Nagaiah Kekkireni, Suryapet, Suryapet V. ITO, Ward-1, , Suryapet

MA 25/Hyd/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5495 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 24-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 17-05-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 07-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DINESH PADUCHURI
• Assessee Lawyers: SREELATA VOOKTKOOR
• Keywords: Unexplained investment; Fair market value; Agreed addition
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A ', HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN , ACCOUNTANT MEMBER M.A. NOS. 23, 24, & 25/HYD/2019 (IN ITA NO. 178 TO 180 /HYD/201 7 ASSESSMENT YEARS: 2009 - 10, 2010 - 11 AND 2011 - 12 ) NAGAIAH KEKKIRENI, SURYAPET. PAN BHDPK 1670 B VS. INCOME - TAX OFFICER, WARD 1, HYDERABAD. APPELLANT RESPONDENT A SSESSEE BY: SMT. SREELATA VOOKTKOOR RE VENUE BY: SHRI DINESH PADUCHURI DATE OF HEARING: 17 / 05 /201 9 DATE OF PRONOUNCEMENT: 24 / 05 /201 9 O R D E R PER S. RIFAUR RAHMAN , AM: TH E S E MISCELLANEOUS APPLICATION S ARE FILED BY THE ASSESSEE U/S 254(2) OF THE INCOME TAX ACT SEEKING RECTIFICATION/MODIFICATION OF T HE O RDER OF THE TRIBUNAL DATED 31 / 01 /201 8 IN ITA NO S . 178 TO 180/HYD/2017 . 2. IN THE M.AS., THE ASSESSEE STATED THAT THE FOLLOWING MISTAKES ARE APPARENT FROM THE ORDER OF THE TRIBUNA L: A. THE ASSESSEE RAISED A GROUND STATING THAT, THE LEARNED ASSESSING OFFICER RELIED ON THE THIRD PARTY SWORN STATEMENT OF THE SHRI. BEEREDDY JAIPAL REDDY. HOWEVER, THE LEARNED ASSESSING OFFICER REJECTED THE SWORN STATEMENT OF THE ASSESSEE WITHOUT GIVING ANY VALID REASON. THE HON BLE INCOME TAX APPELLATE TRIBUNAL ALSO NOT GAVE ANY FINDINGS ON THIS GROUND. B. THE HON BLE INCOME TAX APPELLATE TRIBUNAL ADOPTED THE COST OF LAND @ RS.373.50/SQFT FOR THE BALANCE UNSOLD PLOTS AT THE END OF THE YEAR AS AGAINST RS. 1 00/SQFT. M.A. NO S . 23 TO 25 HYD/1 9 N AGAIAH KEKKIRENI, SURYAPET 2 BEING THE GUIDELINE VALUE OF THE GOVERNMENT, WHICH IS THE FAIR MARKET VALUE AT THE PREVAILING POINT OF TIME. C. O N QUERY FROM HON. BENCH OF THIS TRIBUNAL, DURING THE COURSE OF HEARING, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT, THE ASSESSEE WILL NOT HAVE ANY OBJECTIONS EITHER ALLOWING THE APPEAL BY ESTIMATING OF INCOME OF THE ASSESSEE @ 8% ON THE PURCHASE OF PLOTS OR ALLOWING THE TRADING LOSS AS PER THE STATEMENT PROVIDED BEFORE THE BENCH AGAINST THE ADDITIONS MADE UNDER SECTION 69 OF THE ACT. THE ASSESSEE EXPECTED ANYONE OF THE ABOVE OPTIONS WILL BE ALLOWED BY THE HON. BENCH AND HENCE, DID NOT ADVANCE ANY FURTHER SUBMISSIONS LIKE, TELESCOPIC BENEFIT OF ALLOWING OPENING CAPITAL AGAINST THE ALLEGED UNEXPLAINED INVESTMENTS MADE BY THE ASSESSEE . 3. BEFORE US, LD. AR OF THE ASSESSEE SUBMITTED THAT AO MADE ADDITION OF RS. 42,84,000/ - AS UNDISCLOSED INVESTMENT B Y RELYING ON THIRD PARTY SWORN STATEMENT WITHOUT GIVING ANY VALID REASONS AND THE HONBLE ITAT DID NOT GIVE ANY FINDINGS ON THIS GROUND. SHE ALSO SUBMITTED THAT THE HONBLE ITAT ADOPTED COST OF LAND @ 373.50 PER SQ.FT. FOR THE VALUE OF UNSOLD PLOTS AT THE END OF THE YEAR AGAINST RS. 100/ - PER SQ.FT. BEING THE GUIDELINE VALUE OF THE GOVT., WHICH IS FAIR MARKET VALUE AT THE PREVAILING TIME. FURTHER, SHE SUBMITTED THAT AT THE TIME OF HEARING OF APPEAL, AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE WILL NOT HA VE ANY OBJECTION ALLOWING APPEAL BY ESTIMATING THE INCOME @ 8% ON THE PURCHASE OF PLOTS OR ALLOWING TRADING LOSS AS PER THE STATEMENT SUBMITTED BEFORE THE BENCH AGAINST THE ADDITIONS MADE U/S 69 OF THE ACT. ACCORDINGLY, ASSESSEE EXPECTED TO GET ANY ONE OF THE ABOVE BENEFITS BY THE HONBLE ITAT, THAT IS THE REASON, AR HAS NOT MADE FURTHER SUBMISSIONS. SHE SUBMITTED THAT ASSESSEE IS RUNNING THE BUSINESS AND ASSESSEE IS ALLOWED TO VALUE THE CLOSING STOCK AS PER THE CONVENTIONAL VALUE METHOD OF ADOPTING THE CO ST O R FAIR MARKET VALUE, WHICHEVER IS LESS AND THE LOSS SUFFERED BY THE ASSESSEE SHOULD BE ALLOWED TO CARRY FORWARD . THESE ASPECTS ARE NOT ANSWERED IN THE ORDER. M.A. NO S . 23 TO 25 HYD/1 9 N AGAIAH KEKKIRENI, SURYAPET 3 4. THE LD. DR, ON THE OTHER HAND, SUBMITTED THAT AR ARGUED IN LENGTH AND WHEN THE TRIBUNAL T O CONSIDER THE ARGUMENT ADVANCED BY THE OTHER PARTY FOR ARRIVING AT A CONCLUSION IS NOT AN ERROR APPARENT ON RECORD, AS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RAMESH ELECTRIC & TRADING CO., [1993] 203 ITR 497 (BOM.). HE SUBMITTED THAT , THEREFORE, THERE IS NO MISTAKE APPARENT ON RECORD AND CANNOT BE ENTERTAINED SUCH PLEA OF EITHER OF THE PARTY. 5. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AS SUBMITTED BY THE LD. DR, AR OF THE ASSESSEE HAS MADE ELABORATE SUBM ISSIONS IN HER SUBMISSIONS THAT SOME OF THE ISSUES WERE NOT CONSIDERED BY THE BENCH AND PRAYED FOR RECTIFICATION. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF RAMESH ELECTRIC AND TRADING CO. (SUPRA) HAS CONSIDERED SIMILAR SUBMISSIONS OF THE ASSESSEE AND OB SERVED AS UNDER: 7 . MR. INAMDAR, LEARNED ADVOCATE FOR THE ASSESSEE, DREW OUR ATTENTION TO A JUDGMENT OF THE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. MITHALAL ASHOK KUMAR (1985) 49 CTR (MP) 372 : (1986) 158 ITR 755 (MP) : TC8R.1338. THE MADHYA PRAD ESH HIGH COURT SAID THAT THE TRIBUNAL CAN CORRECT ITS MISTAKE RECTIFYING THE SAME IN CASE IT IS BROUGHT TO ITS NOTICE THAT THE MATERIAL WHICH WAS ALREADY ON RECORD BEFORE DECIDING THE APPEAL ON MERITS WAS NOT CONSIDERED BY IT. IT, HOWEVER, SAID THAT THIS W ILL DEPEND ON THE FACTS OF EACH CASE. AND WHETHER IT AMOUNTS TO A REVIEW OR RECTIFICATION WILL DEPEND ON THE FACTS OF EACH CASE. IN OUR VIEW, THESE WIDE OBSERVATIONS DO NOT ACCORD WITH THE DECISION OF THE SUPREME COURT ON THIS POINT IN T.S. BALARAM, ITO VS . VOLKART BROTHERS (SUPRA). SIMILARLY, THE DECISION OF THE ALLAHABAD HIGH COURT IN THE CASE OF LAXMI ELECTRONIC CORPORATION LTD. VS. CIT (1992) 102 CTR (ALL) 293 : (1991) 188 ITR 398 (ALL) : TC8R.1342 TO THE EFFECT THAT IF THE TRIBUNAL FAILS OR OMITS TO DE AL WITH AN IMPORTANT CONTENTION AFFECTING THE MAINTAINABILITY/MERITS OF AN APPEAL, IT MUST BE DEEMED TO BE A MISTAKE APPARENT FROM THE RECORD WHICH CAN BE RECTIFIED BY THE TRIBUNAL BY ITS SUBSEQUENT ORDER, IS ALSO, IN OUR VIEW, IN THE TEETH OF THE SUPREME COURT JUDGMENT IN THE CASE OF T.K. BALARAM, ITO VS. VOLKART BROTHERS (SUPRA), WAS NOT BROUGHT TO THE ATTENTION OF THE LEARNED JUDGES WHO DECIDED THE ABOVE CASE. IN OUR VIEW, THE POWER OF RECTIFICATION UNDER S. 254(2) OF THE IT ACT CAN BE EXERCISED ONLY WHE N THE MISTAKE WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS AND PATENT MISTAKE WHICH IS APPARENT FROM THE RECORD, AND NOT A MISTAKE WHICH REQUIRES TO BE ESTABLISHED BY M.A. NO S . 23 TO 25 HYD/1 9 N AGAIAH KEKKIRENI, SURYAPET 4 ARGUMENTS AND A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS, AS HAS BEEN SHOWN IN THE PRESENT CASE. FAILURE BY THE TRIBUNAL TO CONSIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSION IS NOT AN ERROR APPARENT ON THE RECORD, ALTHOUGH IT MAY BE AN ERROR OF JUDGMENT. IN THE PRESENT C ASE, THE ALLEGED FAILURE, AT LEAST ON ONE COUNT, IS ATTRIBUTED BY THE ASSESSEE TO THE ITO AND NOT THE TRIBUNAL. IN OUR VIEW, THE TRIBUNAL HAD NO JURISDICTION UNDER S. 254(2) TO PASS THE SECOND ORDER. AS PER THE ABOVE DECISION, THE POWER OF RECTIFICATION U/S 254(2) OF THE ACT CAN BE EXERCISED ONLY WHEN THE MISTAKE WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS AND PATENT MISTAKE WHICH IS APPARENT FROM THE RECORD, AND NOT A MISTAKE WHICH REQUIRES TO BE ESTABLISH ED BY ARGUMENTS AND A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. FAILURE BY THE TRIBUNAL TO CONSIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSION IS NOT AN ERROR APPARENT ON THE RECORD. 5.1 HOWEVER, THE AR OF THE ASSESSEE ARGUED IN HER SUBMISSION THAT THE BENCH HAS NOT GIVEN ANY FINDING ON THE ADDITIONS MADE BY THE AO RELYING ON THIRD PARTY SWORN STATEMENT. THE ISSUE ITSELF IS ALREADY SETTLED IN THE APPROACH OF THE ASSESSEE WHEN ASSESSE E ITSELF MADE A STATEMENT BEFORE THE AO THAT HE ACCEPTED THE ADDITION TO BUY PEACE AND ALSO THE ASSESSEE PUT - FORTH AN ARGUMENT TO ACCEPT THE ADDITION AS PART OF PURCHASE AND WILLING TO ACCEPT 8% OF COST OF PURCHASE AS INCOME OF THE BUSINESS AND ALSO SEEKI NG TO TREAT THE ABOVE ADDITION AS CO S T OF PURCHASE AND GAVE DETAILED WORKINGS ON TREATING THE DIFFERENCE IN PURCHASE AND SALE PRICE AS BUSINESS LOSS. ASSESSEE HAS CONSIDERED THE ADDITION MADE U/S 69 AS BUSINESS LOSS. ASSESSEE CANNOT ARGUE ON MULTIPLE FACET S. 5.2 WITH REGARD TO ADOPTION OF COST OF LAND @ 373.5 PER SQ.FT., ASSESSEE ACCEPTED THE COST OF PURCHASE OF LAND AT RS. M.A. NO S . 23 TO 25 HYD/1 9 N AGAIAH KEKKIRENI, SURYAPET 5 42,84,000/ - AS ADDITION WHICH IS NOTHING BUT AGREED ADDITION BY AO FOR THE VALUE OF LAND AND THE SAME WAS ADOPTED TO ARRIVE AT THE COST OF LAND AND THE CALCULATION WAS CLEARLY EXPLAINED IN THE ORDER ITSELF. WE HAVE ALSO EXPLAINED THE REASON WHY WE CANNOT ADOPT RS. 100/ - PER SQ.FT. COMING TO THE OTHER ISSUE OF PRESUMPTION, THE BENCH CAN PROCEED WITH ADJUDICATION BASED ON THE SUBMISSIONS MADE BY THE PART IES AND WE CANNOT GO WITH THE PRESUMPTIONS ON THE OUTCOME BY THE PARTIES. 5.3 THE ISSUE S RAISED IN ALL THE OTHER MAS ARE SIMILAR. 5.4 IN VIEW OF THE ABOVE OBSERVATIONS, THE M.A S . FILED BY THE ASSESSEE ARE DISMISSED. 6 . IN THE RESULT, MA S FILED BY THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 24 TH MAY , 2019. SD/ - ( P. MADHAVI DEVI ) JUDICIAL MEMBER SD/ - ( S. RIFAUR RAHMAN ) ACCOUNTANT MEMBER HYDERABAD, DATED 24 TH MAY , 201 9. KV COPY FORWARDED TO: 1. KEKKIRENI NAGAIAH, S/O SAIDULU, H.NO. 1 - 1 - 109/A, TALLAGADDA, SURYAPET 508 213. 2. ITO, WARD 1, SURYAPET 3. CIT(A) - 3 , HYDERABAD 4. PR. CIT 3 , HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE M.A. NO S . 23 TO 25 HYD/1 9 N AGAIAH KEKKIRENI, SURYAPET 6