I.T.O. WARD -1(4), Nagpur V. SHRI PRABODH SADASHIV SADAVARTE(HUF), Nagpur

MA 08/NAG/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8228 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-01-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 19-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AGNESH P THOMAS
• Assessee Lawyers: ABHAY AGARWAL
• Keywords: Audit objection; Tax effect; Reason to believe; Reassessment proceedings
• Section: 54B; 191; 13; 147; 148; 54

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL BENCH, NAGPUR (AT E - COURT, PUNE) BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY , JM M .A. NO. 08 / NAG /20 18 (ARISING OUT OF ITA NO. 377 /NAG /20 16 ) / ASSESSMENT YEAR : 2006 - 07 THE INCOME TAX OFFICER, WARD - 1(4), NAGPUR. .. /APPLICANT / V/S. SHRI PRABODH SADASHIV SADAVARTE (HUF), 38, RAM NAGAR, NAGPUR, PIN - 440 033. PAN: AAHHP0169E .. / RESPONDENT A SSESSEE BY : SHRI ABHAY AGARWAL REVENUE BY : SMT. AGNESH P THOMAS / DATE OF HEARING : 17 .01.2020 / DATE OF PRONOUNCEMENT : 22 .01.2020 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS MISCELLANEOUS APPLICATION HAS BEEN FILED BY THE REVENUE U/S.254(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WITH A PRAYER TO RECALL THE ORDER OF TRIBUNAL DATED 13.07.2018 IN ITA NO.377/NAG/2016. 2 M A NO. 08 / NAG /20 1 8 A.Y. 2006 - 07 2. THE LD. DR SUBMITTED THAT THE TRIBUNAL VIDE ORDER DATED 13.07.2018 HAS DISMISSED THE APPEAL OF REVENUE IN ITA NO.377/NAG/2016 ON GROUND OF LOW TAX EFFECT. THE LD. DR FILED DETAILED WRITTEN SUBMISSIONS WITH REGARD TO MISCELLANEOUS APPLICATION AND THE RELEVA NT EXTRACT OF THE SUBMISSIONS REPRODUCED HEREIN BELOW: FROM VERIFICATION OF THE SALE DEEDS DATED 23.11.2005 AND 26.12.2005 ATTACHED ALONG WITH THE RETURN OF INCOME IT WAS NOTICED THAT THE ASSESSEE HAD SOLD PLOTS OF LAND AND NOT AGRICULTURAL LANDS. AS SUC H THE DEDUCTION CLAIMED BY THE ASSESSEE U/ S.54B FOR RS.24,57,440/ - IS NOT CORRECT. AS THE AO HAD REASON TO BELIEVE THAT INCOME TO THE TUNE OF RS. 24,57,440/ - HAD ESCAPED ASSESSMENT, THE CASE WA S REOPENED U/S. 147 FOR A.Y. 2006 - 07 AND NOTICE U/S. 148 WAS ISSUE D. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE LAND SOLD WAS NOT AN AGRICULTURAL LAND BUT A PLOT. THE AO FURTHER FOUND THAT THE DEDUCTION U/S. 54B OF I T ACT WAS NOT ALLOWABLE TO HUF DURING A.Y . 2006 - 07. AS THE ASSESSEE HUF HAD NOT FULFILLED THE CONDITION PRESCRIBED FOR AVAILING THE DEDUCTION U/S . 54 B , THE A O DISALLOWED THE DEDUCTION U/S. 54B CLAIMED BY ASSESSEE HUF. THE LD. CIT(A) WHILE DECIDING THE MATTER IN THE FAVOUR OF ASSESSEE OBSERVED THAT THE LAND IN QUESTION IS AN AGRICULTURAL LAND AND BENEFITS OF PROVISIONS OF SECTION 54B WAS AVAILABLE TO THE HUF DURING A.Y. 2006 - 07. HENCE, THE ASSESSEE HUF IS ELIGIBLE FOR DEDUCTION CLAIMED U/S 54B OF I T ACT. THE DECISION OF THE LD. CIT(A) WAS NOT ACCEPTABLE ON THE GROUND THAT BE NEFITS OF PROVISIONS OF SECTION 54B OF I T ACT WAS NOT AVAILABLE TO HUF DURING A.Y. 2006 - 07. THE AO IN HIS ASSESSMENT ORDER CLEARLY POINTED THAT DEDUCTION U/ S . 54 B WAS NOT AVAILABLE TO THE HUF DURING A.Y.2006 - 07 AND IT WAS ONLY AVAILABLE TO INDIVIDUAL ASSES SEE. THE AO HAS FURTHER POINTED OUT THAT BENEFIT OF PROVISION OF SECTION 54B WAS EXTENDED TO HUF BY THE FINANCE ACT 2012 - 13 W.E.F. A. Y. 2013 - 14 ONLY. THE AO IN THIS REGARD HAS ALSO PLACED RELIANCE ON THE DECISION OF HON'BLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS DEVARAJULU [G.K. ][1991][191 ITR 211] WHEREIN HON BLE HIGH COURT OBSERVED THAT DEDUCTION U /S. 54B IS AVAILABLE TO THE INDIVIDUAL ASSESSEE ONLY AND NOT TO THE ANY OTHER ASSESSEE. THE LD. CIT(A) HAS DISCUSSED THE MATTER WITH REGARD TO APPLICABILITY O F PROVISION OF SECTION 54B IN PARA 9.2 OF HIS ORDER. THE LD. CIT(A) OBSERVED THAT AMENDED PROVISION S ARE APPLICABLE W.E.F. 0 L.04.20 13 PROSPECTIVELY AND CANNOT BE APPLIED RETROSPECTIVELY. THE LD. CIT(A) FURTHER OBSERVED THAT THERE IS NO DISPUTE THAT PRIO R TO THE AMENDMENT OF SECTION 54B, THE BENEFITS OF DEDUCTION WAS BEING EXTENDED TO AN ASSESSEE WHICH DEFINITION INCLUDES HUF. THEREFORE, THE APPELLANT HUF IS ELIGIBLE FOR DEDUCTION U / S . 54B OF I T ACT. THE LD CIT(A)'S OBSERVATION THAT BEFORE AMENDMENT SECTI ON 54B, T HE BENEFITS OF DEDUCTION WAS BEING EXTENDED TO ASSESSEE WHICH DEFINITION INCLUDES HUF IS NOT CORRECT AND HENCE NOT ACCEPTABLE. ALTHOUGH BEFORE THE AMENDMENT THE WORD USED IN THIS SECTION IS ASSESSEE BUT CONDITION (II) PRESCRIBES PARENTS WHICH INDI CATES THAT THIS EXEMPTION U/S.54B IS AVAILABLE ONLY TO THE INDIVIDUAL ASSESSEE AND NOT TO THE ANY OTHER ASSESSEE. THE HON'BLE MADRAS HIGH COURT IN HIS DECISION IN THE CASE OF CIT V S DEVARAJULU [G.K.][ 1991][ 191 ITR 211] ON WHICH THE 3 M A NO. 08 / NAG /20 1 8 A.Y. 2006 - 07 AO HAS RELIED UPON, H AS HELD THAT THE BENEFITS OF SECTION 54B CANNOT BE EXTENDED TO HUF. THE L D. CIT(A) HAS NOT DISCUSSED THE AFORESAID CITED DECISION OF HON'BLE HIGH COURT , MADRAS BENCH AT ALL AND TAKEN CONTRADICTORY STAND WHICH IS NOT ACCEPTABL E. NEITHER ASSESSEE NOR CIT(A) H AS PUT FORTH ANY OTHER CASE LAWS OR DECISI ON OF ANY OTHER COURTS WHICH HINT AT PROVISION OF SECTION IS APPLICABLE TO THE H UF BEFORE AMENDMENT IN SECTION 54B W.E.F. A.Y. 2013 - 14. 2.1 THE LD. DR FURTHER SUBMITTED THAT THE DECISION OF THE CO - ORDINATE BENC H OF THE TRIBUNAL IS NOT ACCEPTABLE ON MERITS AND EVEN THOUGH THE TAX EFFECT INVOLVED IN THIS CASE WAS BELOW THE MONETARY LIMIT TO FILE APPEAL BEFORE THE ITAT AS PER CBDT CIRCULAR NO.3/2018 DATED 11.07.2018 BUT THE CASE OF ASSESSEE FALLS WITHIN THE EXCEPTI ON SPECIFIED AT PARA 10(C) OF THE CBDT CIRCULAR NO. 3 OF 2018 DATED 11.07.2018 AND FURTHER AMENDED BY CBDT LETTER F.NO 279/MISE.142/2007 - ITJ(PT) DATED 20.08.2018. AS PER AMENDED PARA 10 CLAUSE (C) OF CBDT CIRCULAR NO.3 OF 2018 DATED 11.07.2018, IT IS STATE D A DVERSE JUDGMENTS RELATING TO THE FOLLOWING ISSUES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN TH E MONETARY LIMITS SPECIFIED IN P ARA 3 ABOVE OR THERE IS NO TAX E FFECT: (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT , THE APPEAL OF REVENUE FALLS WITHIN THE EXCEPTION. THUS, OUTSIDE THE PARAMETERS OF MONETARY LIMIT FIXED FOR FILING APPEALS BY DEPARTMENT. 3. ON THE OTHER HAND, THE LD. AR OF ASSESSEE SUBMITTED THAT THE CBDT CIRC ULAR SPECIFIES THE MONETARY LIMITS FOR FILING APPEAL BY REVENUE AND IN THE PRESENT APPEAL TAX EFFECT IS LESS THAN THE LIMIT FIXED BY CBDT AND THE INSTANT CASE DOES NOT FALL WITHIN THE EXCEPTIONS MENTIONED IN PARA 10 OF THE SAID CIRCULAR. 4. WE HAVE PERUS ED THE CASE RECORDS AND HEARD THE RIVAL CONTENTIONS. WE HAVE ALSO PERUSED THE ORDER OF TRIBUNAL DATED 13.07.2018 WHEREIN THE 4 M A NO. 08 / NAG /20 1 8 A.Y. 2006 - 07 TRIBUNAL IN A CONSOLIDATE MANNER HAS DISMISSED ITA NO.3 7 7 /NAG /2016 AND OTHERS ON ACCOUNT OF LOW TAX EFFECT. THE MISCELLANEOUS APPLI CATIONS HAS BEEN FILED BY REVENUE TO RECALL THE ORDER OF TRIBUNAL IN ITA NO.3 7 7/N AG /2016 (SUPRA.) ON THE GROUND THAT CBDT CIRCULAR NO.3 OF 2018 DATED 11.07.2018 DOES NOT APPLY IN THE INSTANT CASE AS IT IS COVERED UNDER EXCEPTION (C) MENTIONED IN PARA 10 OF THE CBDT CIRCULAR AS AMENDED BY BOARD LETTER F NO 279/MISE.142/2007 - ITJ(PT) DATED 20.08.2018. BEFORE PROCEEDING FURTHER, IT WOULD BE RELEVANT TO REPRODUCE THE RELEVANT CLAUSE ON WHICH THE DEPARTMENT IS RELYING FOR RECALLING THE ORDER OF TRIBUNAL AND THE SAME READS AS UNDER: 10. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISSUES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT : ( A ) XXXXXX ( B ) XXXXXX ( C ) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT, OR ( D ) XXXXXX ( E ) XXXXXX ( F ) XXXXXX CLAUSE (C) IN PARA 10 OF CBDT CIRCULAR SPECIFIES THAT ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISSUES SHOULD BE CONTESTED ON MERITS NOTWITH STANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN P ARA 3 ABOVE OR THERE IS NO TAX EFFECT : (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT. 5. IN THE INSTANT CASE, WE FIND, THE REVENUE AUDIT PARTY RAISED OBJECTION AND POINTED OUT THAT THIS CASE HAS NOT BEEN ADJUDICATED ON MERITS BY THE CO - ORDINATE BENCH OF THE TRIBUNAL, NAGPUR AS PER THE FACTS INSCRIBED IN THE 5 M A NO. 08 / NAG /20 1 8 A.Y. 2006 - 07 MISCELLANEOUS APPLICATION WHICH HAS ALREADY BEEN REPRODUCED IN THE PRECEDING PARAGRAPHS AND THE SAME HAS BEEN ACCEPTED BY THE DEPARTMENT. THEREFORE, WE FIND MERIT IN THE CONTENTIONS OF THE REVENUE. THEREFORE, IN OUR CONSIDERED VIEW, T HE MISTAKE IS APPARENT FROM RECORD, HENCE, NEEDS RECTIFICA TION. ACCORDINGLY, THE ORDER DATED 13.07.2018 PASSED BY THE TRIBUNAL ONLY IN RESPECT OF ITA NO .3 7 7 /NAG /201 6 IS HEREBY RECALLED AND THE APPEAL OF THE ASSESSEE IS RESTORED TO ITS ORIGINAL NUMBER. THE REGISTRY IS DIRECTED TO LIST THE APPEAL FOR FRESH HEARING ON 0 6 .02.2020 AFTER ISSUING NOTICE OF HEARING TO BOTH THE SIDES. 6. IN THE RESULT, MISCELLANEOUS APPLICATI ON FILED BY THE REVENUE IS ALLOWED . ORDER PRO NOUNCED ON 22 ND D AY OF JANUARY, 2020. SD/ - SD/ - D. KARUNAKARA RAO PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 22 ND JANUARY, 2020. SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - II, NAGPUR. 4. THE CIT - II, NAGPUR. 5 . , , / DR, ITAT, NAGPUR. 6. / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE . 6 M A NO. 08 / NAG /20 1 8 A.Y. 2006 - 07 DATE 1 DRAFT DICTATED ON 20 .01.2020 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 21 .01.2020 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER