S.Sailesh, Madurai V. ITO, Madurai

ITA 2127/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4575 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 27-08-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 26-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: TN BETGERIJCIT
• Assessee Lawyers: G BASKAR
• Keywords: Unexplained investment; Valuation report
• Section: 148; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT AND SHRI S.S. GODARA, JUDICIAL MEMBER I.T.A. NO.2127/MDS/2012 ASSESSMENT YEAR : 2004-05 SHRI S. SAILESH, 216, ANNA NAGAR, MADURAI 625 020. PAN : ARTPS7624L (APPELLANT ) V. THE INCOME TAX OFFICER, WARD II(3), MADURAI. (RESPONDENT) I.T.A. NO.2189/MDS/2012 ASSESSMENT YEAR : 2004-05 THE INCOME TAX OFFICER SHRI S. SAILESH, WARD II(3) V. 216, ANNA NAGAR, MADURAI MADURAI-625 020. PAN : ARTPS7624L (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI G. BASKAR, ADVOCATE DEPARTMENT BY : SHRI TN BETGERI,JCIT DATE OF HEARING : 27 AUG 2013 DATE OF PRONOUNCEMENT : 27 AUG 2013 ITA 2127 & 2189/MDS/2012 2 O R D E R PER S.S. GODARA, JUDICIAL MEMBER : THESE APPEALS FILED BY THE ASSESSEE AND THE REVEN UE RESPECTIVELY FOR ASSESSMENT YEAR 2004-05, ARE DIRE CTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S), MADURAI DATED 07.9.2012, PASSED IN APPEAL NO.0157/10-11, IN PROCEEDINGS UNDER SEC.143(3) READ WITH SEC.147 OF T HE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THE COURSE OF HEARING, THE ASSESSEE VEHEMENT LY ARGUES THAT THE IMPUGNED RE-ASSESSMENT TAKEN RECOUR SE TO BY THE ASSESSING OFFICER AND CONFIRMED BY THE COMMISSI ONER OF INCOME TAX (APPEALS) IS BAD IN THE EYES OF LAW BEIN G NOT BASED ON ANY MATERIAL FORMING REASONS IN ISSUANCE OF SEC. 148 NOTICE. ON MERITS, THE CONTENTION OF THE ASSESSEE IS THAT T HE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN C ONFIRMING THE ADDITION OF ` .23,90,098/- TO THE EXTENT OF ` .8,73,445/- ITA 2127 & 2189/MDS/2012 3 INSTEAD OF DELETING THE ENTIRE AMOUNT. ACCORDINGLY , HE PRAYS FOR THE ACCEPTANCE OF THE APPEAL. 3. IN REPLY, THE REVENUE STRONGLY ARGUES THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS WRONGLY RE STRICTED THE ADDITION FROM ` .23,90,098/- MADE BY THE ASSESSING OFFICER TO ` .8,73,445/- ONLY. ACCORDINGLY, IT PRAYS FOR RESTOR ATION OF THE ADDITION IN ENTIRETY. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL, MANUFACTURER OF GRANITE SLABS. FOR T HE IMPUGNED ASSESSMENT YEAR, HE FILED HIS RETURN ON 30.8.2005 D ECLARING LOSS OF ` .1,20,790/-. THE SAME WAS SUMMARILY PROCESSED ON 07.1.20068. 5. IT IS TO BE SEEN FROM THE CASE FILE THAT ON 31. 3.2010, THE ASSESSING OFFICER ISSUED REOPENING NOTICE UNDER SEC.148 OF THE ACT TO THE ASSESSEE. IN REPLY, THE ASSESSEE RE ITERATED THE RETURN ALREADY SUBMITTED. HE ALSO SOUGHT REASONS F OR REOPENING WHICH WERE COMMUNICATED BY THE ASSESSING OFFICER. A PERUSAL THEREOF AT PAGE 49 OF THE PAPER BOOK MAKES IT CLEAR THAT THE ITA 2127 & 2189/MDS/2012 4 BASIS OF THE REOPENING WAS A REPORT OF VALUATION O FFICER VALUING THE COST OF CONSTRUCTION OF ASSESSEES STOCK YARD A T ` .32,52,000/- INSTEAD OF ` .8,61,902/- STATED ON BOOKS AFTER ADOPTING PLINTH AREA RATE METHOD IE. CPWD RATES. THEREAFTER, THE A SSESSING OFFICER FRAMED RE-ASSESSMENT IN ASSESSEES CASE. IN COURSE THEREOF, THE ASSESSEE FILED A VALUATION REPORT BY A N APPROVED VALUER ESTIMATING THE COST OF CONSTRUCTION AT ` .17,35,300/- BASED ON STATE PWD RATES. AS PER THE ASSESSING OFFICER, THE CPWD RATES ADOPTED BY THE VALUATION OFFICER HAD TO BE AD OPTED SINCE THEY WERE UNIVERSALLY APPLICABLE BEING BASED ON EX HAUSTIVE SPECIFICATIONS. HE ALSO HELD THAT THE STATE PWD RA TES HAD A VERY LIMITED APPLICATION SINCE THEY DID NOT WORK OUT C OST ADJUSTMENT FOR VALUATION IN FLOOR HEIGHT, FOUNDATION DEPTH ETC . ACCORDINGLY, HE ADDED AN AMOUNT OF ` .23,90,098/- IE. DIFFERENCE BETWEEN THE DVOS VALUATION AND THE ADMITTED COST IN THE ASSESS EES BOOKS OF ACCOUNT AS UNEXPLAINED INVESTMENT UNDER SEC.69B OF THE ACT. ITA 2127 & 2189/MDS/2012 5 6. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL. APAR T FROM CHALLENGING THE ADDITIONS, HE ALSO QUESTIONED THE LEGALITY OF RE-OPENING. IT IS EVIDENT FROM THE CASE FILE THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS REJECTED T HE CHALLENGE TO RE-OPENING BY PLACING RELIANCE ON THE CASE LAW OF ACIT V. RAJESH JHAVERI STOCK BROKERS (P) LTD (2007) 291 ITR 500 (SC). ON MERITS, HE HAS AGREED WITH THE ASSESSEE S CONENTION FOR ADOPTING STATE CPWD RATES AS STATED IN THE APP ROVED VALUERS REPORT ESTIMATING COST OF CONSTRUCTION AS ` .17,35,345/-. IN THIS MANNER, THE COMMISSIONER OF INCOME TAX (APP EALS) HAS RECOMPUTED THE ADDITION AS ` .8,73,445/- IS ` .17,35,300 8,61,902/-. IN THIS BACKDROP, BOTH PARTIES ARE AGGRIEVED. 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE CASE FILE. FIRST WE COME TO ASSESSEES CHALLENGE O N LEGALITY OF REOPENING. AS RIGHTLY HELD BY THE COMMISSIONER OF INCOME TAX (APPEALS), THE IMPUGNED ASSESSMENT WAS INITIALLY FR AMED UNDER ITA 2127 & 2189/MDS/2012 6 SEC.143(1) OF THE ACT. THEREAFTER, ON THE BASIS OF VALUATION REPORT BY THE DVO BASED ON SITE INSPECTION DATED 4. 5.2008 AND 5.5.2008 DETERMINING THE COST OF CONSTRUCTION AS ` .32.52 LAKHS, THE ASSESSING OFFICER REOPENED THE ASSESSMENT. IN OUR VIEW, THE SAID REPORT FORMS VALID REASON SO AS TO INITIATE TH E REOPENING IN QUESTION SINCE IN THE SUMMARY ASSESSMENT, THERE W AS NO OPINION FORMED BY THE ASSESSING OFFICER. THEREFORE , WE AGREE WITH THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) REJECTING THE ASSESSEES CONTENTIONS ON LEGALITY AS PECT. 8. ON MERITS, THERE IS HARDLY ANY DISPUTE THAT THE DVO HAD COMPUTED THE COST OF CONSTRUCTION AFTER ADOPTIN G CPWD RATES TO ` .32.52 LAKHS THOUGH THE ASSESSEE HAD SHOWN THE SAME IN HIS BOOKS AS ` .8,61,902/- ONLY. THE APPROVED VALUER SOUGHT TO BE RELIED UPON BY THE ASSESSEE HAD ALSO DETERMINED THE COST OF CONSTRUCTION AS ` .17,35,347/- BASED ON STATE PWD RATES. IT IS EVIDENT TO US THAT AFTER PLACING RELIANCE ON THE CA SE LAW OF M. SELVARAJ V. ITO (2002) 258 ITR (AT) 82 TAXMAN, III MEMBER, AS WELL AS CIT V. SMT. V. GAJALAKSHMI (2011) 331 ITR 216 (MAD), ITA 2127 & 2189/MDS/2012 7 THE COMMISSIONER OF INCOME TAX (APPEALS) HOLDS THAT IN SUCH CASES STATE PWD RATES SHOULD BE ADOPTED. ADMITTEDL Y, THE ASSESSEE HAS ALSO NOT PROVED THE COST OF CONSTRUCTI ON TO BE ONLY THAT OF ` .8,61,902/- BY PLACING OF EVIDENCE AND MATERIAL ON RECORD. THE REVENUE DOES NOT CITE ANY CASE LAW CON TRARY TO THAT RELIED UPON BY THE COMMISSIONER OF INCOME TAX (APPE ALS). IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CO MMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY RESTRICTED THE IMPUGNED ADDITION. THEREFORE, FINDINGS OF COMMISSIONER OF I NCOME TAX (APPEALS) ON MERITS ARE ALSO AFFIRMED. 9. CONSEQUENTLY, BOTH THE APPEALS OF ASSESSEE AS W ELL AS REVENUE ARE DISMISSED. ITA 2127 & 2189/MDS/2012 8 ORDER PRONOUNCED IN THE OPEN COURT AFTER HEARING ON TUESDAY, THE 27 TH DAY OF AUGUST 2013 AT CHENNAI. SD/- SD/- ( DR. O.K. NARAYANAN ) ( S.S. GODARA ) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED : 27 TH AUGUST 2013 JLS. COPY TO :- 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(APPEALS) 4) THE C.I.T., 5) THE D.R., (6) GUARD FILE.