Syed Rafiuddin, Hyderabad V. CIT-(Central), Hyderabad

ITA 901/HYD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6084 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 12-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KONDA RAMESH
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Capital asset; Revision of order; Rectification of order; Search and seizure; Opportunity of being heard; Assessment record
• Section: 143(3); 263; 132; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIAFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO. A.Y. APPELLANT RESPONDENT 901/H/2014 2009- 2010 MR. SYED RAFIUDDIN HYDERABAD PAN BERPS6026J ACIT, CENTRAL CIRCLE-3 HYDERABAD. 902/H/2014 MR. M. SURENDRANATH HYDERABAD PAN AFYPM6952L 903/H/2014 SMT. INDRANI PRASAD, HYDERABAD. PAN AANPI5216K 905/H/2014 MR. S. SATYANARAYANA, HYDERABAD. PAN AULPS1897G 906/H/2014 MRS. L. PREETHA PRIYADARSHINI, HYDERABAD. PAN AAUPL9809Q 907/H/2014 SMT. MAHITA PRASAD CADELL, HYDERABAD. PAN ARWPC6119M 908/H/2014 DR. P.S. PRASAD, HYDERABAD. PAN AAMPP4844K 909/H/2014 MRS. L. LEENA PETERSON, HYDERABAD. PAN APOPP0610C 912/H/2014 SMT. SUNITA PRASAD, HYDERABAD. PAN BKGPP3507E FOR ASSESSEE : MR. P. MURALIMOHAN RAO FOR REVENUE : MR. KONDA RAMESH DATE OF HEARING : 22 . 1 2 .2015 DATE OF PRONOUNCEMENT : 20 . 0 1 .201 6 2 ITA.NO.901 TO 903, 905 TO 909 & 912/H/2014 MR. SYED RAFIUDDIN AND OTHERS, HYDERABAD. ORDER PER BENCH : ALL THESE APPEALS ARE BY A GROUP OF INDIVIDUALS WHO HAVE BEEN ASSESSED UNDER SECTION 143(3) READ WI TH SECTION 153C OF THE I.T. ACT, 1961, PURSUANT TO A S EARCH OPERATION IN THE CASE OF M/S. MBS JEWELERS P. LTD., ON 11.03.2010. 2. BRIEF FACTS OF THE CASE ARE THAT THERE WAS A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF T HE I.T. ACT IN THE CASE OF M/S. MBS JEWELLERS P. LTD., AND ITS GROUP ON 11.03.2010. DURING THE COURSE OF SEARCH, C ERTAIN DOCUMENTS RELATING TO THE ASSESSEES HEREIN WERE FOU ND AND SEIZED AND ACCORDINGLY, NOTICES UNDER SECTION 1 53C OF THE I.T. ACT WERE ISSUED TO THE RESPECTIVE ASSESSEE S AND IN RESPONSE TO THE SAID NOTICE, THE ASSESSEES FILED TH EIR RETURNS OF INCOME FOR THE RELEVANT ASSESSMENT YEAR. THEREAFTER, THE ASSESSMENTS WERE COMPLETED UNDER SE CTION 143(3) READ WITH SECTION 153C OF THE I.T. ACT AFTER CONSIDERING THE INFORMATION FILED BY THE ASSESSEES PARTICULARLY WITH REGARD TO THE CAPITAL GAINS ARISI NG OUT OF THE TRANSFER OF LAND AT SURVEY NO.78, HAFEEZPET (V) , SERILINGAMPALLY (M), R.R. DISTRICT. THE A.O. OBSERV ED THAT THERE WERE 8 ASSIGNEES/OWNERS OF AC.5.00 OF LAND IN THE UNDIVIDED AC.40.00 OF LAND AT SY.NO.78, HAFEEZPET ( V), SERILINGAMPALLY (M), R.R. DISTRICT AND THAT ALL THE ASSIGNEES ALIENATED THEIR RIGHTS IN THE AC.5.00 OF LAND IN FAVOUR OF SMT. INDRANI PRASAD W/O. DR. P.S. PRASAD ONE OF 3 ITA.NO.901 TO 903, 905 TO 909 & 912/H/2014 MR. SYED RAFIUDDIN AND OTHERS, HYDERABAD. THE ASSESSEEES HEREIN BY A REGISTERED AGREEMENT OF SALE CUM GPA REGISTERED VIDE DOCUMENT NO.8955/2005 DATED 19.12.2005. IT WAS FURTHER OBSERVED THAT DURING THE F.Y. 2008-2009, THE ASSESSEES THROUGH THEIR ATTORNEY VID E THREE DIFFERENT SALE DEEDS, SOLD THEIR PIECE OF LAN D AND THE A.O. WAS OF THE OPINION THAT THE CAPITAL GAINS ARIS ING OUT OF THE SALE OF THE LAND OUGHT TO HAVE BEEN OFFERED BY THE ASSESSEES HEREIN. THE ASSESSEES, HOWEVER SUBMITTED THAT THE SALE PROCEEDS WERE RECORDED IN THE BOOKS OF M/S . TRINITY INFRA VENTURES LTD., DURING THE F.Y. 2007-0 8 AND HENCE, ASSESSEE HAS NOT OFFERED THE CAPITAL GAINS. THE A.O. HOWEVER HELD THAT THE ASSESSEES HAVE TRANSFERR ED THEIR RIGHTS TO SMT. INDRANI PRASAD AND THEREFORE, THE FACT OF M/S. TRINITY INFRA VENTURES LTD., DECLARING THE SAME IS OF NO CONSEQUENCE WITH REGARD TO THE ASSESSABILITY OF CAPITAL GAINS IN THE HANDS OF THE ASSESSEES. THEREF ORE, HE HELD THAT THE CAPITAL GAINS ARE TO BE ASSESSED IN T HE HANDS OF THE RESPECTIVE ASSESSEES ON PROTECTIVE BASIS IN THE RATIO OF THEIR SHARE. HE ALSO EXAMINED THE SALE CONSIDERA TION RECEIVED ON TRANSFER OF AC.10.00 OF LAND AT HYDERAB AD TO M/S. OM METAL DEVELOPERS P. LTD., AND BROUGHT THE PROPORTIONATE SHARES OF THE ASSESSEES TO TAX AS UNDISCLOSED CAPITAL GAINS. SIMILARLY, IN THE CASE O F SMT. INDRANI PRASAD WHO IS ONE OF THE ASSESSEES HEREIN A ND IS THE AGREEMENT OF SALE CUM GPA HOLDER, THE ASSESSMEN T WAS COMPLETED BRINGING THE CAPITAL GAINS TO TAX. 3. SUBSEQUENTLY, THE LD. CIT UNDER SECTION 263 OF THE I.T. ACT EXAMINED THE ASSESSMENT RECORDS OF THE 4 ITA.NO.901 TO 903, 905 TO 909 & 912/H/2014 MR. SYED RAFIUDDIN AND OTHERS, HYDERABAD. RESPECTIVE ASSESSEES AND NOTICED THAT THE ASSESSEES HAD SOLD TWO PIECES OF LAND AT HYDERNAGAR AND DIFFERENT RATES WERE ADOPTED IN BOTH THE SALES THOUGH THERE WAS NOT MUCH OF TIME GAP BETWEEN THE TWO DATES OF SALE. HE OBSERVED THAT THE FIRST SALE TOOK PLACE ON 23.04.20 08, THE VALUE OF WHICH WAS TAKEN AT RS.5 CRORE PER ACRE WHE REAS IN THE SECOND SALE WHICH TOOK PLACE ON 25.07.2008, THE VALUE OF THE LAND WAS TAKEN AT RS.1.3 CRORE PER ACR E AND THUS THERE IS A HUGE VARIATION IN THE MARKET VALUE OF THE LAND THOUGH THE LANDS ARE SITUATED IN THE SAME LOCA LITY AND NO REASON FOR SUCH VARIATION IS FORTHCOMING FRO M THE ASSESSMENT ORDER. HE OBSERVED THAT THE A.O. HAS NOT VERIFIED THIS ISSUE WHILE PASSING THE ASSESSMENT OR DER UNDER SECTION 143(3) READ WITH SECTION 153C OF THE I.T. ACT DATED 26.12.2011 AND HENCE, HELD THAT THE ASSESSMEN T ORDER IS BOTH ERRONEOUS IN SO FAR AS IT IS PREJUDIC IAL TO THE INTERESTS OF THE REVENUE. HE THEREFORE, DIRECTED TH E A.O. TO RE-EXAMINE THE ENTIRE ISSUE OF CAPITAL GAINS ON THE SALE OF LAND BY RESPECTIVE ASSESSEES AND THE COMPUTATION OF CAPITAL GAIN ON THE SAME. AGAINST THIS ORDER OF THE LD. CIT UNDER SECTION 263 OF THE I.T ACT, RESPECTIVE ASSESS EES ARE IN APPEAL BEFORE US. 4. AT THE TIME OF FILING OF APPEAL, THE ASSESSE E HAS RAISED 12 GROUNDS OF APPEAL AGAINST THE JURISDICTIO N OF THE LD. CIT UNDER SECTION 263 AND ALSO ON THE MERITS OF THE ISSUE DIRECTED BY THE LD. CIT FOR RE-CONSIDERATION. SUBSEQUENTLY, VIDE LETTER DATED 25.08.2015, ASSESSE E RAISED ADDITIONAL GROUNDS OF APPEAL I.E., GROUND NO S. 13 5 ITA.NO.901 TO 903, 905 TO 909 & 912/H/2014 MR. SYED RAFIUDDIN AND OTHERS, HYDERABAD. TO 20 AGAINST THE JURISDICTION OF THE LD. CIT IN AS SUMING JURISDICTION UNDER SECTION 263 OF THE ACT ON THE GR OUND THAT THE ORDER PASSED BY THE A.O. UNDER SECTION 143 (3) READ WITH SECTION 153C OF THE ACT BECOMES INVALID O N THE GROUND THAT THERE IS NO SATISFACTION RECORDED BY TH E A.O. OF THE ASSESSEES HEREIN AS WELL AS THE A.O. HAVING JURISDICTION OVER THE PERSONS SEARCHED AND THEREFOR E, CONSEQUENTLY, THE IMPUGNED REVISION ORDER UNDER SEC TION 263 OF THE ACT ALSO WOULD BECOME INVALID. SUBSEQUEN TLY, VIDE LETTER DATED 22 ND DECEMBER, 2015, THE ASSESSEE RAISED FURTHER ADDITIONAL GROUNDS OF APPEAL NOS. 21 AND 22 STATING THAT THE LD. CIT HAS ERRED IN LAW AS WELL A S ON FACTS IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT ON THE PROPOSAL MADE BY THE A.O. AND THEREFORE, THE IMPUGNED ORDER UNDER SECTION 263 IS TO BE QUASHED. THE ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE LEGAL GROUNDS ON THE JURISDICTION OF THE LD. CIT UN DER SECTION 263 OF THE ACT AND THEREFORE, THEY ARE ADMI TTED AND CONSIDERED FOR ADJUDICATION. 5. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE, MR. P. MURALIMOHAN RAO, SUBMITTED THAT TH E A.O. HAS ISSUED NOTICE UNDER SECTION 153C OF THE I. T. ACT AND AS CAN BE SEEN FROM THE ASSESSMENT ORDER, A.O. HAS NOT RECORDED ANY SATISFACTION THAT THE INCOME RELAT ABLE TO THE INCRIMINATING MATERIAL FOUND AND SEIZED DURING THE COURSE OF SEARCH, BELONGS TO THE ASSESSEES HEREIN. THUS, ACCORDING TO HIM, ASSESSMENT ORDER ITSELF IS INVALI D AND CONSEQUENTLY, THE REVISION ORDER IS ALSO TO BE QUAS HED. HE 6 ITA.NO.901 TO 903, 905 TO 909 & 912/H/2014 MR. SYED RAFIUDDIN AND OTHERS, HYDERABAD. HAS ALSO DRAWN OUR ATTENTION TO THE ORDER GIVING EF FECT TO THE REVISION ORDER I.E., ASSESSMENT ORDER PASSED UN DER SECTION 143(3) READ WITH SECTION 263 OF THE I.T. AC T, WHEREIN THE A.O. HAS RECORDED THAT THE LD. CIT HAD INITIATED 263 PROCEEDINGS ON THE PROPOSAL MADE BY T HE A.O. HE SUBMITTED THAT IT WAS ONLY ON RECEIPT OF TH E ORDER GIVING EFFECT TO THE ORDER OF LD. CIT UNDER SECTION 263, THAT ASSESSEE HAS COME TO KNOW THAT THE REVISION PROCEEDINGS HAVE BEEN INITIATED AT THE BEHEST OF TH E A.O. AND THEREFORE, ACCORDING TO HIM, THE LD. CIT HAS NO T APPLIED HIS MIND BEFORE INITIATING REVISIONARY PROC EEDINGS AND THEREFORE, THE REVISION ORDERS ARE NOT SUSTAINA BLE. IN SUPPORT OF THESE CONTENTIONS, THE LD. COUNSEL HAS R ELIED UPON THE FOLLOWING JUDGMENTS AND HAS ALSO FILED COP IES OF THE FOLLOWING ORDERS BEFORE US: 1. M/S. AASHI PLYWOOD INDUSTRIES LTD., HYDERABAD VS. ACIT, CIRCLE (3), HYDERABAD IN ITA.NOS.1041 TO 1045/HYD/2014 DATED 13.11.2015 2. M/S. TRINITY INFRA VENTURES LTD., NEW DELHI VS. DCIT, C.C.2(1), HYDERABAD IN ITA.NOS.584 TO 589/H/2015 DATED 04.12.2015 3. DHARMENDRA KUMAR BANSAL VS. CIT (2014) 48 TAXMANN.COM 53 (JAIPUR-TRIB) 5.1. FURTHER, THE ASSESSEE HAS ALSO TAKEN AN ADDITIONAL GROUND OF APPEAL NO.20 THAT THE LD. CIT OUGHT TO HAVE APPRECIATED THE FACT THAT THE ORDER PASSED WITH PRIOR APPROVAL OF JCIT UNDER SECTION 153D CANNOT BE SUBJECT TO REVISIONAL PROCEEDINGS UNDER SECTION 263 OF THE I.T. ACT. IN SUPPORT OF THIS CONTENTION ALSO, THE L D. 7 ITA.NO.901 TO 903, 905 TO 909 & 912/H/2014 MR. SYED RAFIUDDIN AND OTHERS, HYDERABAD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS TRIBUN AL IN THE GROUP CASES OF THE ASSESSEE I.E., M/S. TRINITY INFRA VENTURES LTD., NEW DELHI VS. DCIT, C.C.2(1), HYDERA BAD IN ITA.NOS.584 TO 589/H/2015 DATED 04.12.2015, HAS HEL D THAT 263 PROCEEDINGS CANNOT BE INITIATED WITHOUT RE VISING THE DIRECTIONS OF THE ADDL. CIT GIVEN UNDER SECTION 153D OF THE I.T. ACT. HE HAS SUBMITTED THAT THE TRIBUNAL HAS FOLLOWED THE DECISIONS OF EARLIER BENCHES OF THIS T RIBUNAL IN THE CASE OF MR. CH. KRISHNA MURTHY, HYDERABAD VS . ACIT, C.C.3, HYDERABAD IN ITA.NO.766/HYD/2012 DATED 13.02.2015 TO TAKE THIS VIEW. COPIES OF ALL THESE D ECISIONS ARE FILED BEFORE US. 6. THE LD. D.R. HOWEVER, OPPOSED THE CONTENTIONS OF THE ASSESSEE AND SUBMITTED THAT THE LD. CIT HAV E CONSIDERED THE ISSUES IN THEIR PROPER PERSPECTIVE B EFORE REVISING THE ASSESSMENT ORDERS. THEREFORE, ACCORDIN G TO HIM, NO INTERFERENCE IS CALLED FOR. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT ASSESSEE HAS FILED COPIES OF THE ASSESSMENT ORDERS PASSED BY THE A.O. UNDER SECTION 143(3) READ WITH SECTION 263 OF THE I.T. AC T WHEREIN AT PARA-3 OF THE ORDER, THE A.O. HAS RECORD ED AS UNDER : 3. ACCORDINGLY, THE SAME WAS ASSESSED AS SHORT TERM CAPITAL GAIN (VIDE ORDER U/S 154 OF THE IT ACT DATED 08.03.2013) RAISING A TOTAL DEMAND OF RS. 3,44,12,086/-. LATER, IT IS NOTICED THAT THE MARKET VALUE OF THIS LAND IS RS.5 CRORES PER ACRE AND 8 ITA.NO.901 TO 903, 905 TO 909 & 912/H/2014 MR. SYED RAFIUDDIN AND OTHERS, HYDERABAD. WHEREAS, THE SAME WAS TAKEN INADVERTENTLY AT RS.1,30,28,906 (10,42,31,250/- CRS./8 ACRES) WHILE PASSING THE ORDER U/S 143(3) R.W.S, 153C DATED 26.12.2011 AND IN THE RECTIFICATION ORDER THEREOF. AS THIS WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF REVENUE, A PROPOSAL FOR REVISION OF ORDER U/S 263 WAS SUBMITTED TO THE CIT(C), HYDERABAD ON 14.03.2014. ORDER U/S 263 WAS PASSED BY THE CIT(C), HYDERABAD SETTING ASIDE THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) R.W.S, 153C DATED 26.12.2011 WITH A DIRECTION TO EXAMINE ISSUE OF CAPITAL GAINS ON THE SALE OF LAND BY THE ASSESSEE AND COMPUTATION OF THE CAPITAL GAINS SHOULD BE MADE AFTER MAKING NECESSARY VERIFICATION OF THE ABOVE ISSUES. 7.1. THIS CLEARLY SHOWS THAT THE REVISION PROCEEDINGS HAVE BEEN INITIATED AT THE BEHEST OF TH E A.O. AND NOT INDEPENDENTLY BY THE LD. CIT BECAUSE THE PROPOSAL WAS SENT TO THE LD. CIT BY THE ASSESSING O FFICER. THIS ISSUE HAS BEEN CONSIDERED BY THE B BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. AASHI PLYWOOD INDUSTRI ES LTD., HYDERABAD VS. ACIT, CIRCLE (3), HYDERABAD IN ITA.NOS.1041 TO 1045/HYD/2014 DATED 13.11.2015, CONSEQUENT TO THE SAME SEARCH I.E., SEARCH IN THE C ASE OF M/S. MBS JEWELLERS P. LTD., AND ITS GROUP ON 11.03. 2010, (TO WHICH BOTH OF US ARE SIGNATORIES) AND AT PARA-5 OF THE ORDER, THE TRIBUNAL HAS HELD AS UNDER: 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT IN THE CASE OF DHARMENDRA KUMAR BANSAL VS. CIT (SUPRA), THE A.O. THEREIN HAD PROPOSED THE ACTION UNDER SECTION 263 VIDE LETTER DATED 02.09.2011 AND THE LD. CIT HAD ISSUED NOTICE UNDER SECTION 263 ON 09.01.2013 AND THEREAFTER, PASSED THE ORDER UNDER SECTION 263 OF T HE 9 ITA.NO.901 TO 903, 905 TO 909 & 912/H/2014 MR. SYED RAFIUDDIN AND OTHERS, HYDERABAD. I.T. ACT BY HOLDING THAT THE ASSESSMENT ORDER PASSE D BY THE A.O. UNDER SECTION 143(3) OF THE ACT WITHOUT DUE AND PROPER ENQUIRY WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. ON APPEAL, THE TRIBUNAL CONSIDERED THE ISSUE AT LENGTH AND AT PARA 9 OF ITS ORDER HAS HELD AS UNDER : 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVA ILABLE ON RECORD. IN THE PRESENT CASE, IT IS ABUNDANTLY CL EAR FROM PARA-2-OF THE IMPUGNED ORDER THAT THE ITO, WARD-3, SAWAI MADHOPUR VIDE LETTER NO. 3737, DT. 2ND SEPT., 2001 PROPOSED ACTION UNDER S. 263 OF THE ACT AND IT WAS NOT THE LEARNED CIT, WHO HIMSELF CALLED RECORD AND EXAMINED THE SAME FOR ANY PROCEEDING UNDER S. 263 O F THE ACT. THEREFORE, IT CAN BE SAID THAT THE LEARNED CIT H AD NOT APPLIED HIS MIND BUT THE MATTER WAS REFERRED BY THE AO FOR INITIATING THE PROCEEDING UNDER S. 263 OF TH E ACT. IN THE PRESENT CASE, FROM PARA 3 OF THE IMPUGNED OR DER, IT IS NOTICED THAT THE NOTICE DT. 9TH JAN., 2013 UNDER S. 263 OF THE ACT WAS ISSUED ONLY ON RECEIPT OF THE PROPOS AL UNDER S. 263 OF THE ACT FROM THE ITO, WARD-L (2), KO TA AND THE ASSESSEE EXPLAINED, VIDE WRITTEN SUBMISSION WHICH HAS BEEN REPRODUCED IN PARA 4 OF THE IMPUGNED ORDER, EACH AND EVERY OBJECTION RAISED BY THE ITO, W ARD- 2, SAWAI MADHOPUR. IT IS WELL-SETTLED THAT THE LEAR NED CIT WHILE EXERCISING THE REVISIONARY POWERS UNDER S. 263 OF THE ACT MAY CALL FOR AND EXAMINE THE RECORDS OF ANY PROCEEDINGS AND THEREAFTER IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN IS ERRONEOUS INSOFAR AS IT IS PREJUD ICIAL TO THE INTEREST OF THE REVENUE, HE MAY, AFTER GIVING T HE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MA KING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTA NCES OF THE CASE JUSTIFY. THEREFORE, BEFORE TAKING ANY AC TION, LEARNED CIT HIMSELF SHALL APPLY HIS MIND AFTER EXAMI NING THE RECORD OF ANY PROCEEDINGS AND HIS SATISFACTION IS MUST. HOWEVER, IN THE PRESENT CASE, THE SATISFACTIO N WAS OF THE ITO (TECH.) WHO PROPOSED ACTION UNDER S. 263 O F THE ACT, BUT NOT OF THE LEARNED CIT. THEREFORE, ISS UANCE OF NOTICE UNDER S. 263 OF THE ACT ON THE BASIS OF THE PROPOSAL MADE BY THE ITO WAS VOID AB-INITIO; WE, THEREFORE, SET 10 ITA.NO.901 TO 903, 905 TO 909 & 912/H/2014 MR. SYED RAFIUDDIN AND OTHERS, HYDERABAD. ASIDE THE SAME. FOR THE AFORESAID VIEW, WE ARE FORT IFIED BY THE VARIOUS JUDICIAL PRONOUNCEMENTS RELIED BY THE L EARNED COUNSEL FOR THE ASSESSEE. 5.1. IN THE CASE BEFORE US, THE LD. CIT HAS RECEIVED THE PROPOSAL FROM THE A.O. FOR REVISING TH E ASSESSMENT ORDER AND ALSO ISSUED NOTICE UNDER SECTION 263, BOTH ON THE SAME DATE. ON OUR DIRECTIO N, THE LD. D.R. HAS FILED COPIES OF THE PROPOSALS UNDE R SECTION 263 OF THE ACT AS WELL AS THE NOTICE UNDER SECTION 263 WHICH ARE BOTH DATED 14.03.2014. IT IS ALSO SEEN FROM THE SAME THAT REASONS FOR INITIATING THE PROCEEDINGS UNDER SECTION 263 OF THE ACT BROUGH T TO THE NOTICE OF THE LD. CIT BY A.O. IN THE PROFORM A FOR INITIATING PROCEEDINGS, ARE REFLECTED AS THE REASON S FOR REVISING THE ASSESSMENT ORDER. THUS, IT IS CLEAR TH AT THE LD. CIT HAS ACCEPTED THE PROPOSAL OF THE A.O. WITHOUT ANY FURTHER APPLICATION OF MIND ON HIS PART . THE LD. D.RS CONTENTION THAT THE PROPOSALS ARE ACCOMPANIED BY THE ASSESSMENT RECORDS AND THEREFORE, IT IS TO BE PRESUMED THAT THE LD. CIT HA S INDEPENDENTLY APPLIED HIS MIND TO THE SAID PROPOSAL MAY BE ACCEPTABLE, IF THE LD. CIT HAS TAKEN TIME TO GO THROUGH THE PROPOSALS AND HAS ALSO VERIFIED FROM TH E ASSESSMENT RECORDS TO INDEPENDENTLY TO COME TO THE CONCLUSION THAT THE ASSESSMENT ORDER IS ERRONEOUS I N SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REV ENUE. FOR THE SAKE OF CONVENIENCE AND BREVITY, WE REPRODUCE THE RECOMMENDATIONS OF THE A.O. FOR A.Y. 2008-09 AND ALSO NOTICE UNDER SECTION 263 OF THE I. T. ACT TO DEMONSTRATE THAT THE LD. CIT HAS NOT APPLIED HIS MIND BUT HAS BLINDLY ACCEPTED THE RECOMMENDATIONS OF THE A.O. OFFICE OF THE COMMISSIONER OF INCOME-TAX (CENTRAL) 7TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH HYDERABAD - 500 004. F NO.CIT(C)/HYD/263/2013-14 DATED: 14-03-2014 TO M/S. AASHI PLYWOOD INDUSTRIES, PLOT NO. 5,6,7,18,19 & 20, IDA, PATANCHERU, HYDERABAD. 11 ITA.NO.901 TO 903, 905 TO 909 & 912/H/2014 MR. SYED RAFIUDDIN AND OTHERS, HYDERABAD. SIR, SUB: INCOME TAX ASSESSMENT - YOUR OWN - ASST YEAR 2 008-09 - REVISION OF ASSESSMENT U/S. 263 OF THE IT ACT, 1961 - ISSUE OF SHOW CAUSE NOTICE - REG. THE ACIT-CENTRAL CIRCLE-3, HYDERABAD HAS COMPLETED ASSESSMENT U/S. 143(3) R.W.S.153C OF THE INCOME TAX ACT 1961, FOR THE A Y 2008-09, IN YOUR CASE ON 25-12-2011, DE TERMINING TAXABLE INCOME AT RS. NIL. ON VERIFICATION OF RECOR DS, FOLLOWING FACTS ARE NOTICED : (1) AS PER BALANCE SHEET THERE IS A MINUS BALANCE OF RS . 1,56,77,454/- IN THE PARTNERS' CAPITAL ACCOUNT. AS PER DEED OF PARTNERSHIP, INTEREST @12% WAS PAYABLE BY THE FIRM ON THE CREDIT BALANCE IN THE PARTNER'S CAPITAL ACCOUNT. SIMILARLY WHEN THERE IS DEBIT BALA NCE I.E., MINUS BALANCE IN PARTNERS' CAPITAL ACCOUNT, INTEREST NEEDS TO BE CHARGED AND OFFERED AS INCOME OF THE FIRM. (2) AS PER TRADING A/C THERE WERE NO SALES BUT ASSESSEE FIRM DEBITED RS. 32,18,144/- TOWARDS SALES TAX AND NO SUPPORTING CHALLAN FOR THE PAYMENT OF SALES TAX WAS BROUGHT ON RECORD. SINCE THE ABOVE ISSUES HAVE NOT BEEN VERIFIED DURIN G THE ASSESSMENT PROCEEDINGS, I AM OF THE OPINION THAT TH E ORDER PASSED BY THE ASSESSING OFFICER U/S, 143 (3) R.W.S. 153C, DATED 25-12-2011 FOR THE AY 2008-09 IS ERRONEOUS IN SO FA R AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE, Y OU ARE GIVEN AN OPPORTUNITY OF BEING HEARD AS TO WHY, ON THIS AD DITIONAL ISSUE TOO, THE ORDER MADE BY THE ASSESSING OFFICER SHOULD NOT BE REVISED U/S. 263 OF THE IT ACT. FOR THIS PURPOSE, YO UR CASE IS POSTED FOR HEARING ON 24-03-2014 AT 12.40 P.M. YOU MAY APPEAR EITHER IN PERSON ON THE SAID DATE AT MY OFFICE OR T HROUGH YOUR AUTHORIZED REPRESENTATIVE AND FURNISH YOUR EXPLANAT ION IN WRITING. YOURS FAITHFULLY, SD/- (A.K.SATAPATHY) COMMISSIONER OF INCOME TAX (CENTRAL) HYDERABAD. 12 ITA.NO.901 TO 903, 905 TO 909 & 912/H/2014 MR. SYED RAFIUDDIN AND OTHERS, HYDERABAD. COPY TO: THE ADDL. COMMISSIONER OF INCOME TAX, CENTRAL RANGE- 3, HYDERABAD. THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -8, HYDERABAD, WITH A DIRECTION TO SERVE THE NOTICE ON THE ASSESSEE. OFFICE OF THE ASSISTANT COMMISSIONE R OF INCOME-TAX CENTRAL CIR CLE-8, HYDERABAD F.NO.ACIT,CC-8/263/13-14 DT.14-03- 2014 PROFORMA FOR INITIATING PROCEEDINGS U/S.263 FOR OBTA INING THE APPROVAL OF THE COMMISSIONER OF INCOME-TAX (CENTRAL), HYDERA BAD. 1. NAME AND ADDRESS OF THE ASSESSEE M/S. AASHI PLYWOOD INDUSTRIES, PLOT NO.5,6,7,18,19&20, IDA, PATANCHERU, HYDERABAD. 2. PA NO./ASST. YEAR/STATUS AADFP9625M/2008-09/FIRM 3. WARD/CIRCLE/RANGE CENTRAL CIRCLE-8, HYDERABAD. 4. ORDER U/S. & DATE OF THE ORDER SOUGHT FOR REVISION ORDER U/S.143(3) R.W.S.153C DATED 25-12-2011. 5. LIMITATION DATE FOR REVISION DT. 31-03-2014. 6. THE QUANTUM OF INCOME WHICH HAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. NOT QUANTIFIED. REASONS FOR INITIATION OF PROCEEDINGS U/S. 263 OF T HE IT ACT (1) AS PER BALANCE SHEET THERE IS A MINUS BALANCE OF RS . 1,56,77,454/- IN THE PARTNERS' CAPITAL ACCOUNT. AS PER DEED OF PARTNERSHIP, INTEREST @12% WAS PAYABLE BY THE FIRM ON THE CREDIT BALANCE IN THE PARTNER'S CAPITAL ACCOUNT. SIMILARLY WHEN THERE IS DEBIT BALA NCE I.E., MINUS BALANCE IN PARTNERS' CAPITAL ACCOUNT, INTEREST NEEDS TO BE CHARGED AND OFFERED AS INCOME OF THE FIRM. 13 ITA.NO.901 TO 903, 905 TO 909 & 912/H/2014 MR. SYED RAFIUDDIN AND OTHERS, HYDERABAD. (2) AS PER TRADING A/C WERE NO SALES BUT ASSESSEE FIRM DEBITED RS.32,18,144/- TOWARDS SALES TAX AND NO SUPPORTING CHALLAN FOR THE PAYMENT OF SALES TAX WAS BROUGHT ON RECORD. SINCE THE ABOVE ISSUES HAVE NOT BEEN VERIFIED DURIN G THE ASSESSMENT PROCEEDINGS, THE ORDER U/S 143(3) R.W.S. 153C PASSED EARLIER IS ERRONEOUS IN SO FAR AS IT IS PREJ UDICIAL TO THE INTEREST OF REVENUE. HENCE, A PROPOSAL U/S 263 ALON G WITH MRS IN 1 VOL. FOR AY 2008-09 IS HEREBY SUBMITTED FOR KI ND PERUSAL. ENCL : MRS IN 1 VOL. FOR AY 2008-09 SD/- ( RAJESH NATARAJAN) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CI RCLE-8, HYDERABAD. SUBMITTED TO THE COMMISSIONER OF INCOME-TAX (CENTRA L), HYDERABAD THROUGH THE ADDL. COMMISSIONER OF INCOME- TAX, CENTRAL RANGE-3, HYDERABAD. 5.2. THUS WE CAN SEE THAT EXCEPT FOR SOME COSMETIC CHARGES, THE REASONS ARE ADOPTED VERBATIM BY THE CIT. IN THESE CIRCUMSTANCES, WE FIND THAT T HE DECISION OF JAIPUR BENCH OF THE TRIBUNAL IN THE CAS E OF DHARMENDRA KUMAR BANSAL VS. CIT (SUPRA), IS SQUARELY APPLICABLE TO THE FACTS BEFORE US. RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE REVISION ORDERS PASSED BY THE LD. CIT ARE NOT MAINTAINABLE FOR WANT OF VALID INITIATION OF THE PROCEEDINGS UNDER SECTION 263 OF THE ACT. SINCE THE ADDITIONAL GROUND OF APPEAL OF THE ASSESSEE HAS BEE N ALLOWED, THE REGULAR GROUNDS ON MERITS OF THE REVIS ION HAVE BECOME ACADEMIC AND THEREFORE, WE DO NOT SEE ANY REASON TO ADJUDICATE THE SAME AT THIS STAGE. 8. IN THE CASE BEFORE US ALSO, SIMILAR CIRCUMSTANCES EXISTS AND FOR READY REFERENCE PARA 4 OF THE ASSESSMENT ORDER UNDER SECTION 143(3) READ WITH SEC TION 14 ITA.NO.901 TO 903, 905 TO 909 & 912/H/2014 MR. SYED RAFIUDDIN AND OTHERS, HYDERABAD. 263 OF THE I.T. ACT IN THE CASE OF SMT. INDRANI PRA SAD PLACED AT PAGE 80 OF THE PAPER BOOK IS REPRODUCED HEREUNDER WHEREIN SIMILAR OBSERVATIONS HAVE BEEN MA DE BY THE RESPECTIVE ASSESSING OFFICERS IN THE CASE OF OTHER ASSESSEES ALSO. 04. FURTHER, IT IS NOTICED THAT THE CAPITAL GAINS ARISING OUT OF TRANSFER OF 10.08 ACRES (WHICH WAS ERRONEOUSLY MENTIONED AS 10.8 ACRES IN THE CORRESPONDENCE HELD WITH THE ASSESSEE INCLUDING THE ORDER U/S 263) + 3 ACRES OF LAND AT SURVEY NO. 172, HYDER NAGAR OF WHICH THE ASSESSEE IS THE ACTUAL LEG AL OWNER. ALSO BY VIRTUE OF THE AGREEMENT OF SALE CUM GPA ENTERED INTO BY THE ASSESSEE WITH EIGHT ASSIGNEES WHO WERE CO-OWNERS OF THE LAND AT SURVEY NO. 78, HAFEEZPET, ASSESSEE IS THE OWNER OF THIS LA ND TOO; SINCE NO CAPITAL GAINS WERE DISCLOSED BY THE ASSESSEE IN THESE TWO SEPARATE LAND TRANSACTIONS WHICH TOOK PLACE THE ORDER PASSED EARLIER U/S 143(3 ) R.W.S, 153C BECAME ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE, A PROPOSAL FOR REVISION U/S 263 OF THE ORDER PASSED EARLIER U/S 143(3) R.W.S. 153C WAS SUBMITTED TO THE CIT(C), HYDERABAD ON 26/07/2013. ORDER U/S 263 WAS PASSED BY THE CIT(C), HYDERABAD SETTING ASIDE THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICE R U/S 143(3) R.W.S. 153C DATED 30-12-2011 WITH A DIRECTION TO QUANTIFY THE ACTUAL CAPITAL GAINS ARIS ING IN THE HANDS OF THE ASSESSEE IN RESPECT OF THE LAND TRANSACTIONS NOTED ABOVE AFTER MAKING NECESSARY VERIFICATION OF THE ABOVE ISSUES. IT WAS FURTHER DIRECTED TO LOOK INTO THE ASPECT OF PRICING OF THE LAND WHILE COMPUTING THE CAPITAL GAINS. 8.1. THEREFORE, RESPECTFULLY FOLLOWING THE DECISIO N OF THIS TRIBUNAL IN SIMILAR CIRCUMSTANCES, WE HOLD THA T THE REVISION PROCEEDINGS UNDER SECTION 263 OF THE I.T. ACT ARE NOT SUSTAINABLE. IN VIEW OF ALLOWING OF THE ADDITIO NAL 15 ITA.NO.901 TO 903, 905 TO 909 & 912/H/2014 MR. SYED RAFIUDDIN AND OTHERS, HYDERABAD. GROUNDS OF APPEAL NO. 21 AND 22 AND HOLDING THAT TH E ORDERS UNDER SECTION 263 ARE NOT SUSTAINABLE, THE O THER GROUNDS OF APPEAL NEED NO ADJUDICATION AS SUCH ADJUDICATION WOULD RESULT IN AN ACADEMIC EXERCISE. 9. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.01.2016. SD/- SD/- (S. RIAFAR RAHMAN) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 20 TH JANUARY, 2016 VBP/- COPY TO : 1. MR. SYED RAFIUDDIN, HYDERABAD. C/O. MR. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82. 2. MR. M. SURENDRANATH, HYDERABAD C/O. MR. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82. 3. SMT. INDRANI PRASAD, HYDERABAD. C/O. MR. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82. 4. MR. S. SATYANARAYANA, HYDERABAD. C/O. MR. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82. 5. MRS. L. PREETHA PRIYADARSHINI, HYDERABAD. C/O. MR. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82. 6. SMT. MAHITA PRASAD CADELL, HYDERABAD. C/O. MR. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82. 16 ITA.NO.901 TO 903, 905 TO 909 & 912/H/2014 MR. SYED RAFIUDDIN AND OTHERS, HYDERABAD. 7. DR. P.S. PRASAD, HYDERABAD. C/O. MR. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82. 8. MRS. L. LEENA PETERSON, HYDERABAD. C/O. MR. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82. 9. SMT. SUNITA PRASAD, HYDERABAD. C/O. MR. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82. 10. THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 3, HYDERABAD. 11. THE COMMISSIONER OF INCOME TAX (CENTRAL), 7 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 12. THE ADDL. CIT, C.R. - 3, HYDERABAD. 13. D.R. ITAT B BENCH, HYDERABAD. 14 . GUARD FILE