Sarnala Sayababu, Guntur V. The Income Tax Officer, Ward-2(3), , Guntur

ITA 98/VIZ/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2533 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 15-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Capital Gains
• Section: 6; 143(3)

Judgement Text

आयकर अपीऱीयअधिकरण, विशाखापटणम पीठ, विशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री द ु व्ि ू रु आर एऱ रेड्डी, न्याययक सदस्य एिं श्री एस बाऱाक ृ ष्णन, ऱेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अऩीऱ सं./ I.T.A. No.98/Viz/2021 (ननधधारण वषा / Assessment Year : 2016-17) Sarnala Sayababu, Guntur. PAN: AHEPS 0990 A Vs. Income Tax Officer, Ward-2(3), Guntur. (अऩीऱधथी/ Appellant) (प्रत्यथी/ Respondent) अऩीऱधथी की ओर से/ Appellant by : Sri GVN Hari प्रत्यधथी की ओर से / Respondent by : Sri MN Murthy Naik, CIT-DR स ु नवधई की तधरीख / Date of Hearing : 15/04/2022 घोषणध की तधरीख/Date of Pronouncement : 11/05/2022 O R D E R PER S. BALAKRISHNAN, Accountant Member : This appeal is filed by the assessee against the order of the Ld. Principal Commissioner of Income Tax, Vijayawada passed U/s. 263 of the Act dated 24/03/2021 for the AY 2016-17. 2. The assessee has raised the following grounds in his appeal: “1. The order of the Ld. Commissioner of Income Tax is contrary to the f acts and also the law applicable to the f acts of the case. 2 2. The Ld. CIT is not justified in assuming jurisdiction U/s. 263 of the Act inasmuch as the assessment order dated 21/1/2018 u/s. 143(3) of the Act is neither erroneous nor prejudicial to the interests of the Revenue. 3. The assessment order dated 21/12/2018 had been the matter of appeal before the CIT(A) and the assessment of capital gains having been the main issue in the said appeal, the Ld. Principal Commissioner of Income Tax is precluded from subjecting the assessment order to revision on the very same issue. 4. The Ld. Principal Commissioner of Income Tax ought to have appreciated that the issue of capital gains stood settled under the Vivad Se Vishwas Scheme and consequently the Ld. Principal Commissioner of Income Tax erred in revising the assessment order in respect of the very same issue. 5. Without prejudice to the above, the Ld. Principal Commissioner of Income Tax is not justified in directing the Assessing Officer to assess the capital gains under the head „short term capital gains‟ without giving the benefit of indexation of cost of acquisition. 6. Any other ground that may be urged at the time of appeal hearing.” 3. Brief facts of the case are that the assessee is an individual deriving income from house property & business filed his return of income declaring total income of Rs.8,08,260/- after claiming deduction under Chapter VIA. The return was processed U/s. 143(1) and thereafter the case was selected for scrutiny under CASS with the reasons whether investment and income relating to properties are duly disclosed. Accordingly statutory notice u/s 3 142(1) was issued on the assessee calling for certain details. After considering the submissions of the assessee and on perusal of the documents furnished by the assessee, the Ld. AO completed the assessment U/s. 143(3) of the Act and determined the assessed income at Rs. 1,23,76,818/- which includes addition of Rs. 1,04,68,558/- under the head LTCG and accordingly passed the assessment order on 21/12/2018. Aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A) on 23/01/2019 vide appeal No.10179/2018- 19. 4. While the appeal is pending for disposal before the Ld. CIT(A), the assessee opted for settlement of the disputed tax under Vivad Se Vishwas Scheme and filed the declaration forms accordingly. The PCIT, after perusing the assessee’s Form No.1 and the relevant declaration forms, processed the assessee’s option under VSV Scheme and issued Form-3 determining the amount payable by the assessee. As determined by the Ld. Pr. CIT in Form-3, the assessee had paid taxes. After satisfying receipt of full and final settlement of disputed tax, the Learned Principal Commissioner of Income Tax issued Form No.5 on 30/12/2020. 4 5. Thereafter the Ld. PCIT initiated proceedings u/s. 263 of the Act on 12/2/2021 treating the income declared under VSVS as short term gains. The Ld. PCIT, considering the submissions made by the assessee, passed order u/s 263 of the Act on 24/03/2021. Aggrieved by the order of the Ld. PCIT, the assessee is in appeal before the Tribunal by raising the above mentioned grounds of appeal. 6. Before us, at the outset, the Ld. AR for the assessee submitted that as per the Direct Tax Vivad Se Vishwas Act, 2020, once the order is issued under section 5 of the Act in Form No.5, the dispute cannot be reopened for assessing the same income offered under VSV Scheme. Therefore, the Ld. AR prayed that since the assessee got immunity from initiation of proceedings in respect of the matters covered under the VSV Scheme the order of the Ld. Pr. CIT passed U/s. 263 is not sustainable in law. 7. On the other hand, Ld. DR relied on the order of the Ld. PCIT and argued in support of the same. 8. We have heard both the parties and perused the material on record as well as the orders of the Ld. PCIT. We find merit in the arguments advanced by the Ld. AR in respect of initiation of 5 proceedings in the matters which are already covered by the Direct Tax Vivad Se Vishwas Act, 2020. For the sake of ready reference, we extract the section 5(3) and section 6 of the DTVSV Act, 2020: “Every order passed u/s. (1), determining the amount payable under this act, shall be conclusive as to the matters stated therein and no matter covered by such order shall be reopened in any other proceedings under the Income Tax Act or under any other law for the time being in force or under any agreement, whether for protection of investment or otherwise entered into by India with any other country or territory outside India. Section 6: Subject to the provisions of section 5, the designated authority shall not institute any proceedings in respect of an offence; or impose or levy any penalty; or change any interest under the Income tax Act in respect of tax arrear.” 9. From the plain reading of the above, it is very clear that once the matter under VSV Scheme has reached finality, the same cannot be reopened in any other proceedings under the Income Tax Act or under any other law for the time being in force. The assessee has got immunity from initiation of proceedings in respect of matters covered under the VSV Scheme. We also find that the same Ld PCIT who has issued Form 5 under VSV Scheme has invoked the powers u/s 263 of the Act. Therefore, in our considered opinion, invoking the provisions of section 263 by the Ld. PCIT in the instant case, where the issue 6 is ceased and reached finality under VSV Scheme is not in accordance with law. Therefore, we hereby quash the order passed by the Ld. PCIT U/s. 263 of the Act. Accordingly, grounds raised by the assessee are allowed. 10. In the result, appeal of the asseseee is allowed. Pronounced in the open Court on the 11 th May, 2022. Sd/- Sd/- (द ु व्ि ू रु आर.एऱ रेड्डी) (एस बाऱाक ृ ष्णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) न्याययकसदस्य/JUDICIAL MEMBER ऱेखा सदस्य/ACCOUNTANT MEMBER Dated : 11.05.2022 OKK - SPS आदेश की प्रतिलिपि अग्रेपिि/Copy of the order forwarded to:- 1. ननधधाररती/ The Assessee – Sarnala Sayababu, Prop. Modern Agro Industries, D.No. 8-24-61, Main Road, Agathavarappadi, Auto Nagar, Guntur. 2. रधजस्व/The Revenue – The Income Tax Officer, Ward-2(3), Lakshmipuram Main Road, Guntur. 3. The Principal Commissioner of Income Tax, Vijayawada. 4. आयकर आय ु क्त (अऩीऱ)/ The Commissioner of Income Tax (Appeals), 5. ववभधगीय प्रनतननधध, आयकर अऩीऱीय अधधकरण, ववशधखधऩटणम/ DR, ITAT, Visakhapatnam 6. गधर्ा फ़धईऱ / Guard file आदेशधन ु सधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam