Income Tax Appellate Tribunal - Hyderabad
R. Venkataramaiah, Hyd, Hyderabad vs Acit, Circle-6(1), Hyderabad, ... on 17 February, 2017
ITA Nos 1070 to 1073 of 2016 R Venkataramaiah Hyderabad
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ' B ' Bench, Hyderabad
Before Smt. P. Madhavi Devi, Judicial Member
AND
Shri Inturi Rama Rao, Accountant Member
ITA Nos.1070 to 1073/Hyd/2016
(Assessment Years: 2001-02 to 204-05)
Shri R. Venkataramaiah Vs Asstt. Commissioner of
Hyderabad Income Tax, Circle 6(1),
PAN: ACKPR 1937 R Hyderabad
For Assessee : Shri D.V. Anjaneyulu &
Ms. P. Pravallika
For Revenue : Smt. U. Mini Chandran, DR
Date of Hearing: 09.02.2017
Date of Pronouncement: 17.02.2017
ORDER
Per Smt. P. Madhavi Devi, J.M.
All are assessee's appeals for the A.Ys 2001-02 to 2004-05. For all the A.Ys, the assessee has raised the following concise ground of appeal:
"Whether, on facts and law, reopening the assessment is valid in law invoking the provisions u/s 147 read with 150(1) relying on Hon'ble Income Tax Appellate Tribunal's order in the assessee's case for the A.Y 2006-07 in ITA No.390/Hyd/10 dt. 8.10.2010 to tax only 1/6th of the amount of interest for A.Y 2006-07, tantamount to finding or direction where no right to receive income vests with assessee and also barred by limitation u/s 148 of the I.T. Act".Page 1 of 7
ITA Nos 1070 to 1073 of 2016 R Venkataramaiah Hyderabad
2. Brief facts of the case are that the assessee, an individual, engaged in the business of executing civil contracts, filed his return of income for the A.Y 2001-02 declaring taxable income of Rs.9,38,131 and agricultural income of Rs.7,57,106. There was a survey u/s 133A of the Act on the assessee's premises on 27.12.2001. Consequent to the survey operation, the assessee filed a revised return on 3.5.2002 admitting total income at Rs.25,13,390 and agricultural income at Rs.7,57,106. The original assessment was completed on 16.12.2003 u/s 143(3) determining the taxable income at Rs.26,14,590 and agricultural income at Rs.6,57,106.
3. Subsequently, the assessment for the A.Y 2006-07 was completed u/s 143(3) on 23.12.2008 wherein an addition of Rs.25,69,962 was made on account of interest received. The addition was sustained in first appeal, against which, the assessee filed an appeal before the ITAT. The ITAT Hyderabad, vide its order in ITA No.390/Hyd/2010 dated 8.10.2010, held that only 1/6th of the amount of interest credited in the P&L a/c which pertains to the relevant A.Y before it, is to be taxed. It was observed that the balance amount of interest pertaining to other A.Ys, credited in the books of account, cannot be brought to tax. Basing on the said finding of the Tribunal, the AO was of the opinion that the assessments for the A.Ys 2001-02 to 2005-06 are to be reopened in accordance with the provisions of section 150(1) of the Act. Therefore, the notices u/s 148 were issued for all the A.Ys on 25.03.2011. In response to the said notices, the assessee filed a letter dated 4.7.2011 contending that the very issuance of notice is illegal since the Income Tax Appellate Tribunal never Page 2 of 7 ITA Nos 1070 to 1073 of 2016 R Venkataramaiah Hyderabad gave such a finding to assess the interest in the earlier years. The assessee also contended that since the reopening is sought to be made after expiry of 4 years, the primary conditions for issuance of notice u/s 148 i.e. furnishing of inaccurate particulars or under statement of income did not exist. The assessee placed reliance upon the various case laws in support of this contention. However, the AO was not convinced with the assessee's contentions and observed that the Income Tax Appellate Tribunal had observed that out of the total interest of Rs.26,75,912, only 1/6th is taxable in the A.Y 2006-07 and the balance amount pertains to the earlier years. He proceeded to complete the assessments and completed the assessments by bringing to tax the 1/6th of the interest received in the relevant A.Y. Aggrieved, the assessee preferred appeals before the CIT (A), who confirmed the orders of the AO and the assessee is in 2nd appeal before us.
4. The learned Counsel for the assessee submitted that the Tribunal for the A.Y 2006-07, has only held that for the relevant A.Y, i.e. A.Y 2006-07, only 1/6th of the interest is taxable and that the Tribunal never directed that the balance of interest should be brought to tax in the other A.Ys. He submitted that even if it is to be considered that the Tribunal has given such a finding, he submitted that the Tribunal does not have the power to give directions for any other A.Ys not before it. In support of these contentions, the learned Counsel for the assessee has placed reliance upon the following decisions:
i) ITAT Hyderabad in ITA No.390/Hyd/2010 for the A.Y 2006-07 dated 8.10.2010.Page 3 of 7
ITA Nos 1070 to 1073 of 2016 R Venkataramaiah Hyderabad
ii) Arbitration Award dated 6.1.2009
iii) Hon'ble Supreme Court in the case of P.G. & W.Sawoo Pvt. Ltd and another vs. ACIT & Others reported in (2016) 385 ITR 60 (S.C)
iv) CIT Kerala vs.Manick Sons reported in (1969) 74 ITR 1
v) Emgeeyar Pictures P Ltd vs. DCIT reported in (2016) 179 TTJ (Chennai)(TM) 393
5. The learned DR, on the other hand, supported the orders of the authorities below and submitted that the AO has rightly brought to tax 1/6th of the amount of interest in each of the assessment years in which interest has been held to be taxable by the Tribunal in ITA No.390/Hyd/2010.
6. Having regard to the rival contentions and the material on record, we find that the Tribunal for the A.Y 2006-07 in ITA No.390/Hyd/2010 has held as under:
"... In the facts of the case, we are of the view that the amount of interest as per the accounting entries of the assessee was rightly taxed by the Deptt. However, we find that the Revenue could not contradict the case of the assessee that the amount of interest credited in the books pertains to six years and therefore, could not be taxed in the relevant A.Y alone. We find force in this alternative contention of the learned counsel for the assessee that interest amount pertaining to the relevant A.Y alone could be taxed in this year. Accordingly, we direct the AO to tax only 1/6th of the amount of interest credited in the profit & loss account, which pertains to the relevant A.Y under appeal before us and not to tax the balance Page 4 of 7 ITA Nos 1070 to 1073 of 2016 R Venkataramaiah Hyderabad amount of interest pertaining to other years, credited in the books of account".
7. From a literal reading of the above observation of the ITAT, we find that the Tribunal has held that the entire interest has not accrued to the assessee in A.Y 2006-07 but that it pertains to six years and therefore, only 1/6th of the amount can be brought to tax in the relevant A.Y. We do not find any direction to bring the balance of the interest received to tax in the earlier A.Ys. Therefore, the AO invoking the provisions of section 150(1) and reopening the assessments u/s 147 of the Act for the A.Ys before us is not sustainable. The judgments relied upon by the learned Counsel for the assessee also supports this view. In the case of P.G. and W.Sawoo Pvt Ltd (cited Supra), the Hon'ble Supreme Court has held that income to be charged to tax must accrue or arise at any point of time during the previous year and it can be said to have accrued or arisen only when a right to receive the amount in question is vested in the assessee. It was held in that case that no such right to receive rent accrued to the assessee at any point of time during the A.Y in question, in as much as enhancement of rent though with retrospective effect, was made only in the year 1994. It was held that notice seeking to reopen the assessment for the A.Y 1989-1990 was without jurisdiction or authority of law.
8. In the case of CIT vs. Manick Sons (cited Supra), the Hon'ble Supreme Court has held that the Tribunal in the appeal for the A.Y 1953-54 had no jurisdiction to reopen the assessment for the year 1952-53 as there was no sanction in law to enforce the undertaking given by the respondent to make a voluntary Page 5 of 7 ITA Nos 1070 to 1073 of 2016 R Venkataramaiah Hyderabad return for the year 1952-53 when arguing its appeal for the year 1953-54. It was held that even if the respondent had carried out that undertaking, the assessment for the year 1952-53 should not be re-opened otherwise than in the manner prescribed by law.
9. In the case of Emgeeyar Pictures Pvt. Ltd (cited Supra), the third Member of the Tribunal at Chennai has held that when there is no specific finding or direction in the order of the Tribunal for the A.Ys 2003-04 and 2004-05 that the impugned capital gain is assessable to tax in the A.Y 2001-02, assessment for the said A.Y could not be reopened on the basis of the order of the Tribunal, even otherwise the reopening of the assessment for the A.Y 2001-02 by issuance of a notice on 10.06.2011 is bad in law as the limitation for issue u/s 148 had expired in the year 2008 well before the Tribunal had passed the said order in the year. Thus, it can be seen that the Tribunal cannot give a direction for the A.Ys not before it and even if it is so given, that cannot be a reason for reopening of the assessment for the other A.Ys without satisfying the required conditions u/s 148 of the Act. Further, it is also seen that due date for issuance of notice u/s 148 had already expired for all the A.Ys before us, well before 31.03.2010, while the notices issued u/s 148 were dated 25.03.2011. Therefore, the reopening of the assessment is barred by limitation and is therefore, not sustainable. In view of the same, we are inclined to allow the ground of appeal raised by the assessee for all the A.Ys.
Page 6 of 7ITA Nos 1070 to 1073 of 2016 R Venkataramaiah Hyderabad
10. In the result, assessee's appeals for all the A.Ys are allowed and the assessment orders are set aside.
Order pronounced in the Open Court on 17th February, 2017.
Sd/- Sd/-
(Inturi Rama Rao) (P. Madhavi Devi)
Accountant Member Judicial Member
Hyderabad, dated 17th February, 2017.
Vinodan/sps
Copy to:
1 M/s. Anjaneyulu & Co. CAs, 30 Bhagyalakshmi Nagar, Gandhinagar, Hyderabad 500080 2 Asstt. Commissioner of Income Tax, Circle 6(1), Hyderabad 3 CIT (A)-9 Hyderabad 4 Pr. CIT- 6 Hyderabad 5 The DR, ITAT Hyderabad 6 Guard File By Order Page 7 of 7