Yashwanth Bhim Rao Chawan, Trichur V. DCIT, Trichur

ITA 126/COCH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69122 (ITAT-COCHIN)
• Duration Of Justice: 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-12-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 07-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LATHA V KUMAR
• Assessee Lawyers: V SATYANARAYANAN
• Keywords: Opportunity of being heard; Valuation report
• Section: 263

Judgement Text

ITA NO 126 TO 128/ COCH/ 2013 1 IN THE INCOME TAX APELALTER TIBUNAL COCHIN BENCH , COCHIN BEFORE S/SH RI N.R.S. GANESAN, JM & B. R. BASKARAN, AM ITA NO S . 126 TO 128/ COCH/ 2013 (ASST YEAR 2006 - 07 TO 2008 - 09 ) YESWANTH BHIM RAO CHAWAN PARTNER SREE BALAJI REFINERY NEW CHURCH ROAD, THRISSUR V S THE DY COMM R. OF INCOME TAX CENTRAL CIRCLE, THRISSUR ( APPELLANT) (RESPONDENT) PAN NO. ACIPC8190P ASSESSEE BY SHRI V SATYANARAYANAN REVENUE BY SMT LATHA V KUMAR, JR DR DATE OF HEARING 24 TH DEC 2013 DATE OF PRONOUNCEMENT 27 TH , DEC 2013 OR D ER PER N.R.S G A N ESAN,JM : ALL THE THREE APPEALS OF THE ASSESSEE WERE DISPOSED OF F BY THE ORDER DATED 2 1.5.2013. H OWEVER, THE ASSESSEE FILED AN APPLICATION IN MP NOS. 109, 110 AND 111/COCH/2013 FOR RECALL OF THE ORDER DATED 21.5.2013. ACCORDINGLY, AFTE R HEARING BOTH THE PARTIES, THE ORDER DATED 21.5.2013 WAS RECALLED AND ALL THE APPEALS OF THE ASSESSEE WERE RESTORED TO THE FILE OF THE TRIBUNAL; THEREAFTER THE APPEALS WERE POSTED FOR FINAL DISPOSAL. 2 SHRI V SATYANARAYANAN THE LD REPRESENTATIVE FOR TH E ASSESSEE SUBMITTED THAT THE ASSESSEE FILED THE APPEALS AGAINST THE ORDER OF THE ADMINISTRATIVE COMMISSIONER OF INCOME TAX U/S 263 OF THE ACT. REFERRING TO THE ASSESSMENT ORDER, THE LD REPRESENTATIVE SUBMITTED THAT IN RESPECT OF THE COST OF CONSTRUCTIO N, THE AO REFERRED THE MATTER FOR VALUATION; HOWEVER, THE VALUATION REPORT WAS NOT RECEIVED. THEREFORE, THE AO COMPLETED THE ASSESSMENT SUBJECT TO ITA NO 126 TO 128/ COCH/ 2013 2 RECEIPT OF VALUATION REPORT FROM THE VALUATION OFFICER. IN FACT THE VALUATION OFFICER SUBMITTED THE REPORT A FTER COMPLETION OF THE ASSESSMENT. THERE ARE SEVERAL DEFECTS IN THE VALUATION REPORT. ACCORDING TO THE LD REPRESENTATIVE, THE VALUATION OFFICER ESTIMATED THE COST OF CONSTRUCTION ARBITRARILY; THEREFORE, THE VALUATION REPORT CANNOT BE RELIED UPON IN TOTO. THE ADMINISTRATIVE COMMISSIONER DIRECTED THE AO TO ADD THE DIFFERENCE BETWEEN THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE AND THE COST OF CONSTRUCTION ESTIMATED BY THE VALUATION OFFICER AS INCOME OF THE ASSESSEE. 2.1 ON A QUERY FROM THE BENCH WHY THE MATTER SHOULD NOT BE REMANDED BACK TO THE AO TO EXAMINE THE VALUATION REPORT FILED BY THE VALUATION OFFICER AFTER GIVING OPPORTUNITY TO THE ASSESSEE TO POINT OUT THE DEFECTS IN THE VALUATION REPORT, THE LD REPRESENTATIVE FAIRLY SUBMITTED THAT HE HAS NO OBJECTION, IN SUCH A CASE , AN OPPORTUNITY IS GIVEN TO THE ASSESSEE TO POINT OUT THE DEFECT IN THE VALUATION REPORT BEFORE THE AO. 2.2 WE HAVE HEARD SMT LATHA V KUMAR, THE LD REPRESENTATIVE FOR THE REVENUE ALSO. ACCORDING TO THE LD REPRESENTATIVE, THE V ALUATION OFFICER ESTIMATED THE COST OF CONSTRUCTION ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. THEREFORE, THE DIFFERENCE BETWEEN THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE AND THE COST OF CONSTRUCTION ESTIMATED BY THE VALUATION OFFICER HAS TO BE TAKEN AS INCOME OF THE ASSESSEE. 3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE COST OF CONSTRUCTION WAS REFERRED TO THE VALUATION CELL OF THE DEPARTMENT AND THE V ALUATION REPORT WAS NOT RECEIVED BY THE AO BEFORE COMPLETION OF THE ASSESSMENT. THEREFORE, SUBJECT TO RECEIPT OF THE VALUATION REPORT, THE ITA NO 126 TO 128/ COCH/ 2013 3 ASSESSMENT WAS COMPLETED. IN FACT, THE DEPARTMENT RECEIVED THE VALUATION REPORT AFTER COMPLETION OF THE ASSESSMENT. THEREFORE, THE ADMINISTRATIVE COMMISSIONER FOUND THAT THERE WAS AN ERROR IN THE ORDER OF THE AO SINCE THE VALUATION REPORT WAS NOT CONSIDERED , WHICH IS PREJUDICIAL TO THE INTEREST OF THE REVENUE . THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT NON CONSID ERATION OF THE REPORT OF THE VALUATION OFFICER IS AN ERROR WITHIN THE MEANING OF SECTION 263 OF THE ACT, WHICH IS PREJUDICIAL TO THE INTEREST OF JUSTICE. THEREFORE, WE HAVE NO REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITIES. AT THE SAME TIME, THE AO SHALL GIVE AN OPPORTUNITY TO THE ASSESSEE TO FILE THE OBJECTION TO THE VALUATION REPORT AND POINT OUT THE DEFECT, IF ANY TO THE AO. THE TAX AUTHORITIES, UNDER THE INCOME TAX ACT , HAS TO CONSIDER THE CASE AFTER CONSIDERING THE OBJECTION OF THE ASSE SSEE. SINCE ADMINISTRATIVE COMMISSIONER DIRECTED THE AO TO TAKE THE DIFFERENCE IN THE COST OF CONSTRUCTION AS INCOME OF THE ASSESSEE, WE ARE UNABLE TO UPHOLD THE ORDER OF THE ADMINISTRATIVE COMMISSIONER IN TOTO. IN OUR VIEW, AN OPPORTUNITY SHALL BE GIVEN TO THE ASSESSEE BEFORE THE AO TO POINT OUT THE DEFECTS IN THE VALUATION REPORT. ACCORDINGLY, THE ORDER OF THE ADMINISTRATIVE COMMISSIONER IS MODIFIED AND THE AO IS DIRECTED TO EXAMINE THE VALUATION REPORT FILED BY THE VALUATION OFFICER AFTER GIVING AN OP PORTUNITY TO THE ASSESSEE TO POINT OUT DEFECT, IF ANY, IN THE VALUATION REPORT AND THEREAFTER DECIDE THE COST OF CONSTRUCTION IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ORDER OF THE ADMINISTRATIVE COMMISS IONER IS MODIFIED ACCORDINGLY. ITA NO 126 TO 128/ COCH/ 2013 4 4 IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH , DAY OF DEC 2013. SD/ - SD/ - ( B.R. BASKARAN) ( N .R.S GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN : DATED 27 TH , DEC 2013 RAJ* COPY TO: 1. APPELLANT - YASWANTH BHIM RAO CHAWAN, PARTNER, SREE BALAJI REFINERY, NEW CHURCH ROAD, THRISSUR 2. RESPONDENT THE DY COMMR OF INCOME TAX CENTRAL CIRCLE, THRISSUR 3. CIT(A) 4. CIT 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR I TAT, COCHIN