Smt. Mantena Lalitha Rani, Warangal V. Income Tax Officer, Ward-1, Kothagudem

ITA 998/HYD/2014

• Counselvise Citation: 99822514 RSA 2014
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G APARNA RAO
• Assessee Lawyers: G MANIKYA PRASAD
• Keywords: Presumptive income; Business income
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI P.MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 998/HYD/2014 ASSESSMENT YEAR: 2009-10 SMT. MANTENA LALITHA RANI, WARANGAL. PAN ACUPL 8614 VS. INCOME-TAX OFFICER, WARD 1, KOTHAGUDEM (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G. MANIKYA PRASAD REVENUE BY : SMT. G. APARNA RAO DATE OF HEARING : 06-11-2015 DATE OF PRONOUNCEMENT : 30-11-2015 O R D E R PER S. RIFAUR RAHAMAN, A.M.: THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE OR DER OF LD. CIT U/S 263 OF THE INCOME-TAX ACT, 1961 (ACT) DATED 20 /03/2014. FOR THE AY 2009-10. 2. ASSESSEE IS AN INDIVIDUAL, EARNING INCOME FROM H OUSE PROPERTY, PLYING TWO LORRIES AND TRADING OF SAND. THE ASSESSE E FILED HER RETURN OF INCOME FOR THE AY 2009-10 DECLARING TOTAL INCOME OF RS. 3,35,490. THE ASSESSEE DECLARED INCOME OF PLYING LORRIES OF RS. 1 LAKH AND IN SAND BUSINESS OF RS. 1 LAKH ON PRESUMPTIVE BASIS U/ S 44AE AND 44AF OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) WERE ISSUED. THE ASSESSMENT WAS COMPLETED U/S 143(3 ) OF THE ACT, DETERMINING THE TOTAL TAXABLE INCOME AT RS. 7,56,15 0/-. THE ADDITION WAS MADE MAINLY ON CALCULATION OF SHORT TERM CAPITA L GAINS. LD. CIT 2 ITA NO. 998 /HYD/2014 SMT. MANTENA LALITA RANI USING HIS REVISIONAL POWERS U/S 263 OF THE ACT, ISS UED SHOW CAUSE NOTICE UNDER THIS ACT. HE FOUND THAT THE AO HAD NOT EXAMINED CERTAIN ISSUES PROPERLY. 3. IN BRIEF, THE CIT HAD RAISED THE FOLLOWING ISSU ES IN THE ORDER PASSED U/S 263 AFTER CONSIDERING THE OBJECTIONS FRO M THE ASSESSEE: A) AS PER THE STATEMENT OF TOTAL INCOME, AN AMOUNT OF RS. 1,00,000/- WAS ADMITTED AS INCOME FROM PLYING OF L ORRIES AND WHEREAS, THE SAME WAS ADMITTED AT RS. 1,60,000/- I N THE PREVIOUS ASSESSMENT YEAR. THE AO HAS NOT EXAMINED FOR THE SHORT FALL OF INCOME AND ALSO WHETHER THE ASSESSEE SOLD THE LORRIES DURING THE YEAR OR NOT. FURTHER, THE SAID LORRIES WERE NOT REFLECTED ON THE ASSET SIDE OF THE BALANCE SHEET A ND THIS ASPECT WAS ALSO NOT EXAMINED BY THE AO. B) AS PER THE SWORN STATEMENT DATED 05/04/2011, TH E ASSESSEE SOLD 50% OF HER SHARE HELD IN HOTEL SRILATHA, PALO NCHA IN DECEMBER, 2007 FOR A CONSIDERATION OF RS. 14 LAKHS AND CLAIMED A SHORT TERM CAPITAL LOSS OF RS. 2 LAKHS. THE AO H AS NOT VERIFIED WHETHER THE ASSESSEE DERIVED ANY INCOME FROM THE A BOVE PARTNERSHIP FIRM AS NO INCOME WAS ADMITTED FOR THE AY 2008-09 AND THE DETAILS FOR ARRIVING SUCH CAPITAL LOSS TOW ARDS SALE OF SHARES, WHICH WAS NOT DEBITED TO THE CAPITAL ACCOU NT OF THE ASSESSEE. C) AS PER THE STATEMENT OF TOTAL INCOME, AN AMOUNT OF RS. 1.00 LAKH WAS ADMITTED AS NET INCOME FROM SAND BUS INESS FOR WHICH NO DETAILS WERE CALLED FOR BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. D) THE ASSESSEE PURCHASED A LAND FOR A CONSIDERATI ON OF RS. 7.35 LAKHS ON 16/09/08. THE AO HAS NOT CALLED FOR THE DETAILS OF PAYMENT WHETHER THE ASSESSEE WAS HAVING SUFFICIENT CASH BALANCE FOR THE SAID PURCHASE OR NOT. AS PER THE B ALANCE SHEET 31/03/08, THE ASSESSEE IS HAVING RS. 24,41,906 UND ER THE HEAD INVESTMENT, CASH IN HAND & BANK AND THE AO HAS N OT VERIFIED WITH REFERENCE TO APPLICABILITY OF PROVISIONS OF W EALTH TAX FOR THE AY 2008-09 4. LD. AR SUBMITTED THAT AO HAD ALREADY CONSIDERED ALL THE ISSUES RELATING TO THE CAPITAL GAINS, LORRY AND SAND BUSIN ESS COMPLETELY AND SUBMITTED THAT THE ISSUES RAISED WERE IRRELEVANT AN D UNCALLED FOR. HE SUBMITTED AS BELOW: 3 ITA NO. 998 /HYD/2014 SMT. MANTENA LALITA RANI 4.1 FIRST ISSUE, THE ASSESSEE CARRYING ON BUSINESS OF PLYING LORRY OWNING ONLY TWO LORRIES. THE ASSESSEE WAS ELIGIBLE TO DECLARE PRESUMPTIVE INCOME U/S 44AE OF THE ACT AT RS. 84,00 0/- WHICH IS THE LIMIT PRESCRIBED IN THE ACT WHEREAS THE ASSESSEE HA D DECLARED ACTUAL INCOME OF RS. 1,00,000 FOR THE AY UNDER CONSIDERATI ON. THE LD. CIT HAD COMPARED THIS VOLUNTARY DISCLOSURE OF RS. 1 LAK H WITH EARLIER YEAR INCOME, WHICH WAS DECLARED BY ASSESSEE AT RS. 1.60 LAKHS IN AY 2008-09. THE ACTION OF THE ASSESSEE WAS CONSIDERED TO BE GENUINE AS THE ACTUAL INCOME OUT OF THIS BUSINESS DECLARED BY THE ASSESSEE INSTEAD OF RESORTING TO DECLARE ONLY THE PRESUMPTIV E INCOME AS PER SECTION 44AE. THIS ASPECT WAS ALREADY VERIFIED BY T HE AO. 4.2 LD. AR ALSO SUBMITTED THAT THE SALE OF HOTEL BU SINESS WAS NOT RELATING TO THE AY UNDER CONSIDERATION. 4.3 LD. AR FURTHER EXPLAINED THAT THE OBSERVATION O F THE CIT RELATING TO PURCHASE OF LAND FOR RS. 7.35 LAKHS WAS WRONG. T HE ACTUAL INVESTMENT MADE WERE RS. 24,41,106/- FOR WHICH ASSE SSEE HAD ALREADY DECLARED THE SAME IN THE STATEMENT OF AFFAI RS BEFORE THE AO. 4.4 LD. AR SUBMITTED THAT THE ORDER OF CIT WAS NOT CORRECT BY RELYING ON THE JUDGMENT OF JURISDICTIONAL HIGH COUR T IN THE CASE OF M/S SPECTRA SHARES AND COORDINATE BENCH OF THIS TRIBUNA L IN THE CASE OF CHAVA SRINIVASA RAO IN ITA NO. 997/HYD/2014. 5. LD. DR, ON THE OTHER HAND, SUBMITTED THAT AO HAS DEALT ONLY WITH TWO ISSUES AND FAILED TO MAKE PROPER VERIFICAT ION. SHE JUSTIFIED THE ORDER OF CIT U/S 263. SHE RELIED ON THE JUDGMEN T OF THE HONBLE SUPREME COURT IN THE CASE OF RAMPAYARI DEVI SARAGOI VS. CIT, [1968] 67 ITR 84. 6. HAVING CONSIDERED THE SUBMISSIONS OF BOTH SIDES AND PERUSED THE MATERIAL ON RECORD, WE ARE OF THE OPINION THAT THE CIT HAD INITIATED HIS POWER U/S 263 BY OBSERVING AS AO HAS NOT EXAMI NED CERTAIN ISSUES PROPERLY. THE LD. AR ALSO RAISED THE GROUND BEFORE US 4 ITA NO. 998 /HYD/2014 SMT. MANTENA LALITA RANI CHALLENGING THE JURISDICTION OF THE LD. CIT IN EXER CISING POWER U/S 263. AS PER THE CONTENTION OF LD. AR, THE AO HAD ALREADY MADE NECESSARY ENQUIRY BEFORE COMPLETING THE ASSESSMENT, IN PARTIC ULAR, WHEN THE ASSESSEE HAD DECLARED THE INCOME MORE THAN THE INCO ME BASED ON THE PRESUMPTIVE BASIS U/S 44AF AND 44AE OF THE ACT IN THE BUSINESS OF PLYING LORRY AND SAND BUSINESS. MOREOVER, THE C IT HAD RAISED THE ISSUES RELATING TO THE BUSINESS INCOMES IN RELATION TO CORRESPONDING PREVIOUS AY WHEN THE ASSESSEE HAD DECLARED MORE THA N THE PRESCRIBED PROFIT IN THE SECTIONS 44AF AND 44AE OF THE ACT. MOREOVER, WHEN THE ASSESSEE HAD COMPLIED WITH THE SECTION 44A F AND 44AE, THERE IS NO JURISDICTION ON THE PART OF THE AO TO M AKE FURTHER ASSESSMENT, PARTICULARLY, WHEN THE ASSESSEE IS ALLO WED NOT TO MAINTAIN ANY BOOKS U/S 44AA OF THE ACT. SIMILARLY, IN OTHER ISSUE, SALE OF SHARE IN THE HOTEL SRILATHA IN DECEMBER, 2007, W HICH ARE NOT RELEVANT FOR THE AY UNDER CONSIDERATION. 6.1 IN THE 4 TH ISSUE, ASSESSEE PURCHASED A LAND FOR A CONSIDERATI ON OF RS. 7.35 LAKHS ON 16/09/2008. AGAIN THIS TRANSAC TION RELATING TO PURCHASE OF LAND INVOLVING RS. 24,41, 906, WHICH WA S DECLARED IN THE BALANCE SHEET. BUT, CIT HAD DIRECTED AO TO VERIFY T HE MATTER RELATING TO WEALTH TAX ACT FOR THE AY 2008-09. IT HAS NO REL EVANCE FOR REOPENING THE ASSESSMENT UNDER CONSIDERATION. 6.2 THE OTHER ISSUES WERE COME ACROSS BY LD. CIT SU BSEQUENT TO PROCEEDINGS CARRIED ON U/S 263 OF THE ACT. . 6.3 ON PERUSAL OF THE REASONS PUT FORTH BY THE CIT, IT APPEARS THAT NO COGENT EVIDENCE WAS FOUND BY HIM. CIT HAD USED H IS REVISION POWERS MERELY ON SUSPICION AND WITHOUT ANY BASIS. T HE AO HAD ALREADY APPLIED HIS MIND TO COMPLETE THE ASSESSMENT . CIT HAD EXPRESSED THAT AO HAD NOT COMPLETED THE ASSESSMENT PROPERLY, CONVEYS THAT AO HAD APPLIED HIS MIND AND CIT IS JUS T EXTENDING AND REVIEWING THE PROCESS OF COMPLETED ASSESSMENT. CIT HAD NOT 5 ITA NO. 998 /HYD/2014 SMT. MANTENA LALITA RANI ESTABLISHED THE ASSESSMENT ORDER AS ERRONEOUS OR IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE. 6.4 IN VIEW OF THE ABOVE DISCUSSION, IT CLEARLY EST ABLISHES THAT THE ASSESSMENT ORDER WAS NOT ERRONEOUS AND ALSO NOT PRE JUDICIAL TO THE INTERESTS OF REVENUE. HENCE, THE ORDER U/S 263 IS N OT MAINTAINABLE AND ACCORDINGLY, WE QUASH THE SAME. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2015 SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER ACCOUN TANT MEMBER HYDERABAD, DATED: 30 TH NOVEMBER, 2015 KV COPY TO:- 1) SMT. M. LALITA RANI, C/O SHRI G.S. MADHAVA RAO & CO., CAS., SUDHARMA BUILDINGS, M.G. ROAD, WARANGAL 2) THE ITO, WARD 2, HYDERABAD 3) CIT, VIJAYAWADA 4) ADDL. CIT, KHAMMAM RANGE, KHAMMAM 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.