Income Tax Appellate Tribunal - Hyderabad
Isanaka Masthan Reddy, Hyderabad vs Acit, Central Circle-2(3), Hyderabad on 6 February, 2023
SA Nos 1 to 38 of 2023 G Aparna Kalyani Anantapur
आयकर अपील य अ धकरण, है दराबाद पीठ
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad 'A' Bench, Hyderabad
Before Shri R.K. Panda, Accountant Member
AND
Shri Laliet Kumar, Judicial Member
Appeal in SA & Assessee Revenue A.Y
ITA No
1/Hyd/2023 Gavireddygari Aparna ACIT central Circle 2018-19
(3/Hyd/2023) Kalyani, Anantapur 2(3), Hyderabad
PAN:ABIPG3993P
2/Hyd/2023 Gavireddygari Hari -do- -do-
(4/Hyd/2023) Koshore Reddy,
Anantapur
PAN:ABIPG3991R
3/Hyd/2023 Isanaka Mastan Reddy -do- 2019-20
(5/Hyd/2023) Hyderabad
PAN:AJRPM1992K
4/Hyd/2023 Boorra Praveena -do- -do-
(6/Hyd/2023) Hyderabad
PAN:AUBPB5885F
5/Hyd/2023 Andem Sandhya Reddy -do- -do-
(7/Hyd/2023) Ranga Reddy
PAN:AFQPA3437A
6/Hyd/2023 Ballela Sai Sree -do- 2017-18
(8/Hyd/2023) Nellore
PAN:BDEPB2916G
7/Hyd/2023 -do- -do- 2018-19
(9/Hyd/2023)
8/Hyd/2023 Garudapalli Shruthi -do- 2017-18
(10/Hyd/2023) Gupta, Hyderabad
PAN:AZHPG7733J
9/Hyd/2023 -do- -do- 2018-19
(11/Hyd/2023)
10/Hyd/2023 Sanjay Garudapalli -do- 2017-18
(12/Hyd/2023) Hyderabad
PAN:AIOPG2124K
11/Hyd/2023 -do- -do- 2018-19
(13/Hyd/2023)
12/Hyd/2023 Guduri Venkata Raju -do- 2018-19
(16/Hyd/2023) Hyderabad
PAN:AHIPG4062B
13/Hyd/2023 -do- 2019-20
(17/Hyd/2023)
14/Hyd/2023 Parije Venkat Ram -do- 2018-19
(18/Hyd/2023) Reddy, Kama Reddy
PAN:AKBPP2794D
15/Hyd/2023 -do- 2019-20
(19/Hyd/2023)
Page 1 of 12
SA Nos 1 to 38 of 2023 G Aparna Kalyani Anantapur
16 to 19 Kanipakkam Hari -do- 2016-17
/Hyd/2023 Prasad Reddy 2017-18
(20, 21, 22 & Hyderabad 2018-19
23/ Hyd/2023) PAN:AKEPK2041D 2019-20
20 to Pullalarevu Anusha -do- 2017-18
22/Hyd/2023 Hyderabad 2018-19
(24 to 26/ PAN:AIVPA5223G 2019-20
Hyd/2023)
23 & Tricities Security & -do- 2017-18
24/Hyd/2023 Allied Services (P) Ltd
(14 & Hyderabad 2019-20
15/Hyd/2023) PAN:AABCT6890M
25 & 26 Rama Subba Reddy -do- 2018-19
/Hyd/2023 Kudumula, Hyderabad
(37 & PAN:AKFPK4851Q 2019-20
38/Hyd/2023)
27 to Vamshi Krishna Reddy -do- 2016-17
29/Hyd/2023 Goteke, Hyderabad 2017-18
(44 to PAN:AKJPG5365R 2018-19
46/Hyd/2023)
33 to Saritha Agarawal -do- 2016-17
35/Hyd/2023 Hyderabad 2017-18
(75, 76 & 77/ PAN:AVIPA3467A 2018-19
Hyd/2023)
36/Hyd/2023 Rajesh Kumar Surana -do- 2019-20
(78/Hyd/2023) RR Dist. Hyderabad
PAN:ABVPS4091H
37 & Sai Nath Reddy Padi -do- 2017-18
38/Hyd/2023 Hyderabad
(79 & PAN:AGWPP8152A 2018-19
80/Hyd/2023)
39 & Kaushik Reddy Padi -do- 2017-18
40/Hyd/2023 Hyderabad
(81 & PAN:AKEPP2710Q 2018-19
82/Hyd/2023)
