ACIT, Circle-1, Nellore, Nellore V. Dr. S.V. Krishna Reddy, Nellore, Nellore

ITA 961/HYD/2015

• Counselvise Citation: 96122514 RSA 2015
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 21-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Keywords: Search and seizure; Difference of opinion
• Section: 143(3); 54F; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO. 961/HYD/2015 ASSESSMENT YEAR: 2006-07 ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 1, NELLORE. VS. SV KRISHNA REDDY, NELLORE PAN AIQPS3714H (APPELLANT) (RESPONDENT) C.O. NO. 58/H/2015 (IN ITA NO. 961/HYD/2015 ASSESSMENT YEAR: 2006-07) SV KRISHNA REDDY, NELLORE PAN AIQPS3714H VS. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 1, TIRUPATHI. (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI M. SITARAM ASSESSEE BY : SHRI AMRIT KUMAR KOTA DATE OF HEARING 15-10-2015 DATE OF PRONOUNCEMENT 16-10-2015 O R D E R PER P. MADHAVI DEVI, J.M.: THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORD ER DATED 21/04/2015 OF LD. CIT(A), TIRUPATHI, DELETING THE PENALTY U/S 271(1)(C) OF THE IT ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE RELE VANT AY ON 12/01/2007 DECLARING TOTAL INCOME OF RS. 1,51,590. THERE WAS A 2 ITA NO. 961 /HYD/2015& C.O. 58/H/15 CSV KRISHNA REDDY SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT ON 03/11/2006 IN THE BUSINESS AS WELL AS RESIDENTIAL PREMISES OF ASSESSE E. IN THE ASSESSMENT COMPLETED U/S 143(3) ON 26/11/2008, THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT RS. 57,23,503, WHICH INCLUDED THE ADDITION OF RS. 19,02,349 (TOWARDS DIFFERENCE IN CO ST OF CONSTRUCTION OF NURSING SCHOOL) MADE ON THE BASIS OF THE VALUATI ON REPORT OF THE VALUATION CELL. FURTHER, THE ASSESSEES CLAIM OF DE DUCTION U/S 54F WAS ALSO REJECTED ON THE GROUND THAT ASSESSEE HAS N OT INVESTED IN A RESIDENTIAL PROPERTY BUT HAS INVESTED IN A COMMERCI AL COMPLEX. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), WHO CONFIRMED THE ORDER OF AO AND ASSESSEE FURTHER FIL ED AN APPEAL BEFORE THE ITAT, WHICH HAS BEEN PARTLY ALLOWED. THE TRIBUNAL CONFIRMED THE DISALLOWANCE OF THE EXEMPTION CLAIMED BY ASSESSEE U/S 54F OF THE IT ACT AND THE ASSESSEE DID NOT PREFER A NY FURTHER APPEAL AGAINST THE ORDER OF ITAT. 3. THEREAFTER, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE IT ACT BY ISSUING NOTICE U/S 274 READ WITH S ECTION 271(1)(C) OF THE ACT. IN REPLY TO THE SAME, ASSESSEE FILED HIS D ETAILED SUBMISSIONS. AO, HOWEVER, WAS NOT CONVINCED BY THE ASSESSEES CO NTENTIONS AND LEVIED A MINIMUM PENALTY OF 100% OF THE TAX SOUGHT TO BE EVADED OF RS. 8,39,163. AGGRIEVED, ASSESSEE PREFERRED AN APP EAL BEFORE THE LD. CIT(A), WHO ALLOWED THE SAME BY FOLLOWING THE DECIS ION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER AYS 200 3-04 TO 2005-06. AGGRIEVED BY THE RELIEF GIVEN BY CIT(A), REVENUE IS IN APPEAL BEFORE US. 4. WHILE THE LD. DR SUPPORTED THE ORDER OF AO, THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF CIT(A) AND HAS ALSO SUBMITTED THAT SIMILAR ISSUE CAME UP FOR CONSIDERAT ION BEFORE THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE AYS 2003-04 TO 2005-06 WHEREIN THE TRIBUNAL HAS CONSIDERED THE ISSUE AT LE NGTH AND HAS HELD AS UNDER: 3 ITA NO. 961 /HYD/2015& C.O. 58/H/15 CSV KRISHNA REDDY 6. EVEN WITH REGARD TO THE PENALTY IMP OSED ON THE BASIS OF REJECTION OF THE ASSESSEES CLAIM FOR EXEMPTION UN DER S.54F OF THE ACT, WE FIND THAT THE ASSESSEE HAS CLAIMED EXEMPTION UNDER S.54F IN RESPECT OF HOSTEL BUILDING. THE TRIBUNAL IN ITS ORDER DATED 29.10.2010 NOTED ABOVE , IN THE QUANTUM APPEAL OF THE ASSESSEE HAS RECORDED THAT IT IS NOT THE CASE OF THE ASSESSEE THAT ANY RESIDENTIAL HOUSE WAS CONSTRUCTED. THUS, WE FIND THAT THE ASS ESSEE HAS DISCLOSED ALL MATERIAL FACTS RELATING TO ITS ASSESSMENT TRULY AND CORRECT LY AND THERE IS NO ATTEMPT ON THE PART OF THE ASSESSEE TO MISLEAD THE DEPARTMENT. THE EXP LANATION OF THE ASSESSEE SEEMS TO BE BONA FIDE. THIS IS A CASE OF HONEST DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE DEPARTMENT REGARDING THE APPLICABILITY OF A B ENEFICIAL PROVISION OF LAW,VIZ. S.54F. ALTHOUGH THE PROVISION OF EXEMPTION UNDER S.54F OF THE ACT DOES NOT APPLY TO THE CONSTRUCTION OF A HOSTEL BUILDING, THE FACTS OF TH E CASE LEAD TO THE CONCLUSION THAT THE CONDUCT OF THE ASSESSEE IN CLAIMING THE BENEFIT UN DER S.54F OF THE ACT, WAS BONA FIDE AND HE HAS DISCLOSED ALL THE FACTS TRULY AND CORRE CTLY. MERELY BECAUSE A CLAIM OF DEDUCTION WAS NOT ALLOWABLE IN ACCORDANCE WITH THE SCHEME OF THE ACT, IT DOES NOT FOLLOW THAT THE ASSESSEE WOULD BE LIABLE TO IMPOS ITION OF PENALTY UNDER S.271(1)(C) OF THE ACT, WITHOUT ANY MATERIAL BROUGHT ON RECORD TO JUSTIFY THE PENALTY. IN THESE FACTS OF THE CASE, WE HOLD THAT THE ASSESSEE IS NOT LIABLE FOR PENALTY UNDER S.271(1)(C) OF THE ACT EVEN IN RESPECT OF REJECTION OF ITS CLAIM FOR EXE MPTION UNDER S.54F OF THE ACT. WE ACCORDINGLY CANCEL THE PENALTIES LEVIED UNDER S.27 1(1)(C) OF THE ACT FOR ALL THE THREE ASSESSMENT YEARS, VIZ. 2003-04, 2004-05 AND 2005-0 6 AND CONSEQUENTLY, THE GROUNDS OF APPEAL OF THE ASSESSEE IN THESE APPEALS ARE ALLOWED. 5. WE FIND THAT VERY SAME FACTS EXIST DURING THE RE LEVANT AY AND THE CIT(A) HAS ONLY FOLLOWED THE DECISION OF THE TR IBUNAL TO GRANT RELIEF TO ASSESSEE. THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THE REVENUES APPEAL IS ACCORDI NGLY DISMISSED. 6. C.O. FILED BY ASSESSEE IS ONLY TO SUPPORT THE OR DER OF LD. CIT(A) AND, THEREFORE, C.O IS REJECTED. 7. IN THE RESULT, REVENUES APPEAL AS WELL AS C.O. OF ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 16 TH OCTOBER, 2015. SD/- SD/- (P.M. JAGTAP) (P. MADHAVI DEVI) ACCOUNTANT MEMBER J UDICIAL MEMBER HYDERABAD, DATED: 16 TH OCTOBER, 2015 KV 4 ITA NO. 961 /HYD/2015& C.O. 58/H/15 CSV KRISHNA REDDY COPY TO:- 1) ACIT, CIRCLE 1, 24-2-438, GNT ROAD, DARGAMITT A, NELLORE 2) DR. S.V. KRISHNA REDDY, 16/1727, RAMAMURTHY NAG AR, NELLORE. 3 CIT(A), TIRUPATHI 4) CIT, TIRUPATHI 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.