ACIT, Dehradun V. Shri Tarun Rastogi, Dehradun

ITA 28/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86501 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 12-01-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 03-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P CHANDRAKAR
• Keywords: Unexplained investment
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : H : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI A.T. VARKEY, JM ITA NO.28/DEL/2012 ASSESSMENT YEAR : 2005-06 ACIT, CIRCLE-I, DEHRADUN. VS. TARUN RASTOGI, 13-KANWALI ROAD, DEHRADUN. PAN: AEXPR3359E. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : NONE DEPARTMENT BY : S HRI J.P. CHANDRAKAR, SR. DR ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 31.12.2007 IN RELATION TO T HE ASSESSMENT YEAR 2005-06. 2. THE ONLY GRIEVANCE IS AGAINST TREATING COST OF I NVESTMENT IN BUILDING AT `1,12,87,469/- AS AGAINST `1,37,39,677/ - DETERMINED BY THE DVO. ITA NO.28/DEL/2012 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SURVEY WAS CONDUCTED U/S 133A ON 24.6.2004, IN WHICH THE ASSE SSEE SURRENDERED A SUM OF `2 LAC FOR THE AY 2004-05 AND `19 LAC FOR THE AY 2005-06. THE RETURN OF INCOME WAS FILED DECLARI NG, INTER ALIA, INCOME FROM OTHER SOURCES AT `12,08,835/-, INCLUD ING SURRENDER OF `12,00,000. THE AO OBSERVED THAT THE ASSESSEE FAIL ED TO OFFER THE ENTIRE SURRENDERED AMOUNT IN THE COURSE OF SURVEY I N THE RETURN OF INCOME, AS ONLY A SUM OF `12 LAC WAS SHOWN AS MISCE LLANEOUS INCOME. VALUATION OF BUILDING OF COMMERCIAL COMPLEX AT C-1/101, INDIRA NAGAR, OPPOSITE STATE BANK OF INDIA, DEHRADU N (UTTARAKHAND) OF THE ASSESSEE WAS REFERRED TO THE DEPARTMENTAL VA LUATION OFFICER (DVO). THE DVO DETERMINED INVESTMENT IN THE PROPER TY AT `1.37 CRORE. ON BEING CALLED UPON TO EXPLAIN THE REASONS FOR DIFFERENCE IN THE COST OF BUILDING AS SHOWN BY THE ASSESSEE AND A S DETERMINED BY THE DVO, THE ASSESSEE STATED THAT THE TOTAL EXPENDI TURE INCURRED BY HIM IN THE CONSTRUCTION OF THIS BUILDING AMOUNTED T O `1.05 CRORE. APART FROM THAT, IT WAS SUBMITTED THAT THERE WERE S EVERAL OBJECTIONS AGAINST THE DVOS REPORT, INCLUDING THE DVO ADOPTI NG CPWD RATES FOR VALUATION OF THE PROPERTY AND NOT ALLOWING SELF -SUPERVISION DEDUCTION @ 10%. REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE, ITA NO.28/DEL/2012 3 THE AO ADOPTED THE VALUE DETERMINED BY THE DVO AND MADE ADDITION OF `31.52 LAC (`1.37 CRORE AS ESTIMATED BY THE DVO MINUS `1.05 CRORE AS SHOWN BY THE ASSESSEE IN ITS BOOKS O F ACCOUNT). THE LD. CIT(A) RESTRICTED THE ADDITION TO `7 LAC. THE REVENUE IS AGGRIEVED AGAINST THE RELIEF OF `24.52 LAC ALLOWED BY THE LD. FIRST APPELLATE AUTHORITY. 4. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVAN T MATERIAL ON RECORD. THERE IS NO APPEARANCE FROM THE SIDE OF THE ASSESSEE DESPITE NOTICE. AS SUCH, WE ARE PROCEEDING TO DISP OSE OF THIS MATTER EX PARTE QUA THE ASSESSEE. IT IS NOTICED THAT PURSUANT TO THE SURVEY CONDUCTED U/S 133A, THE ASSESSEE SURRENDERED A SUM OF `19 LAC FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. OUT OF TH AT, A SUM OF `12 LAC WAS OFFERED FOR TAXATION AND THE CIT(A) ENHANCE D THE INCOME WITH THE REMAINING AMOUNT OF `7 LAC, THEREBY ATTRIB UTING THE TOTAL SURRENDERED INCOME TO THE CONSTRUCTION COST. IT CAN BE SEEN THAT THE DVO DETERMINED THE VALUE OF THE PROPERTY AT `1.37 C RORE, AS AGAINST `1.05 CRORE SHOWN BY THE ASSESSEE IN ITS BO OKS OF ACCOUNT. IF THE SURRENDERED INCOME OF `19 LAC IS FURTHER TAK EN INTO CONSIDERATION, THEN, THE ASSESSEES INVESTMENT IN T HE BUILDING WOULD ITA NO.28/DEL/2012 4 COME TO `1.24 CRORE, THEREBY LEAVING A GAP OF `13 L AC IN THE DVOS REPORT AS WELL AS THE ASSESSEES VALUATION. 5. THERE IS NO DISPUTE ON THE FACT THAT THE DV O ADOPTED CPWD RATES FOR THE ESTIMATION OF THE VALUE OF CONSTRUCTI ON. IT IS SETTLED LEGAL POSITION THAT ONLY THE STATE PWD RATES ARE TO BE ADOPTED AND NOT THE CPWD RATES. THE HONBLE ALLAHABAD HIGH COU RT IN CIT VS. RAJ KUMAR (1990) 182 ITR 436 (ALL) HAS UPHELD THE APPLICATION OF STATE PWD RATES INSTEAD OF CPWD RATES. THE HONBLE PUNJAB & HARYANA HIGH COURT IN CIT VS. HARCHAND PALACE (2004) 269 ITR 251 (P&H) , HAS ALSO UPHELD THE VIEW OF THE TRIBUNAL IN HOLDI NG THAT PWD RATES SHOULD BE APPLIED. ONCE IT IS HELD THAT THE STATE PWD RATES ARE TO BE APPLIED INSTEAD OF CPWD RATES, THEN, THE QUESTION ARISES ABOUT THE ADJUSTMENT TO BE ALLOWED FOR CONVERTING T HE VALUATION OF PROPERTY DONE BY THE DVO FROM CPWD TO STATE PWD RAT ES. IN THIS REGARD, IT IS OBSERVED THAT THE HONBLE RAJASTHAN H IGH COURT IN CIT VS. SMT. PREM KUMARI MURDIA (2006) 296 ITR 508 (RAJ), UPHELD THE TRIBUNALS VIEW IN ALLOWING DEDUCTION OF 20% IN CON VERTING THE VALUATION FROM CPWD TO PWD RATES FIRST. APART FROM THAT, THERE ARE SEVERAL DECISIONS IN WHICH IT HAS BEEN HELD THAT TH E DIFFERENCE UPTO ITA NO.28/DEL/2012 5 20% IN DVOS REPORT AND THAT SHOWN BY THE ASSESSEE SHOULD BE IGNORED DUE TO THIS REASON. 6. MOREOVER, THERE IS ALWAYS BOUND TO BE SOME D IFFERENCE IN THE ACTUAL COST OF CONSTRUCTION AND AS ESTIMATED BY A VALUER OR A DVO. THE HONBLE J&K HIGH COURT IN HONEST GROUP OF HOTELS PVT. LTD. VS. CIT (2002) 177 CTR (J&K) 232 , HAS HELD THAT 10% DEDUCTION SHOULD BE ALLOWED ON THIS SCORE. 7. LEAVING ASIDE ALL OTHER ADJUSTMENTS CLAIMED B Y THE ASSESSEE, IF WE CONCENTRATE ONLY ON THESE TWO ASPECTS, THE ADDIT ION SHOULD NOT HAVE BEEN MADE UP TO A DIFFERENCE OF 30% BETWEEN TH E VALUE ADOPTED BY THE DVO AND THAT RECORDED BY THE ASSESSE E IN ITS BOOKS OF ACCOUNT. AS AGAINST THAT, WE FIND THAT THE ACTU AL DIFFERENCE BETWEEN THE VALUE DISCLOSED BY THE ASSESSEE AT `1.0 5 CRORE AND THAT DETERMINED BY THE DVO AT `1.37 CRORE IS LESS THAN 2 3% OF THE DVOS VALUATION. IF WE ALLOW THE EFFECT OF SURRENDER OF `19 LAC TOWARDS THE INVESTMENT IN PROPERTY, THEN, THE DIFFERENCE WOULD BE AROUND 10% OF THE DVOS REPORT. VIEWED FROM ANY ANGLE, THIS D IFFERENCE IS LESS THAN 30% AS CONSIDERED ABOVE WARRANTING NO ADDITION ON ACCOUNTING OF UNEXPLAINED INVESTMENT IN THE PROPERT Y. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER DELETING SUCH ADDITION. ITA NO.28/DEL/2012 6 8. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 14.01.201 5. SD/- SD/- [ A.T. VARKEY ] [ R.S. SYAL ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 14 TH JANUARY, 2015. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.