AVINISH SINGHAL, Jaipur V. ITO, Jaipur

ITA 227/JPR/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5115 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 09-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DR DHK
• Assessee Lawyers: SL GUPTA
• Keywords: Reopening of assessment; Value adopted by valuation officer; Fair market value; Valuation report
• Section: 80C; 143(3); 142(1); 147; 148; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 227 & 228/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2006-07 & 2007-08 SHRI AVNISH SINGHAL A-96, GOLE MARKET, JAWAHAR NAGAR JAIPUR CUKE VS. THE ITO WARD- 6 (1) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AFEPS 3306 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI S.L. GUPTA, CA JKTLO DH VKSJ LS@ REVENUE BY :SHRI R.A. VERMA, ADDL. CIT-. DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 14/07/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 25/07/2016 VKNS'K@ ORDER PER BHAGCHAND, AM BOTH THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST TWO DIFFERENT ORDERS OF THE LD. CIT(A)-2, JAIPUR DATED 25-01-2016 FOR THE ASSESSMENT YEAR 2006-07 AND 2007-08 RESPECTIVELY WH EREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL. ITA NO. 227/JP/2016 A.Y. 2006-07 1. THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS WRONG, UNJUST AND ERRED IN LAW IN ALLOWING THE APPLICATION OF SECTION 147 FOR REOPENING THE ASSESS MENT ALREADY ASSESSED U/S 143(3) SOLELY ON THE BASIS OF THE REPO RT OF THE DVO ITA NO. 227/JP/2016 SHRI AVNISH SINGHAL VS. ITO, WARD- 6 (1), JAIPUR . 2 HAVING DIFFERENCE OF ESTIMATION OF COST RS. 72,534/ -. FURTHER THE LD. CIT(A) IGNORING THE PROVISIONS OF SECTION 149(1)(B) ACCORDING TO WHICH NOTICE ISSUED U/S 148 ITSELF IS TIME BARRED. (2) THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS WRONG, UNJUST AND ERRED IN LAW IN UPHOLDING THE ADDITION TO TOTAL INCOME AS UNDISCLOSED INCOME INVE STMENT RS. 29,659/- ON THE BASIS OF ESTIMATION OF COST OF CONS TRUCTION BY DVO. (3) THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS WRONG, UNJUST AND ERRED IN LAW IN UPHOLDING DISALLOWANCE OF DEDUCTION OF RS. 18,665/- U/S 24(B) FOR INTEREST PAID ON LOAN FOR HOUSE AND RS. 6,041/- U/S 80C FOR REPAYMENT OF HOUSING LOAN. 2.1 FIRST OF ALL, I TAKE UP THE GROUND OF APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 AND ADJUDICATE THE GROUND N O. 1 OF THE ASSESSEE IN WHICH BRIEF FACTS OF THE CASE ARE THAT THE RETUR N FOR THE ASSESSMENT YEAR 2006-07 DECLARING TOTAL INCOME OF RS. 4,08,357/- WA S FILED BY THE ASSESSEE ON 31-07-2007. THE SAME WAS PROCESSED AT T HE RETURNED INCOME ON 5-01-2007. ORDER U/S 143(3) OF THE ACT WAS PASSE D ON 24-10-2008 ACCEPTING THE RETURNED INCOME OF THE ASSESSEE. THE AO DURING THE COURSE OF ASSESSMENT IN THE CASE OF THE ASSESSEE FOR THE A .Y. 2008-09 OBSERVED THAT REFERENCE TO THE VALUATION CELL WAS MADE FOR V ALUATION OF THE HOUSE PROPERTY CONSTRUCTED BY THE ASSESSEE. AS PER THE VA LUATION REPORT THE INVESTMENT DURING THE YEAR UNDER CONSIDERATION WAS OF RS. 13,71,998/- AS AGAINST THE SUM OF RS. 12,99,464/- DECLARED BY THE ASSESSEE. THUS THE ASSESSEE HAD MADE UNDISCLOSED INVESTMENT OF RS. 72, 534/- AND THE SOURCE ITA NO. 227/JP/2016 SHRI AVNISH SINGHAL VS. ITO, WARD- 6 (1), JAIPUR . 3 OF WHICH WAS NOT VERIFIED. FURTHER SOME OTHER INCOM E WERE ALSO ESCAPED ASSESSMENT. HENCE, THE CASE OF THE ASSESSEE WAS REO PENED BY ISSUE OF NOTICE U/S 148 OF THE ACT ON 28-03-2013. IN RESPONS E TO THE NOTICE ISSUED THE LD. AR OF THE ASSESSEE VIDE HIS LETTER DATED 8 -04-2013 SUBMITTED THAT THE RETURN OF INCOME FILED IN RESPONSE TO SECTION 1 39(1) OF THE I.T. ACT MAY BE CONSIDERED TO BE IN RESPONSE TO NOTICE U/S 1 48 OF THE ACT. THE LD. AR OF THE ASSESSEE FROM TIME TO TIME ATTENDED THE P ROCEEDINGS AND THE DETAILS ALONGWITH RECORDS WERE PLACED BEFORE THE AO FOR TEST CHECK. CONSIDERING ALL THE RECORDS AND DETAILS OF THE ASSE SSEE THE AO OBSERVED THAT THERE IS ESCAPEMENT OF INCOME BY THE ASSESSEE AND HENCE APPLIED THE PROVISIONS OF SECTION 147 OF THE ACT WHICH WAS CONF IRMED BY THE LD. CIT(A) IN FIRST APPEAL BY FOLLOWING OBSERVATION. 2.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASS ESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. DURING THE COURSE OF ASSESSMENT FOR THE ASSESSMENT YEAR 2008-09, REFEREN CE TO THE VALUATION CELL WAS MADE FOR VALUATION OF THE HOUSE PROPERTY CONSTRUCTED BY THE ASSESSEE. AS PER VALUATION REPOR T, THE INVESTMENT DURING THE YEAR UNDER CONSIDERATION WAS OF RS. 35,9 5,009/- AS AGAINST THE SUM OF RS. 34,04,950/- DECLARED BY THE ASSESSEE. THUS THE ASSESSEE HAD MADE UNDISCLOSED INVESTMENT OF RS . 1,90,059/- THE SOURCE OF WHICH WAS NOT VERIFIED. HENCE, THE CA SE WAS REOPENED BY ISSUE OF NOTICE U/S 148 OF THE ACT ON 5-03-2013. IT IS OBSERVED THAT THE REASON FOR REOPENING HAVE BEEN PROPERLY RE CORDED AND HENCE THE REOPENING U/S 147 IS HELD TO BE IN ORDER. ITA NO. 227/JP/2016 SHRI AVNISH SINGHAL VS. ITO, WARD- 6 (1), JAIPUR . 4 2.2 THE LD. AR OF THE ASSESSEE FILED THE FOLLOWING WRITTEN SUBMISSION AS TO THE PROVISION OF SECTION 147 OF THE ACT FOR R EOPENING THE ASSESSMENT AND PRAYING THEREIN TO QUASH THE ASSESSMENT PROCEED INGS. 1.1. THE LD CIT APPEAL WRONG, UNJUST AND ERRED IN L AW IN UPHOLDING THE ACTION OF A.O FOR REOPENING OF ASSESSMENT WITH MENT IONING THE INCORRECT STATEMENT OF UNVERIFIED UNDISCLOSED INVESTMENT RS 190059 AT PARA 2.3 OF HER ORDER AND WITHOUT CONSIDERING THE FOLLOWING FACTS: A) AS PER REASON RECORDED ( PB 9 ) , THE ONLY GROUND IS DVOS REPORT DURING THE ASSESSMENT PROCEEDING OF A.Y. 2008-09THERE IS NO O THER MATERIAL ON THE BASIS OF WHICH THE ASSESSING OFFICER HAS FORMED A REASONABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED THE ASSESSMENT. THERE IS NO INDEPEN DENT APPLICATION OF MIND FOR FORMATION OF BELIEF BY THE ASSESSING OFFICER THAT I NCOME CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE HAS ESCAPED ASSESSMENT. AS PE R VARIOUS JUDICIAL PRONOUNCEMENTS IT HAS BEEN CATEGORICALLY HELD THAT THE OPINION OF THE D.V.O. PER SE IS NOT INFORMATION FOR THE PURPOSE OF REOPENING OF AN ASSESSMENT U/S 147 OF THE ACT. THE ASSESSING OFFICER HAS TO APPLY HIS MIND TO THE INFO RMATION, IF ANY, COLLECTED AND MUST FORM BELIEF THEREOF. AS SUCH THE ASSESSMENT IS REOP ENED SOLELY ON THE BASIS OF REPORT OF THE D.V.O., THE REOPENING IS BAD AS IT IS NOT BA SED ON THE FORMATION OF BELIEF OF THE ASSESSING OFFICER THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. WE REFER SOME OF JUDICIAL PRONOUNCEMENTS WITH EXTRACT THE S AME IN THIS REGARDS AS UNDER: (I) DECISION OF HON'BLE SUPREME COURT IN ACIT Y. DHARIA CONSTRUCTION CO., [ 2011 ] 197TAXMANN202(SC) ' THE OPINION OF DISTRICT VALUATI ON OFFICER (DVO) PER SE IS NOT AN INFORMATION FOR PURPOSES OF REOPENING OF AN ASSESSMENT UNDER SECTION 147; ASSESSING OFFICER HAS TO APPLY HIS MIND TO INFORMAT ION, IF ANY, COLLECTED AND MUST FORM A BELIEF THEREON. (II) CTT VS. K. RAJPANDIAN, [2009] 311 ITR 477( MAD.) RE ASSESSMENT - VALIDITY OF REASSESSMENT - CONSTRUCTION OF BUILDING- REASSESSME NT BASED ON REPORT OF DEPARTMENTAL VALUATION OFFICER - NOT VALID (III) DECISION OF HON'BLE ALLAHABAD HIGH COURT IN M/S FU SION ELECTRIC PVT LTD V. INCOME TAX DEPARTMENT AND OTHER[WRITT PETITION NO . 11055 OF 2009 (M/B)] 'IN THE LIGHT OF ABOVE SETTLED POSITION, WE SET ASIDE THE I MPUGNED NOTICE ISSUED BY THE DEPARTMENT UNDER SECTION 148 OF THE INCOME TAX ACT AS THE SAME WAS ISSUED SOLELY BASED ON DVO'S REPORT' (IV) CTT VS. K. RAJPANDIAN, [2009] 311 ITR 477( MAD.) RE ASSESSMENT - REASSESSMENT BASED ON REPORT OF DEPARTMENTAL VALUATION OFFICER - NOT VALID . ITA NO. 227/JP/2016 SHRI AVNISH SINGHAL VS. ITO, WARD- 6 (1), JAIPUR . 5 (V) DECISION OF HON'BLE PUNJAB AND HARYANA HIGH COURT I N THE CASE OF CTT VS. SMT. USHA MATHUR, [2001] 252 ITR 179 (P&H (VI) CIT V. SIMPSON & CO.(2012) 344 ITR 43(MAD) B) INCOME OF A.Y 2006-07 ASSESSED U/S 143(3) (PB11- 14) WHERE THE ASSESSEE FULLY AND TRULY DISCLOED THE COST OF INVESTMENT DUR ING COURSE OF ASSESSMENT PROCEEDING, HENCE AS PER THE FIRST PROVISION OF SEC TION 147 OF THE I.T ACT 1961, NO ACTION SHALL BE TAKEN UNDER SECTION 147 AFTER THE EXPIRY OF 4 YEARS FROM THE END OF RELEVANT A.Y WHERE AN ASSESSMENT U/S 143(3) HAS BEE N MADE FOR THE RELEVANT A.Y UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASS ESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSE E TO MAKE RETURN U/S 139 OR IN RESPONSE TO A NOTICE/S 142(1) OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT FOR THAT A.Y. C) THE NOTICE ISSUED U/S 148 FOR THE A,Y 2006-07 DA TED 28-03-2013 IS ITSELF TIME BARRED AND INVALID IN LAW, BECAUSE AS PER THE PROVISIONS O F SECTION 149(1)(B) NO NOTICE U/S 148 SHALL BE ISSUED FOR THE RELEVANT A.Y IF 4 YEARS, BUT NOT MORE THAN 6 YEARS , HAVE ELAPSED FROM THE END OF THE RELEVANT A.Y UNLES S THE INCOME CHARGEABLE TO TAX AMOUNTS TO OR IS LIKELY TO AMOUNT TO RS ONE LAKH OR MORE FOR THAT YEAR WHICH IS NOT EXIST IN REASON RECORDED. HERE AS PER REASON RECORD ED, FORMATION OF BELIEF WAS MADE FOR DIFFERENCE OF VALUATION RS 72534. HOWEVER WRIT TEN IN RECORDED REASON RS 105000/- INCREASING HYPOTHECALLY FIGURES. D)AS AGAINST THE NOTICE U/S 148 DATED 5-3-2015, AFT ER RECEIVING REASON RECORDED, THE ASSESSEE OBJECTED THE NOTICE VIDE LETTER DATED 3-9-2013 ( PB 11 ) BUT THE LD A.O IGNORED THE OBJECTION AND REASSESSMENT MADE WITHOUT CONSIDERING OBJECTION OF THE ASSESSEE. AS SUSBMITTED ABOVE, NOTICE THE RE-ASSESSMENT PROCE EDING ARE INVALID AND BAD IN LAW THEREFORE YOU 2.3 THE LD. DR RELIED ON THE ORDERS OF THE LOWER AU THORITIES. 2.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTICED THAT DURING THE COURSE OF ASSESSMENT FOR THE ASSESSMENT YEAR 2008-09, REFERENCE TO THE VALU ATION CELL WAS MADE FOR VALUATION OF THE HOUSE PROPERTY CONSTRUCTED BY THE ASSESSEE. AS PER THE VALUATION REPORT, THE INVESTMENT DURING THE YEAR UN DER CONSIDERATION WAS ITA NO. 227/JP/2016 SHRI AVNISH SINGHAL VS. ITO, WARD- 6 (1), JAIPUR . 6 OF RS. 35,95,009/ AS AGAINST THE SUM OF RS. 34,04,9 50/- DECLARED BY THE ASSESSEE. THUS AS PER AO, THE ASSESSEE MADE UNDISCL OSED INVESTMENT OF RS. 1,90,059/- AND THE SOURCE OF WHICH WAS NOT VERI FIED. HENCE, THE CASE WAS REOPENED BY ISSUE OF NOTICE U/S 148 OF THE ACT. CONSIDERING ALL THE RELEVANT RECORDS ON THE ISSUE IN QUESTION, I FIND T HAT THE LD. CIT(A) HAS RIGHTLY UPHELD THE ACTION OF THE AO AS TO INVOKING THE PROVISION OF SECTION 147 OF THE ACT. HENCE, THE GROUND NO. 1 OF THE ASSESSEE IS DISMISSED. 3.1 THE GROUND NO. 2 OF THE ASSESSEE IS REGARDING U PHOLDING THE ADDITION TO TOTAL INCOME AS UNDISCLOSED INVESTMENT OF RS. 72,534/- ON THE BASIS OF ESTIMATION OF COST OF CONSTRUCTION BY DVO. IT IS NOTED AS PER ASSESSMENT ORDER OF THE AO THAT THE ASSESSEE HAD MA DE UNDISCLOSED INVESTMENT OF RS. 72,534/- AND THE SOURCE OF WHICH WAS NOT VERIFIED. HENCE, THE CASE OF THE ASSESSEE WAS REOPENED BY ISS UE OF NOTICE UU148 OF THE ACT ON 28-03-2013. WHEN THE CASE OF THE ASSESSE E WAS REOPENED ON ACCOUNT OF UNDISCLOSED INVESTMENT MADE IN THE HOUSE PROPERTY OF RS. 72,534/-, THE ASSESSEE WAS ASKED VIDE QUESTIONN AIRE TO GIVE THE SOURCE OF INVESTMENT MADE. IN RESPONSE THERETO, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE TOTAL DIFFERENCE IN VALUATION ES TIMATED BY THE DVO AND THAT OF THE ASSESSEE IS ONLY 5.58%. THE VALUATION R EPORT OF DVO IS ONLY ITA NO. 227/JP/2016 SHRI AVNISH SINGHAL VS. ITO, WARD- 6 (1), JAIPUR . 7 ESTIMATE OF CONSTRUCTION COST. IT IS ALSO NOTED THA T THE LD. AR OF THE ASSESSEE RELIED ON FOLLOWING CASE LAWS BEFORE THE AO . (I) CIT VS. AMBIENCE DEVELOPERS & INFRASTRUCTURE (P ) LTD. 25 TAXMANN. COM (DEL.) (II) CIT VS. ABESON HOTELS (P) LTD. 191 CTR 263 (M .P.) THE LD. AR ALSO SUBMITTED BEFORE THE AO THAT THIS B ENCH OF ITAT HAD ALLOWED SELF SUPERVISION CHARGES IN THE CASE OF ASS ESSEE HIMSELF FOR THE ASSESSMENT YEAR 2008-09 AND HAD DELETED THE ADDITIO N. THE LD. AR CONSIDERED THE SUBMISSION OF THE ASSESSEE AND FINAL LY MADE THE ADDITION OF RS. 72,534/- TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF UNDISCLOSED INVESTMENT WHICH WAS PARTLY ALLOWED BY THE LD. CIT(A) IN FIRST APPEAL BY FOLLOWING OBSERVATION. 3.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASS ESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. IN THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2008-09, IT IS SEEN THAT TH E ISSUE OF UNDISCLOSED INVESTMENT IN THE CONSTRUCTION OF THE H OUSE HAS BEEN DISCUSSED IN DETAIL. THE PERIOD OF CONSTRUCTION EXT ENDED BETWEEN ASSESSMENT YEAR 2005-06 TO 2008-09 AND THE TOTAL CO ST OF INVESTMENT DECLARED BY THE ASSESSEE WAS RS. 51,59,3 15/-. THE SAME WAS REFERRED TO THE VALUATION OFFICER AND AS PER TH E VALUATION REPORT THE COST OF INVESTMENT WAS ASCERTAIN BY THE VALUATION OFFICE AT RS. 54,57,300/- AND THE SAME WAS PROPORTIONATELY DISTRIBUTED OVER THE FOUR YEAR DURING WHICH THE CONSTRUCTION IS PLACED. THE A HAD TAKEN CERTAIN OBJECTION THE VALUATION INCLUDING THE FACT THAT THE TOTAL VARIATION WAS ABOVE 5.5% AND ALSO THAT SELF S UPERVISION RATE AT 7.5% OF PLINTH AREA COST RS. 34,04,581/- WHICH COME S TO RS. 2,55,343/- HAD NOT BEEN GRANTED. IN THE ASSESSMENT YEAR 2008-09, THE MATTER TRAVELED TO THE ITAT AND VIDE ITS ORDER DATED 10-07- 2013, THE ASSESSEE WAS GRANTED REBATE ON ACCOUNT OF SELF ITA NO. 227/JP/2016 SHRI AVNISH SINGHAL VS. ITO, WARD- 6 (1), JAIPUR . 8 SUPERVISION AND THE ADDITION MADE OF RS. 21,450/- W AS DELETED. IN THE PROCEEDINGS BEFORE ME, THE ASSESSEE HAS RELIED ON THIS DECISION OF HON'BLE TRIBUNAL REQUESTING FOR ALLOWING REBATE ON ACCOUNT OF SELF SUPERVISION CHARGES. HE HAS ALSO RAISED OTHER OBJECTINS TAKEN IN THE ASSESSMENT YEAR 2008-09. AS PER THE CLAIM OF TH E ASSESSEE FOR THE ASSESSMENT YEAR 2008-09, THE SUPERVISION CHARGE S WERE CLAIMED AT 7.5% HOWEVER, THE SAME IS ALLOWABLE AT 5% AND HE NCE TOTAL SUPERVISION CHARGES TO BE ALLOWED COME TO RS. 170,2 29/-. THE SAME SHALL BE ALLOWED IN THIS YEAR PROPORTIONATE TO THE INVESTMENT IN THIS YEAR. THE SAME COMES TO RS. 42,875/-. IN VIEW OF THE DISCUSSION AS ABOVE, THE RELIEF OF R S. 42,875/- IS GRANTED TO THE ASSESSEE TOWARDS THE ADDITION MAD E RS. 72,534/-. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 3.2 THE LD. AR OF THE ASSESSEE FILED THE FOLLOWING WRITTEN SUBMISSION AS TO PARTLY GRANTED THE RELIEF OF RS. 42,875/- BY THE LD. CIT(A) AND PRAYED THEREIN TO DELETE THE FULL ADDITION MADE BY THE AO. AT THE OUTSET IT IS DIRECTLY COVERED MATTER IN TH E ASSESSEES CASE FOR THE A.Y. 2008-09 RELEVANT TO THIS FACT WHERE, THE HON ITAT, JAIPUR BENCH SMC, JAIPUR VIDE HIS ORDER DATED 10-07-2013 FOR THE A.Y 2008-09 ACC EPTED THE INVESTMENT DISCLOSED BY THE ASSESSEE WITH ALLOWING REBATE ON ACCOUNT OF SELF SUPERVISION CHARGES IN THE COST OF INVESTMENT ASCERTAINED BY THE VALUATION OFF ICER AND DELETED ADDITION MADE ON ACCOUNT OF DIFFERENCE IN VALUATION MADE BY VALUATIO N OFFICER( PB NO 15-17). THE LD CIT APPEAL UNREASONABLY RESTRICTED TO SELF SUPERVIS ION CHARGES WITH A TYPICAL CALCULATION HYPOTHECALLY 5% ON PLINTH AREA COST INS TEAD OF 5.58% DIFFERENCE OF COST ARRIVED WAS ALLOWED BY THIS HON COURT. ON MERIT WE ALSO SUBMIT AS UNDER: 1. THE DIFFERENCE IN VALUATION ESTIMATED BY DVO FROM I NVESTMENT SHOWN IS ONLY 5.58%. THE VALUATION REPORT OF DVO IS ONLY ESTIMATION OF C ONSTRUCTION COST WHICH CAN NEVER BE EXACTLY EQUAL TO ACTUAL COST. THE DIFFERENCE 5.5 8% IS NEGLIGIBLE HENCE SHOULD BE IGNORE. AS DECIDED IN DECISION OF VARIOUS TRIBUNAL AND HIGH COURT, WHEN DIFFERENCE BETWEEN COST OF CONSTRUCTION AS PER BOOKS AND ESTIM ATED AS PER DVO REPORT IS NOT SIGNIFICANT, A.O. IS NOT JUSTIFIED IN MAKING ADDITI ON TO INCOME OF ASSESSEE. SOME OF DECISION DIFFERENCE WITHIN RANGE OF 10% AS CONSID ERED TOLERABLE LIMIT. WE DRAW YOUR ATTENTION IN THE CASE IN THIS REGARDS AS FOLLOW: ITA NO. 227/JP/2016 SHRI AVNISH SINGHAL VS. ITO, WARD- 6 (1), JAIPUR . 9 - CIT VS AMBEINCE DEVELOPERS & INFRASTRUCTURE (P) LTD (2012)25 TAXMAN.COM(DELHI): WHETHER WHERE DIFFERENCE BETWEEN COST OF CONSTRUCT ION AS PER BOOKS OF ACCOUNT AND ESTIMATED COST OF CONSTRUCTION AS PER DVO'S REPORT WAS VERY MINOR, ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKIN G ADDITIONS TO INCOME OF ASSESSEE - ITO VS JMP ENTERPRISES(1994)49TTH(ASR)TM 31 - CIT VS ABESON HOTELS (P) LTD 2004 191 CTR(MP)263 : WHERE DIFFERENCE WITHIN RANGE OF 10% AS CONSIDERED TOLERABLE LIMIT. 2. THE INCOME OF APPELLANT IS ASSESSED U/S 143(3) AS S CRUTINY ASSESSMENT SINCE A.Y. 2004-05 UPTO RELEVANT ASSESSMENT YEAR REGULARLY WHI CH WAS THE PERIOD OF INVESTMENT IN CONSTRUCTION OF HOUSE AND NO ADVERSE FINDING DUR ING COURSE OF SCRUTINY ASSESSMENT IN ANY OF EARLIER YEAR POINTED OUT. 3. THAT THE VALUATION REPORT OF DVO IS ALSO SUFFER FRO M VARIOUS DEFECTS AS POINTED OUT BY THE APPELLANT BEFORE THE LD A.O. DURING COURSE OF S CRUTINY ASSESSMENT AS UNDER: A. THE DVO ADDED RS 54300/- FOR ARCHITECT FEES HOW EVER THE ASSESSEE HAS NOT ENGAGED ANY ARCHITECT FOR CONSTRUCTION OF HOUSE . THE FATHER OF ASSESSEE HAS VAST EXPERIENCE OF CONSTRUCTION ACTIVITIES WHO LOOK AFTER ALL THE CONSTRUCTION ACTIVITIES HENCE REQUIREMENT OF ARCHIT ECT WAS NOT NEEDED TO ASSESSEE. THE ASSESSEE ALSO GIVEN THE AFFIDAVIT IN THIS REGARDS. B. THE DVO HAS NOT ALLOWED SELF SUPERVISION REBATE ON ACCOUNT OF PURCHASES OF MATERIAL AND ENGAGEMENT OF CONSTRUCTION LABOUR WHIC H SHOULD BE @ 7.5 % OF PLINTH AREA COST OF RS 3404581 WHICH COMES TO RS 25 5343. THE ASSESSEE HAS SUBMITTED AN AFFIDAVIT IN THIS REGARDS. IT IS ALSO SUBMITTED THAT THE ASSESSEE BELONGS TO FAMILY WHO WAS EARLIER ENGAGED IN BUSI NESS OF CONSTRUCTION RELATED ACTIVITY HENCE THEY ARE CAPABLE TO PROCURE MATERIAL AND LABOUR THEMSELVES IN EFFICIENT MANNER. C. IN ANNEXURE A THE DVO TAKEN VALUE OF 93.45 MTR CU P BOARD @ 6000/- P.M WHICH IS TOO HIGH. THE ASSESSEES FAMILY ITSEL F ENGAGED IN BUSINESS OF WOODEN WORK AND AS PER ASSESSEE THE COST WAS NOT MO RE THAN 2500/- PER SQ. MTR FOR HIM. ACCORDIGLY ESTIMATION IN SUCH ITEM HIG HER BY RS 327075. THE LD A.O. REJECTED ABOVE DEFECT POINTED OUT BY T HE APPELLANT ONLY ON BASIS OF OWN ASSUMPTION WITHOUT ANY FURTHER ENQUIRY OR EVIDENCE. THE LD A.O ALSO NOT POINTED OUT ANY SINGLE INSTANCE TO SHOW UNRECORDED EXPENDITURE THAT THE ASSESSEE HAS ACTUALLY INCURRED MORE THAN RECORDED IN BOOKS PRODUCED BEFORE HIM. 4. THAT IT IS BURDEN ON THE REVENUE TO PROVE THAT REAL INVESTMENT EXCEEDED THE INVESTMENT SHOWN IN ACCOUNT BOOK OF THE ASSESSEE. IN THE CASE SMT. AMAR KUMARI SURANA VS CIT(1996)89 TAXMAN 544 (RAJ) HELD THAT MERELY ON BASIS OF FAIR MARKET VALUE NO ADDITION CAN BE MADE U/S 69B, BUT IF ON BASIS OF SU FFICIENT MATERIAL ON RECORD SOME REASONABLE INFERENCE CAN BE DRAWN THAT THE ASSESSEE HAS INVESTED MORE THAN SHOWN IN ACCOUNT BOOKS, THAN ONLY ADDITION U/S 69B CAN BE MA DE. ITA NO. 227/JP/2016 SHRI AVNISH SINGHAL VS. ITO, WARD- 6 (1), JAIPUR . 10 3.3 THE LD. DR RELIED ON THE ORDER OF THE LD. CIT(A ). 3.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTICED THAT SUCH TYPE O F ISSUE HAD BEEN DECIDED BY THIS BENCH IN FAVOUR OF THE ASSESSEE VIDE ITS OR DER DATED 10-07-2013 IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2008-09 IN ITA NO. 483/JP/2013 IN WHICH THE ASSESSEE HAD CLAIMED SELF SUPERVISION CHARGES AT 7.5%. THE LD. CIT(A) HAS ALLOWED 5% SUPERVISION CHARGES. HOWEVER, THE DIFFERENCE IN VALUATION ESTIMATED BY DVO FROM I NVESTMENT SHOWN IS ONLY 5.58%. THE VALUATION REPORT OF THE DVO IS ONLY ESTIMATION OF CONSTRUCTION COST. I FEEL THAT THERE IS NO MUCH DIF FERENCE BETWEEN 5% ALLOWED BY THE LD. CIT(A) AS SELF SUPERVISION CHARG ES AND THE TOTAL DIFFERENCE IN VALUATION ESTIMATED BY THE DVO AND TH AT OF THE ASSESSEE AT 5.58% WHICH IS NEGLIGIBLE. HENCE LOOKING TO THE OVE RALL SCENARIO OF THE CASE, THE SELF SUPERVISION CHARGES AT 5.58% IS CONS IDERED REASONABLE AND THE GROUND NO. 2 OF THE ASSESSEE IS ALLOWED. 4.1 THE GROUND NO. 3 OF THE ASSESSEE IS REGARDING U PHOLDING DISALLOWANCE OF DEDUCTION OF RS. 18,665/- U/S 24(B) FOR INTEREST PAID ON LOAN FOR HOUSE AND RS. 6,041/- U/S 80C FOR REPAYING OF HOUSING LOAN. THE BRIEF FACTS OF THE CASE AS PER AO ARE THAT THE ASSE SSEE HAD SHOWN INCOME ITA NO. 227/JP/2016 SHRI AVNISH SINGHAL VS. ITO, WARD- 6 (1), JAIPUR . 11 FROM SALARY, LOSS FROM HOUSE PROPERTY AND INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. THE INCOME UNDER THE INC OME FROM SALARY AND FROM OTHER SOURCES WAS ACCEPTED AS DECLARED BY THE ASSESSEE. HOWEVER, THE HOUSE PROPERTY IS UNDER CONSTRUCTION A N THE CONSTRUCTION HAD BEEN COMPLETED IN F.Y. 2008-09 PERTAINING TO A. Y. 2009-10. THEREFORE, AS PER THE EXPLANATION TO SECTION 24(B) OF THE ACT, THE BENEFIT OF THE DEDUCTION U/S 24(B) OF THE ACT CANNOT BE GIV EN AT THIS STAGE AS THE CONSTRUCTION OF THE HOUSE HAD NOT BEEN COMPLETED. H ENCE, AS PER THE AO, THE LOSS OF RS. 18,665/- CLAIMED BY THE ASSESSEE WA S NOT ALLOWED TO BE CLAIMED DURING THE YEAR AND THE REBATE U/S 80C FOR REPAYMENT OF PRINCIPAL AMOUNT OF RS. 6,041/- WAS ALSO NOT ALLOWED. 4.2 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE CARRIED THE MATTER BEFORE THE AO WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DISMISSED THIS GROUND OF THE ASSESSEE BY OBSERVING AS UNDER:- 4.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSION OF THE APPELLAN T. SINCE THE DEDUCTION U/S 24(B) CAN BE ALLOWED AFTER THE CO MPLETION OF CONSTRUCTION WHICH IN THE PRESENT CASE HAPPENED IN FINANCIAL YEAR 2008-09 THE BENEFIT OF DEDUCTION CAN NOT BE GIVEN IN THIS YEAR. THE DECISION OF THE ASSESSING O FFICER ON THIS GROUND IS UPHELD. THE GROUND OF APPEAL IS DISM ISSED. ITA NO. 227/JP/2016 SHRI AVNISH SINGHAL VS. ITO, WARD- 6 (1), JAIPUR . 12 4.3 NOW THE ASSESSEE IS BEFORE ME FOR NOT ALLOWING THIS GROUND BY THE LD. CIT(A) AND THE LD. AR OF THE ASSESSEE HAS PRAYE D FOR DELETION OF THE DISALLOWANCES AS MADE BY THE AO AND CONFIRMED BY TH E LD. CIT(A) WITH FOLLOWING SUBMISSIONS. IN FACT THE ASSESSEE SELF OCCUPIED THE HOUSE IN T HE PERIOD RELEVANT TO A.Y 2006- 07 IN EXISTING HOUSE PURCHASES AND PARTLY CONSTRUC TED STAGE. THE COST IN NEXT YEAR ARE FOR FURTHER CONSTRUCTION OF HOUSE IN NEXT STAGES AND AL SO HAVING ELECTRICITY CONNECTION (PB37-44). THE BANK WHO HAS PROVIDED LOAN ON HOUSE HAS STARTED EMI AND ALSO GIVEN CERTIFICATE(PB36) THE HOUSE CONSTRUCTED FOR THE SELF OCCUPATION WILL BE DEEMED TO BE COMPLETE AS SOON AS IT IS OCCUPIED BY THE ASSESSEE FOR USE. ALS O IN RESPECT OF DEDUCTION U/S 80C, CLAUSE XVIII, THERE IS NO CONDITION OF REPAYMENT AF TER COMPLETION OF HOUSE. THEREFORE THERE IS NO QUESTION OF DISALLOWING THE DEDUCTION OF RS 18665/- U/S 24(B) FOR THE INTEREST PAID ON LOAN FOR HOUSE AND RS 6041/- U/S 80C FOR RE PAYMENT OF HOUSING LOAN. 4.4 THE LD. DR RELIED ON THE ORDER OF THE LOWER AUT HORITIES. 4.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT EMERGES FROM THE RECORD THA T THE ASSESSEE HIMSELF OCCUPIED THE HOUSE AT PARTLY CONSTRUCTED STAGE DURI NG THE PERIOD OF ASSESSMENT YEAR 2006-07 FOR WHICH THE ASSESSEE HAS SHOWN THE ELECTRICITY CONNECTION INSTALLED AT THIS HOUSE WITH PAYMENT OF BILL WHICH INDICATES THAT THE ASSESSEE HAD PAID THE AMOUNT FOR ELECTRICI TY CONSUMED IN THE MONTH OF MARCH 2006. THE ASSESSEE HAS ALSO SUBMITTE D THE BANK CERTIFICATE FROM ICICI BANK WHICH INDICATES THAT TH E ASSESSEE HAS PAID THE EMI AMOUNT OF LOAN FOR THE PERIOD APRIL 2005 TO MAR CH 2006. HENCE IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CA SE, I FEEL NO REASON TO ITA NO. 227/JP/2016 SHRI AVNISH SINGHAL VS. ITO, WARD- 6 (1), JAIPUR . 13 DISALLOW THE DEDUCTION OF RS. 18,665/- U/S 24(B) FO R THE INTEREST PAID ON LOAN FOR HOUSE AND RS. 6,041/- U/S 80C FOR REPAYMEN T OF HOUSING LOAN. THUS GROUND NO. 3 OF THE ASSESSEE IS ALLOWED. 5.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. 6.1 NOW WE TAKE UP THE APPEAL OF THE ASSESSEE IN IT A NO. 228/JP/2016 FOR THE ASSESSMENT YEAR 2007-08 WHEREIN THE ASSESSE E HAS RAISED THE FOLLOWING GROUNDS. 1. THAT ON THE FACTS AND THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) IS WRONG, UNJUST AND ERRED IN LAW IN ALLOWING THE APPLICATION OF SECTION 147 FOR REOPENING THE ASSESS MENT ALREADY ASSESSED U/S 143(3) SOLELY ON THE BASIS OF THE REPO RT OF THE DVO. (2) THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS WRONG, UNJUST AND ERRED IN LAW IN UPHOLDING THE ADDITION OF RS. 6,6604/- TO TOTAL INCOME AS UNDISC LOSED INCOME INVESTMENT ON THE BASIS OF ESTIMATION OF COST OF CO NSTRUCTION BY DVO. (3) THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS WRONG, UNJUST AND ERRED IN LAW IN UPHOLDING DISALLOWANCE OF DEDUCTION OF RS. 1,50,000/- U/S 24( B) FOR INTEREST PAID ON LOAN FOR HOUSE AND DEDUCTION U/S 80C RS. 52 ,985/- FOR REPAYMENT OF HOUSING LOAN. (4) THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS WRONG, UNJUST AND ERRED IN LAW IN UPHOLDING DISALLOWANCE OF DEDUCTION OF RS. 4,612/- U/S 80D FO R PAYMENT OF MEDICLAIM. 7.1 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AS REGARDS GROUND NO. 1 OF THE ASSESSEE, I FIND THAT ITA NO. 227/JP/2016 SHRI AVNISH SINGHAL VS. ITO, WARD- 6 (1), JAIPUR . 14 THE ISSUE AS RAISED BY THE ASSESSEE IN ITS APPEAL F OR THE ASSESSMENT YEAR 2006-07 IS SIMILAR TO THE ISSUE FOR THE ASSESSMENT YEAR 2007-08 WHEREIN THE ORDER OF THE LD. CIT(A) HAS BEEN CONFIRMED AS TO INVOKING THE PROVISIONS OF SECTION 147 OF THE ACT BY THE AO. THE DECISION TAKEN BY THIS BENCH IN GROUND NO. 1 OF THE APPEAL OF THE AS SESSEE FOR THE ASSESSMENT YEAR 2006-07 SHALL APPLY MUTATIS MUTANDI S TO THE GROUND NO. 1 OF THE APPEAL OF THE ASSESSEE FOR THE 2007-08 ALS O. HENCE, THE GROUND NO. 1 OF THE ASSESSEE IS DISMISSED. 8.1 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AS REGARDS GROUND NO. 2 OF THE ASSESSEE, I FIND THAT THE ISSUE AS RAISED BY THE ASSESSEE IN ITS APPEAL F OR THE ASSESSMENT YEAR 2006-07 IS SIMILAR TO THE ISSUE FOR THE ASSESSMENT YEAR 2007-08 WHEREIN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE HAS BEEN REVERSED ALLOWING 5.58% AS SELF SUPERVISION CHARGES. HENCE THE DECISI ON TAKEN BY THIS BENCH IN GROUND NO. 2 OF THE APPEAL OF THE ASSESSE E FOR THE ASSESSMENT YEAR 2006-07 SHALL APPLY MUTATIS MUTANDIS TO THE GR OUND NO. 2 OF THE APPEAL OF THE ASSESSEE FOR THE 2007-08 ALSO. THUS, THE GROUND NO. 2 OF THE ASSESSEE IS ALLOWED. 9.1 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AS REGARDS GROUND NO. 3 OF THE ASSESSEE, I FIND THAT ITA NO. 227/JP/2016 SHRI AVNISH SINGHAL VS. ITO, WARD- 6 (1), JAIPUR . 15 THE ISSUE AS RAISED BY THE ASSESSEE IN ITS APPEAL F OR THE ASSESSMENT YEAR 2006-07 IS SIMILAR TO THE ISSUE FOR THE ASSESSMENT YEAR 2007-08 WHEREIN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE HAS BEEN REVERSED ALLOWING THE DEDUCTION OF RS. 18,665/- U/S 24(B) FOR THE INTERES T PAID ON LOAN FOR HOUSE AND RS. 6,041/- U/S 80C FOR REPAYMENT OF HOUSING LO AN FOR THE ASSESSMENT YEAR 2006-07. HENCE THE DECISION TAKEN BY THIS BENC H IN GROUND NO. 3 OF THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 SHALL APPLY MUTATIS MUTANDIS TO THE GROUND NO. 3 OF THE APPEAL OF THE ASSESSEE FOR THE 2007-08 ALSO. THUS, THE GROUND NO. 3 OF THE ASSESSE E IS ALLOWED. 10.1 NOW I TAKE UP GROUND NO. 4 FOR THE ASSESSEE RE GARDING UPHOLDING THE DISALLOWANCE OF DEDUCTION OF RS. 3,612/- U/S 80 D FOR PAYMENT OF MEDICLAIM WHEREIN RELEVANT EXTRACT OF ASSESSMENT OR DER IS AS UNDER:- DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE COULD NOT PRODUCE THE DOCUMENTARY EVIDENC E TO THE INVESTMENT MADE U/S 80D OF THE I.T. ACT OF RS. 3,61 2/-, HENCE, THE DEDUCTION CHAPTER VI-A IS RESTRICTED TO RS. 70,000/- ONLY AS PER THE DISCUSSION IN PARA 3 OF TH E ORDER. 10.2 THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO HAS CONFIRMED THE DISALLOWANCE BY OBSERVING AS UNDER: 5.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSION OF THE APPELLAN T. SINCE, ITA NO. 227/JP/2016 SHRI AVNISH SINGHAL VS. ITO, WARD- 6 (1), JAIPUR . 16 THE DETAILS TO EVIDENCE THE PAYMENTS HAVE NOT BEEN PRODUCED, DISALLOWANCE IS CONFIRMED. 10.3 NOW THE ASSESSEE IS BEFORE ME WITH FOLLOWING S UBMISSION AND PRAYING THEREIN TO DELETE THE DEDUCTION CONFIRMED B Y THE LD. CIT(A) AMOUNTING TO RS. 3,612/- U/S 80D OF THE ACT. THAT THE LD. CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF DEDUCTION OF MEDICLAIM PAID TO RELI ANCE GENERAL INSURANCE OF RS. 3,612/- ALLEGING THAT THE DOCUMENTARY EVIDENCE TO INVESTMENT MADE IS NOT PROD UCED. AT THE TIME OF ASSESSMENT PROCEEDINGS, ASSESSEE SUB MITTED BANK STATEMENT TO VERIFY THE PAYMENT. HOWEVER, RECE IPT COULD NOT FIND AT THE TIME OF ASSESSMENT BUT IT WAS FOUND THE SAME WAS DULY SUBMITTED BEFORE LD. CIT(A). 10.4 THE LD. DR RELIED ON THE ORDERS OF THE AUTHORI TIES BELOW. 10.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT EMERGES FROM THE PAPER BOOK PAGE 41 AND 42 FILED BY THE ASSESSEE THAT THE ASSESSEE HAD TAKEN THE ME DICLAIM POLICY NO.282520049822 FROM RELIANCE GENERAL INSURANCE, JA IPUR AMOUNTING TO RS. 3,612/-. HENCE, I DO NOT FIND ANY REASON TO DIS ALLOW THE MEDICLAIM OF THE ASSESSEE. THUS GROUND NO. 4 OF THE ASSESSEE IS ALLOWED. ITA NO. 227/JP/2016 SHRI AVNISH SINGHAL VS. ITO, WARD- 6 (1), JAIPUR . 17 11.0 IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 /07/ 2016 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 25 /07/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI AVNISH SINGHAL, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 6 (1), JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 227/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR