Smt. S. Thilagavathy, CHENNAI V. ITO, Kumbakonam

ITA 168/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96341 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 26-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 17-01-2014
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: PHILIP GEORGE
• Keywords: Reopening of assessment; Unexplained investment; Valuation report
• Section: 147; 148; 12

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , ! , ' #$ BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ ITA NO. 168/MDS/2014 / ASSESSMENT YEAR : 2004-05 SMT. S. THILAGAVATHY, # 26, V.O.C. NAGAR, KORANAD, MAYILADUTHURAI. PAN AEKPT6664B ( /APPELLANT) VS THE INCOME-TAX OFFICER, WARD 1(2), KUMBAKONAM. ( /RESPONDENT) / APPELLANT BY : SHRI PHILIP GEORGE, ADVOCATE / RESPONDENT BY : SHRI A.V.SREEKANTH, JCIT / DATE OF HEARING : 26.10.2015 ! / DATE OF PRONOUNCEMENT: 06.11.2015 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DATED 5. 9.2013. - - ITA 16 8/14 2 2. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WITH REGARD TO REOPENING THE ASSESSMENT BASED ON THE DVO S REPORT. THE NEXT GROUND IS WITH REGARD TO CONFIRMING THE AD DITION OF ` 5,55,878/- AS UNEXPLAINED INVESTMENT. 3. THE BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSE IS NEITHER ENGAGED IN ANY BUSINESS NOR DERIVIN G ANY INCOME FROM ANY SOURCE. THE ASSESSEE S HUSBAND IS WORKING IN OVERS EAS AND OUT OF TH E REMITTANCE MADE BY HIM , THE ASSESSEE CONSTRUCTED A PROPERTY AT M AY ILADUTHURAI AND THE COST OF CONSTRUCTION OF THE SAID PROPERTY WAS AT ` 73 , 6 4 ,2 00/- . THE ASSESSEE FILED THE RETURN OF INCOME FOR AY 2005-06 ADMITTING AN IN C OME OF ` 64,285 / - . THE SAME WAS TAKEN UP FOR SCRUTINY FOR THE SPECIFIC PUR POSE O F V ERIF Y ING THE COST OF CONSTRUCTION OF THE SAID PROPERTY A ND THE ASSESSMENT WAS C OMP L ETED ON 28.12.2007 ACCEPTING THE RETURNED INCOME AND ALSO THE COST OF CON S TRUCTION OF ` 73,64,200/- ADMITTED BY THE ASSESSEE . THE ASSESSEE HAS FILED R E PORT FROM THE REGISTERED VALUER AND THE DEPARTMENT HAS ESTIMA TED THE COST BY ITS OWN INSPECTOR . AFTER CONSIDERING THE OBJECTION FILED BY THE ASSESSEE AGAINST THE VA LU A T ION BY THE INSPECTOR , THE A SS E S SING OFFICER COMPLETED THE ASSESSMENT FOR THE SA I D Y E A R , - - ITA 16 8/14 3 ACCEPTING THE CO ST OF C ON S TRUCTION AS ADMITTED BY THE ASSESSEE. THE A SS E SS IN G OFFICER HAS REFERR E D THE MATTER TO THE DVO . THE REPORT FROM DVO WAS N OT R E CEI V ED TILL THE DATE OF COMPLETION OF ASSESSMENT PROCEEDINGS . THE DVO RE P ORT WAS RE C EI V ED ON 01 . 07.2010. AS THE PERIOD OF CONSTRUCTION SPREADS OVER THE PR EVIO U S Y EAR S 2 003-04 TO 2 005-06 , THE ASSESSING OFFICER APPORTIONED THE TOTAL C OST OF CO N S TRUCTION A S DETERMINED B Y TH E VA LUATION OFFICER OVER THE PERIOD O F THREE YEARS BASE D O N TH E C OST ADMITTED B Y TH E ASSESSEE . ACCORDINGLY, HE ARRIVED AT THE DIFFERENCE O F ` 58 , 75,8 00 1 - ( 13 ,2 4 , 40 , 000 - 73, 64 , 200) AND THE SAID DIFFERENCE W A S APPORT I O N E D TO AY 2 004-05 TO 2006-07 AS UNDER : A. Y . 2004-0 5 23,22, 900/- 200 5 -0 6 30 , 48 , 900/- 2006-0 7 5 , 04 , 000/- NOTICE U / S 14 8 WAS I SS U E D FOR THE A Y S 2 004-05 AND 2006-07 ONLY ON 10.03.2011. AS THE ASSESSEE HA S N O T EARNED AN Y INCOME IN THE FY 2003 - 04 RELATING TO AY 2004 - 05, N O R E TURN OF IN CO M E WAS FIL E D O RI G IN A LL Y A ND IN REPL Y TO THE NOTIC E U/S.148 , T H E RETU RN OF INCOM E A DMITTIN G N IL IN C OM E W A S FILED ONLY ON 22.03 .2 011 . T HE - - ITA 16 8/14 4 ASSESSEE H AS A L SO F IL E D A LETTER D A T E D 2 3.07.2011 OBJECTING TO THE REASSESSMENT PROCEE DIN GS. TH E ASSESS IN G O F F I C ER H O WE V ER COMPLETED THE ASSESSMENT V IDE HIS O RD ER DAT E D 29. 1 2 . 2 011 U/S. 14 8 R.W.S. 14 7 AS S E S SING INCOME OF ` 28 , 78 , 778 / - . THE DRAWA L F R O M TH E B A NK A CCOUNT WAS RE S TRICTED TO ` 23 , 55 , 000/- AND TAKIN G INTO ACCO UNT TH E IN VES TMENT IN CON S TRU C TION OF ` 9,10 , 878 / -, AS ADMITTED BY THE ASSESSEE TH E B A LAN CE O F ` 5 ,55,878 / - WAS A DDED AS INCOME FROM OTHER SOURCES. THE DIFFE R E N CE IN C OST OF CO N S TRU C T IO N A PPORTIONED FOR THIS YEAR AT ` 2 3 , 22 , 900/-. THE ASSESSEE CHALLENGED THE REOPENING BEFORE THE CIT(AP PEALS). 4. THE CIT (APPEALS) CONFIRMED THE FINDING OF THE AO ON THE REASON THAT SINCE THE ASSESSEE HAS NOT FILED ANY RE TURN OF INCOME FOR THE ASST. YEAR 2004-05 AND THERE WAS INVESTMENT IN THE BUILDING DURING THE RELEVANT PERIOD, THE AO REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S.148 OF THE ACT AND THERE WAS VALUATION REPORT H AD SHOWN A DIFFERENTIAL COST OF CONSTRUCTION DURING THE YEAR UNDER CONSIDER ATION AT ` 23,24,100/-. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 5. BEFORE US, THE ASSESSEE HAS NOT MADE ANY SERIOUS ARGUMENT REGARDING THE REOPENING OF ASSESSMENT. IN OUR OPINION, THE REOPENING OF ASSESSMENT IS BASED ON VA LID REASON - - ITA 16 8/14 5 BY UNDERSTATEMENT OF COST OF CONSTRUCTION AND AT TH E TIME OF REOPENING, THE EXPENDITURE OF INCOME NEED NOT TO BE PROVED CONFUSEDLY AND FROM THIS POINT OF VIEW, WE ARE IN A GREEMENT WITH THE FINDING OF THE CIT(APPEALS). THIS GROUND OF AP PEAL IS REJECTED. 6. THE NEXT GROUND IS WITH REGARD TO SUSTAINING THE ADDITION OF ` 5,55,878/- BY ADOPTING THE DVO VALUATION REPORT, W HICH IS BASED ON CENTRAL PWD RATE AND NOT GIVING DEDUCTION TOWARDS SELF- SUPERVISION. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THE LD. AR SUBMITTED THAT THE CONSTRUCT ION TOOK PLACE AT MAYILADUTHURAI, WHICH IS A MOFUSSIL AREA AND IT IS APPROPRIATE TO ADOPT STATE PWD RATE INSTEAD OF CENTRAL PWD RATE . WE FIND FORCE IN THE ARGUMENT OF THE LD. AR THAT THE CONSTR UCTION TOOK PLACE IN A MOFUSSIL AREA, OTHER THAN CHENNAI AND ST ATE PWD RATE SHOULD BE ADOPTED TO DETERMINE THE COST OF CONSTRUC TION. SELF- SUPERVISION CHARGES AT 7.5% SHOULD BE GIVEN IF THE ASSESSEE IS ABLE TO PROVE THAT THE ASSESSEE, HERSELF CARRIED OU T THE SUPERVISION IN THE CONSTRUCTION. THE CIT(APPEALS) HAS ALREADY GIVEN 7.5% AND THE SAME SHOULD BE GIVEN WHILE ADOPT ING STATE - - ITA 16 8/14 6 PWD RATE TO ASCERTAIN THE COST OF CONSTRUCTION OF T HE BUILDING. WITH THIS OBSERVATION, WE ALLOW THIS GROUND OF APPE AL. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 06 TH OF NOV., 2015 AT CHENNAI. SD/- SD/- ( ' . . ' . #$ ) ( % & ' ( ) ) N.R.S.GANESAN * )+,-./0-1223-04* 5 67 /JUDICIAL MEMBER 6789::2;.<-.<=>?@>0 %5 /CHENNAI, A6 /DATED, THE 06 TH NOV., 2015. MPO* 6$ BCDC /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. E)* /CIT(A) 4. E /CIT 5. CF# G /DR 6. #HI /GF.