Murari Lal Goel , Lucknow V. Dy. Commissioner of Income Tax , Lucknow

ITA 191/LKW/2013

• Counselvise Citation: 19123714 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 01-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: YOGESH AGARWAL
• Keywords: Unexplained investment; Unexplained expenditure; Valuation report
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 191/LKW/2013 ASSESSMENT YEAR: 2008 - 09 MURARI LAL GOEL 122/8, GOEL HOUSE FAIZABAD ROAD , LUCKNOW V. DY. CIT RANGE 1 LUCKNOW PAN: AERPG0708G (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. YOGESH AGARWAL, ADVOCATE RESPONDENT BY: SHRI. ALOK MITRA, D.R. DATE OF HEARING: 16 05 2014 DATE OF PRONOUNCEMENT: 23 05 2014 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS: - 1 . THE LD CIT APPEAL - I, LKO ERRED IN FACT AND IN LAW IN CONFIRMING THE REJECTION OF THE BOOKS OF ACCOUNTS WITHOUT POINTING OUT ANY MISTAKE OR DEFECT IN THE BOOKS OF ACCOUNTS. 2 . THE LD CIT APPEAL - I , LKO ERRED IN FACTS AND IN LAW IN CONFIRMING THE REFERENCE TO THE DVO FOR VALUATION OF INVESTMENT IN THE RESIDENTIAL TOWER WHEREAS THE NATURE OF THE BUSINESS ACTIVITY OF THE ASSESSEE WAS C ONSTRUCTION ACTIVITY AND EXPENDITURE ON CONSTRUCTION WAS DEBITED I N THE PROFIT & LOSS ACCOUNT AND ANY UNEXPLAINED EXPENDITURE IS COVERED BY PROVISION OF SECTION 69 C OF THE IT ACT 1961, WHICH IS NOT COVERED BY THE SECTION 142 A . 3 . THE LD CIT APPEAL - I, LUCKNO W IN FACTS IN LAW IN NOT DISCUSSING THE REJECTION OF AND ACCOUNTS UNDER SECTION 145(3). 4 . THE LD CIT APPEAL - I, LUCKNOW ERRED IN FACTS IN LAW IN CONFIRMING PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : THE ADDITION OF RS.19,30,048/ - WHI CH WAS ONLY 5.57% OF THE DECLARED EXPENDITURE RELATED TO THE CONSTRUC TION WHERE AS THE ASSESSMENT COMPLETED IS HIGHLY EXCESSIVE AND AGAINST THE NATURAL J U STICE AND FAIR PLAY. 2 . THOUGH VARIOUS GROUNDS ARE RAISED, BUT THEY ALL RELATE TO THE ADDITION ON ACCOUNT OF DIFFERENCE IN THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE AND ESTIMATED BY THE DEPARTMENTAL VALUATION OFFICER (DVO). 3 . THE FACTS IN BRIEF CULLED OUT FROM THE ORDERS OF THE LOWER AUTHORITIES ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS MADE INVESTMENT IN THE CONSTRUCTION OF PROPERTY DURING THE IMPUGNED ASSESSMENT YEAR AT RS.3,46,52,002/ - . THE ASSESSEE WAS ASKED TO PRODUCE THE BOOKS OF ACCOUNT; DETAILS OF EXPENDITURES; VOUCHERS; ETC., WHICH WERE PRODUCED BY THE ASSESSEE , BUT THE ASSESSING OFFICER WAS NOT SATI SFIED WITH THE SAME AND HE MADE A REFERENCE TO THE DVO FOR ESTIMATING THE INVESTMENT IN THE CONSTRUCTION OF THE PROPERTY. CONSEQUENTLY, THE DVO ESTIMATED THE COST OF CONSTRUCTION AT RS.3,65,82,050/ - . RELYING UPON THE VALUATION REPORT OF THE DVO, THE ASSE SSING OFFICER MADE AN ADDITION OF RS.19,30 , 048/ - UNDER SECTION 69 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') AS UNEXPLAINED INVESTMENT IN THE PROPERTY. 4 . THE ADDITION WAS CHALLENGED BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT THE CONSTRUCTION OF THE PROPERTY UNDERTAKEN BY THE ASSESSEE WAS NOT AN INVESTMENT BUT WAS AN EXPENDITURE , AS THE PROPERTY CONSTRUCTED CONSTITUTED ITS STOCK IN TRADE . T HEREFORE, REFERENCE TO THE DVO WAS NOT PROPER. THE LD. CIT(A) REJECTED THE CONTENTIONS OF T HE ASSESSEE AND APPROVED THE ORDER OF THE ASSESSING OFFICER MAKING ADDITION OF RS.19,30,048/ - UNDER SECTION 69 OF THE ACT. THE LD. CIT(A) HAS ALSO REJECTED THE CONTENTION OF THE ASSESSEE THAT SINCE THE DIFFERENCE BETWEEN THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE AND ESTIMATED BY THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : DVO WAS ONLY AT 5.57% , T HEREFORE, THE SAME SHOULD HAVE BEEN IGNORED BEING NEGLIGIBLE DIFFERENCE IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS. 5 . AGGRIEVED, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND RE ITERATED HIS CONTENTIONS. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO CONTENDED THAT REFERENCE TO THE DVO WAS MADE WITHOUT REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE. THEREFORE , ON THAT SCORE REFERENCE TO THE DVO WAS BAD. IT WAS ALSO CONTENDED THAT TH E DIFFERENCE BETWEEN THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE AND ESTIMATED BY THE DVO WAS LESS THAN 10%. THEREFORE, NO ADDITION FOR THE DIFFERENCE IS CALLED FOR UNDER SECTION 69 OF THE ACT. 6 . THE LD. D.R., ON THE OTHER HAND, HAS SUPPORTED THE ORDE R OF THE LD. CIT(A). 7 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF RECORD, WE FIND FORCE IN THE CONTENTIONS OF THE ASSESSEE. THE ASSESSEE HAS DECLARED THE COST OF CONSTRUCTION AT RS.3,46,52,002/ - AND MAINTA INED PROPER BOOKS OF ACCOUNT IN THIS REGARD WHICH WAS EXAMINED BY THE ASSESSING OFFICER, BUT NO SPECIFIC DEFECT WAS POINTED OUT . MOREOVER, THE DIFFERENCE BETWE EN THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE AND ESTIMATED BY THE DVO WAS LESS THAN 10%. IT HAS BEEN REPEATEDLY HELD BY VARIOUS HIGH COURTS AND THE TRIBUNAL THAT WHERE THE DIFFERENCE BETWEEN THE COSTS OF CONSTRUCTION DECLARED BY THE ASSESSEE AND ESTIMATED BY THE DVO IS LESS THAN 10%, THE DIFFERENCE SHOULD BE IGNORED IN THE LIGHT OF THE ACCOU NTS MAINTAINED BY THE ASSESSEE. THIS FACT CANNOT BE IGNORED THAT THE ASSESSEE HAS MAINTAINED THE ACCOUNTS FOR EXPENDITURES INCURRED , WHEREAS THE DVO HAS ESTIMATED THE COST OF CONSTRUCTION. IN THE LIGHT OF THESE FACTS, WE ARE OF THE VIEW THAT THE ADDITION OF RS.19,30,048/ - AS DIFFERENCE BETWEEN THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE AND ESTIMATED BY THE DVO IS NOT CALLED FOR, AS THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : DIFFERENCE IS VERY NEGLIGIBLE I.E. 5.57%. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DELETE THE AD DITION IN THIS REGARD. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.5.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23 RD MAY , 2014 JJ: 1905 COPY FORWAR DED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )