Sunil Kumar Jain, Damoh V. Income Tax Office, Damoh

ITA 176/JAB/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8074 (ITAT-JABALPUR)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 16-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P D MOUGHALE
• Keywords: Valuation report
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH , JABALPUR BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO. 175 & 176/JAB/2018 ASSESSMENT YEAR: 2010 - 11 & 2011 - 12 SUNIL KUMAR JAIN PROP. MAHAVEER MACHINERY S TORES MAGANJ WARD NO.2 STATION CHOWK, DAMOH V. INCOME TAX OFFICER DAMOH T AN /PAN : AEQPJ2028F (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI VIJAY GUPTA, C.A. RESPONDENT BY: SHRI P. D. MOUGHALE, D.R. DATE OF HEARING: 04 04 201 9 DATE OF PRONOUNCEMENT: 0 4 04 201 9 O R D E R PER A. D. JAIN, V.P . : TH ESE ARE ASSESSEES APPEAL S AGAINST THE ORDERS OF THE LD. CIT(A) - 1, JABALPUR, DATED 28/6/2018 AND 20/6/2018, FOR THE ASSESSMENT YEAR S 20 10 - 11 AND 2011 - 12 RESPECTIVELY. 2 . THE COMMON GROUND S RAISED ARE AS FOLLOWS: - 1 . CONSIDERING THE FACT THAT THE REASSESSMENT PROCEEDING WAS INITIATED BY THE ID AO SOLELY ON THE BASIS OF VALUATION REP ORT OF ID DVO HENCE IN VIEW OF H ON'BLE SUPREME COURT DECISION IN THE CASE OF ACIT V DHARIYA CONSTRUCTION CO. (2010) 328 ITR 515, THE ID CI T (A) OUGHT TO HAVE HELD THAT THE REOPENING OF THE ASSESSMENT IS BAD IN LAW AND CONSEQUENTLY THE REASSESSMENT ORDER DATED 23/12/2013 IS ALSO BAD IN LAW. 2 . IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ID CIT (A) SHOULD HAVE HELD THAT REOPENING OF THE ASSESS MENT IS BAD IN LAW. ITA NO.175 & 176/JAB/2018 PAGE 2 OF 4 3 . CONSIDERIN G THE FACT THAT ADDITION OF RS. 2,40,580/ - FOR ASSESSMENT YEAR 2010 - 11 AND RS.48,120/ - FOR ASSESSMENT YEAR 2011 - 12 , ON ACCOUNT OF DIFFERENCE IN COST OF CONSTRUCTION, WAS MADE BY THE ID AO SOLELY ON THE BASIS OF VALUATION REPORT OF ID DVO HENCE THE ID CIT(A) SHOULD NOT HAV E SUSTAINED THE ADDITION OF RS. 1,68,406/ - MADE ON ACCOUNT OF UNDERSTATEMENT OF COST OF CONSTRUCTION OF BUILDING. 4 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE ID CIT(A) WAS NOT JUSTIFIE D IN CONFIRMING ADDITI ON OF RS. 1,68,406/ - FOR ASSESSMENT YEAR 2010 - 11 AND RS.33,684/ - FOR ASSESSMENT YEAR 2011 - 12, MADE BY THE ID A.O. ON T HE BASIS OF VALUATION REPORT OF ID DVO. 5 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE ID CIT(A) WAS NOT JUSTIFIED IN CONFIRMING DISALLO WANCE OF RS. 3,000/ - FOR ASSESSMENT YEAR 2010 - 11 AND RS.5,000/ - FOR ASSESSMENT YEAR 2011 - 12, MADE BY THE ID AO ON AD HOC BASIS OUT OF EXPENSES DEBITED IN PROFIT AND LOSS ACCOUNT. 6 . THE CIT (A) ORDER DATED 28.06.2018 IS BAD IN LAW HENCE MAY KINDLY BE CANCELLED . 3 . APROPOS GROUND NO.1, THE LD. A.R. OF THE ASSESSEE HAS REFERRED TO APB - 1 , WHICH IS A COPY OF THE NOTICE ISSUED U/S. 148 OF THE ACT, ON 9/4/2013. IT HAS BEEN CONTENDED THAT AS EVIDENT FROM THE REASONS RECORDED BY THE A.O., THE VALUATION REPORT OF THE DVO IS THE SOLE REASON FOR REOPENING OF THE COMPLETED ASSESSMENTS, IN DIRECT CONTRAVENTION OF THE DECISION OF THE HON'BLE SUPREME COURT IN ACIT VS. DHARIYA CONSTRUCTION CO. (2010) 328 ITR 515 (SC). 4 . THE GRIEVANCE OF THE ASSESSEE FOR BOTH THE YEARS IS FOUND T O BE CORRECT. THE FOLLOWING ARE THE REASONS RECORDED FOR THE ASSESSMENT YEAR 2010 - 11: ITA NO.175 & 176/JAB/2018 PAGE 3 OF 4 5 . FROM THE ABOVE REASONS, IT IS CLEAR THAT THE A.O. STATED THAT FROM THE DVOS REPORT, HE NOTICED THAT THE ASSESSEE HAD SHOWN LESS COST OF CONSTRUCTION AND THAT THIS WAS THE REASON OF THE A.O. TO BELIEVE ESCAPEMENT OF INCOME. 6 . IN ACIT VS. DHARIYA CONSTRUCTION CO. (SUPRA), THE HON'BLE SUPREME COURT HAS HELD, AS FOLLOWS: ITA NO.175 & 176/JAB/2018 PAGE 4 OF 4 OPINION OF THE DVO PER SE IS NOT AN INFORMATION FOR THE PURPOSES OF REOPENING ASSESSMENT U/S. 147. TH E A.O. HAS TO APPLY HIS MIND TO THE INFORMATION, IF ANY, COLLECTED AND MUST FORM A BELIEF THEREON. THEREFORE, DEPARTMENT WAS NOT ENTITLED TO REOPEN THE ASSESSMENT ON THE BASIS OF THE OPINION OF THE DVO. 7 . EVIDENTLY, THE REASONS RECORDED BY THE A.O. TO FORM BELIEF OF ESCAPEMENT OF INCOME FOR BOTH THE YEARS UNDER CONSIDERATION ARE IN DIRECT VIOLATION OF THE DECISION OF THE HON'BLE SUPREME COURT IN ACIT VS. DHARIYA CONSTRUCTION CO. (SUPRA). THEREFORE, THESE REASONS ARE NOT VALID REASONS IN THE EYE OF LAW. T HEY ARE, ACCORDINGLY, QUASHED FOR BOTH THE YEARS. AS SUCH , NOTHING PURSUANT TO THESE REASONS RECORDED SUR V IVES FOR ADJUDICATION. THAT BEING SO, ALL THE PROCEEDINGS PURSUANT TO THE REASONS RECORDED BY THE A.O. FOR BOTH THE YEARS UNDER CONSIDERATION, CULM INATING IN BOTH THE IMPUGNED ORDERS, ARE QUASHED. NOTHING ELSE SURVIVES FOR ADJUDICATION, NOR WAS ANYTHING ELSE ARGUED. 8 . IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 / 0 4 /201 9 . SD/ - SD/ - [ T. S. KAPOOR ] [ A. D. JAI N ] ACCOUNTANT MEMBER VICE PRESIDENT DATED: 04 /0 4 / 201 9 JJ: 0404 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR