Smt.Saiva Bhulakshmi, Hyderabad vs Assessee

Smt. Saiva Bhulakshmi, The Income Tax Officer Secunderabad. vs. Ward-2 PAN AJYPS6552J Khammam (Appellant) (Respondent)

For Assessee : Mr. Chandramouleswara Rao For Revenue : Smt. G.V. Hemalatha Devi

Date of Hearing : 10.07.2015 Date of Pronouncement : 15.07.2015

ORDER

This appeal filed by the assessee is directed against the Order of Ld. CIT, Vijayawada dated 11.03.2014 passed under section 263 of the I.T. Act, 1961.

2. The assessee in the present case is an individual. The return of income for the year under consideration was filed by her on 31.03.2007 declaring total income of Rs.910. In the assessment originally completed under section 143(3) vide order dated 29.12.2008, the total income of the assessee was determined by the A.O. at Rs.4,22,510 after making an addition of Rs.4,21,603 by invoking the provisions of section 50C of the Act and by restricting the claim of the assessee made under section 54F to Rs.18,28,523. The 2 ITA.No.1185/Hyd/2014 Smt. Saiva Bhulakshmi, Secunderabad.

said assessment was subsequently revised by the Ld.CIT vide order dated 25.03.2011 passed under section 263 with a direction to the A.O. to verify as to whether the construction started by the assessee in the month of March, 2004 was completed within the period of three years from the date of sale of property i.e., 29.08.2005 in order be eligible to claim exemption under section 54F. As per the direction of the Ld.CIT, the A.O. verified this aspect and found that the construction of the residential house having been completed by the assessee in the month of November, 2006, she was clearly eligible for exemption under section 54F. Accordingly, the claim of the assessee for exemption under section 54F was allowed by the A.O. in the assessment completed under section 143(3) read with section 263 of the Act vide order dated 29.12.2011.

3. The record of the assessment made by the A.O. vide order dated 29.12.2011 under section 143(3) read with section 263 again came to be examined by the Ld.CIT. On such examination, he noticed that assessee was having more than one residential house as on the date of sale of the original asset i.e., 29.08.2005 as evident from the record and therefore, she was not entitled for exemption under section 54F in respect of investment made in the new asset. He therefore, once again issued a notice under section 263 and since there was no reply to the said notice as well as the subsequent notices issued by him from the assessee, the Ld.CIT 3 ITA.No.1185/Hyd/2014 Smt. Saiva Bhulakshmi, Secunderabad.

revised the assessment made by the A.O. under section 143(3) read with section 263 with a direction to the A.O. to re-do the assessment after verifying the claim of the assessee for exemption under section 54F after taking into consideration the error pointed out by him in the notice issued under section 263. Aggrieved by the order of the Ld.CIT, the assessee has preferred this appeal before the Tribunal.

4. At the outset, it is observed that there is a delay of 27 days on the part of the assessee in filing this appeal before the Tribunal. In this regard, assessee has moved an application seeking condonation of the said delay and keeping in view the reasons given therein which are duly supported by an affidavit filed by the assessee, I am satisfied that there was a sufficient cause for the delay of 27 days on the part of the assessee in filing appeal before the Tribunal. I therefore, condone the said delay and now proceed to dispose of the appeal of the assessee on merit.

5. Ld. Counsel for the assessee at the time of hearing before us raised a preliminary issue challenging the validity of the impugned order passed by the Ld.CIT under section 263 on the ground that the same is barred by limitation. He submitted that the original assessment order in this case was passed by the A.O. under section 143(3) on 29.12.2008 allowing the claim of the assessee for exemption under section 54F. He submitted that the 4 ITA.No.1185/Hyd/2014 Smt. Saiva Bhulakshmi, Secunderabad.

said order was revised by the Ld.CIT under section 263 initially vide order dated 25.03.2011 on the ground that there was an error in that order in allowing the claim of the assessee for exemption under section 54F without verifying as to whether the construction of new house was completed by the assessee within a period of three years from the date of sale of the property in order to be eligible for exemption under section 54F. He submitted that this limited aspect as per the direction of the Ld.CIT was examined by the A.O. in the order passed under section 143(3) read with section 263 vide order dated 29.12.2011 and the error now allegedly pointed out by the Ld.CIT in the second order passed under section 263 on 11.03.2014 regarding the assessee having more than one residential property as on the date of sale of original asset therefore, was in the original assessment order dated 29.12.2008 and not in the order dated 29.12.2011 passed by the A.O. under section 143(3) read with section 263 of the Act. He contended that since this issue was not at all involved in the assessment made by the A.O. under section 143(3) read with section 263 vide order dated 29.12.2011, what the Ld.CIT has actually revised by his impugned order passed under section 263 is the order passed by the A.O. under section 143(3) of the Act on 29.12.2008 and the same therefore, is barred by limitation as per section 263(2) which provides that no order under section 263(1) shall be made after the expiry of two years from the end of the financial year in which the order sought to be revised was passed.

5 ITA.No.1185/Hyd/2014 Smt. Saiva Bhulakshmi, Secunderabad.

6. The learned D.R. on the other hand strongly supported the impugned order passed by the Ld.CIT under section 263 on the issue of limitation by contending that as specifically mentioned by the Ld.CIT in the said order, what he has revised by exercising the powers under section 263 is the order dated 29.12.2011 passed by the A.O. under section 143(3) read with section 263 of the Act.

7. I have considered the rival submissions and also perused the relevant material on record. It is observed that the Ld.CIT by his impugned order passed under section 263 of the Act has sought to revise the assessment made in the case of the assessee for the year under consideration i.e., A.Y. 2006-2007 on the issue relating to the assessee's claim for exemption under section 54F which, according to the Ld.CIT, was wrongly allowed to the assessee since the assessee as per the record was having more than one residential property as on the date of sale of the original asset. He accordingly held that the claim of the assessee for exemption under section 54F was allowed by the A.O. without verifying this relevant and vital aspect and there was an error in the assessment completed by the A.O. It is however pertinent to note in this regard that the claim of the assessee for exemption under section 54F was allowed by the A.O. in the assessment originally completed under section 143(3) vide order dated 29.12.2008 and the assessment completed by the A.O. subsequently on 29.12.2011 as per 6 ITA.No.1185/Hyd/2014 Smt. Saiva Bhulakshmi, Secunderabad.

the direction of the Ld.CIT under section 143 read with section 263 involved a limited aspect relating to assessee's claim for exemption under section 54F i.e. whether construction of new property was completed within a stipulated period of three years from the sale of the original asset.

8. It is thus clear that the error allegedly pointed out by the Ld.CIT in his impugned order passed under section 263 was in the order originally passed by the A.O. under section 143(3) vide order dated 29.12.2008 and since the Ld.CIT has sought to revise by his impugned order the order passed by the A.O. under section 143(3) dated 29.12.2008, I am of the view that the period of limitation as provided under section 263(2) has to be reckoned from the date of original assessment passed under section 143(3) and not from the date of revised assessment passed by the A.O. under section 143(3) read with section 263 of the Act. This view gets support from the decision of Hon'ble Supreme Court in the case of CIT vs. Alagendra Finance Limited 211 CTR (SC) 69 as well as the decision of Hon'ble Bombay High Court in the case of ICICI Bank Ltd 343 ITR 74. Accordingly, I hold that the impugned order passed by the Ld.CIT dated 11.03.2014 revising the assessment order passed by the A.O. under section 143(3) on 29.12.2008 is barred by limitation having been passed after the period of two years from the end of the financial year in which order under section 143(3) sought to be revised was passed. The said order is 7 ITA.No.1185/Hyd/2014 Smt. Saiva Bhulakshmi, Secunderabad.

accordingly cancelled treating the same as invalid in the eyes of law and this appeal of the assessee is allowed.

9. In the result, appeal of the assessee is allowed.

Order pronounced in the open Court on 15.07.2015.

Sd/-

(P.M. JAGTAP) ACCOUNTANT MEMBER Dated 15th July, 2015.

VBP/-

Copy to

1. Smt. Saiva Bhulakshmi, Secunderabad.

C/o. Mr. M. Chandramouleswara Rao, Chartered Accountant, C-3, Skylark Apartments, Basheerbagh, Hyderabad-29.

2. The Income Tax Officer, Ward-2, Khammam.

3. Commissioner of Income Tax, 1st Floor, SVR Plaza, D.No.40-6-15, Revenue Colony, Siddhartha Public School Road, Moghalrajpuram, Vijayawada-520010.

4. Addl.CIT, Khammam Range, Khammam.

5. D.R. ITAT "A" (SMC) Bench, Hyderabad.

6. Guard File