M/s Leo Township Developers India Ltd., Hyderabad V. ITO, Ward -16(1), Hyderabad

MA 43/HYD/2014

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 2807 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 20-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 17-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: A V RAGHURAM
• Section: 143(3); 263

Judgement Text

MA NO.43 OF 2014 LEO TOWNSHIP DEVELOPERS INDIA LTD HYD. PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER & SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMB ER M.A. NO.43/HYD/2014 (ARISING OUT OF ITA NO.1080/HYD/2011 (ASSESSMENT YEAR: 2006-07) M/S. LEO TOWNSHIP DEVELOPERS INDIA LIMITED HYDERABAD PAN-AABCL 2477 J VS. INCOME TAX OFFICER WARD 16(1) HYDERABAD (APPLICANT ) (RESPONDENT) FOR ASSESSEE : SHRI A.V. RAGHURAM FOR REVENUE : SHRI RAJAT MITRA, DR DATE OF HEARING : 13/03/2015 DATE OF PRONOUNCEMENT : 20 /03/2015 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, J.M. THE ASSESSEE FILED THIS MISCELLANEOUS PETITION AGA INST THE ORDER OF THE TRIBUNAL IN ITA NO.1080/HYD/2011 PASSE D FOR A.Y 2006-07, DATED 18.05.2012. 2. BY THIS PETITION, THE PETITIONER HAS STATED AS F OLLOWS: THE APPEAL WAS AGAINST AN ORDER DATED 28.03.2011 PASSED BY LEARNED COMMISSIONER OF INCOME TAX-IV, HYDERABAD, EXERCISING POWERS UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTE R 'THE ACT'). THE COMMISSIONER IN THE ORDER IMPUGNED BEFORE THE HON'BLE TRIBUNAL, DEALT WITH THE ISSUE O F TAXABILITY OF RS.5,01,60,000 IN RESPECT OF WHICH TH E MA NO.43 OF 2014 LEO TOWNSHIP DEVELOPERS INDIA LTD HYD. PAGE 2 OF 7 APPELLANT HAD ENTERED INTO AGREEMENT OF SALE DT.02.11.2005 WITH M/S. LEO EDIBLES AND FATS LIMITE D AND RECEIVED ADVANCE AMOUNT OF RS.36,55,000/-.THE ADVANCE WAS TOWARDS AGREEMENT TO SELL LAND TO THE EXTENT AC 22.32 GTS FOR A TOTAL CONSIDERATION OF RS.5,01,60,000/-. THE APPELLANT HAS NOT OFFERED THE ABOVE AMOUNT OF RS.5,01,60,000 AS THE AGREEMENT TO SELL WAS CONDITIONAL UPON SECURING CERTAIN PERMISSIONS, WHICH EVENTUALLY WERE NOT SECURED, AND THE AGREEMENT TO SELL WAS CANCELLED WITH MUTUAL AGREEMENT. THOUGH THE APPELLANT HAS ESTABLISHED THE ABOVE FACTS WITH DOCUMENTARY EVIDENCE, THE LEARNED COMMISSIONER OF INCOME TAX HAS SET ASIDE THE ASSESSMENT AND HAS ORDERED THE ASSESSING OFFICER TO REDO THE ASSESSMENT IN THE LIGHT OF FINDINGS, OBSERVATIONS AND DIRECTIONS MADE BY THE LEARNED COMMISSIONER. IN SUM AND SUBSTANCE, THE DIRECTION WAS TO MAKE A DE- NOVO ASSESSMENT KEEPING IN VIEW THE ORDER OF THE LEARNED COMMISSIONER. 3. WHEN THE PETITIONER CHALLENGED THE ORDER OF THE LD CIT BEFORE THE TRIBUNAL, THE TRIBUNAL AT PARA 31 OF ITS ORDER HELD AS FOLLOWS: 31. EVEN ON MERIT, IN OUR OPINION, THROUGH THE AGRE EMENT OF SALE DATED 2.11.2005, THE ASSESSEE IS ENTITLED TO R ECEIVE RS. 5,01,60,000/- TOWARDS SALE CONSIDERATION OF THE PRO PERTY AND IT IS ACCRUED TO THE ASSESSEE AS THE ASSESSEE HAS RIGH T TO RECEIVE THE SAME. AS THE ASSESSEE HAS BEEN FOLLOWING THE MERCAN TILE SYSTEM OF ACCOUNTING AND THE WHOLE AMOUNT OF SALE SHOULD B E CONSIDERED AS ACCRUED TO THE ASSESSEE. THE CIT IS J USTIFIED IN DIRECTING THE ASSESSING OFFICER TO EXAMINE THE ISSU E AFRESH. IT IS ALSO ON RECORD THAT THE AMOUNT ACCRUED TO THE ASSES SEE DURING CURRENT YEAR IS RS. 5,01,60,000 AND ASSESSEE RECEIV ED RS. 36.55 LAKHS ON THE DATE OF SIGNING THE AGREEMENT AND THE BALANCE IS TO MA NO.43 OF 2014 LEO TOWNSHIP DEVELOPERS INDIA LTD HYD. PAGE 3 OF 7 BE PAID WITHIN 9 MONTHS AND GET THE FINAL CONVEYANC E DEED IS TO BE REGISTERED AND LAND IS TO BE HANDED OVER TO THE PURCHASER. IT IS TRUE THAT THE AGREEMENT MENTIONS A TIME FRAME IN WHICH THE DISPUTES ARE TO BE SETTLED, IF ANY. THE SALE AGREEM ENT CITED SUPRA IS NOT YET CANCELLED AND IT IS STILL IN FORCE. IT I S VALID AND ENFORCEABLE BY LAW. IF THERE IS ANY DISPUTE IT COUL D BE SETTLED MUTUALLY OR BEFORE A COURT OF LAW. IT IS ALSO BE NO TED THAT THE SALE AGREEMENT WAS ENTERED 2.11.2005. BY 31ST MARCH , 2006 I.E., DURING THE FINANCIAL YEAR RELEVANT TO ASSESSM ENT YEAR 2006- 07 NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE SALE AGREEMENT HAS BECOME INVALID OR CANCELLED OR ADVANC E MONEY HAS BEEN REFUNDED BY THE ASSESSEE TO THE PURCHASER. IN VIEW OF THE ABOVE, WE DIRECT THE ASSESSING OFFICER TO CARRY OUT THE DIRECTION GIVEN BY THE CIT AND PASS CONSEQUENTIAL O RDER IN ACCORDANCE WITH LAW, IF IT IS NOT ALREADY PASSED . 4. IT HAS BEEN SUBMITTED IN THIS PETITION THAT FINDINGS OF FACT IN PARAGRAPH 31 OF THE ORDER OF THE HON'BLE TR IBUNAL WERE NOT REQUIRED FOR DISPOSAL OF GROUNDS OF APPEAL BEFORE IT AND TO THAT EXTENT THE HON'BLE TRIBUNAL H AS OVER STEPPED ITS JURISDICTION AND COMMITTED AN ERROR. IT IS SUBMITTED THAT THE HON'BLE TRIBUNAL IN THIS PROCESS HAS PUT THE ASSESSEE IN A MUCH WORSE SITUATION, THAN WHAT T HE ASSESSEE WAS, BEFORE FILING OF APPEAL. IN OTHER WOR DS, THE ORDER OF THE HON'BLE TRIBUNAL RESULTED INTO ENHANCE MENT AS IT HAD STRAIGHT AWAY COME TO THE CONCLUSION THAT TH E INCOME OF RS.5,01,60,000/- ACCRUED TO THE ASSESSEE. 5. IT WAS FURTHER SUBMITTED THAT COMMISSIONER OF INCOME TAX DIRECTED THE ASSESSING OFFICER TO PASS AN ASSES SMENT MA NO.43 OF 2014 LEO TOWNSHIP DEVELOPERS INDIA LTD HYD. PAGE 4 OF 7 ORDER IN A PARTICULAR FASHION, WHICH IN ITSELF, IS ILLEGAL. BUT IT WAS NOT A DIRECTION TO MAKE AN ADDITION. HOWEVER , THE HON'BLE TRIBUNAL BY GIVING FINDING ON FACTS IN PARAGRAPH 31 OF ITS ORDER HAS OVER STEPPED ITS JURI SDICTION WHICH RESULTED IN ENHANCEMENT OF INCOME. IT IS SUBM ITTED THAT THE HON'BLE TRIBUNAL UNDER THE PROVISIONS OF S ECTION 254 OF THE ACT HAS NO POWER TO ENHANCE THE INCOME. TO THIS EXTENT, THERE IS AN APPARENT ERROR IN THE ORDER OF THE HON'BLE TRIBUNAL WHICH REQUIRES NECESS ARY MODIFICATION. FURTHER, THE OBSERVATIONS AND FINDING S OF THE HON'BLE TRIBUNAL IN PARAGRAPH 31 OF ITS ORDER WERE NOT REQUIRED FOR DISPOSAL OF APPEAL BEFORE IT AND THERE FORE ENTIRE PARAGRAPH 31 IN THE ORDER PASSED BY THE HON' BLE TRIBUNAL HAS TO BE EXPUNGED FROM THE ORDER OF THE H ON'BLE TRIBUNAL. 6. IN THE AFORESAID CIRCUMSTANCES, IT WAS PRAYED BY THE PETITIONER THAT THE TRIBUNAL MAY RECTIFY THE APPARE NT ERROR IN PARAGRAPH 31 OF ITS ORDER DATED 18.05.2012 PASSED B Y IT IN ITA NO.1080/HYD/2011 FOR A.Y 2006-07 WHICH HAS THE EFFE CT OF ENHANCING THE ASSESSMENT, BY EXPUNGING THE ENTIRE F INDINGS AND OBSERVATIONS CONTAINED IN PARAGRAPH 31 OF ITS ORDER AND LIMITING ITS ORDER TO THE DIRECTIONS CONTAINED IN THE ORDER OF THE LD CIT IV MA NO.43 OF 2014 LEO TOWNSHIP DEVELOPERS INDIA LTD HYD. PAGE 5 OF 7 HYDERABAD (WHICH THE TRIBUNAL DID IN LAST SENTENCE OF PARA 30 OF ITS ORDER) AND PASS SUCH OTHER ORDER(S) IN THE INTE REST OF JUSTICE. 7. WE HAVE GONE THROUGH THE ORDER OF THE TRIBUNAL A ND PERUSED THE RECORDS. WE FIND MERIT IN THE PETITION FILED IN THIS REGARD. WE NOTE THAT THE TRIBUNAL ENHANCED THE INCO ME AND THEREFORE, THERE IS AN APPARENT ERROR IN THE ORDER OF THE TRIBUNAL DATED 18.05.2012 WHICH REQUIRES NECESSARY MODIFICAT ION. FURTHER THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS FOLLOWS: 1. THE LD CIT-IV HYDERABAD HAS COMPLETELY ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN S ETTING ASIDE THE ASSESSMENT FOR THE A.Y 2006-07 AND DIRECT ING THE AO TO REDO THE SAME IN THE LIGHT OF FINDINGS, OBSERVATIONS AND DIRECTIONS IN THE IMPUGNED ORDER U /S 263 DATED 28.03.2011. 2. THE LD CIT-IV HAS FAILED TO ESTABLISH ANY ERROR IN THE ASSESSMENT ORDER DATED 24.12.2008 MUCH LESS ANY PREJUDICE TO THE REVENUE AND CONSEQUENTLY THE ASSUMPTION OF THE POWER U/S 263 AS WELL AS THE IMPUGNED ORDER U/S 263 ARE WITHOUT JURISDICTION, VO ID AB INITIO, NOT SUSTAINABLE IN LAW AND LIABLE TO BE QUA SHED. 3. THE LD CIT-IV OUGHT TO HAVE NOTED THAT THE FACT OF EXECUTION OF AGREEMENT OF SALE AND RECEIPT OF ADVAN CE FOR SALE OF LAND, THE SUBSEQUENT CANCELLATION OF THE AGREEMENT OF SALE AND REFUND OF THE MONIES STANDS F ULLY PROVED BEYOND ANY DOUBT. ALL THE EVIDENCES ON RECOR D, INCLUDING EVIDENCES FOR PAYMENTS THROUGH BANK, THE INFORMATION AND EXPLANATIONS FURNISHED DURING THE COURSE OF HEARINGS U/S 263 PROCEEDINGS, THE VERIFIC ATIONS OF ORIGINAL DOCUMENTS AND RECORDS AS REQUIRED BY TH E CIT AND PRODUCED BEFORE HIM, PROVE THE ABOVE FACTS AND THERE IS NO SCOPE FOR ANY ADVERSE FINDING. THE CIT IN SUCH CIRCUMSTANCES OUGHT TO HAVE DROPPED THE PROCEEDINGS INITIATED U/S 263. THE CIT IS COMPLETEL Y MA NO.43 OF 2014 LEO TOWNSHIP DEVELOPERS INDIA LTD HYD. PAGE 6 OF 7 UNJUSTIFIED IN DIRECTING THE AO TO RE-DO THE ASSESS MENT JUST TO MAKE FURTHER ROAMING AND FISHING ENQUIRIES, WHEN THERE IS NOT EVEN AN IOTA OF EVIDENCE AVAILABLE ON RECORD TO SUPPORT THE SUSPICION THAT THE ADVANCE FOR SALE OF LAND AMOUNTING TO RS.5.01 CRORES RECEIVED BY THE ASSESSE E IS A CONCLUDED SALE ASSESSABLE TO TAX. 4. THE LD CIT OUGHT TO HAVE NOTED THAT AN ORDER U/S 263 CANNOT DIRECT THE AO TO CARRY OUT ENQUIRIES AND ASSESSMENT IN ANY PARTICULAR MANNER, INTERFERING WI TH THE QUASI JUDICIAL AUTHORITY OF THE AO. 5. THE LD CIT OUGHT TO HAVE NOTED THAT IN THE EXIST ENCE OF ERROR AND PREJUDICE TO THE REVENUE ARE SINE QUA NON (WHICH HAVE NOT BEEN ESTABLISHED IN THIS CASE). IN SUCH CIRCUMSTANCES THE ORDER U/S 263 CANNOT REVIVE THE ASSESSMENT PROCEEDINGS ONLY TO MAKE ROAMING ENQUIRI ES AND INVESTIGATIONS AND ONLY TO EXAMINE WHETHER A PARTICULAR RECEIPT IS ASSESSABLE TO TAX. 6. THE IMPUGNED ORDER U/S 263 IS PASSED ON MERE SUSPICIONS AND SURMISES, EXTRANEOUS, IRRELEVANT AND BASELESS FINDINGS AND OBSERVATIONS, ARBITRARY ASSUMPTION OF POWER AND THEREFORE CANNOT DISTURB TH E ASSESSMENT WHICH HAS REACHED A QUIETUS AFTER DUE PROCESS OF LAW. 7. FOR THIS, AND OTHER GROUND OR GROUNDS OF APPEAL MAY BE ARGUED AT THE TIME OF HEARING IT IS PRAYED THAT (A) THE IMPUGNED ORDER U/S 263 DATED 28.03.2011 BE QUASHED AND THE ASSESSMENT ORDER U/S 143(3) DATED 24.12.200 8 BE SUSTAINED AND (B) THE AO BE RESTRAINED FROM CARR YING OUT ANY ASSESSMENT PROCEEDINGS IN PURSUANCE OF THE IMPUGNED ORDER U/S 263 TILL THE DISPOSAL OF THIS AP PEAL FILED BEFORE THE HON'BLE ITAT. 8. FROM THE READING OF THE GROUNDS OF APPEAL, WE AR E OF THE OPINION THAT PARA 31 OF THE ORDER DATED 18.05.2012 IS NOT REQUIRED FOR DISPOSAL OF APPEAL BEFORE THE TRIBUNAL . IN THESE MA NO.43 OF 2014 LEO TOWNSHIP DEVELOPERS INDIA LTD HYD. PAGE 7 OF 7 CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE ENTIR E PARA 31 OF THE TRIBUNALS ORDER BE DELETED AND THE TRIBUNAL OR DER SHALL END WITH PARA NO.30 AND PARA NO.31 SHALL BE READ AS FO LLOWS: 31. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMI SSED. 9. IN THE RESULT MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH MARCH, 2015. S D/ - S D/ - (B. RAMAKOTAIAH) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 20 TH MARCH, 2015. VNODAN/SPS COPY TO: 1. M/S. LEO TOWNSHIP DEVELOPERS INDIA PVT. LTD FLAT N O.304, MINAR APARTMENTS, DECCAN TOWERS, BASHEERBAGH HYDERA BAD 500001 2. THE INCOME TAX OFFICER WARD 16(1) HYDERABAD 3. THE CIT(A)-IV HYDERABAD 4. THE CIT IV HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER