Sri.K. Satishkumar, Bangalore V. ACIT, Bangalore

ITA 1176/BANG/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5610 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 28-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARSHA PRAKASH CITII
• Assessee Lawyers: V SRINIVASAN
• Keywords: Valuation report

Judgement Text

PAGE 1 OF 5 ITA NO.1176/BANG/ 2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI N BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI GEORGE GEORGE K, J.M ITA NO.1176/BANG/2010 (ASSESSMENT YEAR 2007-08) SRI K SATISH KUMAR, #132/2, SOUTH PARK ROAD, NEHRU NAGAR, BENGALURU. - APPELLANT VS THE ADDL. COMMISSIONER OF INCOME-TAX, RANGE-9, BENGALURU. - RESPONDENT APPELLANT BY : SHRI V SRINIVASAN, C.A. RESPONDENT BY : SHRI HARSHA PRAKASH, CIT-II ORD ER PER GEORGE GEORGE K : THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF THE CIT (A)-V, BENGALURU DATED 23.08.2 010. THE RELEVANT ASSESSMENT YEAR IS 2007-08. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLL OWS:- THE ASSESSEE IS AN INDIVIDUAL. HE IS CARRYING ON THE BUSINESS OF REAL ESTATE AS A LAND DEVELOPER. FOR THE CONCERNED ASST. YEAR, THE ASSESSEE FILED HIS RETURN OF INCOME ON 31.10.2007 DISCLOSING AN INCOME OF RS.2,49,87,100/-. THE RETURN WAS PROCESSED U/S 143 (1) OF THE ACT AND A DEMAND OF RS.96,64,935/- WAS RAISED. THERE WAS A S URVEY CONDUCTED BY THE PAGE 2 OF 5 ITA NO.1176/BANG/ 2010 2 ACIT, CIRCLE9(1), BANGALORE IN THE BUSINESS PREMISE S OF THE ASSESSEE ON 27.6.2008. DURING THE COURSE OF SURVEY, IT WAS NOTI CED THAT THE ASSESSEE HAD DEBITED A SUM OF RS.7,55,85,800/- FOR THE ASST. YEAR 2006-07 AND RS.6,46,86,000/- FOR THE ASST. YEAR 2007-08 TOWARDS EARTH FILLING CHARGES IN KASAVANAHALLI PROJECT. IT WAS NOTICED THAT THE A SSESSEE HAD INCURRED THESE EXPENSES THROUGH SELF-MADE VOUCHERS ON LAND L EVELING. SINCE THE AO DOUBTED THE INCURRING OF THESE EXPENSES FOR THE ABO VE SAID ASST. YEARS, HE REFERRED THE MATTER TO THE DISTRICT VALUATION OFFIC ER TO FIND OUT THE TRUE AND ACTUAL COST OF DEVELOPMENTAL EXPENSES INCURRED ON THE ABOVE PROPERTY. THE DVO, WHO IS AN AUTHORITY EMPOWERED UNDER THE I T ACT, VALUED THE DEVELOPMENTAL EXPENSES TO THE TUNE OF RS.9,30,000/- FOR BOTH THE ASST. YEARS. BASED ON THE VALUATION REPORT OF THE DVO, TH E AO ALLOWED A SUM OF RS.4,27,800/- (ON PROPORTIONATE BASIS) AS DEVELOPME NTAL EXPENSES INCURRED BY THE ASSESSEE FOR THE CONCERNED ASST. YEAR AND PROC EEDED TO MAKE AN ADDITION OF RS.6,42,58,200/- (RS. 6,46,86,000 RS. 4,27,800/-). IT WAS SUBMITTED THAT THE AFORESAID ADDITIONS MAD E BY THE AO ARE UNJUSTIFIED AND PURELY ON SUSPICION AND SURMISE, ASSUMPTIONS AND PRESUMPTIONS. IT WAS SUBMITTED THAT THE EXPENDITU RE INCURRED BY THE ASSESSEE WAS SUPPORTED BY VOUCHERS MAINTAINED BY THE ASSESSEE THAT ARE IN VOGUE IN THIS LINE OF TRADE. IT WAS SUBMITTED THA T THE MERE FACT THAT THE ASSESSEE WAS NOT ABLE TO FURNISH THE NAME AND ADDRE SS OF THE LORRY OWNERS, WHO HAD RECEIVED THE PAYMENTS FOR TRANSPORTATION OF THE EARTH DOES NOT MEAN THAT THE EXPENSES INCURRED WERE BOGUS. FURTHE RMORE, IT WAS SUBMITTED, THE AO FAILED TO APPRECIATE THE EVIDENCE FILED BY THE ASSESSEE TO SUBSTANTIATE THAT THE LANDS OF THE ASSESSEE HAD SEVERAL CONTOUR PAGE 3 OF 5 ITA NO.1176/BANG/ 2010 3 DIFFERENCES AND REQUIRED SUBSTANTIAL EXPENDITURE TO BE INCURRED. IT WAS FURTHER SUBMITTED THAT THE AO FAILED TO APPRECIATE THAT THE REFERENCE MADE TO THE DVO FOR DETERMINING THE EXTENT OF DEVEL OPMENT WORKS WAS BAD IN LAW AND IN ANY CASE, THE SAME WAS NOT RELIABLE AN D THEREFORE, THE DISALLOWANCE MADE BY THE AO IS OPPOSED TO LAW AND LI ABLE TO BE DELETED. 3. THE AO, HOWEVER, REJECTED THE CONTENTIONS/OBJEC TIONS RAISED BY THE ASSESSEE AND COMPLETED THE ASSESSMENT U/S 143 (3) OF THE ACT VIDE ORDER DATED 31.3.2009 DETERMINING THE TOTAL TAXABLE INCOME AT RS.9,02,68,100/-. 4. AGGRIEVED BY THE ASSESSMENT COMPLETED, THE ASSES SEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUT HORITY. 5. BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS NOT ICED THAT THE ASSESSEE HAD NOT PAID THE COMPLETE TAX ON THE ADMIT TED INCOME OF RS.2,49,87,100/- AS PER THE RETURN OF INCOME FILED. HENCE, THE APPEAL WAS REJECTED IN LIMINE U/S 249(4)(A) OF THE ACT. 6. AGGRIEVED BY THE ORDER OF THE FIRST APPELLATE AU THORITY, THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LEARNED AR HAS FILED A PAPER BOOK ENCLOSING THEREIN COPY OF THE CHALLANS EVIDENCING THE PAYMENT OF ADMITTED T AX FOR THE CONCERNED ASST. YEAR, COPY OF THE PETITION FOR RECALLING THE OR DER OF THE CIT(A) IN DISMISSING THE APPEAL IN LIMINE AND ALSO A COPY OF T HE LETTER OF THE CIT(A) REJECTING THE ASSESSEES APPLICATION TO RECALL THE ORDER OF THE CIT(A), WHO PAGE 4 OF 5 ITA NO.1176/BANG/ 2010 4 HAD DISMISSED THE ASSESSEES APPEAL IN LIMINE. IT WAS SUBMITTED BY THE LEARNED COUNSEL THAT THE ASSESSEE HAS PAID THE ENTI RE TAX ON THE ADMITTED INCOME AND THE SAME IS EVIDENCED FROM THE CHALLAN P RODUCED, WHICH IS RUNNING FROM PAGES 1 TO 6 OF THE PAPER BOOK FILED B EFORE US. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD MOVED APPLICATION B EFORE THE CIT(A) TO RECALL THE IMPUGNED ORDER, WHICH WAS REJECTED BY THE CIT(A) VIDE HIS LETTER DATED 23.11.2010. THE LEARNED AR RELIED ON THE DE CISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF D KOMALAKS HI V DCIT 292 ITR 99 WHEREIN THE HONBLE HIGH COURT AT THE REQUEST OF TH E ASSESSEES COUNSEL, DIRECTED THE ASSESSEE TO PAY THE ADMITTED TAX WITHIN A PERIOD OF 4 WEEKS AND THEREAFTER, THE CIT(A) WAS DIRECTED TO DECIDE T HE APPEAL ON MERITS. 8. THE LEARNED DR ON THE OTHER HAND SUPPORTED THE ORDERS OF THE INCOME TAX AUTHORITIES. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE HAS NOW PRODUCED CHALLAN E VIDENCING PAYMENT OF ADMITTED TAX. IN THE INTEREST OF JUSTICE, WE ARE O F THE VIEW THAT THE MATTER SHOULD BE REMITTED BACK TO THE FILE OF THE C IT(A), WHO SHALL VERIFY WHETHER THE ENTIRE ADMITTED TAX HAS BEEN PAID AND I F SO, HE SHALL DECIDE THE CASE ON MERITS. IT IS ORDERED ACCORDINGLY. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED ON FRIDAY, THE 13 TH DAY OF MAY, 2011 AT BANGALORE. SD/- SD/- (N BARATHVAJA SANKAR) (GEORGE GEORGE K) VICE PRESIDENT JUDICIAL MEMBER PAGE 5 OF 5 ITA NO.1176/BANG/ 2010 5 COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE C IT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/12/5. BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.