M.Kariappan, Tiruppur V. ACIT, Coimbatore

ITA 1298/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4698 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 12-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 13-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRIN MADHA VAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained investment; Opportunity of being heard; Principle of natural justice; Valuation report
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI (BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ) .. I.T.A. NO.1298 /MDS/2012 ASSESSMENT YEAR : 2008-09 M.KARIAPPAN, 7,NEEDIAMMAL NAGAR, WEAVERS COLONY NORTH, P.N.ROAD, TIRUPUR 641 602. PAN : ALIPK 6482 H (APPELLANT) V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II, COIMBATORE. (RESPONDENT) APPELLANT BY : SHRI S.SRIDHAR,ADVOCATE RESPONDENT BY : SHRIN.MADHA VAN, JCIT D.R. DATE OF HEARING : 12.11.13 DATE OF PRONOUNCEMENT : 21.11.13 O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A) DATED 10 .01.2012 IN ITA NO. 1298/MDS/12 2 I.T..APPEAL NO.455C/09-10 PASSED U/S 143(3) READ WI TH SECTION 250 OF THE ACT. 2. THE ASSESSEE HAS RAISED TWO ELABORATE GROUNDS W HICH ARE HEREIN BELOW REPRODUCED FOR REFERENCE. (I). THE LD. CIT(A) COIMBATORE IS NOT JUSTIFIED I N CONFIRMING THE ADDITION OF RS.8,52,666/-, THE EXPENSES INCURRED IN THE NEXT FINANCIAL YEAR, WITHOUT CONSIDERING THE PERIOD OF CONSTRUCTIO N GIVEN IN THE VALUATION REPORT DATED 29.09.2009. (II) THE LD. CIT(A) COIMBATORE IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.1,39,690/-, THE AMOUNT ARBITRARILY E STIMATED BY THE VALUATION OFFICER TOWARDS ARCHITECTURAL/STRUCTURAL DRAWING. (III) THE LD. CIT(A) COIMBATORE IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.3,00,000/- TOWARDS REBATE CLAIMED BY YOUR APPELLANT FOR SELF SUPERVISION WITHOUT CONSIDERING THE EXPERIENCE AND WITHOUT GIVING OPPORTUNITY OF BEING HEARD. THE LD. CIT(A) COIMBA TORE IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.3 LAKHS BY UNDER ESTI MATE THE CAPABILITY OF YOUR APPELLANT TOWARDS SELF SUPERVISION, WITHOUT GI VEN OPPORTUNITY OF BEING HEARD. (IV) THE LD. CIT(A) COIMBATORE IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.4,97,000/-, WITHOUT GIVING OPPORTUNI TY OF BEING HEARD BEFORE CONFIRMING THE IMPUGNED ORDER AND ANY ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE IS NULLITY IN LAW. 2. IN VIEW OF ALL THESE AND OTHER GROUNDS WHICH M AY BE PRODUCED DURING THE HEARING OF APPEAL, THE APPEAL MAY BE ALL OWED AND JUSTICE RENDERED. ITA NO. 1298/MDS/12 3 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL ON WHOM ACTION UNDER SECTION 132 WAS CONDUCTED ON 1 2.02.2008, SUBSEQUENT TO WHICH NOTICE UNDER SECTION 153A WAS I SSUED AND ASSESSMENT ORDER WAS PASSED FROM THE ASSESSMENT YEA RS 2002-03 TO 2008-09. FOR THE RELEVANT ASSESSMENT YEAR 2008-09 W HICH IS BEFORE US, ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) O F THE ACT ON 30.12.2009 WHEREIN LD.AO MADE AN ADDITION OF `. 17,67,385/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION O F A RESIDENTIAL HOUSE. THE REASONS CITED BY THE LD.AO FOR MAKING SUCH ADDITIONS ARE:- (I) THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY EVID ENCE FOR THE EXPENDITURE INCURRED AND DECLARED FOR THE CONSTRUC TION OF THE RESIDENTIAL BUILDING DURING THE ASSESSMENT YEA R 2009-10 AMOUNTING TO `. 8,50,000/-. (II) ASSESSEE HAD DISCLOSED ONLY `. 20,000/- AS FEES PAID TO ARCHITECT, WHILE IT IS ESTIMATED BY THE VALUATION O FFICER AT `. 1,39,693/-. ITA NO. 1298/MDS/12 4 (III) NOT GRANTING THE CLAIM OF THE ASSESSEE TOWAR DS REBATE ON SELF-SUPERVISION OF RS . 3,00,000/- BY THE LD.AO FOR WANT OF PROPER EVIDENCE. (IV) DIFFERENCE IN VALUATION REPORT AND COST OF CO NSTRUCTION DECLARED BY THE ASSESSEE (AS PER VALUATION REPORT `. 71.24 LAKHS, COST OF CONSTRUCTION DECLARED BY THE ASSESSE E `. 53.57 LAKHS) 4. LD. CIT(A) CONFIRMED THE ORDER OF THE LD.AO BY OBSERVING AS UNDER: 4.1. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPE LLANT AND THE ASSESSMENT ORDER. THE VALUATION OFFICER AFTER CONS IDERING ALL THE EVIDENCES PLACED BEFORE HIM WAS VALUED THE COST OF CONSTRUCTI ON OF THE RESIDENTIAL BUILDING AT RS.71,24,165/- AS AGAINST RS.53,56,780/ - ADMITTED BY THE APPELLANT GIVING A DIFFERENCE OF RS.17,67,385/-. 4.2. THE APPELLANT HAS CLAIMED RS.8,52,666/- AS EX PENSES INCURRED IN THE NEXT F.Y. 2008-09. THE LD.A.R HAS NTO BEEN ABL E TO PRODUCE ANY EVIDENCES SUCH AS BILLS, VOUCHERS, CHEQUES, DEMAND DRAFTS ETC. IN SUPPORT OF THE SAID CLAIM. MERELY STATING THAT THE AMOUNT WAS INCURRED IN THE NEXT FINANCIAL YEAR IN THE ABSENCE OF ANY PROPER EVIDENC E CANNOT BE ACCEPTED. THEREFORE, HE GROUND TAKEN BY THE APPELLANT IS REJE CTED AND ADDITION IS CONFIRMED. 4.3. THE APPELLANT ALSO CONTESTED THAT AS AGAINST RS.1,39,690/- ESTIMATED BY THE VALUATION OFFICER TOWARDS FEES PAI D TO THE ARCHITECTURAL/STRUCTURAL DRAWING, HE HAD SPENT ONLY RS.20,000/-. THE ITA NO. 1298/MDS/12 5 APPELLANTS CONTENTION IS THAT HE GOT THE DRAWING A ND PLAN APPROVAL FOR THE PURPOSE OF OBTAINING BANK LOAN AND NOT FOR ANY OTHE R PURPOSE. THE CLAIM IS VERY DIFFICULT TO BELIEVE FOR A HOUSE WHERE THE COS T OF CONSTRUCTION IS RS.71,24,165/-. THIS HAS TO BE VERY DETAILED WHICH INCLUDES DRAWING AND ESTIMATES FOR FOUNDATION, SUPERSTRUCTURE, ELEVATION ETC. THEREFORE, THE RATE ADOPTED BY THE VALUATION OFFICER WILL HAVE TO BE TR EATED AS EXPENSES INCURRED TOWARDS FEES PAID TO THE ARCHITECTURAL/STRUCTURAL D RAWING. THEREFORE, THE DIFFERENCE OF RS.1,19,690/- [ RS.1,39,690/- MINUS R S.20,000/-] IS CONFIRMED AS UNEXPLAINED INVESTMENT. 4.4. THE APPELLANT CLAIMS RS.3,00,000/- ESTIMATED BY THE VALUATION OFFICER FOR SUPERVISION IS ON THE HIGHER SIDE AS THE APPELL ANT IS IN REAL ESTATE BUSINESS AND HAS EXPERTISE FOR BUILDING CONSTRUCTIO N ALSO. PERUSAL OF THE APPELLANTS RECORDS SHOWS THAT HE IS IN REAL ESTATE BUSINESS. HE PURCHASES LANDS, DIVIDES INTO PLOTS AND SELLS TO VARIOUS BUYE RS. HE IS PER SE NOT QUALIFIED FOR UNDERTAKING BUILDING CONSTRUCTION ON HIS OWN. THEREFORE, THE SUBMISSION FROM THE APPELLANT THAT HE HAS DIRECT NE XUS WITH THE BUILDERS BEING IN REAL ESTATE BUSINESS AND CAPABLE OF SELF S UPERVISION DOES NOT HOLD WATER. THEREFORE, THE AMOUNT OF RS.3,00,000/- ESTI MATED BYT EH VALUATION OFFICER TOWARDS SUPERVISORY CHARGES IS CONFIRMED IN THE HANDS OF THE APPELLANT. 4.5. IN VIEW OF THE ABOVE, RS.17,67,385/- ON ACCOU NT OF THE DIFFERENCE IN VALUE OF THE COST OF CONSTRUCTION ADOPTED BY THE VA LUATION OFFICER AND THE APPELLANT, IS CONFIRMED IN THE HANDS OF THE APPELLA NT AS UNEXPLAINED INVESTMENT. 5. LD.A.R SUBMITTED BEFORE US THAT THE LD. DVO HAD ADOPTED CPWD RATES AND NOT THE PWD RATES. FURTHER, THE BEN EFIT OF SELF ITA NO. 1298/MDS/12 6 SUPERVISION CHARGES WAS ALSO DENIED BY THE LD.AO. HE FURTHER REQUESTED THAT IF THE BENCH DIRECTS THE REVENUE FOR ADOPTING PWD RATES AND GRANTING BENEFIT OF SELF-SUPERVISION OF C HARGES OF `. 3 LAKHS, THE ASSESSEE WOULD NOT HAVE ANY FURTHER GRIEVANCE. LD.D.R SUPPORTED THE ORDERS OF THE REVENUE AND PRAYED THAT THE SAME MAY BE CONFIRMED. 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY P ERUSED THE MATERIALS ON RECORD. IT IS APPARENT FROM THE FACTS OF THE CASE THAT THE RESIDENTIAL HOUSE WAS CONSTRUCTED AT TIRUPUR, WHICH IS NOT A BIG CITY WHERE THE COST OF CONSTRUCTION WILL BE HIGH. IN SUC H CIRCUMSTANCES, IT WOULD APPROPRIATE TO ADOPT PWD RATES RATHER THAN TH E CPWD RATES TO ARRIVE AT THE CORRECT VALUATION WHICH LD. DVO HAD F AILED TO DO SO. FURTHER IT IS EVIDENT FROM THE ORDER OF THE LD.AO T HAT THE ASSESSEE WAS A SMALL TIME TRADER, WHO LATER ON BECAME A SUCCESSF UL REAL ESTATE DEALER, WHICH WOULD HAVE DEFINITELY GIVEN HIM EXPER IENCE IN CONSTRUCTION ACTIVITIES. THEREFORE, THE CLAIM OF T HE ASSESSEE FOR GRANTING HIM THE BENEFIT OF SELF SUPERVISION CHARGE OF `. 3 LAKHS CANNOT BE SIMPLY BRUSHED ASIDE. CONSIDERING THE F ACTS AND CIRCUMSTANCES OF THE CASE, AND THE PRAYER OF THE LD .A.R, WE HEREBY ITA NO. 1298/MDS/12 7 DIRECT THE LD.AO TO OBTAIN THE VALUATION REPORT BAS ED ON PWD RATES FROM THE DVO AND ADOPT THE SAME FOR VALUING THE CON STRUCTION COST OF THE RESIDENTIAL HOUSE AND ALSO DIRECT HIM TO GRANT THE BENEFIT OF SELF SUPERVISION CHARGES OF `. 3 LAKHS CLAIMED BY THE ASSESSEE. SINCE THE ASSESSEE HAS NOT PRESSED ANY OTHER GROUND S, THEY ARE DISMISSED AS SUCH. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 21 ST NOVEMBER, 2013 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 21 ST NOVEMBER, 2013. K S SUNDARAM. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE