Smt. Indrani Prasad, Hyderabad V. Commissioner of Income Tax-(Central), Hyderabad

ITA 904/HYD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6063 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-12-2015
• Assessment Year: 2010-2011
• 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.904/HYD/2014 ASSESSMENT YEAR 2010-2011 SMT. INDRANI PRASAD HYDERABAD. PAN AANPI5216K VS. ACIT, CENTRAL CIRCLE - 3 HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. P. MURALIMOHAN RAO FOR REVENUE : MR. KONDA RAMESH DATE OF HEARING : 22 . 12 .2015 DATE OF PRONOUNCEMENT : 29 . 01 .201 6 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y. 2010- 2011 AGAINST THE ORDER OF THE LD. CIT UNDER SECTION 263 OF THE I.T. ACT, 1961. 2. THE ASSESSEE IS AN INDIVIDUAL SHOWING INCOME FROM OTHER SOURCES. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT IN THE CASE OF MBS JEWELLERS GROUP, HYDERABAD DURING WHICH CERTAIN EVIDENCE RELATING TO REAL ESTATE TRANSACTIONS BETWEEN THE MBS GROUP AND THE G OLD STONE GROUP WAS FOUND. THE EVIDENCE FOUND DURING SEARCH SHOWED THAT THE ASSESSEE WAS THE AGREEMENT O F SALE CUM- GPA HOLDER OF THE LAND INVOLVED IN THE R EAL 2 ITA.NO.904/HYD/2014 SMT. INDRANI PRASAD, HYDERABAD. ESTATE TRANSACTIONS AND THAT SUBSEQUENTLY, THE LAND WAS SOLD TO A THIRD PARTY AND THE ISSUE OF CAPITAL GAIN S ARISING OUT OF SUCH TRANSACTION IN THE HANDS OF THE ORIGINA L OWNERS OF THE LAND AND ALSO IN THE HANDS OF THE ASS ESSEE HEREIN WAS CONSIDERED BY THE A.O. AND WAS ACCORDING LY BROUGHT TO TAX. ON APPEAL, THE ADDITIONS WERE CONFI RMED BY THE CIT(A) AND ALL THE LAND OWNERS AS WELL AS TH E ASSESSEE ARE IN APPEAL BEFORE US RAISING SIMILAR GR OUNDS OF APPEAL. THUS, THE FACTS IN THIS CASE ARE SIMILAR TO THE FACTS IN THE CASE OF MR. SYED RAFIUDDIN AND OTHERS IN ITA .NOS. 901 TO 903/HYD/2014, 905 TO 909/HYD/2014 AND 912/HYD/ 2014 AND A BENCH OF THIS TRIBUNAL DISPOS ED OF ABOVE BATCH OF THE CASES BY ORDER DATED 20.01.2016. THE ASSESSEE WAS ONE OF THE ASSESSEE THEREIN AND THE FA CTS ARE ALSO SIMILAR. HOWEVER, SINCE THE PRESENT APPEAL COU LD NOT BE DISPOSED OF ALONG WITH OTHER APPEALS, WE ARE DIS POSING OF THE PRESENT APPEAL BY RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH OF THIS TRIBUNAL DATED 20.01.2 016 IN ITA.NOS.901 TO 903/HYD/2014, 905 TO 909/HYD/2014 AND 912/HYD/2014 AND FOR READY REFERENCE, THE RELEV ANT OBSERVATIONS OF THE TRIBUNAL ARE REPRODUCED AS UNDE R: 2. BRIEF FACTS OF THE CASE ARE THAT THERE WAS A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE I.T. ACT IN THE CASE OF M/S. MBS JEWELLERS P. L TD., AND ITS GROUP ON 11.03.2010. DURING THE COURSE OF SEARCH, CERTAIN DOCUMENTS RELATING TO THE ASSESSEES HEREIN WERE FOUND AND SEIZED AND ACCORDINGLY, NOTICES UNDER SECTION 153C OF THE I.T. ACT WERE ISS UED TO THE RESPECTIVE ASSESSEES AND IN RESPONSE TO THE SAID NOTICE, THE ASSESSEES FILED THEIR RETURNS OF INCOME FOR THE RELEVANT ASSESSMENT YEAR. THEREAFTER , 3 ITA.NO.904/HYD/2014 SMT. INDRANI PRASAD, HYDERABAD. THE ASSESSMENTS WERE COMPLETED UNDER SECTION 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, HAFEEZ PET (V), SERILINGAMPALLY (M), R.R. DISTRICT. THE A.O. OBSERVED THAT THERE WERE 8 ASSIGNEES/OWNERS OF AC.5.00 OF LAND IN THE UNDIVIDED AC.40.00 OF LAND A T 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. IND RANI PRASAD W/O. DR. P.S. PRASAD ONE OF 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 ATTORNE Y VIDE THREE DIFFERENT SALE DEEDS, SOLD THEIR PIECE O F LAND AND THE A.O. WAS OF THE OPINION THAT THE CAPIT AL GAINS ARISING 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. 