Ito, Erode V. E.V.K.S. Elangovan, Erode

ITA 1837/CHNY/2013

• Counselvise Citation: 183721714 RSA 2013
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 14-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAJI P JACOBADDL
• Assessee Lawyers: S SRIDHAR
• Keywords: Valuation report
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI (BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER ) .. I.T.A. NO. 1837/MDS/13 ASSESSMENT YEAR :2010-11 & C.O. NO.167/MDS./13 INCOME TAX OFFICER, WARD I(2), ERODE. (APPELLANT) V. E.V.K.S.ELANGOVAN(HUF), 161,CUTCHERY STREET, ERODE 638 001. PAN AAAHE 1193 A (RESPONDENT/CROSS OBJECTOR) APPELLANT BY : SHRI SHAJI P. JACOB,ADDL. CIT D. R RESPONDENT BY : SHRI S.SRID HAR, ADVOCATE DATE OF HEARING : 26 .11.13 DATE OF PRONOUNCEMENT : 03.12.13 O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL BY THE REVENUE AND CROSS OBJECTIONS B Y THE ASSESSEE, ARE AGAINST THE ORDER OF THE LEARNED COMM ISSIONER OF ITA NO. 1837/MDS/13 CO NO.167/MDS./13 2 INCOME TAX(A) DATED 05.07.2013 IN APPEAL NO.144/12- 13 PASSED UNDER SECTION 143(3) READ WITH SECTION 250 OF THE ACT. 2. THE REVENUE HAS RAISED SEVEN GROUNDS IN ITS APP EAL; HOWEVER THE TWIN SURVIVING GROUNDS ARE THAT:- (1) LD. CIT(A) HAD ERRED IN DELETING THE ADDITION O F `. 13,56,450/- MADE BY THE ASSESSING OFFICER BEING THE DIFFERENCE IN COST INCURRED FOR THE CONSTRUCTION OF A RESIDENTIAL BUIL DING DURING THE FINANCIAL YEAR 2009-10. (2) LD. CIT(A) HAD ERRED BY REDUCING 10% OF THE C OST OF CONSTRUCTION IN THE FIRST FLOOR AS COMPARED TO THE COST OF CONST RUCTION FOR THE GROUND FLOOR. 3. THE ASSESSEE IN HIS CROSS OBJECTION HAS RAISED FOUR GROUNDS, HOWEVER, THEY ARE SUMMARIZED AND CONCISED AS FOLLOW S FOR THE SAKE OF CONVENIENCE:- (1) THE CIT(A) WAS RIGHT IN LAW CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE BY SETTING ASIDE THE ORDE R OF LD. ASSESSING OFFICER WITH RESPECT TO THE ADDITIONS MAD E FOR `. 13,56,450/- (2) THE FINDINGS OF THE CIT(A) WAS TO THE EFFECT THAT, THE AO WAS DIRECTED ONLY TO VERIFY THE RATES FOR GROUND FL OOR AND FIRST FLOOR AND TO PASS APPROPRIATE ORDER. ITA NO. 1837/MDS/13 CO NO.167/MDS./13 3 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A HUF, FILED ITS RETURN OF INCOME ON 17.03.2011 FOR THE ASSESSME NT YEAR 2010-11 ADMITTING TOTAL INCOME OF `. 4,33,300/- AND NET AGRICULTURAL INCOME AT `. 1,48,498/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 15.02.2013 WHEREIN ADDI TION OF RS.13,56,450/- WAS MADE TOWARDS UNDISCLOSED VALUE F OR COST OF CONSTRUCTION OF THE RESIDENTIAL HOUSE CONSTRUCTED D URING THE RELEVANT PREVIOUS YEAR. SINCE THE ASSESSEE HAD NOT MAINTAI NED BOOKS OF ACCOUNTS FOR ARRIVING AT THE EXPENDITURE INCURRED F OR THE COST OF CONSTRUCTION AND SINCE THE YEAR-WISE BREAK UP OF TH E COST OF CONSTRUCTION WAS NOT FURNISHED NEITHER BY THE ASSES SEE NOR BY THE DVO, THE DIFFERENCE BETWEEN THE TOTAL COST OF CONST RUCTION ESTIMATED BY THE DVO AND THE ASSESSEE (ESTIMATED BY DVO `. 2, 29, 95,000/- AS AGAINST `. 2 CRORES STATED BY THE ASSESSEE) , AMOUNTING TO `. 13,56,450/- WAS ADDED TO THE INCOME OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR 2010-11 AS INCOME FROM UN DISCLOSED INVESTMENTS. ITA NO. 1837/MDS/13 CO NO.167/MDS./13 4 5. ON APPEAL, LD. CIT(A) REMITTED THE MATTER BACK TO THE FILE OF LD.ASSESSING OFFICER WITH DIRECTION TO OBTAIN THE C OST OF CONSTRUCTION YEAR-WISE FROM THE VALUATION OFFICER AND ADOPT THE SAME TAKING INTO CONSIDERATION OF THE EVIDENCE PRODUCED BY THE ASSES SEE, IN RESPECT OF THE DIFFERENCE IN COST OF CONSTRUCTION CALCULAT ED BY PRO-RATA BASIS. THE RELEVANT PARA OF THE ORDER OF THE LD. CIT(A) IS REPRODUCED HEREIN BELOW FOR REFERENCE:- 5. GROUND NOS.2, 3 & 4: THESE GROUNDS OF APPEAL ARE AGAINST THE ACTION OF THE ASSESSING OFFICER IN ADOPTING THE PE RCENTAGE COMPLETION METHOD TO ARRIVE AT THE COST OF CONSTRUCTION FOR TH IS ASSESSMENT YEAR. AS SEEN FROM THE FACTS OF THE CASE, THE ASSESSING OFF ICER ACCEPTED THE REPORT OF THE VALUATION OFFICER REGARDING THE COST OF CONSTRUCTION OF THE HOUSE. HOWEVER, THE YEAR-WISE BREAK-UP FOR THE COS T OF CONSTRUCTION AS NOT RECEIVED FROM THE VALUATION OFFICER AT THE TIME OF ASSESSMENT ORDER. HENCE, THE ASSESSING OFFICER FOLLOWED THE PERCENTA GE COMPLETION METHOD TO ARRIVE AT THE DIFFERENCE IN THE COST OF C ONSTRUCTION. AS SUBMITTED BY THE AR, THE PERCENTAGE COMPLETION METH OD IS APPLICABLE ONLY TO CONTRACTORS AND CANNOT BE ADOPTED IN THE CA SE OF THE APPELLANT. THE ASSESSING OFFICER IS DIRECTED TO OBTAIN THE CO ST OF CONSTRUCTION YEAR- WISE FROM THE VALUATION OFFICER AND FOLLOW THE SAME OR TAKE INTO CONSIDERATION THE EVIDENCES PRODUCED BY THE ASSESSE E, WITH REGARD TO COST OF CONSTRUCTION FOR DIFFERENT YEARS, A PRO-RAT A BASIS CAN BE ADOPTED FOR THE COST OF CONSTRUCTION OF DIFFERENT YEARS. TH ESE GROUNDS OF APPEAL ARE ALLOWED. ITA NO. 1837/MDS/13 CO NO.167/MDS./13 5 6. BEFORE US, LD. D.R RELIED ON THE ORDER OF THE L D. ASSESSING OFFICER AND LD. A.R ARGUED IN SUPPORT OF THE ORDER OF THE LD. CIT(A). 7. AFTER HEARING BOTH SIDES, WE DO NOT FIND ANY IN FIRMITY IN THE ORDER OF THE LD. CIT(A) BECAUSE THE LD. CIT(A) HAD ONLY DIRECTED THE REVENUE TO OBTAIN THE VALUATION REPORT OF THE DVO O N YEAR-WISE BASIS, WHICH WAS NOT AVAILABLE BEFORE THE LD. ASSE SSING OFFICER WHILE ARRIVING AT HIS DECISION. SINCE THE REVENUE HAD PR EDOMINANTLY RELIED ON THE VALUATION REPORT OF THE LD. DVO, IT IS NECES SARY FOR SUCH VALUATION REPORT TO BE EXAMINED AND COST OF CONSTRU CTION COMPUTED ON YEAR WISE BASIS DURING WHICH PERIOD THE CONSTRUC TION OF THE BUILDING WAS CARRIED ON. THIS EXERCISE IS REQUIRED , TO INCORPORATE THE EXPENDITURE INCURRED BY THE ASSESSEE ON YEAR-WISE B ASIS IF SUPPORTED BY AUTHENTIC AND GENUINE EVIDENCE. THEREFORE, WE H EREBY CONFIRM THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. 8. WITH RESPECT TO THE OTHER GROUND RAISED BY THE REVENUE WITH REGARD TO REDUCING THE COST OF CONSTRUCTION OF THE FIRST FLOOR BY 10%, WE ARE OF THE OPINION THAT THIS GROUND DO NOT SURV IVE, SINCE THE ENTIRE ISSUE WITH RESPECT TO VALUATION IS REMITTED BACK TO THE FILE OF THE ITA NO. 1837/MDS/13 CO NO.167/MDS./13 6 LD.ASSESSING OFFICER. HENCE THIS GROUND OF THE REV ENUE IS ALSO DISMISSED. 9. SINCE WE HAVE CONFIRMED THE ORDER OF THE LD. C IT(A) WITH REGARD TO THE ADDITION OF `. 13,56,450/-, THE FIRST GROUND RAISED IN THE CROSS OBJECTION IN SUPPORT OF THE ORDER OF THE LD. CIT(A) DO NOT SURVIVE AND ACCORDINGLY IS DISMISSED. FURTHER, A S WE HAVE DISMISSED THE GROUND RAISED BY THE REVENUE FOR REDU CING THE COST OF CONSTRUCTION OF FIRST FLOOR BY 10%, THE SECOND ISSU E RAISED IN THE CROSS OBJECTION HAS ALSO BECOME IN-FRUCTUOUS AND TH EREFORE DISMISSED AS SUCH. 10. IN THE RESULT, THE APPEAL OF REVENUE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 3 RD DECEMBER, 2013 AT CHENNAI. SD/- SD/- (S.S.GODARA) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 3 RD DECEMBER, 2013. K S SUNDARAM. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE