ITO, Tirunelveli V. Dr.R.Anburajan, Tirunelveli

ITA 2015/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61189 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-05-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 12-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G BASKAR
• Keywords: Unexplained investment; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH CHENN AI BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER .. ITA NO.2014 TO 2017/MDS./2011 ASSESSMENT YEARS:2003-04 TO 2007-08 INCOME TAX OFFICER, WARD 1(1), TIRUNELVELI. VS. DR.R.ANBURAJAN, PROP. PEACE HEALTH CENTRE, NO.48H/5,NEW BUS STAND ROAD,PALAYAMKOTTAI, TIRUNELVELI. PAN ABDPA 2605 H (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI ANIRDUDH RAI, C.I.T. D.R. K.E.B.RENGARAJAN, JR.STANDING COUNSEL ASSESSEE BY : SHRI G.BASKAR, ADVOCATE DATE OF HEARING : 22 .05.12 DATE OF PRONOUNCEMENT : 25. 05.12 O R D E R PER N.S.SAINI, ACCOUNTANT MEMBER : THESE ARE THE APPEALS FILED BY THE ASSESSEE AGA INST THE CONSOLIDATED ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-II(I/C), MADURAI DATED 12.09.2011. ITA. 2014 TO 2017 /MDS/11 DR.R ANBURAJAN 2 2. THE REVENUE HAS TAKEN THE FOLLOWING COMMON GROU NDS OF APPEAL. 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX(A) HAS ER RED IN HOLDING THAT REGULAR ACCOUNTS IS CERTAINLY MORE RELIABLE THAN AN ESTIMATE BY AN EXPERT THOUGH THE ASSESSEE H AS FAILED TO PRODUCE SUPPORTIVE VOUCHERS BEFORE THE ASSESSING OFFICER FOR VERIFICATION. 3. THE COMMISSIONER OF INCOME TAX(APPEALS) OUGHT TO HAVE SEEN THE REASONS STATED BY THE ASSESSING OFFIC ER THAT THE ASSESSEE DOES NOT HAVE PROPER ACCOUNTS FOR CONSTRUCTION, MANY ITEMS OF EXPENSES ARE NOT SUPPOR TED BY BILLS OR VOUCHERS AND NO PROPER BILLS FOR PURCHA SE OF MATERIALS. FURTHER, THE ASSESSEE HAS NOT ADDUCED A NY CREDIBLE EVIDENCE TO PROVE THAT THE COST OF CONSTRU CTION ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS IS THE REAL COST OF CONSTRUCTION. 4. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT T HE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) MAY BE S ET ASIDE TO THAT EXTENT AND THAT THE ORDER OF ASSESSIN G OFFICER MAY BE RESTORED. 3. THE ONLY ISSUE INVOLVED IN THE APPEAL IS THAT T HE LEARNED COMMISSIONER OF INCOME TAX(A) ERRED IN DELETING THE ADDITION MADE TOWARDS PROPORTIONATE DIFFERENCE IN COST OF CO NSTRUCTION BETWEEN THE VALUE OF DEPARTMENTAL VALUATION OFFICER AND ITA. 2014 TO 2017 /MDS/11 DR.R ANBURAJAN 3 ASSESSEES COST OF CONSTRUCTION DURING THE RELEVANT ASSESSMENT YEARS. 3.1. THE BRIEF ACTS OF THE CASE ARE THAT THE ASSES SEE IS A DOCTOR BY PROFESSION. THE ASSESSEE CONSTRUCTED A N URSING HOME NAMELY PEACE HEALTH CENTRE AND A MEDICAL STO RE AT TIRUNELVELI . THE COST OF CONSTRUCTION OF THE BU ILDING WAS DURING THE PERIOD 2001-02 TO 2007-08. THE COST OF CONSTRUCTION AS AT 31.03.2007 AS PER THE RETURN OF INCOME FOR ASSESSMENT YEAR 2007-08 WAS ` 95,25,169/-. ASSESSING OFFICER REFERRED THE MATTER TO THE VALUATION OFFICE R, WHO VALUED THE SAME ON 25.03.2009 AND VALUED THE COST AT ` 1,09,88,000/- IN THE FIRST REPORT AND ` 1,18,08,700/- IN THE MODIFIED REPORT. ASSESSING OFFICER ASSESSED THE DIFFERENCE IN COST O F CONSTRUCTION ON PRO-RATA BASIS UNDER THE HEAD UNEXP LAINED INVESTMENT FOR VARIOUS ASSESSMENT YEARS. DETAILS A RE AS FOLLOWS: A.Y DATE OF FILING OF RETURN RETURNED INCOME ASSESSED INCOME ADMITTED COST OF CONSTRUCTION (A) ESTIMATED COST OF CONSTRUCTION AS PER DVO (B) DIFFERENCE IN COST OF CONSTRUCTION (B) (A) 2003- 04 24.3.04 2,03,656 12,84,456 45,08,281 55,89,081 10,80,800 2004- 05 21.12.04 (-)75,243 3,69,670 25,62,964 31,77,400 6,1 4,436 2006- 07 26.02.07 3,65,898 8,14,390 17,64,567 21,87,598 4,23,031 2007- 08 14.11.07 4,24,841 3,96,406 2,19,405 2,72,004 52,599 4. BEING AGGRIEVED AGAINST THE ORDER OF THE ASSESS ING OFFICER, THE ASSESSEE FILED AN APPEAL BEFORE THE CO MMISSIONER ITA. 2014 TO 2017 /MDS/11 DR.R ANBURAJAN 4 OF INCOME TAX(A). THE ASSESSEE CONTENDED THAT ASSE SSING OFFICER HAD NOT POINTED OUT ANY MATERIAL DEFECTS IN THE ACCOUNTS MAINTAINED BY THE ASSESSEE. IT WAS FURTHER SUBMISSION THAT CPWD RATES WERE ADOPTED FOR VALUATI ON BY DVO WHEREAS ASSESSEE CLAIMED THAT STATE PWD RATES S HOULD BE TAKEN INTO CONSIDERATION FOR VALUATION OF THE BU ILDING. ASSESSEE QUESTIONED THE RATE OF REBATE AT 6% ALLOWE D TOWARD SELF SUPERVISION AND DIRECT PURCHASE OF BUILDING MA TERIALS. THE COMMISSIONER OF INCOME TAX(A) DELETED THE ADDITIONS BY OBSERVING AS UNDER:- 6. ONLY ISSUE TO BE DECIDED IN ALL THE APPEALS IS THE ADDITION MADE TOWARDS PROPORTIONATE DIFFERENCE IN C OST OF CONSTRUCTION BETWEEN THE VALUE OF DEPARTMENTAL VALUATION OFFICER AND ASSESSEES COST OF CONSTRUCTI ON DURING THE RELEVANT ASSESSMENT YEARS. AS PER BOOKS OF ACCOUNTS OF ASSESSEE, TOTAL COST O F CONSTRUCTION OF HOSPITAL WAS ` 1,06,70,600/- AS ON 31.03.2008. ASSESSING OFFICER HAD NOT POINTED OUT A NY MATERIAL DEFECTS IN THE ACCOUNTS MAINTAINED BY THE APPELLANT. 6.1. DEPARTMENTAL VALUATION OFFICER (DVO) IN HIS R EPORT DATED 30.6.09 ARRIVED AT ESTIMATED COST OF CONSTRUC TION OF HOSPITAL AT ` 1,09,88,000/-. HOWEVER, THE ESTIMATED COST WAS REVISED TO ` 1,18,08,700/- VIDE MODIFIED REPORT DATED 18.08.09. THE UPWARD REVISION OF ESTIMATED C OST OF CONSTRUCTION IN THE MODIFIED REPORT WAS SAID TO BE ON ACCOUNT OF TYPING ERROR IN THE ORIGINAL REPORT. ITA. 2014 TO 2017 /MDS/11 DR.R ANBURAJAN 5 6.2. ASSESSEE OBJECTED TO THE ESTIMATED COST OF CONSTRUCTION AS PER THE VALUATION REPORT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE FOLLOWING REASONS: A) APPLICATION OF CPWD PLINTH AREA RATES INSTEAD OF STATE PWD RATES. B) REBATE OF SELF SUPERVISION AND DIRECT PURCHASE W AS ALLOWED ONLY AT 6% AT TOTAL COST. C) THE COST OF VETRIFIED FLOORING TILES WAS ACTUALL Y ` 825/- PER SQ. MT (SUPPORTED BY PURCHASE BILLS) INSTEAD OF ` 1,140/- PER.SQ.MT. ADOPTED BY DVO. D) DVO ESTIMATED CHARGES FOR PREPARATION OF PLANS/DRAWINGS/PLAN APPROVAL ETC AT 3% OF TOTAL COS T WHEREAS AMOUNT ACTUALLY INCURRED WAS MUCH LESS. 6.3. OVERRULING THESE OBJECTIONS, ASSESSING OFFICE R CONSIDERED THE DIFFERENCE IN THE CONSTRUCTION OF HO SPITAL ON PRO-RATA BASIS TO ARRIVE AT ASSESSABLE INCOME FO R RELEVANT ASSESSMENT YEARS. IN RESPECT OF INCOME TAX VALUATION, THE VALUER IS A MERE EXPERT TO GUIDE ASS ESSING OFFICER. WHEN THE OBJECTIONS WERE RAISED BY ASSES SEE, ASSESSING OFFICER SHOULD HAVE REFERRED THE MATTER T O DVO FOR HIS COMMENTS. ASSESSING OFFICER HAD NOT DONE SO . 6.4. IT HAS BEEN CONSIDERED IN ITO VS. SMT. SANTHO SH KHANNA 20 TAXMAN 15(JP)(ITAT), WHERE THE STATE PWD RATES HAD BEEN THE BASIS OF THE VALUATION OF THE RE GISTERED VALUER, THE SUBSTITUTION OF THE SAME WITH REFERENCE TO THE RATES PRESCRIBED BY THE CENTRAL PWD, WHICH WAS THE BASIS OF VALUATION MADE BY THE VALUATION CELL WAS N OT WARRANTED. IT WAS ACCEPTED THAT FOR PROPERTY SITUA TED IN ITA. 2014 TO 2017 /MDS/11 DR.R ANBURAJAN 6 RAJASTHAN, THE LOCAL PWD RATES SHOULD HAVE GREATER RELEVANCE AND THAT SUCH A VIEW HAS ALREADY BEEN TAK EN BY THE JAIPUR BENCH IN SOME OTHER CASES. A SIMILAR VIEW WAS TAKEN BY THE TRIBUNAL IN SHEIKHA R CHAND JAIN AND SONS VS. IAC (1999) 45 TAXMAN 82(TAX MAG), WHERE IT WAS HELD THAT THE VALUATION CELL WAS NOT JUSTIFIED IN REJECTING THE REGISTERED VALUERS REPO RT BASED UPON LOCAL PWD RATES MERELY BECAUSE THE CENTRAL PWD RTES WERE HIGHER, SINCE THE LOCAL PWD RATES ARE ALS O FIXED BY A GOVT. DEPARTMENT, WHICH COULD NOT BE DISREGARD ED WITHOUT ADEQUATE MATERIALS. WHEN THERE IS A DIFFERE NCE BETWEEN THE CPWD AND STATE PWD RATES, ONLY THE LAT TER WILL HAVE GREATER CREDIBILITY, UNLESS IT COULD BE S HOWN THAT THE FACTS WARRANT A DIFFERENT INFERENCE. 6.5 MAXIMUM REBATE WHICH CAN BE ALLOWED WHILE ESTIMATING VALUE OF THE INVESTMENT IN CONSTRUCTION IS 7.5% IF CPWD PLINTH AREA RATE IS ADOPTED (P.82 TO 84 OF GUIDELINES FOR VALUATION OF IMMOVABLE PROPERTIES, 2 009, PUBLISHED BY DTE. OF INCOME TAX). HOWEVER, DVO HAD CONSIDERED ONLY 6% REBATE TOWARDS SELF SUPERVISION AND DIRECT PURCHASE OF MATERIALS. MAXIMUM REBATE @ 7.5% ON TOTAL COST OF ` 1,16,89,433/- (AS PER DVOS FIGURE) WORKS OUT TO ` 8,76,707/- AS AGAINST DVOS REBATE @ 6% OF ` 7,01,366/-. THE DIFFERENCE WORKED OUT TO ` 1,75,341/- ( ` 8,76,707 ` 7,01,366). THE CLAIM OF ASSESSEE REGARDING COST OF VETRIFIED T ILES SEEMS TO BE CORRECT. ITA. 2014 TO 2017 /MDS/11 DR.R ANBURAJAN 7 6.6. DVO IN HIS REPORT IN ASSESSEES CASE HAD ESTIMATED CHARGES FOR PREPARATION OF PLANS, STRUCTU RAL DRAWINGS, APPROVAL FROM LOCAL BODIES ETC. @ 3% OF T OTAL COST AT ` 2,33,780/- AND CONSIDERED ARCHITECT FEE AT ` 1,55,964/-. VALUATION AUTHORITIES THEMSELVES HAD ADDED PAYMENT TOWARDS PLANS, STRUCTURAL DRAWINGS, APPROVAL FROM L OCAL BODIES ETC. @ 1% OF TOTAL COST IN CERTAIN OTHER CAS ES. SIMILARLY, ARCHITECT FEE PAYMENT WAS ADDED @ 1% OF TOTAL COST IN SUCH CASES. IF 1% OF TOTAL COST IS CONSIDERED FOR PAYMENT TO WARDS PLANS, STRUCTURAL DRAWINGS, APPROVAL FROM LOCAL BOD IES ETC. AND FOR ARCHITECT FEE EACH, THEN THERE WOULD BE SUB STANTIAL REDUCTION IN THE ESTIMATE OF DVO. IF STATE PWD RATES ARE ADOPTED INSTEAD OF CENTRAL PWD RATES, THEN THERE WOULD BE FURTHER SUBSTANTIAL REDU CTION IN THE ESTIMATE OF DVO. ULTIMATELY, THE DIFFERENCE BETWEEN THE COST OF CONSTRUCTION ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS OF ASSESSEE AND THE ESTIMATE OF DVO AFTER TAKING INTO ACCOUNT THE ABOVE FACTORS WOULD BE VERY NEGLIGIBLE. 6.7 DURING THE COURSE OF APPELLATE PROCEEDINGS, ASSESSEE PRODUCED BOOKS OF ACCOUNTS PERTAINING TO C OST OF CONSTRUCTION OF HOSPITAL A WELL AS ORIGINAL VOUCHERS/BILLS/INVOICES IN THIS REGARD. I HAVE PER USED THEM. IN MY VIEW, ASSESSEE HAD MAINTAINED PROPER ORIGINAL BILLS/VOUCHERS IN RESPECT OF MOST OF THE E XPENSES RECORDED IN THE CONSTRUCTION ACCOUNT FOR RELEVANT ASSESSMENT YEARS. ASSESSING OFFICER HAD NOT FOUND O UT ITA. 2014 TO 2017 /MDS/11 DR.R ANBURAJAN 8 ANY CONTROVERTIBLE MATERIALS TO SHOW THAT THE COST WAS DEFINITELY HIGHER THAN DECLARED. ASSESSING OFFICER DID NOT POINT OUT ANY DEFICIENCY IN THE ACCOUNTS OF ASSESSE E. SHE DID NOT REJECT THE BOOKS OF ACCOUNTS OF ASSESSEE. 6.8 IN ITO V.J K K TEXTILE PROCESSING MILLS (1990 ) 38 ITD 178 (SPECIAL BENCH) IT WAS HELD THAT WHERE THE ASSESSING OFFICER HAS NOT ESTABLISHED THAT THE ASS ESSEE HAS SPENT ANYTHING MORE THAN WHAT IS RECORDED IN TH E BOOKS FOR THE CONSTRUCTION OF THE BUILDING NOR WAS THERE ANY MATERIAL ON RECORD SUGGESTIVE OF SUCH EXPENDITU RE HAVING BEEN INCURRED, NO ADDITION COULD BE MADE. IN ITO V MEGHIJI JADAV & CO (1986) 18 ITD 170(AHD.)(TM) IT WAS HELD THAT CONSTRUCTION COSTS A S IN THE BOOKS COULD NOT BE DISBELIEVED MERELY BECAUSE T HE VALUE OF CONSTRUCTED PROPERTY WAS ESTIMATED AT A HI GHER AMOUNT. IN SHEIKHAR CHAND JAIN AND SONS VS. IAC (1999) 45 TAXMAN 82(TAX MAG),(DEL.) IT WAS POINTED OUT THA T VALUATION REPORT WITHOUT REFERENCE TO BOOKS OF ACCO UNTS WOULD BE BAD IN LAW. WHERE THE ASSESSEE HAS MAINTAINED PROPER BOOKS OF ACCOUNTS IN RESPECT OF THE INVESTMENT MADE IN TH E CONSTRUCTION OF HOUSE PROPERTY, NO DEFECTS ARE POIN TED OUT IN SUCH BOOKS, THE EXPENSES ARE FULLY SUPPORTED BY VOUCHERS AND FULL DETAILS ARE ALSO MENTIONED IN RES PECT OF EACH ITEM IN THE BOOKS, SIMPLY BECAUSE A VALUATION REPORT HAS BEEN OBTAINED WHICH GIVES VALUATION AT A HIGHER AMOUNT, THE BOOKS CANNOT BE SAID TO BE UNRELIABLE A ND NO ITA. 2014 TO 2017 /MDS/11 DR.R ANBURAJAN 9 ADDITION ON THE BASIS OF SUCH HIGHER VALUATION CAN BE MADE [C.I.T V PRATAPSINGH AMROSINGH RAJENDRA SINGH AND DEEPAK KUMAR (1993) 200 ITR 788 (RAJ.) 6.9 HONBLE ITAT AMRITSAR BENCH IN ITS ORDER DT.09.03.2007 IN THE CASE OF DR.RAMESH KUMAR ANAND VS. ITO ( IT APPEAL NO.56(ASR) OF 2001) HELD AS FOLLOWS : WHERE VALUATION OFFICER ESTIMATED COST OF PROPER TY IN QUESTION BY APPLYING CPWD RATES INSTEAD OF LOCAL PW D RATES, WHICH RATES SHOULD HAVE BEEN APPLIED, COST ESTIMATED BEING EXCESSIVE, RELIEF AT 15% OF THE COS T ESTIMATED BY THE VALUATION OFFICER WAS TO BE GIVEN AND SINCE AFTER THAT DIFFERENCE IN COST WORKED OUT TO J UST ABOUT 10%, NO ADDITION ON ACCOUNT OF UNEXPLAINED INVESTME NT WAS TO BE MADE. 7. CONSTRUCTION COST RECORDED IN THE BOOKS OF ACCOUNTS NEED NOT BE DISBELIEVED MERELY BECAUSE THE VALUE OF THE CONSTRUCTED PROPERTY WAS ESTIMATED AT HIGHER AMOUNT BY THE DVO. EVIDENCE IN THE FORM OF REGULAR ACCOUNTS IS CERTAINLY MORE RELIABLE THEN AN ESTIMAT E BY AN EXPERT. WHERE BOOKS ARE MAINTAINED FOR COST OF CONSTRUCTION, THE QUESTION OF RESORT TO EXPERT VALU ATION SHOULD ALSO ARISE ONLY WHEN THE BOOKS WERE FOUND TO BE UNRELIABLE. IN ASSESSEES CASE, COST OF CONSTRUCTIO N IS DULY SUPPORTED BY PROPER VOUCHERS/BILLS ETC. IN SUCH CIRCUMSTANCES, I AM NOT INCLINED TO AGREE WITH ASSE SSING OFFICERS STAND TO MAKE ADDITIONS ONLY ON THE BASIS OF ESTIMATE OBTAINED FROM DVO. CONSEQUENTLY ADDITIONS ITA. 2014 TO 2017 /MDS/11 DR.R ANBURAJAN 10 MADE FOR VARIOUS ASSESSMENT YEARS TOWARDS DIFFEREN CE IN COST OF CONSTRUCTION AS UNEXPLAINED INVESTMENTS, ARE DIRECTED TO BE DELETED. 5. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER IN ASSESSMENT YEAR 2007-08 HAS MENTIONED THAT THE ASSESSEE HAS NOT MAINTAINED PROP ER ACCOUNTS FOR COST OF CONSTRUCTION. MANY ITEMS OF EX PENSES ARE NOT SUPPORTED BY BILLS OR VOUCHERS. THERE ARE ALSO NO PROPER BILLS FOR PURCHASE OF MATERIALS. THE ASSESSEE HAS NOT ADDUCED ANY CREDIBLE EVIDENCE OF MATERIALS TO PROVE THAT THE COST OF CONSTRUCTION ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS IS THE REAL COST OF CONSTRUCTION. HE ,THEREFORE, REFER RED THE MATTER TO THE DVO FOR ESTIMATING THE COST OF CONSTRUCTION. HE SUBMITTED THAT FROM THE ABOVE QUOTED REASONS IT CAN BE INFERRED THAT THE ASSESSING OFFICER HAS REJECTED TH E BOOKS OF ACCOUNTS OF THE ASSESSEE BEFORE REFERRING THE MAT TER TO THE DVO. HE FURTHER REFERRED TO THE DVOS REPORT WHERE IN THE DVO AT PARA NO.4.1.1. OF HIS REPORT DATED 30.06.09 HAS OBSERVED THAT THE ACCOUNTS METHOD OF VALUATION CAN BE ADOPTED ONLY IF PROPER BOOKS OF ACCOUNTS ARE MAINT AINED BY THE OWNER DULY SUPPORTED WITH VOUCHERS. SCRUTINY O F THE ACCOUNTS AND VOUCHERS ARE REQUIRED TO FIND OUT IF T HE QUANTITY ACCOUNTED FOR THE MATERIALS AND LABORERS ARE COMMEN SURATE WITH THE REQUIREMENTS OF THE BUILDING. THIS METHOD COULD NOT BE ADOPTED IN THE ABSENCE OF DETAILED WORKING DRAWI NGS AND BILL OF QUANTITIES. HE THUS SUBMITTED THAT DVO HAS ALSO OPINED THAT NO PROPER BOOK OF ACCOUNTS WAS MAINTAINED BY T HE ASSESSEE FOR COST OF CONSTRUCTION OF THE BUILDING. HENCE, HE ITA. 2014 TO 2017 /MDS/11 DR.R ANBURAJAN 11 JUSTIFIED THE ACTION OF THE ASSESSING OFFICER IN RE FERRING THE MATTER TO THE DVO. AS REGARDS CPWD RATES ADOPTED B Y MAKING VALUATION OF THE BUILDING, IT WAS THE SUBMIS SION THAT MOST OF THE BUILDINGS OF THE GOVERNMENT ARE CONSTRU CTED BY THE CPWD PEOPLES SUCH AS BSNL BUILDINGS, INCOME-TAX BUILDINGS, POST OFFICE BUILDINGS ETC. AND IT CANNOT BE SAID THAT THE GOVERNMENT IS PAYING HIGHER RATE FOR CONSTRUCTI ON OF THE BUILDING AND THAT THE SAME IS NOT THE ACTUAL COST O F THE BUILDING. 6. ON THE OTHER HAND, AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE BOOKS ACCOUNT OF THE AS SESSEE WERE NOT REJECTED BY THE ASSESSING OFFICER AND THER EFORE, ASSESSING OFFICER COULD NOT HAVE PROCEEDED TO ESTIM ATE THE COST OF CONSTRUCTION OF THE BUILDING BY MAKING A RE FERENCE TO THE DVO. THE AUTHORISED REPRESENTATIVE OF THE ASSES SEE RELIED ON THE DECISION OF THE CHENNAI B BENCH OF THE TRIBUNAL IN THE CASE OF C.I.T. VS. SMT. C.K.SUMATHY REPORTED IN [2010] 6 ITR (TRIB) 193 (CHENNAI) WHERE IT WAS HELD THAT T HE PWD RATES ARE APPLICABLE IN THE CASE OF VALUE OF THE PR OPERTY SITUATED IN A MOFUSSIL AREA. 15 PER CENT DEDUCTION APART FROM THE DEDUCTION TOWARDS SELF-SUPERVISION SHOULD BE GI VEN FOR MATCHING THE COST OF CONSTRUCTION ESTIMATED ON THE BASIS OF CPWD RATES WITH THE PWD RATES. HE SUBMITTED THAT I F 15% REDUCTION IS GIVEN IN THE COST OF CONSTRUCTION, THE N THE COST OF CONSTRUCTION SHOWN BY ITS BOOKS OF ACCOUNTS COMPARE S FAVORABLY WITH THAT OF THE DVOS. ITA. 2014 TO 2017 /MDS/11 DR.R ANBURAJAN 12 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAIL ABLE ON RECORD, WE FIND THAT IN THE INSTANT CASE ASSESSING OFFICER OBSERVED THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE FOR COST OF CONSTRUCTION OF THE BUILDING IS NOT RELIABLE ON THE GROUNDS THAT MANY ITEMS OF EXPENSES ARE NOT SUPPORTED BY BI LLS OR VOUCHERS AND THERE ARE ALSO NO PROPER BILLS FOR PUR CHASE OF MATERIALS. ON THE ABOVE FACTS, WE AGREE WITH THE DEPARTMENTAL REPRESENTATIVE THAT BOOKS OF ACCOUNTS OF THE ASSESSEE IN RESPECT OF COST OF CONSTRUCTION OF BUIL DING WERE REJECTED BY THE ASSESSING OFFICER. HOWEVER, WE FIN D THAT SUCH A REJECTION WAS NOT MADE AFTER POINTING OUT ANY SPE CIFIC DEFECT IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND WAS RE JECTED MERELY ON THE BASIS OF GENERALIZED STATEMENT. WE F IND THAT THE COMMISSIONER OF INCOME TAX(APPEALS) HAS CATEGORICA LLY RECORDED FINDING THAT ON PERUSING OF BOOKS OF ACCO UNTS AND ORIGINAL BILLS AND VOUCHERS, HE FOUND THAT ASSESSE E HAD MAINTAINED PROPER ORIGINAL BILLS/VOUCHERS IN RESPEC T OF MOST OF THE EXPENSES RECORDED IN THE CONSTRUCTION ACCOUNT F OR RELEVANT ASSESSMENT YEARS. THE DEPARTMENTAL REPRESENTATIVE C OULD NOT BRING ANY MATERIAL BEFORE US TO CONTROVERT THE ABOVE FINDING OF THE COMMISSIONER OF INCOME TAX(APPEALS). IN ABS ENCE OF ANY SPECIFIC DEFECT BROUGHT BY THE ASSESSING OFFICE R IN RESPECT OF COST OF CONSTRUCTION OF BUILDING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND IN VIEW OF THE ABOVE FINDING OF THE COMMISSIONER OF INCOME TAX(APPEALS), IN OUR CONSIDE RED OPINION THE REJECTION OF BOOKS OF ACCOUNT BY THE A SSESSING OFFICER IS UNTENABLE AND CANNOT BE SUSTAINED. CONSE QUENTLY, THE REFERENCE TO THE DVO BY THE ASSESSING OFFICER W AS NOT ITA. 2014 TO 2017 /MDS/11 DR.R ANBURAJAN 13 JUSTIFIED. IN RESPECT OF ADOPTING CPWD RATES FOR VA LUATION OF BUILDING, WE FIND THAT THE ISSUE IS SQUARELY COVE RED BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF C.I.T. VS. SMT. V.GAJALAKSHMI [2011] 331 ITR 216 WH EREIN IT WAS HELD THAT THE TRIBUNAL IN ITS ORDER HAD FOUND T HAT ADOPTION OF THE RATE BY THE ASSESSING OFFICER BASED ON STATE PWD RATES AT ` 3079/- PER SQ. MTR. WAS JUSTIFIED. WE ALSO FIND TH AT THE THIRD MEMBER OF THE TRIBUNAL IN THE CASE OF M.SELV ARAJ VS. ITO (2002) 258 ITR (AT) PAGE 82 (CHENNAI) HAS HELD AS UNDER: COMING TO THE ASSESSEES PLEA THAT THE STATE P.W.D RATES SHOULD HAVE BEEN ADOPTED, I AM OF THE OPINION THAT THIS IS SUE IS SQUARELY COVERED BY THE DECISION OF THE A-BENCH OF THIS TRIB UNAL IN THE CASE OF M.S.PONRAJ (I.T.A NOS.1656 & 1657 OF 1996) REFERRED TO EARLIER, A COPY OF WHICH IS PLACED ON RECORD, IN FA VOUR OF THE ASSESSEE AND AGAINST THE REVENUE, MORE SO BECAUSE T HE REVENUE HAS NOT BROUGHT ANY DECISION TO MY KNOWLEDG E TAKING A CONTRARY VIEW. I AM THEREFORE, OF THE OPINION THAT IF AT ALL THE COST OF CONSTRUCTION IS TO BE DETERMINED IT SHOULD HAVE BEEN BY ADOPTING THE STATE P.W.D.RATES AND NOT BY ADOPTING THE C.P.W.D RATES. THE VALUATION REPORT BASED ON THE CPWD RATE S WAS THEREFORE, NOT BE RELIED UPON. 8. STILL FURTHER, THE CHENNAI B BENCH OF THE TRIB UNAL IN THE CASE OF ACIT VS. M/S.T.N.NANDAGOPAL & SONS IN ITA NOS.17 7 TO 179/MDS./2011 IN ASSESSMENT YEARS 2002-03 TO 2004-0 5, ORDER DATED 21.06.2011, AND CHENNAI C BENCH OF THE TRIB UNAL IN THE CASE OF M.AMUTHA VS. ACIT IN ITA NO.961/MDS./2010 IN ASS ESSMENT YEARS 2006-07, ORDER DATED 16.06.2011 HAS ALSO HELD ACCORDINGLY. ITA. 2014 TO 2017 /MDS/11 DR.R ANBURAJAN 14 THEREFORE, WE DO NOT FIND ANY FORCE IN THE ARGUMENT OF THE DEPARTMENTAL REPRESENTATIVE. IN ABSENCE OF ANY OTHE R SPECIFIC DEFECT BEING POINTED OUT IN THE ORDER OF THE COMMIS SIONER OF INCOME TAX(APPEALS), WE DO NOT FIND ANY GOOD AND J USTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIO NER OF INCOME TAX(A) AND THEREFORE, THE APPEALS OF THE REV ENUE ARE DISMISSED AND THE ORDER OF THE COMMISSIONER OF INCO ME TAX(APPEALS) IS CONFIRMED. 8. IN THE RESULT, THE APPEALS OF REVENUE ARE DISMI SSED. ORDER PRONOUNCED ON FRIDAY, THE 25 TH MAY, 2012 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD ) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 25 TH MAY, 2012. K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE ITA. 2014 TO 2017 /MDS/11 DR.R ANBURAJAN 15