Jayadev.T. Yelamali, Gadag V. Income Tax Officer, Ward-11, Gadag

ITA 2917/BANG/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5469 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 29-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L V BHASKAR REDDY
• Assessee Lawyers: ASHOK A KULKARNI
• Keywords: Opportunity of being heard; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER APPEAL NO. APPELLANT VS. RESPONDENT ASSESSMENT YEAR ITA NO. 2914/BANG/2017 SRI MAHADEV T. YELAMALI, YELAMALI PLOT, KASHI VISHWANATH NAGAR, NEAR APMC YARD, GADAG. PAN: AAEPY8187G THE INCOME TAX OFFICER, WARD 2, GADAG. 2014-15 ITA NO. 2915/BANG/2017 SRI SHIDDALINGESH T. YELAMALI, YELAMALI PLOT, KASHI VISHWANATH NAGAR, NEAR APMC YARD, GADAG. PAN: AACPY7485P ITA NO. 2916/BANG/2017 SRI ANUP SHANKAR YELAMALI, YELAMALI PLOT, KASHI VISHWANATH NAGAR, NEAR APMC YARD, GADAG. PAN: ABPPY6877M ITA NO. 2917/BANG/2017 SRI JAYADEV T. YELAMALI, YELAMALI PLOT, KASHI VISHWANATH NAGAR, NEAR APMC YARD, GADAG. PAN: AACPY7484N ITA NO. 2918/BANG/2017 SRI SHANKAR T. YELAMALI, YELAMALI PLOT, KASHI VISHWANATH NAGAR, NEAR APMC YARD, GADAG. PAN: AACPY7483M APPELLANT BY : SHRI ASHOK A. KULKARNI, ADVOCATE RESPONDENT BY : SHRI L.V. BHASKAR REDDY, ADDL. CIT (DR) DATE OF HEARING : 2 0 . 0 3 .2018 DATE OF PRONOUNCEMENT : 20 . 0 3 .201 8 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER ALL THESE FIVE APPEALS ARE FILED BY DIFFERENT BUT C ONNECTED ASSESSEES AND THESE ARE DIRECTED AGAINST FIVE SEPARATE ORDERS OF LD. CI T(A), HUBLI ALL DATED 25.10.2017 FOR ASSESSMENT YEAR 2014-15. ITA NOS. 2914 TO 2918/BANG/2017 PAGE 2 OF 6 2. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO. 29 14/BANG/2017 ARE AS UNDER. 1. THE ORDER PASSED BY THE LEARNED CIT APPEALS IS I LLEGAL, BASELESS AND OPPOSED TO THE FACTS OF THE CASE. 2. THE LEARNED CIT APPEALS AND LEARNED INCOME TAX O FFICER HAVE ERRED IN NOT CONSIDERING THE PLEA OF THE ASSESSE OF DELETING THE LOAN REPAID BY SON IN LAW OF RS. 442,578 AND INCOME TAX REFUND OF RS. 196,110 WRONGLY CREDITED TO THE PROFIT AND LOSS ACC OUNT. THE LEARNED ITO HAS AGREED THAT THE LOAN REPAID OF RS. 442,578 BY THE SON IN LAW AND INCOME TAX REFUND OF RS. 196,110 HAS BEEN CREDI TED TO THE PROFIT AND LOSS ACCOUNT. 3. THE LEARNED CIT APPEALS HAS ERRED IN NOT DELETIN G ENTIRE ADDITION ON ACCOUNT OF COST OF CONSTRUCTION OF RS. 40,38,208 . THE VALUATION REPORT OF THE DISTRICT VALUATION OFFICE, VALUATION REPORT OF THE APPROVED VALUER AND THE EXPENSES DEBITED IN THE BOO KS TOWARD COST OF CONSTRUCTION ALMOST MATCH AND NO ADDITION IS REQUIR ED ON THIS ACCOUNT. 5. THE ASSESSE PRAYS LEAVE TO ADD ANY MORE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 3. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO. 29 15/BANG/2017 ARE AS UNDER. 1. THE ORDER PASSED BY THE LEARNED CIT APPEALS IS I LLEGAL, BASELESS AND OPPOSED TO THE FACTS OF THE CASE. 2. THE LEARNED CIT APPEALS HAS ERRED IN NOT DELETIN G THE ENTIRE ADDITION ON ACCOUNTS OF COST OF CONSTRUCTION OF RS. 40,38,208. THE VALUATION MADE BY THE DISTRICT VALUATION OFFICER, A PPROVED VALUER AND THE EXPENSES DEBITED TOWARDS COST OF CONSTRUCTI ON MATCH EACH OTHER AND DOES NOT REQUIRED ANY ADDITION TO THE RET URNED INCOME. 3. THE LEARNED CIT APPEALS HAS ERRED IN SUSTAINING ADDITION OF RS. 3,76,000 BEING LOAN FROM FATHER SHRI. TOTAPPA YELAM ALI. 4. THE ASSESSE PRAYS LEAVE TO ADD ANY MORE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 4. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO. 29 16/BANG/2017 ARE AS UNDER. 1. THE ORDER PASSED BY THE LEARNED CIT APPEALS IS I LLEGAL, BASELESS AND OPPOSED TO THE FACTS OF THE CASE. 2. THE LEARNED CIT APPEALS, HAS ERRED IN NOT DELETI NG ADDITION OF RS. 40,38,208 TOWARDS COST OF CONSTRUCTION OF THE SHOPP ING COMPLEX EVEN THOUGH THE VALUATION REPORTS OF THE DISTRICT VALUAT ION OFFICER, APPROVED VALUED AND THE EXPENSES DEBITED IN THE BOO KS OF ACCOUNTS ITA NOS. 2914 TO 2918/BANG/2017 PAGE 3 OF 6 ALMOST MATCH. 3. THE ASSESSE PRAYS LEAVE TO ADD ANY MORE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 5. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO. 29 17/BANG/2017 ARE AS UNDER. 1. THE ORDER PASSED BY THE LEARNED CIT APPEALS IS I LLEGAL, BASELESS AND OPPOSED TO THE FACTS OF THE CASE. 2. THE LEARNED CIT APPEALS HAS ERRED IN NOT DELETIN G ENTIRE ADDITION ON ACCOUNT OF COST OF CONSTRUCTION OF RS. 40,38,208 . THE VALUATION MADE BY THE DISTRICT VALUATION OFFICER AND THE EXPE NSES DEBITED BY THE ASSESSEE MATCH EACH OTHER. THE VALUATION MADE BY TH E APPROVED VALUER IS ALSO IN LINE WITH THE EXPENSES DEBITED BY THE ASSESSE. 3. THE ASSESSE PRAYS LEAVE TO ADD ANY MORE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 6. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO. 29 18/BANG/2017 ARE AS UNDER. 1. THE ORDER PASSED BY THE LEARNED CIT APPEALS IS I LLEGAL, BASELESS AND OPPOSED TO THE FACTS OF THE CASE. 2. THE LEARNED CIT APPEALS HAS ERRED IN NOT DELETIN G ENTIRE ADDITION ON ACCOUNT OF COST OF CONSTRUCTION OF RS. 40,38,208 . THE VALUATION MADE BY THE DISTRICT VALUATION OFFICER AND THE EXPE NSES DEBITED BY THE ASSESSE FOR THE CONSTRUCTION OF THE COMPLEX MAT CH AND THERE IS NO ROOM ANY ADDITION ON THIS ACCOUNT. THE VALUATION RE PORT OF THE APPROVED VALUER IS ALSO MATCHING WITH THE EXPENSES DEBITED. 3. THE LEARNED CIT APPEALS HAS ERRED SUSTAINING ADD ITION OF RS. 3,00,000 BEING LOAN OBTAINED FROM FATHER SHRI. TOTAPPA YELAMALI. THE FATHER OWNS AGRICULTURAL LANDS AND HAS SUBSTANT IAL INTEREST INCOME ON HIS DEPOSITS IN BANKS. 4. THE ASSESSE PRAYS LEAVE TO ADD ANY MORE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 7. AT THE VERY OUTSET, IT WAS SUBMITTED BY LD. AR O F ASSESSEE THAT THE AO HAS PASSED THE ASSESSMENT ORDER IN ALL THESE CASES ON 2 9.12.2016 BUT AT THAT POINT OF TIME, REPORT OF DVO WAS NOT RECEIVED BY THE AO. THE REPORT OF DVO WAS RECEIVED BY THE AO ON 05.10.2017 AND THE IMPUGNED O RDERS OF CIT(A) IS DATED 25.10.2017 AND HENCE, IT IS SEEN THAT SUCH REPORT O F DVO WAS AVAILABLE WHEN THE ORDER WAS PASSED BY CIT(A). HE DRAWN MY ATTENT ION TO PARA 20 OF THE ORDER OF CIT(A) AND POINTED OUT THAT IN THIS PARA, THE CI T(A) HAS NOTED THAT THE DVO VIDE ITS ORDER DATED 05.10.2017 HAS ESTIMATED THE C OST OF CONSTRUCTION AT RS. ITA NOS. 2914 TO 2918/BANG/2017 PAGE 4 OF 6 4,80,19,300/- BUT SINCE THE COST OF CONSTRUCTION ES TIMATED BY THE DVO IS LESS THAN ADMITTED BY THE ASSESSEE, THE VALUATION REPORT IS NOT TAKEN COGNIZANCE OF IN DISPOSAL OF THE ASSESSEES APPEAL. HE SUBMITTED THAT IT IS NOT FAIR ON THE PART OF THE ASSESSEE TO IGNORE THE REPORT OF THE DVO AND HENCE, THE MATTER MAY BE RESTORED BACK TO THE FILE OF CIT (A) FOR FRESH DECI SION AFTER TAKING INTO ACCOUNT THIS REPORT OF DVO. HE ALSO SUBMITTED THAT APART F ROM THIS ISSUE IN RESPECT OF ADDITION MADE BY THE AO ON ACCOUNT OF COST OF CONST RUCTION, OTHER GROUNDS RAISED IN ITA NOS. 2914, 2915 & 2918/BANG/2017 ARE NOT PRESSED AND ACCORDINGLY THESE GROUNDS ARE REJECTED AS NOT PRESS ED. 8. THE REMAINING ISSUE TO BE DECIDED IS ONE ONLY I. E. ADDITION OF RS. 40,38,208/- IN THE HANDS OF EACH OF THESE FIVE ASSESSEES, ON THE B ASIS OF DECLARATION IN COURSE OF SURVEY CONDUCTED IN THE ASSESSEES PREMISES ON 2 2.11.2013 IN WHICH THERE WAS COMBINED DECLARATION OF RS. 2,01,91,040/- IN RE SPECT OF VALUATION FOR THE COMMERCIAL COMPLEX JOINTLY OWNED BY THESE FIVE PERS ONS. THIS IS THE CASE OF THE ASSESSEE THAT OUT OF SUCH DECLARATION OF RS. 20 1.91 LAKHS, THE ASSESSEE HAS ALREADY DECLARED RS. 137.20 LAKHS IN THE BOOKS OF ACCOUNTS BUT IN PARA 9.20 OF THE ASSESSMENT ORDER, THE AO HAS GIVEN THIS FINDING THAT THIS CONTENTION OF THE ASSESSEE IS NOT FACTUALLY CORRECT. BEFORE M E, THE ASSESSEE HAS MADE A SUBMISSION THAT THE ASSESSEE HAS DECLARED IN COURSE OF SURVEY THAT THE ESTIMATED COST OF CONSTRUCTION IS RS.1460/- PER SQ. FT. AND THE AREA OF CONSTRUCTION WAS STATED TO BE 33,624SQ.FT. AND THER EFORE, THE TOTAL ESTIMATED COST OF CONSTRUCTION WAS RS. 4,90,91,040/-. HE ALS O SUBMITTED THAT COST DEBITED AS PER BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE IS RS. 2,83,33,221/- AND AMOUNT OF RS. 137.20 LAKHS WAS FURTHER DECLARED AND TOTAL COST AS PER BOOKS OF ACCOUNT AND THIS DECLARED AMOUNT COMES TO RS. 4,20, 53,221/- AND THE AMOUNT SPENT AFTER SURVEY IS RS. 76.61 LAKHS AND IN THIS M ANNER, THE TOTAL AMOUNT AS PER BOOKS OF ACCOUNT AND AS PER DECLARATION AND AMO UNT INCURRED AFTER SURVEY COMES TO RS. 4,97,14,221/- AS AGAINST ESTIMATED COS T AT THE RATE OF RS. 1460/- PER SQ.FT. OF RS. 4,90,91,040/- AND THEREFORE, NO A DDITION IS CALLED FOR AND THE DVO HAS ESTIMATED THE COST OF CONSTRUCTION AT RS. 4 ,80,19,300/- BUT THE CIT(A) HAS NOT CONSIDERED THE REPORT OF DVO AND HE HAS NOT GIVEN A FINDING ON THIS ASPECT ALSO THAT RS. 137.20 LAKHS WAS ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS ITA NOS. 2914 TO 2918/BANG/2017 PAGE 5 OF 6 AS PER THE ASSESSEE BUT AS PER THE AO, IT IS STATED BY HIM IN PARA 9.20 OF ASSESSMENT ORDER, THAT THIS CLAIM IS NOT FACTUALLY CORRECT AND HENCE, I FEEL IT PROPER TO RESTORE THE MATTER BACK TO THE FILE OF CI T(A) FOR FRESH DECISION WITH THE DIRECTION THAT HE SHOULD CONSIDER REPORT OF DVO ALS O AND HE SHOULD ALSO EXAMINE AND GIVE THE FINDING AS TO WHETHER THE ASSE SSEE HAS ACCOUNTED FOR EXTRA INVESTMENT OF RS. 137.20 LAKHS BY DECLARING T HE SAME AS EXTRA INCOME AND THEN PASS NECESSARY ORDER AS PER LAW AFTER PROV IDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. I HOLD SO BECAUSE EVE N IF AS PER THE REPORT OF DVO, THE VALUE IS LESS THAN THE AMOUNT SHOWN BY THE ASSESSEE, THE REPORT OF DVO AND THE COST SHOWN BY THE ASSESSEE SHOULD BE CO MPARED TO FIND OUT AS TO WHETHER, ANY ITEM OF COST ACTUALLY INCURRED BY THE ASSESSEE AND ACCOUNTED FOR IS MISSING IN THE REPORT OF DVO. IF IT IS SO, SUCH COST FROM ACTUAL COST ACCOUNTED BY THE ASSESSEE SHOULD BE EXCLUDED AND THE REMAININ G COST SHOULD BE COMPARED WITH THE COST AS PER DVOS REPORT TO FIND OUT AS TO WHETHER THE COST AS PER DVOS REPORT IS IN EXCESS. IF SO, HOW MUCH I S THE EXCESS AND WHAT IS THE EXPLANATION OF THE ASSESSEE IN THAT REGARD. IF THER E IS NO EXCESS OR IF THE EXCESS, IF ANY, IS PROPERLY EXPLAINED BY THE ASSESS EE, NO ADDITION IS JUSTIFIED. HENCE, I SET ASIDE THE ORDER OF CIT (A) IN ALL THES E CASES AND RESTORE THE MATTER BACK TO THE FILE OF CIT(A) FOR FRESH DECISION WITH THE DIRECTION THAT HE SHOULD CONSIDER REPORT OF DVO ALSO AND DECIDE THE ISSUE AF RESH AS PER ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. 9. IN THE RESULT, THREE APPEALS OF THE ASSESSEE IN ITA NOS. 2914, 2915 & 2918/BANG/2017 ARE PARTLY ALLOWED WHEREAS THE REMAI NING TWO APPEALS IN ITA NO. 2916 & 2917/BANG/2017 ARE ALLOWED FOR STATISTIC AL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 20 TH MARCH, 2018. /MS/ ITA NOS. 2914 TO 2918/BANG/2017 PAGE 6 OF 6 COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.