Chandra Bai, CHENNAI V. ITO, CHENNAI

ITA 2763/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7634 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-12-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 23-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V NANDA KUMAR
• Assessee Lawyers: T BANUSEKAR
• Keywords: Unexplained investment

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC C BENCH, CHENNAI . . . , !.. # $%, ' ( BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NOS.2764 & 2765/MDS/2016 * +* / ASSESSMENT YEARS : 2003-04 & 2004-05 SHRI JHUMARLAL, 87, MINT STREET, SOWCARPET, CHENNAI - 600 079. PAN : AAFPJ 7980 F V. THE INCOME TAX OFFICER, NON-CORPORATE WARD 4(2) / 4(3), CHENNAI - 600 006. (-./ APPELLANT) (/0-./ RESPONDENT) ./ ITA NOS.2762 & 2763/MDS/2016 * +* / ASSESSMENT YEARS : 2003-04 & 2004-05 SMT. CHANDRA BAI, 87, MINT STREET, SOWCARPET, CHENNAI - 600 079. PAN : AADPC 6871 E V. THE INCOME TAX OFFICER, NON-CORPORATE WARD 4(3), CHENNAI - 600 006. (-./ APPELLANT) (/0-./ RESPONDENT) -. 1 2 / APPELLANTS BY : SH. T. BANUSEKAR, CA /0-. 1 2 / RESPONDENT BY : SH. V. NANDAKUMAR, JCIT # 1 3' / DATE OF HEARING : 29.12.2016 45+ 1 3' / DATE OF PRONOUNCEMENT : 09.03.2017 2 I.T.A. NOS.2764 & 2765/MDS/16 I.T.A. NOS.2762 & 2763/MDS/1 6 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: APPEALS OF THE RESPECTIVE ASSESSEES ARE DIRECTED AGAINST RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) -5, CHENNAI, DATED 20.07.2016 AND PERTAIN TO ASSESSMENT YEARS 2003- 04 AND 2004-05. SINCE COMMON ISSUE ARISES FOR CONS IDERATION IN ALL THE APPEALS, WE HEARD THESE APPEALS TOGETHER AND DI SPOSING OF THE SAME BY THIS COMMON ORDER. 2. SH. T. BANUSEKAR, THE LD. REPRESENTATIVE FOR THE ASSESSEES, SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IN THE APPEALS OF BOTH THE ASSESSEES IS WITH REGARD TO COMPUTATION OF COST OF CONSTRUCTION. FOR THE ASSESSMENT YEAR 2004-05, THE ASSESSING OFFICER MADE ADDITION OF ` 11,26,739/- IN THE CASE OF SHRI JHUMARLAL AND ` 11,15,940 IN THE CASE OF SMT. CHANDRA BAI. HOWEVE R, FOR THE ASSESSMENT YEAR 2003-04, THE ASSESSING OFFICER MADE ADDITION OF ` 16,97,755/- AND ` 17,87,594/- RESPECTIVELY IN THE CASE OF THESE ASSESSEES. THE LD. REPRESENTATIVE SUBMITTED THAT T HE MAIN CONTENTION OF THE ASSESSEES IS THAT THERE CANNOT BE ANY ADDITION AS UNEXPLAINED INVESTMENT IN THE HANDS OF THE ASSESSEE S. THE ASSESSING OFFICER OUGHT TO HAVE ACCEPTED THE COST O F CONSTRUCTION 3 I.T.A. NOS.2764 & 2765/MDS/16 I.T.A. NOS.2762 & 2763/MDS/1 6 AS ESTIMATED BY THE REGISTERED VALUER OF THE ASSESS EES. IN ANY CASE, ACCORDING TO THE LD. REPRESENTATIVE, THE ASSE SSING OFFICER HAS TO ESTIMATE THE COST OF CONSTRUCTION AS PER THE STA TE PWD RATES. IN THIS CASE, ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSING OFFICER HAS ESTIMATED THE COST OF CONSTRUCTION ON THE BASIS OF CPWD RATES. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFIC ER CANNOT BE SUSTAINED. THE LD. REPRESENTATIVE SUBMITTED THAT T HE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO ESTIMATE THE COST OF CONSTRUCTION ON THE BASIS OF STATE PWD RATE. 3. ON THE CONTRARY, SHRI V. NANDAKUMAR, THE LD. DEP ARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSING OFFICE R REFERRED THE COST OF CONSTRUCTION TO THE DEPARTMENTAL VALUATION OFFICER. IN FACT, THE DEPARTMENTAL VALUATION OFFICER ESTIMATED THE CO ST OF CONSTRUCTION AT ` 1,74,20,000/-. A DEDUCTION OF ` 10,35,775/- WAS ALLOWED AND ULTIMATE COST OF CONSTRUCTION WAS CALCU LATED AT ` 1,63,84,225/- AND 1/4 TH SHARE OF THE ASSESSEE CAME TO ` 40,96,057/- FOR THE ASSESSMENT YEAR 2003-04. AS PE R THE BOOKS OF ACCOUNT IN RESPECT OF SHRI JHUMARLAL AND SMT. CHAND RA BAI, THE COST OF CONSTRUCTION HAS BEEN RECORDED TO THE EXTENT OF ` 17,03,841/- AND ` 12,86,700/- RESPECTIVELY. THEREFORE, THE UNEXPLAI NED INVESTMENT 4 I.T.A. NOS.2764 & 2765/MDS/16 I.T.A. NOS.2762 & 2763/MDS/1 6 IN THE COST OF CONSTRUCTION WAS ESTIMATED AT ` 23,92,216/- AND ` 28,09,357/- RESPECTIVELY IN THE CASE OF THESE ASSES SEES. HOWEVER, THE ASSESSING OFFICER ON THE BASIS OF DIRECTION OF THIS TRIBUNAL AND HIGH COURT, QUANTIFIED THE INVESTMENT IN COST OF CO NSTRUCTION AT ` 16,97,755/- FOR THE ASSESSMENT YEAR 2003-04 AND ` 11,26,739/- FOR THE ASSESSMENT YEAR 2004-05 IN THE CASE OF SHRI JHU MARLAL AND ` 17,87,594/- FOR THE ASSESSMENT YEAR 2003-04 AND ` 11,15,940/- FOR ASSESSMENT YEAR 2004-05 IN THE CASE OF SMT. CHANDRA BAI. THEREFORE, ACCORDING TO THE LD. D.R., NO INTERFEREN CE IS CALLED FOR. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WHILE CONSIDERING THE COST OF CONSTRUCTION, EVEN THOUGH T HE ASSESSEES HAVE FILED THE REGISTERED VALUERS REPORT ON ESTIMA TION OF COST OF CONSTRUCTION, THE ASSESSING OFFICER ADMITTEDLY REFE RRED THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER WHO ESTIMATED TH E SAME AT ` 1,74,20,000/-. AFTER GIVING DEDUCTION OF ` 10,35,775/-, THE COST OF CONSTRUCTION WAS ESTIMATED ON THE BASIS OF DEPARTME NTAL VALUATION OFFICERS AT ` 1,63,84,225/-. AFTER CONSIDERING THE SHARE OF RESP ECTIVE ASSESSEES TO THE EXTENT OF 1/4 TH AND COST OF CONSTRUCTION DISCLOSED BY THE ASSESSEES, THE ASSESSING OFFICER CALCULATED THE UNEXPLAINED 5 I.T.A. NOS.2764 & 2765/MDS/16 I.T.A. NOS.2762 & 2763/MDS/1 6 INVESTMENT AT ` 23,92,216/- AND ` 28,09,357/- RESPECTIVELY IN THE CASE OF SHRI JHUMARLAL AND SMT. CHANDRA BAI. AFTER GIVING DEDUCTION AS PER THE DIRECTION OF TRIBUNAL AND HIGH COURT, THE ASSESSING OFFICER ARRIVED AT THE COST OF CONSTRUCTI ON AT ` 16,97,755/- AND ` 17,87,594/- RESPECTIVELY FOR THE ASSESSMENT YEAR 20 03-04 AND ` 11,26,739/- AND ` 11,15,940/- RESPECTIVELY FOR THE ASSESSMENT YEAR 2004-05 IN THE CASE OF THESE ASSESSEES. 5. NOW THE ASSESSEES CLAIM THAT THE COST OF CONSTRU CTION WAS ESTIMATED BY THE DEPARTMENTAL VALUATION OFFICER ON THE BASIS OF CENTRAL PWD RATE. THIS TRIBUNAL IS OF THE CONSIDER ED OPINION THAT WHEN THE RATES OF STATE PWD ARE ALSO AVAILABLE FOR THE PURPOSE OF ESTIMATING THE COST OF CONSTRUCTION, THE STATE PWD RATE HAS TO BE PREFERRED. ESTIMATING THE COST OF CONSTRUCTION AT THE RATE PROPOSED BY CPWD IN THE STATE WHERE STATE PWD RATE IS ALSO A VAILABLE, MAY NOT BE JUSTIFIED. THEREFORE, THE DEPARTMENTAL VALU ATION OFFICER WAS EXPECTED TO ESTIMATE COST OF CONSTRUCTION AFTER TAK ING THE STATE PWD RATE. SINCE STATE PWD RATE WAS NOT APPLIED, TH E MATTER NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER AFTER R EFERRING THE MATTER ONCE AGAIN TO THE DEPARTMENTAL VALUATION OFF ICER. ACCORDINGLY, THE ORDERS OF THE AUTHORITIES BELOW AR E SET ASIDE AND 6 I.T.A. NOS.2764 & 2765/MDS/16 I.T.A. NOS.2762 & 2763/MDS/1 6 THE ADDITION OF UNEXPLAINED INVESTMENT IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE THE MATTER AFRESH AND REFER THE MATTER TO DEPARTMENTAL VALUATION OFFICER WITH THE INSTRUCTION TO ESTIMATE THE COST OF CONSTR UCTION ON THE BASIS OF STATE PWD RATE. THEREAFTER THE ASSESSING OFFICE R SHALL FURNISH A COPY OF DEPARTMENTAL VALUATION OFFICERS REPORT TO THE ASSESSEES AND AFTER CONSIDERING THE OBJECTION OF THE ASSESSEE S, IF ANY, HAS TO ESTIMATE THE COST OF CONSTRUCTION. 6. WITH THE ABOVE OBSERVATION, THE APPEALS OF THE A SSESSEES ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 9 TH MARCH, 2017 AT CHENNAI. SD/- SD/- ( ! . . # $% ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) ' / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 9 TH MARCH, 2017. KRI. 1 /3$8 98+3 /COPY TO: 1. -. /APPELLANT 2. /0-. /RESPONDENT 3. # :3 () /CIT(A)-5, CHENNAI-34 4. PRINCIPAL CIT-9, CHENNAI 5. 8; /3 /DR 6. !* < /GF.