Addl. C.I.T., Range-2, Farrukhabad V. M/s Sweta Kalyan Samiti, Farrukhabad

ITA 219/AGR/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0379 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-02-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 13-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S K GUPTA
• Keywords: Depreciation; Loose papers; Valuation report; Assessment record
• Section: 143(3); 133A; 69; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.219/AGR/2011 ASSESSMENT YEAR: 2005-06 ADD. COMMISSIONER OF INCOME TAX, VS. M/S. SW ETA KALYAN SAMITI, RANGE-2, FARRUKHABAD. 1/59, AWAS VIKAS COLONY, FARRUAKHABAD. (PAN: AAAJS 2803 H). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : SHRI SWARAN SINGH, FCA & SHRI S.K. GUPTA, C.A. DATE OF HEARING : 19.02.2013 DATE OF PRONOUNCEMENT OF ORDER : 22.02.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 28.03.2011 PASSED BY THE LD. CIT(A), GHAZIABAD FOR THE ASSESSM ENT YEAR 2005-06. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.31,05,967/- ON ACCOUNT OF ALLEGED IN COME AND UNACCOUNTED EXPENSES AND INVESTMENT, IGNORING THE F ACT THAT ASSESSEE SOCIETY WAS NOT MAINTAINING BOOKS OF ACCOUNT IN REG ULAR COURSE OF BUSINESS AND FOR THE SAME REASON IT WAS NOT ENTITLE D FOR EXEMPTION U/S 10(23C) OF THE ACT. ITA NO.219/AGR/2011 A.Y. 2005-06 2 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.11,83,249/- MADE ON THE BASIS OF THE VALUERS REPORT WITHOUT GIVING SUFFICIENT OPPORTUNITY TO VALUATION OFFICER TO MAKE HIS STAND CLEAR ON THIS ISSUE AND PASSING THE ORDER IN HASTE. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS ALL OWING THE EXEMPTION U/S 10(23C) OF THE I.T. ACT, IGNORING THE FACT THAT ASSESSEE WAS NOT MAINTAINING BOOKS OF ACCOUNT IN REGULAR COU RSE OF BUSINESS. 4. THE LD. CIT(A) HAS ERRED IN ALLOWING THE EXEMPTI ON ON THE BASIS OF EXEMPTION GRANTED TO THE ASSESSEE IN PREVIOUS AN D SUBSEQUENT YEARS WHICH IS NOT CORRECT AS PER LAW BECAUSE DOCTRINE OF RES-JUDICATA IN NOT APPLICABLE IN INCOME TAX PROCEEDINGS. MOREOVER NON MAINTENANCE OF BOOKS OF ACCOUNTS IN THE ISSUE IN THIS YEAR ONLY. 5. APPELLANT CRAVES LEAVE TO AMEND ALTER, ADD OR MO DIFY ANY GROUND OR GROUND OF APPEAL EITHER BEFORE OR AFTER T HE TIME OF HEARING OF CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CHARITABLE SOCIETY. THE SOCIETY WAS FORMED PRIMARILY WITH THE CHARITABLE OB JECTS SUCH AS PROVIDING EDUCATIONAL AND MEDICAL RELIEF TO POOR AND DESERVIN G PATIENTS. THE SOCIETY CONSTRUCTED HOSPITAL. A SURVEY UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) WAS CONDUCTED ON 9.09.2005. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THERE IS A DIFFE RENCE IN CONSTRUCTION EXPENDITURE AS PER VALUATION REPORT AND DECLARED BY THE ASSESSE E. SOME OF THE TRANSACTIONS ENTERED IN THE ACCOUNTS/LEDGER ARE NOT IN AGREEMENT WITH THE REGULAR CASH BOOK AND LEDGER. THE A.O. NOTICED VARIOUS ITEMS OF ENTRIES AND FOUND THAT THE ASSESSEE HAS FAILED TO EXPLAIN RS.40,85,115/-. THEREFORE, THE S AME WAS TREATED AS UNEXPLAINED ITA NO.219/AGR/2011 A.Y. 2005-06 3 AND UNACCOUNTED EXPENSES/PAYMENTS & INVESTMENT. TH E RELEVANT FINDING OF THE A.O. IS REPRODUCED AS UNDER :- (PAGE NO.13) THE TOTAL UNACCOUNTED & UNEXPLAINED PAYMENT, EXPEN SES & INVESTMENT ARE SUMMARIZED AS UNDER :- AS PER ANNEXURE A RS.36,54,062/- AS PER ANNEXURE A-1 RS. 90,778/- AS PER ANNEXURE B RS. 3,40,275/- RS.40,85,115/- THE TOTAL OF RS.40,85,115/- IS FOUND TO BE UNEXPLAI NED, UNACCOUNTED EXPENSES/PAYMENTS & INVESTMENT AND ADDE D TO THE TOTAL INCOME OF THE ASSESSEE AS INCOME FROM UNDISCLOSED S OURCES. 4. THE CIT(A) AFTER CONSIDERING THE ASSESSEES SUBM ISSION AND AFTER CONSIDERING THE RELEVANT MATERIAL, CONFIDENTIAL REC ORD AND REMAND REPORT OF THE A.O., DELETED THE ADDITION OF RS.40,85,115/- AS UND ER :- (PAGE NOS.25, 26, 27 & 28) I HAVE EXAMINED THIS ASPECT CAREFULLY AND FOR THIS PURPOSE, I CALLED FOR THE CONFIDENTIAL RECORDS CONTAINING ALL SURVEY MATERIALS AND STATEMENT AND ALSO ALL THE ASSESSMENT RECORDS. I F IND THAT FROM THE INVENTORY OF RECORDS FOUND DURING SURVEY, IT IS AMP LY CLEAR THAT ALL THE PRIMARY RECORDS I.E. RECEIPTS, VOUCHERS, BILLS ETC. , AS WELL AS LOOSE DIARIES WERE BEING MAINTAINED, AS NORMALLY EXPECTED FROM AN ASSESSEE WHOSE BUSINESS IS STILL NOT STARTED AND CONSTRUCTIO N OF BUILDING IS GOING ON. IN FACT, FROM THE STATEMENT RECORDED, I FIND THAT SPECIFIC QUESTION REGARDING MAINTENANCE OF BOOKS OF ACCOUNTS HAVE BEEN PUT FORTH AND THE ASSESSEE HAS CATEGORICALLY STATED THA T BOOKS ARE BEING MAINTAINED, MAINLY THE CASH BOOK AND LEDGER. ALTHO UGH THESE BOOKS WERE NOT FOUND IN THE SURVEY PREMISES, BUT WHEN CAT EGORICALLY ASKED AS TO WHERE ARE THE BOOKS OF ACCOUNTS; THE ASSESSEE HAS STATED THAT THESE HAVE GONE TO THE AUDITORS. SAME STAND HAS BE EN TAKEN BY THE APPELLANT EVEN LATER. I FIND THAT NO EFFORT WAS MA DE BY SURVEY OFFICER OR, LATER, BY AO TO OBTAIN AND TAKE CUSTODY OF THE BOOKS WHICH WERE STATED TO BE WITH THE AUDITORS. NOT HAVING MADE SU CH EFFORT; IT WAS NOT CORRECT FOR THE AO TO COMMENT THAT BOOKS ARE NO T MAINTAINED, ITA NO.219/AGR/2011 A.Y. 2005-06 4 WHEN ASSESSEE WAS PRODUCING SUCH BOOKS OF ACCOUNTS FOR VERIFICATION DURING ASSESSMENT PROCEEDINGS, AS IS CLEAR FROM THE ASSESSMENT RECORDS. TO REITERATE, THE AO HAS, IN ANY CASE, MADE CONTRAD ICTORY STAND BY REFERRING TO BOOKS OF ACCOUNTS IN THE ASSESSMENT ORDER ITSELF. FROM THE PERUSAL OF CONFIDENTIAL RECORDS AND THE AS SESSMENT FOLDERS, I AM OF THE VIEW THAT THE ALLEGATION OF NO N-MAINTENANCE OF BOOKS OF ACCOUNTS HAS NOT BEEN ESTABLISHED. AOS R EMARKS IN ASSESSMENT ORDER ARE NO FOUND TO BE COHERENT WHILE REMARKS OF ADDITIONAL CIT ARE APPARENTLY WITHOUT DUE REFERENCE TO THE CONFIDENTIAL RECORDS, ESPECIALLY, INVENTORY OF BOOK S AND ALL PRIMARY DOCUMENTS FOUND DURING SURVEY AND STATEMENT RECORDE D. I HOLD THAT BOOKS PRODUCED WERE MAINTAINED IN REGUL AR COURSE OF BUSINESS AND ARE, HENCE, AUTHENTIC AND ADMISSIBL E. 9.1.1. THE ADDITIONAL CIT HAS HIMSELF ACCEPTED THAT ALL THE ENTRIES IN THE LOOSE PAPERS ARE FOUND DULY INCORPORATED IN THE BOOKS OF ACCOUNTS. I HAVE ALSO MADE SAMPLE VERIFICATION IN RESPECT OF MAJOR ENTRIES APPEARING IN THESE LOOSE PAPERS; WHICH ARE ALL FOUN D REPRODUCED IN THE ASSESSMENT ORDER. ALL THESE ENTRIES HAVE BEEN SATISFACTORILY EXPLAINED BY THE APPELLANT. MAJORITY OF THESE ENTR IES PERTAIN TO EXPENSES IN RESPECT OF BUILDING CONSTRUCTION AND AL L THESE ARE FOUND DULY RECORDED IN OTHER PRIMARY RECORDS AS WELL AS I N BOOKS OF ACCOUNTS. MY BRIEF COMMENTS ON SOME OF THESE SIMPLE ENTRIES A RE AS UNDER: ASST. ORDER PAGE 10: RS.10,50,000/- - ADVANCE FOR PURCHASE OF MACHINERY THIS IS MADE OF VARIOUS PAYMENTS ASSESSEES EXPLANATION DATED 27. 12.2007, DULY SHOWN IN LEDGER A/C. RS.3,50,000/- - INCLUDED IN ABOVE ITA NO.219/AGR/2011 A.Y. 2005-06 5 RS.3,30,250/- - PAYMENT TO LABOUR, CARPENTER & ELE CTRICIANS VERIFIED. RS.1,10,000/- - PURCHASE OF EQUIPMENTS REFLECTED IN DAY BOOK DATED 19.09.2004 & 05.10.2004. RS.1,71,000/- - NO SUCH AMOUNT ON PAGE MENTIONED BY AO; THE SAID PAGE MENTIONS TOTAL PAYMENT OF RS.2,49,000/- WHICH IS PAYMENT FOR ELECTRIC WORKS. RS.77,000/- - CASH PAYMENTS TO ASHRAT CONSTRUCTION, DULY REFLECTED IN LEDGER ACCOUNT. RS.1,59,976/- - IS CHALLAN/DELIVERY SLIP FOR BUILDI NG MATERIALS; DULY ACCOUNTED FOR. THEREFORE, NO DISCREPANCY REMAINS UNEXPLAINED. THI S IS ALSO TO BE NOTED THAT OUT OF ADDITION OF RS.40,85,115/-; AO HAD HIMSELF RECTIFIED AND REDUCED ADDITION TO THE EXTENT OF RS. 7,38,668/- VIDE HIS ORDER U/S 154 DATED 26.08.2010. VIDE THIS ORDER U/ S 154, A TOTAL REDUCTION OF RS.9,79,148/- WAS EFFECTED, WHICH INCL UDED RS.7,38,668/- PERTAINING TO OR BEING PART OF ADDITION OF RS.40,85 ,115/- (BALANCE OF RS.2,40,480/- PERTAINS TO ADDITION OF RS.6,29,776/- , WHICH WOULD BE DISCUSSED LATER). IN VIEW OF THE ABOVE, THE BALANCE ITEMS OF RS.40,85 ,115/- ARE ALSO NOW DELETED, HAVING BEEN FOUND EXPLAINED AND A CCOUNTED FOR. THUS, THE ENTIRE ADDITION OF RS.40,85,115/- IS DELE TED. 5. THE CONTENTION OF THE LD. DEPARTMENTAL REPRESENT ATIVE WAS THAT DURING THE COURSE OF SURVEY REGULAR BOOKS OF ACCOUNT WERE NOT FOUND. AS REGARDS THE DIFFERENT AMOUNTS IN GROUNDS OF APPEAL, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT SUBSEQUENTLY THERE WAS A PRIMA FACIE MISTAKE, THERE FORE, THE A.O. CORRECTED THE SAME MISTAKE UNDER SECTION 154 OF THE ACT AND FINAL LY THE AMOUNT OF ADDITION WAS RS.31,05,967/-. ITA NO.219/AGR/2011 A.Y. 2005-06 6 6. THE LD. AUTHORISED REPRESENTATIVE, ON THE OTHER HAND, SUBMITTED THAT THE DATE OF SURVEY WAS 09.09.2005 WHICH PERTAINED TO A.Y. 20 06-07 AND ASSESSMENT OF A.Y. 2006-07 HAS BEEN MADE BY THE A.O. UNDER SECTIO N 143(3) OF THE ACT ACCEPTING THE BOOKS OF ACCOUNT OF THE ASSESSEE. TH E LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSMENT FOR A.Y. 2004 -05 HAS ALSO BEEN MADE WITHOUT MAKING ANY ADDITION. THE LD. AUTHORISED REPRESENTA TIVE SUBMITTED THAT WHEN OPENING AND CLOSING AMOUNT OF INVESTMENT HAS BEEN A CCEPTED THERE IS NO QUESTION OF MAKING ADDITION IN BETWEEN THE YEAR I.E. THE YEA R UNDER CONSIDERATION I.E. 2005- 06. 7. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THE ADMITTED FACTS OF THE CASE ARE THAT SEIZED/IMPO UNDED LOOSE PAPERS FOUND AT THE TIME OF SURVEY WERE RECORDED IN THE BOOKS OF ACCOUN T AND NO INCORRECTNESS WAS FOUND IN RESPECT OF RECORDING SUCH TRANSACTION IN B OOKS OF ACCOUNT. ONLY GRIEVANCE OF THE REVENUE WAS THAT AT THE TIME OF SURVEY BOOKS OF ACCOUNT WAS NOT FOUND MAINTAINED UPTO THE DATE. THE A.O. HIMSELF ADMITTE D BEFORE THE CIT(A) THAT ALL THE ENTRIES IN THE LOOSE PAPERS WERE FOUND DULY INCORPO RATED IN THE BOOKS OF ACCOUNT. IN THIS REGARD, WE ARE OF THE CONSIDERED VIEW THAT THE BOOKS OF ACCOUNT SUBSEQUENTLY PREPARED ON THE BASIS OF THE LOOSE PAP ERS OR MATERIAL FOUND AT THE TIME OF SURVEY IS ACCEPTABLE UNLESS THERE IS MATERIAL SH OWING THAT THE BOOKS OF ACCOUNT SUBSEQUENTLY MAINTAINED WAS NOT PROPER OR NOT IN AC CORDANCE WITH APPROVED ITA NO.219/AGR/2011 A.Y. 2005-06 7 METHOD OF ACCOUNTING. IN THE CASE UNDER CONSIDERAT ION NO SUCH CONTRARY MATERIAL WAS FOUND THAT THE BOOKS OF ACCOUNT SUBSEQUENTLY MA INTAINED WERE NOT IN ACCORDANCE WITH PRINCIPLE OF ACCOUNTANCY. WHEN THE A.O. MADE ADDITION ON THE BASIS OF LOOSE PAPER WHICH HAS BEEN INCORPORATED IN THE BOOKS OF ACCOUNT AND NO DEFECT OTHERWISE HAS BEEN FOUND THAT THOSE LOOSE PA PER ENTRIES WERE RECORDED INCORRECTLY. UNDER THE CIRCUMSTANCES WHEN THOSE EN TRIES PERTAINING TO THE LOOSE PAPERS HAVE BEEN INCORPORATED IN BOOKS OF ACCOUNT A ND THAT WAS FOUND IN ORDER AND THAT AMOUNTS TO A SATISFACTORY EXPLANATION ABOUT TH E LOOSE PAPERS FOUND, UNDER THAT CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT N O ADDITION IS WARRANTED. THE CIT(A) HAS CORRECTLY APPRECIATED THE FACTS OF THE C ASE AND RIGHTLY DELETED THE ADDITION OF RS.40,85,115/-. ORDER OF THE CIT(A) IS CONFIRMED ON THE ISSUE. 8. THE SECOND GROUND IS PERTAINING TO ADDITION OF R S.11,83,249/-. THE A.O. HAS MADE ADDITION OF RS.11,83,249/- ON ACCOUNT OF D IFFERENCE BETWEEN COST OF CONSTRUCTION DECLARED BY THE ASSESSEE AND COST OF C ONSTRUCTION ESTIMATED BY THE VALUATION OFFICER. THE FINDING OF THE A.O. IS AS U NDER :- (PAGE NO.14) AFTER GOING THROUGH THE REPLY OF THE ASSESSEE REGA RDING VALUATION REPORT, IT IS FOUND THAT THERE IS NO FORC E IN CONTENTION OF THE ASSESSEE. THE DIFFERENCE BETWEEN THE COST OF CONST RUCTION DECLARED BY THE ASSESSEE RS.28,80,651/- RELEVANT TO ASSESSMENT YEAR 2005-06 AND COST OF CONSTRUCTION AS ESTIMATED BY THE VALUATION OFFICER OF RS.40,63,900/- COMES TO RS.11,83,249/-. THE DIFFER ENCE AMOUNT OF RS.11,83,249/- IN CONSTRUCTION OF HOSPITAL BUILDING IS TREATED AS UNDISCLOSED SOURCE OF INCOME OF THE ASSESSEE AND AD DED TO THE INCOME OF ASSESSEE U/S 69 OF I.T. ACT 1961. ITA NO.219/AGR/2011 A.Y. 2005-06 8 9. THE ADDITION MADE BY THE A.O. HAS BEEN DELETED B Y THE CIT(A) AS UNDER:- (PAGE NOS.29, 30 & 31). A. THE MAJOR ASPECT IS REGARDING A SELF EXPLAINED DIFFERENCE OF RS.5,05,769/-. THIS IS BECAUSE THE VO MENTIONED CO ST OF CONSTRUCTION, AS PER ASSESSEES BOOKS, AT RS.28,80,651/- FOR FINA NCIAL YEAR 2004-05 AND RS.9,91,995/- FOR FINANCIAL YEAR 2003-04. THUS , AS PER ASSESSEES BOOKS, PROGRESSIVE VALUE OF CONSTRUCTED BUILDING AS ON 31.03.2005 WAS RS.38,72,646/-. HOWEVER, I FIND FOR CE IN APPELLANTS CONTENTION THAT AS PER BALANCE SHEET, AS ON 31.03.2 005, COMPLETED AND FILED MUCH BEFORE THE MATTER WAS REFERRED TO VO ; THE VALUE OF CONSTRUCTED BUILDING AS ON 31.03.2005 WAS SHOWN BY THE ASSESSEE AT RS.43,78,415/- !! THUS, IT IS NOT CLEAR AS TO FROM WHERE THE VO PICKED UP THE VALUE OF RS.38,72,646/- ! THIS OBJECTION WA S RAISED BY THE APPELLANT VIDE POINT NO.8 OF APPELLANTS REPLY DATE D 19.12.2007 TO VO/AO. AS STATED ABOVE, AT NO STAGE, THE VO OR AO HAVE CARED TO CONSIDERED THESE OBJECTIONS. THUS, THE DIFFERENCE TO THE EXTENT OF RS.5,05,769/- (RS.43,78,415/- - RS.38,72,646/) IS EXPLAINED BEING SIMPLE ERROR MADE BY THE VO. B. REGARDING THE OTHER PARTS, I WOULD LIKE TO QUOTE , FOR READY REFERENCE, ALL THE 8 POINTS OF OBJECTIONS RAISED BY THE APPELLANT VIDE HIS LETTER DATED 19.12.2007 (WHICH INCLUDES THE ISS UE DISCUSSED ABOVE IN PARA A): (1) VALUATION OFFICER HAS WORKED OUT THE COST OF C ONSTRUCTION OF WORK DONE UPTO 31.3.2006 WHERE AS HE SHOULD WORK OUT THE COST FOR THE WORK DONE UPTO 31.03.2005. (2) VALUATION OFFICER HAS ADOPTED THE PLINTH AREA R ATE C.P.W.D. SCHEDULE WHERE AS HE SHOULD ADOPT THE RATE AS PER P.W.D. SCH EDULE. THE RATE PREPARED BY P.W.D. ARE MORE AUTHENTIC FOR THE WORK BEING DONE I N U.P. THE P.W.D. RATES ARE 6 & % LESSER THAN C.P.W.D. RATE. (3) IN BASEMENT, WE HAVE NOT DONE ANY WATER PROOFIN G. ALSO IN BASEMENT MEASURE PORTION IS IN THE SHAPE OF A BIG HALL. AS SUCH THE RATE ADOPTED BY VALUATION OFFICER MAYBE REDUCED AS GIVEN BELOW. (I) FOR HALL TYPE CONSTRUCTION - 25% (II) FOR THE WATER PROOFING - 10% ITA NO.219/AGR/2011 A.Y. 2005-06 9 (4) THE VALUATION OFFICER HAS ALLOWED ONLY 7.5% DED UCTION FOR SELF SUPERVISION WHERE AS HE SHOULD ALLOW THE DEDUCTION OF 9.1% FOR SELF SUPERVISION. (5) THE VALUATION OFFICER HAS ADDED 2% (136078.00) TOWARDS ARCHITECT FEES & CONSULTANCY ETC. WHERE AS WE HAVE PAID ONLY ARS.65 000.00 TO SANJAY RANJAN ARCHITECT. AS SUCH EXTRA AMOUNT MAYBE REDUCED. (6) WE HAVE NOT PROVIDED ANY WATER FITTING IN BASEM ENT. AS SUCH 3% ADDED BY LD. VO TOWARDS WATER AND SANITARY FITTINGS AND 1.5% ADDED FOR EXTERNAL CONNECTION MAY BE REDUCED. (7) THE LD. VALUATION OFFICER HAS NOT CLARIFIED THA T HOW HE HAS DERIVED/ALLOCATED CONSTRUCTED AREA IN DIFFERENT FIN ANCIAL YEARS, AS BY THE END 31.0.2005, THE GROUND FLOOR WAS PARTLY CONSTRUCTED, WHICH IS EVIDENT FROM OUR VALUATION REPORT 24.05.2005, PREPARED AFTER PHYSICA L VERIFICATION ON 18.05.2005, IN WHICH AREA OF GROUND FLOOR IS 337.00 SQ. METER. (8) FURTHER THE LD. V.O. HAS SHOWN THE VALUE OF CIV IL WORK AS AT 31 ST MARCH, 2005 RS.3872646.00 AS PER BOOKS WHEREAS COST OF BUI LDING AS PER BOOKS BEFORE DEPRECIATION IS RS.4378415.00 WHICH SHOWS THAT LD. V.O. GIVEN THE BOOK VALUE LESSER BY RS.505769.00 THE COST INCURRED IN 2005-06 IS RS.898714.00 WHICH HAVE BEEN TAKEN AS 684896.00 & LD. VO HAS NOT GIVEN ANY REASON FOR THIS DISCREPANCY. UNDER THE FACTS & CIRCUMSTANCES STATED ABOVE THE VA LUATION MADE BAY LD. VO CANNOT BE TAKEN AS CORRECT & VALID VALUATION FOR AS SESSMENT PURPOSES WITHOUT RESOLVING THE ABOVE SAID DISCREPANCIES. AGAIN, AS MENTIONED REPEATEDLY, THE APPELLANTS OBJ ECTIONS WERE NEVER CONSIDERED BY THE VO/AO. I FIND ALL THESE OB JECTIONS TO BE VALID, RATIONAL AND RELEVANT. THESE OBJECTIONS ARE ON TECHNICAL GROUND I.E. REGARDING DIFFERENCE IN AREA AS WELL AS DIFFERENCE IN QUALITY OF CONSTRUCTION AND ALSO RATES. C. APART FROM THE ABOVE MENTIONED TECHNICAL OBJECTI ONS, I ALSO FIND ACCEPTABLE LEGAL FORCE IN APPELLANTS SUBMISSI ONS THAT THE DIFFERENCE IN THE C.P.W.D. AND P.W.D. RATES CAN VER Y WELL EXPLAIN THE DIFFERENCE IN VALUATION UPTO 10%. D. THERE IS ALSO FORCE IN APPELLANTS EXPLANATION T HAT SOME ITEMS OF EXPENDITURE TOWARDS BUILDING CONSTRUCTION HAVE A LREADY BEEN ADDED VIDE ADDITION OF RS.40,85,115/- AND TO THAT E XTENT THERE IS DOUBLE ADDITION. BUT THIS ASPECT WILL NOT HAVE ANY RELEVANCE NOW WHEN ADDITION OF RS.40,85,115/- HAS ALREADY BEEN DE LETED. ITA NO.219/AGR/2011 A.Y. 2005-06 10 THUS, ON THE BASIS OF DISCUSSION, AS MADE VIDE POIN TS A, B & C, I CONCLUDE THAT THE ENTIRE ADDITION OF RS.11,83,249 /- IS WITHOUT VALID BASIS AND IS RATHER BASED ON WRONG FACTS AS WELL AS FAULTY METHOD OF VALUATION. THE ADDITION OF RS.11,83,249/- IS DELET ED. IN PASSING REFERENCE, IT IS ALSO MENTIONED THAT NO ADDITION HAS BEEN MADE ON THE ISSUE OF CONSTRUCTION COST FOR ASS ESSMENT YEAR 2006- 07 BECAUSE THE DIFFERENCE WAS FOUND TO BE ONLY 7% A ND HENCE WAS IGNORED. 10. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. THE CIT(A) HAS DELETED THE ADDITION AFTER CONSIDERI NG ALL ASPECTS AND EXPLANATION OF THE ASSESSEE. THE CIT(A) FOUND THAT THE DIFFERE NCE OF RS.5,05,769/- IS SELF EXPLANATORY BECAUSE THE VALUATION OFFICER MENTIONED COST OF CONSTRUCTION AS PER ASSESSEES BOOKS, PROGRESSIVE VALUE OF CONSTRUCTED BUILDING AS ON 31.03.2005 WAS RS.38,72,646/-. THE CIT(A) ACCEPTED THE DIFFERENCE OF RS.5,05,769/- AS UNEXPLAINED. THUS, ON ACCOUNT OF SIMPLE ERROR MADE BY VALUATION OFFICER THE CIT(A) HAS ALSO CONSIDERED ALL THE 8 POINTS OF OBJE CTIONS RAISED BY THE ASSESSEE AND FOUND THAT THE SAID OBJECTIONS OF THE ASSESSEE WERE NEVER CONSIDERED EITHER BY THE A.O. OR BY VALUATION OFFICER. APART FROM THE TECHN ICAL OBJECTIONS, THE CIT(A) FOUND THAT THE DIFFERENCE IN C.P.W.D. AND P.W.D. RA TES WERE WELL EXPLAINED WHICH IS UPTO 10% VALUE. IT HAS ALSO BEEN RECORDED BY TH E CIT(A) THAT SOME OF THE ITEMS OF EXPENDITURE TOWARDS BUILDING CONSTRUCTION HAVE A LREADY BEEN MADE ON ACCOUNT OF LOOSE PAPERS OF WHICH ADDITION OF RS.40,85,115/- HAS BEEN DELETED, MEANING THEREBY, THAT TO THE EXTENT THERE IS EXPLANATION FR OM THE ASSESSEE. AFTER CONSIDERING ITA NO.219/AGR/2011 A.Y. 2005-06 11 ALL THE ASPECTS OF THE MATTER, THE CIT(A) DELETED T HE ADDITION OF RS.11,83,249/-. WE, THEREFORE, FIND THAT THE CIT(A) HAS RIGHTLY DEL ETED THE ADDITION OF RS.11,83,249/-. ORDER OF THE CIT(A) IS CONFIRMED O N THE ISSUE. 11. GROUND NO.3 IS IN RESPECT OF DISALLOWANCE/WITHD RAWING EXEMPTION UNDER SECTION 10(23C) OF THE ACT. THE A.O. DISALLOWED TH E EXEMPTION UNDER SECTION 10(23C) OF THE ACT ON THE GROUND THAT AT THE TIME O F SURVEY BOOKS OF ACCOUNT WERE NOT FOUND. THE CIT(A) HAS ALLOWED EXEMPTION UNDER SECTION 10(23C) OF THE ACT AS UNDER :- (PARAGRAPH NO.9.5) 9.5 REGARDING GROUND OF APPEAL NO.2: THE APPELLANT HAS OBJECTED TO REFUSAL OF EXEMPTION U/S.10(23C). THE AO REJECTED IT ON THE GROUND THAT INCOME IS FOR M HOSPITAL AND NOT OF THE SOCIETY TRUST; AND FURTHER, BOOKS OF ACCOUNT S HAVE NOT BEEN MAINTAINED IN REGULAR COURSE. AS DISCUSSED, AT LENGTH, IN EARLIER PARAS; I REJECT AOS ALLEGATION OF NON-MAINTENANCE OF BOOKS. I FIND THA T BOOKS AS WELL AS PRIMARY RECORDS HAVE BEEN DULY MAINTAINED. BESIDES ABOVE, THE RECEIPTS ARE LESS THAN RS.1 CROR E AND THESE RECEIPTS ARE FROM THE HOSPITAL WHICH IS THE FACE OF THE ASSESSEES SOCIETY. THUS, RECEIPTS OF ASSESSEE SOCIETY CAN AL SO BE CONSTITUTED TO BE BELOW RS.1 CRORE LIMIT. FURTHER, I FIND THAT FOR OTHER YEARS, I.E. 2003-04, 2004-05 AND 2006-07, THE AO HAS, ON THE BASIS OF SAME BOOKS AND SAME SET OF FACTS & CIRCUMSTANCES, ALLOWED EXEMPTION U/S 10 (23C). THUS, CONSIDERING ALL THE ABOVE ASPECTS, I HAVE NO HESITATION IN DIRECTING THE AO TO ALLOW EXEMPTION U/S.10(23C) TO THE ASSESSEE. ITA NO.219/AGR/2011 A.Y. 2005-06 12 12. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. IT IS ADMITTED FACT THAT THE BOOKS OF ACCOUNT PREPARED SUBSEQUENT TO SURVEY WAS FOUND IN ORDER. THERE IS NO PROVISION UNDER THE ACT THAT IF THE BOOKS OF ACCOUNT ARE NOT FOUND AT THE TIME OF SURVEY, THE EXEMPTION UNDER SE CTION 10(23C) WILL BE WITHDRAWN. WHEN FINALLY AT THE TIME OF ASSESSMENT AND BEFORE THE CIT(A) THE BOOKS OF ACCOUNT WAS FOUND IN ORDER, EVEN OTHERWISE ALSO EXEMPTION UNDER SECTION 10(23C) DOES NOT DEPEND UPON BOOKS OF ACCOUNT BUT I T DEPENDS UPON RELEVANT PROVISIONS OF THE ACT. IN THIS REGARD, WE MAY REFE R A JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF KEDARNATH JUTE MFG. CO . LTD VS. CIT, 82 ITR 363 (SC). IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES, WE FIND THAT THE CIT(A) HAS RIGHTLY ALLOWED THE ASSESSEES CLAIM UNDER SECTION 10(23C) OF THE ACT. 13. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY