Sardaar Surjeet Singh Bagga, V. Income Tax Officer,

ITA 220/JAB/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5723 (ITAT-JABALPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-04-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 06-08-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D R LATHORIYA
• Assessee Lawyers: L L SHARMA; K N S CHAUHAN
• Keywords: Principle of natural justice; Additional evidence; Valuation report
• Section: 142(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI N.K. CHOUDHRY , HONBLE JUDICIAL MEMBER ITA NO. 2 20 / J AB /201 3 (ASST. YEAR : 200 4 - 0 5 ) SARDAR SURJEET SINGH BAGGA, S /O LATE SARDAR TRILOK SINGH, C/O HOTEL ANMOL PALACE, BURHAR ROAD, SHAHDOL (MP) VS. ITO, SHAHDOL PAN NO. BHYPS 9609 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI L.L. SHARMA & SHRI K.N.S. CHAUHAN A R . DEPARTMENT BY : S HRI D.R. LATHORIYA - DR DATE OF HEARING : 04 / 0 4 /201 6 . DATE OF PRONOUNCEMENT : 04 / 04 /201 6 . O R D E R PER N.S. SAINI , ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) , JABALPUR , DATED 17 / 12 /201 2 . 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ISSUING NOTICE U/S 148 AS NECESSARY CONDITIONS PRECEDENT FOR REOPENING THE ASSESSMENT WERE NOT SATISFIED. THE PROCEEDINGS ARE, THEREFORE, AB INITIO VOID AND ILLEGAL . 2. THAT THE ASSESSING OFFICER HAS NOT COMM UNICATED REASONS FOR REOPENING THE ASSESSMENT ALONG WITH NOTICE UNDER SEC. 148 AS LAID DOWN BY ALLAHABAD HIGH COURT IN (2006) 280 ITR 16 , WHICH RENDERS THE ASSESSMENT MADE UNDER SEC. 147/144 OF THE ACT BAD IN LAW. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER OUGHT TO HAVE DISCLOSED REASONS FOR ISSUE 2 ITA NO. 2 20 / JAB /201 3 OF THE NOTICE UNDER SEC. 148 OF THE IT ACT AND FAILURE TO DO SO HAS DENIED THE APPELLANT THE BENEFIT OF R A ISING OBJECTION IN VIEW OF JUDGMENT OF HON'BLE SUPREME COURT IN 259 ITR 19 AND THE VIOLATION OF PRINCIPLES OF NATURAL JUSTICE RENDERED THE ASSESSMENT INVALID AND THEREFORE, LIABLE TO BE QUASHED. 4. THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TAKING PLINTH AREA RATE OF RS. 400 PER SQ.FT. FOR GROUND FLOOR AREA AND 300 PER SQ.FT. FOR THE FIRST FLOOR WITHOUT ANY BASIS. 5. THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TAKING COST OF FURNITURE AND FIXTURES AT RS. 2,00,000/ - ON ESTIMATE BASIS. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER, THE CIT(A) JABALPUR AND FOR THAT MATTER, THE D VO ERRED IN DETERMINING COMMENCE MENT 7. OF CONSTRUCTION AND COMPLETION OF HOTEL ANMOL PALACE BUILDING IN FINANCIAL YEAR 2003 - 04 AND COMPLETED IN FINANCIAL YEAR 2006 - 07. 8 . THAT IN ANY CASE, THE AUTHORITIES BELOW OUGHT TO HAVE APPRECIATED THE VALUATION REPORT OF THE REGISTERED VALUER OF THE APPELLANT, WHICH IS BASED ON THE LOCAL PWD RATES, WHEREAS THE VALUATION REPORT OF THE DVO IS BASED ON CPWD RATES OF BIGGER CITIES WITHOUT GIVING DEDUCTIONS FOR WORKS NOT DONE AND THE PREVAILING MARKET RATES OF LABOUR AND MATERIALS. 9 . THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. ASSESSING OFFICER AND THE CIT(A) JABALPUR FOR THAT MATTER OUGHT TO HAVE APPRECIATED THE REASONS FOR NON - COMPLIANCE WITH NOTICES UNDER SEC. 142(1) OF THE ACT AND OUGHT TO HAVE ADMITTED THE ADDITIONAL EVIDENCE UNDER RULE 46A OF THE IT RULES AFTER ALLOWING THE APPELLANT OF ADEQUATE OPPORTUNITY TO EXPLAIN THE EVIDENCE AND OUGHT TO HAVE VERIFIED THE ADDITIONA L EVIDENCE FROM THE LOCAL AUTHORITIES BEFORE ARRIVING AT THE CONCLUSION REGARDING THE PERIOD OF CONSTRUCTION, AND EXTENT OF CONSTRUCTION. 10 . THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT (A) WAS NOT JUSTIFIED IN ENHANCING THE ASSESSMENT BY DETERMINING THE TOTAL INCOME AT RS. 27,85,900/ - AS AGAINST RS. 12,20,000/ - DETERMINED BY THE ASSESSING OFFICER IN VIOLATION PROVISIONS OF SEC. 251(2) OF THE IT ACT, 1961 WITHOUT ISSUING ANY SHOW CAUSE NOTICE OR AFFORDING ADEQUATE OPPORTUNITY TO THE APPE LLANT. 1 1 . THAT THE ORDER OF THE ASSESSING OFFICER AND LD. CIT(A) JABALPUR IS CONTRARY TO FACTS LAW AND PRINCIPLES OF NATURAL JUSTICE. 12. THE APPELLANT CRAVES FOR LEAVE TO AMEND, ADD TO OMIT ANY OF THE GROUND AT THE TIME OF HEARING OF APPEAL. 3 ITA NO. 2 20 / JAB /201 3 3 . AT THE TIME OF HEARING , AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS NOT PRESSED THE GROUND NO S . 1 TO 4, 6 & 8 OF THE APPEAL. ACCORDINGLY, THE SAME ARE DISMISSED FOR WANT OF PROSECUTION. 4 . IN GROUND NO S . 5, 7, 9 & 10 , THE GRIEVANCE OF THE ASSESSEE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) DID NOT ACCEPT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WHILE ADJUDICAT I NG THE ISSUE OF ESTIMATING THE COST OF CONSTRUCTION OF THE BUILDING. 5. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE CONSTRUCTED A HOTEL IN THE NAME AND STYLE ANMOL PALACE DURING THE FINANCIAL YEAR 2003 - 04 AND SHOPS , IN GROUND FLOOR , WERE LET OUT TO SEVEN PERSONS ON MONTHLY RENT OF RS. 1,000/ - P.M. THE ASSESSEE HAS EXECUTED AGREEMENT DATED 29/11/2004, 06/12/2004 ETC. WITH ALL THE TENANTS , BY WHICH IT IS EVIDENT THAT THE CONSTRUCTION OF THE SHOP S AT GROUND FLOOR AND HOTEL IN FIRST FLOOR HAVE BEEN COMPLETED DURING THE FINANCIAL YEAR 2004 - 05. IN ABSENCE OF ANY DETAILS OF CONSTRUCTION, INVESTMENT, APPROVED MAP FROM NAGAR PALIKA ETC. AS WELL AS RETURN OF INCOME , THE ASSESSING OFFICER ESTIMATED THE CONSTRUCTION CONSIDERING THAT THE CONSTRUCTION AREA WAS AT 80 X 20 SQ.FT. WITH SEVEN SHOPS AT GROU ND FLOOR , AND 14 ROOMS IN THE FIRST FLOOR, WHICH ARE FOUND TO BE WELL FURNISHED , AND SOME ROOMS PROVIDED WITH AIR CONDITIONERS . GROUND FLOOR 1600 SQ.FT (80 X 20) WAS ESTIMATED @ 400/ - PER SQ.FT . AT RS. 6,40,000/ - FIRST FLOOR 1600 SQ.FT. @ 300/ - PER SQ.FT AT RS. 3,80,000/ - AND COST OF FURNITURE AND 03 ACS AT RS. 2,00,000/ - , WHICH TOTALED TO RS. 12,20,000/ . SINCE, TH E ASSESSEE HAS NOT FILED THE RETURN OF INCOME , THE WHOLE OF THE INVESTMENT AT RS. 12,20,000/ - HAS BEEN TREATED AS UNDISCLOSED INCOME. 6 . BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) , AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FILED AN APPLICATION 21/11/2009 WITH A REQUEST TO ADMIT HIS ADDITIONAL EVIDENCES WITH REGARD TO CONSTRUCTION OF SHOPS . HE FILED COPY OF TWO NOTE BOOKS CONTAINING DETAILS OF PURCHASES 4 ITA NO. 2 20 / JAB /201 3 OF MATERIAL AND PAYMENTS TO LABOUR , COPY OF PRINTED BILLS AND S UBMITTED THAT THE MUNICIPAL ITY HAS RECORD ED THE COMMENCEMENT AND DATE OF COMPLETION OF ANMOL PALACE. IT WAS REQUESTED TO ISSUE S UMMON TO THE CMO, SHAHDOL AND THE ADDITION AL EVIDENCE FILED MAY KINDLY BE ADMITTED IN THE INTEREST OF JUSTICE. A GAIN , VIDE LETTER DATED 25/04/2011 , THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FILED DETAILED SUBMISSIONS REITERATING THE EARLIER SUBMISSIONS MADE BY HIM AND REQUESTED TO ADMIT THE ADDITIONAL EVIDENCE FILED UNDER RULE 46A. THE COMMISSIONER OF INCOME TAX (APPEALS) SENT THE ADDITIONAL EVIDENCE TO THE ASSESSING OFFICER VIDE LETTER DATED 30/01/2012 FOR HIS COMMENTS . THE ASSESSING OFFICER VIDE LETTER DATED 15/03/2012 STATED THAT THE ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITY, WHICH HE FAILED TO AVAIL OF F . THE ASSESSEE FAILED TO PRODUCE EVIDENCES DURING THE COURSE OF ASSESSMENT PROCEEDINGS A ND HE DID NOT TAKE UP ANY SUCH PLEA BEFORE THE DVO. HE ALSO STATED THAT THE ADDITIONAL EVIDENCE MIGHT NOT NECESSARILY RELATE TO INVESTMENT IN PROPERTY , IN QUESTION. THE ASSESSEE ALSO DID NOT CHALLENGE THE PERIOD OF CONSTRUCTION EITHER DURING THE ASSESSME NT STAGE OR AT THE TIME OF INSPECTION BY THE DVO FOR VALUATION. THE ASSESSING OFFICER STATED THAT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE NEED NOT BE ACCEPTED. THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT THE ADDITIONAL EVIDENCE FILED AT THE APPELLATE STAGE ARE NOT ADMITTED, AS THE RE WAS NO LACK OF OPPORTUNITY AFFORDED TO THE ASSESSEE , NOR HAS ANY SUFFICIENT CAUSE BEEN STATED BY THE ASSESSEE , WHICH PREVENTED HIM FROM PRODUCING THE EVIDENCE BEFORE THE ASSESSING OFFICER. THE ASSES SEE DOES NOT FULFILL THE CONDITIONS PRESCRIBED UNDER RULE 46A FOR ADMITTING THE ADDITIONAL EVIDENCE. 7. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED BEFORE US THAT THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN NOT ADMITTING THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AND IN THE INTEREST OF JUSTICE , THE MATTER MAY BE RESTORE D BACK TO THE FILE OF THE 5 ITA NO. 2 20 / JAB /201 3 COMMISSIONER OF INCOME TAX (APPEALS) DIRECTING HIM TO ADMIT THE ADDITIONAL EVIDENCE AND RE - ADJUDICATE THE ISSUE OF INVESTMENT IN CONSTRUCTION OF HOTEL AS PER LAW. 8. DEPARTMENTAL REPRESENTATIVE OPPOSED FOR SETTING ASIDE THE MATTER TO THE FILE OF THE COMMISSIONER OF INCOME TAX (APPEALS). 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS AVAILABLE ON RECORD, WE ARE OF THE OPINION THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT ADMITTED THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE ON THE GROUND THAT THERE WAS NO LACK OF OPPORTUNITY AFFORDE D TO THE ASSESSEE NOR HAS GIVEN ANY SUFFICIENT CAUSE FOR NOT BEING ABLE TO PRODUCE THE SAME BEFORE THE ASSESSING OFFICER . WE ARE OF THE CONSIDERED OPINION THAT I N THE INTEREST OF SUBSTANTIAL JUSTICE, THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE COMMISSIONER OF INCOME TAX (APPEALS) FOR RE - ADJUDICATING THE ISSUE AFTER CONSIDERING THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE HIM AFTER ALLOWING BOTH THE PARTIES A REASONABLE AND PROPER O PPORTUNITY OF HEARING . THE ASSESSEE IS ALSO DIRECTED TO FILE ALL EVIDENCES AS AND WHEN CALLED UPON TO DO SO , BY THE COMMISSIONER OF INCOME TAX (APPEALS). THUS, THESE GROUNDS OF APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON MONDAY , THE 1 4 TH DAY OF APRIL , 201 6 AT JABALPUR . S D/ - SD/ - ( N.K. CHOUDHRY ) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER D ATED : 04 TH APRIL , 201 6 . 6 ITA NO. 2 20 / JAB /201 3 VR/ - COPY TO: 1. THE ASSESS E E. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R . 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY, ITAT, JABALPUR.