DY. COMMISSIONER OF INCOME TAX, CIRCLE-11(1), HYDERABAD vs. GOTTUMUKKALA RAMA RAO, HYDERABAD

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ITA 790/HYD/2019Status: DisposedITAT Hyderabad08 September 2021AY 2008-098 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer's reasons for reopening the assessment were unsustainable. It further found that the transfer of the capital asset, as per the stricter interpretation of Section 2(47)(v) of the Act, had not taken place in the relevant assessment year.

What were the facts?

The Assessing Officer made a reassessment addition of Long Term Capital Gains (LTCG) for AY 2008-09. The assessee argued that the transfer of the capital asset occurred after September 25, 2012, and thus not taxable in the impugned year.

What were the issues?

Whether the reassessment proceedings were validly initiated and whether the LTCG addition was justified based on the timing of the transfer of the capital asset.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148,Section 2(47)(v),Section 53A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD ‘B’ BENCH, HYDERABAD.

For Appellant: Shri Rohit Majumdar (D.R.)

Per Shri S.S. Godara, J.M. : This assessee’s appeal for Asst. Year 2008-09 arises from the Commissioner of Income Tax (Appeals)-7, Hyderabad’s order dt.20.03.2019 passed in case No.077/CIT(A)-7/2018-19 in proceedings under Section 143(3) r.w.s. 147 of Income Tax Act, 1961 (‘the Act’).

Heard both parties. Case file perused.

2

2.

Coming to the sole substantive issue of correctness of the learned CIT(A)’s action deleting Long Term Capital Gains (LTCG) addition amounting to Rs.2,98,49,374 made in the course of reassessment framed on 31.03.2016, both the learned representatives invited our attention to lower appellate discussion to this effect reading as under :

3 4 5 6

3.

We have given our thoughtful consideration to rival pleadings against and in support of the CIT(A)’s foregoing conclusion deciding the issue of assessment of LTCG in assessee's favour. Case file suggests that the Assessing Officer had made a protective addition in Assessment Year 2007-08 which stood deleted in the tribunal’s order (supra)

7 on the ground that no transfer within the meaning of section 2(47)(v) r.w.s. 53A of the Act had taken place therein. The factual position is no different in the impugned A.Y. 2008-09 as well as the relevant “transfer” stood completed after 25.09.2012 only (supra).

4.

We further note during the course of hearing that the Assessing Officer’s reopening reasons recorded also make a fit case to hold the said section 148 / 147 mechanism being invoked here as not sustainable in law. We deem it appropriate at this stage to reproduce the Assessing Officer’s reasons to this effect as under :

“ As per the Sworn statement of Sri G. Rama Rao, recorded on 09.11.2011 u/s 131 of the I.T. Act, 1961 for the question no. 7 regarding filing of all the due returns of income considering the substantive transactions for self and family members, the assessee stated that, "it is true that there are transactions starting from the A.Y 2007-08 to 2011-12 wherein the income was required to be offered and however some of the income was not offered and the tax on is yet to be paid. Though the returns of income of myself and my wife have been filed upto A.Y. 2008-09, considering the substantive issues and the incomes which are required to be offered by me and the tax thereof I will file the returns / revise my returns of income. In view of the above, I have reason to believe that income chargeable to tax has escaped assessment for the AY 2008-09 as per provisions of section 147 of the LT. Act, 1961.”

5.

Learned department representative fails to dispute the Assessing Officer’s foregoing reopening reasons

8 nowhere indicate as to whether the assessee had transferred his capital asset in the relevant previous year 2007-08 or not. Hon’ble Bombay high court’s in Hindustan Lever Limited Vs. R.B. Wadekar (2014) 268 ITR 332 (Bom) has held long back that the Assessing Officer’s reopening reasons have to be read on standalone basis without any scope for addition, deletion or substitution therein at a later stage. We therefore quash the impugned reassessment as well on account of the Assessing Officer’s failure to add LTCG without invoking section 2(47)(v) of the Act going by stricter interpretation principle in tax proceedings.

6.

This Revenue’s appeal is dismissed. Order pronounced in the open court on 8th Sept., 2021. (L.P. SAHU) (S.S. GODARA) Accountant Member Judicial Member Hyderabad, Dt.08.09.2021. * Reddy gp Copy to :

1.

Sri Gottimukkala Rama Rao, Plot No.817, Vivekananda Nagar Colony, Kukatpally, Hyderabad-500 072

2.

DCIT, Circle 11(1), Hyderabad.

3.

Pr. C I T-5, Hyderabad.

4.

CIT(Appeals)-7, Hyderabad.

5.

DR, ITAT, Hyderabad.

6.

Guard File.

By Order

Sr. Pvt. Secretary, ITAT, Hyderabad.

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