The ITO, Ward-4(2), Ahmedabad V. J.Upendra Construction Pvt.Ltd., Baroda

ITA 2253/AHD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80430 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-09-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 08-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND SR DR
• Assessee Lawyers: M G PATEL
• Keywords: Unexplained investment; Valuation report
• Section: 147; 148

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) ' )* + ) ' )* + ) ' )* + ) ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.2532 TO 2534/AHD/2009 [ASSTT.YEAR : 2002-2003, 2003-04 AND 2004-05] J. UPENDRA CONSTRUCTION PVT. LTD. 3-UTKANTH SOCIETY B/H. ALKAPURI CLUB ROAD, BARODA. PAN : AAACJ 3815 F /VS. THE DCIT, CIR.4 AHMEDABAD. ITA NO.2253/AHD/2012 [ASSTT.YEAR : 2003-2004] THE ITO,WARD 4(2) AHMEDABAD. /VS. J. UPENDRA CONSTRUCTION PVT. LTD. 3-UTKANTH SOCIETY B/H. ALKAPURI CLUB ROAD BARODA. ( (( ( -. -. -. -. / APPELLANT) ( (( ( /0-. /0-. /0-. /0-. / RESPONDENT) 1& 2 3 ) / ASSESSEE BY : SHRI M.G. PATEL + 2 3 ) / REVENUE BY : SHRI ROOPCHAND, SR.DR 5 2 &(* / DATE OF HEARING : 1 ST SEPTEMBER, 2014 678 2 &(* / DATE OF PRONOUNCEMENT : 17/10/2014 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THESE APPEALS BY THE ASSESSEE FOR THE ASSTT.YEARS 2002-2003, 2003-04 AND 2004-05 AND BY THE REVENUE F OR ITA NO.2532 TO 2534/AHD/2009 ITA NO.2253/AHD/2012 -2- THE ASSTT.YEAR 2003-04 ARE DIRECTED AGAINST THE ORD ERS OF THE CIT(A). THESE ARE BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER. ITA NO.2532 TO 2534/AHD/2009 FOR THE ASTT.YEARS 2002-2003, 2003-04 AND 2004-05 (ASSESSEES APPEALS) 2. THE IDENTICAL GROUNDS OF THE APPEAL IN ALL THESE THREE APPEALS ARE AS UNDER: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THE REOPENING THE ASSESSMENT U/S.147 OF THE IT ACT, 196 1 TO BE VALID IN LAW. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE BY CONFIRMING THE ADDITION OF RS.2,85,362/- (FOR A.Y.2 002-03), RS.41,77,536/- (FOR ASSTT.YEAR 2003-04) AND RS.6,21 ,684/- (FOR A.Y.2004-05) BEING THE DIFFERENCE OF COST OF CONSTR UCTION SHOWN BY THE APPELLANT AND COST OF CONSTRUCTION ESTIMATED BY THE DEPARTMENTAL VALUER BY WAY OF UNEXPLAINED INVESTMENT. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT PRELIMINARY ISSUE TO BE DECIDED IN THESE CASES IS REGARDING THE VALID ITY OF REOPENING OF THE ASSESSMENT UNDER SECTION 147 OF THE ACT. HE REFERR ED TO THE COPY OF REASONS RECORDED BY THE AO AT THE TIME OF REOPENING OF THE ASSESSMENT, COPY OF WHICH WAS FILED IN THE COMPILATION BEFORE T HE TRIBUNAL. HE SUBMITTED THAT THE RE-OPENING WAS DONE IN THIS CASE ON THE BASIS OF THE VALUATION REPORT AS FRAMED BY THE DISTRICT VALUATIO N OFFICER (DVO) IN THE CASE OF M/S.MANJUSHA ESTATE PVT. LTD.(MEPL FOR SH ORT). HE SUBMITTED THAT BUILDING WAS UNDER CONSTRUCTION BY MEPL AND DURING THE CONSTRUCTION PERIOD ITSELF THE ASSESSEE HAS PURCHAS ED THE SAME. HE SUBMITTED THAT THE HONBLE GUJARAT HIGH COURT IN TH E CASE OF M/S.MANJUSHA ESTATE PVT. LTD. VS. ITO VIDE THEIR OR DER DATED 24.2.2009 HAS QUASHED AND SET ASIDE THE NOTICE ISSUED UNDER S ECTION 148 OF THE ACT . HE SUBMITTED THAT THE DECISION OF THE HONBLE JURIS DICTIONAL HIGH COURT IN ITA NO.2532 TO 2534/AHD/2009 ITA NO.2253/AHD/2012 -3- MEPL HAS BECOME FINAL AS THE SLP OF THE REVENUE H AS BEEN DISMISSED BY THE HONBLE APEX COURT. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT VALUATION REPORT OF THE DVO IN THE C ASE MEPL IS A BORROWED REPORT AS FAR AS THE ASSESSEE IS CONCERN ED, AND IT DOES NOT PERTAIN TO THE ASSESSEE, AND THE ASSESSEE WAS NEVER CONFRONTED WITH THE PROPOSED VALUATION. HE SUBMITTED THAT IN ASSISTANT COMMISSIONER OF INCOME-TAX V. DHARIYA CONSTRUCTION CO., 328 ITR 515 (SC), THE HONBLE APEX COURT HELD THAT THE OPINION GIVEN BY THE DISTR ICT VALUATION OFFICER IS NOT PER SE INFORMATION FOR THE PURPOSE OF REOPENING AN ASSESS MENT UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961. THE LEARN ED DR HAS OPPOSED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSE. HE REFERRED TO RELEVANT PORTIONS OF THE ASSESSMENT ORDER AND THE CIT(A) IN SUPPORT OF THE CASE OF THE REVENUE, AND IN PARTICULAR, IN PARA 5.5 OF THE ORDER OF THE CIT(A), WHEREIN HE HAS MENTIONED THE CASE OF THE HONBLE JU RISDICTIONAL HIGH COURT IN M/S.MANJUSHA ESTATE PVT. LTD. AND HAS RECO RDED THAT WITH DUE RESPECT TO THE DECISION OF THE HONBLE HIGH COURT, THE VALUATION REPORT OBTAINED BY THE ITO, BECAME INFORMATION FOR THE AO OF THE APPELLANT. THE CIT(A) HAS FURTHER RECORDED THAT EVEN IF THE DVOS REPORT OBTAINED BY THE ITO WAS NOT WITHIN FOUR CORNERS OF LAW, YET IT DOES NOT LOSES EVIDENTIARY VALUE IN THE CASE OF THE APPELLANT, AND THE AO HAS RIGHTLY BASED HIS BELIEF FOR ESCAPMENT OF INCOME ON THE BASIS OF SUCH REPORT . 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS CAREFULLY A ND PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND ALSO THE DECISI ON OF THE HONBLE JURISDICATIONAL HIGH COURT IN THE CASE OF M/S.MANJU SHA ESTATE PVT. LTD. (SUPRA). WE FIND THAT THE RE-OPENING IN THIS CASE HAS BEEN DONE ON THE BASIS OF DVOS REPORT ONLY. THE REPORT OF THE DVO IS AN ESTIMATE OF THE AMOUNT SPENT IN THE COST OF CONSTRUCTION OF BUILDIN G, AND IT COULD NOT BE ITA NO.2532 TO 2534/AHD/2009 ITA NO.2253/AHD/2012 -4- SAID THAT IT IS AN INFORMATION TO JUSTIFY THE REO PENING OF THE ASSESSMENT. THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE WIT H THE SERIES OF DECISIONS OF THE HONBLE COURTS INCLUDING THAT OF THE HONBLE SUPREME COURT CITED SUPRA. IT IS WELL SETTLED THAT THE VALUATION IS MA TTER OF ESTIMATE ONLY AND TWO VALUERS WOULD NOT ARRIVE AT THE SAME FIGURE OF VALUE OF THE PROPERTY, AND THEREFORE, ANY ESTIMATE MADE BY A VALUER COULD NOT BE SAID TO BE INFORMATION TO JUSTIFY THE REOPENING OF THE ASSES SMENT UNDER SECTION 147 OF THE ACT. MOREOVER, IN THIS CASE, THE REOPENING HAS BEEN SOUGHT ON THE BASIS OF THE VALUATION REPORT OF THE DVO IN SOME OT HER CASE, VIZ. M/S.MANJUSHA ESTATE PVT. LTD.(MEPL) IN THE CASE OF MEPL, THE REOPENING UNDER SECTION 147 HAS BEEN QUASHED BY THE HONBLE JURISDICTIONAL HIGH COURT. THE OBSERVATION OF THE CIT(A) THAT WITH DUE RESPECT TO THE DECISION OF THE HONBLE GUJARAT HIGH COURT, THE VALUATION REPORT OBTAINED BY THE ITO BECAME INFORMATION OF TH E AO OF THE APPELLANT, IS NOT SUSTAINABLE IN LAW. IN OUR CONSIDERED VIEW, THE AO COULD NOT BASE HIS BELIEF FOR ESCAPEMENT OF INCOME ON THE BASIS OF THE ESTIMATE OF THE AMOUNT SPENT IN CONSTRUCTION, ON THE BASIS OF MERE DVOS REPORT. THE DVOS REPORT IN MEPL DOES NOT PERTAIN TO THE ASSE SSEE AND WAS NEVER CONFRONTED TO IT BY THE DVO. IN THESE FACTS OF THE CASE, WE HOLD THAT IT COULD NOT BE SAID THAT THAT DUE TO DVOS REPORT IN MEPL, THE AO WAS HAVING A VALID BELIEF AND INFORMATION THAT THE IN COME HAS ESCAPED THE ASSESSMENT IN THE HANDS OF THE ASSESSEE. IN THIS V IEW OF THE MATTER, WE ARE UNABLE TO SUSTAIN THE ACTION OF THE AO IN REOPENING OF THE ASSESSMENT IN ALL THREE RELEVANT YEARS UNDER SECTION 147 OF THE ACT, AND ACCORDINGLY, THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT FOR ALL THE RELEVANT ASSESSMENT YEARS ARE CANCELLED AND THE GROUND NO.1 OF THE APPE AL OF THE ASSESSEE, IN ALL THESE APPEALS ARE ALLOWED. ITA NO.2532 TO 2534/AHD/2009 ITA NO.2253/AHD/2012 -5- 5. OTHER ISSUE RAISED BY THE ASSESSEE IN THE GROUND NO.2 OF THE ASSESSEE IS NOT ADJUDICATED FOR THE REASONS THAT THE REOPENI NG ITSELF HAS BEEN HELD AS NOT VALID IN THESE CASES, AND THAT THE GROUND NO.1 IN ALL THESE THREE YEARS HAS BEEN ALLOWED. ITA NO.2253/AHD/2012 (ASSTT.YEAR 2003-04) REVENUES APPEAL: 6. THE GROUND OF THE APPEAL OF THE REVENUE IS AS UN DER: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT AMOUNTING T O RS.15,35,245/- ON ACCOUNT OF THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND FAILED TO EXPLAIN THE DIFFERENCE BETWEEN THE COST OF CONSTRUCTION DETERMINED BY THE DVO AND THE EXPENDIT URE SHOWN BY IT IN ITS BOOKS OF ACCOUNTS. 7. WE HAVE HEARD THE PARTIES. WE FIND THAT SINCE T HE REOPENING ITSELF FOR THE RELEVANT ASSTT.YEAR 2003-04 HAS BEEN HELD A S NOT VALID, VIDE OUR ORDER IN THE FOREGOING PARAS OF THIS ORDER, WHILE D ISPOSING OF THE QUANTUM APPEAL OF THE ASSESSEE FOR THE ASST.YEAR 2003-04, W E HOLD THAT NO PENALTY UNDER SECTION 271(1)(C) COULD BE VALIDLY LEVIED ON THE ASSESSEE, AND ACCORDINGLY, THE ORDER OF THE CIT(A) ON THIS ISSUE IS CONFIRMED AND THE GROUND OF THE APPEAL OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, THREE APPEALS OF THE ASSESSEE FOR THE ASST.YEAR 2002- 2003, 2003-04 AND 2004-05 ARE ALLOWED AND THE APPEAL OF THE REVENUE FOR THE ASST.YEAR 2003-04 IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT