Sri M.V.Madhusudan Sarma, Hyderabad V. Asst. Commissioner of Income Tax, Circle-4(1), Hyderabad

MA 7/Hyd/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 6755 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-06-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 29-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANJALA SAHU
• Assessee Lawyers: P MURALI MOHAN RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1330/HYD/2017 ASSESSMENT YEAR: 2007-08 VENKATA MADHUSUDANA SARMA MALAPAKA, HYDERABAD [PAN: ADYPM1458M] VS ASST. COMMISSIONER OF INCOME TAX, CIRCLE-4(1), HYDERABAD (APPELLANT) (RESPONDENT) M.A. NO. 07/HYD/2018 [ARISING OUT OF ITA NO. 1612/HYD/2014] ASSESSMENT YEAR: 2007-08 M.V. MADHUSUDHAN SHARMA HYDERABAD [PAN: ADYPM1458M] VS ASST. COMMISSIONER OF INCOME TAX, CIRCLE-4(1), HYDERABAD (APPLICANT) (RESPONDENT) FOR ASSESSEE : SHRI P. MURALI MOHAN RAO, AR FOR REVENUE : SMT. ANJALA SAHU, DR DATE OF HEARING : 01-06-2018 DATE OF PRONOUNCEMENT : 27-06-2018 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-1, HYDERABAD, DATED 24-04-2017, REJECTING ASSESSEES APPEAL ON THE CONSE QUENTIAL ITA NO. 1330/HYD/2017 M.A. NO. 07/HYD/2018 :- 2 - : ORDER PASSED. THE MISCELLANEOUS APPLICATION IS ON T HE DIRECTIONS OF THE ITAT, GIVEN IN ITA NO. 1612/HYD/201 4. 2. BRIEFLY STATED, ASSESSEE HAS A PROPRIETARY CONCERN M/S. WILSHIRE SOFTWARE TECHNOLOGIES AND MAIN BUSINESS IS IMPARTING TRAINING IN COMPUTER SOFTWARE. A SURVEY WAS CONDUCTED ON ASSESSEE'S BUSINESS PREMISES IN WHICH A SLIP WAS FOUND WHERE IN FOUR FLAT NUMBERS AND AMOUNT IN TWO DI GITS WAS MENTIONED. THIS, WHEN ENQUIRED WAS EXPLAINED THA T IT REFERS TO ACTUAL SALE CONSIDERATION OF FOUR APARTMENTS. ASSESSEE ADMITTED AN AMOUNT OF RS. 75 LAKHS IN THE CO URSE OF SURVEY. ASSESSEE FOLLOWED UP THE SAME BY DECLARING TOTAL INCOME AT RS. 2,72,60,897/- INCLUDING THE ADMITTED AM OUNT. HOWEVER, IN THE COURSE OF ASSESSMENT, ASSESSING OFFIC ER (AO) WAS OF THE VIEW THAT THE AVERAGE SALE RATE OF FOUR FLATS WAS RS. 2,417/- PER SQ. FT., WHEREAS SALE PRICE OF OTHER TWO FLATS I.E., 201 & 502 WORKS OUT TO RS. 1,058/- PER SQ. FT. CONSID ERING THOSE FLATS ARE SOLD AT A LATER TIME FOR A LESSER PRICE AND THAT THERE CANNOT BE VARIATION IN THE SALE PRICE TO THAT EXTEN T, THE DIFFERENCE PRICE WORKED OUT AT RS. 33,56,824/- WAS AD DED TO THE RETURNED INCOME. IT WAS CONTENDED BEFORE THE LD.CIT( A) THAT ADDITIONAL CONSIDERATION WAS RECEIVED AS THOSE PAR TIES VARIED FROM THE APPROVED PLAN AND WARRANTED ADDITIONA L WORKS WHICH WAS NOT THE CASE WITH REFERENCE TO OTHER TWO FLA TS. FURTHER, IT WAS SUBMITTED THAT ALL THE SIX FLATS WERE SOLD AT THE SAME TIME MUCH BEFORE THE SURVEY WAS CONDUCTED. KEEPIN G THAT IN VIEW, ASSESSEE DECLARED AN AMOUNT OF RS. 75 LA KHS AND ITA NO. 1330/HYD/2017 M.A. NO. 07/HYD/2018 :- 3 - : THEREFORE FURTHER ADDITION WAS NOT REQUIRED. LD.CIT(A) HOWEVER, DID NOT AGREE AND UPHELD THE CONTENTIONS OF AO. WHEN TH E MATTER WAS CARRIED TO ITAT, NOTICING THAT TWO FLATS HAVE BEEN SOLD AT THE SAME TIME AND CONSIDERING THE SUBMISSION THA T DECLARATION WAS FOR ALL SIX FLATS SOLD, REMITTED THE MA TTER TO AO RE-EXAMINE THE ISSUE, VIDE PARA 13 OF THE APPEAL IN ITA NO. 1365 AND 1456/HYD/2011 DT. 31-08-2012. THE AO, HOWE VER, PASSED A CONSEQUENTIAL ORDER ON 10-10-2012 ALLOWING THE RELIEF GRANTED BY THE ITAT ON ANOTHER ISSUE BUT NOT EXAMINED T HE ISSUE OF ADDITION WITH REFERENCE TO THE SALE PRICE OF THE TWO APARTMENTS. 2.1. ASSESSEE, HOWEVER, CARRIED THE MATTER TO CIT(A), WHO ADJUDICATED ON AN ISSUE WHICH WAS NOT EXAMINED BY THE AO IN THE CONSEQUENTIAL ORDER DT. 10-10-2012. WHEN REVENUE H AS CARRIED THE MATTER IN APPEAL, THE ITAT HAS CONSIDERED THE SAME AND SET ASIDE THE ORDER OF CIT(A) WITH A DIRECTION TO AO TO COMPLETE THE VERIFICATION WITHIN A PERIOD OF SIX MONTH S FROM THE RECEIPT OF THE ORDER. THE FINDINGS OF THE ITAT IN P ARA 6 ARE AS UNDER: 6. WE HAVE CONSIDERED THE CONTENTIONS AND ARGUMENT S OF THE RIVAL PARTIES. BASICALLY, AO HAS NOT EXAMINED THE ISSUE AT ALL WHILE ISSUING THE CONSEQUENTIAL ORDER. IN FACT THE CONSEQ UENTIAL ORDER ITSELF, THE AO HAS STATED THE FOLLOWING. ITA NO. 1330/HYD/2017 M.A. NO. 07/HYD/2018 :- 4 - : ITAT HAS DIRECTED THE AO TO RE-EXAMINE THE ADDITION AL INCOME OF RS. 75 LAKHS IS RELATING TO FLAT NO. 201 AND 502 IN ADDITI ON TO FLAT NOS. 103, 204, 401 AND 404. CREDIT WILL BE GIVEN IF NECESSARY AFTER E XAMINING THE ISSUE. SINCE THE AO HAS NOT EXAMINED THE ISSUE AS DIRECTED BY THE ITAT, WE ARE OF THE OPINION THAT CIT(A) ERRED IN ENTERTAININ G THE APPEAL ON THE CONSEQUENTIAL ORDER. AS THIS ISSUE IS NOT ARISING OUT OF THE IMPUGNED ORDER, IN OUR VIEW, CIT(A) EXCEEDED THE JURISDICTIO N IN DECIDING THE ISSUE WHICH WAS NOT SUBJECT MATTER OF THE CONSEQUEN TIAL ORDER. IN VIEW OF THIS, WE HAVE NO OPTION THAN TO SET ASIDE T HE ORDER OF CIT(A) AND DIRECT THE AO TO COMPLETE THE VERIFICATION AND GIVE EFFECT TO THE ORDER OF ITAT AFTER DUE EXAMINATION. ASSESSEE'S EXP LANATION SHOULD BE CONSIDERED AFTER GIVING DUE OPPORTUNITY. WITH TH ESE DIRECTIONS, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE M ATTER TO THE FILE OF AO TO COMPLETE THE VERIFICATION WITHIN A PERIOD OF SIX MONTHS FROM THE RECEIPT OF THIS ORDER AND PASS NECESSARY ORDERS. THIS ORDER BY ITAT WAS ISSUED ON 08-07-2015. 3. IT SO TRANSPIRED THAT THE AO HAS PASSED THE CONSEQUENTIAL ORDER ON THE ISSUE OF VERIFICATION VIDE ORDER DT. 08-08-2013. THIS ORDER WAS NOT PLACED BEFORE THE ITAT , WHEN THE APPEAL WAS HEARD IN ITA NO. 1612/HYD/2014 ON THE CONSEQUENTIAL ORDER DT. 10-10-2012. THEREFORE, THE ITA T HAS ISSUED THE ABOVE DIRECTIONS TO THE AO TO COMPLETE VERIF ICATION AND PASS THE CONSEQUENTIAL ORDER. 4. AFTER THE ABOVE ORDER OF ITAT, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A) ON THE SECOND CONSEQUENTIA L ORDER DATE 08-08-2013, WITH A DELAY OF 828 DAYS AND INSTITUT ED AN APPEAL ON 14-12-2015. LD.CIT(A) CONDONED THE DELAY A ND APPEAL WAS ADMITTED BUT ON MERITS, DID NOT ENTERTAIN TH E APPEAL STATING THAT THE ITAT HAS SET ASIDE THE ISSUE TO T HE AO. ITA NO. 1330/HYD/2017 M.A. NO. 07/HYD/2018 :- 5 - : CONSEQUENTLY, ASSESSEE IS IN APPEAL ON THE IMPUGNED ORDER OF CIT(A) REJECTING ASSESSEES CONTENTIONS IN THE CONSEQU ENTIAL ORDER AND ALSO PREFERRED A MISCELLANEOUS APPLICATION WITH A REQUEST TO MODIFY THE DIRECTIONS OF THE ITAT, GIVEN IN T HE APPEAL IN ITA NO. 1612/HYD/2014. 5. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE ARE OF TH E OPINION THAT THE APPEAL BEFORE THE LD.CIT(A) IS TO BE RESTORED FOR CONSIDERING ON MERITS. THE IMPUGNED ORDER I.E., THE CONSEQUENTIAL ORDER DT. 08-08-2013 HAS NOT BEEN ADJUDI CATED BY THE CIT(A). SINCE THIS ORDER WAS NOT PLACED BEFORE THE ITAT AND AS ITAT HAS NOTICED THAT LD.CIT(A) HAS WRONGLY CON SIDERED THE ISSUE WHICH WAS NOT SUBJECT MATTER OF THE APPEAL IN T HE APPEAL ORDER DT. 26-05-2014, ITAT HAS DIRECTED THE AO TO COMPLETE THE VERIFICATION AND PASS A CONSEQUENTIAL ORD ER WITHIN SIX MONTHS. SINCE THE AO HAS COMPLETED THAT EX ERCISE BY THE TIME ITAT HAS PASSED ORDER ON 08-07-2015, WE M ODIFY THE DIRECTION. SINCE THE AO HAS ALREADY COMPLETED VER IFICATION, ISSUE OF RE-EXAMINATION DOES NOT ARISE AT THE LEVEL OF AO. THEREFORE, WE RESTORE THE APPEAL ON THE CONSEQUENTIAL ORDER DT. 08-08-2013 BEFORE THE CIT(A) TO BE ADJUDICATED ON MERI TS. LD.CIT(A) IS DIRECTED TO CONSIDER ASSESSEES SUBMISSI ONS ON MERITS WITH REFERENCE TO THE SUPPRESSION/ DECLARATION OF RECEIPTS CONTESTED ORIGINALLY. NEEDLESS TO STATE THAT AS SESSEE SHOULD BE GIVEN DUE OPPORTUNITY. ITA NO. 1330/HYD/2017 M.A. NO. 07/HYD/2018 :- 6 - : 6. IN THE RESULT APPEAL IN ITA NO. 1330/HYD/2017 IS CONSIDERED ALLOWED FOR STATISTICAL PURPOSES AND MISCEL LANEOUS APPLICATION NO. 07/HYD/2018 IS ALLOWED TO THAT EXTENT. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JUNE, 2018 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 27 TH JUNE, 2018 TNMM ITA NO. 1330/HYD/2017 M.A. NO. 07/HYD/2018 :- 7 - : COPY TO : 1. SHRI VENKATA MADHUSUDANA SARMA MALAPAKA, C/O. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3 , 1 ST FLOOR, SOMAJIGUDA, HYDERABAD. 2. ACIT, CIRCLE-4(1), HYDERABAD. 3. CIT(APPEALS)-1, HYDERABAD. 4. PR.CIT-1,HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.