A.Srinivasarao , Rajahmundry V. The Assistant Commissioner of Income Tax, Circle-1(1), Rajahmundry

ITA 117/VIZ/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1809 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 18-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Unexplained investment; Valuation report; Set aside
• Section: 10; 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 1 17 / VIZ /201 8 (ASST. YEAR : 20 12 - 13 ) DR. A. SRINIVASA RAO, D.NO. 46 - 17 - 17, DANAVAIPETA, RAJAHMUNDRY. V S . A CIT, CIRCLE - 1(1), RAJAHMUNDRY . PAN NO. ABDPA 9299 D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SMT. SUMAN MALIK SR. DR DATE OF HEARING : 22 / 0 1 /201 9 . DATE OF PRONOUNCEMENT : 20 / 0 3 /201 9 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 12 , HYDERABAD , DATED 22 /0 3 /201 8 FOR THE ASSESSMENT YEAR 20 12 - 13 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE IMPUGNED ORDER PASSED BY LEARNED COMMISSIONER OF INCOME - TAX (APPEALS), DISMISSING THE APPEAL IN LIMINE IS NOT CORRECT AND TENABLE IN THE FACTS AND CIRCUMSTANCES OF APPELLANT'S CASE. 2 THE LEARNED CIT (APPEALS) OUGHT TO HAVE CONSIDERED GROUNDS OF APPEAL AND SHOULD HAVE DECIDED THE APPEAL ON THE MERITS OF THE GROUNDS RAISED. 3 THE LEARNED ASSESSING OFFICER IS NOT JU STIFIED IN MAKING AN ADDITION OF RS 10,00,000/ - TOWARDS UNEXPLAINED INVESTMENT IN HOUSE CONSTRUCTIONS IN THE 2 ITA NO. 117/VIZ/2018 ( DR. A. SRINIVASA RAO ) FACTS AND CIRCUMSTANCES OF APPELLANT'S CASE. 3.1 ALTERNATIVELY, THE LEARNED ASSESSING OFFICER SHOULD HAVE R ESTRICTED THE ADDITION TO 5.71 L AKHS ONLY AND SHOULD NOT HAVE MADE FURTHER ADDITION ON ESTIMATE BASE. 4. THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING AN ADDITION OF RS 10,00,000/ - AS UNEXPLAINED INVESTMENT TOWARDS COST OF LIFT INSTALLATION AND CERTAIN FURNITURE INSTALLATION, IN THE FAC T AND CIRCUMSTANCES OF APPELLANT'S CASE. 5. FOR THESE GROUNDS AND ANY OTHER GROUNDS THAT MAY BE URGED DURING THE COURSE OF HEARING OF THE APPEAL, THE APPELLANT HUMBLY PRAYS THE HON'BLE ITAT TO SET ASIDE THE ORDER PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DISMISSING THE APPEAL IN LIMINE AND TO ALLOW THE APPEAL. 3 . FROM THE ABOVE, THERE ARE TWO ISSUES INVOLVED IN THIS APPEAL. FIRST ISSUE RELATES TO ADDITION IN RESPECT OF UNEXPLAINED INVESTMENT (GROUND NO.3) AND SECOND ISSUE RELATES TO UNEXPLAINED INVESTMENT TOWARDS COST OF LIFT INSTALLATION (GROUND NO.4) . 4 . FACTS OF THE FIRST ISSUE IN BRIEF ARE THAT THERE IS A SURVEY UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT') WAS CONDUCTED ON 27/01/2012 . A NOTICE UNDER SECTION 143(2) , DATED 03/06/2013 WAS ISSUED ALONG QUESTIONNAIRE , WHICH WAS DULY SERVED ON THE ASSESSEE ON 05/06/2013. DURING THE COURSE OF SURVEY, THE ASSESSEE HAS DISCLOSED A SUM OF RS. 4,41,584/ - AS RECEIPTS , WHICH WERE NOT ACCOUNTED FOR. IT HAS BEEN VERIFIED FROM THE RETURN AND THE BOOKS OF ACCOUNT THAT THE SAME HAS BEEN REFLECTED PROPERLY. IN REGARD TO INVESTMENT IN CONSTRUCTION OF BUILDING, THE ASSESSEE HAS GIVEN A 3 ITA NO. 117/VIZ/2018 ( DR. A. SRINIVASA RAO ) VALUATION REPORT DATED 06/02/2012 , ACCORDING TO WHICH TH E C O NSTRU C TION COST IS VALUED AT RS. 61.00 LAKHS . AS PER THE VALUATION REPORT SUBMITTED BY THE ASSESSEE , THE CONSTRUCTION STARTED SINCE APRI L , 2011 . THE ASSESSING OFFICER HAS REFERRED THE MATTER TO THE DEPARTMENT VALUATION CELL FOR VALUATION OF THE HOUSE CONSTRUCTION. VIDE ITS REPORT DATED 25/09/2014, DETERMINED THE CONSTRUCTION COST AT RS. 147.74 LAKHS. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE DIFFERENCE BETWEEN THE COST OF CONSTRUCTION AS PER TWO VALUATION REPORTS SHALL NOT BE TAKEN AS UNDISCLOSE D INVESTMENT IN CONSTRUCTION OF BUILDING . THE ASSESSEE VIDE HIS LETTER DATED 02/03/2015 REPLIED TH A T THE DIFFERENCE ARISES BECAUSE TH E PERSONAL VALUATION IS DONE UP TO 06/02/2012 WHEREAS THE DEPARTMENTAL VALUATION HAS BEEN DONE FOR THE ENTIRE CONSTRUCTION. THE ASSESSEE FURNISHED SOME DETAILS WITH REGARD TO CONSTRUCTION COST AND BILLS FOR PURCHASE OF VARIOUS CON S TRUCTION MATERIAL. THE ASSESSING OFFICER HAS NOTED THAT THE VALUATIO N REPORT SUBMITTED BY THE ASSESSEE IS A PERSONAL VALUATION REPORT GIVEN BY AAKAR CONSULTING ENGINEERS WHICH STATE S TH A T THE CONSTRUCTION HAS BEEN STARTED IN THE MONTH OF APR I L, 2011 THAT MEANS CONSTRUCTION COMMENCED FROM THE FINANCIAL YEAR 2011 - 12 (A.Y. 2012 - 13) , BUT THE ASSESSEE GAVE THE STATEMENT IN WRITING ON 02/03/2015 THAT CONSTRUCTION COST FOR THE FINANCIAL YEAR 2010 - 11 IS RS. 3.23 LAKHS. 4 ITA NO. 117/VIZ/2018 ( DR. A. SRINIVASA RAO ) THE ABOVE FACTS ARE SURELY CONTRADICTORY. SO THE STATEMENT OF THE ASSESSEE DOES NOT CONF O RM TO THE FI N DING OF THE PRIVATE VALUER . SO THE DETAILS OF THE CONSTRUCTION EXPENSES AS GIVEN ON 02/03/2015 ARE NOT RELIABLE , HOWEVER, THE TOTAL CONSTRUCTION EXPENSES OF THE HOSPITAL BUILDING WERE PRESENTED AT RS. 142.30 LAKHS AS AGAINST THE CONSTRUCTION EXPENSES COMPUTED AT RS. 147.74 LAKHS BY THE DEPARTMENTAL VALUATION CELL. THE ASSESSING OFFICER HAS A S KED THE AR OF THE ASSESSEE IN RESPECT OF THE ABOVE DIFFERENCE OF RS. 5.71 LAKHS (RS. 147.74 RS. 142.03) . THE AR OF THE ASSESSEE AGREED TO CHARGE THE TAX OF DIFFERENTIAL AMOUNT OF RS. 5.71 LAKHS, HOWEVER, THE ASSESSING OFFICER H AS NOT SATISFIED AND A S KED THE ASSESSEE TO SUBMIT FURTHER DETAILS AND OBSERVED THAT RS. 5.71 LAKHS AS CALCULATED BY THE ASSESSEE IS NOT RELIED UPON IN VIEW OF THE FACT THAT PROPER DETAILS OF EXPENSE S ARE NOT GIVEN FOR EXAMINATION AND NO BOOKS OF ACCOUNT S ARE MAINTAINED IN THIS REGARD . IN VIEW OF THIS, TAKEN A LENIENT VIEW IN THE MATTER AND A SUM OF RS. 10.00 LAKHS ON ESTIMATE BASIS IS ASSUMED TO BE THE UNEXPLAINED INVESTMENT IN CONSTRUCTION OF HOUSE . ACCORDINGLY, ADDITION WAS MADE. 5. ON APPEAL, LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING THAT THE AR OF THE ASSESSEE AGREED FOR THE ADDITION. 5 ITA NO. 117/VIZ/2018 ( DR. A. SRINIVASA RAO ) 6 . ON APPEAL BEFORE US, LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE AR OF THE ASSESSEE ADMITTED ONLY RS. 5.71 LAKHS AND ADDITION WAS MADE BY THE ASSESSING OFFICER FOR RS.10.00 LAKHS , THEREFORE, LD. CIT(A) WITHOUT DECIDING THE APPEAL ON MERITS SIMPLY C ONFIRMED THE ORDER OF THE ASSESSING OFFICER ON THE GROUND THAT ADDITION MADE BY THE ASSESSING OFFICER IS AGREED BASIS . 7 . LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 8 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 9. THE ISSUE INVOLVED IN THIS GROUND OF APPEAL RELATES TO CONSTRUCTION OF HOUSE. BEFORE THE ASSESSING OFFICER, THE AR OF THE ASSESSEE AGREED FOR THE ADDITION OF RS. 5.71 LAKHS, HOWEVER THE ASSESSING OFFICER IS OF THE OPINION THAT RS. 5.71 LAKHS IS NOT SUFFICIENT, THEREFORE ADDITION OF RS. 10.00 LAKHS IS MADE . THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A), WHO CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING THAT A SSESSEE GAVE A CONSENT. WE FIND THAT THE ASSESSEE HAS NOT AGREED FOR THE ADDITION OF RS. 10.00 LAKHS, THEREFORE LD. CIT(A) WRONGLY PRESUMED THAT ADDITION IS AGREED. IN VIEW OF THE ABOVE, THE ORDER PASSED BY THE LD. CIT(A) HAS TO BE SET ASIDE. ACCORDINGL Y, WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND 6 ITA NO. 117/VIZ/2018 ( DR. A. SRINIVASA RAO ) REMIT THE ISSUE BACK TO THE LD. CIT(A) WITH A DIRECTION TO ADJUDICATE THE GROUND RAISED BY THE ASSESSEE ON MERITS AFTER GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS, THIS GROUND OF APPEAL RAISE D BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 10 . SECOND GROUND OF APPEAL RAISED BY THE ASSESSEE RELATES TO ADDITION OF RS. 10.00 LAKHS IN RESPECT OF UNEXPLAINED COST OF INSTALLATION OF LIFT. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT BOTH THE REPORTS OF P RIVATE VALUER AND DEPARTMENTAL VALU ER HAVE NOT TAKEN INTO CONSIDERATION THE COST OF LIFT INSTALLATION AND CERTAIN FURNITURE INSTAL LATION WHICH FORMS THE PART OF THE CONSTRUCTION. THE ASSESSING OFFICER HAS A S KED THE ASSESSEE TO SUBMIT THE DETAILS. THE ASSESSEE HAS NOT PRODUCED ANY DETAILS FOR EXAMINATION. HE ONLY STATED THAT THE EXPENSES HAVE BEEN MET OUT OF BORROWED FUNDS AND PERS ONAL SAVINGS. THEREFORE, THE ASSESSING OFFICER HAS MADE THE ADDITION AS UNEXPLAINED INVESTMENT OF RS.10.00 LAKHS. 11 . ON APPEAL, LD. CIT(A) HAS NOT ADJUDICATED THIS GROUND . APART FROM ABOVE, WE FIND THAT LD.CIT(A) BY RELYING ON THE DECISION OF ITAT, DELHI BENCHES IN THE CASE OF CIT VS. MULTIPLAN (INDIA) PVT. LTD. [(38 ITD 320) (DEL.)] DISMISSED THE APPEAL OF THE ASSESSEE. THE LD. CIT(A) OUGHT NOT TO HAVE DISMISSED THE APPEAL BY APPLYING MULTIPLANS CASE (SUPRA) . THE LD. CIT(A) HAS TO DISPOSE OF THE 7 ITA NO. 117/VIZ/2018 ( DR. A. SRINIVASA RAO ) APPEAL BY CONSIDERING THE MERITS OF THE CASE ON THIS GROUND ALSO . THEREFORE, WE DIRECT THE LD. CIT(A) TO ADJUDICATE THE GROUND RELATES TO UNEXPLAINED INVESTMENT IN LIFE AND PASS ORDERS IN ACCORDANCE WITH LAW. THUS, THIS GR OUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON TH IS 2 0 T H DAY OF MARCH , 201 9 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 0 T H MARCH , 201 9 . VR/ - COPY TO: 1. THE ASSESSEE - DR. A. SRINIVASA RAO, D.NO. 46 - 17 - 17, DANAVAIPETA, RAJAHMUNDRY. 2. THE REVENUE ACIT, CIRCLE - 1(1), RAJAHMUNDRY. 3. THE PR. CIT , RAJAHMUNDRY. 4. THE CIT(A) - 12, HYDERABAD. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.