41/Hyd/2023 Karthik Raghupathi -do- 2019-20
(83/Hyd/2023) Reddy Padi, Hyderabad
PAN:AKEPP2711R
(Appellant) (Respondent)
Assessee by: Shri M.V. Prasad, CA
Revenue by: Shri K.E. Sunil Babu, CIT(DR)
Date of hearing: 03/02/2023
Date of pronouncement: 06/02/2023
Page 2 of 12
SA Nos 1 to 38 of 2023 G Aparna Kalyani Anantapur
ORDER
Per Laliet Kumar, J.M
These Stay Applications filed by the respective assessees are directed against the separate orders dated
30/11/2022 of the learned CIT (A)-12, Hyderabad relating to respective A.Ys. Since identical grounds have been raised by the respective assessees in all these Stay Applications, therefore, all these Stay Applications were heard together and are being disposed of by this common order for the sake of convenience.
2. First we take up the S.A. No.1/Hyd/2022 for the A.Y 2018-19 as the lead case. The present stay application filed by the assessee for the A.Y 2018-19 for seeking stay of outstanding demand of Rs.2,95,98,651/- (total outstanding demand inclusive taxation demand of Rs.1,77,59,191/- and interest of Rs.1,18,39,460/-). The said demand is arising out of the assessment order passed by the Assessing Officer on 28.3.2022.
3. The assessee feeling aggrieved by the order had challenged the assessment order before the learned CIT (A) and the learned CIT (A) vide order dated 30.11.2022 has dismissed the appeal of all the assessees by a consolidated order. The contention of the learned AR for the assessee before us are as under:
3.1 A search took place in the premises of M/s. KMR Estates and Builders (P) Ltd on 4.2.2019 wherein some incriminating material/evidence in the form of Excel Sheet was found in the mobile of one of the Director of the Company showing payment of on-money by the buyers of the villas of M/s. KMR Page 3 of 12 SA Nos 1 to 38 of 2023 G Aparna Kalyani Anantapur Estates & Builders (P) Ltd were found. The Assessing Officer, relying upon the seized material had made the addition in the hands of the assessee u/s 153C r.w.s. 143(3) of the Act for an amount of Rs.2,95,98,651/-. The assessee challenged the order passed by the Assessing Officer before the learned CIT (A) and it was the contention of the assessee before the learned CIT (A) that the seized material reproduced at page 71 of the CIT (A)'s order, it is not possible to find out (i) as to which Villa/Villas it pertains to
ii) Whether it belongs to the assessee (iii) the said document was neither signed by the assessee or on behalf of the company and
(iv) it did not mention the date of payment of on-money by the assessee to the Company.
4. It was submitted that even the statement of two villa purchasers were recorded by the Revenue authorities who denied to have made any payment of on-money. Further, it is the contention of the learned AR that the addition can only be made based on the incriminating material pertaining to the impugned year under consideration only and in the absence of any incriminating material pertaining to the A.Y, no addition can be made. He relied upon the decision of the Hon'ble Supreme Court in the case of CIT vs. Sinhgad Technical Education Society (Supreme Court) dated 1/9/2017. He had also submitted that even the satisfaction note reproduced by the learned CIT (A) does not mention the date and year of the receipt of the cash by the builder from the assessee and it has no co-relation with the income sought to be taxed based on the alleged seized material in the year under consideration.Page 4 of 12
SA Nos 1 to 38 of 2023 G Aparna Kalyani Anantapur
5. It was submitted that the learned Assessing Officer/CIT (A) have not made any independent inquiry in support of the addition and have merely relied upon the settlement arrived at by M/s. KMR Estates before the Settlement Commission. It was submitted that the settlement is binding on the Assessing Officer and the assessee who were part to the settlement. It was further submitted that no document much less incriminating document was/were recovered from the premises of the assessee and even two purchasers in their statement have declined to have paid on- money for the purchase of the villas. In the light of the above, it was submitted by the learned AR that the assessee is having a good prima facie case in his favour, the balance of convenience lies in favour of the assessee and the assessee shall suffer irreparable loss if the Revenue is not restrained from recovering the amount. He had relied upon the decision of the Delhi Tribunal in the following cases:
i) ITA No.360/Del/2022 - Jubilant Foodworks Ltd vs. ` ACIT
ii) S.A. No.351/Del/2022 (arising out of ITA No.2493/Del/2022) for the A.Y 2017-18 in the case of M/s. LG Electronics India (P) LTd vs. Dy. CIT
iii) S.A. No.227/Del/2022 (Arising out of ITA 1668/Del/2022) for the A.Y 2018-19 in the case of Benetton India (P) Ltd vs. Dy. CIT.
iv) SA Nos.352 & 353/Del/2022 (Arising out of ITA Nos.1863 & 1862/Del/2022) for the A.Ys 2018-19 & 2017-18 in the case of Microsoft Corporation (India) (P) Ltgd vs. Dy.CIT.Page 5 of 12
SA Nos 1 to 38 of 2023 G Aparna Kalyani Anantapur
6. It was submitted that in the above 4 cases, the Delhi Bench of the Tribunal granted blanket stay as the assessee, was having prima facie cases, for a period of 180 days.
7. The learned AR had alternatively submitted that in case the Tribunal is not convinced with the grant of blanket stay then some early hearing in the appeals be given.
8. Per contra, the learned DR relied upon the provisions of section 254(2A) of the Act and he had relied upon the decision of the Mumbai Bench of the Tribunal in SA No.116/Mum/2022 in the case of Hindustan Liver Ltd vs. Dy. CIT wherein the Tribunal in Para 6 to 9 held as under:
"6. We find that section 254(1) of the Act provides that "(t)he Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit".
While explaining the scope of the powers of the Tribunal under section 254(1), Hon‟ble Supreme Court has indeed held, as rightly pointed out by the learned counsel, that "In our opinion, the Appellate Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction. This is particularly so when section 220(6) deals expressly with a situation when an appeal is pending before the Appellate Assistant Commissioner, but the Act is silent in that behalf when an appeal is pending before the Appellate Tribunal. It could well be said that when section 254 confers appellate jurisdiction, it impliedly grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution and that the statutory power carries with it the duty in proper cases to make such orders for staying proceeding as will prevent the appeal if successful from being rendered nugatory". Their Lordships, however, hastened to add that these powers cannot be used in a routine manner, and added that, "A certain apprehension may legitimately arise in the minds of the authorities administering the Act that, if the Appellate Tribunal proceed to stay the recovery of taxes or penalties payable by or imposed on the assessees as a matter of course, the revenue will be put to great loss because of the inordinate delay in the disposal of appeals by the Appellate Tribunal. It is needless to point out that the power of stay by the Tribunal is not likely to be exercised in a routine way or as a matter of course in view of the special nature of taxation and revenue laws. It will only be when a strong prima facie case is made out that the Tribunal will consider whether to stay the recovery proceedings and on what conditions, and the stay will be granted in most deserving and Page 6 of 12 SA Nos 1 to 38 of 2023 G Aparna Kalyani Anantapur appropriate cases where the Tribunal is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal". Be that as it may, that was a situation, as evident from