Puspa Agarwalla, Khurda V. ITO, Khurda

ITA 256/CTK/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4364 (ITAT-CUTTACK)
• Duration Of Justice: 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 24-06-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 10-05-2011
• Court: TRIBUNAL
• Department Lawyers: A K PATRADR
• Assessee Lawyers: R KARARS; G NAIK
• Keywords: Valuation report

Judgement Text

1 IN THE INCME TAX APPELLATE TRIBUNAL, (SMC) BENCH, CUTTACK BEFORE : HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER ITA NO.256 AND 257 /CTK/2011 (ASSESSMENT YEAR 2000 - 01 AND 2001 - 02) SMT. PUSPA AG ARWALLA,W/O. SANTOSH KU.AGARWALLA, PROP.M/S.AGARWALLASTONE P RODUCTS,MAINROAD, OLD FIRE STATION, DIST.KHURDA PAN: ADGPA 8539 H VERSUS INCOME - TAX OFFICER, KHURDA WARD, KHURDA (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI G.NAIK AND R.KAR,ARS FOR THE RESPONDENT SHRI A.K.PATRA,DR ORDER SHRI K.K.GUPTA, ACCOUNTA NT MEMBER : THESE APPEALS BY THE ASSESSEE ARISE OUT OF THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) DT.18 TH FEBRUARY, 2011. 2. THE HISTORY OF THIS CASE FOR THE AYS 2000 - 01 AND 2001 - 02 ARE WAS CONSIDERED ALONG WITH ASSESSMENT YEAR 1998 - 99 WHICH WAS SUBJECTED TO COMMON ORDER OF THE ITAT, SMC BENCH IN ITA NOS.110, 111 AND 112 DT.8.12.2008 WHEN THE TRIBUNAL WAS PLEASED TO RESTORE THE ISSUE TO THE FILE OF THE LEARNED CIT(A) FOR CONSIDERING THE REGISTERED VALUER S REPORT AS FURNISHED BEFORE IT INSOFAR AS THE REGISTERED VALUER S REPORT WAS OBTAINED AFTER THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAD SOUGHT TO BRING TO TAX THE VALUATION AS COMPUTED BY THE INSPECTOR OF INCOME TAX FOR WANT OF SUBMISSION AND EXPLANATION BY THE ASSESSEE BEFORE HIM WHICH WA S SUBJECTED TO APPEAL BEFORE THE TRIBUNAL. THE VALUATION HAD BEEN SPREAD OVER FOR THESE THREE YEARS WHEN THE COMPUTATION WAS RESTORED TO THE LEARNED CIT(A) TO CONSIDER THE VALUATION OF THE REGISTERED VALUER . 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE FATE OF THE ASSESSMENT YEAR 1998 - 99 IS STILL PENDING BEFORE THE LEARNED CIT(A). HOWEVER, WHILE CONFINING TO THE ISSUE IN HAND FOR THE AYS 2000 - 01 AND 2001 - 02 , HE ITA NO.256 AND 257/CTK/2011 2 POINTED OUT THAT WITH THE LIMITED DIRECTION TO THE CIT(A) TO CONSIDER THE REPORT O F THE REGISTERED VALUER , THE CIT(A) ORDER MAY BE PERUSED IN PARAGRAPH 6 HAS CATEGORICALLY HELD THAT THE VALUATION REPORT IS DT.10.3.2007 AND AS THE ASSESSMENTS WERE COMPLETED BY THE ASSESSING OFFICER ON 24.3.2006 WAS OBTAINED BY THE ASSESSEE AFTER THE DATE OF ASSESSMENT. HE HAD CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER WHICH HE HAS REPRODUCED IN HIS ORDER AND THEN PROCEEDED TO NOTE THE FOLLOWING 7 . THE VALUER HAS STATED THAT HE HAS PERSONALLY INSPECTED THE PROPERTY ON 03.03.2007. BASED ON SU CH INSPECTION, THE VALUER HAS GIVEN A VALUATION OF IMMOVABLE PROPERTY FOR COST OF CONSTRUCTION (INCOME TAX) AS ON 31.03.2001. THIS IS QUITE STRANGE. IF THE VALUER INSPECTED THE PROPERTY ON 03.03.2007, HE CAN AT BEST GIVE A CERTIFICATE REGARDING THE VALUE O F CONSTRUCTION AS ON THAT DATE. WHAT WAS THE STATE OF AFFAIRS SIX YEARS EARLIER CAN NOT BE ASCERTAINED BY ANY HUMAN FACULTY OR REASONING. THE VALUER DO NOT HAVE ANY MECHANISM TO SEE BACKWARDS IN TIME OVER A SPAN OF SIX YEARS THEREFORE, THE VALUATION REPORT CANNOT BE ACCEPTED AS A GOSPEL TRUTH . 3. THE LEARNED COUNSEL FOR THE ASSESSEE ARGUED THAT EVEN AFTER RECEIVING THE REMAND REPORT, THE LEARNED CIT(A) INSISTED ON HOLDING A VIEW THAT THE ASSESSEE HAS DELIBERATELY REDUCED THE COST OF CONSTRUCTION BY USING TIMBER OBTAINED FROM TEAK AND SAL WOOD BELONGING TO THE FAMILY. HE FAILED TO APPRECIATE THAT THE REGISTERED VALUER HAS TAKEN THE VALUE IN ACCORDANCE WITH THE PRINCIPLES OF VALUATION AND NOT ON THE BASIS OF WHAT THE INSPECTOR VALUES ON THE BASIS OF SUPERFIC IAL OBSERVATION. THE BIFURCATED VALUATION OF THESE TWO AYS THEREFORE IS ONLY ON THE BASIS OF REPORT OF THE INSPECTOR IS NOT SUSTAINABLE IN THE EYES OF LAW HE BEING A NON - TECHNICAL PERSON ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE LEARNED DR SUPPOR TED THE ORDER OF THE LEARNED CIT(A). 5. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LEARNED CIT(A) SHOWED HIS INABILITY TO ACCEPT THE VALUATION AS ITA NO.256 AND 257/CTK/2011 3 GIVEN BY THE REGISTERED VALUER WHICH WAS NOTED BY THE TRIBUNAL TO B E CONSIDERED BY THE CIT(A) NOT FOR COMPARISON WITH THE INSPECTORS REPORT. HE IS AN EXPERT AND THEREFORE HAD VALUED THE WOOD COST IN THE CONSTRUCTION IN ACCORDANCE WITH THE VALUE EXCLUDING THAT PARTICULAR ITEM. THE INSPECTOR THEREFORE COULD NOT HAVE VISUA LIZED THE EXTENT OF THE USE AS HE IS NOT AN EXPERT. THE TRIBUNAL THEREFORE, HAD RESTORED THE ISSUE TO THE CIT(A) AND NOT TO THE ASSESSING OFFICER. AS MENTIONED ABOVE, THE NOTIN GS OF THE LEARNED CIT(A) BECOME FUTILE TO THE EXTENT THAT THE TRIBUNAL WANTED TO GIVE AN OPPORTUNITY TO THE DEPARTMENT TO BRING OUT THAT SHORT COMINGS IN THE REPORT ON THE BASIS OF THE SAME NOT HAVING BEEN PROPERLY CONSIDERED. THE OPINION OR THE THEME GIVEN BY THE AO OR THE INSPECTOR THEREFORE HAS NOT BEEN UPHELD BY THE LEARNED CIT(A) TO DISLODGE THE REGISTERED VALUERS REPORT WHICH THE ASSESSEE HAS ACCEPTED VIS - - VIS AS INVESTED AND RETURNED BY THE ASSESSEE IN THE RESPECTIVE AYS . THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED A PAPER BOOK WHICH INTER ALIA DELIBERATES ON THE ISSUE OF ADOPTION OF A PARTICULAR VALUE WHEN THERE ARE VARIOUS METHODS OF COMPUTATION OF VALUATION ON THE BASIS OF ACTUAL EXPENDITURE CAN ONLY BE DONE BY AN EXPERT OR APPROVED VALUER DULY APPROVED BY THE DEPARTMENT, I DO NOT FIND ANY INFIRMITY IN THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT IN VIEW OF THE TRIBUNALS DIRECTION THE REPORT OF THE REGISTERED VALUER DOES NOT SUFFER FROM ANY LACUNA. THE ADDITION BEING ON PROPORTIONATE DIFFERENCE IN THE IMPUGNED ORDERS THEREFORE DOES NOT HAVE LEGS TO STA ND ON. THE ASSESSING OFFICER IS DIRECTED TO ADOPT THE VALUE AS GIVEN BY THE REGISTERED VALUER IN PROPORTION TO THE AMOUNT INVESTED IN THESE TWO AYS AS GIVEN, AS AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER ON THE BASIS OF INSPECTORS REPORT. THE ORDE R OF THE LEARNED CIT(A) IS SET ASIDE FOR BOTH THE AYS UNDER CONSIDERATION AND THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR THE ABOVE LIMITED PURPOSE. ITA NO.256 AND 257/CTK/2011 4 6. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. PRONOUNCED IN OPE N COURT ON DT. 30 TH JUNE, 2011 S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 30 TH JUNE, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: SMT. PUSPA AG ARWALLA,W/O. SANTOSH KU.AGARWALLA, PROP.M/S.AGARWALLA STONE PRODUCTS,MAINROAD, OLD FIRE STATION, DIST.KHURDA 2. THE RESPONDENT: INCOME - TAX OFFICER, KHURDA WARD, KHURDA 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.