DCIT, Circle-16(1), Hyderabad V. M/s. Legend Estates (P) Limited, Hyderabad

ITA 1265/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66593 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 27-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained investment; Unexplained expenditure; Income from undisclosed sources; Opportunity of being heard; Retrospective amendment; Valuation report; Revenue expenditure
• Section: 69C; 143(3); 133A; 131; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NOS. 1265 & 1266/HYD/2012 ASSESSMENT YEARS: 2006-07 AND 2007-08 DY. COMMISSIONER OF INCOME-TAX, APP ELLANT CIRCLE 16(1), HYDERABAD. VS. LEGEND ESTATES (P) LTD., RESPONDENT HYDERABAD. (PAN AAACL9640A) APPELLANT BY : SHRI M.H. NAIK RESPONDENT BY : SHRI A.V. RAGHURAM DATE OF HEARING : 06/12/2012 DATE OF PRONOUNCEMENT : 20/12/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: BOTH THESE APPEALS PREFERRED BY THE REVENUE ARE DIR ECTED AGAINST THE RESPECTIVE ORDERS OF THE CIT(A)-V, HYDE RABAD, FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08. ITA NO. 1265/HYD/2012 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND SALE OF RESIDENTIAL FLATS. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILE D ITS RETURN OF INCOME ON 29/11/2006 ADMITTING TOTAL INCOME OF RS. 1,70,37,229/-. ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT WAS COMPL ETED ON ITA NOS. 1265 & 1266/HYD/2012 M/S LEGEND ESTATES (P) LTD. 2 31/12/2008 DETERMINING THE TOTAL INCOME OF THE ASSE SSEE AT RS. 1,90,48,117/-. THEREAFTER, THE AO REOPENED THE ASSE SSMENT AND COMPLETED THE SAME U/S 143(3) R.W.S. 147 OF THE ACT DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 6,52,65,559 /- BY MAKING AN ADDITION OF RS. 4,62,17,439/- ON ACCOUNT OF DIFFERE NCE IN VALUATION OF PROPERTIES AS UNEXPLAINED INCOME U/S 69 OF THE A CT. 3. ON APPEAL, BEFORE THE CIT(A) THE AR OF THE ASSES SEE STATED THAT THERE WAS A SURVEY U/S 133A OF THE ACT AT THE PREMISES OF THE ASSESSEE ON 23/08/2006 AND DURING THE COURSE OF SUR VEY, CERTAIN PAYMENTS AND STOCKS WERE FOUND TO BE UNVERIFIABLE F ROM THE EXISTING RECORDS. ACCORDINGLY, THE MATTER WAS REFERRED U/S 1 42A BY THE AO TO THE DVO. THE DVO FURNISHED THE VALUATION REPORT OF CONSTRUCTION AT RS. 55,83,06,733/-. ACCORDING TO THE ASSESSEES BO OKS OF ACCOUNT THE COST OF CONSTRUCTION WAS RS. 38,58,53,602/-. TH E DIFFERENCE WAS WORKED OUT AT RS. 17,24,53,131/- AND THE SAME WAS A PPORTIONED AMONG THE FYS 2004-05 TO 2008-09 AND THE AMOUNT ATT RIBUTABLE TO THE ASSESSMENT YEAR UNDER CONSIDERATION WAS RS. 4,6 2,17,439/-. THE AO MADE THIS ADDITION U/S 69 OF THE ACT. 4. FURTHER, FOR THE AY 2007-08 AN ADDITION OF RS. 6,51,01,056/- WAS MADE BY THE AO ON ACCOUNT OF DIFFERENCE IN VALU ATION OF PROPERTIES AND THE SAME WAS CONFIRMED BY THE CIT(A) . HOWEVER, THE ITAT, HYDERABAD HELD THAT THE REFERENCE OF VALUATIO N TO THE DVO WAS AB-INITIO INCORRECT. THEREFORE, THE AO CANNOT D ISTURB THE CONCLUDED ASSESSMENTS OF OTHER ASSESSMENT YEARS. 5. THE CIT(A) FOLLOWING THE ORDER OF THE ITAT, HYDE RABAD IN ASSESSEES OWN CASE FOR AY 2007-08 IN ITA NO. 1542/ -HYD/2010, DATED 30/03/2012, HELD THAT SINCE THE ISSUE UNDER C ONSIDERATION IS ITA NOS. 1265 & 1266/HYD/2012 M/S LEGEND ESTATES (P) LTD. 3 IDENTICAL TO THAT OF AY 2007-08, THE DECISION OF TH E ITAT IS APPLICABLE AND, THEREFORE, DIRECTED THE AO TO DELET E THE ADDITION. 6. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US AN D HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THE CIT(A) ALLOWED ASSESSEES APPEAL WITHOUT GOI NG INTO THE MERITS OF THE CASE. THE ORDER OF THE HONBLE IT AT ON WHICH THE CIT(A) RELIED UPON IS NOT ACCEPTABLE FOR VARIOU S DEFICIENCIES CONTAINED IN THEIR FINDINGS. 2. THE CIT(A) ERRED ON BOTH FACTS AND CIRCUMSTANCES OF THE CASE IN NOT CONSIDERING THE DIFFERENCE IN VALUATION AS UNEXPLAINED INVESTMENT IN CONSTRUCTION OF BUILDINGS . 3. THE CIT(A) OUGHT TO HAVE APPRECIATED THE EFFORTS OF THE AO THAT THE DIFFERENCE IN COST OF CONSTRUCTION WAS ADD ED AS UNEXPLAINED EXPENDITURE AFTER GIVING ASSESSEE DUE O PPORTUNITY OF BEING HEARD. 4. THE CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THA T INVESTMENT OF UNACCOUNTED INCOME IN CONSTRUCTION OF FLATS HAS BEEN CORRECTLY BROUGHT TO TAX INVOKING THE PROVISIO NS OF SEC. 69C OF THE ACT, 1961. 5. THE CIT(A) ERRED IN LAW IN GRANTING RELIEF TO TH E ASSESSEE ON THE GROUND THAT UNEXPLAINED EXPENDITURE U/S 69C DOE S NOT FALL UNDER THE AMBIT OF THE PROVISIONS OF SECTION 142A F OR REFERENCE TO DVO. IN FACT THE PROPERTIES WERE REFERRED TO THE DVO FOR THE PURPOSE OF VALUATION OF UNACCOUNTED INVESTMENTS MAD E BY THE ASSESSEE INTO THOSE PROPERTIES. THEREFORE, THE REFE RENCE MADE IS VALID IN LAW. 6. EVEN IF THE REFERENCE TO THE DVO IS HELD TO BE B AD IN LAW, THE INFORMATION GATHERED WITH REGARD TO VALUATION OF PROPERTIES CAN ALWAYS BE USED AS EVIDENCE FOR MAKIN G ASSESSMENT. 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDERS OF TH E AUTHORITIES BELOW. WE FIND THAT THE ISSUE UNDER CONSIDERATION I S SQUARELY ITA NOS. 1265 & 1266/HYD/2012 M/S LEGEND ESTATES (P) LTD. 4 COVERED BY THE DECISION OF THE ITAT, HYDERABAD IN A SSESSEES OWN CASE IN ITA NO. 1542/HYD/2010 FOR AY 2007-08 VIDE O RDER DATED 03/03/2012, A COPY OF WHICH HAS BEEN FILED ON RECOR D. THE RELEVANT FINDINGS OF THE ITAT ARE AS FOLLOWS: 12. WE FURTHER FIND FROM THE CASE RECORDS THAT EVE N IF A REFERENCE U/S. 142A IS MADE BY THE ASSESSING OFFICER ON CERTAIN CO NSIDERATION SUCH AS ANYTHING FIND DURING THE COURSE OF SURVEY U/S 133A OF THE A CT OR ON THE BASIS OF A TAX EVASION PETITION OR A REFERENCE IS REQUIRED TO BE M ADE DURING THE COURSE OF OTHER PROCEEDINGS OR A REPORT OF THE DVO IS AVAILABLE TO THE AO BEFORE MAKING AN ASSESSMENT OR REASSESSMENT THEN SAME CAN BE UTILIZE D ONLY IN ACCORDANCE WITH SUB-SEC.(3) OF SEC. 142A I.E., THE ASSESSEE HAS TO BE GIVEN AN OPPORTUNITY OF BEING HEARD BEFORE SUCH A REPORT IS UTILIZED AND IN ACCOR DANCE WITH SEC.145 WHERE BOOKS OF ACCOUNT ARE REQUIRED TO BE REJECTED BY POI NTING OUT SOME APPARENT DEFECTS. IN OUR CONSIDERED VIEW THE PROVISIONS OF S EC. 142A CANNOT BE READ IN ISOLATION TO SEC.145. IN OTHER WORDS, IF BOOKS OF A CCOUNT ARE FOUND TO BE CORRECT AND COMPLETE IN ALL RESPECT AND NO DEFECT IS POINTE D OUT THEREIN AND COST OF CONSTRUCTION OF BUILDING IS RECORDED THEREIN, THEN THE ADDITION ON ACCOUNT OF DIFFERENCE IN COST OF CONSTRUCTION COULD NOT BE MAD E EVEN IF A REPORT IS OBTAINED WITHIN HE MEANING OF SEC.142A FROM THE DVO. IT IS B ECAUSE THE USE OF THE REPORT OF THE DVO OBTAINED U/S.142A IS NOT MANDATORY BUT I S DISCRETIONARY AS THE WORD USED IS MAY THEREIN. ACCORDINGLY, WE ARE OF THE C ONSIDERED VIEW THAT IN THE PRESENT CASE WHEN AO HAS NOT REJECTED THE BOOKS OF ACCOUNT BY POINTING OUT ANY DEFECTS REFERENCE TO THE DVO WILL NOT BE VALID AND, THEREFORE, DVOS REPORT COULD NOT BE UTILIZED FOR FRAMING ASSESSMENT EVEN IF SUCH A REPORT IS CONSIDERED TO BE OBTAINED U/S.142A. SINCE REFERENCE TO DVO BEING HEL D AS INVALID, THE ASSESSMENT/ REASSESSMENT FRAMED THEREAFTER WOULD AL SO BE INVALID. EVEN OTHERWISE, THE ISSUE OF UNEXPLAINED EXPENDITURE U/S .69C OF THE ACT IS NOT COVERED UNDER THE POWERS OF SEC.142A OF THE ACT AND THIS IS SUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY T HE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF AAR PEE APARTMENTS (P) LT D. (SUPRA). THE HONBLE DELHI HIGH COURT HELD AS UNDER:- 6. BEFORE WE ADVERT TO THE INTERPRETATION TO THE A FORESAID PROVISION WE DEEM IT PROPER TO REPRODUCE THE FOLLOWING DISCUS SIONS DETAINED IN THE ORDER OF TRIBUNAL ON THIS ASPECT:- THE NEXT POINT TO BE DETERMINED IS WHETHER THE AO IS JUSTIFIED IN REFERRING TO THE DVO FOR COMPUTING COST OF CONSTRUC TION CLAIMED AS REVENUE EXPENDITURE. PRIOR TO INSERTION OF SEC. 142 A BY FINANCE (NO.2) ACT, 2004 WITH RETROSPECTIVE EFFECT FROM 15T H NOV. 1972, THE REFERENCE TO DVO IN ASSESSMENT PROCEEDINGS OTHER TH AN AS PERMISSIBLE UNDER S. 55A WAS HELD TO BE INVALID AS HELD BY HONBLE SUPREME COURT IN THE CASE OFF SMT. AMIYA BALA PAUL VS. CIT (2003) 182 CTR (SC) 489 : (2003) 262 ITR 407 (SC). SEC. 14 2A, WAS INSERTED WITH RETROSPECTIVE EFFECT FROM 15TH NOV., 1972, HOWEVER, EVEN UNDER S. 142A, A REFERENCE CAN BE MADE FOR ASS ESSMENT OR ITA NOS. 1265 & 1266/HYD/2012 M/S LEGEND ESTATES (P) LTD. 5 REASSESSMENT WHERE AN ESTIMATE OF VALUE OF ANY INV ESTMENT REFERRED TO IN S. 69 OR S. 69B OR THE VALUE OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES REFERRED IN S. 69A OR 69B I S REQUIRED TO BE MADE. THE AO MAY REQUIRE THE VALUATION OFFICER TO M AKE AN ESTIMATE OF SUCH VALUE AND REPORT UNDER S. 142A(1), FOR THE PURPOSE OF MAKING AS ASSESSMENT UNDER ACT, WHERE AN ESTIMAT E OF THE VALUE OF ANY INVESTMENT REFERRED TO IN S. 69A OR S. 69B O R THE VALUE OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE REFERR ED TO IN S. 69A OR S.69B IS REQUIRED TO BE MADE, THE ASSESSING OFFICER MAY REQUIRE THE VALUATION OFFICER TO MAKE AN ESTIMATE OF SUCH VALUE AND REPORT THE SAME TO HIM. THUS THE POWER AVAILABLE UNDER S. 142( 1) IS REQUIRING THE VALUATION OFFICER TO VALUE ANY INVESTMENT OR BU LLION, JEWELLERY OR OTHER VALUABLE ARTICLE REFERRED IN S.69, S 69A OR S .69B OF THE ACT,. THESE POWERS DO NOT EXTEND TO ESTIMATE THE AMOUNT O F UNEXPLAINED EXPENDITURE REFERRED IN S. 69C OF THE ACT. ADMITTED LY, IN THE PRESENT CASE THE EXPENDITURE ON CONSTRUCTION ARE CLAIMED AN D ALLOWED AS REVENUE EXPENDITURE AND CANNOT BE CONSIDERED AS AN INVESTMENT OR BULLION, JEWELLERY ETC. REFERRED IN S. 69, S. 69A O R S.69B, OF THE ACT. WE ACCORDINGLY HOLD THAT THE REFERENCE TO DVO IS NO T IN ACCORDANCE WITH THE PROVISIONS OF S. 142A. HENCE THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SMT. AMIYA BALA PAUL ( SUPRA) WILL STILL APPLY TO HOLD THAT NO ADDITION CAN BE MADE MERELY R ELYING UPON THE VALUE ARRIVED AT BY DVO. IN VIEW OF THE ABOVE DISCU SSION, ADDITION OF RS.19,69,881 IS DIRECTED TO BE DELETED. 7. WE ARE IN AGREEMENT WITH THE AFORESAID INTERPRET ATION GIVEN BY THE TRIBUNAL TO SEC. 142(A) OF THE ACT. OUR DISCUSS ION ON THIS ASPECT PROCEEDS AS UNDER: 8. SEC. 142(A) IS TO THE FOLLOWING EFFECT:- 142A. FOR THE PURPOSES OF MAKING AN ASSESSMENT OF REASSESSMENT UNDER THIS ACT, WHERE AN ESTIMATE OF THE VALUE OF A NY INVESTMENT REFERRED TO IN S 69 OR S. 69B OR THE VALUE OF ANY B ULLION, JEWELLERY OR OTHER VALUABLE ARTICLE REFERRED TO IN S. 69A OR S. 69B IS REQUIRED TO BE MADE, THE AO MAY REQUIRE THE VALUATION OFFICER TO M AKE AN ESTIMATE OF SUCH VALUE AND REPORT THE SAME TO B HIM . 9. IT IS CLEAR FROM THE READING OF SUB-S.(1) OF THI S PROVISION THAT IT ENABLES THE AO TO GET THE VALUATION DONE FROM THE V ALUATION OFFICER IN CERTAIN SPECIFIC TYPES OF CASES. THESE WOULD BE THE CASES WHEREIN AN ESTIMATE OF THE VALUE OF ANY INVESTMENT REFERRED TO IN S. 69 OR S. 69B OR THE VALUE OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES REFERRED TO IN S. 69A OR 69B IS REQUIRED. THERE IS NO MENTION ABOUT S. 69C OF THE ACT. AS IS CLEAR FROM THE ABOVE, S 69A D EALS WITH UNEXPLAINED MONEY. SEC. 69B LIKEWISE RELATES TO THE AMOUNT OF INVESTMENT ETC. NOT FULLY DISCLOSED IN BOOKS OF ACC OUNTS. ON THE OTHER HAND, THE PROVISION RELATES TO UNEXPLAINED EX PENDITURE IS IN S. 69C. ITA NOS. 1265 & 1266/HYD/2012 M/S LEGEND ESTATES (P) LTD. 6 10. IN THE PRESENT CASE THE AO HAD DOUBTS ABOUT THE EXPENDITURE INCURRED ON THE PROJECT. AS POINTED OUT ABOVE THE A SSESSEE HAD SHOWN THE EXPENDITURE ON THE AT RS. 38,58,53,602. S INCE AO HAD DOUBTED THIS EXPENDITURE, HE REFERRED THE MATTER TO DVO FOR THE PURPOSE OF DETERMINING THE COST OF CONSTRUCTION OF SAID PROJECT. HOWEVER, AS POINTED OUT ABOVE, FOR THE PURPOSE OF G ETTING HIMSELF SATISFIED ABOUT THE PURPORTED UNEXPLAINED EXPENDITU RE UNDER S. 69C POWERS UNDER S. 1142A COULD NOT BE INVOKED. 11. LEARNED COUNSEL FOR REVENUE SUBMITTED THAT SUCH A POWER COULD BE TRACED TO S. 69B OF THE ACT WHICH RELATES TO AMOUNT OF INVESTMENT ETC. NOT FULL DISCLOSED IN THE BOOKS OF ACCOUNTS. 12. HER SUBMISSION WAS THAT THE EXPENDITURE INCURR ED SHOULD BE CONSIDERED AS COMING WITHIN THE EXPRESSION INVESTM ENT.13. WE CANNOT AGREE WITH THIS SUBMISSION OF LEARNED COUNSE L FOR REVENUE. IF INVESTMENTS COULD INCLUDE WITHIN ITS FOLD HE EXPEND ITURE AS WELL WHICH IS INCURRED BY A BUSINESSMAN DURING THE COURS E OF HIS BUSINESS, THERE WAS NO NECESSITY OF HAVING A SEPARA TE PROVISION UNDER S. 69C OF THE ACT WHICH DEALS WITH UNEXPLAINE D EXPENDITURE AND READS AS UNDER: 69C. WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS I NCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF HE AO SATISFACTORY, T HE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MA Y BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FI NANCIAL YEAR. 14. THE SCOPE AND AMBIT OF SS. 69B AND 69C ARE ALTO GETHER DIFFERENT. THE CONNOTATION TO THE INVESTMENT APPEAR ING IN S. 69B HAS TO BE IN THE CONTEXT OF INVESTMENTS MADE IN SOME PR OPERTY OR ANY OTHER TYPE OF INVESTMENT AND IT COULD NOT BE THE BU SINESS EXPENDITURE. THE WORD INVESTMENT CONTAINED IN S. 69B DEALS WITH INVESTMENT IN BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES, ETC. IF THE CONTENTION OF LEARNED COUNSEL FOR REVENUE IS ACCEPT ED AND THE IS GIVEN WIDER MEANING AS SOUGHT TO BE MADE OUT, THE P ROVISIONS OF S. 69C SHALL BE RENDERED OTIOSE. 15. THE LEARNED COUNSEL FOR REVENUE HOWEVER TOOK AN OTHER PLEA TO BUTTRESS HER SUBMISSION. HE SUBMITTED THAT HAVING R EGARD TO THE CIRCUMSTANCES UNDER WHICH S. 142A WAS INSERTED BY T HE FINANCE ACT, 2004, IT BE DEEMED THAT THE INTENTION OF LEGIS LATURE WAS TO INCLUDE EVEN THOSE UN-EXPLAINED EXPENDITURE STIPULA TED IN S. 69C. NO DOUBT THE NEED BEHIND INSERTING S. 142A WAS TO E MPOWER THE AO TO MAKE A REFERENCE TO THE VALUATION OFFICER AS THE RE WAS NO SUCH SPECIFIC POWERS AND EXISTING PROVISION CONTAINED IN S. 131 WERE INADEQUATE. HOWEVER, EVEN THIS STATEMENT OF OBJECT AND REASON CLEARLY CONFINED AND LIMITED THE REFERENCE TO HOLD A SCIENTIFIC, TECHNICAL AND EXPERT INVESTIGATION ETC. LEARNED CO UNSEL FOR THE ITA NOS. 1265 & 1266/HYD/2012 M/S LEGEND ESTATES (P) LTD. 7 ASSESSEE HAS DRAWN OUR ATTENTION TO CBDT CIRCULAR ISSUED BY IT EXPLAINING THE FINANCE BILL, 2004 WHICH SPECIFICALL Y OMITS THE WORD EXPENDITURE AS WELL AS S. 69C. IT IS ON THIS BASI S THAT THE S. 142A WAS INSERTED IN THE FORM AS IT APPEARS ON THE STATU TE BOOK NOW. IF THE INTENTION WAS TO INCLUDE UNEXPLAINED EXPENDITUR E AS CONTEMPLATED IN S. 69C OF THE ACT AS WELL THIS PROV ISION SHOULD HAVE BEEN SPECIFICALLY MENTIONED IN S. 142A OF THE ACT. 16. FROM THE READING OF SUB-S.(1) OF S. 142A, IT IS CLEAR THAT THE LEGISLATURE REFERRED TO THE PROVISIONS OF SS. 69, 6 9A AND 69B BUT SPECIFICALLY EXCLUDED 69C. THE PRINCIPLE OF CASUS O MISSUS BECOMES APPLICABLE IN A SITUATION LIKE THIS. WHAT IS NOT IN CLUDED BY THE LEGISLATURE AND RATHER SPECIFICALLY EXCLUDED, CANNO T BE INCORPORATED BY THE COURT THROUGH THE PROCESS OF INTERPRETATION. THE ONLY REMEDY IS TO AMEND THE PROVISIONS. IT IS NOT THE FUNCTION OF THE COURT TO LEGISLATE OR TO PLUG THE LOOPHOLES IN THE LAW. 17. IN THE PRESENT CASE EXCEPT THE REPORT OF DVO ON WHICH THE AO RELIED UPON, THERE WAS NOTHING ON RECORD TO SUGGEST THAT THERE WAS ANY OF THE EVIDENCE TO DISBELIEVE THE EXPENDITURE S HOWN BY THE ASSESSEE. IN FACT DURING THE COURSE OF ARGUMENTS, L EARNED COUNSEL FOR THE ASSESSEE PRODUCED THE ASSESSMENT ORDER WHIC H CLEARLY DEMONSTRATES THAT THE EXPENDITURE SHOWN BY THE ASSE SSEE FROM THE TIME, WHEN IT WAS AN ON-GOING PROJECT, WAS EXAMINED AND ACCEPTED BY, THE AO 13. IN VIEW OF THE ABOVE FACTS AND THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF AAR PEE APARTMENTS PVT. LTD. ( SUPRA) WE ARE OF THE CONSIDERED VIEW THAT THE LEGISLATURE HAS NOT INCLUD ED UNEXPLAINED EXPENDITURE STIPULATED IN SEC.69C OF THE ACT FOR INVOCATION OF PROVISIONS OF SEC.142A OF THE ACT. WE FURTHER FIND THAT EVEN THE CBDT CIRCULAR ISSUED BY IT, EXPLAINING THE FINANCE BILL, 2004, SPECIFICALLY OMITTED THE WORD EXPENDIT URE AS WELL AS SEC.69 FROM THE AMBIT OF SEC.142A OF THE ACT AS INSERTED IN THE FOR M AS IT APPEARS ON THE STATUE BOOK. IF THE INTENTION OF THE LEGISLATURE TO INCLUD E UNEXPLAINED EXPENDITURE AS CONTEMPLATED IN SEC.69C OF THE PROVISION OF SEC.142 A SHOULD HAVE BEEN SPECIFICALLY MENTIONING THE SAME. FURTHER THE COST OF FLAT BEING SHOWN BY THE ASSESSEE AS CURRENT ASSETS NOT AS AN INVESTMENT, IT CANNOT BE SUBJECT MATTER OF REFERENCE U/S. 142A. EVEN OTHERWISE, THE ASSESSIN G OFFICER REFERRING THE MATTER TO THE DVO FOR VALUATION OF CURRENT ASSETS IN ONE A SSESSMENT YEAR, HE CANNOT DISTURB THE CONCLUDED ASSESSMENTS OF OTHER ASSESSME NT YEARS. ACCORDINGLY, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGA INST THE REVENUE. 14. IN VIEW OF THE ABOVE DECISION ON BOTH THE LEG AL ISSUES, WE DECIDE THIS APPEAL OF THE ASSESSEE IN FAVOUR OF THE ASSESS EE AND THE ISSUES ON MERITS HAVE BECOME ACADEMIC AND NEEDS NO ADJUDICATION. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ITA NOS. 1265 & 1266/HYD/2012 M/S LEGEND ESTATES (P) LTD. 8 8. SINCE THE ISSUE UNDER CONSIDERATION IS IDENTICAL TO THAT OF AY 2007-08 IN ASSESSEES OWN CASE (SUPRA), WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) IN DIRECTING THE AO TO DELETE T HE ADDITION OF RS. 4,62,17,439/-. MADE U/S 69 OF THE ACT, FOLLOWING TH E SAID DECISION OF THE ITAT IN ASSESSEES OWN CASE(SUPRA). THEREFORE, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUNDS RAISED BY THE REVENUE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ITA NO. 1266/HYD/2012 10. BRIEFLY, THE FACTS OF THE CASE ARE THAT FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY FILED ITS RETUR N OF INCOME ON 01/12/2007 ADMITTING TOTAL INCOME OF RS. 1,78,23,58 0/-. THE AO COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT DETE RMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 8,49,13,972/- B Y MAKING THE ADDITION OF RS. 6,51,01,056/- U/S 69C OF THE ACT, AND ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT STATIN G THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS TO TH E EXTENT OF RS. 6,51,01,056/-. ACCORDINGLY, HE LEVIED A MINIMUM PEN ALTY U/S 271(1)(C) OF THE ACT ON THE SAID ADDITION, AMOUNTI NG TO RS. 2,19,13,015/-. 11. ON APPEAL, THE CIT(A) HELD THAT SINCE THE ITAT IN THE QUANTUM APPEAL DELETED THE ADDITION MADE BY THE AO AND CONF IRMED BY THE CIT(A) BY HOLDING THAT THE REFERENCE TO THE VALUAT ION CELL WAS ITSELF INCORRECT AND LEGALLY UNTENABLE, THE ADDITION BASED ON SUCH VALUATION WILL STAND DELETED, THE PENALTY LEVIED ON SUCH NON-EXISTENT ADDITION ALSO STANDS CANCELLED. ACCORDINGLY, HE DIR ECTED THE AO TO CANCEL THE PENALTY. ITA NOS. 1265 & 1266/HYD/2012 M/S LEGEND ESTATES (P) LTD. 9 12. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US C HALLENGING THE DELETION OF PENALTY U/S 271(1)(C) MADE BY THE AO. 13. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDERS OF TH E AUTHORITIES BELOW. WE FIND THAT THE CIT(A), DELETED THE PENALTY LEVIED U/S 271(1)(C) BY THE AO IN RESPECT OF THE ADDITION OF RS. 6,51,01,056/- U/S 69C OF THE ACT MADE BY THE AO, ON THE GROUND TH AT THE ITAT IN THE QUANTUM APPEAL DELETED THE SAID ADDITION, THERE FORE, ON SUCH NON-EXISTENT ADDITION, THE PENALTY SO LEVIED STANDS CANCELLED. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE CIT(A) IN DELETING THE PENALTY AS THE SOURCE OF THE ADDITION FOR MAKING PENALTY ITSELF IS DELETED BY THE ITAT IN THE QUANTUM APPEAL , HENCE, THE PENALTY DOES NOT HAVE LEGS TO STAND IN THE EYE OF L AW. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) ON THIS COUNT AND DISMISS THE GROUNDS RAISED BY THE REVENUE. 14. IN THE RESULT, THIS APPEAL IS DISMISSED. 15. TO SUM UP, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER, 2012. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGH AVAN) ACCOUNTANT MEMBER JUDICIAL MEMBE R HYDERABAD, DATED: 20 TH DECEMBER, 2012. KV ITA NOS. 1265 & 1266/HYD/2012 M/S LEGEND ESTATES (P) LTD. 10 COPY TO:- 1) DCIT, CIRCLE 16(1), ROOM NO. 612, 6 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERBAD. 2) M/S LEGEND ESTATES (P) LTD., 6-3-1238, 6 TH FLOOR, LEGEND APARTMENTS, RENUKA ENCLAVE, RAJ BHAVAN ROAD, SOMAJIGUDAN, HYDERABAD. 3) THE CIT (A)-V, HYDERABAD 4) THE CIT-IV, HYDERABAD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.