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Income Tax Appellate Tribunal, HYDERABAD ‘A’ BENCH, HYDERABAD
Before: S/SHRI A .MOHAN ALANKAMONY & CHANDRA MOHAN GARG
O R D E R Per Bench This is an appeal filed by the assessee against the order of the CIT (IT& TP), Hyderabad dated 26th February, 2020 for the assessment year 2013-14.
The assessee has raised the following grounds of appeal:
“1. The order u/s.263 dated 26.2.2020 in the facts and circumstances of the case, is erroneous both on facts and in law. 2. The ld CIT is not justified in setting aside the assessment u/s.263 without pointing out specific insufficiency in the enquiries caused by the AO especially when the AO has considered the all the material on record and made necessary enquiries.
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3. The ld CIT failed to appreciate the fact that the entire transaction of receipt of advance and subsequent repayment was fully examined in the proceedings u/s.143(3) r.w.s 147 and hence, order of the AO is not erroneous.
4. The ld CIT is not justified in questioning the financial capacity of the persons giving advance against purchase, especially ignoring the fact that the AO having examined the farmers as well as the detailed material placed before him arrived at a factual finding,. 5. The ld CIT failed to appreciate the legal position that his observations and findings in the order u/s.263 of the Act, would amount to review of the matter which is not permissible in the eye of law. 6. The ld CIT failed to appreciate the fact that the provisions of section 263 cannot be invoked to examine source of source especially when the farmers confirmed on oath, and sources for repayment on cancellation was also examined in the hands of the appellant. 7. The ld Revisional Authority erred in adopting a prejudicial view on the basis of initial explanation by the appellant, overlooking the fact that the subsequent correct explanation was noticed and fully verified by the AO. 8. The ld Revisional Authority erred in invoking the provisions of section 263 of the Act when an appeal proceedings are pending before first appellate authority.”
The appeal filed by the assessee is barred by 291 days. The assessee has filed condonation application dated 5.8.2021, stating that the order u/s.263 of the Act was received by the assessee on 5.3.2020, thus, the time limit for filing appeal before the Appellate Tribunal u/s.253 of the act was 4.5.2020. However, due to the outbreak of COVID-19, the appeal could not be filed within the due date. In the petition, the assessee referred to the decision of Hon’ble Supreme Court vide its order dted 23rd March, 2020 in Writ Petition (Civil) No(s) 3/2020 took suo moto cognizance
P a g e 2 | 9 of the difficulties faced by the citizens of the Country on account of COVID- 19 pandamic by which litigants are facing challenges in filing their petitions/applications/suits/appeals within the period of limitation and ordered that the period of limitation in all such proceedings shall stand extended with effect from 15th March, 2020 till further orders and declared that the order should be a binding order within the meaning of Article 141 on all Courts/Tribunals and authorities. Hence, the assessee filed appeal on 19.2.2021 causing a delay of 291 days. It was prayed that the delay caused be condoned. Ld CIT DR did not oppose to the condonation of delay application of the assessee/applicant.
After hearing both the sides and respectfully following the judgment of Hon’ble Supreme Court dated 23.3.2020, we condone the delay of 291 days and admit the appeal for adjudication.
Facts of the case are that the assessee is an NIR, filed his return of income for the assessment year 2013-14 on 20.3.2015 admitting taxable income of Rs.3,61,720/- from “other sources” and claimed refund of Rs.18,810/- from the TDS made of Rs.35,465/-. The Assessing Officer completed the assessment u/s.143(3) r.w s 147 of the Act on 31.12.2018 assessing taxable income at Rs.10,61,720/-.
The CIT (IT & TP), Hyderabad, issued notice u/s 263 dated 11.12.2019, seeking to revise the assessment order passed u/s 143(3)/147
P a g e 3 | 9 of the Act. The CIT (IT & TP), Hyderabad was of the view that the assessment order was passed without making proper inquiries/ verification/investigations which should have been made before accepting the cash deposits in NRO account of the assessee of Rs.2,25,00,000/- , therefore, the assessment order is erroneous and prejudicial to the interest of the Revenue. In response to the show cause notice, the assessee submitted that the assessment order is not erroneous and prejudicial to the interest of revenue and also the assessment has been made after making inquiries or verification on all the facts as have been alleged in the show cause notice. The assessee filed detailed response to the show cause notice issued u/s 263 of the Act. Accordingly, vide order u/s 263 of the Act dated 26.2.2020 the ld. CIT (IT&TP) set aside the assessment order and directed the AO to make a fresh assessment and examine the source of cash deposits. Against the order u/s 263 of the Act, the assessee has preferred this appeal.
Ld A.R. submitted that the impugned sum of Rs.2.25 crores were received by the assessee from two agriculturists i.e. Sri Kandimalla Venkateshwarlu and Sri Kandimalla Ramanaidu, towards advance for purchase of assessee’s ancestral house property located in Nellore in the assessment year 2013-14. He submitted that the said amount was returned back to both the agriculturists in subsequent assessment years i.e. 2014-15 & 2015-16 since the parties could not fulfil the agreed terms and conditions
P a g e 4 | 9 with regard to the payment of the balance consideration. He submitted that agreement registered on 30.10.2014 and information regarding two farmers was filed. Ld A.R. submitted that during the course of reassessment u/s.147 of the Act, in response to enquiry u/s.133(6), copies of the sale agreement, cancellation of agreement, Aadhar cards of the farmers, receipt of sale of agricultural produce to a local grain miller by the concerned farmers, pattadar pass books, bank statements of the farmers and a certificate of the respective agricultural land holdings and revenues of the farmers by the concerned village revenue officer were also filed. He submitted that in response to notice u/s.131 of the Act, both the farmers appeared and confirmed the transaction and provided the requisite information and documents. Thus, the Assessing Officer after conducting the enquiries and examining the facts on record, accepted the source of cash deposits in the bank accounts of the assessee. In response to cash deposit of Rs.7,00,000/- into the assessee’s bank account, it was explained by the assessee that the sum was received from his father-in-law and bank interest. Ld A.R. submitted that on the basis of above information, the AO completed the assessment on 31.12.2018 accepting the claim of receipts of Rs.2.25 crores as receipts from both agriculturists. However, the AO did not accept the explanation of the assessee regarding cash receipts of Rs.7 lakhs, the appeal on which, is pending before the ld CIT(A).
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Ld A.R. submitted that in the assessment years 2014-15 & 2015-16, the AO accepted the sources for the repayments to the extent of Rs.1.16 crores and the balance amount of Rs.1.09 crores was added, implying thereby that the advance payment by Sri Kandimalla Venkateshwarly and Sri Kandimalla Ramanaidu is admitted to be genuine and the source of later year, partly could not be proved. He also submitted that the request of the assessee to avail the benefits under VSVS was accepted for the assessment years 2014-15 & 2015-16. He, accordingly, submitted that the Ld CIT was not justified in revising the assessment order, which was passed after thorough enquiry and verification of the source of payment.
Replying to above, ld DR submitted that the Assessing Officer has not recorded his finding regarding source of cash deposits of Rs.2.25 crores. Ld DR submitted that the assessee has changed his view regarding source of cash deposits in the bank. It was initially submitted that the cash withdrawn through bankers cheques from the account held with Coutts & Co in London. It was further stated that these deposits were made to meet some local expenditure at Nellore towards renovation of ancestral home, marriage of sister, repayment of some monies vowed to friends, etc. But when the matter was taken up with SBI, Nellore Branch, it was cleared that those cheques were not presented to the account and later on the assessee retracted to his earlier statement and stated that monies deposited into the account were not out of the encashment of those cheques. He submitted
P a g e 6 | 9 that the assessment order passed by the AO without conducting proper enquiries is erroneous and prejudicial to the interest of the revenue, therefore, the CIT was fully justified in directing the AO to reframe the assessment after examining the source cash deposits of Rs.2.25 crores.
10. Placing rejoinder to above, ld A.R. also relied on following decisions to support its case:
i) Narayan Tatu Rane vs ITO, 70 taxmann.com 227 (Mum) ii) Amira Enterprises Ltd vs Pr. CIT, ITAT Delhi in order dated 29.11.2017 iii) P. Narasihma Reddy vs ITO, in ITA No.932/Hyd/2017 for A.Y. 2009-10 order dated 20.7.2018.
We have heard the rival submissions and perused the record of the case. We find that the assessee has filed a chronological events from 30.7.2012 i.e. date of agreement for sale of Nellore Property to two farmers upto 26.2020 i.e. on the date the Ld CIT rejected the claim of the assessee without pointing out any particular defect in the assessment order. We find that on 23.1.2015 and 23.2.2015, notices u/s.133(6) of the Act were issued by the ITO (Inv.& CI) enquiring about cash deposits made into the NRO account of the assessee and in response to those notices, on 30.1.2015 and 25.10.2017, the assessee filed explanations alongwith sale agreement, cancellation agreement, aadhar numbers, etc in support of the claim of the assessee. Thereafter, on 26.10.2017, notice u/s.148 of the Act was issued
P a g e 7 | 9 for the purpose of verifying the cash deposits in the NRO bank account and in response to the notice, on 29.11.2017, 21.5.2018 and 17.12.2018, the assessee filed supporting evidences before the AO. On 29.11.2018, the AO summed two farmers, who confirmed the transaction and the amounts paid to the assessee to the tune of Rs.2.25 crores alongwith details such as pattadar passbooks, bank account statements and aadhar cards etc. in support of their claim of credibility. Therefore, the Assessing Officer has accepted the cash credits into NRO account of Rs.2.25 crores and disallowed Rs.7,00,000/- in the SBI account and completed the assessment u/s.143(3)/147 of the Act. Hence, it cannot be said that the Assessing Officer has not made proper enquiry on the issue of credits of Rs.2.25 crores in the accounts of the assessee. We also peruse the decisions relied on by ld A.R. of the assessee and finds support in favour of the assessee.
On going through the chronological events which led to the Assessing Officer to pass assessment order u/s.143(3)/147 of the Act accepting the cash deposits of Rs.2.25 crores, we are of the considered opinion that the Assessing Officer in the instant case has verified all the aspects and therefore, the view taken by the CIT is only a second view which is not permissible under Section 263 of the Act. It is the settled proposition of law that for invoking jurisdiction under Section 263, the twin conditions, namely, the order is erroneous and the order is prejudicial to the interest of the Revenue must be satisfied. In the instant case, since the P a g e 8 | 9 Assessing Officer has called for various details and after verification of the same has passed the order, therefore, the same cannot be treated as erroneous, as held by Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd. 243 ITR 83 (SC). We also get support from the decisions of Mumbai Bench in the case of Narayan Tatu Rane, Delhi bench in the case of Amira Enterprises Ltd (supra) and Co-ordinate Bench in the case of P.Narasihma Reddy (supra). Accordingly, we set aside the order passed by the ld.CIT u/s. 263 of the Act and decide the issue in favour of the assessee.
In the result, appeal of the assessee is allowed. Order pronounced u/s. 34(4) of I.T.A.T.Rules, 1963 on 06/01/2022. Sd/- Sd/- (A .MOHAN ALANKAMONY) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad ; Dated 06/01/2022 B.K.Parida, SPS (OS) Copy of the Order forwarded to :
1. 1. The Appellant : Ganga Vinay Babu, C/O. Ch. Parthasarathy & Co., 1-1-298/2/B/3, 1st floor, Ashok Nagar, Hyderabad 2. The Respondent. ITO, International Taxation, Nellore.
3. The CIT(A)-,(International Taxation & Transfer Pricing) 4. Pr.CIT-, Hyderabad 5. DR, ITAT, Hyderabad 6. Guard file. //True Copy// By order
Sr.Pvt.secretary ITAT, Hyderabad
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