Md. Majedhar Rahaman, Kolkata V. CIT, Kol - IX, Kolkata, Kolkata

ITA 1187/KOL/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8083 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2012
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2000-2001
• Appeal Filed On: 10-06-2010
• Court: TRIBUNAL
• Department Lawyers: A K MAHAPATRA
• Assessee Lawyers: K M ROY
• Keywords: Value adopted by valuation officer; Revision of order; Valuation report
• Section: 143(3); 263

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , . . !' ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM ] # # # # / I.T.A NOS. 1187 TO 1189/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEARS: 2000-01 TO 2002-03 MD. MAJEDHAR RAHAMAN VS. COMMISSIONER OF INCOME -TAX-IX, KOLKATA (PAN: AFWPR2879F) ()* /APPELLANT ) (+,)*/ RESPONDENT ) DATE OF HEARING: 09.10.2012 DATE OF PRONOUNCEMENT: 25.10.2012 FOR THE APPELLANT: SHRI K. M. ROY FOR THE RESPONDENT: SHRI A. K. MAHAPATRA !- / ORDER PER MAHAVIR SINGH, JM ( , , , , ) ALL THESE APPEALS BY ASSESSEE ARE ARISING OUT OF CO MMON REVISION ORDER OF CIT-IX, KOLKATA IN MEMO NO. CIT/KOL-IX/REVISION/U/S.263/09- 10/2943-44 DATED 30.03.2010. ASSESSMENTS WERE FRAMED BY ITO, WD-27(2), KOLKATA U /S. 143(3) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FO R ASSESSMENT YEARS 2000-01 TO 2002-03 VIDE HIS SEPARATE ORDERS DATED 31.12.2007. 2. THE ONLY ISSUE IN ALL THESE THREE APPEALS OF AS SESSEE IS AGAINST THE REVISION ORDERS PASSED BY CIT-IX, KOLKATA U/S. 263 OF THE ACT REVIS ING THE ASSESSMENTS FRAMED U/S. 143(3) R.W.S. 147 OF THE ACT. 3. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT THE ASSESSEE IS AN EMPLOYEE OF GOVT. OF WEST BENGAL, WORKING UNDER THE MINISTRY OF FOREST. THE ASSESSEE CONSTRUCTED A RESIDENTIAL HOUSE AT BC-248, SALT LAKE, KOLKATA DURING THE PERI OD 01.04.1999 TO 31.03.2003. THE RELEVANT THREE ASSESSMENT YEARS ARE 2000-01, 20001-02 AND 20 02-03. AS CLAIMED BY THE ASSESSEE, HE HAS MAINTAINED FULL DETAILS OF EXPENDITURE AND GOT THE PROPERTY VALUED BY REGISTERED VALUER. THE ASSESSEE CLAIMED THAT HE HAS MAINTAINED BOOKS OF AC COUNT BUT THE ASSESSEE IS ONLY A SALARIED EMPLOYEE AND HIS SOURCE OF INCOME AS PER ASSESSMENT ORDER IS SALARY AND INTEREST. EVEN FROM THE RECORDS, IT IS NOT CLEAR WHETHER THE ASSESSEE H AS MAINTAINED BOOKS OF ACCOUNTS AND ON QUERY FROM THE BENCH, THE LD. COUNSEL COULD NOT EXPLAIN W HAT TYPE OF RECORD HE HAS MAINTAINED OR WHAT TYPE OF BOOKS OF ACCOUNT HE HAS MAINTAINED. F OR ALL THESE THREE YEARS ASSESSMENTS WERE 2 ITA NOS. 1187-1189/K/2010 MD. MAJEDHAR RAHAMAN A.Y. 2000-01 TO 2002-03 FRAMED U/S. 143(3) R.W.S. 147 OF THE ACT VIDE ORDE RS DATED 31.12.2007. DURING THE COURSE OF ASSESSMENTS, THE AO NOTED FACTS THAT ASSESSEE HAS P URCHASED PLOT OF LAND AND ALSO CONSTRUCTED AND ACCOUNTED FOR COST OF CONSTRUCTION OF HOUSE BUI LDING IN ALL THE THREE YEARS. THE AO HAS RECORDED THE FACT E.G. IN AY 2000-01, THE AO IN HIS ASSESSMENT ORDER AT PAGE 3 RECORDED THE FACT AS UNDER: TOTAL OUTGOINGS INCLUDING CLOSING BANK BALANCES AN D CAASH IN HAND IS AS UNDER: COST OF LAND RS. 6,00,000/- COST OF CONSTRUCTION OF H.B. RS. 6,35,000/- REPAYMNT OF LOAN RS. 68,400/- DRAWINGS RS. 1,00,012/- CLOSING BANK BALANCES BANK OF BARODA RS.31,687/- CANARA BANK RS. 2,744/- STATE BANK OF INDIA RS. 1,043/- RS. 35,474/- CASH IN HAND RS. 1,30,930/- TOTAL: RS.15,69,816/- 4. THE ASSESSMENT, AS PER ASSESSMENT ORDER WAS COMP LETED ON 31.12.2007 AND AO MADE REFERENCE TO DVO FOR VALUING THE LAND AND COST OF C ONSTRUCTION U/S. 142A OF THE ACT VIDE LETTER NO. WD.27(2)/KOL/AFWPR2879F/AY2000-01/07-08/1102 DA TED 31.12.2007. THE REFERENCE WAS MADE U/S. 142A OF THE ACT FOR DETERMINATION OF COST OF CONSTRUCTION/LAND. THE ASSESSEE SUBMITTED HIS VALUATION REPORT AND THERE WAS DIFFER ENCE BETWEEN THESE TWO VALUATION REPORTS, WHICH IS NARRATED BY CIT-IX, KOLKATA AND THE SAME R EADS AS UNDER: FINANCIAL YEAR FIGURE AS PER VALUATION REPORT SUBMI TTED BY THE ASESSEE FIGURE AS PER VALUATION REPORT OF D.V.O. DIFFERENCE 1999-2000 COST OF LAND : RS.6,00,00 0/- COST OF CONSTRUCTION RS,6,35,000/- TOTAL : RS.12,35.000/- COST OF LAND: RS.12,87,000/- COST OF CONSTRUCTION:RS.10,11,929/- TOTAL RS.22,99,129/- RS.10,64,129/- 2000-2001 COST OF CONSTRUCTION RS. 1,36,031/- C OST OF CONSTRUCTION RS. 2,16,778/- RS. 80,747 /- 2001-02 COST OF CONSTRUCTION RS.2,90,0900/- COST OF CONSTRUCTION RS.4,62,141/- RS. 1,72,141/- CIT-IX, KOLKATA ISSUED SHOW CAUSE NOTICE U/S. 263 O F THE ACT VIDE NO. CIT/KOL- IX/REVISION/U/S. 263/09-10/2819 DATED 25.03.2010 FO R REVISING THE ASSESSMENTS TO CONSIDER THE DVOS REPORT. CIT WHILE PASSING REVISION ORDER NOT ED THAT IN THE INSTANT CASE, AO COMPLETED THE ASSESSMENT AND VALUATION REPORT FROM THE DVO WA S RECEIVED AFTER THE COMPLETION OF ASSESSMENTS. AS THE VALUATION WAS RECEIVED AFTER T HE COMPLETION OF ASSESSMENT, THERE WAS DIFFERENCE BETWEEN COST OF CONSTRUCTION DISCLOSED B Y ASSESSEE AND ASSESSED BY DVO, THERE WAS UNDER ASSESSMENT OF TAX AND IN SUCH CIRCUMSTANCES, HE WAS OF THE VIEW THAT THE AO SHOULD RE- EXAMINE VALUATION OF THE HOUSE PROPERTY. THEREFORE , CIT DIRECTED THE AO AS UNDER: IT IS, THEREFORE, CLEAR THAT IN THIS CASE THE PROV ISION OF SECTION 263 OF I. T. ACT CAN BE INVOKED. I HAVE CONSIDERED THE FACTS AND CIRCUMSTA NCES OF THE CASE. FROM THE ABOVE DISCUSSION IT APPEARS THAT THE ORDERS OF THE A.O. W ERE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS THE VALUATIONS AS SHOWN IN T HE DEPARTMENTAL VALUERS REPORT WAS NOT CONSIDERED BY THE AO AND SUCH DIFFERENCES WOULD HAVE TO BE CONSIDERED. 3 ITA NOS. 1187-1189/K/2010 MD. MAJEDHAR RAHAMAN A.Y. 2000-01 TO 2002-03 IN EFFECT, THE ASSESSMENTS ARE SET ASIDE WITH THE D IRECTION TO RE-EXAMINE THE ISSUES AS DISCUSSED ABOVE AFTER AFFORDING THE ASSESSEE AN OPP ORTUNITY OF BEING HEARD. SIMILAR DIRECTION WAS GIVEN BY CIT IN ALL THE THREE YEARS. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 5. LD. COUNSEL FOR THE ASSESSEE BEFORE US STATED TH AT NO DOUBT THE BOOKS OF ACCOUNT ARE NOT MAINTAINED BUT HE HAS MAINTAINED EVERY RECORDS/DETA ILS OF CONSTRUCTION EXPENSES, WHICH WAS NEVER REJECTED BY AO WHILE REFERRING THE MATTER TO DVO. HE STATED THAT THE REASSESSMENT IN ALL THESE THREE YEARS WAS COMPLETED VIDE ASSESSMENT ORD ERS U/S. 143(3) R.W.S. 147 OF THE ACT DATED 31.12.2007 AND EVEN THE REFERENCE TO DVO IS ALSO DA TED 31.12.2007. ACCORDING TO LD. COUNSEL, THE LAST DATE OF HEARING BY THE AO FOR FRA MING ASSESSMENT WAS 28.12.2007 AND ASSESSEE WAS NEVER INFORMED ABOUT REJECTION OF ASSE SSEES CLAIM. HE STATED THAT THE ASSESSEE FILED VALUATION REPORT FROM A REGISTERED VALUER ON 20.12.2007. THE ASSESSEE BEFORE US ALSO FILED COPY OF VALUATION REPORT DATED 18,12,2007 WHICH IS ESTIMATED BY THE ASSESSEES VALUER WHO IS A GOVERNMENT APPROVED VALUER. IN SUCH CIRCUMSTANCES, LD. COUNSEL FOR THE ASSESSEE STATED THAT WITHOUT REJECTION OF DETAILS OF COST OF CONSTRUCTIO N, EXPENSES RECORDED AND MAINTAINED BY ASSESSEE, THE AO CANNOT REFER THE MATTER TO DVO U/S . 142A OF THE ACT IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SARGAM CINE MA VS. CIT (2011) 197 TAXMAN 203 (SC). LD. COUNSEL STATED THAT EVEN JUST BECAUSE THE DVOS REPORT WHICH IS A SUBJECTIVE OPINION IS HIGHER DOES NOT AUTOMATICALLY PROVE THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. ACCORDING TO LD. COUNSEL, THIS IS MERELY AN OPINION WHEREAS ANOTHER OPINION OF REGISTERED VA LUER IS ALSO AVAILABLE BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHICH WAS ACC EPTED BY HIM WHILE COMPLETING ASSESSMENT. 6. ON THE OTHER HAND, THE LD. CIT, DR SHRI A. K. MO HAPATRA HEAVILY RELIED ON THE DECISION OF HONBLE SUPREME IN THE CASE OF CIT VS. SHREE MA NJUNATHESWARE PACKING PRODUCTS & CAMPHOR WORKS (1998) 231 ITR 53 (SC) AND STATED THA T HONBLE SUPREME COURT HAS CONSIDERED THAT EVEN IT IS OPEN TO THE CIT TO TAKE INTO CONSIDERATION ALL THE RECORDS AVAILABLE AT THE TIME OF REVISION PROCEEDINGS U/S. 263 OF THE AC T AND THUS HAS TO CONSIDER THE VALUATION REPORT SUBMITTED BY DVO EVEN THOUGH SUBSEQUENT TO T HE PASSING OF THE ASSESSMENT ORDER AND THAT HAS TO BE CONSIDERED. LD. CIT DR STATED THAT T HE REVISION ORDER PASSED BY CIT U/S. 263 OF THE ACT IS AS PER THE PROVISION OF THE ACT AND CIT IN HIS REVISION ORDER HAS ONLY DIRECTED THE AO TO GIVE OPPORTUNITY TO THE ASSESSEE BEFORE DECID ING THE ISSUE. BUT ACCORDING TO HIM, THE ASSESSMENT ORDER FRAMED BY AO IN ALL THESE THREE YE ARS ARE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS THE VALUATION MADE BY DVO WA S NOT CONSIDERED BY THE AO AND THE 4 ITA NOS. 1187-1189/K/2010 MD. MAJEDHAR RAHAMAN A.Y. 2000-01 TO 2002-03 DIFFERENCE BETWEEN THE COST OF CONSTRUCTION DECLARE D BY THE ASSESSEE AND COST OF CONSTRUCTION ESTIMATED BY DVO WOULD HAVE TO BE CONSIDERED. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSMENT IN THESE THREE YEARS WE RE FRAMED U/S. 143(3) R.W.S. 147 OF THE ACT VIDE ORDER DATED 31.12.2007. EVEN THE REFERENCE TO DVO IS DATED 31.12.2007. IT IS NOT CLEAR FROM THE RECORDS WHETHER THE REFERENCE TO DVO WAS A FTER COMPLETION OF ASSESSMENT ORDER OR BEFORE COMPLETION OF ASSESSMENT. NOW, WE CAN PRESUM E IN THE GIVEN FACTS AND CIRCUMSTANCES THAT THE REFERENCE MADE BY DVO WAS WITHIN THE FRAMI NG OF ASSESSMENT IN ALL THESE THREE YEARS BY THE AO, BUT, IT CERTAINLY GIVEN DOUBTS. EVEN TH E REVISIONARY PROCEEDING WAS STARTED BY THE CIT-IX, KOLKATA ON 25.03.2010 JUST SIX DAYS BEFORE THE EXPIRY OF LIMITATION VIDE SHOW CAUSE NOTICE NO. CIT/KOL-IX/REVISION/U/S. 263/09-10/2819 DATED 25.03.2010 AND REVISION ORDER WAS PASSED U/S. 263 OF THE ACT ON 30.03.2010 DIRECTING THE AO TO EXAMINE THE DIFFERENCE BETWEEN COST OF CONSTRUCTION DECLARED BY ASSESSEE AND COST OF CONSTRUCTION AS ESTIMATED BY DVO. WE FIND THAT THE AO WHILE FRAMING ASSESSMENT U/S. 143( 3) R.W.S. 147 OF THE ACT HAVE EXAMINED THE ASPECT OF PURCHASE OF LAND AND COST OF CONSTRUCTION AS NOTED ABOVE AND ALSO HAS GONE THROUGH THE VALUATION MADE BY REGISTERED VALUER VALUING THE COST OF CONSTRUCTION AND COST OF LAND. THE AO AFTER GOING THROUGH THE DETAILS OF CONSTRUCTION AS WELL AS THE VALUATION REPORT OF REGISTERED VALUER ESTIMATING COST OF CONSTRUCTION, ACCEPTED TH E COST OF CONSTRUCTION AS DECLARED BY THE ASSESSEE AND IN THAT TERM HE HAS FORMED OPINION THA T THE ASSESSEES COST OF CONSTRUCTION IS CORRECT AND SO HE HAS NOT MADE ANY ADDITION ON THE ABOVE. THE REFERENCE TO DVO AND VALUATION MADE BY DVO IS JUST AN ESTIMATE I.E. ANOT HER OPINION. WHETHER, ON THE BASIS OF THESE FACTS, OPINION EXPRESSED BY DVO CAN BE THE BASIS FO R REVISION U/S. 263 OF THE ACT OR NOT. HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUST RIAL CO. LTD. VS. CIT (2000) 243 ITR 83 HAS HELD THAT IF DUE TO AN ERRONEOUS ORDER OF THE AO THE DEPARTME NT IS LOSING TAX, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTEREST OF REVENUE . BUT THE PHRASE PREJUDICIAL TO THE INTEREST OF REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRO NEOUS ORDER PASSED BY THE AO. ACCORDING TO HONBLE SUPREME COURT, EVERY LOSS OF REVENUE HAS A CONSEQUENCE OF AN ORDER OF THE AO CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF REVENUE. HONBLE SUPREME COURT CITED AN EXAMPLE THAT WHEN AN AO ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE OR WHERE TWO VIEWS ARE POSSIBLE AND THE AO HAS TAKEN ONE VIEW, WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOU S ORDER PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE IN LAW. IN VIEW OF THE ABOVE DECISION OF HONBLE SUPREME COURT, WE ARE OF THE VIEW THAT THE CIT HAS NO JURISDICTION TO SET ASIDE THE ORDER OF ASSESSMENT MERELY TO CONDUCT THE ANOTHER P URPOSELESS AND FRUITLESS ENQUIRY TO REACH THE SAME RESULT WHICH WAS ARRIVED AT EARLIER AND IF ANY FRESH ENQUIRIES HELD IT WILL BE EMPTY 5 ITA NOS. 1187-1189/K/2010 MD. MAJEDHAR RAHAMAN A.Y. 2000-01 TO 2002-03 FORMALITY AS BY GOING THROUGH THE MOTION OF MAKING A FURTHER ENQUIRY AND REACHING THE SAME CONCLUSION NO USEFUL PURPOSE WILL BE SERVED. IN TH E PRESENT CASE BEFORE US, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, THE AO HAS ALREADY F ORMED AN OPINION REASON BEING, THE DETAILS REGARDING COST OF CONSTRUCTION AS WELL AS THE VALUA TION REPORT DRAFTED BY REGISTERED VALUER OF THE ASSESSEE WAS AVAILABLE AT THE TIME OF FRAMING OF AS SESSMENT AND ON THAT BASIS HE FRAMED ASSESSMENT WHICH IS AN OPINION OF THE AO. EVEN OTH ERWISE, THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F SARGAM CINEMA (SUPRA). HENCE, IN ENTIRELY OF THE FACTS OF THE CASE, WE ALLOW THE APP EALS OF THE ASSESSEE. 8. IN THE RESULT, APPEALS OF ASSESSEE ARE ALLOWED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCT., 2012. SD/- SD/- . . !' , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( ' ' ' ') )) ) DATED : 25TH OCTOBER, 2012 ./ $01 2 JD.(SR.P.S.) 6 ITA NOS. 1187-1189/K/2010 MD. MAJEDHAR RAHAMAN A.Y. 2000-01 TO 2002-03 !- 3 +4 5!4&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT MD. MAJEDHAR RAHAMAN, BC-248, SALT LAKE , SECTOR-1, KOLKATA-700 064 2 +,)* / RESPONDENT CIT-IX, KOLKATA. 3 . -$ ( )/ THE CIT(A), KOLKATA 4. 5. -$ / ITO, WARD-27(2), KOLKATA 4<= +$ / DR, KOLKATA BENCHES, KOLKATA ,4 +/ TRUE COPY, !-$>/ BY ORDER, 1 /ASSTT. REGISTRAR .