Late Shri M.Bhupathi Reddy, Secunderabad V. ITO,Ward 11(2), Hyderabad

ITA 848/HYD/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6317 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-06-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 06-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: M V ANIL KUMAR
• Keywords: Additional evidence
• Section: 143(3); 54F; 144

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. 848/HYD/2014 ASSESSMENT YEAR: 2003-04 LATE SHRI M. BHUPATHI REDDY, L/H M. SURENDER REDDY/ M. SUJATHA, HYDERABAD. PAN ANBPM 4836 VS. INCOME-TAX OFFICER, WARD 6(3), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.V. ANIL KUMAR REVENUE BY : SHRI A. SITARAMA RAO DATE OF HEARING 18-08-2016 DATE OF PRONOUNCEMENT 26-08-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - VI, HYD ERABAD, DATED 03/02/ 2014 FOR AY 2003-04. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE LATE SHRI M. BHUPATHI REDDY WAS ABSOLUTE OWNER OF THE PLOTS ADME ASURING 959.5 SQ.YARDS SITUATED AT HABSIGUDA, HYDERABAD. SHRI M.B HUPATHI REDDY HAS DIED AND HIS LEGAL REPRESENTATIVES SMT. M.SUJAT HA, WIFE AND SHRI M.SURENDER REDDY, HAVE ENTERED INTO AN AGREEMENT WI TH M/S. ARPITHA CONSTRUCTIONS FOR CONSTRUCTION OF FLATS VIDE AGREEM ENT DATED 26.11.2001. AS PER THE AGREEMENT, THE ASSESSEE AND THE DEVELOPER ARE HAVING EQUAL SHARE IN THE CONSTRUCTED PLINTH AR EA. THE TOTAL PLINTH AREA CONSTRUCTED BY M/S. ARPITHA CONSTRUCTION WAS 2 4,000 SQ.FT. THE 2 ITA NO. 848/H/14 LATE SHRI M. BHUPATHI REDDY PROJECT WAS COMPLETED IN JUNE, 2002 AND THE ASSESSE E GOT 12,000 SQ.FT. TOWARDS THEIR SHARE. THE ASSESSEE IS LIABLE TO CAPITAL GAINS IN CONSEQUENCE OF SURRENDERING THE PLOT ADMEASURING 47 9.75 SQ. YDS. AS PER THESE FACTS, THE AO HAS ISSUED NOTICE U/S 142(1 ) TO THE ASSESSEE FOR FILING OF RETURN OF INCOME. IN RESPONSE TO THIS NOTICE, THE ASSESSEE DID NOT FILE ANY RETURN. THE LEGAL REPRESENTATIVE O F THE ASSESSEE SHRI M. SURENDER REDDY WAS PRESENT BEFORE THE AO AND SOU GHT ADJOURNMENT. THE A.O. HAS ALLOWED ANOTHER OPPORTUNI TY, BUT AGAIN NOBODY APPEARED BEFORE THE A.O. NOR SUBMITTED ANY W RITTEN REPLY, THEREFORE, THE AO. HAS COMPUTED THE CAPITAL GAIN WH ICH IS WORKED OUT AMOUNTING TO RS. 28,39,388/-. 3. WHEN THE ASSESSEE CARRIED THE MATTER IN APPEAL B EFORE THE CIT(A), THE CIT(A) CONFIRMED THE ACTION OF THE ASSE SSING OFFICER. 4. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US RA ISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE CIT(A) ERRED IN LAW AND FACTS OF THE CASE TH AT BEFORE HIS PREDECESSOR INFORMATION WAS FILED AND BASED ON THIS A REMAND REPORT WAS CALLED FOR AND THE CIT (A) IGNORING THE REMAND REPORT DISMISSED THE APPEAL IS BAD IN LAW. 2. THE CIT(A) BEING AWARE OF THE FACT THAT NO RETUR N WAS FILED AND THE ASSESSMENT IS UNDER SECTION 144 AND NOT 143(3) OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO ASSESS THE I NCOME IN THE HANDS OF THE LEGAL HEIRS IN THE RATIO MENTIONED IN THE REMAND REPORT AND ALLOWED THE CLAIM OF DEDUCTION UNDER SEC TION 54F ACCORDINGLY. 3. THE CIT(A) OUGHT TO HAVE GIVEN OPPORTUNITY OF HE ARING AFTER SERVING A COPY OF THE REMAND REPORT ON YOUR APPELLA NT. 4. THE CIT(A) ERRED IN LAW AND FACTS OF THE CASE IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER WITHOUT CONSIDERING THE FACT THAT THERE ARE FOUR LEGAL HEIRS AND THE INCOME HAS TO BE ASSESSED IN THE HANDS OF THE FOUR LEGAL HEIRS. 5. YOUR APPELLANT SUBMITS THAT EVEN IN ABSENCE OF A RETURN, THE CIT(A) OUGHT TO HAVE CONSIDERED THE CLAIM OF THE AP PELLANT BEFORE THE CIT(A) THAT INCOME HAS TO BE ASSESSED IN THE HANDS OF 3 ITA NO. 848/H/14 LATE SHRI M. BHUPATHI REDDY THE LEGAL HEIRS AND DEDUCTION UNDER SECTION 54F OUG HT TO HAVE BEEN ALLOWED ACCORDINGLY. 4.1 THE ASSESSEE FILED A PETITION TO ADMIT THE ADDI TIONAL GROUNDS OF APPEAL. HOWEVER, AT THE TIME OF HEARING BEFORE US, THE SAME HAVE NOT BEEN PRESSED BY THE LD. AR OF THE ASSESSEE. 5. BEFORE US, THE LD. AR OF THE ASSESSEE CONTENDED THAT THE CIT(A) BEING AWARE OF THE FACT THAT NO RETURN WAS FILED AN D THAT THE ASSESSMENT WAS MADE U/S 144 AND NOT U/S 143(3) OF T HE ACT OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO ASSESS THE I NCOME IN THE HANDS OF THE LEGAL HEIRS IN THE RATIO MENTIONED IN THE REMAND REPORT AND ALLOWED THE CLAIM OF DEDUCTION U/S 54F ACCORDIN GLY. HE FURTHER CONTENDED THAT THE CIT(A) IGNORED THE REMAND REPORT OF THE ASSESSING OFFICER WHILE CONFIRMING THE ORDER OF THE CIT(A). H E, THEREFORE, PLEADED THAT THE APPEAL MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE APPEAL ON MERITS . 5.1 THE LD. AR OF THE ASSESSEE FILED A PETITION FOR ADMISSION OF ADDITIONAL EVIDENCE STATING THAT THE DURING THE ASS ESSMENT PROCEEDING NOR BEFORE THE CIT(A) COPIES OF THE DEVELOPMENT AGR EEMENT DATED 30/04/2000 OR THE SUPPLEMENTARY AGREEMENT DATED 21/ 11/2011 HAVE BEEN PRODUCED. HE, THEREFORE, SUBMITTED, THE SAID D OCUMENTS AS ADDITIONAL EVIDENCES BEFORE US. 5.2 AS THE ADDITIONAL EVIDENCE FILED BY THE ASSESSE E ARE NECESSARY TO ADJUDICATE THE ISSUE, WE ADMIT THE SAME. 6. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 7. CONSIDERED THE SUBMISSIONS OF BOTH THE COUNSELS AND PERUSED THE MATERIAL FACTS ON RECORD. IT IS OBSERVED THAT S INCE THE ASSESSEE DID NOT FILE ANY RETURN AGAINST THE NOTICE U/S 142( 1) ISSUED BY THE 4 ITA NO. 848/H/14 LATE SHRI M. BHUPATHI REDDY ASSESSING OFFICER OR SUBMITTED ANY WRITTEN REPLY, T HE ASSESSING OFFICER PASSED AN EX-PARTE ORDER U/S 144 COMPUTING THE CAPITAL GAINS AT RS. 28,39,388/-. ACCORDING TO LD. AR OF THE ASSE SSEE, THE ASSESSEE HAS NOT FILED ANY RETURN ON THE HONEST BELIEF THAT THERE WILL BE NO CAPITAL GAINS AS THEY ARE ELIGIBLE FOR DEDUCTION U/ S 54F OF THE ACT. 7.1 IN THE REMAND REPORT DATED 10/08/2010, THE ASSE SSING OFFICER STATED AS UNDER: 'IN THIS CASE, THE LRS OF THE ASSESSEE SMT. M. SUJA THA (WIFE) AND SHRI M. SURENDER REDDY (SON) HAVE ENTERED INTO AN A GREEMENT ON 26.11.2001 FOR DEVELOPMENT OF LAND, BELONGING TO THE DECEASED ASSESSEE, ADMEASURING ABOUT 959 SQ.YDS. SI TUATED AT HABSIGUDA, HYDERABAD, WITH M/S. ARPITHA CONSTRUCTIO NS, HYDERABAD. AS PER THE DEVELOPMENT AGREEMENT, THE OW NERS AND THE BUILDER HAVE EQUAL SHARE IN CONSTRUCTED AREA. T HE SAID PROJECT 'BHUPATHI CHAMBERS' WAS COMPLETED IN JUNE, 2002. SINCE THE LRS WERE LIABLE FOR CAPITAL GAINS ON THE VALUE OF CONSTRUCTED AREA RECEIVED FROM THE BUILDER IN LIEU OF THE LAND SURRENDERED THE CASE WAS CONVERTED TO SCRUTINY. AS THERE WAS NO COO PERATION FROM THE LR S, THE ASSESSMENT WAS COMPLETED U/S 144 ON 31.03.2006 RAISING A DEMAND OF RS. 9,76,0131/- SUBSEQUENTLY, A DISPUTE AROSE BETWEEN SMT. M. SUJAT HA (WIFE), SMT. M.SRILATHA REDDY (DAUGHTER), SMT. M.PREMALATHA REDDY (DAUGHTER) ON ONE PART AND SHRI M. SURENDER REDDY ( SON) ON OTHER PART, IN PARTITION OF THE PROPERTIES OF THE D ECEASED ASSESSEE. A SUIT TO THIS EFFECT WAS FILED BEFORE TH E ADDL. DISTRICT JUDGE, R.R.DIST., HYDERABAD (OS NO. 140 OF 2003). T HE ADDL. DISTRICT JUDGE IN HIS JUDGEMENT HELD THAT THE AGREE MENT ENTERED BY THE LRS HAS TO BE TREATED AS. AGREEMENT ENTERED BY HUF AND NOT AS INDIVIDUALS AND ACCORDINGLY HELD THAT THE MO THER AND DAUGHTERS ARE ENTITLED FOR A SHARE OF 1/8 EACH AND THE SON IS ENTITLED FOR A SHARE OF 5/8. AS PER THE INFORMATION GATHERED, IT IS LEARNT THAT THE MOTHER AND DAUGHTERS HAVE FILED AN APPEAL BEFORE THE HON'BLE H IGH COURT OF AP. (AS NO. 660 OF 2006) CONTENDING THAT THE PROPER TIES OF SHRI M.BHUPATHI REDDY DID NOT BELONG TO HUF BUT WERE HEL D IN HIS INDIVIDUAL CAPACITY AND ACCORDINGLY, CLAIMED EQUAL SHARE IN ALL THE PROPERTIES OF THE DECEASED ASSESSEE. MEANWHILE, SHRI M. SURENDER REDDY (SON) VIDE HIS LETTER DATED 09.02.20 09 REQUESTED TO KEEP THE INCOME TAX APPEAL PROCEEDINGS IN ABEYAN CE TILL THE DISPOSAL OF THE CASE BY THE HON'BLE HIGH COURT OF A P. 5 ITA NO. 848/H/14 LATE SHRI M. BHUPATHI REDDY IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND SINCE THE ADDL. DISTRICT JUDGE HAS ALREADY DETERMINED THE SHA RES OF ALL THE LRS, THE APPEAL MAY BE DECIDED ON MERITS. 7.2 WE FIND THAT THE CIT(A) HAS HELD THAT THE ASSES SEE HAS NOT FILED RETURN OF INCOME IN THE NAME OF LEGAL HEIRS, AND TH EREFORE, THE ASSESSEE CANNOT CLAIM THAT THE A.O. SHOULD MAKE ASS ESSMENT IN THE HANDS OF FOUR LEGAL HEIRS AND THAT IT IS THE DUTY O F THE ASSESSEE TO SUBMIT THE DOCUMENTARY EVIDENCES BEFORE THE A.O. RE GARDING THE NOMINATION OF LEGAL HEIRS AND SHOULD HAVE SUBMITTED RETURN OF INCOME SEPARATELY. HE HAS HELD THAT AS NO RETURN WAS FILED AND NO NOMINATION OF OTHER LEGAL HEIRS WAS FILED, JUST WITH THE ARGUM ENT THAT THE MATTER IS PENDING BEFORE THE COURT, IS NOT A SUFFICIENT COMPL IANCE, HE UPHELD THE ACTION OF THE ASSESSING OFFICER IN PASSING ORDER U/ S 144 IN THE NAME OF THE LEGAL HEIRS AS PER THE RECORD. 7.3 CONSIDERING THE TOTALITY OF THE FACTS OF THE CA SE, WE ARE OF THE VIEW THAT TO MEET THE ENDS OF JUSTICE, THE ISSUE IS TO BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE APPEAL ON MERITS AFTER EXAMINING THE EVIDENCES FILED BEFORE US BY TH E ASSESSEE AND IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE OPPO RTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO FURNISH ALL THE DOCUMENTS THAT ARE REQUIRED TO SUPPORT THEIR CASE T O COMPLETE THE ASSESSMENT BY THE ASSESSING OFFICER. WE ORDER ACCOR DINGLY. 7.4 IT WAS BROUGHT TO OUR NOTICE THAT THERE ARE FOU R LEGAL HEIRS TO THE DECEASED M. BHUPATHI REDDY AS HELD BY THE HONBLE J URISDICTIONAL HIGH COURT. ASSESSING OFFICER IS DIRECTED TO ISSUE NOTICES TO ALL THE LEGAL HEIRS AND COMPLETE THE ASSESSMENT PROCEEDINGS THEREAFTER. 6 ITA NO. 848/H/14 LATE SHRI M. BHUPATHI REDDY 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 26 TH AUGUST, 2016. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 26 TH AUGUST, 2016 KV COPY TO:- 1) LATE SHRI M. BHUPATHI REDY, C/O M. ANANDAM & CO ., CAS., 7A, SURYA TOWERS, S.P. ROAD, SECUNDERABAD. 2) ITO, WARD 11(2), HYDERABAD. 3) CIT(A) - VI, HYDERABAD 4) CIT - 5/6, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.