PRINCIPAL COMMISSIONER OF INCOME-TAX MEERUT vs. M/S V.A.M. RESORTS and HOTELS P LTD.

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IAPL/283/2017HC AllahabadUPHC01188448201725 August 20192 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal filed by the Revenue was devoid of merit and dismissed it. The Court noted that the ITAT had allowed the assessee's appeal on the ground that the order under Section 263 of the Act had already been set aside. The Assessee had placed on record this Court's order in Income Tax Appeal No. 107 of 2015 dated 20.08.2019, wherein the department's appeal was dismissed and the proceedings under Section 263 were held to be bad. Consequently, the consequential order passed by the Assessing Officer was also deemed bad. Therefore, the questions of law were decided in favour of the assessee and against the revenue. The operative direction was the dismissal of the appeal.

What were the facts?

The appeal was filed by the Principal Commissioner of Income-Tax, Meerut (Revenue) against the order of the Income Tax Appellate Tribunal (ITAT) dated 23.03.2019. The ITAT had allowed the appeal of M/s V.A.M. Resorts And Hotels P Ltd. (Assessee). The Revenue's grievance stemmed from the ITAT's deletion of an order passed under Section 263 of the Income Tax Act, 1961, which had been initiated by the Assessing Officer on 07.03.2014. The Revenue contended that the ITAT erred in deleting the Section 263 order, particularly concerning development expenses, agricultural income, and discrepancies in gross receipts. The assessment years are not explicitly stated.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the ITAT erred in law in deleting the order under Section 263 concerning development expenses, given that only a small portion of such expenses was related to land development receipts. 2. Whether the ITAT erred in law in deleting the order under Section 263 concerning agricultural income, when the assessee merely purchased land on which crops were sown, and the sale proceeds of these crops do not constitute agricultural income. 3. Whether the ITAT erred in law in allowing the assessee's appeal by ignoring the difference between gross receipts as per Form 26AS and those declared by the assessee, without a reconciliation statement. Revenue's Contentions: The Revenue argued that the ITAT erred in deleting the Section 263 order on the aforementioned issues. They contended that the Assessing Officer's order was valid and that the ITAT should not have set it aside without proper consideration of the facts. Assessee's Contentions: The Assessee relied on this Court's order passed in Income Tax Appeal No. 107 of 2015 dated 20.08.2019, which dismissed the department's appeal and held the proceedings under Section 263 of the Act to be bad. Consequently, the Assessee argued that the consequential order passed by the Assessing Officer is also bad.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3)

AI-generated summary — verify with the full judgment below

Court No. - 35 Case :- INCOME TAX APPEAL No. - 283 of 2017 Appellant :- Principal Commissioner Of Income-Tax Meerut Respondent :- M/S V.A.M. Resorts And Hotels P Ltd. Counsel for Appellant :- Manu Ghildyal Counsel for Respondent :- Suyash Agrawal,Suyash Agarwal Hon'ble Bharati Sapru,J. Hon'ble Rohit Ranjan Agarwal,J. Heard Sri Manu Ghildyal, learned Counsel for the revenue and Sri R.R.Agarwal, learned Senior Counsel assisted by Sri Suyash Agarwal, learned Counsel for the assessee. This appeal was admitted on 04.10.2017 on the following substantial questions of law:- "(1) Whether the Ld. ITAT has erred in law in deleting the order u/s 263 on the issue of development expenses when it was clear that only a small portion of such development expenses was actually related to land development receipts? (2) Whether the Ld. ITAT has erred in law in deleting the order u/s 263 on the issue of agricultural income when it was clear that assessee only purchased the land on which crops were sown and sale proceed of such crops does not constitute agricultural income? (3) Whether the Ld. ITAT has erred in law in allowing the appeal of the assessee ignoring the fact that there was a difference between gross receipts as per 26AS and gross receipts declared by the assessee when the assessee did not furnish any reconciliation statement to explain the difference?" Sri Manu Ghildyal, learned Counsel for the revenue submits that the order under challenge arising out of proceedings under Section 263/143(3) of the Income Tax Act dated 07.03.2014 had been passed by the assessing officer. The Tribunal had allowed the appeal of the assessee on 23.03.2019 on the ground that the order under Section 263 of the Act had already been set aside, as such no addition can be made. Sri R.R. Agarwal, learned Senior Counsel appearing for the assessee has placed on record the order of this court passed in Income Tax Appeal No.107 of 2015 dated 20.08.2019 whereby the appeal of the department was dismissed wherein the proceedings under Section 263 of the Act held to be bad.

Hence, the consequential order passed by the assessing officer is also bad. In view of the above, the appeal is devoid of merit and is hereby dismissed. The questions of law are decided in favour of the assessee and against the revenue. Order Date :- 26.8.2019 S.P.

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