these observations, when the statute did not vest any express powers in the Tribunal for grant of the stay on the collection/recovery of disputed demands during the pendency of the litigation before the Tribunal. As the legal position stands today, the first proviso to Section 254(2A), categorically inter alia provides that ".... the Appellate Tribunal may, after considering the merits of the application made by the assessee, pass an order of stay in any proceedings relating to an appeal filed under sub-section (1) of section 253, for a period not exceeding one hundred and eighty days from the date of such order subject to the condition that the assessee deposits not less than twenty per cent of the amount of tax, interest, fee, penalty, or any other sum payable under the provisions of this Act, or furnishes security of equal amount in respect thereof and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order"
[Emphasis, by underlining, supplied by us]. Hon‟ble Supreme Court‟s inferring the Tribunal‟s power to grant the stay, in the absence of any specific statutory power to that effect, is one thing, and our dealing with a power statutorily recognized, even if implicitly, is quite another thing. In our considered view, once a statutory provision specifically provides that the Tribunal can only grant a stay subject to a deposit of not less than 20% of the disputed demand, or furnishing of security thereof, it cannot be open to us to grant a stay in violation of these basic statutory provisions. SA No. 116/Mum/2022 In ITA No.:
2125/Mum/2022 Assessment year: 2018-19 Page 4 of 7 The Income Tax Appellate Tribunal, being a creature of the statute itself, cannot question the reasonableness of this provision; that‟s a call to be taken by the Hon‟ble constitutional Courts above. It is also elementary that the provisions of the law are to be so read as to make them workable rather than redundant. If we are to read the source of this Tribunal‟s powers for granting the stay, as section 254(1) on a standalone basis and in disjunction with the proviso to Section 254(2A), the said proviso will be rendered otiose. As observed by Hon‟ble Supreme Court, in the case of CIT Vs Hindustan Bulk Carriers [(2003) 259 ITR 449 (SC)], "A construction which reduces the statute to a futility has to be avoided. A statute or any enacting provision therein must be so construed as to make it effective and operative on the principle expressed in maxim ut res magis valeat quam pereat i.e., a liberal construction should be put upon written instruments, so as to uphold them, if possible, and carry into effect the intention of the parties. [See Broom‟s Legal Maxims (10th Edition), page 361, Craies on Statutes (7th Edition) page 95 and Maxwell on Statutes (11th Edition) page 221.]" Applying this principle, a coordinate bench of this Tribunal, speaking through one of us (i.e. the Vice President) and in the case of ACIT Vs Papillon Investments Pvt Ltd [(2005) 4 SOT 234 (Mum)] had observed that "That is certainly not an interpretation which can be termed as ut res magis valeat quam pereat, i.e., to make the statute effective rather than making it redundant. As held by Hon‟ble Supreme Court, in the case of S. Teja Singh (supra) a construction which results in rendering a provision Page 7 of 12 SA Nos 1 to 38 of 2023 G Aparna Kalyani Anantapur redundant must be avoided. For this reason alone, the interpretation canvassed by the revenue is to be rejected". The view so taken has been affirmed by the Hon‟ble jurisdictional High Court, in the judgment reported as CIT Vs Papillon Investments Pvt Ltd [(2012) 20 taxmann.com 201 (Bom)]. What essentially follows from these discussions is that the powers of this Tribunal, under section 254(1), to grant a stay cannot be so interpreted as to make the first proviso to Section 254(2A) redundant.
...................
8. Viewed thus, we should not interpret a provision of the law to make the other statutory provision within the same section ineffective and nugatory. However, that will precisely be the outcome if we are to hold that the Tribunal‟s powers of granting the stay, even after the enactment of the first proviso to Section 254(2A), are unfettered inasmuch as a stay can indeed be granted even in clear disharmony with the statutory conditions set out under the first proviso to Section 254(2A). The requirement with respect to the partial payment of demand or furnishing of security in respect thereof will thus be redundant. The law as it stood at the point of time when Mohd Kunhi‟s judgment was delivered has undergone significant change vis-à-vis the position prevailing as of now, and, therefore, the observations made by the Hon‟ble Supreme Court are now to be read in the light of the subsequent enactment of the law. Unlike the Hon‟ble Constitutional Courts above, it is not for this forum, i.e. the Income Tax Appellate Tribunal, to sit in judgment over the reasonableness of the legal provisions; the remedies lie elsewhere. We have to perform the role assigned to us within the framework of the law as it exists- whether made by the lawmakers or as interpreted by the Hon‟ble judges above.
When the statute does not give us the powers to grant a blanket stay, nor the Hon‟ble Courts above hold so, it cannot be open to us to hold that we can grant a blanket stay- clearly contrary to the scheme of the law as visualised under the first proviso to Section 254(2A). We are, thus, not inclined to hold that we have the powers to grant any stay on collection/recovery of demands impugned in the appeal before us, in violation of the first proviso to Section 254(2A). The decisions that the learned counsel for the assessee has sighted before us in the context of the grant of stay under section 220(2), i.e. during the pendency of the first appeal, do not really apply in the present context, as Hon'ble Supreme Court itself and in Mohd Kunhi‟s case (supra), has observed that "It may also be that, as a matter of practice prevailing in the department, the Commissioner or the Inspecting Assistant Commissioner, in exercise of administrative powers, can give the necessary relief of staying recovery to the assessee but that can hardly be put at par with a statutory power as is contained in section 220(6) which is confined only to the stage of pendency of an appeal before the Appellate Assistant Commissioner." These judicial precedents, which are specifically in the context of section 220(6) or with reference to the CBDT instructions issued in respect thereof, thus are contrary to the scheme of law as visualised by the Hon‟ble Supreme Court in Mohd Kunhi‟s case (supra). Neither the statutory provisions, as they exist as of now, confer any powers of granting the blanket stay on collection or Page 8 of 12 SA Nos 1 to 38 of 2023 G Aparna Kalyani Anantapur recovery of the disputed demands impugned in appeals before us, nor do we find any judicial precedents which dilute, curtail, or otherwise narrow down, the relevant restriction, on our power to grant a stay on collection/recovery of disputed demands impugned in appeal before us- as visualised in the first proviso to Section 254(2A). Learned counsel fairly submitted that though there are decisions of the Hon‟ble Courts above granting a stay in the cases involved covered issues but in none of these cases, has it been specifically held that the Tribunal has the powers of granting blanket stay in such cases. No matter how fair, just or desirable it is to grant a blanket stay on collection or recovery of the demands on the issues covered by the binding judicial precedents in favour of the assessee, even if that be so, if we do not have the power to grant such a blanket stay, we have to live with this reality. An institution like this Tribunal, which is itself a creature of the Income Tax Act, 1961, has to perform its functions within the limitations that the Income Tax Act, 1961, has imposed on its functioning. As we say so, we make it clear that the law itself visualises that the payment of 20% of the disputed demands, impugned in the appeal before the Tribunal, cannot be viewed as a condition precedent for the grant of stay by the Tribunal, inasmuch as when the applicant "furnishes security of equal amount in respect thereof", the Tribunal can exercise its powers of granting a stay. While the issue of the reasonableness of the nature of security cannot be at the unfettered discretion of the Assessing Officer, and it must meet the judicial scrutiny as and when so required. On the one hand, it has to be ensured that the limitations placed upon the powers of the Tribunal are respected, in letter and in spirit, and, on the other hand, it has to be equally ensured that, within this framework, substantial justice is to be rendered to the assessee and the rights of the assessee even to seek the legal remedies against any inappropriate use of power by the field authorities are zealously guarded. What constitutes reasonable security may vary from case to case. That is where a judicious and pragmatic approach by the field authorities is of utmost importance. Still, where their decisions, on this aspect, are less than appropriate, the Tribunal can surely judicially examine the same, or even decide, on its own, as to what is the nature of security to be offered by the assessee. In the present case, for the reasons we will set out in a short while, there is no need for us, as of now, to take a call on the nature of security to be offered by the assessee, even as the usual precautions to safeguard legitimate rights of the assessee are being taken anyway.
9. Learned counsel hastens to add, at the fag end of the proceedings, that since almost all the issues are covered by the binding judicial precedents in favour of the assessee, a conditional stay may be granted by directing the Assessing Officer to grant a stay on collection/recovery of the demands impugned in appeal before us, after accepting security equivalent to 20% of the disputed demands and to his satisfaction, on the same lines as was ordered by a coordinate bench in the case of Grasim India Ltd Vs DCIT [(2021) 126 taxmann.com 106 (Bom)]. That is a case in which the stay was granted on the condition that the assessee was to provide, to the satisfaction of the Assessing Officer, security for the amount of 20% of the disputed Page 9 of 12 SA Nos 1 to 38 of 2023 G Aparna Kalyani Anantapur demands impugned in the appeal. Having heard the learned Departmental Representative on this plea and having satisfied ourselves that the issues in appeal are by and large covered by the judicial precedents- including in the assessee‟s own case, we are inclined to accord the same treatment, and, consequently, grant a stay on collection/recovery of the disputed impugned demands, and interest thereon, aggregating to Rs. Rs 172,47,58,360, on the following conditions:
(a) The assessee shall provide a reasonable security for an amount of Rs. 35 crores or more, within two weeks from the date of receipt of this order; Provided, however, in case the Assessing Officer is, for any reasons whatsoever, not satisfied with the security offered by the assessee, the Assessing Officer shall pass a detailed speaking order in respect of the same and setting out his position on the issue, and will give a two week notice to the assessee, before initiating any coercive recovery proceedings, so that the assessee can pursue appropriate legal remedies, if so advised, against the stand of the Assessing Officer;
(b) The assessee will fully cooperate in expeditious disposal of appeal before this Tribunal and will not seek any unnecessary adjournment of the hearing, and, in case the bench is, at any point of time, of the view that the assessee is resorting to dilatory tactics, the stay will be liable to vacated forthwith; and
(c) This stay will be in operation for 180 days from the date of this order, till the order on the related appeal is pronounced or till further orders- whichever is earlier."
9. We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the case laws filed on behalf of the parties. We have also applied our mind to the matter. Undoubtedly, the assessee was able to establish a prima facie case in his favour as all the issues on the face of it are covered in favour of the assessee. However, the assessee had failed to establish the financial hardship as required to be proved in the light of the decision in the case of Ace. Collector of Central Exercise vs. Dunlop India Ltd (1985) 154 ITR 172. Without going into the conflictive decisions of the Tribunal in granting of blanket stay, even though the assessee is having prima facie case, we are of the opinion that the assessee was required to plead and prove financial hardship at the time of grant of stay. As the assessee had not proved financial hardship, Page 10 of 12 SA Nos 1 to 38 of 2023 G Aparna Kalyani Anantapur therefore, stay prayed is rejected. However, looking to the facts and circumstances, we are of the opinion that the alternate plea raised by the assessee that early hearing be granted accepted which has not been opposed by the learned DR. In the light of the above, we reject the stay applications filed by the assessees. However, the case is fixed for early hearing i.e., on 13.02.2023 which was announced in the Open Court.
10. In the light of the above, the case is preponed to 13/02/2023 and the earlier date given on 16.03.2023 is cancelled. Needless to say, no separate notices shall be issued to the parties concerned as the date of hearing had been announced in the Open Court in the presence of both the parties. The parties are directed to file their paper book, if any, before the next date of hearing.
11. In the result, S.A. No.1/Hyd/2023 is dismissed.
12. In the remaining Stay Application Nos.2 to 41/Hyd/2023, identical issues have been raised by the respective assessees. Following our reasonings given in the preceding paragraphs in SA No.1/Hyd/2023, the remaining Stay Applications are also dismissed.
13. To sum up, all the Stay Applications filed by the assessee are dismissed.
Order pronounced in the Open Court on 6th February, 2023.
Sd/- Sd/-
(R.K. PANDA) (LALIET KUMAR)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Hyderabad, dated 6th February, 2023.
Vinodan/sps
Page 11 of 12
SA Nos 1 to 38 of 2023 G Aparna Kalyani Anantapur
Copy to:
S.No Addresses
1 All Assessees C/o M.V. Prasad , Sanath & Rajasekhara, C.As 8-2-
120/86/3, Krishna Sindhu Residency, Road No.03, Banjara Hills, Hyderabad 500034 2 ACIT Central Circle 2(3) Hyderabad 3 CIT (A)-12 ,Hyderabad 4 Pr. CIT- Central, Hyderabad 5 DR, ITAT Hyderabad Benches 6 Guard File By Order Page 12 of 12