ACIT, Central Circle-3(2), Hyd., Hyderabad V. Vamadeva Greenlands Pvt.Ltd., Hyd, Hyderabad

ITA 925/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6210 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 20-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Keywords: Retrospective amendment; Reason to believe
• Section: 143(3); 147; 148

Judgement Text

ITA NO 925 AND CO 67 OF 2016 VAMADEVA GREENLANDS P LTD HYDERABAD PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.925/HYD/2016 (ASSESSMENT YEAR: 2008-09) ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(2), HYDERABAD VS M/S. VAMADEVA GREENLANDS PRIVATE LIMITED HYDERABAD PAN: AACCV 3280 C C.O. NO.67/HYD/2016 (ARISING OUT OF ITA NO.925/HYD/2016) (ASSESSMENT YEAR: 2008-09) M/S. VAMADEVA GREENLANDS PRIVATE LIMITED, HYDERABAD PAN: AACCV 3280 C VS ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(2), HYDERABAD FOR REVENUE : SMT. U. MINI CHANDRAN, DR FOR ASSESSEE : SHRI K.C. DEVDAS O R D E R PER SMT. P. MADHAVI DEVI, J.M. THE ABOVE APPEAL IS FILED BY THE REVENUE, WHILE THE CROSS OBJECTION IS FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT (A)-12, HYDERABAD, DATED 18.03.2016 FOR THE A.Y 2008-09. THE REVENUE IS AGGRIEVED BY THE ORDER OF THE CIT (A ) HOLDING THAT THE REOPENING OF THE ASSESSMENT U/S 147 OF THE ACT IS BAD IN LAW. DATE OF HEARING : 06.02.2017 DATE OF PRONOUNCEMENT : 10.02.2017 ITA NO 925 AND CO 67 OF 2016 VAMADEVA GREENLANDS P LTD HYDERABAD PAGE 2 OF 5 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY INVOLVED IN AGRICULTURAL ACTIVITIES, FILED ITS RETU RN OF INCOME FOR THE A.Y 2008-09 ON 29.09.2008 WHICH WAS SCRUTINIZED U/S 143(3) AND ASSESSMENT WAS COMPLETED ON 30.12.2010. THE ASSESSM ENT WAS REOPENED U/S 147 OF THE ACT BY RECORDING THE REASON S AS UNDER: IT IS SEEN FROM THE PROFIT AND LOSS ACCOUNT AND COMPUTATION OF TOTAL INCOME FILED ALONG WITH THE RETURN OF INCOME, THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.3,13,04,905 TOWARDS INTEREST PAYMENT TO SICOM LTD, A GOVT. OF MAHARASHTRA CORPORATION. HOWEVER, IT IS NOTICED THAT TDS WAS NOT DEDUCTED ON THE ABOVE PAYMENT AND HENCE THIS AMOUNT OF RS.3,13,04,905 PAID TOWARDS INTEREST PAID ON LOAN NEEDS TO BE DISALLOWED U/S 40(IA) OF THE ACT. 3. IN RESPONSE TO THE NOTICE ISSUED BY THE AO, THE ASSESSEE FURNISHED THE DETAILS AND THE AO HELD THAT THE TDS PROVISION IN RESPECT OF THE INTEREST PAID TO SICOM LTD IS NOT APPLICABLE. HE THEREFORE, ACCEPTED THE CONTENTIONS OF THE ASSESSEE. THEREAFTER, HE PROCEEDED TO CONSIDER OTHER ISSUES A ND COMPLETED THE ASSESSMENT BY MAKING CERTAIN DISALLOWANCES. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) CHALLENGING BOTH THE VALIDITY OF THE REOPENING OF THE ASSESSMENT AND ALSO THE ADD ITIONS MADE BY THE AO. THE CIT (A) HELD THAT THE REOPENING OF T HE ASSESSMENT IS BAD IN LAW, AS NO ADDITION WAS MADE ON THE GROUN D ON WHICH THE ASSESSMENT WAS REOPENED AND THE ADDITIONS WERE CONFINED TO OTHER ISSUES TO WHICH NO REASONS WERE RECORDED. FOR COMING TO THIS CONCLUSION, THE CIT (A) RELIED UPON THE DECISI ON OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET AIRWAY S (INDIA) LTD, REPORTED IN 331 ITR 236. AGAINST THE ORDER OF THE C IT (A), THE REVENUE IS IN APPEAL BEFORE US, WHILE THE ASSESSEE HAS FILED THE CROSS OBJECTIONS SEEKING ADJUDICATION OF THE ISSUES ON MERIT. ITA NO 925 AND CO 67 OF 2016 VAMADEVA GREENLANDS P LTD HYDERABAD PAGE 3 OF 5 4. THE LEARNED DR SUPPORTED THE ORDER OF THE AO AND ALSO RELIED UPON THE EXPLANATION 3 TO SECTION 147 INSERT ED BY THE FINANCE ACT OF 2009 WITH RETROSPECTIVE EFFECT FROM 1 .4.1989. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, SUPPORTED THE ORDER OF THE CIT (A). 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSMENT HAS BEEN REOPENED ONLY ON ONE GROUND I.E. TDS TO BE MADE ON INTEREST PAYMENT TO SICOM LTD. AS RECORDED BY THE AO HIMSELF IN THE ASSESSMENT ORDER, THE AO HAS ACCEPTED THAT THE TDS PROVISION IS NOT APPLICABLE TO THIS PAYMENT AND THEREFORE, THE P ROVISIONS OF SECTION 40(IA) OF THE ACT ARE ALSO NOT ATTRACTED. T HEREFORE, THE REASON FOR WHICH THE ASSESSMENT HAS BEEN REOPENED D ID NOT SURVIVE. THE ADDITIONS MADE BY THE AO ARE ON THE GR OUNDS WHICH WERE NOT PART OF THE REASONS FOR REOPENING OF THE A SSESSMENT. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JE T AIRWAYS (INDIA) LTD (CITED SUPRA) HAS CONSIDERED EXPLANATIO N 3 TO SECTION 147 OF THE ACT AND HAS HELD AS UNDER: EXPLANATION 3 LIFTS THE EMBARGO, WHICH WAS INSERTED BY JUDICIAL INTERPRETATION, ON THE MAKING OF AN ASSESS MENT OR REASSESSMENT ON GROUNDS OTHER THAN THOSE ON THE BAS IS OF WHICH A NOTICE WAS ISSUED UNDER SECTION 148 SETTING OUT THE REASONS FOR THE BELIEF THAT INCOME HAD ESCAPED ASSE SSMENT. THOSE JUDICIAL DECISIONS HAD HELD THAT WHEN THE ASS ESSMENT WAS SOUGHT TO BE REOPENED ON THE GROUND THAT INCOME HAD ESCAPED ASSESSMENT ON A CERTAIN ISSUE, THE ASSESSIN G OFFICER COULD NOT MAKE AN ASSESSMENT OR REASSESSMENT ON ANO THER ISSUE WHICH CAME TO HIS NOTICE DURING THE PROCEEDIN GS. THIS INTERPRETATION WILL NO LONGER HOLD THE FIELD AFTER THE INSERTION OF EXPLANATION 3 BY THE FINANCE ACT (NO. 2) OF 2009. ITA NO 925 AND CO 67 OF 2016 VAMADEVA GREENLANDS P LTD HYDERABAD PAGE 4 OF 5 HOWEVER, EXPLANATION 3 DOES NOT AND CANNOT OVERRIDE THE NECESSITY OF FULFILLING THE CONDITIONS SET OUT IN T HE SUBSTANTIVE PART OF SECTION 147. AN EXPLANATION TO A STATUTORY PROVISION IS INTENDED TO EXPLAIN ITS CONTENTS AND CANNOT BE CONS TRUED TO OVERRIDE IT OR RENDER THE SUBSTANCE AND CORE NUGATO RY. SECTION 147 HAS THIS EFFECT THAT THE ASSESSING OFFICER HAS TO ASSESS OR REASSESS THE INCOME ('SUCH INCOME') WHICH ESCAPED ASSESSMENT AND WHICH WAS THE BASIS OF THE FORMATION OF BELIEF AND IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS A NY OTHER INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH, COME S TO HIS NOTICE DURING THE COURSE OF THE PROCEEDINGS. HO WEVER, IF AFTER ISSUING A NOTICE UNDER SECTION 148, HE ACCEPT ED THE CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOM E WHICH HE HAS INITIALLY FORMED A REASON TO BELIEVE HAD ESCAPE D ASSESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASS ESSMENT, IT IS NOT OPEN TO HIM INDEPENDENTLY TO ASSESS SOME OTH ER INCOME. IF HE INTENDS TO DO SO, A FRESH NOTICE UNDER SECTIO N 148 WOULD BE NECESSARY, THE LEGALITY OF WHICH WOULD BE TESTED IN THE EVENT OF A CHALLENGE BY THE ASSESSEE. IN VIEW OF THE SAME, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE CIT (A) WHICH IS IN CONSONANCE WITH THE ABOVE D ECISION OF THE HON'BLE BOMBAY HIGH COURT. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 8. SINCE THE REVENUES APPEAL HAS BEEN DISMISSED AN D THE CIT (A)S FINDING THAT THE RE-ASSESSMENT IS INV ALID IS UPHELD, WE SEE NO REASON TO ADJUDICATE THE CROSS OBJECTIONS OF THE ASSESSEE ON MERITS OF THE ADDITIONS WHICH WERE NOT ADJUDICATED BY THE CIT (A) AS IT WOULD ONLY RESULT IN AN ACADEMIC EXERCISE AT THIS STAGE. THE MERITS OF THE ADDITIONS ARE LEFT OPEN FO R ADJUDICATION AT THE RELEVANT POINT OF TIME, IF THE NEED SO ARISES. ITA NO 925 AND CO 67 OF 2016 VAMADEVA GREENLANDS P LTD HYDERABAD PAGE 5 OF 5 9. IN THE RESULT, BOTH THE REVENUES APPEAL AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH FEBRUARY, 2017. SD/- SD/- (INTURI RAMA RAO) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEM BER HYDERABAD, DATED 10 TH FEBRUARY, 2017. VINODAN/SPS COPY TO: 1 ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(2) 3 RD FLOOR, POSNETT BHAVAN, TILAK ROAD, HYDERABAD 2 M/S.VAMADEVA GREENLANDS P LTD, R.K. RESIDENCY, H. NO.8-3- 229/D/32, 3 RD FLOOR, VENKATAGIRI, YOUSUFGUDA, HYDERABAD 3 CIT (A)-12 HYDERABAD 4 PR. CIT (CENTRAL), HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER