Sahara India Financial Corp. Ltd, V. DCIT CC-1,

ITA 1696/DEL/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3793 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 11-05-2011
• Assessment Year: 1994-1995
• Appeal Filed On: 05-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: REENA S PURI
• Assessee Lawyers: J J MEHROTRA; D R RANJAN
• Keywords: Valuation report; Reassessment proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H : NEW DELHI DELHI BENCH H : NEW DELHI DELHI BENCH H : NEW DELHI DELHI BENCH H : NEW DELHI BEFORE SHRI R.P.TOLANI, JM AND SHRI B.C.MEENA, AM BEFORE SHRI R.P.TOLANI, JM AND SHRI B.C.MEENA, AM BEFORE SHRI R.P.TOLANI, JM AND SHRI B.C.MEENA, AM BEFORE SHRI R.P.TOLANI, JM AND SHRI B.C.MEENA, AM ITA NO.1696/DEL/2008 ITA NO.1696/DEL/2008 ITA NO.1696/DEL/2008 ITA NO.1696/DEL/2008 ASSESSMENT YEAR : 1994 ASSESSMENT YEAR : 1994 ASSESSMENT YEAR : 1994 ASSESSMENT YEAR : 1994- -- -95 9595 95 M/S SAHARA INDIA FINANCIAL M/S SAHARA INDIA FINANCIAL M/S SAHARA INDIA FINANCIAL M/S SAHARA INDIA FINANCIAL CORP. LIMITED, CORP. LIMITED, CORP. LIMITED, CORP. LIMITED, 1 11 1- -- -KAPOORTHALA COMPLEX, KAPOORTHALA COMPLEX, KAPOORTHALA COMPLEX, KAPOORTHALA COMPLEX, ALIGANJ, ALIGANJ, ALIGANJ, ALIGANJ, LUCKNOW. LUCKNOW. LUCKNOW. LUCKNOW. PAN PAN PAN PAN NO.AADCS8698C. NO.AADCS8698C. NO.AADCS8698C. NO.AADCS8698C. VS. VS. VS. VS. DY.COMMISSIONER OF INCOME TAX, DY.COMMISSIONER OF INCOME TAX, DY.COMMISSIONER OF INCOME TAX, DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -I, I,I, I, LUCKNOW. LUCKNOW. LUCKNOW. LUCKNOW. (APPELLANT) (RESPONDENT) ITA NO.1649/DEL/2008 ITA NO.1649/DEL/2008 ITA NO.1649/DEL/2008 ITA NO.1649/DEL/2008 ASSESSMENT YEAR : 1994 ASSESSMENT YEAR : 1994 ASSESSMENT YEAR : 1994 ASSESSMENT YEAR : 1994- -- -95 9595 95 ASSTT.COMMISSIONER OF ASSTT.COMMISSIONER OF ASSTT.COMMISSIONER OF ASSTT.COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -6, 6,6, 6, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S SAHARA INDIA M/S SAHARA INDIA M/S SAHARA INDIA M/S SAHARA INDIA FINANCIAL FINANCIAL FINANCIAL FINANCIAL CORP. LIMITED, CORP. LIMITED, CORP. LIMITED, CORP. LIMITED, 1 11 1- -- -KAPOORTHALA COMPLEX, KAPOORTHALA COMPLEX, KAPOORTHALA COMPLEX, KAPOORTHALA COMPLEX, ALIGANJ, ALIGANJ, ALIGANJ, ALIGANJ, LUCKNOW. LUCKNOW. LUCKNOW. LUCKNOW. PAN NO.AADCS8698C. PAN NO.AADCS8698C. PAN NO.AADCS8698C. PAN NO.AADCS8698C. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI J.J.MEHROTRA AND SHRI D.R.RANJAN. RESPONDENT BY : MS.REENA S.PURI, CIT-DR. ORDER ORDER ORDER ORDER PER R.P.TOLANI, JM : PER R.P.TOLANI, JM : PER R.P.TOLANI, JM : PER R.P.TOLANI, JM : THESE ARE CROSS-APPEALS FILED BY THE ASSESSEE AND T HE REVENUE. 2. BRIEF FACTS ARE THAT THESE APPEALS WERE ORIGINAL LY HEARD BY THE ITAT VIDE ORDER DATED 30.11.2009. ASSESSEE FILED M .A.NO.51/DEL/2010 ARISING OUT OF THESE ORDERS, CONTENDING THAT SOME G ROUNDS REMAINED UNDISPOSED OF. THE ITAT VIDE ITS ORDER DATED 3.12. 2010 ALLOWED THE ASSESSEES MISCELLANEOUS APPLICATION BY FOLLOWING O BSERVATIONS:- ITA-1696 & 1649/D/2008 2 3. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTA NCES WE FIND THAT GROUND NO.6 AND PARTLY GROUND NO.7 TAK EN BY THE ASSESSEE REMAINED UNADJUDICATED BY THE TRIBUNAL WHILE DISPOSING OF THE APPEAL OF ASSESSEE. TO OUR MIND I T IS AN APPARENT ERROR, WHICH REQUIRED RECTIFICATION. THER EFORE, WE ALLOW THE APPLICATION FILED BY THE ASSESSEE AND RES TORE THE APPEAL OF ASSESSEE TO ITS ORIGINAL NUMBER FOR A LIM ITED PURPOSE I.E. FOR ADJUDICATING GROUND NO.6 AND 7. T HE APPLICATION OF THE ASSESSEE IS ALLOWED. 3. THESE APPEALS ARE CONSEQUENTLY FIXED NOW TO DECI DE GROUND NO.6 & 7 TAKEN BY THE ASSESSEE IN THE ORIGINAL APPEAL AN D THE REVENUES APPEAL BEING THE CONSEQUENTIAL THEREOF. SUCH GROUN DS ARE:- ASSESSEES GROUNDS:- 6. THAT THE LD.CIT(A) IS NOT JUSTIFIED IN CONFIRMI NG THE ADDITION ON ACCOUNT OF DIFFERENCE IN VALUATION OF P LANT AND MACHINERY AS DONE BY THE DEPTT. VALUATION OFFICER O VER THE ACTUAL COST THEREOF AS APPEARING IN THE DAY TO DAY MAINTAINED BOOKS OF THE APPELLANT. 7. THAT WITHOUT PREJUDICE THE LD.CIT(A) HAS FAILED TO APPRECIATE THAT THE UNDISCLOSED INVESTMENT ASSESSED IN RESPECT OF THREE ITEMS VIZ. PROPERTY AT LUCKNOW, PR OPERTY AT NOIDA AND PLANT AND MACHINERY AT NOIDA ARE MEREL Y BASED ON THE ESTIMATION OF THE VALUATION OFFICER WH ILE THE ACTUAL COST THEREOF HAS BEEN DULY ACCOUNTED FOR IN THE DAY- TO-DAY MAINTAINED BOOKS OF ACCOUNT OF THE APPELLANT AND DULY SUPPORTED BY VOUCHERS AND WITHOUT FINDING ANY DEFECT THEREIN THERE IS NO JUSTIFICATION IN SUBSTITUTING T HE ACTUAL COST WITH THE ESTIMATION OF THE DEPTT. VALUATION OF FICER. REVENUES GROUND:- ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN DIRECTING THE AO TO ALLOW SE LF SUPERVISION CHARGES @ 7.5% IN RESPECT OF PROPERTIES AT SAHARA BHAWAN, LUCKNOW AND SAHARA BUILDING AT NOIDA . ITA-1696 & 1649/D/2008 3 4. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS THAT D URING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, THE AO H AD REFERRED THE PROPOSAL FOR VALUATION OF ITS BUILDINGS AT NOIDA AN D LUCKNOW AND PLANT & MACHINERY I.E. OFFICE EQUIPMENTS INSTALLED THEREI N. THIS REPORT WAS NOT RECEIVED BY THE AO TILL THE ORIGINAL ASSESSMENT WAS FRAMED. THEREAFTER, A TWO PAGE VALUATION REPORT DATED 24.9. 1999 WAS RECEIVED BY AO WHO ISSUED 148 NOTICES ON THE GROUND THAT THE VALUATION IN THE BOOKS OF ACCOUNT IN RESPECT OF OFFICE BUILDING AND EQUIPMENTS WAS LESS THAN THE VALUE ADOPTED BY THE DVO. ASSESSEE, DURIN G THE COURSE OF REASSESSMENT PROCEEDINGS, FILED DETAILED OBJECTIONS ON JURISDICTION AND MERITS CONTENDING THAT VALUATION REPORT WAS TOTALLY UNRELIABLE, PHYSICAL INSPECTION OF ASSETS WAS NOT CARRIED OUT, THERE WAS NO MEASUREMENT OR DESCRIPTION OF PROPERTY, ASSESSEES OBJECTIONS WERE NOT CONSIDERED. 5. THE AO, HOWEVER, HELD THAT THE REPLY OF THE ASSE SSEE WAS NOT SATISFACTORY AND MADE THE ADDITIONS IN RESPECT OF V ALUATION OF BUILDING AT LUCKNOW AND NOIDA AND PLANT & MACHINERY AND EQUI PMENTS IN NOIDA. CIT(A) CONFIRMED THE ADDITIONS EXCEPT GIVIN G A RELIEF OF SELF SUPERVISION CHARGES @ 7.5% IN RESPECT OF NOIDA AND LUCKNOW PROPERTIES. IN THIS BACKDROP, THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO DVOS REPORT DATED 24.9.1999 WHICH ACCE PTS THE FACT:- (I) THAT ASSESSEE FILED NECESSARY DOCUMENTS ON 7.9.1998 ; (II) AT THE END OF THE REPORT, IT HAS BEEN CATEGORICALLY MENTIONED THAT THE ASSETS HAVE NOT BEEN PHYSICALLY INSPECTED AND; (III) VALUATION IS MADE ON THE BASIS OF DOCUMENTS SUBMITTED BY THE ASSESSEE. IT IS FURT HER CONTENDED THAT:- (I) IN THE REPORT, THE ONLY CONTENTS ARE THE ASSESS EES DECLARED COST AND AS ADOPTED BY THE DVO, THERE IS NEITHER AN Y REFERENCE TO THE SPECIFICATION, MEASUREMENT OR NATU RE OF ASSETS. THERE IS NO DISCUSSION AT ALL EITHER OF IM MOVABLE ITA-1696 & 1649/D/2008 4 PROPERTY, ITS LOCATION, THE BASIS OF VALUATION AND IN RESPECT OF PLANT & MACHINERY AS ALSO THE YEAR OF MAKE, USE ETC. (II) THE ASSESSEE FILED VARIOUS DOCUMENTS BEFORE TH E DVO INCLUDING THE REPORT IN RELATION TO LUCKNOW AND NOI DA PROPERTIES AS WELL AS PLANT & MACHINERY. THE DVO I N HIS REPORT REFERS TO THE VALUATION BEING PREPARED ON TH E BASIS OF DOCUMENTS SUBMITTED BY THE ASSESSEE. THE ASSESS EES DOCUMENTS DO NOT CONTAIN ANYTHING TO THE EFFECT THA T THE ASSETS WERE UNDERVALUED. (III) LEARNED COUNSEL RELIES ON THE JUDGMENT OF HON 'BLE SUPREME COURT IN THE CASE OF SARGAM CINEMA VS. CIT 328 ITR 513 HOLDING AS UNDER:- 4. IN THE PRESENT CASE, WE FIND THAT THE TRIBUNAL DECIDED THE MATTER RIGHTLY IN FAVOUR OF THE ASSESSEE INASMU CH AS THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESS ING AUTHORITY COULD NOT HAVE REFERRED THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER (DVO) WITHOUT THE BO OKS OF ACCOUNT BEING REJECTED. IN THE PRESENT CASE, A CAT EGORICAL FINDING IS RECORDED BY THE TRIBUNAL THAT THE BOOKS WERE NEVER REJECTED. THIS ASPECT HAS NOT BEEN CONSIDERE D BY THE HIGH COURT. IN THE CIRCUMSTANCES, RELIANCE PLA CED ON THE REPORT OF THE DVO WAS MISCONCEIVED. (IV) LEARNED COUNSEL CONTENDS THAT THE ASSESSEES B OOKS HAVE NOT BEEN REJECTED AND ITEMS OF PLANT & MACHINERY WE RE DULY RECORDED AS DEPRECIABLE ASSETS BESIDES THE CONSTRUCTION OF HOUSE PROPERTY HAS BEEN DULY RECORD ED IN THE BOOKS OF ACCOUNT FROM YEAR TO YEAR. THERE BEIN G NO REJECTION OF BOOKS, AO WAS NOT JUSTIFIED IN MAKING A REFERENCE TO THE DVO. (V) THE DVOS REPORT IS TOTALLY UNRELIABLE. IT IS A TWO PAGE REPORT WHICH CLEARLY ADMITS THAT NO PHYSICAL INSPEC TION OF THE ASSET WAS MADE WITHOUT WHICH IT IS IMPOSSIBLE T O MAKE ITA-1696 & 1649/D/2008 5 THE VALUATION. THERE IS NO REFERENCE TO MEASUREMEN TS, LOCATION OR BASIS OF DIFFERENCE OF VALUATION. (VI) THERE IS NO COMMENT ON THE DOCUMENTS FILED BY THE ASSESSEE. EVEN IF IT IS ASSUMED THAT REFERENCE MAD E TO DVO WAS PROPER, THE VALUATION REPORT IS TOTALLY UNR ELIABLE AND CANNOT BE MADE A BASIS TO MAKE THE ADDITION IN THE HANDS OF THE ASSESSEE. 6. LEARNED DR IS HEARD. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. IT IS NOT DISPUTED THAT THE ASSESSEES BOO KS OF ACCOUNT RECORDING THE COST OF CONSTRUCTION WERE NOT REJECTE D. IN VIEW THEREOF, HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF SARGA M CINEMA (SUPRA) IS CLEARLY APPLICABLE TO THE ASSESSEES CAS E. BESIDES, THE VALUATION REPORT WHICH IS RELIED ON IS TOTALLY SKET CHY AND DOES NOT GIVE ANY DETAILS ABOUT DESCRIPTION, LOCATION, MEASUREMEN T OF PROPERTY OR BASIS OF ASSET BEING VALUED. THERE IS NO COMMENT O N DOCUMENTS FILED BY THE ASSESSEE AND AS ADMITTED BY THE VALUER, IT W AS PREPARED WITHOUT PHYSICALLY INSPECTING THE ASSETS. 8. SUCH NON-SPECIFIC AND NON-SPEAKING VALUATION REP ORT WHICH ITSELF LACKS IN DETAILS OF INSPECTION OF PROPERTY, MEASURE MENT AND PROPER DESCRIPTION CANNOT BE MADE AS RELIABLE EVIDENCE TO MAKE SUCH VAGUE ADDITIONS. IN OUR VIEW, THE ADDITIONS MADE IN RESP ECT OF ABOVE ASSETS DESERVE TO BE DELETED BOTH IN VIEW OF HON'BLE SUPRE ME COURT JUDGMENT IN THE CASE OF SARGAM CINEMA (SUPRA) AND ON MERITS AS DVOS REPORT IS TOTALLY UNRELIABLE. IN THESE FACTS, WE ALLOW GROUN D NO.6 & 7 OF THE ASSESSEES APPEAL. ITA-1696 & 1649/D/2008 6 9. SINCE WE HAVE DELETED THE ADDITION ON ACCOUNT OF DVOS REPORT, THE REVENUES APPEAL IN RESPECT OF SELF SUPERVISION CHARGES BECOMES INFRUCTUOUS AS THE ADDITIONS DO NOT SURVIVE. 10. IT MAY BE MENTIONED THAT IN ORIGINAL APPEAL, TH E ASSESSEES APPEAL WAS ALLOWED. SINCE WE ARE DECIDING THE RECA LLED GROUNDS IN FAVOUR OF THE ASSESSEE, THE RESULT OF THE ASSESSEE S AND REVENUES APPEAL WILL CONTINUE TO REMAIN AS THE ASSESSEES APPEAL IS ALLOWED AND THAT OF THE REVENUE IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 17 TH JUNE, 2011. SD/- SD/- (B.C.MEENA) (B.C.MEENA) (B.C.MEENA) (B.C.MEENA) (R.P.TOLANI) (R.P.TOLANI) (R.P.TOLANI) (R.P.TOLANI) ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED : 17.06.2011. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR