C.S.Daniel Proprietor, Palakkad V. DCIT, Kottayam

ITA 154/COCH/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64726 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-08-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 28-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JOSEPH MATHEW
• Assessee Lawyers: A S BINDHU
• Keywords: Question of law; Valuation report; Block assessment
• Section: 153A

Judgement Text

1 ITAS NO.154 & 155/COCH/2011 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N(AM) I.T.AS NO. 154 & 155/COCH/2011 (ASSESSMENT YEARS 2006-07 & 2007-08) C.S. DANIEL VS DY.CI.T., CENT.CIR PROP. DAN & CO KOTTAYAM COLLEGE ROAD, PATHANAMTHITTA PAN : AFJPS6562D APPELLANT BY : SHRI JOSEPH MATHEW ASSESSEE BY : MS. A.S. BINDHU DATE OF HEARING : 06/08/2012 DATE OF PRONOUNCEMENT : 10/08/2012 O R D E R PER N.R.S. GANESAN (JM) BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGAI NST THE TWO INDEPENDENT ORDERS OF C.I.T.(A) FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN BOTH THE APPEALS WE HEARD THEM TOGETHER AND DISPOSE OF THE SAME BY THIS COMMON ORDER. 2. THE FIRST GROUND OF APPEAL FOR BOTH THE ASSESSME NT YEARS IS ESTIMATION OF HOUSEHOLD EXPENSES. THE ASSESSING OFFICER MADE ADD ITION OF RS.2,80,000 FOR THE ASSESSMENT YEAR 2006-07 AND RS.1,80,000 FOR THE ASSE SSMENT YEAR 2007-08 ON ESTIMATE BASIS TO COVER UP THE DEFICIENCY IN PERSON AL AND HOUSEHOLD EXPENDITURE. 3. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE HAS ALREADY ACCOUNTED FOR RS.2 LAKHS FOR ASSESSMENT YEAR 2006-07 AND RS.3 LAKHS FOR ASSESSMENT YEAR 2007- 08. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT T HE ASSESSEE FAMILY CONSISTS OF ASSESSEE, HIS WIFE AND THREE CHILDREN. THE ASSESSEE OWNS 2.2 ACRES OF AGRICULTURAL 2 ITAS NO.154 & 155/COCH/2011 LAND NEARBY HIS RESIDENTIAL HOUSE. THERE ARE FOUR SERVANTS AND TWO MAID SERVANTS EMPLOYED FOR AGRICULTURAL OPERATIONS. NO MATERIAL WAS AVAILABLE ON RECORD TO SHOW THAT THE ASSESSEE HAS MADE ANY DONATION OR ANY OTHER EXPENDITURE. THEREFORE, THE ESTIMATION MADE BY THE ASSESSING OFF ICER IS ON THE HIGHER SIDE. 4. ON THE CONTRARY, MS. A.S. BINDHU, THE LD.DR SUBM ITTED THAT THE ASSESSEE IS LIVING IN A HOUSE WHERE SIX AIR CONDITION UNITS ARE INSTALLED WITH A STAND-BY GENERATOR FOR UNINTERRUPTED SUPPLY OF POWER. THE M ONTHLY ELECTRICITY EXPENSES IS FOUND TO BE TO THE EXTENT OF RS.3,500. THE ASSESEE HAS GOT FOUR REGULAR SERVANTS AT THE RESIDENCE ON PAYMENT OF RS.4,000 PER MONTH. THE ASSESSEE HAS ALSO EMPLOYED TWO MAID SERVANTS REGULARLY. THE CHILDREN WERE ADMITTED IN THE ELITE SCHOOL ON PAYMENT OF HUGE DONATIONS. THE ASSESSEE AND HIS FAMILY WAS LIVING LUXURIOUS LIFE. THEREFORE, BY CONSIDERING ALL THES E MATERIAL FACTS, THE ASSESSING OFFICER FOUND THAT THE EXPENDITURE SHOWN BY THE ASS ESSEE AT RS.2 LAKHS FOR THE ASSESSMENT YEAR 2006-07 AND RS.3 LAKHS FOR THE ASSES SMENT YEAR 2007-08 IS VERY LOW. THEREFORE, THE ASSESSING OFFICER HAS ESTIMATE D THE EXPENDITURE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RECORDS. THE ASSESSMENTS ARE MADE U/S 153A AFTER A SEARCH U/ S 132A OF THE ACT. IN VIEW OF THE LANGUAGE EMPLOYED IN SECTION 153A THE ASSESS ING OFFICER HAS TO COMPUTE THE TAXABLE INCOME ON THE BASIS OF THE MATERIAL AVA ILABLE ON RECORD INCLUDING THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N. IN THIS CASE, ADMITTEDLY, IT WAS FOUND THAT THE ASSESSEE IS LIVING IN A HOUSE WH ERE SIX AIR CONDITIONERS WERE INSTALLED WITH A GENERATOR BACK UP. THE ASSESSEE HA S EMPLOYED FOUR SERVANTS REGULARLY BESIDES TWO MAID SERVANTS. THOUGH THE AS SESSEE CLAIMS THAT SIX PEOPLE WERE EMPLOYED FOR AGRICULTURAL OPERATION, THE FACT REMAINS IS THAT THE ASSESSEE OWNS ONLY 2.2 ACRES OF AGRICULTURAL LAND. IN VIEW OF THE MATERIAL FOUND IN THE HOUSE OF THE ASSESSEE AT THE TIME OF SEARCH, THE LI FE STYLE OF THE ASSESSEE, THE NUMBER OF SERVANTS, THE MAINTENANCE EXPENDITURE FO R THE AIR CONDITIONERS AND THE GENERATOR, THIS TRIBUNAL IS OF THE OPINION THAT THE ASSESSING OFFICER HAS RIGHTLY ESTIMATED THE EXPENDITURE FOR HOUSEHOLD WHICH WAS R IGHTLY CONFIRMED BY THE COMMISSIONER OF INCOME-TAX(A). THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 3 ITAS NO.154 & 155/COCH/2011 6. THE NEXT GROUND OF APPEAL FOR THE ASSESSMENT YEA R 2006-07 IS ESTIMATED ADDITION OF RS.22,10,000 FOR THE EXTENSION AND RENO VATION OF THE RESIDENTIAL BUILDING. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTE D THAT THERE WAS NO MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. THERE FORE, THERE CANNOT BE ANY ADDITION ON ESTIMATE BASIS IN THE BLOCK ASSESSMENT. THE LD.REPRESENTATIVE PLACED HIS RELIANCE ON THE JUDGMENT OF THE PUNJAB & HARYAN A HIGH COURT IN COMMISSIONER OF INCOME-TAX VS N.S. BAKSHI (2010) 325 ITR 607 (P&H). THE LD.REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS A LSO FILED THE REGISTERED VALUERS REPORT. THE LD.REPRESENTATIVE FURTHER SUB MITTED THAT THE VALUATION OFFICER OF THE DEPARTMENT HAS NOT TAKEN INTO CONSIDE RATION THE EXISTING HOUSE. ACCORDING TO THE LD.REPRESENTATIVE, THERE WAS A HOU SE IN EXISTENCE WHICH WAS CERTIFIED BY PRAMADAM GRAMA PANCHAYAT AND THE ASSESS EE WAS ALSO PAYING HOUSE TAX. SINCE THIS FACT WAS NOT CONSIDERED, ACCORDING TO THE LD.REPRESENTATIVE, THE ESTIMATION OF THE EXPENDITURE FOR RENOVATION AND EX TENSION IS NOT CORRECT. ACCORDING TO THE LD.REPRESENTATIVE, THE VALUATION O FFICER HAS NOT CONSIDERED THE FACTS CORRECTLY. ONLY ONE PORTION OF THE HOUSE WAS CONSTRUCTED DURING THE YEAR UNDER CONSIDERATION. THE MAIN PORTION WAS CONSTRUC TED DURING THE ASSESSMENT YEAR 1995-96. THEREFORE, ACCORDING TO THE LD.REPRES ENTATIVE, THE ADDITION MADE BY THE LOWER AUTHORITY IS NOT JUSTIFIED. 7. WE HEARD MS. A.S. BINDHU, THE LD.DR ALSO. THE L D.DR POINTED OUT THAT THE VALUATION OFFICER AND THE ASSESSING OFFICER, AFTER CONSIDERING THE OBJECTIONS RAISED BY THE ASSESSEE HAS ESTIMATED THE COST OF CONSTRUCT ION ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. THE LD.DR SUBMITTED THAT THE EXISTENCE OF THE HOUSE WAS ALSO TAKEN INTO CONSIDERATION AND THEREAFT ER THE MATERIAL USED BY THE ASSESSEE FOR CONSTRUCTION AND OTHER EVIDENCE AVAILA BLE ON RECORD WAS TAKEN INTO CONSIDERATION FOR THE PURPOSE OF ESTIMATING THE COS T OF CONSTRUCTION. THEREFORE, IT IS NOT CORRECT TO SAY THAT THERE IS NO MATERIAL AVAILABLE ON RECORD FOR THE PURPOSE OF ESTIMATION OF THE COST OF CONSTRUCTION. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. ADMITTEDLY, THE ASSESSEE HAS EXTENDED AND RENOVATED THE EXISTING HOUSE. THIS FACT WAS TAKEN INTO CONSIDERATION BY THE VALUAT ION OFFICER AS WELL AS THE ASSESSING OFFICER. THEREFORE, IT IS NOT CORRECT TO SAY THAT THE VALUATION OFFICER HAS 4 ITAS NO.154 & 155/COCH/2011 NOT TAKEN INTO CONSIDERATION THE EXISTENCE OF THE EX ISTING HOUSE AND THE CERTIFICATE ISSUED BY THE PRAMADAM GRAM PANCHAYAT. THE FACT REMAINS IS THAT THE ASSESSEE EXTENDED AND RENOVATED THE EXISTING HOUSE. THE QUESTION ARISES FOR CONSIDERATION IS THE COST OF EXTENSION AND RENOVATI ON OF THE EXISTING HOUSE. THE DEPARTMENTAL VALUATION OFFICER AFTER TAKING INTO CON SIDERATION ALL THE MATERIAL FACTS INCLUDING THE NATURE OF THE WOOD AND OTHER MA TERIALS ESTIMATED THE COST OF CONSTRUCTION. THE COMMISSIONER OF INCOME-TAX(A) AFT ER CONSIDERING THE ENTIRE FACTS ON RECORD SUSTAINED THE ADDITION OF RS. 22,10 ,000 MADE BY THE ASSESSING OFFICER. THE ONLY CONTENTION OF THE ASSESSEE BEFOR E THIS TRIBUNAL IS THAT THERE IS NO MATERIAL FOUND DURING THE COURSE OF SEARCH OPERA TION. THE FACT REMAINS IS THAT THE EXTENSION AND THE RENOVATION OF THE HOUSE WAS F OUND DURING THE COURSE OF SEARCH OPERATION ITSELF. THEREFORE, IT IS THE BOUN DEN DUTY OF THE ASSESSEE TO EXPLAIN THE ACTUAL EXPENDITURE INCURRED FOR RENOVAT ION AND EXTENSION OF THE HOUSE. THEREFORE, IT IS NOT CORRECT TO SAY THAT TH ERE FOUND NO MATERIAL DURING THE COURSE OF SEARCH OPERATION. 9. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF THE PUNJAB & HARYANA HIGH COURT IN COMMISSIONER OF INCOME-TAX VS N.S. BAKSHI (SUPRA). IN THE CASE BEFORE THE PUNJAB & HARYANA HIGH COURT THE DIF FERENCE IN VALUE AS ESTIMATED BY THE DISTRICT VALUATION OFFICER AND THE VALUE DEC LARED BY THE ASSESSING OFFICER WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL BY THE ASSESSEE THE COMMISSIONER OF INCOME-TAX(A) DELETED THE ADDITION O N THE GROUND THAT THE REPORT OF THE VALUATION OFFICER IS NOT RELIABLE AND THE ADDITION BASED ON THAT VALUATION WAS DELETED. THIS FINDING OF THE COMMISS IONER OF INCOME-TAX(A) REGARDING THE RELIABILITY OF THE VALUATION REPORT W AS NOT CHALLENGED BY THE REVENUE BEFORE THE TRIBUNAL. IN THESE FACTUAL CIRC UMSTANCES, THE PUNJAB & HARYANA HIGH COURT FOUND THAT IT MAY NOT BE NECESSA RY TO ANSWER THE QUESTION OF LAW RAISED BY THE REVENUE IN THAT APPEAL. IN THE C ASE BEFORE US THE COMMISSIONER OF INCOME-TAX(A) FOUND THAT THE VALUATION REPORT IS RELIABLE ONE; THEREFORE, THE JUDGMENT OF THE PUNJAB & HARYANA HIGH COURT MAY NOT BE OF ANY ASSISTANCE TO THE REVENUE. THE COMMISSIONER OF INCOME-TAX(A), AFT ER CONSIDERING THE DVOS REPORT FOUND THAT THE VALUATION WAS MADE AS PER THE GUIDELINES LAID DOWN FOR VALUING THE IMMOVABLE PROPERTY BY THE DIRECTORATE O F INCOME-TAX. THE DVO AND THE ASSESSING OFFICER HAS PROVIDED SUFFICIENT OPPOR TUNITY TO THE ASSESSEE. THE 5 ITAS NO.154 & 155/COCH/2011 ASSESSEE ALSO HAD FULL OPPORTUNITY BEFORE THE LOWE R AUTHORITIES TO EXPLAIN THE FLAW, IF ANY, IN THE VALUATION REPORT. THE COMMISS IONER OF INCOME-TAX(A) AFTER CONSIDERING THE VALUATION REPORT FOUND THAT THE CON TENTION OF THE ASSESSEE WAS NOT JUSTIFIED. 10. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF LOW ER AUTHORITIES AND THE REPORT OF THE VALUATION OFFICER, COPY OF WHICH IS A VAILABLE IN THE PAPER BOOK. WE FIND THAT THE VALUATION OFFICER HAS EXAMINED THE MA TERIALS USED FOR THE PURPOSE OF CONSTRUCTION AND THE AREA OF THE CONSTRUCTION AND T HE EXPENDITURE INCURRED BY THE ASSESSEE FOR RENOVATION AND EXTENSION. THE ASS ESSEES MAIN CONTENTION IS THAT NO MATERIAL WAS FOUND DURING THE COURSE OF SEA RCH OPERATION. THE ASSESSEE COULD NOT POINT OUT ANY DEFECT IN THE VALUATION REP ORT SPECIFICALLY ANY ITEMS POINTED BY THE VALUATION OFFICER. IN THESE FACTUAL CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH AUGUST, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 10 TH AUGUST, 2012 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH