R.Shanmugam, Erode V. ACIT, Erode

ITA 133/CHNY/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68750 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-09-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 28-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N C RAVIKRISHNAN
• Keywords: Unexplained investment; Value adopted by valuation officer; Capital expenditure
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NO. 455/MDS/2013 (ASSESSMENT YEAR : 2009-10) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I, ERODE. (APPELLANT) V. SHRI R. SHANMUGAM, PROP. GOWRI TRANSPORTS, CE-8, NEW BUS STAND, ERODE 638 003. PAN : AGUPS 1193 G (RESPONDENT) I.T.A. NO. 133/MDS/2013 (ASSESSMENT YEAR : 2009-10) SHRI R. SHANMUGAM, PROP. GOWRI TRANSPORTS, CE-8, NEW BUS STAND, ERODE 638 003. (APPELLANT) V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I, ERODE. (RESPONDENT) C.O. NO. 68/MDS/2013 (IN I.T.A. NO. 455/MDS/2013) (ASSESSMENT YEAR : 2009-10) SHRI R. SHANMUGAM, PROP. GOWRI TRANSPORTS, CE-8, NEW BUS STAND, ERODE 638 003. (CROSS-OBJECTOR) V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I, ERODE. (RESPONDENT) REVENUE BY : SHRI GURU BASHYAM, JCIT ASSESSEE BY : SHRI N.C. RAVIKRISHNAN, ADVOCATE DATE OF HEARING : 24.09.2013 DATE OF PRONOUNCEMENT : 26.09.2013 I.T.A. NO. 455/MDS/13 I.T.A. NO. 133/MDS/13 C.O. NO. 68/MDS/13 2 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THESE ARE CROSS-APPEALS AND CROSS-OBJECTION FILED BY THE REVENUE AND ASSESSEE RESPECTIVELY, DIRECTED AGAINST AN ORDER DATED 11.12.2012 OF COMMISSIONER OF INCOME TAX (APPEALS)- I, COIMBATORE. 2. REVENUE IN ITS APPEAL, IS AGGRIEVED THAT CIT(APP EALS) HELD REFERENCE TO VALUATION OFFICER TO HAVE BEEN DONE BY THE A.O. WITHOUT REJECTING THE BOOKS OF ACCOUNTS. AS PER THE REVENU E, CIT(APPEALS) HAD RELIED ON THE DECISION OF HON'BLE APEX COURT IN THE CASE OF SARGAM CINEMA V. CIT (328 ITR 513), WHICH WAS NOT A PPLICABLE ON FACTS. AS AGAINST THIS, ASSESSEE IN HIS CROSS-APPE AL IS AGGRIEVED THAT CIT(APPEALS) DID NOT ALLOW HIS APPEAL IN FULL, DESP ITE COMING TO A CONCLUSION THAT THE REFERENCE TO DVO WAS DONE WITHO UT RECORDING ANY REASON. AS PER THE ASSESSEE, CIT(APPEALS) ERRED IN NOT FOLLOWING THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF K.K. SESHAIYER V. CIT (246 ITR 351). IN HIS CROSS-OBJEC TION, ASSESSEE SUPPORTS THE ORDER OF CIT(APPEALS) INSOFAR AS IT IS IN HIS FAVOUR. 3. FACTS APROPOS ARE THAT ASSESSEE, AN INDIVIDUAL E NGAGED IN THE BUSINESS OF PLYING BUSES, HAD FILED HIS RETURN FOR IMPUGNED I.T.A. NO. 455/MDS/13 I.T.A. NO. 133/MDS/13 C.O. NO. 68/MDS/13 3 ASSESSMENT YEAR ON 8.10.2009 DECLARING AN INCOME OF ` 13,58,310/-. ASSESSEE HAD PRODUCED BOOKS OF ACCOUNTS, BILLS, VOU CHERS, BANK STATEMENTS AS ALSO LEDGER COPY OF CAPITAL ACCOUNT, DETAILS OF ADVANCE RECEIVED FROM TENANTS, DETAILS OF BONUS PAYMENTS, T RAVELLING EXPENSES, UNSECURED LOANS, SECURED LOANS AND COPIES OF REGISTERED VALUERS REPORT, DURING THE COURSE OF ASSESSMENT PR OCEEDINGS BEFORE THE ASSESSING OFFICER. ASSESSEE HAD CONSTRUCTED A BUILDING AT PERUNDURAI AND CAPITAL EXPENDITURE WAS SHOWN BY THE ASSESSEE IN HIS BOOKS AS ` 1,10,73,150/-. ASSESSING OFFICER REFERRED FOR A V ALUATION TO DVO, WHO BY HIS REPORT DATED 12.12.2011, ESTIMAT ED THE COST OF CONSTRUCTION AT ` 1,32,68,776/-. THOUGH THE ASSESSEE EXPLAINED THAT A PART OF CONSTRUCTION OF COMPOUND WALL WAS COMPLET ED AFTER THE RELEVANT PREVIOUS YEAR, ASSESSING OFFICER DID NOT A CCEPT THIS. HE MADE AN ADDITION OF ` 21,95,626/- BEING THE DIFFERENCE AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF INCOME-T AX ACT, 1961 (IN SHORT 'THE ACT'). 4. IN HIS APPEAL BEFORE CIT(APPEALS), ARGUMENT OF T HE ASSESSEE WAS THAT WITHOUT REJECTING BOOKS OF ACCOUNTS, A REF ERENCE TO VALUATION OFFICER COULD NOT BE MADE. ACCORDING TO ASSESSEE, HE HAD MAINTAINED PROPER BOOKS OF ACCOUNTS REFLECTING THE COST OF I.T.A. NO. 455/MDS/13 I.T.A. NO. 133/MDS/13 C.O. NO. 68/MDS/13 4 CONSTRUCTION. ASSESSING OFFICER HAD REJECTED HIS E XPLANATION CONSIDERING NOT TO BE SATISFACTORY, WITHOUT GIVING ANY REASONS. RELYING ON THE DECISION OF HON'BLE JURISDICTIONAL H IGH COURT IN THE CASE OF K.K. SESHAIYER (SUPRA), ASSESSEE ARGUED THA T VALUATION DONE BY DVO COULD NOT BE SUBSTITUTED AGAINST THE BOOK RE SULTS. ASSESSEE ALSO RELIED ON THE DECISION OF HON'BLE APEX COURT I N THE CASE OF SARGAM CINEMA (SUPRA). 5. LD. CIT(APPEALS), AFTER CONSIDERING SUBMISSIONS OF THE ASSESSEE, NOTED THAT ASSESSING OFFICER HAD NOT REJE CTED THE BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE. AS PER LD. CIT( APPEALS), ASSESSING OFFICER ALSO HAD NOT CONSIDERED THE EXPEN DITURE DETAILS FILED BY THE ASSESSEE. ACCORDING TO LD. CIT(APPEAL S), CONSTRUCTION OF COMPOUND WALL WAS MADE SUBSEQUENT TO THE DATE OF VA LUATION DONE BY THE DVO. SIMILARLY, THERE WERE CONSTRUCTIONS OF SECOND FLOOR AND WATER TANK IN A SUBSEQUENT YEAR. THEREFORE, ACCORD ING TO HIM, THE COST OF CONSTRUCTION OF COMPOUND WALL ` 1,28,000/- AND WATER TANK ` 3,38,000/- HAD TO BE REDUCED FROM QUANTUM OF ADDITI ON MADE. LD. CIT(APPEALS) ALSO DIRECTED THE ASSESSING OFFICER TO GIVE A REDUCTION OF 8% FOR SELF SUPERVISION OF THE WORK. I.T.A. NO. 455/MDS/13 I.T.A. NO. 133/MDS/13 C.O. NO. 68/MDS/13 5 6. NOW BEFORE US, SHRI GURU BASHYAM, APPEARING FOR THE REVENUE, SUBMITTED THAT REFERENCE TO THE VALUATION OFFICER COULD BE MADE UNDER SECTION 142A OF THE ACT EVEN WITHOUT REJ ECTING THE BOOKS. ACCORDING TO LEARNED D.R., SECTION 142A WAS INTRODUCED BY THE ACT BY FINANCE ACT, 2004 WITH RETROSPECTIVE EFF ECT FROM 15.11.1972 AND WAS THEREFORE APPLICABLE FOR IMPUGNE D ASSESSMENT YEAR. THERE WAS NO PRE-CONDITION OF REJECTION OF B OOKS OF ACCOUNTS FOR A REFERENCE UNDER SECTION 142A OF THE ACT. 7. PER CONTRA, SHRI N.C. RAVIKRISHNAN, APPEARING FO R THE ASSESSEE, SUBMITTED THAT ONCE BOOKS OF ACCOUNTS WERE NOT REJE CTED, THERE COULD BE NO REFERENCE TO DVO IN VIEW OF THE DECISION OF H ON'BLE APEX COURT IN THE CASE OF SARGAM CINEMA (SUPRA). ACCORDING TO HIM, SAME VIEW WAS TAKEN BY HON'BLE JURISDICTIONAL HIGH COURT IN T HE CASE OF K.K. SESHAIYER (SUPRA) ALSO. 8. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. A PERUSAL OF ASSESSMENT ORDER CLEARLY SHOWS THAT TH E ASSESSEE HAD PRODUCED BOOKS OF ACCOUNTS IN SUPPORT OF EXPENDITUR E OF ` 1,10,73,150/- CLAIMED TO HAVE BEEN INCURRED BY HIM IN THE BUILDING CONSTRUCTED BY HIM IN PERUNDURAI. ASSESSING OFFICE R CLEARLY STATED THAT THE SUM OF ` 1,10,73,150/- CLAIMED AS TOTAL CAPITAL EXPENDITURE AS I.T.A. NO. 455/MDS/13 I.T.A. NO. 133/MDS/13 C.O. NO. 68/MDS/13 6 PER BOOKS. ASSESSING OFFICER HAS SPECIFICALLY MENT IONED THAT ASSESSEE ALSO PRODUCED IN SUPPORT A COPY OF REGISTE RED VALUERS REPORT AND VARIOUS DETAILS CALLED FOR BY HIM, IN AD DITION TO BOOKS, BILLS, VOUCHERS AND BANK STATEMENTS. IN OUR OPINION, WITH OUT ANY LACUNA BEING POINTED OUT IN SUCH BOOKS OF ACCOUNTS, THE VA LUE SHOWN IN THE BOOKS COULD NOT BE SUBSTITUTED BY AN ESTIMATED VALU E FIXED BY DEPARTMENTAL VALUATION OFFICER. THERE WAS NO MISTA KE OR ERROR POINTED OUT IN THE BOOKS WARRANTING A REJECTION THE REOF. THE ASSESSING OFFICER HAD NEVER REJECTED THE BOOKS OF A CCOUNTS. WHEN THE BOOKS WERE SUPPORTED BY BILLS AND VOUCHERS, SUB STITUTION OF FIGURES SHOWN THEREIN BY AN ESTIMATION FIXED BY DEP ARTMENTAL VALUATION OFFICER WOULD NOT BE FAIR. THIS VIEW HAS BEEN PROPOUNDED BY HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF K.K. SESHAIYER (SUPRA) AS WELL AS THAT OF HON'BLE APEX COURT IN TH E CASE OF SARGAM CINEMA (SUPRA). NO DOUBT, THESE DECISIONS WERE REN DERED CONSIDERING THE POSITION OF LAW BEFORE INTRODUCTION OF SECTION 142A OF THE ACT THROUGH FINANCE ACT, 2004 WITH RETROSPECTIV E EFFECT FROM 15.11.1972. BUT, HERE THE QUESTION IS NOT WHETHER THE REFERENCE WAS APPROPRIATE OR NOT, BUT THE QUESTION IS WHETHER THE VALUE REFLECTED IN THE BOOKS, WHICH WAS SUPPORTED BY BILLS AND VOUCHER S, COULD BE SUBSTITUTED BY AN ESTIMATED VALUE FIXED BY VALUATIO N OFFICER. IN OUR I.T.A. NO. 455/MDS/13 I.T.A. NO. 133/MDS/13 C.O. NO. 68/MDS/13 7 OPINION, UNLESS AND UNTIL IT SHOWED THAT THE BOOKS OF ACCOUNTS SUFFERED FROM SOME DEFECT, THE BOOK RESULTS CANNOT BE REJECTED. WE ARE, THEREFORE, OF THE OPINION THAT THE ADDITION MA DE BY THE A.O. CONSIDERING THE DVOS REPORT WAS NOT WARRANTED. SU CH ADDITION STANDS DELETED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED , CROSS APPEAL OF THE REVENUE IS DISMISSED AND CROSS-OBJECTION OF THE ASSESSEE BEING INFRUCTUOUS IS DISMISSED. ORDER WAS PRONOUNCED IN THE COURT ON THURSDAY, THE 26 TH OF SEPTEMBER, 2013, AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 26 TH SEPTEMBER, 2013. KRI. COPY TO: (1) ASSESSEE (2) ASSESSING OFFICER (3) CIT(A)-I, COIMBATORE (4) CIT-II, COIMBATORE (5) D.R. (6) GUARD FILE