ITO, CHENNAI V. M/s. A.L.Homes, CHENNAI

ITA 1723/CHNY/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7959 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 20-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 12-09-2012
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained investment; Valuation report

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , . ! , ' # $ [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.1723/MDS/2012 / ASSESSMENT YEAR : 2009-10 THE INCOME TAX OFFICER BUSINESS WARD III(1) CHENNAI VS. M/S A.L. HOMES 22, 2 ND STREET, NEHRU NAGAR ADYAR, CHENNAI - 20 [PAN AAMFA 0169 J ] ( %& / APPELLANT) ( '(%& /RESPONDENT) / APPELLANT BY : SHRI A.V SREEKANTH, JCIT /RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE / DATE OF HEARING : 20 - 01 - 2016 ! / DATE OF PRONOUNCEMENT : 19 - 02 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)VIII, CHEN NAI, DATED 14.6.2012 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2. SHRI A.V. SREEKANTH, LD. DEPARTMENTAL REPRESENTATIV E SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE CONSTRUCTED A FLAT AT OLD MAHABALIPURAM ROAD. THE CONSTRUCTION WAS IN FACT STARTED IN FINANCIAL YEAR 2006-07 AND IT WA S COMPLETED DURING ITA NO.1723/12 :- 2 -: THE FINANCIAL YEAR 2008-09. THE EXPENDITURE RELATI NG TO FINANCIAL YEAR 2009-10 RELATES TO UNFINISHED WORK SUCH AS FLOORING , LIFT, ELECTRIC AND OTHER MISCELLANEOUS WORK. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2008-09, THE ASSESS ING OFFICER REFERRED THE MATTER TO THE DISTRICT VALUATION OFFIC ER TO ESTIMATE THE COST OF CONSTRUCTION. THE DVO BY A LETTER DATED 31.1.2011 ESTIMATED THE COST OF CONSTRUCTION AT ` 48,45,39,000/-. THE ASSESSEE HAS FILED ITS OBJECTION TO THE VALUATION REPORT ON THE GROUND THAT THE ASSESSEE IS MAINTAINING REGULAR BOOKS OF ACCOUNT AND WITHOUT RE JECTING THE BOOKS OF ACCOUNT, THE COST OF CONSTRUCTION CANNOT BE ESTI MATED. THE ASSESSEE ALSO OBJECTED FOR ADOPTING THE CPWD RATES FOR ESTIMATING THE COST OF CONSTRUCTION. THE ASSESSING OFFICER AFTER CONSIDERING THE OBJECTION OF THE ASSESSEE, FOUND THAT AS PER THE B OOKS OF ACCOUNT OF THE ASSESSEE, THE COST OF CONSTRUCTION WAS ` 45,13,46,810/-. HOWEVER, THE DVO ESTIMATED THE COST OF CONSTRUCTION AT ` 48,45,39,000/-. THE DIFFERENCE OF ` 3,31,92,190/- WAS FOUND TO BE UNACCOUNTED INVESTMENT MADE BY THE ASSESSEE FOR CO NSTRUCTION. ACCORDINGLY, THE ASSESSING OFFICER MADE ADDITION. ON APPEAL BY THE ASSESSEE, THE CIT(A) WITHOUT ANY JUSTIFIABLE CAUSE, DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 3. ON THE CONTRARY, SHRI S. SRIDHAR, LD. COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THE ASSESSEE IS MAINTAINING BOOKS O F ACCOUNT IN THE ITA NO.1723/12 :- 3 -: REGULAR COURSE OF CONSTRUCTION. NO MISTAKE WAS FOU ND IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNT MAINTAINED BY THE AS SESSEE. ACCORDING TO THE LD. COUNSEL, WITHOUT REJECTING THE BOOKS OF ACCOUNT, THE COST OF CONSTRUCTION CANNOT BE ESTIMATED BY THE ASSESSING O FFICER. THE LD. COUNSEL FURTHER SUBMITTED THAT THE DVO HAS ESTIMATE D THE COST OF CONSTRUCTION BY ADOPTING CPWD RATES. ACCORDING TO THE LD. COUNSEL, THE STATE PWD RATES WOULD BE MORE APPROPRIATE FOR E STIMATING THE COST OF CONSTRUCTION. THE LD. COUNSEL FURTHER SUBMITTED THAT AFTER CONSTRUCTING THE FLATS, THE ASSESSEE HAS SOLD THE FLATS TO VARIOUS INDIVIDUAL CUSTOMERS. THE VALUATION OFFICER WITHOU T ASCERTAINING THE IMPROVEMENT MADE BY THE PURCHASERS OF THE FLATS, ES TIMATED THE COST OF CONSTRUCTION. ACCORDING TO THE LD. COUNSEL, IF AT ALL THERE WAS ANY ADDITIONAL CONSTRUCTION OR IMPROVEMENT MADE IN THE BUILDING IT HAS TO BE ADDED ONLY IN THE HANDS OF THE PURCHASERS OF THE FLAT AND NOT IN THE HANDS OF THE ASSESSEE. THEREFORE, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AS RIGHTLY CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE, WHEN THE ASSE SSEE IS MAINTAINING BOOKS OF ACCOUNT, THE ASSESSING OFFICER CANNOT REFE R THE MATTER TO THE DVO WITHOUT REJECTING THE BOOKS OF ACCOUNT MAINTAIN ED BY THE ITA NO.1723/12 :- 4 -: ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT THE ASSE SSEE HAS SOLD THE FLATS AND MAJORITY OF THE PURCHASERS OF THE FLAT OCCUPIED THE SAME. THEREFORE, THE IMPROVEMENT MADE BY THE RESPECTIVE P URCHASERS OF THE FLAT HAS TO BE CONSIDERED ONLY IN THE HANDS OF THE RESPECTIVE PURCHASERS AND NOT IN THE HANDS OF THE ASSESSEE. AS OBSERVED BY THE CIT(A), WHEN THE PURCHASERS OF THE FLATS ENGAGED TH E CONTRACTORS TO MAKE IMPROVEMENT IN THE FLATS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT NO ADDITION CAN BE MADE IN THE HANDS O F THE PRESENT ASSESSEE. IN VIEW OF THE ABOVE, THIS TRIBUNAL DO N OT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGL Y, THE SAME IS CONFIRMED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH FEBRUARY, 2016, AT CHENNAI. SD/- SD/- ( . ! ) (A. MOHAN ALANKAMONY) ' / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 19 TH FEBRUARY, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF