF ITAT, HYDERABAD, THE TAXABLE INCOME GOT REVISED AG AIN TO RS. 7,16,880/-, THE CONSEQUENTIAL ORDER DATED 28.12.2011, PASSED BY THE A.O, WHILE GIVING EFFECT TO THE ORDER OF HIGH COURT. 4. WHILE GIVING EFFECT TO THE ORDER OF THE HON'BLE HIGH COURT OF ANDHRA PRADESH IN ITTA NOS. 422, 443, 529, 530, 531, 532 & 533 OF 2006 AND 78, 81 OF 2007 AND 244 OF 2010 DATED 27.08.2011, THE ASSESSING OFFICER HAS COMPUTED THE REVISED TAXABLE INCOME OF THE ASSESSEE CLUB AT RS. 7,16,880/- WHILE MODIFYING THE ORDER DATED 14.11.2005, AS PER WHICH THE INCOME WAS TAKEN AT RS. 85,110/-, THEREBY RESULTING A NET ADDITION/ENHANCEMENT OF INCOME BY RS. 6,31,771/-, ON ACCOUNT OF GIVING EFFECT TO THE ORDER OF THE HIGH C OURT. 3 5. AGGRIEVED, BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE HAS FILED APPEAL BEFORE THE CIT(A). THE LE ARNED CIT(A) AFTER CAREFULLY EXAMINING THE ORDER OF THE ASSESSING OFFICER OBSERVED THAT THE MODIFICATION ORDER OF THE ASSESSI NG OFFICER DATED 28.12.2011, WHICH IS UNDER DISPUTE IS NOT FAL LING UNDER ANY OF THE PROCEEDINGS AS MENTIONED UNDER SECTION 24 6A(1). AS SUCH, THE APPEAL FILED BY THE ASSESSEE BECOMES NOT M AINTAINABLE IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH CO URT IN THE CASE OF CALTEX ORE REFINERY INDIA (LTD.) VS. CIT 202 ITR 375 WHEREIN THE HONBLE BOMBAY HIGH COURT OBSERVED THAT I F STATTUE HAS NOT PROVIDED FOR APPEAL AGAINST ORDER PASSED UN DER SEVERAL SECTIONS, APPEAL WILL NOT LIE AGAINST SUCH ORDERS. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE BOMBAY HIGH COU RT IN THE CASE OF CALTEX ORE REFINERY INDIA (LTD.) SUPRA, THE L EARNED CIT(A) DISMISSED THE APPEALS OF THE ASSESSEE IN LIMINE. 6. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E US. THE LEARNED COUNSEL FOR THE ASSESSEE, SHRI S. RAMA RAO SUBMITTED THAT THE CIT(A) ERRED IN HOLDING THAT APPEAL FILED BY THE ASSESSEE IS NOT MAINTAINABLE AND HE OUGHT TO HAVE CONSIDERED THE APPEAL ON MERITS. FURTHER, HE POINTED OUT THAT THE NET INC OME FOR THE YEAR UNDER CONSIDERATION I.E., ASSESSMENT YEAR 1996-1 997 IS AT LOSS AND THE CIT(A) SHOULD HAVE DIRECTED THE ASSESS ING OFFICER TO ADJUST LOSSES AGAINST THE INCOME TO BE ASSESSED. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER OBJECTED TO THE LEV Y OF INTEREST UNDER SECTION 234B AND 234C AND 220(2) OF THE INCOM E TAX ACT, 1961. 7. THE FACTS FOR THE ASSESSMENT YEAR 1998-99 IS SIMI LAR TO ASSESSMENT YEAR 1996-1997. 8. THE LEARNED COUNSEL FOR THE ASSESSEE, SUBMITTED BEFORE US THAT THE FACTS PERTAINS TO OTHER ASSESSMENT YEARS I. E., 1999-2000 TO 2003-2004 ARE SIMILAR TO ASSESSMENT YEAR 1996-199 7. 4 9. HOWEVER, FOR ASSESSMENT YEAR 1999-2000, LEARNED C OUNSEL FOR THE ASSESSEE SHRI S.RAMA RAO SUBMITTED THAT THE NET INCOME OF RS.13,05,267/- ALONE SHOULD BE BROUGHT TO TAX AN D NOT RS.25,82,102/- AS DONE BY THE ASSESSING OFFICER. 10. FOR THE ASSESSMENT YEAR 2000-2001 IT WAS SUBMITT ED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT NET INCOM E FOR THE YEAR OF RS.13,82,430/- ALONE SHOULD BE BROUGHT TO TAX AN D NOT RS.34,14,985/- AS DONE BY THE ASSESSING OFFICER. 11 FOR THE ASSESSMENT YEAR 2001-2002 THE LEARNED COU NSEL FOR THE ASSESSEE SHRI S. RAMA RAO SUBMITTED THAT A SUM OF RS.19,11,076/- ALONE SHOULD BE BROUGHT TO TAX AND NO T RS.45,72,594/- AS WAS DONE BY THE ASSESSING OFFICER. 12. FOR THE ASSESSMENT YEAR 2002-2003, IT WAS SUBMIT TED BY THE LEARNED COUNSEL THAT A SUM OF RS.12,33,800/- AL ONE SHOULD BE BROUGHT TO TAX AND NOT RS.55,90,720/- AS WAS DON E BY THE ASSESSING OFFICER. 13. FOR THE ASSESSMENT YEAR 2003-2004 IT WAS SUBMITT ED BY THE LEARNED COUNSEL THAT A SUM OF RS.4,01,165/- ALO NE SHOULD BE BROUGHT TO TAX AND NOT RS.60,73,448/- AS WAS DONE BY THE ASSESSING OFFICER. 14. THE LEARNED D.R. ON THE OTHER HAND, RELIED ON T HE ORDER OF THE CIT(A) AND ARGUED THAT THE APPEAL IS NOT MAINTA INABLE. 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE JURISDICTIONAL HIGH COUR T IN THE CASE OF BAKELITE HYLAM LTD. VS. CIT (1988) 171 ITR 344 (A .P.) WHEREIN IT HAS BEEN HELD AS FOLLOWS : THE TRIBUNAL GRANTED CERTAIN RELIEFS TO THE ASSESS EE AND IN GIVING EFFECT TO THE TRIBUNALS ORDER, THE INCOME T AX OFFICER PASSED A MODIFICATION ORDER GRANTING REFUND TO THE 5 ASSESSEE. THE ASSESSEE PREFERRED AN APPEAL TO THE COMMISSIONER (APPEALS) AGAINST THE MODIFICATION ORD ER AND CLAIMED THAT THE INCOME TAX OFFICER WAS IN ERROR IN NOT GRANTING INTEREST ON REFUND UNDER SECTION 244 OF TH E INCOME TAX ACT, 1961. THE COMMISSIONER (APPEALS) HELD THAT NO APPEAL LAY AGAINST AN ORDER GIVING EFFECT TO THE AP PELLATE ORDER OF THE TRIBUNAL AND THAT, IN ANY EVENT, NO RI GHT OF APPEAL WAS PROVIDED AGAINST THE INCOME TAX OFFICER S OMISSION TO GRANT REFUND UNDER SECTION 244. THE TRI BUNAL UPHELD THE VIEW TAKEN BY THE COMMISSIONER (APPEALS) . ON A REFERENCE. HELD, (I) THAT THE ASSESSEE HAD A RIGHT OF APPEAL A GAINST THE MODIFICATION ORDER AS IF IT WERE AN ASSESSMENT ORDE R ITSELF AND THE APPELLATE AUTHORITY WAS BOUND TO ENTERTAIN THE APPEAL AND DECIDE IT ON MERITS. (II) THAT SINCE THERE WAS TOTAL DENIAL OF LIABILITY ON THE PART OF THE REVENUE TO PAY INTEREST ON THE REFUND, AN APPEA L LAY TO THE NEXT APPELLATE AUTHORITY. 16. IT HAS ALSO BEEN HELD BY THE KOLKATA HIGH COURT IN THE CASE OF KOOKA SIDHWA & CO. VS. CIT, WEST BENGAL (1964) 5 4 ITR 54 AS FOLLOWS : IF A HIGHER APPELLATE AUTHORITY SUCH AS THE APPELL ATE ASSISTANT COMMISSIONER OR THE TRIBUNAL DIRECTS OR O RDERS AN INCOME TAX OFFICER TO DO SOMETHING AGAIN WITH REGAR D TO AN ASSESSMENT, BY WAY OF REVISION OR AMENDMENT, THE IN COME TAX OFFICER MUST BE HELD TO BE STILL UNDER SECTION 23 OF THE ACT ON THE PROCESS OF ASSESSING THE TOTAL INCOME OF THE ASSESSEE AND DETERMINING THE SUM PAYABLE ON THE BAS IS OF THE RETURN ALREADY FILED BY HIM. (II) THE STATUTORY RIGHT OF APPEAL CANNOT BE WIPED OUT BY THE PROCEDURAL FORMALITIES WHICH THE APPELLANT HAS TO OBSERVE. 17. THE PUNJAB HIGH COURT IN THE CASE OF GOPI LAL VS . CIT (1967) 65 ITR 477 IT HAS BEEN HELD AS FOLLOWS : AN APPEAL LIES TO THE APPELLATE ASSISTANT COMMISSI ONER AGAINST THE ORDER OF THE INCOME TAX OFFICER, MADE IN PURSUA NCE OF A DIRECTION OF THE APPELLATE TRIBUNAL GIVEN UNDER SEC TION 33(5) OF THE INCOME TAX ACT, 1922, REALLOCATING THE PROFITS OF A FIRM IN THE HANDS OF ITS PARTNERS. FROM THE ORDER OF THE APPELL ATE ASSISTANT COMMISSIONER ON SUCH AN APPEAL, A FURTHER APPEAL LI ES TO THE APPELLATE TRIBUNAL, EVEN WHERE THE APPELLATE ASSIST ANT COMMISSIONER HAS DISMISSED THE APPEAL TO HIM AS INC OMPETENT. 6 18. FOLLOWING THE DECISION OF THE JURISDICTIONAL HIG H COURT IN THE CASEOF BAKELITE HYLAM LTD. VS. CIT (SUPRA), WE ARE OF THE OPINION THAT THE ASSESSEE HAS RIGHT OF APPEAL AGAIN ST THE MODIFICATION ORDER AS IF IT WAS AN ASSESSMENT ORDER ITSELF AND THE APPELLATE AUTHORITY IS BOUND TO ENTERTAIN THE APPEAL AND DECIDE IT ON MERITS. HENCE, WE HOLD THAT THE APPEAL IS MAINTA INABLE AND THEREFORE, WE REMIT THE ISSUE BACK TO CIT(A) TO DEC IDE THE ISSUE ON MERITS. IT IS NEEDLESS TO SAY THAT THE CONSEQUENTIAL ORDER PASSED BY THE LOWER AUTHORITIES SHALL BE IN CONFORMITY WITH THE JUDGMENT OF THE HONBLE HIGH COURT AND THE LOWER AUT HORITIES CANNOT SIT ON THE JUDGMENT OF HIGHER FORUM. 19. IN THE RESULT, ITA.NO.841/HYD/2013 OF THE ASSESS EE IS ALLOWED FOR STATISTICAL PURPOSES. 20. SINCE FACTS ARE SIMILAR IN ALL OTHER APPEALS I. E., ITA.NO. 842/HYD/2013 TO 847/HYD/2013 FOR THE A.YS. 1998-1999 TO 2003-2004, RESPECTFULLY FOLLOWING OUR DECISION IN ITA.NO.841/HYD/2013 HEREINABOVE, WE ALLOW THE APPEAL S OF THE ASSESSEE FOR STATISTICAL PURPOSES. 21. TO SUM-UP, IN THE RESULT, ITA.NOS. 842/HYD/2013 TO 847/HYD/2013 OF THE ASSESSEE ARE ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 05.09.2013. SD/- SD/- (CHANDRA POOJARI) (SMT. ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD DATE 05 TH SEPTEMBER, 2013. VBP/- 7 COPY TO 1. SHRI NITIN KUMAR SHAH, LAXMINIWASNEETH & CO. 402, 4 TH FLOOR, MOGHULS COURT, BASHEERBAGH, HYDERABAD 500001. 2. ACIT, CIRCLE 1 (2), HYDERABAD. 3. CIT(A) - II, HYDERABAD. 4. CIT - I , HYDERABAD 5. DR B BENCH