ITO, MAKRANA V. Ikkramuddin Rander, MAKRANA

ITA 152/JODH/2014

• Counselvise Citation: 15223314 RSA 2014
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 07-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AND CROSS OBJECTION S CO
• Keywords: Reopening of assessment; Unexplained investment; Valuation report; Reason to believe; Reassessment proceedings
• Section: 147; 148; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA , JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO S . 152 & 1 5 3 / JU/ 20 1 4 ASSESSMENT YEAR S : 2007 - 08 & 200 8 - 0 9 THE INCOME - TAX OFFICER VS. SHRI IKK RAMUDDIN RANDER WARD - 1 S/O SHRI RAHIM BUX MAKRANA NEAR MODI MASJID, MAKRANA PAN NO. AFTPR 0795 R (APPELLANT) (RESPONDENT) CO NO S . 1 3 & 14/ JU /201 4 A/O ITA NO S . 152 & 1 5 3 / JU/20 1 4 ASSESSMENT YEAR S : 2007 - 08 AND 2008 - 09 SHRI IKKRAMUDDIN RANDER VS. THE INCOME - TAX OFFICER S/O SHRI RAHIM BUX WARD - 3 NEAR MODI MASJID MAKRANA MAKRANA PAN NO. AFTPR 0795 R (APPELLANT) (RESPONDENT) A SSESSEE B Y : SHRI U.C. JAIN, SHRI RA JENDRA JAIN DEPARTMENT B Y : SHRI N.A. JOSHI , DR DATE OF H EARING : 24 . 0 7 .201 4 DATE OF PRONOUNCEMENT : 30. 0 7 . 201 4 2 ORDER PER HARI OM MARATHA , J .M. TH ESE TWO APPEAL S BY THE REVENUE AND CROSS OBJECTION S [CO] BY THE ASSESSEE ARE DIRECTED A GAINS T THE SEPARATE ORDER S OF THE CIT (A) , JODHPUR DATED 13 . 0 1 .20 1 4 AND 31 - 12 - 2013 RESPECTIVELY PERTAINING TO A.Y S 200 7 - 08 AND 2008 - 09 . 2. BRIEFLY STATED, THE FACTS OF THE CASE AS OBTAINED FROM THE LD. CIT(A)S ORDER ARE THAT WHILE COMPLETING THE ASSESSMENT FOR THE AY 2009 - 10, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE FAILED TO FURNISH PROPER EVIDENCES IN SHAPE OF VOUCHERS AND BILLS TOWARDS CONSTRUCTION ACCOUNT AND ACCORDINGLY, REJECTED THE BOOKS OF ACCOUNT U/S 145(3). THEREAFTER, THE ASSESSING OFFICER REFERRED THE MATTER TO AVO AND AFTER RECEIVING THE VALUATION REPORT, HE, AFTER RECORDING THE REASONS, ISSUED NOTICE U/S 148 FOR THE AY 2007 - 08 ON ACCOUNT OF UNDER VALUATION OF THE COST OF CONSTRUCTION BY RS. 8,14,684/ - . IN RESPONSE, THE ASSESSEE REQUESTED TO TREAT THE RETURN ORIGINALLY FILED AS THE RETURN SUBMITTED IN RESPONSE TO NOTICE U/S 148 AND ALSO RAISED OBJECTION AGAINST THE ISSUANCE OF NOTICE U/S 148 WHICH WAS DISPOSED OFF BY THE ASSESSING OFFICER. AS PER THE AVOS VALUATION REPORT DATED 10 - 10 - 2011 (OBTAINED DURING THE ASSESSMENT PROCEEDING 3 AY 2009 - 10), ESTIMATION OF INVESTMENT TOWARDS CONSTRUCTION IN HOUSE PROPERTY WAS AS UNDER: - ON THE GROUND THAT THE ASSESSEE FAILED TO SHOW CA USE AS TO HOW THE VALUATION DETERMINED BY THE AVO WAS NOT CORRECT, THE ASSESSING OFFICER DETERMINED THE COST OF CONSTRUCTION ON THE BASIS OF THIS AVO REPORT, ACCORDING TO WHICH THE COST OF CONSTRUCTION DURING THE YEAR UNDER CONSIDERATION COMES TO RS. 15,29 ,006/ - AS AGAINST RS. 7,14,322/ - DECLARED BY THE ASSESSEE. THE ASSESSING OFFICER ACCORDINGLY, MADE THE ADDITION OF RS. 8,14,684/ - U/S 69B TREATING IT UNEXPLAINED INVESTMENT TOWARDS CONSTRUCTION OF HOUSE PROPERTY. APART FROM THE ABOVE ADDITION OF RS. 8,14, 684/ - , THE ASSESSING OFFICER ALSO DISALLOWED A SUM OF RS. 3,80,210/ - OUT OF EXPENDITURE OF RS. 9,50,527/ - DEBITED TO TRADING ACCOUNT. ANOTHER ADDITION MADE BY THE ASSESSING OFFICER RESULTED FROM DISALLOWANCE OF A SUM OF RS. 2,28,800/ - U/S 40A(3). HE ALSO D ISALLOWED A SUM OF AY COST OF CONSTRUCTION OF THE BUILDING / HOUSE DECLARED BY THE ASSESSEE ESTIMATED BY AVO DIFFERENCE 2007 - 08 RS. 7,14 ,322/ - RS. 15,29,006/ - RS. 8,14,684/ - 2008 - 09 RS. 11,40,321/ - RS. 24,40,857/ - RS. 13,00,536/ - 2009 - 10 RS. 6,26,730/ - RS. 13,41,515/ - RS. 7,14,585/ - TOTAL RS. 24,81,383/ - RS. 53,11,400/ - RS. 28,30,017/ - 4 RS. 8,751/ - FROM INDIRECT EXPENSES AND FURTHER A SUM OF RS. 9,194/ - OUT OF TRAVELING EXPENSES. 3. SINCE THE LD. CIT(A) DELETED THESE ADDITIONS, THE ASSESSEE HAS FILED CROSS OBJECTIONS RAISING THE ISSUE AGAINST REOPENING OF ASSESSMENT OR DER U/S 147 R.W.S 148 OF THE ACT. IT WAS ARGUED THAT THE REASONS GIVEN FOR REOPENING IN BOTH THE YEARS IS THE AVOS REPORT. SINCE THE AVO/DVOS REPORT CANNOT AMOUNT TO NEW EVIDENCE BUT IT IS ONLY AN INFORMATION, IT HAS BEEN SUBMITTED THAT THE REASSESSMEN T PROCEEDINGS ARE BAD IN LAW AND ON THE BASIS OF AVO/DVOS REPORT, REOPENING U/S 147 R.W.S 148 OF THE ACT IS NOR PERMISSIBLE IN VIEW OF THE DECISION OF THE HON'BLE SUPREME HIGH COURT RENDERED IN THE CASE OF ACIT VS. DHARIYA CONSTRUCTION REPORTED IN 328 ITR 513 [COPY ENCLOSED] IN WHICH IT HAS BEEN HELD THAT THE REASON TO BELIEVE BASED ON DVOS REPORT CANNOT BE TREATED AS INFORMATION FOR THE PURPOSE OF REOPENING OF ASSESSMENT U/S 147 OF THE ACT. HENCE THE DEPARTMENT IS NOT ENTITLED TO REOPEN THE ASSESSMENT O RDER. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE O F MEENA DEVI MANSINGHKA [2008] 3 03 ITR 351 HOLDING THAT THE DVOS 5 REPORT CANNOT REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT FOR THE PURPOSE OF INITIATING REAS SESSMENT AND THEREFORE, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT REASSESSMENT PROCEEDINGS INITIATED ON THE BASIS OF DVOS REPORT WERE INVALID AB INITIO MORE SO WHEN IT WAS FOUND THAT THE DVOS REPORT SUFFERED FROM VARIOUS DEFECTS AND MISTAKES. RELIANCE WAS ALSO PLACED ON THE DECISION OF THIS BENCH IN THE CASE OF ITO VS. ORBIT INN RESORT IN ITA NO. 424/JU/2013 ORDER DATED 10.12.2013. 4. ON THE OTHER HAND, THE LD. D.R RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 5. AFTER CONSIDERING THE RIVAL SUBMISSI ONS WE FIND FORCE IN THE SUBMISSION OF THE LD. A.R THAT SINCE THE AVO/DVOS REPORT CANNOT AMOUNT TO NEW EVIDENCE BUT IT IS ONLY AN INFORMATION, THE REASSESSMENT PROCEEDINGS ARE BAD IN LAW AND ON THE BASIS OF AVO/DVOS REPORT, REOPENING U/S 147 R.W.S 148 OF THE ACT IS NOT PERMISSIBLE IN VIEW OF THE DECISION OF THE HON'BLE SUPREME HIGH COURT RENDERED IN THE CASE OF ACIT VS. DHARIYA CONSTRUCTION REPORTED IN 328 ITR 513 [COPY 6 ENCLOSED] IN WHICH IT HAS BEEN HELD THAT THE REASON TO BELIEVE BASED ON DVOS REPORT C ANNOT BE TREATED AS INFORMATION FOR THE PURPOSE OF REOPENING OF ASSESSMENT U/S 147 OF THE ACT. HENCE THE DEPARTMENT IS NOT ENTITLED TO REOPEN THE ASSESSMENT ORDER. ACCORDINGLY, WE QUASH BOTH THE ASSESSMENT ORDERS FOR A.YS. 2007 - 08 AND 2008 - 09 AND ALLOW T HE CROSS OBJECTIONS. 6 . IN THE RESULT, THE APPEAL S OF THE REVENUE ARE DISMISSED WHEREAS THE CROSS OBJECTION S OF THE ASSESSEE STAND ALLOWED . ORDER PRON OUNCED IN THE COURT ON 30 TH JU LY , 2014. SD/ - SD/ - (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEM B ER DATED : 30 TH JU LY , 201 4 VL/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR SENIOR PRIVATE SECRETARY ITAT, JODHPUR