THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, GUNTUR V. SIVA CITY CENTER PRIVATE LIMITED, GUNTUR

ITA 148/VIZ/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9540 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-10-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 04-08-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Opportunity of being heard; Valuation report
• Section: 148; 132; 2; 260A; 143(2)

Judgement Text

आयकरअपीलीयअधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री द ु व्वूरुआर एल रेड्डी, न्याधयकसदस्य एिं श्री एस बालाकृ ष्णन, लेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLEJUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A.No.148/Viz/2022 (निर्धारण वर्ा/ Assessment Year : 2017-18) Dy.Commissioner of Income Tax Central Circle-2 Guntur Vs. M/s Siva City Centre Private Limited D.No.4-5-8/12, Lakshmi Nilayam 1 st Lane, Navabharat Nagar Ring Road, Guntur [PAN : AAUCS6304E] (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) Cross Objection No.15/Viz/2022 (Arising out of I.T.A.No.148/Viz/2022) (निर्धारणवर्ा/ Assessment Year : 2017-18) M/s Siva City Centre Private Limited D.No.4-5-8/12, Lakshmi Nilayam 1 st Lane, Navabharat Nagar Ring Road, Guntur [PAN : AAUCS6304E] Vs. Dy.Commissioner of Income Tax Central Circle-2 Guntur (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) राजस्वकीओर से/ Revenue by : Shri ON Hari Prasada Rao, DR निर्ााररतीकीओर से/ Assessee by : Shri M.V.Prasad, AR सुिवधई की तधरीख/ Date of Hearing : 19.10.2022 घोर्णध की तधरीख/Date of Pronouncement : 28.10.2022 O R D E R Per Shri S.Balakrishnan, Accountant Member : This appeal is filed by the revenue against the order of the Commissioner of Income Tax(Appeals) [in short, [CIT(A)], Visakhapatnam- 2 ITA No.148/Viz/2022 & CO No.15/Viz/2022, A.Y.2017-18 M/s Siva City Centre Pvt. Ltd, Guntur 3in DIN & Order No.ITBA/APL/S/250/2022-23/1042934411(1) dated 04.05.2022 for the Assessment Year (A.Y.)2017-18 and the cross objections are filed by the assessee in support of the order of the Ld.CIT(A). 2. Brief facts of the case are that the assessee company, incorporated with the object of constructing commercial complexes and to derive rental income from such commercial complexes, filed it’s return of income for the A.Y.2017-18 on 30.03.2018, declaring NIL income. A search and seizure operation u/s 132 of the Income Tax Act, 1961 (in short ‘Act’) was conducted on 21.12.2015 in the group cases of Sri Alla Siva Reddy, Guntur. Based on the evidences found in seized material, the Assessing Officer (AO), considering the cost of construction shown by the assessee company opined that the books of account was not reflecting the actual expenditure incurred by the company towards the construction of the seven storied multiplex. In order to ascertain the actual expenditure of the construction of the above building, the case was referred to Departmental Valuation Officer (DVO) on 12.09.2017 as per provisions of 142A of the I.T.Act. The DVO furnished the report dt 30.05.2018 on 14.06.2018, determining the cost of construction at Rs.19,84,03,000/-. The DVO provided the cost of construction of the building assessment year-wise, as detailed in the order of the Ld.AO. Subsequently, notice u/s 148 was issued on the assessee on 3 ITA No.148/Viz/2022 & CO No.15/Viz/2022, A.Y.2017-18 M/s Siva City Centre Pvt. Ltd, Guntur 08.01.2021 and served on 12.01.2021. In response, the assessee company filed it’s return of income on 19.01.2021, declaring total loss of Rs.1,72,55,974/-. The assessee company also filed a letter seeking reasons for reopening u/s 148 of the Act. Notice u/s 143(2) was issued on 21.01.2021 along with reasons for reopening of assessment and notice u/s 142(1) was issued to the assessee on 10.01.2021. In response to the above notices, apart from submitting information, the assessee company raised certain objections in reopening of assessment u/s 148 of the Act. Further, the assessee company also contested that the valuation report submitted by the DVO u/s 142A is not technically valid and should be considered as non-est, since the DVO submitted the report on 14.06.2018, which is beyond the prescribed time limit u/s 142A of the Act. The Ld.AO rejecting the submissions made by the assessee considered the report of the DVO and assessed the total income at Rs.1,32,66,324/-. 3. Aggrieved by the order of the Ld.AO, the assessee filed appeal before the CIT(A). The Ld.CIT(A) considering the provisions of section 142A of the Act allowed the appeal of the assessee. 4. Aggrieved by the order of the Ld.CIT(A), the revenue is in appeal before us. The Ld.DR submitted that the Ld.AO has rightly considered the valuation report and pleaded that the order of the Ld.AO be upheld. The 4 ITA No.148/Viz/2022 & CO No.15/Viz/2022, A.Y.2017-18 M/s Siva City Centre Pvt. Ltd, Guntur Ld.DR could not counter the provisions of the Act, based on which the Ld.CIT(A) allowed the appeal. 5. Per contra, the Ld.AR relied on the order of the Ld.CIT(A) and pleaded that the Ld.CIT(A) has acted in accordance with law and hence, the order of the Ld.CIT(A) be upheld. 6. We have heard both the parties, perused the material available on record and orders of the authorities below. The crux of the issue raised by the revenue as culled out from the grounds of appeal is with respect to applicability of provisions of section 142A(6) of the Act. For the sake of convenience, we reproduce below section 142A(6) of the Act. Estimation of value of assets by Valuation Officer. 142A. (1) The Assessing Officer may, for the purposes of assessment or reassessment, make a reference to a Valuation Officer to estimate the value, including fair market value, of any asset, property or investment and submit a copy of report to him. (2) The Assessing Officer may make a reference to the Valuation Officer under sub-section (1) whether or not he is satisfied about the correctness or completeness of the accounts of the assessee. (3) The Valuation Officer, on a reference made under sub-section (1), shall, for the purpose of estimating the value of the asset, property or investment, have all the powers that he has under section 38A of the Wealth-tax Act, 1957 (27 of 1957). (4) The Valuation Officer shall, estimate the value of the asset, property or investment after taking into account such evidence as the assessee may produce and any other evidence in his possession gathered, after giving an opportunity of being heard to the assessee. (5) The Valuation Officer may estimate the value of the asset, property or investment to the best of his judgment, if the assessee does not co-operate or comply with his directions. 5 ITA No.148/Viz/2022 & CO No.15/Viz/2022, A.Y.2017-18 M/s Siva City Centre Pvt. Ltd, Guntur (6) The Valuation Officer shall send a copy of the report of the estimate made under sub-section (4) or sub-section (5), as the case may be, to the Assessing Officer and the assessee, within a period of six months from the end of the month in which a reference is made under sub-section (1). (7) The Assessing Officer may, on receipt of the report from the Valuation Officer, and after giving the assessee an opportunity of being heard, take into account such report in making the assessment or reassessment. Explanation.—In this section, "Valuation Officer" has the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). On plain reading of the above section, it is very clear that the valuation officer shall send a copy of the valuation report to the AO within the period of six months from the end of the month in which reference was made under sub section (1) of section 142A of the Act. However, in this case, the DVO has submitted his report on 14.06.2018 based on the reference made by the AO on 12.09.2017. The due date of the report of the valuation officer is ending on March 2018. But the DVO has submitted the report with the delay of 3 months, beyond the due date prescribed under the Act. The Ld.DR also could not contest the argument of the Ld.AR that the DVO’s valuation report is non-est in the eyes of law, since it is submitted beyond the prescribed due date u/s 142A(6) of the Act. The AO has merely rejected the submissions of the Ld.AR, stating that the department has filed the appeal u/s 260A of the Act before the Hon’ble 6 ITA No.148/Viz/2022 & CO No.15/Viz/2022, A.Y.2017-18 M/s Siva City Centre Pvt. Ltd, Guntur High Court of Andhra Pradesh, against the judgement given by Hon’ble ITAT in ITA No.247/Viz/2019 dated 06.09.2019. It is observed that there is no material placed before us regarding any stay being granted on the operation of the order of the Hon’ble ITAT. In the absence of the same pending disposal of the appeal by the Hon’ble High Court of Andhra Pradesh, the decision of Hon’ble ITAT in ITA No.247/Viz/2019 is valid in law as on date. We are therefore, in concurrence with the Ld.CIT(A). In view of the above observations, we are of the considered view that the Ld.CIT(A) has rightly considered the provisions of the Act, hence, no interference is required in the order of the Ld.CIT(A). Accordingly, the appeal of the revenue is dismissed. The assessee filed cross objections in support of the order of the Ld. CIT(A). Since the appeal of the revenue is dismissed, the cross objections filed by the assessee will become infructuous, hence, dismissed. 9. In the result, the appeal of the revenue as well as the cross objections of the assessee are dismissed. 7 ITA No.148/Viz/2022 & CO No.15/Viz/2022, A.Y.2017-18 M/s Siva City Centre Pvt. Ltd, Guntur Order pronounced in the open court on 28 th October, 2022. Sd/- Sd/- (द ु व्वूरुआर.एल रेड्डी) (एस बालाकृ ष्णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) न्याधयकसदस्य/JUDICIAL MEMBERलेखासदस्य/ACCOUNTANT MEMBER Dated : 28.10.2022 L.Rama, SPS आदेश की प्रनतनिनि अग्रेनषत/Copy of the order forwarded to:- 1. रधजस्व/The Revenue –Dy.Commissioner of Income Tax, Central Circle-2, 3 rd Floor, Raj Kamal Complex, Lakshmipuram Main Road, Guntur 2.निर्धाऩरती/ The Assessee–M/s Siva City Centre Private Limited, D.No.4-5- 8/12, Lakshmi Nilayam, 1 st Lane, Navabharat Nagar, Ring Road, Guntur 3. The Principal Commissioner of Income Tax (Central), Visakhapatnam 4. The Commissioner of Income Tax (Appeals)-3, Visakhapatnam 5.नवभधगीय प्रनतनिनर्, आयकर अपीलीय अनर्करण, नवशधखधपटणम/ DR,ITAT,Visakhapatnam 6.गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam