The Dy.CIT.,(OSD), Dehradun V. M/s. Motorcraft Automotive, Dehradun

ITA 1192/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9958 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 18-08-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 30-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SAHOTA
• Keywords: Unexplained investment; Principle of natural justice; Valuation report
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `E : NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.1191 & 1192/DEL./2009 (ASSESSMENT YEARS : 1999-2000 & 02-03) DCIT(OSD), RANGE 1, VS. M/S MOTOR CRAFT AUTOMOTIV E, DEHRADUN. 124-1, STREET NO.4, RAJENDER NAGAR, DEHRADUN. (PAN/GIR NO.A/F) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE. REVENUE BY : SHRI G.S. SAHOTA, SR.DR ORDER PER A.K. GARODIA: AM BOTH THESE APPEALS ARE REVENUES APPEALS DIRECTED AGAINST TWO SEPARATE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS), DEHRADUN DATED 26.12.2008 FOR ASSESSMENT YEAR 1999-2000 AND 2002-03. SINCE SIMILAR ISSUE IS INVOLVED IN BOTH THESE APPEALS, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE IN SPITE OF NOTICE AND HENCE THESE APPEALS WERE HEARD EX-PARTE QUA-THE-ASSESSEE. LD.DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDERS. 3. WE HAVE HEARD THE SUBMISSIONS OF LD.DR OF THE RE VENUE AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT IN THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 1999-2000, IT IS NOTED BY THE ASSESSING OFFICE R ON PAGE NO.2 THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS CONSTRUCTED T HE BUILDING, THE VALUE OF WHICH HAS BEEN ADMITTED TO BE RS.25,52,660 AND AS PER THE REP ORT OF THE DVO, THE VALUE OF THE PROPERTY IS RS.3302567. THE ASSESSING OFFICER ASKE D THE ASSESSEE TO EXPLAIN THE SOURCES OF INVESTMENT OF THE DIFFERENCE AMOUNT OF RS.749907 . IN REPLY, IT WAS SUBMITTED BY THE LD.AR OF THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT THE ASSESSEE DOES NOT AGREE WITH I.T.A. NOS.1191 & 1192/DEL./2009 (A.YS. : 1999-2000 & 02-03) 2 THE BASIS OF VALUATION AS ADOPTED BY THE DVO. VARI OUS DEFECTS WERE POINTED IN THE REPORT OF THE DVO. ONE DEFECT POINTED OUT WAS THAT THE DV O HAS CONSIDERED CPWD RATE BUT HE SHOULD HAVE CONSIDERED UPPWD RATE. IN THIS REGARD, RELIANCE WAS PLACED ON THE JUDGMENT OF THE HONBLE ALLAHABAD HIGH COURT RENDER ED IN THE CASE OF DCIT VS. RAJ KUMARI AS REPORTED IN 182 ITR 436. RELIANCE WAS AL SO PLACED ON THE TRIBUNALS DECISION OF B BENCH OF DELHI, RENDERED IN THE CASE OF SHRI B.B. SHARMA VS. ITO, WARD 2, DEHRADUN IN I.T.A. NO.532/DEL./01. IT WAS SUBMITTE D THAT IN THIS CASE, THE TRIBUNAL HAS UPHELD THE RATES APPLICABLE FOR VALUATION OF PROPER TY IN DEHRADUN (UTTRANCHAL) AS UPPWD RATES AND NOT CPWD RATES. THE SECOND DEFECT POINTE D OUT WAS THAT IN THE CASE OF B.B. SHARMA, REBATE OF 15% WAS ALLOWED FOR SELF-SUPERVIS ION AND DIRECT MATERIAL. THE THIRD DEFECT POINTED OUT WAS THAT NO DEDUCTION HAS BEEN ALLOWED FOR 8 ROOMS AND TIN SHEDS WHICH WERE EXISTING ON THE LAND AND IN THIS REGARD IT WAS SUBMITTED THAT THIS FACT IS AVAILABLE IN THE SALE DEED SUBMITTED TO DVO. THE F OURTH DEFECT POINTED WAS THAT NO REBATE WAS ALLOWED FOR TRANSPORTATION OF MATERIAL I N TRUCKS OWNED BY THE PARTNERS AND FAMILY MEMBERS AND THE ASSESSEE DID NOT PAY ANY TRA NSPORT CHARGES FOR BUILDING MATERIAL WHICH WERE TRANSPORTED BY OWN TRUCKS. THE FIFTH DE FECT POINTED WAS THAT RATES ADOPTED BY DVO IS VERY EXCESSIVE. AN EXAMPLE WAS GIVEN THAT T HE DVO HAS ADOPTED THE RATE OF MARBLE @ 329 PER SQ.MT. WHEREAS THE ASSESSEE HAS PU RCHASED MARBLE AT RS.180 PER SQ.MT. AND IN SUPPORT OF THE SAME INVOICE FOR MARBLE WAS S UBMITTED TO DVO. REGARDING ARCHITECT FEES, IT WAS SUBMITTED THAT RS.25,000 I S ASSUMED TO HAVE BEEN PAID AS AGAINST RS.7500 ACTUALLY PAID AND EXPLAINED TO DVO. THE AS SESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND MADE ADDITIONS ON TH E BASIS OF DVOS REPORT FOR DIFFERENCE OF RS.749907. BEING AGGRIEVED, THE ASSESSEE CARRIE D THE MATTER IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) WHO HAS DELETE D THIS ADDITION ON THE BASIS THAT THE DVO HAS ADOPTED CPWD RATES INSTEAD OF UPPWD RAT ES AS PER THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT, RENDERED IN THE CASE OF CIT VS. RAJ KUMARI(SUPRA). IT IS ALSO NOTED BY THE COMMISSIONER OF INCOME-TAX (APPEA LS) THAT NO REBATE HAS BEEN GIVEN FOR SELF-SUPERVISION WHICH WAS ALLOWED TO THE EXTEN T OF 15% IN THE CASE OF B.B. SHARMA. RELEVANT PARA.4 OF THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IS REPRODUCED AS UNDER: I.T.A. NOS.1191 & 1192/DEL./2009 (A.YS. : 1999-2000 & 02-03) 3 4. GROUNDS OF APPEAL AS REPRODUCED FROM PAG ES 2 TO 4 ANTE SHOW THAT THE MAIN GROUND IS AGAINST THE ADDITION OF RS.7,49,907/ - REPRESENTING A DIFFERENCE IN VALUATION OF IMMOVABLE PROPERTY BY THE DVO AND THE APPELLANTS VALUER. THE LD. COUNSELS, SHRI KASHYAP AND SHRI MALIK, FCAS HAVE FU RNISHED THEIR WRITTEN SUBMISSIONS IN RELATION TO THE AFORESAID GROUND AGI TATING THE ADDITION OF RS.7,49,907/- MADE IN TERMS OF SECTION 69 OF THE AC T AS UNEXPLAINED INVESTMENT. THE LD. ARS. HAVE TAKEN EXCEPTION TO AOS REFERENCE OF THE IMMOVABLE PROPERTY TO THE DISTRICT VALUATION OFFICER, NEW DELHI U/S 14 2A MAINLY ON GROUNDS OF PRINCIPLES OF NATURAL JUSTICE STATING THAT ADEQUATE OPPORTUNITY WAS NOT ALLOWED TO EXPLAIN THE REASONS FOR THE DIFFERENCE IN VALUATIO NS. THE GRIEVANCE APPEARS TO BE SLIGHTLY CONVOLUTED IN THE SENSE THAT THE AO HIMSE LF CAME TO KNOW OF THE DIFFERENCE ONLY AFTER HE RECEIVED THE VALUATION R EPORT OF THE DVO. HE COULD NOT HAVE, THEREFORE, CONFRONTED THE APPELLANT ON THE DI FFERENCE EVEN BEFORE RECEIPT OF THE REPORT OF THE DVO. THE GROUND IS BASICALLY PAR T OF THE GRIEVANCES AND DOES NOT SPRING FROM ANY REAL BREACH OF LAW, ACCOUNTS OR PROCEDURE BY THE AO. ON MERITS, HOWEVER, THE LD. ARS IN THE GROUNDS OF APPE AL ITSELF HAVE CITED REASONS FROM SL. NO. (A) TO (G) EXPLAINING WHY ADDITION OF THE DIFFERENCE BETWEEN THE TWO VALUATIONS WAS NOT JUSTIFIED IN THE CIRCUMSTANCES O F THE APPELLANT. IN FURTHERANCE OF THE POINTS MADE IN THE GROUNDS OF APPEAL, ELABOR ATE REASONS HAVE BEEN GIVEN AND REPRODUCED FROM PAGES 4 TO 8 ANTE, INTER ALIA, CONTENDING THAT THE VALUATION REPORT OF THE DVO WAS BASED ON CPWD RATES WHEREAS F OR THIS REGION UP PWD RATES SHOULD HAVE BEEN ADOPTED IN THE LIGHT OF THE JUDGMENT OF HONBLE HIGH COURT OF ALLAHABAD IN CIT VS. RAJ KUMAR (182 ITR 43 60. THE LD. ARS. THEREAFTER ON PAGE 5 ANTE HAVE CITED OTHER CASES WH EREIN THE HONBLE TRIBUNAL AND LD. CIT(A) IN THE PAST HAVE FOLLOWED THE JUDGMENT O F THE HONBLE ALLAHABAD HIGH COURT AND NOT UPHELD THE REPORT OF THE DVO ADOPTION CPWD RATES. THE LD. ARS. HAVE ALSO CONTENDED THAT NO REBATE HAS BEEN GIVEN FOR SELF SUPERVISION AND THE DIFFERENCE WORKED OUT IS, THEREFORE, TOTALLY UNACCE PTABLE AS THE SAME IS NOT ACCORDING TO ANY PRINCIPLE, LAW OR EVEN PROCEDURE. WRITTEN SUBMISSIONS HIGHLIGHTING SEVERAL OTHER RELEVANT ASPECTS SPRING FROM THE ADDITION HAVE BEEN ATTENTIVELY GONE THROUGH AND POINT TO THEIR CORRECT NESS VIS--VIS THE ASSERTION OF THE AO. THE AO HAS NOT APPLIED THE VALUATION RATES OF PWD AND HAS AMPLY ACCEPTED THE REPORT OF THE DVO WHICH HAD BEEN QUEST IONED BY THE LD. ARS. EVEN BEFORE HIM IN THE COURSE OF ASSESSMENT PROCEEDINGS . SINCE THE ADDITION MADE IS MERELY A MECHANICAL ONE NOT SHOWING AN APPLICATION OF MIND ON THE PARTY OF THE AO, NOT EVEN SHOWING THAT THE AO ATTEMPTED TO EXAMI NE THE RULINGS OF VARIOUS HIGHER APPELLATE AUTHORITIES PUT UP BEFORE HIM BY T HE APPELLANT, THE ADDITION IS NOT UPHELD. IN THE RESULT, THE APPEAL IS ALLOWED. 4. FROM THE ABOVE, WE FIND THAT NO REBATE WAS ALLOW ED BY THE DVO ON ACCOUNT OF SELF-SUPERVISION AND HE HAS ADOPTED CPWD RATES AS A GAINST UPPWD RATES. THIS ISSUE WAS RAISED BY THE ASSESSEE BEFORE THE ASSESSING OF FICER ALSO, BUT THE CONTENTION OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER. CO NSIDERING THE FACTS OF THE PRESENT CASE I.T.A. NOS.1191 & 1192/DEL./2009 (A.YS. : 1999-2000 & 02-03) 4 AND RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT, RENDERED IN THE CASE OF CIT VS. RAJ KUMARI(SUPRA) AND THE TRIBU NALS DECISION IN THE CASE OF B.B. SHARMA(SUPRA), WE CONFIRM THE ORDER OF THE COMMISSI ONER OF INCOME-TAX (APPEALS) ON THIS ISSUE BECAUSE WE FIND THAT DVO HAS CONSIDERED CPWD RATES AND NOT UPPWD RATES AND THE DIFFERENCE OF THE AMOUNT BETWEEN THE CONST RUCTION COST SHOWN BY THE ASSESSEE AND AS PER THE DVO IS AROUND 30%, OUT OF WHICH 15% IS ON ACCOUNT OF SELF-SUPERVISION. AND DIRECT MATERIAL. THERE IS DIFFERENCE IN THE RA TE OF MARBLE AND ARCHITECT FEES AND ALSO REGARDING TRANSPORTATION CHARGES OF BUILDING MATERI AL AND CONSIDERING ALL THESE FACTS, WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE COM MISSIONER OF INCOME-TAX (APPEALS) IN BOTH THE YEARS BECAUSE IN ASSESSMENT YEAR 2002-03 A LSO, THE ISSUE INVOLVED IS SAME. 5. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. 6. ORDER PRONOUNCED IN OPEN COURT ON 18.08.2009 AT THE CONCLUSION OF THE HEARING OF THE CASE. (RAJPAL YADAV) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: AUG. 18, 2009. *SKB* COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A), DEHRADUN. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. AR/ITAT