Sri Keerti Satya Veerabhadra Rao, Peddapuram v. The Commissioner of Income Tax, Rajahmundry

ITA 491/VIZ/2010 | 2007-2008
Pronouncement Date: 24-01-2011 | Result: Allowed

Appeal Details

RSA Number 49125314 RSA 2010
Assessee PAN AEQPK9085F
Bench Visakhapatnam
Appeal Number ITA 491/VIZ/2010
Duration Of Justice 2 month(s) 28 day(s)
Appellant Sri Keerti Satya Veerabhadra Rao, Peddapuram
Respondent The Commissioner of Income Tax, Rajahmundry
Appeal Type Income Tax Appeal
Pronouncement Date 24-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 24-01-2011
Date Of Final Hearing 05-01-2011
Next Hearing Date 05-01-2011
Assessment Year 2007-2008
Appeal Filed On 27-10-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM. BEFORE SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI B.R.BASKARAN ACCOUNTANT MEMBER. I.T.A. NO. 491/VIZAG/2010 ASSESSMENT YEAR : 2007 - 08 KEERTI SATYA VEERABHADRA RAO COMMISSI ONER OF INCOME TAX PEDDAPURAM. VS. RAJAHMUNDRY. PAN : AEQPK9085F APPELLANT. RESPONDENT. ASSESSEE BY : SHRI P PRABHAKARA MURTHY ADV. RESPONDENT BY : SHRI TL PETER CIT - DR SHRI DS SUNDER SINGH DR. O R D E R PER SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT ON VARIOUS GROUNDS BUT THEY ALL RELATE TO T HE VALIDITY OF INITIATION OF REVISION PROCEEDINGS U/S 263 OF THE INCOME TAX ACT SETTING ASIDE THE ASSESSMENT ORDER IN WHICH CLAIM OF THE ASSESSEE U/S 10(10C) OF THE INCOME TAX ACT WAS ALLOWED. ASSESSEE HAS ALSO CHALLENGED THE INIT IATION OF REVISION PROCEE DINGS ON THE GROUND THAT IT IS BARRED BY LIMITATION AS THE ISSUE REGARDING EXEMPTION U/S 10(10C) OF THE ACT HAS ATTAINED FINALITY ON 28.03.2008 ITSELF I.E. ON THE DATE OF INTIMATION U/S 143(1) OF INCOME TAX ACT. 2 2. DURING THE COURSE OF HEARING THE LD COU NSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE IMPUGNED ISSUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF VALLURI D AS KAKINADA VS ITO KAKINADA IN ITA NO.465/VIZAG/2010 IN WHICH UNDER THE IDENTICAL CIRCUMSTANCES THE ASSESSMENT ORDER WAS SOUGHT TO BE REVISED BY THE CIT AND THE TRIBUNAL HAS SET ASIDE THE ORDER OF THE CIT PASSED U/S 263 OF THE ACT AFTER HOLDING THAT EVEN THE ISSUE ON MERIT IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. 3. THE LD DR DID NOT DISPUTE THE FACTUAL ASPECT. 4. W E HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE ORDER OF THE AUTHORITIES BELOW AND THE ORDER OF THE TRIBUNAL IN WHICH UNDER THE IDENTICAL CIRCUMSTANCES THE ASSESSMENT ORDER WAS SOUGHT TO BE REVISED BY THE CIT AND THE TRIBUNAL SET ASIDE THE ORD ER OF THE CIT. THE RELEVANT OBSERVATION OF THE TRIBUNAL ORDER IS AS UNDER: 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO PERUSED THE RECORD. BEFORE PROCEEDING WE FEEL IT PERTINENT TO DISCUSS ON THE LEGAL POSITION ON THE ISSUE OF SECTION 263 OF THE ACT. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GRASIM INDUSTRIES LTD. V CIT (321 ITR 92) HAS DEALT WITH THE SCOPE OF PROVISIONS OF SECTION 263 AS UNDER: SECTION 263 OF THE INCOME - TAX ACT 1961 EMPOWERS THE COMMISSIONER TO CALL FOR AND EXAMINE T HE RECORD OF ANY PROCEEDINGS UNDER THE ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE TO PASS AN ORDER UPON HEARING THE ASSESSEE AND AFTER AN ENQ UIRY AS IS NECESSARY ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. THE KEY WORDS THAT ARE USED BY SECTION 263 ARE THAT THE ORDER MUST BE CONSIDERED BY THE COMMISSIONER TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS 3 OF THE REVENUE. THIS PROVISION HAS BEEN INTERPRETED BY THE SUPREME COURT IN SEVERAL JUDGMENTS TO WHICH IT IS NOW NECESSARY TO TURN. IN MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83 THE SUPREME COURT HELD THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER AND IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. THE SUPREME COURT HELD THAT AN INCORRECT ASSUMPTION OF F ACT OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. AN ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND WOULD BE AN ORDER FALLING IN THAT CATEGORY. THE EXPRESSION PREJUDICIAL TO THE INTERESTS OF THE REVENUE THE SUPREME COURT HELD IT IS OF WIDE IMPORT AND IS NOT CONFINED TO A LOSS OF TAX. WHAT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IS EXPLAINED IN THE JUDGMENT OF THE SUPREME COURT (HEAD NOTE) : THE PH RASE PREJUDICIAL TO THE INTERESTS OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE FOR EXAMPLE WHEN AN INCOME - TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME - TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH TH E COMMISSIONER DOES NOT AGREE IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME - TAX OFFICER IS UNSUSTAINABLE IN LAW. THE PRINCIPLE WHICH HAS BEEN LAID DOWN IN MALABAR INDUST RIAL CO. LTD. [2000] 243 ITR 83 (SC) HAS BEEN FOLLOWED AND EXPLAINED IN A SUBSEQUENT JUDGMENT OF THE SUPREME COURT IN CIT V. MAX INDIA LTD. [2007] 295 ITR 282. 4 7. COMING TO THE FACTS OF THE CASE WE FIRST NOTICE THAT THE LEARNED CIT HAS RELIED ON THE DIRECTIVES OF CBDT ISSUED IN THE LETTER DATED 06 - 10 - 2009 WHICH IS APPARENTLY ISSUED AFTER THE COMPLETION OF THE IMPUGNED ASSESSMENT ORDERS. SECONDLY THE LEARNED CIT HAS OPINED THAT THE EXIT OPTION SCHEME DOES NOT FULLY COMPLY WITH THE RULE 2BA OF T HE INCOME TAX RULES AND ACCORDINGLY HELD THAT THE EX - GRATIA PAYMENT RECEIVED UNDER THE SAID SCHEME WILL NOT BE ENTITLED TO EXEMPTION UNDER SECTION 10(10C) OF THE ACT. HOWEVER THE CASE OF THE LEARNED A.R IS THAT THE LEARNED CIT HAS FAILED TO CONSIDER THE SUBSEQUENT CIRCULAR ISSUED BY THE STATE BANK OF INDIA WHEREIN THE LACUNAE POINTED OUT BY THE LEARNED CIT HAS BEEN FULFILLED. 8. APART FROM THE ABOVE WHAT IS REQUIRED TO BE SEEN IN A PROCEEDING UNDER SECTION 263 IS WHETHER THE VIEW OF THE ASSESSING O FFICER IS A PLAUSIBLE VIEW AND IS SUSTAINABLE IN LAW. AT THE TIME WHEN THE ASSESSMENT ORDER WAS PASSED THE LETTER DATED 06 TH OCTOBER 2009 OF CBDT WAS NOT ISSUED AND HENCE THE ASSESSING OFFICER COULD NOT HAVE REFERRED TO IT. AS POINTED OUT EARLIER THE ASSESSING OFFICER HAS COMPARED THE FACTS OF THE INSTANT CASES WITH THE DECISION OF ITAT LUCKNOW IN THE CASE OF ANANT KUMAR AGARWAL (SUPRA) AND FINALLY CAME TO THE CONCLUSION THAT THESE ASSESSEES ARE ENTITLED FOR EXEMPTION UNDER SECTION 10(10C) OF THE AC T. HENCE IN OUR VIEW THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS AND IN THESE CIRCUMSTANCES THE IMPUGNED ASSESSMENT ORDERS CANNOT BE TERMED AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE ON THE BASIS OF A SUBSEQUENT LETTER. OUR ATTENTION WAS DRAWN TO THE LETTER ISSUED BY THE CBDT. WE NOTICE THAT THE CBDT HAS ISSUED THE SAID LETTER BY PLACING RELIANCE ON THE RECITALS OF THE SAID SCHEME. HOWEVER THE ASSESSING OFFICER IN THE INSTANT CASES HAVE COMPARED THE FACTS WITH THE FACTS OF THE CASE OF ANANT KUMAR AGARWAL (SUPRA) AND ON BEING SATISFIED WITH THE PARITY OF FACTS ALLOWED THE CLAIM OF THE ASSESSEES. IN THESE CIRCUMSTANCES WE DO NOT FIND ANY JUSTIFICATION IN INITIATING PROCEEDINGS UNDER SECTION 263 OF THE ACT IN THE HANDS OF THESE ASSESSEES. ACCORDINGLY WE SET ASIDE THE ORDERS OF THE LEARNED CIT PASSED UNDER SECTION 263 OF THE ACT IN THE HANDS OF THESE ASSESSEES. 9. IN THE RESULT ALL THE APPEALS OF THE ASSESSEES ARE ALLOWED. 5 5. WE THEREFORE FOLLOWING THE ORDER OF THE TRIBUNAL IN ABOVE CASE SET ASIDE THE ORDER OF THE CIT PASSED U/S 263 OF THE ACT. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED ACCORDINGLY IN THE COURT ON 24.1.2011. SD/ - SD/ - (B.R. BASKARAN ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VISAKHAPATNAM DATED: 24 TH JANUARY 2011 *MSB/UDC COPY OF ORDER IS FORWARDED TO : 1. KEERTI SATYA VEERA BHADRA RAO S/O SOMA RAJU B - 1 SBI COLONY BEHIND LIC OFFICE PEDDAPURAM - 533 437 EAST GODAVARI DISTRICT. 2 . CIT AYAKAR BHAVAN VEERABHADRAPURAM NEAR KAMBAL TANK RAJAHMUNDRY 533104. 3 . ITO WARD - 1 KAKINADA. 4 . DR ITAT VISAKHAPATNAM. 5 . GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM.