SRINIVASA RAO CHUNDURI,TANUKU V. THE INCOME TAX OFFICER, WARD-2, TANUKU

ITA 235/VIZ/2024

AI Insights

The case revolves around the reassessment of income tax for the Assessment Year 2013-14 concerning the sale of a property by Srinivasa Rao Chunduri. The property was sold for Rs. 65,00,000, significantly higher than its purchase price and the market value assessed by the SRO. The Income Tax Officer (ITO) issued a notice under section 148 of the Income Tax Act, 1961, suspecting income escape. The AO's reassessment was initially quashed by CIT(A), Rajamahendravaram, due to procedural lapses in handling the assessee's objections. However, after a rectification petition by the AO, CIT(A), National Faceless Appeal Centre, Delhi, partly allowed the appeal, leading to further legal contestation by the assessee. The Tribunal's decision emphasized the necessity of a speaking order in the disposal of objections to reassessment, aligning with the Supreme Court's precedent.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633183 (ITAT-VISAKHAPATNAM)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Other Referred Cases: GKN Drive Shaft (India) Ltd. v. ITO [259 ITR 19 (SC)]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reassessment proceedings; Sale consideration of property below Jantri Value; Rectification of order
• Section: 147; 148; 154; 54F; 50C

Judgement Text

"आयकर अपीलीय अधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM (HYBRID HEARING) श्री रिीश सूद ,न्याधयक सदस्य एिं श्री एस बालाक ृष्णन, लेखा सदस्य क े समक्ष BEFORE SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपीलसं./I.T.A.No.235/VIZ/2024 (निर्धारण वर्ा/ Assessment Year: 2013-14) Srinivasa Rao Chunduri D.No. 33-8-20(4), Satya Homes Kanchi Raju Vari Street Babu Gari Street, Tanuku – 534211 Andhra Pradesh [PAN:ADWPC3135D] v. Income Tax Officer – Ward – 2 Income Tax Office Aayakar Bhavan Sajjapuram, Tanuku – 534211 Andhra Pradesh (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Shri GVN Hari, Advocate राजस्व का प्रतततितित्व/ Department Represented by : Dr. Aparna Villuri, Sr. AR सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 15.05.2025 घोर्णध की तधरीख/Date of Pronouncement : 09.06.2025 आदेश /O R D E R PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER: 1. This appeal is filed by the assessee against rectification order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter in short “Ld.CIT(A)”] vide DIN & Order No. I.T.A.No.235/VIZ/2024 Srinivasa Rao Chunduri Page. No 2 ITBA/APL/M/250/2019-20/1017606575(1) dated 27.03.2024 for the A.Y.2013-14 passed Under section 154 r.w.s. 250 of the Income Tax Act, 1961 (in short ‘Act’). 2. Brief facts of the case are that, assessee being an individual has purchased Ac. 1.95 ½ cents of land at chivatam village for Rs. 3,53,000/- which was sold on 21.07.2012 for Rs. 65,00,000/-. It was observed that as per SRO, the market value of the property is Rs. 1,70,31,960/- and since the Chivatam Village is under the Municipal Limits of Tanuku Municipality, the provisions of section 50C of the Act are applicable. The assessee has not filed any return of income for the A.Y. 2015-16. Therefore, Ld. Assessing Officer [hereinafter in short “Ld. AO\"] observed that there is an “income escaping assessment” within the meaning of section 147 of the Act and accordingly notice under section 148 of the Act was issued on 13.11.2017 after taking necessary approval from the Competent Authorities. In response to the notice, assessee filed return of income on 02.02.2018 admitting a taxable income of Rs. 1,72,876/-. Assessee also claimed deduction under section 54F for Rs. 54,02,361/-. Thereafter, notice under section 143(2) of the Act dated 06.02.2018 was issued and served on the assessee on 10.02.2018. Assessee vide letter dated 19.02.2018 sought reasons for reopening of the assessment which was replied vide letter dated 23.02.2018 informing the reasons for reopening. On 27.02.2018 assessee filed its objections for reopening of the assessment. Ld. AO vide letter dated I.T.A.No.235/VIZ/2024 Srinivasa Rao Chunduri Page. No 3 07.03.2018 addressed to the objections raised by the assessee. Thereafter Ld.AO completed the assessment by adopting the SRO value and also disallowing the deduction claimed under section 54F of the Act. 3. On being aggreivedby the order of the Ld. AO, assessee filed an appeal before Ld. CIT(A), Rajamahendravaram. Ld. CIT(A), Rajamahendravaram vide his order dated 13.08.2019 affirmed that Ld. AO has not passed a speaking order for disposing the objections of the assessee for reopening of the case before proceeding with the assessment and therefore the re-assessment under section 147 was quashed. Ld. CIT(A), Rajamahendravaram thus allowed the appeal of the assessee. 4. Subsequently, the Ld. AO filed a rectification petition before Ld. CIT(A), National Faceless Appeal centre, Delhi, after seeking prior approval from the competent authorities stating that the assessee has not brought to the notice of the Ld. CIT(A), Rajamahendravaram, regarding the disposal of objections vide Ld.AO letter dated 07.03.2018. Considering the rectification petition, the Ld.CIT(A), National Faceless Appeal centre, Delhi, passed an order under section 154 r.w.s. 250 of the Act dated 27.03.2024 rectifying the order of the Ld. CIT(A), Rajamahendravaram, thereby partly allowing the appeal of the assessee. Ld.CIT(A), National Faceless Appeal centre, Delhi, observed that the order passed under section 250 of the Act by his predecessor has not considered the disposal of the objections by Ld AO, thereby rectifying the order passed by I.T.A.No.235/VIZ/2024 Srinivasa Rao Chunduri Page. No 4 Ld. CIT(A), Rajamahendravaram accordingly. Further he also directed the Ld.AO to allow the deduction under section 54F of the Act provided that the assessee has completed the construction of the new house within the three years after the date of sale of land and fulfilment of other conditions as specified under section 54F of the Act. 5. Feeling aggrieved by the order of the Ld.CIT(A), National Faceless Appeal centre, Delhi, assessee is in appeal before us by raising following grounds of appeal: - “1. The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case. 2. The order passed by the learned Commissioner of Income Tax (Appeals) u/s 154 r.w.s 250 of the Act is barred by limitation. 3. The decision of the learned Commissioner of Income Tax (Appeals) in upholding the validity of the notice issued u/s 148 of the Act is outside the scope of rectification u/s 154 of the Act. 4. Without prejudice to Ground no. 2 and 3, the learned Commissioner of Income Tax (Appeals) ought to have quashed the notice issued u/s 148 of the Act as invalid and ought to have quashed the consequent reassessment proceedings as void -ab- initio. 5. Without prejudice to Ground no.2 to 4, the learned Commissioner of Income Tax (Appeals) ought to have directed the assessing officer to allow the deduction of Rs.54,02,361 claimed by the appellant u/s 54F of the Act in as much as the assessing officer mentioned in the assessment order passed on 26.11.2018 u/s 143 (3) r.w.s 147 of the Act that the appellant completed the construction of the house within 3 years from the date of sale of the asset. 6. Any other grounds may be urged at the time of hearing.” I.T.A.No.235/VIZ/2024 Srinivasa Rao Chunduri Page. No 5 6. Ground Nos. 1 & 6 are general in nature and needs no specific adjudication. 7. Ground Nos. 2, 3 & 4 are not pressed by the Ld. Authorised Representative [hereinafter “Ld.AR”] and hence disposed of as not pressed. 8. Ground Nos. 5 is with respect to allowance of deduction under section 54F of the Act. At the outset, Ld.AR argued that the assessee has raised objections vide letter dated 27.02.2018 regarding the issuance of notice under section 148 of the Act. However, he submitted that Ld. AO vide letter dated 07.03.2018 has not passed a speaking order regarding the second objection of allowance of deduction under section 54F of the Act but has only sought for clarification and information from the assessee. He therefore submitted that this cannot be considered as disposal of objections raised by the assessee and hence order passed by the Ld. CIT(A), Rajamahendravaram dated 13.08.2019 quashing the reassessment proceedings for non-disposal of the objections is justifiable and to be sustained. 9. Per contra, Ld. Departmental Representative [hereinafter in short “Ld.DR”] referring to the letter dated 07.03.2018 by the Ld. AO and argued that Ld. AO has rightly disposed of the objections raised by the assessee vide letter dated 27.02.2018. Ld. DR further submitted that this disposal of objections was not brought to the notice of the Ld. CIT(A), Rajamahendravaram and thus the I.T.A.No.235/VIZ/2024 Srinivasa Rao Chunduri Page. No 6 Ld.CIT(A) has passed an order that Ld.AO has not disposed of the objections. She therefore, pleaded that the rectification order passed by the Ld. CIT(A), National Faceless Appeal centre, Delhi dated 27.03.2024 is justifiable and valid in law. 10. We have heard both the sides and perused the material available on record. It is an admitted and undisputed fact that the assessee has sought reasons for reopening which was communicated to him. Assessee objecting to the re-assessment proceedings by way of issue of notice under section 148 of the Act filed his objections vide letter dated 27.02.2018. Ld. AO vide letter dated 07.03.2018 replied to the objections raised by the assessee for reopening of the assessment under section 148 of the Act. The disposal of the objections by the Ld. AO is reproduced below: - I.T.A.No.235/VIZ/2024 Srinivasa Rao Chunduri Page. No 7 11. It is noticed that the Ld. AO has not passed a speaking order while disposing the objections raised by the assessee but rather called for clarification and information from the assessee. The Hon’ble Supreme Court in the case of GKN Drive Shaft (India) Ltd., v. ITO [259 ITR 19 (SC)] has clearly held that Ld.AO has to dispose off the objections, if filed, by passing a speaking order before proceeding with the assessment. Considering the ratio laid down in the case of GKN Drive Shaft (India) Ltd., v. ITO (supra) the Ld. CIT(A), Rajamahendravaram during the first round of appeal proceedings found that the Ld. AO has not disposed of the objections as mandated by passing a speaking order and therefore quashed the re-assessment order passed by the Ld. AO. However, the Ld. AO citing that the Ld. CIT(A), Rajamahendravaram while passing the order has not considered the disposal of objection by the Ld. AO vide letter dated 07.03.2018 and therefore sought the order to be rectified. On perusal of the letter dated 07.03.2018, Ld. AO has sought for details to consider I.T.A.No.235/VIZ/2024 Srinivasa Rao Chunduri Page. No 8 the claim for deduction under section 54F of the Act which cannot be considered as disposal of the objection by way of a speaking order. In the light of the facts and circumstances as discussed above, we find that the Ld. AO has not passed a speaking order while disposing of the objections raised by the assessee for the reopening of the proceedings under section 148 of the Act. We are therefore inclined to restore the order passed by the Ld. CIT(A), Rajamahendravaram dated 13.08.2019 while setting aside the rectification order passed under section 154 r.w.s. 250 of the Act by the Ld. CIT(A), National Faceless Appeal centre, Delhi dated 27.03.2024. Accordingly, Ground No. 5 raised by the assessee is allowed. 12. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 09th June, 2025. Sd/- (रिीश सूद) (RAVISH SOOD) न्याधयक सदस्य/JUDICIAL MEMBER Sd/- (एस बालाक ृष्णन) (S. BALAKRISHNAN) लेखासदस्य/ACCOUNTANT MEMBER Dated:09.06.2025 Giridhar, Sr.PS I.T.A.No.235/VIZ/2024 Srinivasa Rao Chunduri Page. No 9 आदेशकीप्रनतनलनपअग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/ The Assessee : Srinivasa Rao Chunduri D.No. 33-8-20(4), Satya Homes Kanchi Raju Vari Street Babu Gari Street, Tanuku – 534211 Andhra Pradesh 2. रधजस्व/ The Revenue : Income Tax Officer – Ward – 2 Income Tax Office Aayakar Bhavan Sajjapuram, Tanuku – 534211 Andhra Pradesh 3. The Principal Commissioner of Income Tax 4. नवभधगीयप्रनतनिनर्, आयकरअपीलीयअनर्करण, नवशधखधपटणम /DR,ITAT, Visakhapatnam 5. The Commissioner of Income Tax 6. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam "