The Commissioner of Income Tax V. M. Laxmana

ITTA/2/2002

AI Insights

The case revolves around an appeal by the Revenue against the order of the Income Tax Appellate Tribunal, which pertained to the assessment year 1996-97. The core issue was the addition of Rs. 7,23,465 as undisclosed income, which was derived from a discrepancy between the cost of construction reported by the assessee and the valuation made by the assessing officer's valuation officer. The Tribunal found merit in the assessee's objections to the valuation, leading to a reduction in the unexplained investment amount. The High Court's decision to dismiss the appeal was based on the absence of substantial questions of law and the factual nature of the Tribunal's decision.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 718985 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 11-02-2014
• Assessment Year: misc
• Result in Favour of: Respondent
• Court: HIGH COURT
• Keywords: Undisclosed income; Unexplained investment; Valuation report; Differential cost of construction

Judgement Text

"HON'BLE SRI JUSTICE G.CHANDRAIAH & HON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A. No. 2 of 2002 O R D E R:- (per Hon’ble Sri Justice Challa Kodanda Ram) This Appeal arising out of the order dated 04.07.2000 of the Income Tax Appellate Tribunal in I.T.A.No. 13/Hyd/2000 is at the instance of the Revenue. The following questions of law for the assessment year 1996-97 are raised for opinion of this Court. i) Whether on the facts and in the circumstances of the case, the Tribunal is correct in holding that the unexplained investment is only Rs.3.50 lakhs in the absence of any reliable and cogent evidence placed by the assessee? ii) Whether on the facts and in the circumstances of the case, the Tribunal is correct in not adverting to the assessee’s sworn statement, the order of the Assessing Officer and the order of the first appellate authority [CIT(Appeals)]? The issue in controversy is with respect to addition of Rs.7,23,465/- as undisclosed income from other sources. The amount has been arrived at as difference of amount as shown by the assessee with respect to the cost of construction of the house and the valuation made at the instance of the assessing officer by the valuation officer. As against this addition, the assessee raised objections to the valuation report submitted by the Superintending Engineer through Chartered Engineer. The Assessing Officer in his assessment order merely stated that objections raised by the assessee were forwarded to the Superintendent Engineer – Valuation Officer, who had stated that the valuation report “is in order and may be adopted without any change”. The assessment order, in other words, had not dealt with the objections raised by the assessee with respect to the valuation. The first appellate authority also did not deal with this aspect and did not consider the objections raised by the assessee. On appeal, the Income-tax Tribunal, in its order, recorded as under: “We heard both sides in detail, and discussed the matter in the Court. We find much force in the argument of the learned counsel for the assessee that a series of technical objections raised by the assessee’s Chartered Engineer have not been properly dealt with either by the Valuation Officer or by the lower authorities of the Department. Therefore, we find that the assessee is entitled to reasonable relief in this amount of Rs.7,23,465/- added by the assessing officer on account of differential cost of construction, in respect of the ground floor of the building. Considering all the aspects of the case, we set aside the orders of the lower authorities and direct the assessing officer to limit the difference in cost of construction to Rs.3.50 lakhs and treat only that amount as the unexplained investment of the assessee in the construction. In the circumstances, the cost of construction of ground floor should be taken as Rs.10,16,591/-. The assessee, therefore, gets a relief of Rs.3,73,465/-.” The order of the Tribunal is on appreciation of the facts and material placed before them. The conclusions arrived at by the Tribunal are based on pure questions of fact. There is no question raised before us against these questions of fact and no contra material as such has been placed before us to arrive at a conclusion that the findings recorded by the Tribunal are unsustainable or perverse. In that view of the matter, we do not find any reason to interfere with the orders of the Tribunal and in the circumstances, we decline to answer the questions of law as they are pure questions of fact. Accordingly, this Appeal is dismissed. No order as to costs. As a sequel to the dismissal of the Appeal, Miscellaneous Petitions, if any pending, shall stand disposed of as infructuous. _________________ G. CHANDRAIAH, J 11.02.2014 ______________________ CHALLA KODANDA RAM,J bcj "