Tgv Projects And Investments Private ... vs Assessee

I.T.A. No. 1673/HYD/2014 & C.O. No. 1/HYD/2015 (In ITA No.1683/HYD/2014) Assessment Year: 2007-08 M/s. TGV Projects & The Deputy Commissioner Investments Pvt. Ltd., Vs of Income Tax, Sanathnagar, Circle-2(3), HYDERABAD HYDERABAD [PAN: AAACT8340H]

(Appellant/Cross-Objector) (Respondent)

I.T.A. No. 1683/HYD/2014 Assessment Year: 2007-08 The Asst. Commissioner M/s. TGV Projects & of Income Tax, Vs Investments Pvt. Ltd., Circle-2(3), Sanathnagar, HYDERABAD HYDERABAD [PAN: AAACT8340H]

(Appellant) (Respondent)

For Revenue : Shri Rama Krishna, Bandi, DR For Assessee : Shri K.K. Gupta, AR

Date of Hearing : 12-03-2015 Date of Pronouncement : 25-03-2015

ORDER

PER B. RAMAKOTAIAH, A.M. :

These three appeals are filed against the order of the Commissioner of Income Tax(Appeals)-III, Hyderabad dated 21-08-2014.

ITA Nos.1673 & 1683 /Hyd/2014 :- 2 -: C.O.No. 1/Hyd/2015 M/s.TGV Projects & Investments P. Ltd.,

2. These appeals arise in a peculiar situation of directions of CIT(A) given u/s.251(1)(c) of the Income Tax Act [Act]. Assessee is a company engaged in the business of hotel, leasing of property and franchise of Idea Cellular. Assessing Officer completed the assessment on 22-03-2013 u/s.143(3) r.w.s.147 determined the total income at Rs.55,60,740/-. As seen from the assessment order, an assessment order u/s.143(3) for the AY.2007-08 was passed on 25-03-2009 assessing the income at Rs.7,98,956/- under the normal provisions of book profit u/s.115JB of Rs.40,30,507/-. Subsequently, notice u/s.148 was issued after re-opening proceedings u/s.147 on 22-03-2012. The order indicates that the assessment was re-opened within four years from the end of the assessment year, whereas CIT(A) records in para 4 that it was re-opened after four years from the end of assessment year. However, what is peculiar in the order of the CIT(A) is that when assessee relied on the decision of ITAT, Hyderabad in the case of Gowri Gopal Hospital Vs. ITO in ITA No.1330/Hyd/2013, as similar facts are applicable in the case of assessee, Ld.CIT(A) given decision as under:

"4.2 In the appeal the appellant only pressed the ground of reopening on the ground that it was an audit objection and had relied on the decision of the Hon'ble ITAT in the case of M/s. GowriGopal Hospital Vs. ITO in ITA No.1330/Hyd/2013 and did not press ground No.2 and 3 i.e., the issue of depreciation and share application money. Hence, these issues are not adjudicated in the appeal.

5. In the light of the above, the Assessing Officer is directed to examine carefully the facts and circumstances in the case of TGV Projects and Investments Pvt. Ltd., and in the case of M/s.Gowri Gopal Hospital and decide whether the facts and circumstances stated by the appellant are exactly applicable towards reopening of the assessment in the present case. In case, the facts, circumstances and issues of the appellant's case and the decision of the Hon'ble ITAT in the case of M/s. Gowri Gopal Hospital are identical, the Assessing Officer is directed to allow the appeal of the appellant. In this context, the AO is directed to call for the records from the ITO Ward 2(2) and examine whether the issue involved are ITA Nos.1673 & 1683 /Hyd/2014 :- 3 -: C.O.No. 1/Hyd/2015 M/s.TGV Projects & Investments P. Ltd.,

identical and if so only allow the appeal of the appellant. In case, the facts, circumstances and issues of the two cases are not identical the order of the Assessing Officer is upheld. This order is passed under the provisions of section 251(1)(c) of the I.T.Act, 1961".

3. Revenue has raised the following material grounds contesting the order of CIT(A):

"2. The CIT(A) has erred on facts and in law in not controverting the assessee's wrong submission that the case was reopened after four years.

3. The provisions of S.251(1) of the Income Tax Act, 1961 empowers the CIT(A) to confirm, reduce, enhance or annul the assessment but the said section does not empower the CIT(A) to set aside any assessment or issue any direction for further enquiry and passing of the consequential order.

4. The Ld.CIT(A) ought to have appreciated the fact that the Assessing Officer does not have the power to revisit the assessment again on the concluded assessment and cannot gain the power from the order of the CIT(A) which is not authorized by the provisions of the Income Tax Act, 1961.

5. In view of the above, in the instant case, Ld.CIT(A) has erred on facts and in law in directing the A.O. to compare the facts, circumstances and issue involved in the case of the assessee with that of M/s. Gowri Gopal Hospital case and if the facts, circumstances and issue are same, then allow the appeal of the assessee.

6. The Ld.CIT(A) erred in passing the appellate order u/s.251(1)(c) of the Income Tax Act whereas the order appealed against was an assessment order".

4. Assessee in its appeal raised the following grounds:

"1. The order passed by the CIT(Appeals) while allowing the appeal, contains instructions to the assessing officer to compare the facts in the case of the appellant, with the facts in the ruling relied upon i.e., ITAT order in the case of Gowri Gopal Hospital Pvt. Ltd., V. ITO (ITA No.1330/Hyd/2013).

ITA Nos.1673 & 1683 /Hyd/2014 :- 4 -: C.O.No. 1/Hyd/2015 M/s.TGV Projects & Investments P. Ltd.,

The modification order deleting the addition was not passed yet. The appellant prefers this appeal before the hon'ble Tribunal to hold that the appeal is allowed and in favour of the appellant.

2. On the facts of the case the reopening of assessment is not valid in law.

3. The appellant requests for passing an appropriate order".

5. In the cross-objection, assessee raised the following grounds:

"1. The assessment was completed u/s.143(3) and all the aspects were examined. Assessment was reopened u/s.147. It is to be stated that the decision of ITAT in the case of Gowri Gopal Hospitals (P) Ltd., (Appeal No.ITA No.1330/Hyd/2013) squarely applies to the assessee's case.

2. The honourable tribunal has held that when an assessment was made u/s.143(3) after examination a further examination u/s.147 is not valid and liable to be quashed, reliance is place on the decision in the case of Viswanath Engineering Vs. ACIT (354 ITR 0211) wherein it was held that having previously examined the nature of expenditure and having accepted during the original assessment, when a scrutiny has taken place it was not open to the assessing officer to re-examine. Any such attempt on the part of the assessing officer would be based on only a change of opinion. It was held that reopening of assessment even within four years would not be permissible.

3. The respondent requests the honourable tribunal to dismiss the appeal filed by the department".

6. After considering the detailed objections of the Revenue and assessee, we are unable to uphold the order of CIT(A). Provisions of Section 251(1) are to be examined in order to consider whether the order of CIT(A) is correct or not. Provisions of 251(1) are as under:

"Section 251. (1) In disposing of an appeal, the [Commissioner (Appeals)] shall have the following powers--

ITA Nos.1673 & 1683 /Hyd/2014 :- 5 -: C.O.No. 1/Hyd/2015 M/s.TGV Projects & Investments P. Ltd.,

(a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment;

[(aa) in an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement Commission, in the course of the proceeding before it and such other material as may be brought on his record, confirm, reduce, enhance or annul the assessment;]

(b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty;

(c) in any other case, he may pass such orders in the appeal as he thinks fit".

7. Therefore, as can be seen, the CIT(A) has to decide the appeal u/s.251(1)(a) as contested by the Revenue in ground No.3 either to confirm, reduce, enhance or annul the assessment. It does not empower the CIT(A) to set aside any assessment or delegating the same to the file of Assessing Officer. As can be seen from the direction of the CIT(A), he directs the Assessing Officer to examine another file and hold that appeal is allowable or not. Since appeal is on an order of an assessment, CIT(A) should have examined and decided the issue by virtue of powers conferred under section 251(1)(a) only. He can not delegate the same to AO. We are afraid that if this order of CIT(A) delegating his jurisdiction to AO is allowed, then in the guise of deciding issues, the matters will be set aside to AO, which is not permitted under the provisions.

8. Moreover, CIT(A)'s order indicates that he passed the order u/s.251(1)(c). As can be seen from the provisions, in the case of appeal against the order of assessment, he has to invoke the powers u/s.251(1)(a) and against penalty u/s.251(1)(b) and in any other case ie. any miscellaneous proceedings u/s.154 etc., he can invoke powers ITA Nos.1673 & 1683 /Hyd/2014 :- 6 -: C.O.No. 1/Hyd/2015 M/s.TGV Projects & Investments P. Ltd.,

u/s.251(1)(c). The appeal preferred before the CIT(A) is against the order of assessment i.e., re-assessment u/s.147. Therefore, he should have passed the orders invoking 251(1)(a). Had he restricted himself to 251(1), the issue would not have arisen. However, CIT(A) in his wisdom specifically mentioned clause 251(1)(c), which does not apply to the proceedings pending before him.

9. As seen from the grounds raised by the Revenue, as well as by assessee, CIT(A) has not adjudicated the issue at all in its correct perspective. While adjudicating the issue, it is his duty to examine the facts, verify the applicable law and give a decision based on facts and provisions of law. He cannot shirk his responsibility and direct the Assessing Officer to examine the issues and decide appeal accordingly. As rightly contended by the Revenue, the Assessing Officer does not have the power to re-visit the assessment again and cannot gain the power from the order of CIT(A), which is not according to the provisions of Income Tax Act, 1961. In view of this, we have no hesitation in setting aside the order of CIT(A) and restore the appeal to the file of CIT(A) to consider it afresh and pass appropriate order on merits after examining assessee's contentions. He should also give a finding whether the assessment was re-opened within four years or after four years and if so, should analyze the applicable case law and the provisions of the Act to give a finding whether assessment order can be upheld or not? If required, he should also give a finding in the merits on the additions made by Assessing Officer. With these observations, appeal before the CIT(A) is restored by setting aside the impugned order of the CIT(A).

10. Assessee's appeal by way of cross objection, is more or less on the issue of re-opening u/s.147. Since the order of CIT(A) is set aside for ITA Nos.1673 & 1683 /Hyd/2014 :- 7 -: C.O.No. 1/Hyd/2015 M/s.TGV Projects & Investments P. Ltd.,

fresh adjudication on all issues, there is no need to adjudicate these grounds by us at present.

11. In the result, Revenue's appeal as well as assessee's appeal and cross-objection are considered allowed for statistical purposes.

Order pronounced in open Court on 25th March, 2015.

Sd/- Sd/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, Dated 25th March, 2015.

TNMM

copy to :

1. M/s. TGV Projects & Investments Pvt. Ltd., C-4, Industrial Estate, Sanathnagar, Hyderabad. C/o. Sri K.K. Gupta, Chartered Accountant, 3464, Dundoo Vihar, R.P. Road, Secunderabad.

2. The Deputy Commissioner of Income Tax, Circle-2(3), B- Block, 8th Floor, IT Towers, AC Guards, Hyderabad.

3. The Asst. Commissioner of Income Tax, Circle-2(3), 8th Floor, B-Block, Room No.824, IT Towers, AC Guards, Hyderabad.

4. CIT(Appeals)-III, Hyderabad

5. CIT-II, Hyderabad

6. D.R. ITAT, Hyderabad