Sree Annapoorna Gowrishankar Estates and Constructions Private Limited, Coimbatore V. ACIT, Coimbatore

ITA 1721/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58092 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-03-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 20-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R B NAIL
• Assessee Lawyers: T BANUSEKAR
• Keywords: Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENN AI BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. ITA NO.1721/MDS./2011 ASSESSMENT YEAR:2007-08 SREE ANNAPOORNA GOWRISHANKAR ESTATES AND CONSTRUCTIONS PRIVATE LTD. NO.117, WEST BASHYAKARULU ROAD, R.S.PURAM, COIMBATORE 641 002. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE 1(1), COIMBATORE 641 018. PAN AAECS 5426 K (APPELLANT) (RESPONDENT) ITA NO.1776/MDS./2011 ASSESSMENT YEAR:2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE 1(1), COIMBATORE 641 018. VS. SREE ANNAPOORNA GOWRISHANKAR ESTATES AND CONSTRUCTIONS PRIVATE LTD. NO.117, WEST BASHYAKARULU ROAD, R.S.PURAM, COIMBATORE 641 002. PAN AAECS 5426 K (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI R.B.NAIL, C.I.T. DR ASSESSEE BY : SHRI T. BANUSEKAR, C.A. ITA. 1721 & 1776/MDS/11 2 DATE OF HEARING : 13.03.12 DATE OF PRONOUNCEMENT : 16.03.1 2 O R D E R PER GEORGE MATHAN JUDICIAL MEMBER : ITA NO.1721/MDS/11 IS AN APPEAL FILED BY THE ASS ESSEE AND ITA NO.1776/MDS./2011 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(A)- I, COIMBATORE IN APPEAL NO.178/10-11 DATED 01.08.2011. SHRI T.BANUSEKAR, C.A., REPRESENTED ON BEHALF OF THE ASS ESSEE AND SHRI R.B. NAIK REPRESENTED ON BEHALF OF THE REVENUE . 2. IT WAS SUBMITTED BY THE LD. A.R. THAT ONLY ISSU E IN THIS APPEAL WAS AGAINST THE ACTION OF THE CIT(A) IN CONF IRMING THE ADDITION REPRESENTING THE DIFFERENCE IN THE COST OF CONSTRUCTION BETWEEN THE COST AS DISCLOSED BY THE ASSESSEE AND E STIMATED BY THE DEPARTMENTAL VALUATION OFFICER (DVO). LD. A.R. DREW OUR ATTENTION TO THE ASSESSMENT ORDER ORIGINALLY PA SSED ON 31.12.2009 WHEREIN LD. ASSESSING OFFICER HAS RECORD ED THAT THE ASSESSEE HAD PRODUCED REGULAR BOOKS OF ACCOUNTS , AUDIT REPORT, BILLS AND VOUCHERS, ANNUAL REPORT, HARD COP Y OF THE RETURN OF INCOME ALONG WITH THE BALANCE SHEET, PROF IT AND LOSS ACCOUNT WITH RELEVANT SCHEDULES. IT WAS SUBMITTED THAT THE ITA. 1721 & 1776/MDS/11 3 BOOKS OF ACCOUNTS OF THE ASSESSEE HAD NOT BEEN REJE CTED. IT WAS SUBMITTED THAT WITHOUT REJECTING THE ASSESSEES BOOKS OF ACCOUNTS, OR POINTING OUT THE DEFECTS IN THE ACCOUN TS MAINTAINED BY THE ASSESSEE, THE LD. ASSESSING OFFI CER HAD MADE THE ADDITION IN THE DIFFERENCE OF COST CONSTRU CTION BY ESTIMATING THE COST OF CONSTRUCTION BY REFERENCE TO THE DVO. IT WAS SUBMITTED THAT IN VIEW OF THE DECISION OF THE H ONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA 328 IT R 513 (SC),THE ASSESSING OFFICER COULD NOT HAVE REFERRED THE MATTER TO THE DVO WITHOUT BOOKS OF ACCOUNTS BEING REJECTED . IT WAS SUBMITTED THAT ON MERITS, THE ADDITION AS SUSTAINED BY THE C.I.T.(A) REPRESENTING THE DIFFERENCE IN THE COST O F CONSTRUCTION WAS LIABLE TO BE DELETED. IT WAS FURTHER SUBMISSIO N THAT THE DVOS REPORT WAS NOT LIABLE TO BE CONSIDERED IN VIE W OF THE FACT THAT THE PWD RATES WAS LIABLE TO BE APPLIED IN PLAC E OF THE CPWD RATES. FOR THIS PROPOSITION, HE RELIED UPON T HE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT OF MADRAS IN THE CASE OF D.SUBRAMANIAN REPORTED IN 296 ITR 348 (MAD.). I T WAS FURTHER SUBMISSION THAT EVEN THE REOPENING WAS DONE ON THE BASIS OF DVOS REPORT, WHICH WAS NOT PERMISSIBLE IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH IN THE CASE OF V.T. RAJENDRAN IN 288 ITR 312 (MAD) WHEREIN THE HONBLE ITA. 1721 & 1776/MDS/11 4 JURISDICTIONAL HIGH COURT HAS CATEGORICALLY HELD TH AT THE VALUATION REPORT OF THE DVO COULD NOT BE MADE BASIS FOR REOPENING OF THE ASSESSMENT. IT WAS FURTHER SUBMISS ION THAT IN THE REVENUES APPEAL THE ISSUE WAS AGAINST THE ORDE R OF THE CIT(A) IN DELETING THE ADDITION OF ` 20 LAKHS REPRESENTING AN ADHOC ADDITION MADE BY THE ASSESSING OFFICER ALLEGI NG SUPPLEMENTARY ADDITIONAL WORK CARRIED OUT IN THE SE COND PHASE CONSTRUCTION. IT WAS THE SUBMISSION THAT IN VIEW O F THE HONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA, AS TH E BOOKS OF ACCOUNTS HAD NOT BEEN REJECTED, THERE WAS NO ROO M FOR ESTIMATING THE COST OF CONSTRUCTION ITSELF AND CONS EQUENTLY, THE REVENUES APPEAL WAS LIABLE TO BE DISMISSED. 3. IN REPLY, LD. D.R. VEHEMENTLY SUPPORTED THE OR DER OF THE ASSESSING OFFICER. IT WAS SUBMITTED THAT LD. C.I.T .(A) OUGHT NOT TO HAVE DELETED THE ADDITION OF ` 20 LAKHS MADE BY THE ASSESSING OFFICER TOWARDS THE SUPPLEMENTARY WORKS D ONE. IT WAS THE SUBMISSION THAT IT WAS BECAUSE THE ASSESSIN G OFFICER DOUBTED THE COST OF CONSTRUCTION AND THE BOOKS MAIN TAINED BY THE ASSESSEE, THE ASSESSING OFFICER HAD REFERRED T HE VALUATION TO THE DVO. IT WAS THE SUBMISSION THAT THE ORDER OF C.I.T.(A) TO THE EXTENT IT CONFIRMED THE ORDER OF THE ASSESSING OFFICER WAS ITA. 1721 & 1776/MDS/11 5 LIABLE TO BE SUSTAINED AND THE ADDITION AS DELETED BY THE C.I.T.(A) WAS LIABLE TO BE REVERSED. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. PE RUSAL OF THE ORIGINAL ASSESSMENT ORDER PASSED U/S.143(3) OF THE ACT BY THE ASSESSING OFFICER ON 31.12.09 CLEARLY SHOWS THA T THE ASSESSEE HAD PRODUCED ALL THE BOOKS AND DOCUMENTS A S CALLED FOR BY THE ASSESSING OFFICER. NO WHERE IN THE ASSE SSMENT ORDER IS THERE ANY MENTION THAT THE BOOKS WERE UNRE LIABLE OR THAT THEY ARE REJECTED. PERUSAL OF THE ASSESSMENT ORDER IN THE APPEAL UNDER CHALLENGE ALSO DOES NOT SHOW THE BOOKS OF ACCOUNTS OF THE ASSESSEE BEING REJECTED NOR IS THER E ANY DISCUSSION IN REGARD TO THE ACCOUNTS MAINTAINED BY THE ASSESSEE IN RESPECT OF THE CONSTRUCTION OF THE PROP ERTY AT SF NO.608, EACHANI, COIMBATORE BEING UNRELIABLE. THE ASSESSING OFFICER MENTIONS THAT THERE IS VARIATION BETWEEN FI GURE REPORTED BY THE VALUATION CELL AND THE FIGURE SHOWN IN THE R ETURN BY THE ASSESSEE IN RESPECT OF COST OF CONSTRUCTION OF THE ASSESSEES PROPERTY. IT IS ALSO NOTICED THAT ASSESSEE HAS PRO DUCED THE DETAILED DRAWINGS FOR THE PHASE-1, PHASE-2 & PHASE- 3 OF THE CONSTRUCTION, AS ALSO THE CONSTRUCTION CERTIFICATE ISSUED BY THE EXECUTIVE OFFICER, GREAT TOWN PANCHAYAT AND AS ALSO THE ITA. 1721 & 1776/MDS/11 6 APPROVED COPY OF THE PLANS. IT IS FURTHER NOTICED THAT THE ASSESSING OFFICER HAS ADOPTED THE DVOS REPORT WITH OUT REJECTING THE ASSESSEES BOOKS OF ACCOUNTS. THIS W OULD BE IMPERMISSIBLE IN VIEW OF THE DECISION OF HONBLE SU PREME COURT IN THE CASE OF SARGAM CINEMA REFERRED TO SUPR A. IN THE CIRCUMSTANCES ON THIS GROUND ITSELF, ADDITION AS SU STAINED BY THE C.I.T.(A) STANDS DELETED. AS WE HAVE ALREADY HE LD THAT NO REFERENCE TO THE DVO COULD BE MADE AS THE ASSESSEE S BOOK OF ACCOUNTS HAS NOT BEEN REJECTED. ADHOC ADDITION MADE BY THE ASSESSING OFFICER TOWARDS THE SUPPLEMENTARY ADD ITIONAL WORKS, WHICH HAS BEEN DELETED BY THE COMMISSIONER O F INCOME TAX(A), WOULD ALSO STAND RIGHTLY DELETED AN D THE FINDING OF THE COMMISSIONER OF INCOME TAX(A) ON THA T ISSUE WOULD STAND CONFIRMED. 5. FURTHER, IN VIEW OF THE DECISION OF HONBLE JUR ISDICTIONAL HIGH COURT OF MADRAS IN THE CASE OF D.SUBRAMANIAN R EFERRED TO SUPRA, THE CONSTRUCTION HAVING BEEN DONE IN COIMBAT ORE, THE PWD RATES HAVE TO BE APPLIED FOR THE PURPOSE OF EST IMATING THE COST OF CONSTRUCTION, IF AT ALL IT COULD BE ESTIMAT ED. HOWEVER, AS WE HAVE ALREADY HELD THAT REFERENCE TO THE DVO IS IMPERMISSIBLE AS BOOKS OF ACCOUNTS OF THE ASSESSEE HAVE NOT ITA. 1721 & 1776/MDS/11 7 BEEN REJECTED. WE HAVE NOT GIVEN ANY SPECIFIC FIND ING ON THE ISSUE OF THE APPLICABILITY OF PWD RATES NOR IN REGA RD TO RE-OPENING OF THE ASSESSMENT. IN THE CIRCUMSTANCES , THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 16 TH MARCH, 2012. SD/- SD/- ( N.S.SAINI ) (GEORGE MATHAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 16 TH MARCH, 2012. K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE ITA. 1721 & 1776/MDS/11 8