Aarumugaa Industries, CHENNAI V. DCIT, CHENNAI

ITA 1170/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52033 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 16-11-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 21-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Assessee Lawyers: PUSHYA SITTARAMAN
• Keywords: Value adopted by valuation officer; Principle of natural justice

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI D BENCH, CHENNAI. BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 1170/MDS/2011 ASSESSMENT YEAR: 2008-09 AARUMUGAA INDUSTRIES, G-9, VYASARPADI INDUSTRIAL ESTATE, VYASARPADI, CHENNAI 39. [PAN: AAHFA9440K] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE X, CHENNAI 06. (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. PUSHYA SITTARAMAN, ADVOCATE REVENUE BY : SHRI K.E.B. RENGARAJAN, JR. STANDING COUNSEL DATE OF HEARING : 1 6 . 1 1 .2011 DATE OF PRONOUNCEMENT : 18.11.2011 ORDER PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT(A) IV, CHENNAI DATED 14.06.2011. THE ASSESSEE H AS RAISED FOLLOWING GROUNDS OF APPEAL: 1) THE ASSESSMENT ORDER IS ERRONEOUS AND UNSUSTAI NABLE IN LAW AND OPPOSED TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2) THE CIT(A) FAILED TO APPRECIATE THAT THERE WAS N O CONSTRUCTION ACTIVITY DURING THE RELEVANT PREVIOUS YEAR, AND AS SUCH, NO ADDITION COULD BE MADE WITH RESPECT TO COST OF CONSTRUCTION FOR THIS ASSES SMENT YEAR; AND WITHOUT CONSIDERING THE FACT THAT AMOUNTS SPENT TOWARDS CON STRUCTION HAVE BEEN DISCLOSED IN THE RELEVANT YEARS WHEN THE CONSTRUCTI ON TOOK PLACE. 3) THE CIT (A) ERRED IN NOT FOLLOWING THE ORDER OF HIS PREDECESSOR FOR THE EARLIER ASSESSMENT YEAR ON THE GROUND THAT THE CLAR IFICATION REPORT OF THE OVA I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO. 1 11 1170 170170 170/ // /MDS/ MDS/ MDS/ MDS/11 1111 11 2 WAS NOT BEFORE HIM, EVEN THOUGH THE ORIGINAL OVA RE PORT WAS CONSIDERED IN THAT ORDER, AND THE 2 ND REPORT IS MERELY A REITERATION OF THE SAME. 4. THE CIT(A) HAS FAILED TO SEE THAT THE CONDITION OF THE TOILETS REFERRED TO IN THE OVA'S REPORT ARE SITUATED IN THE GROUND FLOO R AND 1 ST FLOOR WHICH WERE CONSTRUCTED PRIOR TO 2006, WHILE THE 2 ND AND 3 RD FLOORS WERE CONSTRUCTED ONLY IN F Y 2008-09 AND 2009-10 AND THE SAME HAS BEEN AD MITTEDLY ACCEPTED BY THE APPELLANTS. THE CIT(A) HAS FURTHER ERRED IN SUP PORTING THE VO THAT THE ARCHITECTURAL AND STRUCTURAL PLANS WERE NOT FURNISH ED AS THE SAME WAS SUBMITTED ALONG WITH A LETTER DATED 18.12.2008, WHI CH WAS PRODUCED AS AN EVIDENCE. 5. THE CIT(A) FAILED TO SEE THAT THE VALUES GIVEN IN THE REGISTERED VALUER'S REPORT, WAS BASED ON STATE PWD RATES, AND FAILED TO SEE THAT THE OVA CANNOT TAKE A STAND THAT THE STATE PWD RATES ARE NOT ACCUR ATE. THE APPELLANTS RELIES ON THE DECISIONS OF THE HIGH COURT AND TRIBUNAL, WH EREIN IT HAS BEEN CLEARLY LAID DOWN THAT WHERE THE VALUATION HAS BEEN DONE BY THE REGISTERED VALUER ON THE BASIS OF STATE PWD RATES, IT SHOULD BE ACCEPTED . THE FOLLOWING ARE THE CASE LAWS WHICH HAS LAID THE ABOVE PROPOSITION: I. CIT VS. D. SUBRAMANIAN[2008] 296 ITR 0348 (MAD) II. CIT VS. VT RAJENDRAN - TC(A) NO. 1256/2006 III. CIT VS. FRANCIS IRUDAYARAJ - TC 751 OF 2007 IV. CIT VS. ELEGANT HOMES PVT. LTD. [2003] 259 ITR 0232 (RAJ) V. KRISHNAN KUMAR JHAMB -VS-ITO, 009-TIOL-23-HC-P& H-IT VI. CIT VS. DINESH TALWAR, [2004] 265 ITR 344 VII. CIT VS. SMT. PREM KUMARI MURDIYA [2008] 296 I TR 0508 VIII. CIT VS. HOTEL JOSHI, [2000] 242 ITR 0478 IX. CIT VS. P.JEYAVELAN - TC (A) 1487/2007 X. AMIT ESTATE ORGANIZER -VS- ITO, WARD-3, ANAND, 113 ITD 0255 XI. ITO, V (1) LUCKNOW V. VIJETA EDUCATIONAL SOCIE TY [2009] 118 ITD 0382 XII. M.SELVARAJ V. ITO [2002] 258 ITR (A.T.) 0082 (MAD) 6) THE CIT(A) HAS FAILED TO GRANT AN OPPORTUNITY TO THE APPELLANT TO RAISE THEIR OBJECTION ON THE 2 ND DVO REPORT BY CITING THE HIGH COURT ORDER DATED 8.4.2011 THAT THE APPEAL HAS TO BE DISPOSED OFF IN 8 WEEKS, AND PASSING THE ORDER EVEN BEFORE THE PERIOD OF 8 WEEKS FROM THE DA TE OF RECEIPT OF THE ORDER EXPIRED. 2. AT THE OUTSET, THE LD. AR OF THE ASSESSEE SUBMI TTED THAT IN GROUND NO. 6 OF THE APPEAL TAKEN BY THE ASSESSEE, IT HAS BEEN STATED THAT THE LD. CIT(A) I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO. 1 11 1170 170170 170/ // /MDS/ MDS/ MDS/ MDS/11 1111 11 3 HAS FAILED TO GRANT AN OPPORTUNITY TO THE ASSESSEE TO RAISE THEIR OBJECTION ON THE 2 ND DVO REPORT. THEREFORE, IT WAS PRAYED THAT THE MATT ER SHOULD BE RESTORED BACK TO THE FILE OF THE LD. CIT(A) TO ALLO W OPPORTUNITY TO THE ASSESSEE TO RAISE OBJECTION ON THE 2 ND DVO REPORT AND THEN READJUDICATE THE ISSUE AFRESH. 3. THE LD. DR HAD NO OBJECTION TO THE ABOVE SUBMIS SIONS OF THE LD. AR OF THE ASSESSEE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. WE FIND THAT IN PARA 3 AT PAGE 4 OF THE IMPUGNED ORDER, THE LD. CIT(A) H AS OBSERVED AS UNDER: 3. AFTER GETTING THIS LETTER, FROM VALUATION OFFI CER, THE SAME WAS FORWARDED TO THE ASSESSEE ON 09.06.2011 REQUESTING HIM TO FILE THEIR OBJECTIONS, IF ANY, BY 13.06.2011, BECAUSE THE APPE AL IS TO BE DISPOSED OFF BY 15.06.2011. ON 13.06.2011, MR. A. S UDARSHAN, MANAGING PARTNER OF ASSESSEE FIRM HAS FILED A LETTE R STATING THAT HE REQUIRES 3 DAYS TIME TO FILE THEIR OBJECTION AGAINS T DVOS ORDER. 5. THUS, WE OBSERVE THAT SUFFICIENT OPPORTUNITY TO REBUT THE REPORT OF THE DVO DATED 03.06.2011 WAS NOT ALLOWED TO THE ASSESSE E ON THE BASIS OF WHICH AN ADVERSE INFERENCE AGAINST THE ASSESSEE WAS DRAWN BY THE LD. CIT(A). NATURAL JUSTICE DEMANDS THAT SUFFICIENT OPP ORTUNITY MUST BE ALLOWED TO THE ASSESSEE TO RAISE ITS OBJECTION AGAINST THE REPORT OF THE DVO BEFORE THE SAME CAN BE ADMITTED. AS BOTH THE PARTIES BEFOR E US AGREED THAT TO FULFILL THE REQUIREMENTS OF THE NATURAL JUSTICE, IT SHALL B E, IN THE INTEREST OF JUSTICE TO RESTORE THIS ISSUE BACK TO THE FILE OF THE LD. CIT( A) FOR ADJUDICATION AFRESH I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO. 1 11 1170 170170 170/ // /MDS/ MDS/ MDS/ MDS/11 1111 11 4 AFTER TAKING INTO CONSIDERATION THE OBJECTION OF TH E ASSESSEE AGAINST THE REPORT OF THE DVO, WE SET ASIDE THE ORDER OF THE LD . CIT(A) AND REMAND THE MATTER BACK TO HIM. WE DIRECT THE ASSESSEE TO FILE ITS OBJECTION AGAINST THE REPORT OF THE DVO WITHIN TWO WEEKS FROM THE DATE OF RECEIPT OF THIS ORDER AND ALSO REQUEST THE LD. CIT(A) TO DISPOSE OF THIS APPE AL AFRESH AFTER CONSIDERING THE OBJECTION OF THE ASSESSEE TO THE DVOS REPORT A ND AFTER ALLOWING BOTH THE PARTIES AN OPPORTUNITY OF HEARING WITHIN FOUR WEEKS FROM THE DATE OF RECEIVING OF OBJECTION BY THE ASSESSEE. WITH THESE DIRECTIONS , THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 18.11.2011. SD/ - SD/ - (GEORGE MATHAN) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER CHENNAI, DATED, THE 18.11.2011 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.