Income Tax Officer,Ward -7(2), Nagpur V. Shri. Deorao Dhondbaji Sontakke, Nagpur

ITA 31/NAG/2011

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3099 (ITAT-NAGPUR)
• Duration Of Justice: 8 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 17-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B RAJARAM
• Assessee Lawyers: M MANI
• Keywords: Valuation report
• Section: 143(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR E-BENCH, NAGPUR (THROUGH VIDEO CONFERENCE AT MUMBAI) . . , . / BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER / AND , . . SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO. 29/NAG/2011 / ASSESSMENT YEAR 2003-04 INCOME TAX OFFICER, WARD 7(2), 5 TH FLOOR, ROOM NO. 518, AMBEDKAR BHAWAN, SEMINARY HILLS, NAGPUR VS. SHRI DEORAO DHONDBAJI SONTAKKE, 11, KADU NAGAR, HUDKESHWAR, NAGPUR. PAN: AMHPS 4876 C . / ITA NO. 30/NAG/2011 / ASSESSMENT YEAR 2004-05 INCOME TAX OFFICER, WARD 7(2), 5 TH FLOOR, ROOM NO. 518, AMBEDKAR BHAWAN, SEMINARY HILLS, NAGPUR VS. SHRI DEORAO DHONDBAJI SONTAKKE, 11, KADU NAGAR, HUDKESHWAR, NAGPUR. PAN: AMHPS 4876 C . / ITA NO. 31/NAG/2011 / ASSESSMENT YEAR 2005-06 INCOME TAX OFFICER, WARD 7(2), 5 TH FLOOR, ROOM NO. 518, AMBEDKAR BHAWAN, SEMINARY HILLS, NAGPUR VS. SHRI DEORAO DHONDBAJI SONTAKKE, 11, KADU NAGAR, HUDKESHWAR, NAGPUR. PAN: AMHPS 4876 C ( / APPELLANT ) ( / RESPONDENT ) [[ REVENUE BY : SHRI B. RAJARAM ASSESSEE BY : SHRI M. MANI ! '#$ / DATE OF HEARING : 21-12-2012 %& ! '#$ / DATE OF PRONOUNCEMENT : 31-12-2012 '( / O R D E R PER RAJENDRA, AM IDENTICAL GROUNDS OF APPEAL HAVE BEEN FILED BY THE ASSESSING OFFICER (AO) AGAINST THE ORDER DT. 03-12-2010 OF CIT(A)-II, NAGP UR, GROUNDS OF APPEAL FOR THE ASSESSMENT YEARS (AYS) 2003-04, 2004-05 & 2005-06 R EAD AS UNDER: ITA NO. 29 30 31/NAG/2011 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A) ERRED IN HOLDING THAT THE REASONS TO BELIEVE TO REOPEN TH E ASSESSMENT U/S. 147 OF THE I.T. ACT DID NOT EXIST FOR THE ASSESSING OFFICE R. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE AO HAD RECORD ED HIS REASONS TO BELIEVE U/S. 147 AFTER CONSIDERING THE FACTS OF THE CASE AS WELL AS THE REPORTS OF THE DVO. 3. THE CIT(A) HAS ERRED IN GIVING RELIEF TO THE ASSESS EE FOR RS. 5,84,000/- RS. 6,59,147/- AND RS. 4,58,457/- FOR AY 2003-04, 2004- 05 & 2005-06 RESPECTIVELY. 4. THE CIT(A) HAS ERRED IN HOLDING THAT THE REFERENCE TO THE DVO COULD NOT HAVE BEEN MADE WITHOUT FIRST REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. 5. ANY OTHER GROUND THAT MAY BE RAISED AT THE TIME OF HEARING. 2. AS PER THE INFORMATION AVAILABLE ON RECORD ABOUT DA TE OF FILING OF RETURNS OF INCOME, RETURNED INCOME, DATE OF ASSESSMENT ORDER E TC., CAN BE SUMMARIZED AS UNDER: ITA NO. AND AY DATE OF FILING OF RETURN RETURNED INCOME DATE OF PROCESS U/S. 143(1) OF THE ACT 29/NAG/2011 AY 2003-04 30-01-2004 77,798 22-06-2004 30/NAG/2011 AY 2004-05 07 - 10 - 2005 31,107 20 - 04 - 2006 31/NAG/2011 AY 2005-06 07-11-2005 91,210 04-08-2006 AO ISSUED A LETTER TO THE DISTRICT VALUATION OFFIC ER (DVO) ON 23-10-2006 TO VALUE THE RESIDENTIAL BUILDING OF THE ASSESSEE AS P ER THE PROVISIONS OF SECTION 142A OF THE INCOME TAX ACT, 1961 (ACT). THE DVOS VALUATIO N REPORT WAS RECEIVED BY THE AO ON 29-03-2007. DVO IN HIS REPORT EVALUATED THE ESTIMATE COST INCURRED IN THE CONSTRUCTION OF THE BUILDING AS UNDER: FY AY COST AS ESTIMATED BY DVO COST OF CONSTRUCTION AS SHOWN BY THE ASSESSEE IN HIS RETURN 2002-03 2002-03 RS. 15,59,735/- RS. 8,00,000/- 2003-04 2003-04 RS. 24,57,070/- RS. 12,60,000/- 2004-05 2004-05 RS. 20,47,783/- RS. 10,50,000/- 2005 - 06 2005 - 06 RS. 6,10,565/ - RS. 3,13,000/ - TAKING INTO CONSIDERATION, THE DIFFERENCE BETWEEN THE ESTIMATE COST OF VALUATION AND THE INVESTMENT SHOWN BY THE ASSESSEE IN THE ABOVE CHART, AO RE-OPENED THE CASE U/S. 147 OF THE ACT AND A NOTICE U/S. 148 WAS ISSUED ON 30-03-2007. AFTER ISSUING THE NOTICE TO THE ASSESSEE FOR ALL THE 3 AY S, AO DETERMINED THE INCOME AS UNDER: AY 2003-04 - RS. 13.3 LAKHS AY 2004-05 - RS. 12.7 LAKHS AY 2005-06 - RS. 11.33 LAKHS ITA NO. 29 30 31/NAG/2011 3 3. ASSESSEE PREFERRED AN APPEALS AGAINST THE SAID ASSE SSMENT ORDERS BEFORE THE FIRST APPELLATE AUTHORITY (FAA) VIDE A COMMON ORDER DT. 03-12-2010. FAA DECIDED THE APPEALS. HE HELD THAT IN THE CASE UNDER CONSID ERATION, ASSESSMENT WERE COMPLETED U/S. 43(1) OF THE ACT, THAT ON THE DATE OF REFERENC E TO THE DVO, NO PROCEEDING WAS PENDING BEFORE THE AO, THAT REFERENCE TO DVO FOR AS CERTAINING COST OF CONSTRUCTION WAS NOT VALID, PENDENCY OF PROCEEDINGS FOR A RELEVA NT AY IS THE PRE-CONDITION FOR INVOKING THE PROVISIONS OF SECTION 142 OF THE ACT, THAT ASSESSMENT COULD NOT BE RE- OPENED U/S. 148 BASED ON THE VALUATION REPORT OF TH E DVO. RELYING UPON THE DECISIONS DELIVERED BY THE HONBLE SUPREME COURT IN THE CASE OF DHARIYA CONSTRUCTION COMPANY (328 ITR 515) AND SARGAM CINEM A (328 ITR 513). FAA ALLOWED THE APPEALS FILED BY THE ASSESSEE. HE FINA LLY HELD THAT ACTION OF THE AO IN RE- OPENING ASSESSMENT U/S. 147 BASED ON THE VALUATION OF THE DVO WAS NOT TENABLE 4. BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR) SUBMITT ED THAT FAA HAD IGNORED THE REPORT OF THE DVO, THAT THE CASES WERE RE-OPENE D AS PER THE PROVISIONS OF LAW. AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT REFER ENCE COULD NOT BE MADE TO THE DVO SPECIALLY WHEN NO PROCEEDINGS WERE PENDING, THA T RE-OPENING ON THE BASIS OF A REPORT FROM THE DVO WAS BAD IN LAW, BOOKS OF ACCOUN TS OF THE ASSESSEE WERE NEITHER EXAMINED NOR REJECTED BEFORE MAKING A REFERENCE TO THE DVO. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE UN-DISPUTED FACTS OF THE CASES UNDER C ONSIDERATION ARE THAT RETURNS OF INCOME OF THE ASSESSEE WERE PROCESSED U/S. 143(1) O F THE ACT, THAT ON THE DATE OF MAKING REFERENCE TO THE DVO, NO PROCEEDINGS WERE PE NDING BEFORE THE AO, THAT THE ASSESSMENTS WERE RE-OPENED INVOKING PROVISIONS OF S EC. 147/148 OF THE ACT, THAT RE- ASSESSMENT PROCEEDINGS WERE INITIATED ON THE BASIS OF DVOS REPORT. 6. IN OUR OPINION, FAA HAS RIGHTLY HELD REFERENCE UNDE R 142A OF THE ACT CAN BE MADE TO THE DVO ONLY WHEN ANY ASSESSMENT PROCEEDING S ARE PENDING BEFORE THE AO. IN THE CASES UNDER CONSIDERATION, AS STATED EARLIER , NO PROCEEDINGS WERE PENDING BEFORE THE AO. THEREFORE, REFERENCE MADE TO DVO WAS NOT AS PER THE PROVISIONS OF LAW. SECONDLY, RE-OPENING OF AN ASSESSMENT ON THE BASIS OF A VALUATION REPORT OF THE DVO HAS BEEN QUASHED BY THE HONBLE SUPREME COURT IN TH E CASE OF DHARIYA CONSTRUCTION CO., (SUPRA). RESPECTFULLY FOLLOWING THE SAID DECI SION OF THE HONBLE APEX COURT, FAA HAD ALLOWED THE APPEALS OF THE ASSESSEE. WE SE E NO REASON TO INTERFERE WITH HIS ORDERS AS THEY DO NOT SUFFER FROM ANY INFIRMITY. U PHOLDING THE ORDER OF THE FAA, WE DECIDE GROUND NOS. 1 5 FOR ALL THE THREE AYS AGAI NST THE AO. AS A RESULT, APPEALS FILED BY THE REVENUE STAND DIS MISSED. ) *+ , + . '/0 ! 1 *23 ! ' 45. ORDER PRONOUNCED BY E-BENCH AT MUMBAI ON THIS 31 ST DAY OF DECEMBER, 2012. *7 ! 758 . '( ! %& 31 ;' 7,2012 & ! . SD/- SD/- ( . . / R.K. GUPTA ) ( / RAJENDRA ) '+ / JUDICIAL MEMBER $ '+ / ACCOUNTANT MEMBER *7 MUMBAI, ;' DATE: 31 ST DECEMBER, 2012 TNMM ITA NO. 29 30 31/NAG/2011 4 COPY TO: 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5 . DR, ITAT, NAGPUR 6. GUARD FILE ?' ' //TRUE COPY// BY ORDER, ASST. REGISTRAR, ITAT