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Income Tax Appellate Tribunal, HYDERABAD ‘B’ BENCH, HYDERABAD.
Before: SHRI S.S. GODARA & SHRI L. P. SAHU
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD ‘B’ BENCH, HYDERABAD.
BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L. P. SAHU, ACCOUNTANT MEMBER (Through Virtual Hearing)
ITA No.367 & 368/Hyd/2017 (Assessment Year : 2012-13)
i) Shri C. M. Ramesh, Hyderabad. PAN ACYPC 8722B ii) Shri C. M. Rajesh, Hyderabad. PAN ABTPC 8391G …..Appellants.
Vs.
Dy. Commissioner of Income Tax, Circle 3(1), Hyderabad. …..Respondent.
Appellant By : Shri P. Murali Mohana Rao. (A.R.) Respondent By : Shri Balakrishna. (CIT-D.R.)
Date of Hearing : 10.06.2021. Date of Pronouncement : 23.11.2021.
O R D E R Per Shri S.S. Godara, J.M. : These two assessees’ appeals for Asst. Year 2012-13 arise from
the separate orders of Principal Commissioner of Income Tax-3,
Hyderabad dt.24.01.2017 & 7.2.2017 passed in case F.No.10/Pr.CIT-
2 ITA Nos.367 & 368/Hyd/2017 3/263/16-17 and 10/Pr.CIT-3/263/16-17 in proceedings under Section
263 of Income Tax Act, 1961 (‘the Act’); respectively.
Heard both the parties. Case files perused.
It emerges during the course of hearing that the PCIT herein has
termed both the regular assessments framed in these twin assessees’
cases on 26.03.2015 as erroneous one so far as causing prejudice to the
interest of Revenue thereby assuming 263 revision jurisdiction for
directing the Assessing Officer to frame fresh assessments for the
purpose of examining the common issue of capital gains.
We note with the able assistance coming from both the learned
representatives that the PCIT’s detailed discussion has raised twin issues
of non-invocation of 50C and interest expenditure disallowance for the
purpose of computing assessees’ Long Term Capital Gains (LTCG). His
identical detailed discussion from paras 6 onwards holds that neither
the Assessing Officer had examined or enquired the applicability of
section 50C of the Act as well as the second aspect of allowability
interest expenditure for computing LTCG.
3 ITA Nos.367 & 368/Hyd/2017 5. Learned counsel strongly argued that the Assessing Officer had
rightly not invoked 50C addition going by the SRO price since there were
many distressing factors; mainly including location of the lands in issue
for not making any addition after carrying out detailed enquiries only in
scrutiny.
His next argument for the second issue of interest cost is that
these assessees’ had utilized corporate loan(s) for acquiring the capital
asset in issue which in turn were satisfied by obtaining yet another loans
in personal name(s) from M/s. Indiabulls Financial Services Limited after
acquisition of the asset in issue. Mr. Murali Mohana Rao vehemently
contended therefore that since the assessee had proved very much a
live nexus between the earlier corporate loans being utilized for
acquiring the capital asset and repayment thereof by similar credits
coming from M/s. Indiabulls Financial Services Limited’s loan, the
Assessing Officer had taken a conscious decision not to disallow the said
interest for the purpose of computing capital gains.
The Revenue has strongly supported the PCIT’s revision direction
herein.
4 ITA Nos.367 & 368/Hyd/2017 8. We have heard rival contentions and find no merit from the
assessee's stand. This is for the reason that we have ourselves
summoned and perused the corresponding assessment files made
available by the department wherein there is not even a slight indication
of the Assessing Officer having carried out any enquiry; much less a
detailed one at all, regarding applicability of section 50C as well as
allowability of interest amount on loans obtained after acquisition of
the capital asset in issue so as to come to the conclusion that the learned
PCIT has wrongly invoked his 263 revision jurisdiction. Hon’ble apex
court landmark decision in Malabar Industrial Co. Vs. CIT 243 ITR 83 (SC)
has settled the law long back that an assessment has to be both
erroneous as well as causing prejudice to the interest of revenue;
simultaneously before CIT or the PCIT; as the case may be, decides to
assume the impugned revision jurisdiction. Their lordships further
clarified that merely because the Assessing Officer has taken one of the
two possible views would not render an assessment as erroneous one
causing prejudice to the interest of revenue. Hon’ble apex court lastly
concluded that such a non-enquiry itself by the Assessing Officer during
the course of assessment indeed attract exercise of revision jurisdiction.
5 ITA Nos.367 & 368/Hyd/2017 We thus hold in this factual backdrop that the PCIT herein has rightly
concluded the Assessing Officer not to have carried out any enquiry(ies)
regarding the foregoing twin issues thereby rendering 143(2)
assessment(s) dt.26.03.2015 as erroneous ones causing prejudice to the
interest of revenue. His revision jurisdiction exercised in both these
cases is upheld therefore.
It is lastly noticed that these cases were heard on 10.06.2021 and
are being pronounced beyond the period of 90 days. We next note that
hon’ble apex court’s recent directions in Misc. Application No.665 of
2021 in SMW(c) of 2020 “IN RE: COGNIZANCE FOR EXTENSION OF
LIMITATION” has excluded the time period from 15.3.2020 to 2.10.2020
in all respects.
Both these assessees’ appeals are dismissed in above terms. A
copy of this common order be placed in the respective case files.
Order pronounced in the open court on 23rd Nov., 2021. Sd/- Sd/- (L.P. SAHU) (S.S. GODARA) Accountant Member Judicial Member Hyderabad, Dt. 23.11.2021. * Reddy gp
6 ITA Nos.367 & 368/Hyd/2017 Copy to : 1. i) Shri C.M. Ramesh, 8-2-2993/82/A, Plot No.1295, Road No.63, Jubilee Hills, Hyderabad. ii) Shri C.M. Rajesh, Plot No.1295, Road No.63, Jubilee Hills, Hyderabad. 2. DCIT, Circle 3(1), Hyderabad. 3. Pr. C I T-3, Hyderabad. 4. Addl. CIT, Range-3, Hyderabad. 5. DR, ITAT, Hyderabad. 6. Guard File.
By Order Sr. Pvt. Secretary, ITAT, Hyderabad.