Smt. Jiby Mathew, Kottayam V. The DCIT, Kottayam

ITA 176/COCH/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7751 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 02-08-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 11-04-2016
• Court: TRIBUNAL
• Department Lawyers: PAN NO AOQPC C
• Assessee Lawyers: SHRI A DHANARAJ
• Keywords: Unexplained investment; Valuation report
• Section: 69

Judgement Text

ITA NO.176/COCH/2016 1 , IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN . . , ., ! ! ! ! BEFORE S/SHRI B. P. JAIN, AM & GEORGE GEORGE K., JM ' ' ' ' ./ I.TA NO.176/COCH/201S6 ( #$ % /ASSESSMENT YEAR : 2010-11) SMT. JIBY MATHEW, BIJU NIVAS, KUMARANALLOOR P.O., KOTTAYAM-686 016 VS THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, KOTTAYAM. ( &' &' &' &' /ASSESSEE APPELLANT) ( ( (( ( ) ) ) ) &' &'&' &' /REVENUE - RESPONDENT) & . . ' ./PAN NO. AOQPC 2947C &' * + /ASSESSEE BY SHRI MATHEW JOSEPH, CA ( ) &' * + /REVENUE BY SHRI A. DHANARAJ, SR. DR ,- * ./ / DATE OF HEARING 02/08/2016 0 % * ./ /DATE OF PRONOUNCEMENT 03/08/2016 1 1 1 1 /ORDER PER B.P. JAIN, AM: THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER O F THE LD. CIT(A)-II, KOCHI VIDE ORDER DATED 25/01/2016 FOR THE ASSESSMEN T YEAR 2010-11. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: ITA NO.176/COCH/2016 2 1. THE ASSESSING OFFICER WENT WRONG IN ADOPTING THE VA LUATION REPORT BASED ON THE CPWD RATES. IN A SMALL PLACE L IKE KOTTAYAM, THE ASSESSING OFFICER SHOULD HAVE APPLIED THE LOCAL PWD RATES INSTEAD OF CPWD RATES. 2. THE ASSESSING OFFICER AND CIT(APPEALS) HAS IGNORED THE FACT THAT THE ASSESSEE HAD NOT INCURRED A SUM OF RS.8.72 LAKHS TOWARDS ARCHITECT AND SUPERVISION CHARGES BUT HAS PAID ONLY RS.50,000/-. 3. ANY OTHER GROUNDS THAT MAY BE ALLOWED AT THE TIME OF HEARING. 3.THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE ORDER OF THE AO ARE REPRODUCED HEREINBELOW: THE ASSESSEE HAS SHOWN AN INVESTMENT OF RS.2,90,00 ,000/- IN THE BUILDING. THE MAIN SOURCE OF THIS ACCOUNTED INVEST MENT WAS FROM THE BANK LOAN OF RS.1,60,00,000/- AND THE ADVANCE RECEI VED FROM M/S. EMMANUAVAL SILKS. THE ASSESSEE HAS FURTHER CLAIME D THAT REMAINING AMOUNT OF INVESTMENTS WERE MADE OUT OF THE CASH REC EIVED ON THE SALE OF LAND AT KAKKANAD. THE TOTAL SALE CONSIDERATION I N CASH ON SALE OF KAKKANAD LAND WAS RS.2,00,00,000/-. OUT OF THIS AN AMOUNT OF RS.32,50,000/- SPENT FOR THE PURCHASE OF RESIDENTIA L BUILDING AT ETTUMANOOR BY SHRI C.M. JOSEPH, ASSESSEES FATHER I N LAW IN THE FINANCIAL YEAR 2007-08. FURTHER THE ASSESSEE CLAIMED THAT RS .40,00,000/- DRAWN BY SHRI C.M. JOSEPH FROM THE HOTEL FLORAL PARK IS UTI LIZED FOR THE CONSTRUCTION OF THE BUILDING. BUT FROM THE ABOVE TABLE IT IS SEE N THAT THE FUNDS ARE AVAILABLE FROM THE FINANCIAL YEAR 2008-09 TO THE TU NE OF RS.34.05 LAKHS. THE TOTAL FUNDS AVAILABLE FOR THE FINANCIAL YEAR 20 10-11 WAS RS.2,24,05,000/-. BUT AS PER THE VALUATION REPORT AND THE EVIDENCE AVAILABLE IN THE SEIZED MATERIAL THE ASSESSEE HAS I NVESTED AN ADDITIONAL AMOUNT OF RS.36,80,000/- AS UNACCOUNTED INVESTMENT IN THE BUILDING CONSTRUCTION. THIS IS EVIDENT FROM THE DETAILS OF CASH PAYMENT TO THE TUNE OF RS.51,30,000/- TO VELLAPPALLY BUILDERS IN T HE FINANCIAL YEAR 2009-10 WHICH IS AVAILABLE IN THE SEIZED MATERIAL MARKED AS CHN10/18-KPH A-1. CONSIDERING THE ABOVE DISCUSSION THE UNACCOUNTED IN VESTMENT OF ITA NO.176/COCH/2016 3 RS.36,80,000/- IS ADDED AS INCOME OF THE ASSESSEE U /S. 69 OF THE INCOME TAX ACT, 1961. 4.BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED THAT THE DEPARTMENT VALUATION IS BASED ON CPWD RATES WHEREAS IN A SMALL PLACE LIKE KOTTAYAM, THE RATE HAS TO BE APPLIED ON THE BASIS OF STATE PW D RATES. CONSEQUENTLY, HE SUBMITTED THAT THE BANK LOAN WAS AVAILED FOR RS. 170 LAKHS INSTEAD OF RS.160 LAKHS. THE DVO HAS TAKEN THE VALUATION ON T HE BASIS OF CPWD RATES WHEREAS IN A SMALL PLACE LIKE KOTTAYAM, THE STATE P WD RATE IS TO BE TAKEN INTO ACCOUNT. THE LD. COUNSEL FOR THE ASSESSEE REL IED UPON THE DECISION OF THE ITAT, COCHIN BENCH IN THE CASE OF SHRI D. THIRU MENI VS. ACIT IN I.T.A. NO.89/COCH/2011 VIDE ORDER DATED 10-07-2013 WHERE I T HAS BEEN HELD THAT THE STATE PWD RATE IS TO BE ADOPTED FOR THE PURPOSE OF VALUATION. HE FURTHER ARGUED THAT ONLY RS.50,000/- WAS GIVEN TO T HE ARCHITECT AND REST OF THE SUPERVISION WAS MADE BY THE ASSESSEE AND HER ST AFF. NOTHING HAS BEEN BROUGHT BY EITHER OF THE AUTHORITIES BELOW THAT ANY THING MORE THAN RS.50,000/- HAS BEEN GIVEN TO THE ARCHITECT OR SUPE RVISION HAS BEEN MADE BY ANY OUTSIDE AGENCY. SIMPLY ESTIMATING WITHOUT AN Y BASIS OR WITHOUT ANY DOCUMENTARY EVIDENCE THERE CANNOT BE ANY BASIS FOR ESTIMATION OF THE ASSESSEES INCOME. ITA NO.176/COCH/2016 4 4. THE LD. DR ON THE OTHER HAND RELIED UPON THE ORDER S OF BOTH THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE CONS TRUCTIONS HAVE BEEN MADE AT A SMALL PLACE LIKE KOTTAYAM WHERE THE CPWD RATES CANNOT BE APPLIED AND STATE PWD RATES CAN BE APPLIED. MOREOV ER, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE ITAT, COCHIN BENCH IN THE CASE OF SHRI D. THIRUMEN (SUPRA) AND T HE RELEVANT DECISION IS REPRODUCED HEREINBELOW: S 7. WE FIND MERIT IN THE SUBMISSION OF THE LD. AR O F THE ASSESSEE. WE NOTICE THAT THE HONBLE JURISDICTIONAL HIGH COURT I N ITS ORDER DATED 9.9.2009 PASSED IN THE CASE OF CIT VS. HOTEL ALUKKA S (1588 OF 2009) HAS HELD THAT THE STATE OF PWD SHOULD BE ADOPTED FOR TH E PURPOSE OF VALUATION. IN THE INSTANT CASE, IT IS NOTICED THAT THE DISTRICT VALUATION OFFICER HAS ADOPTED CPWD RATES. ACCORDINGLY, AS PL EADED BY THE ASSESSEE, THE MATTER OF VALUATION OF RESIDENTIAL BU ILDING REQUIRES RECONSIDERATION. ACCORDINGLY, WE SET ASIDE THE ORD ER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THE ISSUE AFRESH BY DULY CONSI DERING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F HOTEL ALUKKAS (SUPRA) 6. IN THE CIRCUMSTANCE AND FACTS OF THE CASE, WE ARE O F THE VIEW THAT THE ASSESSING OFFICER AND THE LD. CIT(A) ARE NOT JU STIFIED IN ADOPTING THE CPWD RATES AND IT IS ONLY THE STATE PWD RATES WHICH SHOULD HAVE BEEN ADOPTED FOR THE PURPOSE OF VALUATION. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO ADOPT STATE PWD RATES IN VIEW OF THE DE CISION OF THE CO- ITA NO.176/COCH/2016 5 ORDINATE BENCH IN THE CASE OF SHRI D. THIRUMENI (SU PRA) WHICH HAS RELIED UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIG H COURT IN THE CASE OF HOTEL ALUKKAS (SUPRA). ACCORDINGLY, THE ISSUE IS S ET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO CALCULATE THE VALUATION AS PER STATE PWD RATES AND DECIDE THE ISSUE ACCORDINGLY. IN VIEW OF OUR FINDI NG HEREINABOVE, GROUND NO. 1 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PU RPOSES. 7.AS REGARDS GROUND NO. 2, THERE IS NO DISPUTE THAT THE ASSESSEE HAS PAID RS.50,000/- TO THE ARCHITECT AND NOTHING HAS BEEN B ROUGHT BY ANY OF THE AUTHORITY BELOW THAT THE ANY AMOUNT MORE THAN RS.50 ,000/- HAS BEEN PAID TO THE ARCHITECT. IT HAS BEEN SUBMITTED TIME AND AGAIN BEFORE THE AUTHORITES BELOW THAT THE SUPERVISION WAS MADE BY T HE ASSESSEE AND HER STAFF. NOTHING ADVERSE, AS STATED BY THE ASSESSEE, HAS BEEN BROUGHT ON RECORD BY ANY OF THE AUTHORITIES BELOW. ANY ESTIMA TION OF ARCHITECT AND SUPERVISION CHARGES OVER AND ABOVE RS.50,000/- IS B AD IN LAW AND CANNOT BE SUSTAINED. SUCH ESTIMATION MADE BY THE DVO AND ACCORDINGLY BY THE ASSESSING OFFICER IS ON CONJECTURES AND SURMISES AN D CANNOT BE SUSTAINED. ACCORDINGLY, ADDITION MADE ON THIS COUNT IS DIRECTE D TO BE DELETED. THUS GROUND NO. 2 OF THE ASSESSEE IS ALLOWED. ITA NO.176/COCH/2016 6 8.IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE O PEN COURT ON 03-08-2016. SD/- SD/- ( . ) (GEORGE GEORGE K.) ( . . ) (B. P. JAIN) /ACCOUNTANT MEMBER /JUDICIAL MEMBER & /PLACE: /COCHIN 2 /DATED: 3RD AUGUST, 2016 GJ/ 1 * (.3 43%. /COPY TO: 1. &' /SMT. JIBY MATHEW, BIJU NIVAS, KUMARANALLOOR P.O., KOTTAYAM-686 016 2. () &' /THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIR CLE, KOTTAYAM., 3. ,5 . ( )/THE COMMISSIONER OF INCOME-TAX(APPEALS)-II, KOCHI . 4. ,5 . /THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 5. 367 (. , /THE DR/ITAT, COCHIN BENCH. 6. 79 :- /GUARD FILE. 1, /BY ORDER ; /ASSISTANT REGISTRAR - .