2007-08 AND HENCE, ASSESSEE HAS NOT OFFERED THE CAPITAL GAINS. THE A.O . HOWEVER HELD THAT THE ASSESSEES HAVE TRANSFERRED 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. THEREFORE, HE HELD THAT THE CAPITAL GAIN S ARE TO BE ASSESSED IN THE HANDS OF THE RESPECTIVE ASSESSEES ON PROTECTIVE BASIS IN THE RATIO OF THEIR SHARE. HE ALSO EXAMINED THE SALE CONSIDERATION RECEIVED ON TRANSFER OF AC.10.00 OF LAND AT HYDERAB AD TO M/S. OM METAL DEVELOPERS P. LTD., AND BROUGHT TH E 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 AND IS THE AGREEMENT OF SALE CUM GPA HOLDER, THE ASSESSMENT WAS COMPLETED BRINGING THE CAPITAL GAINS TO TAX. 4 ITA.NO.904/HYD/2014 SMT. INDRANI PRASAD, HYDERABAD. 3. SUBSEQUENTLY, THE LD. CIT UNDER SECTION 263 OF THE I.T. ACT EXAMINED THE ASSESSMENT RECORDS OF THE 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 23.04.2008, THE VALUE OF WHICH WAS TAKEN A T RS.5 CRORE PER ACRE WHEREAS IN THE SECOND SALE WHIC H TOOK PLACE ON 25.07.2008, THE VALUE OF THE LAND WAS TAKEN AT RS.1.3 CRORE PER ACRE AND THUS THERE IS A HUGE VARIATION IN THE MARKET VALUE OF THE LAND THOU GH THE LANDS ARE SITUATED IN THE SAME LOCALITY AND NO REASON FOR SUCH VARIATION IS FORTHCOMING FROM THE ASSESSMENT ORDER. HE OBSERVED THAT THE A.O. HAS NOT VERIFIED THIS ISSUE WHILE PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3) READ WITH SECTION 153C O F THE I.T. ACT DATED 26.12.2011 AND HENCE, HELD THAT THE ASSESSMENT ORDER IS BOTH ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. HE THEREFORE, DIRECTED THE A.O. TO RE-EXAMINE THE ENTI RE 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 ASSESSEE HAS RAISED 12 GROUNDS OF APPEAL AGAINST THE JURISDICTION OF THE LD. CIT UNDER SECTION 263 A ND ALSO ON THE MERITS OF THE ISSUE DIRECTED BY THE LD. CIT FOR RE-CONSIDERATION. SUBSEQUENTLY, VIDE LETTER DA TED 25.08.2015, ASSESSEE RAISED ADDITIONAL GROUNDS OF APPEAL I.E., GROUND NOS. 13 TO 20 AGAINST THE JURISDICTION OF THE LD. CIT IN ASSUMING JURISDICTIO N UNDER SECTION 263 OF THE ACT ON THE GROUND THAT THE ORDER PASSED BY THE A.O. UNDER SECTION 143(3) READ WITH SECTION 153C OF THE ACT BECOMES INVALID ON 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 THEREFORE, CONSEQUENTLY, THE IMPUGNED REVISION ORDE R UNDER SECTION 263 OF THE ACT ALSO WOULD BECOME 5 ITA.NO.904/HYD/2014 SMT. INDRANI PRASAD, HYDERABAD. INVALID. SUBSEQUENTLY, 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 AS ON FAC TS IN INVOKING THE PROVISIONS OF SECTION 263 OF THE AC T 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 T HE LD. CIT UNDER SECTION 263 OF THE ACT AND THEREFORE, THEY ARE ADMITTED AND CONSIDERED FOR ADJUDICATION. 5. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE, MR. P. MURALIMOHAN RAO, SUBMITTED THAT THE 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 RELATABLE TO THE INCRIMINATING MATERIAL FOUN D AND SEIZED DURING THE COURSE OF SEARCH, BELONGS TO THE ASSESSEES HEREIN. THUS, ACCORDING TO HIM, ASSESSMENT ORDER ITSELF IS INVALID AND CONSEQUENTLY , THE REVISION ORDER IS ALSO TO BE QUASHED. HE HAS AL SO DRAWN OUR ATTENTION TO THE ORDER GIVING EFFECT TO T HE REVISION ORDER I.E., ASSESSMENT ORDER PASSED UNDER 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 THE A.O. HE SUBMITTED THAT IT WAS ONLY ON RECEIPT O F THE ORDER GIVING EFFECT TO THE ORDER OF LD. CIT UND ER SECTION 263, THAT ASSESSEE HAS COME TO KNOW THAT TH E REVISION PROCEEDINGS HAVE BEEN INITIATED AT THE BEH EST OF THE A.O. AND THEREFORE, ACCORDING TO HIM, THE LD . CIT HAS NOT APPLIED HIS MIND BEFORE INITIATING REVISIONARY PROCEEDINGS AND THEREFORE, THE REVISION ORDERS ARE NOT SUSTAINABLE. IN SUPPORT OF THESE CONTENTIONS, THE LD. COUNSEL HAS RELIED UPON THE FOLLOWING JUDGMENTS AND HAS ALSO FILED COPIES OF TH E 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 6 ITA.NO.904/HYD/2014 SMT. INDRANI PRASAD, HYDERABAD. 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 TH IS CONTENTION ALSO, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS TRIBUNAL IN THE GROUP CASES OF THE ASSESSEE I.E., M/S. TRINITY INFRA VENTURES LTD., NE W DELHI VS. DCIT, C.C.2(1), HYDERABAD IN ITA.NOS.584 TO 589/H/2015 DATED 04.12.2015, HAS HELD THAT 263 PROCEEDINGS CANNOT BE INITIATED WITHOUT REVISING TH E DIRECTIONS OF THE ADDL. CIT GIVEN UNDER SECTION 153 D OF THE I.T. ACT. HE HAS SUBMITTED THAT THE TRIBUNAL HAS FOLLOWED THE DECISIONS OF EARLIER BENCHES OF THIS TRIBUNAL 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 DECISIONS ARE FILED BEFOR E US. 6. THE LD. D.R. HOWEVER, OPPOSED THE CONTENTIONS OF THE ASSESSEE AND SUBMITTED THAT THE LD. CIT HAVE CONSIDERED THE ISSUES IN THEIR PROPER PERSPECTIVE BEFORE REVISING THE ASSESSMENT ORDERS. THEREFORE, ACCORDING TO HIM, NO INTERFERENCE IS CAL LED 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. ACT WHEREIN AT PARA-3 OF THE ORDER, THE A.O. H AS RECORDED AS UNDER : 3. ACCORDINGLY, THE SAME WAS ASSESSED AS SHORT TERM CAPITAL GAIN (VIDE ORDER U/S 154 OF THE IT 7 ITA.NO.904/HYD/2014 SMT. INDRANI PRASAD, HYDERABAD. 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 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 ASSESSI NG OFFICER. THIS ISSUE HAS BEEN CONSIDERED BY THE B BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. AASHI PLYWOOD INDUSTRIES 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 CASE OF M/S. MBS JEWELLERS P. L TD., AND ITS GROUP ON 11.03.2010, (TO WHICH BOTH OF US ARE SIGNATORIES) AND AT PARA-5 OF THE ORDER, THE TRIBUN AL 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 THE I.T. 8 ITA.NO.904/HYD/2014 SMT. INDRANI PRASAD, HYDERABAD. ACT BY HOLDING THAT THE ASSESSMENT ORDER PASSED 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 AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS ABUNDANTLY CLEAR 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 OF THE ACT. THEREFORE, IT CAN BE SAID THAT THE LEARNED CIT HAD NOT APPLIED HIS MIND BUT THE MATTER WAS REFERRED BY THE AO FOR INITIATING THE PROCEEDING UNDER S. 263 OF THE ACT. IN THE PRESENT CASE, FROM PARA 3 OF THE IMPUGNED ORDER, IT IS NOTICED THAT THE NOTICE DT. 9TH JAN., 2013 UNDER S. 263 OF THE ACT WAS ISSUED ONLY ON RECEIPT OF THE PROPOSAL UNDER S. 263 OF THE ACT FROM THE ITO, WARD-L (2), KOTA 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, WARD-2, SAWAI MADHOPUR. IT IS WELL-SETTLED THAT THE LEARNED 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 PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH 9 ITA.NO.904/HYD/2014 SMT. INDRANI PRASAD, HYDERABAD. INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY. THEREFORE, BEFORE TAKING ANY ACTION, LEARNED CIT HIMSELF SHALL APPLY HIS MIND AFTER EXAMINING THE RECORD OF ANY PROCEEDINGS AND HIS SATISFACTION IS MUST. HOWEVER, IN THE PRESENT CASE, THE SATISFACTION WAS OF THE ITO (TECH.) WHO PROPOSED ACTION UNDER S. 263 OF THE ACT, BUT NOT OF THE LEARNED CIT. THEREFORE, ISSUANCE 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 ASIDE THE SAME. FOR THE AFORESAID VIEW, WE ARE FORTIFIED BY THE VARIOUS JUDICIAL PRONOUNCEMENTS RELIED BY THE LEARNED COUNSEL FOR THE ASSESSEE. 5.1. IN THE CASE BEFORE US, THE LD. CIT HAS RECEIVED THE PROPOSAL FROM THE A.O. FOR REVISING THE ASSESSMENT ORDER AND ALSO ISSUED NOTICE UNDER SECTION 263, BOTH ON THE SAME DATE. ON OUR DIRECTION, THE LD. D.R. HAS FILED COPIES OF THE PROPOSALS UNDER 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 BROUGHT TO THE NOTICE OF THE LD. CIT BY A.O. IN THE PROFORMA FOR INITIATING PROCEEDINGS, ARE REFLECTED AS THE REASONS FOR REVISING THE ASSESSMENT ORDER. THUS, IT IS CLEAR THAT 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 HAS 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 THE ASSESSMENT RECORDS TO INDEPENDENTLY TO COME TO THE CONCLUSION THAT THE ASSESSMENT ORDER IS 10 ITA.NO.904/HYD/2014 SMT. INDRANI PRASAD, HYDERABAD. ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE. 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. SIR, SUB: INCOME TAX ASSESSMENT - YOUR OWN - ASST YEAR 2008-09 - 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, DETERMINING TAXABLE INCOME AT RS. NIL. ON VERIFICATION OF RECORDS, 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 BALANCE I.E., MINUS BALANCE IN PARTNERS' CAPITAL ACCOUNT, INTEREST 11 ITA.NO.904/HYD/2014 SMT. INDRANI PRASAD, HYDERABAD. 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 DURING THE ASSESSMENT PROCEEDINGS, I AM OF THE OPINION THAT THE 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 FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE, YOU ARE GIVEN AN OPPORTUNITY OF BEING HEARD AS TO WHY, ON THIS ADDITIONAL ISSUE TOO, THE ORDER MADE BY THE ASSESSING OFFICER SHOULD NOT BE REVISED U/S. 263 OF THE IT ACT. FOR THIS PURPOSE, YOUR 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 THROUGH YOUR AUTHORIZED REPRESENTATIVE AND FURNISH YOUR EXPLANATION IN WRITING. YOURS FAITHFULLY, SD/- (A.K.SATAPATHY) COMMISSIONER OF INCOME TAX (CENTRAL) 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. *** 12 ITA.NO.904/HYD/2014 SMT. INDRANI PRASAD, HYDERABAD. OFFICE OF THE ASSISTANT COMMISSIONER OF INC OME-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 OBTAI NING THE APPROVAL OF THE COMMISSIONER OF INCOME-TAX (CENTRAL), HYDERABAD. 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 - 201 4. 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 13 ITA.NO.904/HYD/2014 SMT. INDRANI PRASAD, HYDERABAD. THERE IS DEBIT BALANCE 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 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 DURING THE ASSESSMENT PROCEEDINGS, THE ORDER U/S 143(3) R.W.S. 153C PASSED EARLIER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. HENCE, A PROPOSAL U/S 263 ALONG WITH MRS IN 1 VOL. FOR AY 2008-09 IS HEREBY SUBMITTED FOR KIND PERUSAL. ENCL : MRS IN 1 VOL. FOR AY 2008-09 SD/- ( RAJESH NATARAJAN) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIR CLE-8, HYDERABAD. SUBMITTED TO THE COMMISSIONER OF INCOME-TAX (CENTRAL), 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 THE DECISION OF JAIPUR BENCH OF THE TRIBUNAL IN THE CASE 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 14 ITA.NO.904/HYD/2014 SMT. INDRANI PRASAD, HYDERABAD. THE PROCEEDINGS UNDER SECTION 263 OF THE ACT. SINCE THE ADDITIONAL GROUND OF APPEAL OF THE ASSESSEE HAS BEEN ALLOWED, THE REGULAR GROUNDS ON MERITS OF THE REVISION 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 SECTION 263 OF THE I.T. ACT IN THE CASE OF SMT . INDRANI PRASAD PLACED AT PAGE 80 OF THE PAPER BOOK IS REPRODUCED HEREUNDER WHEREIN SIMILAR OBSERVATIONS HAVE BEEN MADE 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 LEGAL 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 LAND 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 OFFICER U/S 143(3) R.W.S. 153C DATED 30-12-2011 WITH A DIRECTION TO QUANTIFY THE ACTUAL CAPITAL GAINS ARISING IN THE HANDS OF THE ASSESSEE IN RESPECT 15 ITA.NO.904/HYD/2014 SMT. INDRANI PRASAD, HYDERABAD. 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 DECISION OF THIS TRIBUNAL IN SIMILAR CIRCUMSTANCES, WE HOLD THAT THE REVISION PROCEEDINGS UNDER SECTION 26 3 OF THE I.T. ACT ARE NOT SUSTAINABLE. IN VIEW OF ALL OWING OF THE ADDITIONAL GROUNDS OF APPEAL NO. 21 AND 22 AND HOLDING THAT THE ORDERS UNDER SECTION 263 ARE N OT SUSTAINABLE, THE OTHER GROUNDS OF APPEAL NEED NO ADJUDICATION AS SUCH ADJUDICATION WOULD RESULT IN A N ACADEMIC EXERCISE. 9. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. 3. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH DATED 20.01.2016 (CITED SUPRA), WE PARTLY ALLOW THE APPEAL OF THE ASSESSEE. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.01.2016. SD/- SD/- (S. RIAFAR RAHMAN) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 29 TH JANUARY, 2016 VBP/- 16 ITA.NO.904/HYD/2014 SMT. INDRANI PRASAD, HYDERABAD. COPY TO : 1. SMT. INDRANI PRASAD, HYDERABAD. C/O. MR. P. MURALI & CO., CHARTER7ED ACCOUNTANTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82. 2 . THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, HYDERABAD. 3 . THE COMMISSIONER OF INCOME TAX (CENTRAL), 7 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 4 . THE ADDL. CIT, C.R. - 3, HYDERABAD. 5 . D.R. ITAT A BENCH, HYDERABAD. 6 . GUARD FILE