Pradeep Kumar Uppala , Hyderabad v. Dy. Commissioner of Income Tax , Central Circle-3(1), Hyderabad

ITA 278/Hyd/2018 | 2013-2014
Pronouncement Date: 03-03-2021 | Result: Allowed

Appeal Details

RSA Number 27822514 RSA 2018
Assessee PAN AAEPU1435H
Bench Hyderabad
Appeal Number ITA 278/Hyd/2018
Duration Of Justice 3 year(s) 24 day(s)
Appellant Pradeep Kumar Uppala , Hyderabad
Respondent Dy. Commissioner of Income Tax , Central Circle-3(1), Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 03-03-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB-B
Tribunal Order Date 03-03-2021
Last Hearing Date 03-02-2021
First Hearing Date 03-02-2021
Assessment Year 2013-2014
Appeal Filed On 09-02-2018
Judgment Text
ITA NOS 277 278 433 AND 434 OF 2018 RAVI KUMAR UPP ALA AND OTHERS PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER APPEAL IN ITA NO APPELLANT RESPONDENT A.Y 277/HYD/2018 RAVI KUMAR UPPALA HYDERABAD PAN:AAEPU1435H DY. CIT CENTRAL CIRCLE 3 (1) HYDERABAD 2013-14 278/HYD/2018 PRADEEP KUMAR UPPALA HYDERABAD PAN:AAEPU1436E -DO- 2013-14 433/HYD/2019 DY. CIT CENTRAL CIRCLE 3(1) HYDERABAD R AVI KUMAR UPPALA HYDERABAD PAN:A AEPU1435H 2013-14 434/HYD/2019 DY. CIT CENTRAL CIRCLE 3(1) HYDERABAD PRADEEP KUMAR UPPALA HYDERABAD PAN:AAEPU1436E 2013-14 ASSESSEE BY: SRI M.V. ANIL KUMAR REVENUE BY : SRI V.V.S.T. SAI CIT(DR) DATE OF HEARING: 03/02/2021 DATE OF PRONOUNCEMENT: 03/03/2021 ORDER PER SMT. P. MADHAVI DEVI J.M. THESE ARE CROSS APPEALS OF THE RESPECTIVE ASSESSEES AGAINST THE ORDER OF THE CIT U/S 263 OF THE I.T. AC T FOR THE A.Y 2013-14 AND THE REVENUES APPEALS AGAINST THE RELIE F GRANTED BY THE CIT (A) IN THE APPEAL AGAINST THE CONSEQUENTIAL ORDER PASSED BY THE AO U/S 143(3) R.W.S. 263 OF THE I.T. ACT. 2. BOTH THE ASSESSEES ARE BROTHERS AND FACTS AND IS SUES IN BOTH THE CASES ARE THE SAME. THEREFORE FOR THE SAKE OF BREVITY AND READY REFERENCE THE FACTS IN THE CASE OF SHRI PRADEEP KUMAR UPPALA IN ITA NO.278/HYD/2018 ARE REFERRED TO HEREU NDER: ITA NOS 277 278 433 AND 434 OF 2018 RAVI KUMAR UPP ALA AND OTHERS PAGE 2 OF 7 3. BRIEF FACTS OF THE CASE ARE THAT BOTH THE ASSESS EES ARE INDIVIDUALS. THEY FILED THEIR RESPECTIVE RETURNS OF INCOME FOR THE RELEVANT A.Y. THEIR RETURNS WERE SELECTED FOR SCRUT INY AND NOTICES U/S 143(2) WERE ISSUED RESPECTIVELY. LATER THE ASS ESSEES FILED THEIR REVISED RETURNS OF INCOME ON 27.8.2015 DECLAR ING LOWER INCOME THAN THE INCOME DECLARED IN THEIR ORIGINAL R ETURNS OF INCOME. IN RESPONSE TO THE NOTICES U/S 143(2) THE ASSESSEES COUNSEL APPEARED BEFORE THE AO AND SUBMITTED THAT T HE REMUNERATION AND THE INTEREST ON THEIR CAPITAL THO UGH WAS NOT DEBITED NOR PAID TO THE ASSESSEES BY THE PARTNERSH IP FIRM SRI KRISHNA JEWELLERY MART WAS ERRONEOUSLY DECLARED IN THEIR RETURNS OF INCOME AND THEREFORE THEY REQUESTED FOR ACCEPTA NCE OF THE REVISED RETURNS OF INCOME. THE AO CONSIDERED THE SA ME AND ACCEPTED THE ASSESSEES CONTENTIONS AND THUS THE IN COME DECLARED BY THEM IN THE REVISED RETURNS OF INCOME WAS ACCEPT ED. 4. THEREAFTER THE CIT PERUSED THE ASSESSMENT RECO RD OF BOTH THE ASSESSEES U/S 263 OF THE ACT AND OBSERVED THAT THE ASSESSEES WERE NOT ENTITLED TO FILE THE REVISED RET URNS OF INCOME AS THE ORIGINAL RETURNS WERE FILED U/S 139(4) AND NOT U/S 139 (1) OF THE ACT. FURTHER HE ALSO HELD THAT THE ASSESSMENT ORDER WAS PASSED BY THE AO U/S 143(3) OF THE ACT WITHOUT APP LICATION OF MIND AND THEREFORE IT IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE HELD THAT THE AO OU GHT TO HAVE RECOGNIZED THE REVENUE EXPENSES ON ACCRUAL BASIS AN D THEREFORE THE REMUNERATION AND INTEREST OFFERED IN THE ORIGIN AL RETURNS OF INCOME SHOULD HAVE BEEN BROUGHT TO TAX. HE ACCORDIN GLY DIRECTED THE AO TO REDO THE ASSESSMENT AFRESH AFTER EXAMININ G THE ISSUE AND AFTER PROVIDING REASONABLE OPPORTUNITY TO THE A SSESSEES. AGAINST THIS ORDER OF THE CIT U/S 263 OF THE ACT T HE RESPECTIVE ITA NOS 277 278 433 AND 434 OF 2018 RAVI KUMAR UPP ALA AND OTHERS PAGE 3 OF 7 ASSESSEES ARE IN APPEAL BEFORE THIS TRIBUNAL BY RA ISING THE FOLLOWING GROUNDS WHICH ARE COMMON IN BOTH THE APPE ALS: 1. YOUR APPELLANT SUBMITS THAT ISSUE OF NOTICE ULS 263 OF THE INCOME TAX ACT 1961 IS BAD IN LAW. 2. YOUR APPELLANT SUBMITS THAT PR. CIT OUGHT TO HAV E APPRECIATED THE FACT THAT THE ASSESSING OFFICER HAS MADE THE CORRECT ASSESSMENT OF REAL INCOME AND CONSEQUENT RE VISION OF ASSESSMENT ORDER BY PR. CIT ULS 263 IS UNWARRANT ED AS SUCH ASSESSMENT ORDER CANNOT BE SAID TO BE ERRONEOU S OR PREJUDICIAL TO THE INTERESTS OF REVENUE. 3. THE PR. CIT OUGHT TO HAVE APPRECIATED THE FACT T HAT THE FIRM IN WHICH YOUR APPELLANT IS A PARTNER HAS NOT CLAIMED/ALLOWED ANY DEDUCTION WITH RESPECT TO THE I NTEREST AND REMUNERATION TO PARTNERS HENCE THE SAME CANNOT BE TAXED IN THE HANDS OF PARTNER THE ASSESSMENT ORDER IS NOT ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF REVENU E. 4. YOUR APPELLANT SUBMITS THAT THE ASSESSING OFFICE R HAS CONSIDERED THE REVISED COMPUTATION/RETURN AND MADE THE CORRECT ASSESSMENT OF INCOME WHICH IS NOT ERRONEOU S AND IS NOT PREJUDICIAL TO THE INTERESTS OF REVENUE. HENCE REVISION OF ORDER BY PR. CIT IS BAD IN LAW. 5. YOUR APPELLANT SUBMITS THAT THE ASSESSING OFFICE R AFTER APPLICATION OF MIND HAS ASSESSED THE REAL AND CORRE CT INCOME. WHICH IS ONE OF THE PLAUSIBLE WAYS OF THE ASSESSMENT. THEREFORE. THE PR. CIT OUGHT NOT TO HAV E EXERCISED REVISIONARY POWERS U/S 263 OF THE INCOME TAX ACT.1961. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING YOUR APPELLANT PRAYS THAT THE ADDIT ION MAY BE DELETED. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI M.V. ANIL KUMAR REITERATED THE SUBMISSIONS MADE BY THE ASSES SEE BEFORE THE CIT AND HAS ALSO DRAWN OUR ATTENTION TO THE REL EVANT PAPERS WHEREIN THE FIRM SRI KRISHNA JEWELLERY MART HAD NO T DEBITED NOR CLAIMED THE EXPENDITURE OF PAYMENT OF REMUNERATION AND INTEREST TO THE PARTNERS IN ITS BOOKS OF ACCOUNT. HE SUBMITT ED THAT ERRONEOUSLY THE ASSESSEES HAD OFFERED THE INCOME I N THEIR ORIGINAL RETURNS OF INCOME BUT SUBSEQUENTLY THEY HAVE REVIS ED THEIR RETURNS OF INCOME AND THE AO HAS CONSIDERED THE SAM E AND ITA NOS 277 278 433 AND 434 OF 2018 RAVI KUMAR UPP ALA AND OTHERS PAGE 4 OF 7 RIGHTLY ACCEPTED THE REVISED RETURNS. THEREFORE TH E ASSESSMENT ORDERS ARE NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. 6. THE LEARNED DR ON THE OTHER HAND SUPPORTED THE ORDERS OF THE CIT (A) AND SUBMITTED THAT THE ORIGIN AL RETURNS OF INCOME WERE FILED U/S 139(4) AND THEREFORE A REVIS ED RETURN COULD NOT BE FILED U/S 139(5) OF THE ACT AND THEREFORE T HE REVISED RETURNS OF INCOME SHOULD NOT HAVE BEEN CONSIDERED B Y THE AO MAKING THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF REVENUE. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD WE FIND THAT BOTH THE ASSESSEES BEFORE U S ARE THE PARTNERS OF SRI KRISHNA JEWELLERY MART. THE FIRM HA S FILED ITS RETURN OF INCOME ON 29.9.2013 AND FROM THE SCHEDULE 15 TO THE P&L A/C WHICH IS SELLING GENERAL AND ADMINISTRATI VE EXPENDITURE IT IS SEEN THAT FOR THE RELEVANT YEAR THE FIRM HAS NOT CLAIMED ANY PAYMENT OF INTEREST OR REMUNERATION TO THE PARTNERS. WE FIND THAT THE ASSESSEES HAVE FILED THEIR RETURNS OF INCOME ON 29.3.2014 I.E. SUBSEQUENT TO THE FILING OF THE RETU RNS OF INCOME BY THE FIRM. THE FIRM HAS NOT REVISED ITS RETURNS OF I NCOME BUT IT IS THE ASSESSEES WHO HAVE REVISED THEIR RETURNS OF INC OME. THEREFORE THE CLAIM OF THE ASSESSEES THAT THEY HAVE ERRONEOUS LY OFFERED THE INCOME TO TAX IS NOT AN AFTER THOUGHT OR A WRONG CL AIM. WHEN IT WAS BROUGHT TO THE NOTICE OF THE AO BY WAY OF A REV ISED RETURN THE AO HAS ACCEPTED THE REVISED RETURNS OF INCOME. NOW THE QUESTION IS WHETHER A RETURN FILED U/S 139(4) CAN B E REVISED U/S 139(5) OF THE ACT. THE RELEVANT A.Y BEFORE US IS 20 13-14 AND DURING THE RELEVANT A.Y SECTION 139(5) ALLOWED FIL ING OF REVISED ITA NOS 277 278 433 AND 434 OF 2018 RAVI KUMAR UPP ALA AND OTHERS PAGE 5 OF 7 RETURN ONLY IF THE ORIGINAL RETURN WAS FILED U/S 13 9(1) OR IN RESPONSE TO NOTICE ISSUED U/S 142(1) OF THE ACT. BY FINANCE ACT OF 2016 SECTION 139(5) HAS BEEN SUBSTITUTED PERMITTIN G THE RETURNS FILED U/S 139(1) AND 139(4) TO BE REVISED AND IT IS APPLICABLE W.E.F. 1.4.2017 I.E. A.Y 2017-18 ONWARDS. THEREFORE THE R EVISED RETURN OF INCOME BY THE RESPECTIVE ASSESSEES ARE INVALID A ND THEREFORE THE ASSESSMENT ORDER IS ERRONEOUS. BUT DURING THE COURSE OF ASSESSMENT THE ASSESSEE CAN POINT OUT ANY MISTAKE IN THE RETURN OF INCOME AND IT IS THE DUTY OF THE AO TO COMPUTE T HE CORRECT INCOME OF THE ASSESSEE. THE CBDT VIDE CIRCULAR NO.1 4 OF 1955 DATED 11.4.1955 HAS HELD THAT THE OFFICERS OF THE D EPARTMENT MUST NOT TAKE ADVANTAGE OF IGNORANCE OF THE ASSESSE E ABOUT HIS RIGHTS AND IT IS THEIR DUTY TO ASSIST THE TAX PAYER IN EVERY REASONABLE WAY PARTICULARLY IN THE MATTER OF CLAIMI NG AND SECURING RELIEFS. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SHELLY PRODUCTS REPORTED IN 261 ITR 367 (S.C) HAS H ELD AS UNDER: WE CANNOT LOSE SIGHT OF THE FACT THAT THE FAILURE O R INABILITY OF THE REVENUE TO FRAME A FRESH ASSESSMENT SHOULD NOT PLAC E THE ASSESSEE IN A MORE DISADVANTAGEOUS POSITION THAN IN WHAT HE WOULD HAVE BEEN IF A FRESH ASSESSMENT WAS MADE. IN A CASE WHERE AN ASSES SEE CHOOSES TO DEPOSIT BY WAY OF ABUNDANT CAUTION ADVANCE TAX OR S ELF- ASSESSMENT TAX WHICH IS IN EXCESS OF HIS LIABILITY ON THE BASIS OF RETURN FURNISHED OR THERE IS ANY ARITHMETICAL ERROR OR INACCURACY IT IS OPEN TO HIM TO CLAIM REFUND OF THE EXCESS TAX PAID IN THE COURSE OF ASSESSMENT PROCEEDING. HE CAN CERTAINLY MAKE SUCH A CLAIM ALSO BEFORE THE CONCERN ED AUTHORITY CALCULATING THE REFUND. SIMILARLY IF HE HAS BY MIS TAKE OR INADVERTENCE OR ON ACCOUNT OF IGNORANCE INCLUDED IN HIS INCOME ANY AMOUNT WHICH IS EXEMPTED FROM PAYMENT OF INCOME-TAX OR IS NOT INCO ME WITHIN THE CONTEMPLATION OF LAW HE MAY LIKEWISE BRING THIS TO THE NOTICE OF THE ASSESSING AUTHORITY WHICH IF SATISFIED MAY GRANT HIM RELIEF AND REFUND THE TAX PAID IN EXCESS IF ANY . 8. THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. LUCKNOW PUBLIC EDUCATIONAL SOCIETY IN INCOME T AX APPEAL NO.134 OF 2007 ALSO REPORTED IN (TS-5024-HC-2009 AL LAHABAD)-0) HAS CONSIDERED SIMILAR CIRCUMSTANCES WHEREIN THE OR IGINAL RETURN WAS FILED LATE DUE TO WHICH THE REVISED RETURN WA S TREATED BY THE ITA NOS 277 278 433 AND 434 OF 2018 RAVI KUMAR UPP ALA AND OTHERS PAGE 6 OF 7 AO AS NONEST THE HON'BLE HIGH COURT HELD THAT A CL AIM TO WHICH THE ASSESSEE IS LEGALLY ENTITLED CANNOT BE DENIED B Y THE AO ON TECHNICAL GROUNDS EVEN IF SUCH A CLAIM HAS NOT BEE N MADE BY THE ASSESSEE. HENCE IN THIS CASE THE ASSESSEE DURING T HE ASSESSMENT PROCEEDINGS MADE THE CLAIM AND THE AO AFTER DUE VER IFICATION HAS ACCEPTED THE ASSESSEES CLAIM. FURTHER SINCE THE F IRM HAS NOT CLAIMED THE EXPENDITURE THERE IS NO LOSS TO THE RE VENUE AND THE SAME CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE A SSESSEES WITHOUT RECEIPT OR EVEN CREDIT TO THEIR A/C. THUS THERE IS ALSO NO PREJUDICE CAUSED TO THE REVENUE. IN VIEW OF THE SAM E THE ORDERS U/S 263 IN THE CASE OF BOTH THE ASSESSEES ARE NOT SUSTAINABLE AND ARE ACCORDINGLY SET ASIDE. 9. IN THE RESULT ASSESSEES APPEALS ARE ALLOWED. T HE REVENUES APPEALS ARE AGAINST THE RELIEF GIVEN BY T HE CIT (A) IN THE APPEAL AGAINST THE CONSEQUENTIAL ORDER PASSED BY TH E AO U/S 143(3) R.W.S. 263 OF THE I.T. ACT. SINCE THE VERY B ASIS I.E. ORDERS U/S 263 ARE SET ASIDE THE CONSEQUENTIAL ORDERS HAV E NO LEGS TO STAND AND THEREFORE THE REVENUES APPEALS ARE INFR UCTUOUS. FURTHER THE APPEAL IN ITA NO.433/HYD/2019 IS BELOW THE TAX EFFECT. THEREFORE THIS APPEAL IS LIABLE TO BE DISM ISSED ON ACCOUNT OF LOW TAX EFFECT AS WELL. 10. IN THE RESULT ASSESSEES APPEALS ARE ALLOWED A ND THE REVENUES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3D MARCH 202 1. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD DATED 3 RD MARCH 2021. VINODAN/SPS ITA NOS 277 278 433 AND 434 OF 2018 RAVI KUMAR UPP ALA AND OTHERS PAGE 7 OF 7 COPY TO: 1 S/S RAVI KUMAR UPPALA AND PRADEEP KUMAR UPPALA C/O M. ANANDAM & CO. C.A. 7A SURYA TOWERS SP ROAD SECUND ERABAD 500003 2 DY.CIT CENTRAL CIRCLE 3(1) HYDERABAD 3 CIT (CENTRAL) HYDERABAD 4 ADD.CIT RANGE-3 HYDERABAD 5 THE DR ITAT HYDERABAD 6 GUARD FILE BY ORDER