M/s. N.Rajagopal Chettiar & Sons, Karur V. DCIT, Trichy

ITA 1483/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58116 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 14-03-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 05-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R B NAIK
• Assessee Lawyers: N QADIR HOSEYN
• Keywords: Unexplained investment
• Section: 69; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER] I.T.A.NO.1483/MDS/2011 ASSESSMENT YEAR : 2003-04 M/S N.RAJAGOPAL CHETTIAR & SONS PALANIMURUGAN JEWELLERY 240,242, JAWAHAR BAZAAR KARUR VS THE DY. CIT CIRCLE II TRICHY [PAN AAAFN4268K] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N. QADIR HOSEYN RESPONDENT BY : SHRI R.B.NAIK, CIT/DR DATE OF HEARING : 14-03-2012 DATE OF PRONOUNCEMENT : 16-03-2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSE SSEE AGAINST THE ORDER OF THE LD.CIT(A), TIRUCHIRAPALLI, DATED 11.3.2011. 2. THE APPEAL FILED BY THE ASSESSEE IS BARRED BY LIMITATION OF 86 DAYS. THE ASSESSEE HAS FILED AN AFFIDAVIT EXPLAIN ING THE REASONS FOR THE DELAY. THE LD.CIT/DR HAD NO OBJECTION TO CONDO NE THE DELAY IN FILING THE APPEAL BY THE ASSESSEE. WE, THEREFORE, CONDONE THE DELAY I.T.A.NO. 1483/11 :- 2 -: OF 86 DAYS IN FILING THE APPEAL BY THE ASSESSEE AN D ADMIT THE APPEAL FOR HEARING. 3. THE ASSESSEE HAS TAKEN SEVEN GROUNDS OF APPEA L. AT THE TIME OF HEARING, THE LD. A.R OF THE ASSESSEE ONLY A RGUED GROUND NO.6 OF THE APPEAL WHICH IS DIRECTED AGAINST THE ORDER O F THE LD.CIT(A) THAT THE LD.CIT(A) FAILED TO APPRECIATE THAT THE ASSES SEES BOOK RESULT AS FAR AS COST OF CONSTRUCTION WAS CONCERNED WAS IN AC CORDANCE WITH THE REGISTERED VALUER PWD RATES AND HENCE OUGHT TO HAVE HELD THAT THERE WAS NO CASE FOR ANY ADDITION AT ALL. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SING OFFICER FOUND THAT THE ASSESSEE-FIRM HAD CONSTRUCTED A NEW SHOWROOM BUILDING DURING THE PERIOD FINANCIAL YEAR 2000-01 T O FINANCIAL YEAR 2003-04. THE ASSESSEE HAS FILED RETURNS OF INCOME FOR THESE ASSESSMENT YEARS WHEREIN COST OF CONSTRUCTION WAS S HOWN AT A TOTAL AMOUNT OF ` 63,73,644/-. THE ASSESSING OFFICER REFERRED THE M ATTER TO THE DVO AND THE DVO DETERMINED THE COST OF CONSTRUC TION OF THE SHOWROOM AT ` 1,02,03,000/-. THE ASSESSEE HAD SHOWN THE COST O F CONSTRUCTION AS ` 8.86 LAKHS IN ASSESSMENT YEAR 2002-03 AND ` 36.26 LAKHS IN ASSESSMENT YEAR 2003-04 AND ` 18.61 LAKHS IN ASSESSMENT YEAR 2004-05. THE ASSESSING OFFICER DISTRIBUTED TH E COST OF CONSTRUCTION DETERMINED BY THE DVO PROPORTIONATELY ON THE BASIS OF ASSESSEES CLAIM AS ` 14.18 LAKHS IN ASSESSMENT YEAR 2002-03, ` 57.95 I.T.A.NO. 1483/11 :- 3 -: LAKHS IN ASSESSMENT YEAR 2003-04 AND ` 29.79 LAKHS IN ASSESSMENT YEAR 2004-05. THUS, THE ASSESSING OFFICER MADE AN ADDITION OF ` 21,76,000/- IN THE ASSESSMENT YEAR UNDER APPEAL AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. 5. ON APPEAL, THE LD.CIT(A) HELD THAT ON THE BASI S OF DETAILS AVAILABLE, IT CAN BE CONCLUDED THAT THE ASSESSEES SHOWROOM WAS CONSTRUCTED DURING THE PERIOD NOVEMBER 2001 TO OCT OBER 2003 AND DVO WAS WRONG IN ADOPTING THE CONSTRUCTION PERIOD A S MAY 2002 TO OCTOBER 2003. HE ALSO OBSERVED THAT THE ASSESSING OFFICER HAS ROUTINELY ADOPTED THE FIGURE FOR THE PURPOSES OF AS SESSMENT AND ALLOCATED THE AMOUNT ACCORDINGLY AND THEREFORE, THE DVOS ORDER AND ASSESSMENT ORDER SUFFER FROM FUNDAMENTAL DEFECTS. THE LD.CIT(A), THEREFORE, DIRECTED THE ASSESSING OFFICER TO ADOPT THE CORRECT CONSTRUCTION PERIOD ACCORDINGLY AS PER DETAILS SUBM ITTED BY THE ASSESSEE AND THE COST OF CONSTRUCTION VALUED BY THE DVO SHOULD BE MODIFIED ON THE BASIS OF THE PERIOD OF CONSTRUCTIO N AS PER COST OF INDEX APPLICABLE TAKING INTO ACCOUNT THE ACTUAL PER IOD OF CONSTRUCTION FROM NOVEMBER 2001 TO OCTOBER 2003 AS PER THE SUBMI SSIONS OF THE ASSESSEE AND THE MATERIALS AVAILABLE ON RECORD. 6. THE LD. A.R OF THE ASSESSEE SUBMITTED THAT IT W AS ARGUED BEFORE THE LOWER AUTHORITIES THAT THE STATE PWD RAT ES SHOULD BE ADOPTED WHILE TAKING THE VALUATION AS PER THE DVO A ND NOT THE CPWD I.T.A.NO. 1483/11 :- 4 -: RATES. FOR THIS, HE RELIED ON THE DECISION OF CHEN NAI B BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS M/S T.N.NANDAGOPAL & SONS IN I.T.A.NOS.177,178&179/MDS/2011, CONSOLIDATED ORDER DATED 21.6.2011 PASSED IN ASSESSMENT YEARS 2002-03, 2003-04 AND 200 4-05. HENCE, HE PRAYED THAT THE ORDER OF THE LD.CIT(A) SHOULD B E MODIFIED AND THE ASSESSING OFFICER SHOULD BE DIRECTED TO ADOPT THE S TATE PWD RATES WHILE CONSIDERING THE DVOS REPORT FOR THE PURPOSES OF DETERMINING THE UNEXPLAINED INVESTMENT OF THE ASSESSEE IN THE SHOW ROOM U/S 69 OF THE ACT. 7. THE LD.CIT/DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PE RUSING THE MATERIALS ON RECORD, WE FIND THAT THE TRIBUNAL IN T HE CASE OF M/S T.N.NANDAGOPAL & SONS (SUPRA) HAS HELD AS UNDER: 6. FURTHER IT IS NOTICED THAT CPWD RATES WOULD NOT BE APPLIED TO PLACES LIKE KARUR AND THAT LOCAL PWD RATES THAT ARE SUPPOSED TO BE APPLIED. THE DVO HAS ALSO IN HIS REPORT IN PARA 5 ACCEPTED THAT THE PLINTH AREA RATES PREPARED BY THE TAMILNADU STATE PWD AND ALSO BY THE GOVT. OF INDIA ARE AVAILABLE. ONCE THE PWD RATES A RE AVAILABLE AND THE AREA FALLS WITHIN THE PWD RATE, T HEN OBVIOUSLY IT IS THE PWD RATE THAT SHOULD BE APPLIED AND NOT THE CPWD RATE. IT IS NOTICED THAT THE LEARNED CIT(A) HAS ALSO GRANTED RELIEF TO THE ASSESSEE BY ESTIMAT ING THE DISCOUNT OF 10% FROM THE CPWD RATES TO ARRIVE AT TH E PWD RATES AND HAS ALSO GIVEN 7.5% TOWARDS SELF- SUPERVISION. . I.T.A.NO. 1483/11 :- 5 -: 9. THE LD.CIT/DR COULD NOT POINT OUT ANY GOOD AN D JUSTIFIABLE REASON NOT TO FOLLOW THE ABOVE QUOTED ORDER OF THE TRIBUNAL. 10. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE QUO TED ORDER OF THE TRIBUNAL, WE MODIFY THE ORDER OF THE LD.CIT(A) AND DIRECT THE ASSESSING OFFICER TO ADOPT STATE PWD RATES WHILE CO NSIDERING THE DVOS REPORT TO DETERMINE THE UNEXPLAINED INVESTMEN T OF THE ASSESSEE IN THE CONSTRUCTION OF THE SHOWROOM U/S 6 9 OF THE ACT. THUS, THE GROUND OF APPEAL IS PARTLY ALLOWED. 11. NO OTHER GROUND OR POINT WAS PRESSED OR ARGUED BY THE LD. A.R OF THE ASSESSEE. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 -03-2012. SD/- SD/- (GEORGE MATHAN) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 16 TH MARCH, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR