Sri K Suryaprakasa Rao, Chirala V. The ITO Ward-1 Chirala, Chirala

ITA 299/VIZ/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76451 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 14-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Keywords: Unexplained investment; Value adopted by valuation officer; Valuation report
• Section: 143(3); 133A; 69; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI J.SUDHAKAR REDDY, AM AND SHRI SAKTIJIT DEY, JM ITA NO.299/VIZAG/2011 : ASST.YEAR 2008-2009 SRI K.SURYA PRAKASA RAO 11-1-34, SANKAVARI STREET PERALA, CHIRALA. PAN : AKXPK2727K. VS. THE INCOME TAX OFFICER WARD 1 CHIRALA. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.V.N.HARI RESPONDENT BY : SHRI K.V.N.CHARYA, CIT DATE OF HEARING : 25.02.2014 DATE OF PRONOUNCEMENT : 25.02.2014 O R D E R PER J.SUDHAKAR REDDY (AM) : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), GUNTUR , DATED 25.08.2011. 2. AT THE TIME OF HEARING BEFORE US, THE LEARNED CO UNSEL FOR THE ASSESSEE SUBMITS THAT HE IS NOT PRESENTING GROUND N OS.1, 2 AND 3 AS WELL AS GROUND NOS. 8 AND 9. HENCE, THESE ARE DISMI SSED AS NOT PRESSED. THE SURVIVING GROUNDS ARE AS FOLLOWS:- 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ADDITI ON OF RS.8,11,709/- MADE BY THE ASSESSING OFFICER TOWARDS ALLEGED UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. ITA NO.299/VIZAG/2011. SRI K.SURYA PRAKASA RAO. 2 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE HELD THAT THE REFERENCE TO VALUATION OFFICER IS VALID AND CONSEQUENTLY THE ADD ITION MADE ON THE BASIS OF THE VALUATION REPORT IS LIABLE TO THE DELETED. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE ALLOWED REBATE TOWARDS SELF SUPERVISION @ 10% AS AGAINST 7.5%. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE ALLOWED REBATE @ 15% TOWARDS DIFFERENCE IN CPWD RATES AND LOCAL RATES. 3. THE FACTS OF THE CASE BROUGHT OUT AT PARA 2 OF T HE ORDER OF THE CIT(A), ARE EXTRACTED BELOW FOR READY REFERENCE:- BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CARR YING ON BUSINESS IN SALE OF SAREES. A SURVEY U/S 133A WAS CONDUCTED IN THIS CASE ON 10.08.2007 AND SOME DISCREPANCIES WERE NOTICED BY THE DEPARTMENT. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE A.Y.200 8-09 ON 30.09.2008 DECLARING TOTAL INCOME AT RS.1,98,430/-. THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT U/S 143(3) BY DETERMINING THE TOTAL INCOME AT RS.68,33, 743/- BY MAKING CERTAIN ADDITIONS AS UNDER:- (I) AN AMOUNT OF RS.2,40,000/- WAS DISALLOWED AS T HE ASSESSEE HAS DIVERTED BUSINESS FUNDS AND NOT OFFERE D INTEREST ON THE SAME. (II) UNACCOUNTED BILLS AMOUNTING TO RS.3,00,485/- WAS ADDED. ITA NO.299/VIZAG/2011. SRI K.SURYA PRAKASA RAO. 3 (III) AN AMOUNT OF RS.23,600/- IS DISALLOWED U/S 4 0A(3) ON ACCOUNT OF PAYMENT MADE TO D.SUBRAHMANYAM IN CASH. (IV) ADDITION TOWARDS UNEXPLAINED INVESTMENT U/S 6 9 ON ACCOUNT OF DIFFERENCE IN COST OF CONSTRUCTION AMOUN TING TO RS.8,11,709/-. (V) ADDITION OF RS.52,59,509/- ON ACCOUNT OF EXCES S STOCK. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD SHRI G.V.N.HARI, THE LEARNED COUNSE L FOR THE ASSESSEE AND SHRI K.V.N.CHARYA, THE LEARNED CIT-DR ON BEHALF OF THE REVENUE. 6. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRC UMSTANCES OF THE CASE AND ON PERUSAL OF THE PAPERS ON RECORD AND ORD ERS OF THE AUTHORITIES BELOW, CASE LAWS CITED, WE HOLD AS FOLL OWS. 7. THE FIRST APPELLATE AUTHORITY, IN OUR VIEW, HAS WRONGLY DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING THAT THE DEPA RTMENTAL VALUATION OFFICERS (DVO) REPORT AS A TECHNICAL ONE BINDING O N THE DEPARTMENT. 8. AS PER THE BOOKS OF THE ASSESSEE, THE COST OF CO NSTRUCTION IS AS FOLLOWS:- ITA NO.299/VIZAG/2011. SRI K.SURYA PRAKASA RAO. 4 COST OF CONSTRUCTION AS PER BOOKS OF ACCOUNT : (18.08.2006 TO 29.06.2010) FIN. YEAR 2006-2007 A.Y. 2007-2008 RS.1645256.00 FIN. YEAR 2007-2008 A.Y. 2008-2009 RS. 952975.00 FIN. YEAR 2008-2009 A.Y. 2009-2010 ---- FIN. YEAR 2009-2010 A.Y. 2010-2011 ---- FIN. YEAR 2010-2011 A.Y. 2011-2012 RS.1055040.00 ------------------- RS.3653271.00 =========== 9. THE REGISTERED VALUER VALUED THE PROPERTY AT 36. 07 LAKH. ON A REFERENCE, THE DVO VALUED THE PROPERTY AT 48,11,305 . THE SUBMISSIONS OF THE ASSESSEE ARE (A) THE REFERENCE TO VALUATION CELL BAD IN LAW FOR THE REASON THAT THE BOOKS HAVE NOT B EEN REJECTED, (B) REBATE TOWARDS SELF-SUPERVISION SHOULD BE 10% INSTE AD OF 7.5% GRANTED BY THE ASSESSING OFFICER, (C) ALLOW OF FURT HER REBATE OF @ 15% SHOULD BE GRANTED TOWARDS DIFFERENCE BETWEEN CE NTRAL PWD RATE AND STATE PWD RATES, (D) THE ASSESSEE HAS DURING THE FINANCIAL YEAR 2010-2011 RELEVANT TO THE ASSESSMENT YEAR 2011-2012 HAS INVESTED AN AMOUNT OF RS.10,55,040 AND THAT THIS FACT IS EVIDEN T FROM THE READING OF THE DVOS REPORT AND THAT CREDIT HAS TO BE GIVEN FOR THIS AMOUNT. THE LEARNED DEPARTMENTAL REPRESENTATIVE OPPOSED THE SE CONTENTIONS BY SUBMITTING THAT THE ASSESSEE SHOULD HAVE MADE HI S GRIEVANCES AT THAT TIME BEFORE THE DVO AND NOT THEREAFTER. HE REL IED ON THE ORDERS OF THE ASSESSING OFFICER AND CIT(A). ITA NO.299/VIZAG/2011. SRI K.SURYA PRAKASA RAO. 5 10. ON THE ISSUE OF JURISDICTION, THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. AMBIENCE DEVELOPERS AND INFRASTRUCTURE (P) L TD. [(2012) 25 TAXMANN.COM 210 (DELHI)] , HELD AS UNDER:- IN THE ABSENCE OF A FINDING REJECTING THE ACCOUNTS OF THE ASSESSEE, THE REFERENCE TO THE DVO COULD NOT HAVE B EEN MADE BY THE ASSESSING OFFICER IN THE FIRST PLACE. IT IS EVIDENT THAT THE VALUATION IN THE INSTANT CA SE WAS UNCRITICALLY ACCEPTED BY THE ASSESSING OFFICER. AS CAN BE SEEN FROM A COMPARISON OF THE VALUATION BY THE ASSE SSEE, WITH THAT OF THE DVO, THE VARIATION IS 3.86 PER CEN T. THIS IS A VERY MINOR VARIATION, HAVING REGARD TO THE LAR GE AMOUNTS INVOLVED. BESIDES, THE FACT THAT THE ASSESS ING OFFICER DID NOT EXAMINE THE VALUATIONS, WITH SPECIF IC REFERENCE TO ANY ITEMS OF EXPENDITURE THAT WERE REASONABLE, OR SHOWED WIDE VARIATION, THESE DIFFERE NCES CAN ALSO BE PUT DOWN TO DIFFERING PERCEPTIONS, AND THE PRACTICE ADOPTED BY THE CONCERNED BUSINESS ACTIVITY . IN VIEW OF THE ABOVE DISCUSSION, AND HAVING REGARD TO THE FACT THAT THE VARIATION IN VALUATION, IN THE INSTAN T CASE BETWEEN WHAT WAS DISCLOSED BY THE ASSESSEE AND WHAT WAS INDICATED BY THE DVO IS NOT SIGNIFICANT, THE CO URT IS OF OPINION THAT THERE IS NO INFIRMITY IN THE FINDIN G CONTAINED IN THE IMPUGNED ORDER OF THE TRIBUNAL. 11. THE HONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA V. CIT [(2010) 328 ITR 513 (SC)] HELD AS UNDER:- THAT THE ASSESSING AUTHORITY COULD NOT REFER THE M ATTER TO THE DEPARTMENTAL VALUATION OFFICER IN A CASE WHE RE THERE WAS A CATEGORICAL FINDING RECORDED BY THE TRI BUNAL THAT THE BOOKS OF ACCOUNT WERE NEVER REJECTED. ITA NO.299/VIZAG/2011. SRI K.SURYA PRAKASA RAO. 6 12 . RESPECTFULLY FOLLOWING THE SAME, WE HAVE TO HOLD TH AT THE VERY REFERENCE TO VALUATION CELL IN THIS CASE IS BAD IN LAW FOR THE REASON THAT THE AO DID NOT REJECT THE BOOKS OF ACCOUNT. 13. COMING TO THE SECOND CONTENTION REGARDING REBAT E, WE FIND THAT THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF SMT.PREM KUMARI MUDRIA V. ACIT [(2008) 303 ITR 128 (RAJ.)] HAS APPROVED THE FINDING OF THE TRIBUNAL OF 20% DEDUCTION ON ACCOUNT OF DIFF ERENCE IN CPWD RATES AND LOCAL PWD RATES. AS THE ASSESSEE IN THIS C ASE IS ASKING 15% REBATE, THIS GROUND HAS TO BE ALLOWED. COMING TO TH E ISSUE OF SELF- SUPERVISION, THE TRIBUNAL IN THE CASE OF G.NARASING A RAO ITA NOS.318/V/2008 & 360/V/2007 HAS ALLOTTED 10% AS REB ATE FOR SELF- SUPERVISION. IN VIEW OF THE CONSISTENT VIEW TAKEN H EREINABOVE, WE APPROVE THE CONTENTION RAISED BY THE ASSESSEE. THE LAST CONTENTION THAT THE ASSESSEE HAS INCURRED CERTAIN EXPENSES DURING T HE FINANCIAL YEAR 2010-2011, IS SUPPORTED BY THE FINDING OF FACT GIVE N BY THE DVO, WHICH IS NOT CONTROVERTED BEFORE US. THUS, THE ASSE SSEE SHOULD GET THE BENEFIT OF SPREAD OVER OF EXPENDITURE INCURRED IN T HE YEARS 2010-2011 AND THE FINDING OF THE A.O. THAT IT IS AN AFTERTHOU GHT, CANNOT BE SUSTAINED IN VIEW OF THE FINDING GIVEN BY THE DVO. 14. IN VIEW OF THE ABOVE DISCUSSION, SPECIFICALLY O N THE FINDING THAT THE DIFFERENCE ITSELF IS BAD IN LAW, WE ALLOW THESE GROUNDS OF THE ASSESSEE. ITA NO.299/VIZAG/2011. SRI K.SURYA PRAKASA RAO. 7 15. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF FEBRUARY, 2014 . SD/- SD/- (SAKTIJIT DEY) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM ; DATED : 25 TH FEBRUARY, 2014. DEVDAS* COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT, GUNTUR. 4. CIT(A) GUNTUR. 5. DR, ITAT, VISAKHAPATNAM. 6. GUARD FILE. BY ORDER, //TRUE COPY// (SENIOR PRIVATE SECRETARY) ITAT, VISAKHAPATNAM