Income tax Officer, Bathinda V. M/s. Mahabir Cotton Traders,

ITA 326/ASR/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2232 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-05-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 16-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADAM BAHL
• Assessee Lawyers: R L CHHANALIA ITA NOS TO ASR
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Opportunity of being heard; Principle of natural justice; Fair market value; Valuation report; Competent authority
• Section: 50C; 234B; 69; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NOS.445(ASR)/2012 ASSESSMENT YEARS:2006-07 PAN :ADWPM0105H SH.RAJESH MAHAJAN, VS. INCOME TAX OFFICER, AMRITSAR. WARD-2(2), AMRITSAR. (APPELLANT) (RESPONDENT) I.T.A. NOS.446(ASR)/2012 ASSESSMENT YEARS:2008-09 PAN :ADWPM0105H SH.RAJESH MAHAJAN, VS. ASSTT. COMMR. OF INCOME TA X, AMRITSAR. CIRCLE, AMRITSAR. (APPELLANT) (RESPONDENT) I.T.A. NOS.447(ASR)/2012 ASSESSMENT YEARS:2007-08 PAN :ADWPM0105H SH.RAJESH MAHAJAN, VS. INCOME TAX OFFICER (TECH), AMRITSAR. AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.PADAM BAHL, CA RESPONDENT BY:SH.R.L.CHHANALIA, ITA NOS 445 TO 447(ASR)/2012 2 DATE OF HEARING:15/05/2013 DATE OF PRONOUNCEMENT:23/05/2013 ORDER PER BENCH ; THESE THREE APPEALS OF THE ASSESSEE ARISE FROM THR EE DIFFERENT ORDERS OF CIT(A), AMRITSAR, EACH DATED 16.10.2012 FOR THE ASS ESSMENT YEARS 2006-07, 2008-09 & 2007-08. 2. THE ASSESSEE IN ALL THE APPEALS HAS RAISED IDEN TICAL GROUNDS OF APPEAL EXCEPT THE AMOUNT MENTIONED IN EACH APPEAL IS DIFFE RENT. THE GROUNDS OF APPEAL FOR THE ALL ASSESSMENT YEARS ARE REPRODUCED AS UNDER: 1. THAT THE WORTHY CIT(A), AMRITSAR HAS GROSSLY E RRED IN CONFIRMING THE ADDITION MADE BY THE ITO WARD 2(2) , AMRITSAR AT RS.40,35,805/-(RS.10,22,902 FOR THE AY.2008-09 AND RS.15,97,865/- FOR THE A.Y.2007-08) ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN THE CONSTRUCTION OF HOT EL BUILDING U/S 69 OF THE INCOME TAX ACT, 1961. 2. THAT THE WORTHY CIT(A), AMRITSAR HAS FAILED TO APPR ECIATE THAT ITO WARD 2(2), AMRITSAR HAD NOT REJECTED THE BOOKS PRIOR TO MAKING REFERENCE U/S 142A OF THE I.T. ACT, 1961 AND HAD DONE SO ON THE PROMPTING OF ADDITIONAL COMMISSIONER OF I NCOME TAX RANGE-2, AMRITSAR. 3. THAT THE WORTHY CIT(A), AMRITSAR HAS FAILED TO APPR ECIATE THAT AS PER VALUATION OFFICERS CALCULATION AN ADDITION OF RS.7,94,164/- (15,79,189-7,85,025) ONLY COULD BE MA DE FOR ASSESSMENT YEAR 2006-07. ITA NOS 445 TO 447(ASR)/2012 3 4. THAT BOTH THE WORTHY CIT(A), AMRITSAR AND ITO WAR D 2(2) HAVE FAILED TO APPRECIATE THAT THE ASSESSEE HAD PU RCHASED THE PROPERTY ALONGWITH CONSTRUCTION THEREON FOR A SUM O F RS.28,08,000/-FROM SH. BHUPINDERJIT SINGH AND KASHM IR KAUR VIDE PURCHASE DEED DATED 20.05.2005 AND THE PURCHAS E DEED CLEARLY MENTIONED THIS FACT AND THE SAME IS ALSO EV IDENT FROM THE SANCTIONED PLAN. 5. THAT THE WORTHY CIT(A), AMRITSAR HAS GROSSLY ERRED IN CONFIRMING THE ADDITION MADE BY THE ITO WARD 2(2), AMRITSAR IN REFUSING TO GIVE ALLOWANCE OF RS.33,65,253/-BEIN G THE VALUE OF SUPERSTRUCTURE VALUED BY VALUATION OFFICER FOR T HE PERIOD UPTO 25.05.2005 WHICH EXISTED ON THE DATE OF PURCHASE OF PROPERTY BY THE ASSESSEE. 6. THAT THE WORTHY CIT(A), AMRITSAR HAS FAILED TO APPR ECIATE THAT THE VALUATION MADE BY THE VALUATION OFFICER AT RS.1,03,06,617/- WAS HIGHLY EXCESSIVE AND VALUATION OFFICER HAS APPLIED CPWD RATES INSTEAD OF PWD RATES OF PUNJAB. 7. THAT BOTH THE WORTHY CIT(A), AMRITSAR AND ITO WAR D 2(2) HAVE FAILED TO APPRECIATE THAT NO REFERENCE U/S 14 2A COULD BE MADE AND WAS MADE TO VALUATION OFFICER FOR THE PERI OD PRIOR TO 20.05.2005 AND FOR THE A.Y. 2007-08 & 2008-09 AND T HE VALUATION SO MADE BY VALUATION OFFICER WAS BEYOND T HE REFERENCE MADE. 8. THAT THE WORTHY CIT(A), AMRITSAR HAS GROSSLY ERRED IN REJECTING ALL THE GROUNDS OF THE ASSESSEE AND THE DETAILED LE GAL AND FACTUAL SUBMISSIONS BY PASSING HIS ORDER IN A VERY SUMMARY MANNER WITHOUT DEALING WITH INDIVIDUAL ARGUMENTS, SUBMISSI ONS AND CASE LAWS AND THE SAME IS PERVERSE. ITA NOS 445 TO 447(ASR)/2012 4 9. THAT THE WORTHY CIT(A), AMRITSAR HAS GROSSLY ERRED IN CONFIRMING CHARGING OF INTEREST U/S 234B AT RS.4,43 ,922/- (RS.1,61,348/- FOR THE A.Y.2007-08). 2. FIRST OF ALL, WE TAKE UP APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 IN ITA NO.445(ASR)/2012. OUR ORDER IN THIS APPEAL SHALL BE APPLICABLE IN OTHER APPEALS MENTIONED HEREINABOVE F OR THE ASSESSMENT YEARS 2007-08 & 2008-09 OF THE ASSESSEE BEING ON IDENTICA L FACTS. 3. THE BRIEF FACTS IN ITA NO.445(ASR)/2012 ARE THA T THE ASSESSEE HAS INVESTED IN THE PURCHASE OF PLOT AND CONSTRUCTION O F THE HOTEL BUILDING AT QUEENS ROAD, AMRITSAR KNOWN AS HOTEL NAMASKAR. T HE ASSESSEE WAS ASKED TO FURNISH THE VALUATION REPORT OF THE APPRO VED VALUER ALONG WITH COMPLETION CERTIFICATION ISSUED BY THE COMPETENT AU THORITY. ASSESSEE FURNISHED THE VALUATION REPORT OF THE APPROVED VALU ER DETERMINING THE TOTAL COST OF CONSTRUCTION OF THE HOTEL BUILDING AT RS. 3 4,57,800/-. THE CASE WAS REFERRED TO THE VALUATION OFFICER OF THE INCOME TAX DEPARTMENT FOR DETERMINING THE ACTUAL COST OF CONSTRUCTION OF THE HOTEL BUILDING. THE VALUATION OFFICER HAS SUBMITTED HIS REPORT UNDER H IS OFFICE LETTER NO. 181 DATED 04.12.2008 DETERMINING THE TOTAL COST OF CONS TRUCTION OF THE HOTEL BUILDING AT RS. 1.03,06,617/- AFTER GIVING DUE OPPO RTUNITY TO THE ASSESSEE. IN THE VALUATION REPORT, THE V.O. HAS FURTHER GIVEN AN ALLOWANCE OF RS. ITA NOS 445 TO 447(ASR)/2012 5 33,65,253/- ON ACCOUNT OF THE COST OF UNFINISHED ST RUCTURE CONSISTING OF BASEMENT, GROUND FLOOR, 1 ST FLOOR & 2 ND FLOOR AS THE AFFIDAVIT FURNISHED BY THE ASSESSEE TO THE VALUATION OFFICER AT THE TIME O F VALUATION IN WHICH IT WAS STATED THAT AT THE TIME OF PURCHASE OF LAND, THERE EXISTED A RAW-STRUCTURE AND THE V.O. HAS SEPARATELY COMPUTED THE VALUE OF CONST RUCTION OF THE RAW- STRUCTURE AT RS. 33,65,253/-. A COPY OF THE VALUATI ON REPORT WAS MADE AVAILABLE TO THE ASSESSEE, VIDE AOS LETTER DATED 0 4.12.2008, FOR SEEKING THE ASSESSEES OBJECTIONS TO THE VALUATION MADE, IF ANY . THE ASSESSEE COUNSEL FURNISHED OBJECTIONS TO THE VALUATION REPORT IN WHI CH IT WAS STATED THAT THE VALUATION MADE IS ON VERY MUCH HIGHER SIDE AND UNR EASONABLE AS COMPARED TO THE VALUATION REPORT OF THE APPROVED VALUER DATE D 29.09.2008. IT WAS ALSO STATED THAT BOOKS OF ACCOUNT HAVE BEEN MAINTAINED A ND BILL OF PURCHASE OF MATERIAL ARE FULLY AUTHENTIC AND HAVE DULY BEEN REC ORDED IN THE BOOKS OF ACCOUNT. SUBSEQUENTLY, REPLY TO THE OBJECTIONS RAIS ED WAS ALSO FURNISHED IN THIS OFFICE ON 16.12.2008 IN WHICH IT WAS STATED TH AT THE PLINTH AREA RATE OF CPWD RATE ARE APPROXIMATELY 30% HIGHER THAN THE MAR KET RATES. IT WAS ALSO MENTIONED IN THE OBJECTION FILED THAT THE SELF SUPE RVISION ALLOWANCE HAS BEEN ALLOWED @ 7.5% WHEREAS THE ASSESSEE WAS ELIGIBLE @ 15% AS THE ASSESSEE HAS DEVOTED PROPER TIME, ATTENTION ETC. A COPY OF T HE OBJECTIONS RECEIVED FROM THE ASSESSEE COUNSEL WAS SENT TO THE VALUATION OFFICER FOR HIS ITA NOS 445 TO 447(ASR)/2012 6 COMMENTS. THE VALUATION OFFICER DISPOSES OFF THE AS SESSEES OBJECTIONS UNDER HIS OFFICE LETTER NO. 192 DATED 17.12.2008 AN D COPY OF SAME WAS SERVED UPON THE ASSESSEE. IN THE VALUATION REPORT S UBMITTED BY THE VALUATION OFFICER, IT WAS FOUND THAT ASSESSEE HAS FURNISHED A N AFFIDAVIT BEFORE THE VALUATION OFFICER IN WHICH IT HAS BEEN SUBMITTED TH AT THE LAND MEASURING 238 SQ. YARD WAS PURCHASED FROM SH. BHUPINDERJIT SI NGH & SMT. KASHMIR KAUR, W/O SH. BHUPINDERJIT SINGH HAVING RAW STRUCTU RE BUILDING CONSISTING OF BASEMENT, GROUND FLOOR, 1 ST FLOOR AND 2 ND FLOOR AND THE VALUATION OFFICER HAS DETERMINED THE VALUE OF THE RAW STRUCTURE AT RS . 33,62,253/- SEPARATELY IN THE VALUATION REPORT. INQUIRIES WERE MADE FROM SH. BHUPINDERJIT SINGH & SMT. KASHMIR KAUR, R/O- A-122, RANJIT AVENUE, AMRIT SAR, SELLER OF THE LAND. IN RESPONSE TO ENQUIRY ISSUED, SH. BHUPINDERJIT SIN GH FURNISHED AN AFFIDAVIT TO THIS OFFICE IN WHICH IT WAS SOLEMNLY AFFIRMED TH AT HE AND HIS WIFE HAS SOLD PROPERTY MEASURING 238 SQ. YARD SITUATED AT QUEENS ROAD, AMRITSAR ON 20.05.2005 TO SH. RAJESH KUMAR, S/O SH. CHUNNI LAL FOR RS. 28,08,000/- AND THE SAME SUM WAS MAINLY ON ACCOUNT OF PIECE OF LAN D AND A VERY SMALL CONSTRUCTION IN THE SHAPE OF TWO ROOMS RAY-STRUCTUR E WAS DONE BY HIM. IT WAS FURTHER AFFIRMED THAT HE HAD SPENT A SUM OF RS. 4,10,000/- ONLY TOWARDS THE CONSTRUCTION ON THE SAID PLOT AND THE CONSTRUCT ION WAS NOT MADE UNDER ANY APPROVED BUILDING PLAN. VIDE THIS OFFICE LETTER DATED 11.12.2008, THE ITA NOS 445 TO 447(ASR)/2012 7 COPY OF THE ASSESSEES AFFIDAVIT ADMITTING THE COST SEEKING THE ASSESSEES EXPLANATION. HOWEVER, NO REPLY WAS RECEIVED FROM TH E ASSESSEE IN THIS REGARD. 3.1 THE ASSESSEE WAS ISSUED A SHOW CAUSE LETTER DA TED 18.12.2008 REQUIRING THE ASSESSEE TO STATE AS TO WHY THE DIFFE RENCE IN THE VALUATION DETERMINED BY THE V.O. AND SHOWN BY THE ASSESSEE MA Y NOT BE ADDED TO HIS TOTAL INCOME. IN RESPONSE TO THIS, WRITTEN SUBMISSI ON OF THE AR OF THE ASSESSEE WAS RECEIVED, THE RELEVANT PORTION OF WHIC H IS REPRODUCED AS UNDER:- THE VALUATION REPORT HAS ALREADY BEEN CHALLENGED WI TH YOUR OFFICE. REGARDING COST OF UN-FINISHED STRUCTURE, IT IS VERY MUCH EVIDENT FROM THE TITLE DEED FOR PURCHASE OF LAND & BUILDING THAT WE HAVE PURCHASE THE LAND ALONG WITH UNFINISHED STRUCT URE THEREON. THE COPY OF WHICH HAS ALREADY BEEN SUBMITTED TO YOU R OFFICE. REGARDING VALUATION OF PURCHASED STRUCTURE WHICH HA S BEEN DONE BY YOUR VALUATION OFFICER IS AGAIN VERY MUCH OF THE HI GHER SIDE. AS REGARDS UN-FINISHED STRUCTURE ALREADY EXISTING A T THE TIME OF PURCHASE BY MY ASSESSEE THE FACTS HAVE ALREADY B EEN STATED IN ABOVE PARAGRAPH. THE AFFIDAVIT OF SH. BHUPINDERJIT SINGH, S/O SH. JAGDISH SINGH ONLY DOES NOT CONFIRM THE FACTS FOR T HE AMOUNT SPENT BY THE SELLERS AND IS NOT BINDING ON MY ASSESSEE. T HE FACTS FOR UNFINISHED WAS ALREADY IS EXISTENCE IS VERY MUCH EV IDENT FROM THE COPY OF THE TITLE DEED ALREADY BEEN SUBMITTED TO YO UR OFFICE. REGARDING THE VALUATION DONE BY THE DVO THE FACTS H AVE ALREADY BEEN SUBMITTED TO YOUR OFFICE VIDE MY LETTER DATED 15.12.2008. THE EXPENDITURE DONE BY MY ASSESSEE FOR THE CONSTRUCTIO N OF BUILDING IS FULLY SUPPORTED BY BOOKS OF ACCOUNTS, PURCHASE BILL S AND VOUCHERS ETC. AND ARE BASED ON FACTS. MOREOVER, THE PERIOD O F VALUATION CONSIDERED BY DVO IS IRRELEVANT. 3.2 THE ASSESSEES EXPLANATION WAS CONSIDERED BY THE A O, THE SAME WAS ITA NOS 445 TO 447(ASR)/2012 8 NOT ACCEPTABLE TO THE AO BECAUSE SHRI BHUPINDERJIT SINGH SELLER OF THE LAND HAS SOLEMNLY AFFIRMED IN HIS AFFIDAVIT THAT HE HAS SPENT RS. 4,10,000/- ON THE CONSTRUCTION OF TWO ROOM RAW-STRUCTURE WITHOUT ANY APPROVED PLAN. THE BENEFIT OF THE OLD TWO ROOMS CONSTRUCTED WITHOUT AN Y APPROVED PLAN COULD NOT BE ALLOWED TO THE ASSESSEE ON THE GROUND THAT T HE SAME WOULD HAVE BEEN DISMANTLED AT THE TIME CONSTRUCTION OF THE HOTEL BU ILDING. THE ASSESSEE WAS ALSO AFFORDED OPPORTUNITY TO CROSS-EXAMINE SHRI BHU PINDERJIT SINGH IN RESPECT OF THE AFFIDAVIT FILED BY HIM. BUT THE ASSE SSEE DID NOT COME FORWARD TO AVAIL THIS OPPORTUNITY. IF FOR THE ARGUMENT SAKE , IT MAY BE CONSIDERED THAT THERE EXISTED RAW STRUCTURE AS ALLEGED BY THE ASSES SEE AT THE TIME OF PURCHASE OF LAND, THE CIRCLE RATE OF THE LAND AT QUEENS ROA D, ASR IN RESPECT OF THE COMMERCIAL PROPERTY HAS BEEN FIXED AT RS. 25,000/- PER SQ. YARD FOR THE STAMP DUTY PURPOSE AND ACCORDING TO WHICH THE TOTAL VALUE OF THE LAND ONLY PURCHASES BY THE ASSESSEE COMES TO RS. 59,50,000/-. THEREFORE, IT IS UN- REALISTIC TO ASSUME THAT CAN ANY PERSON WILL SELL T HE PROPERTY OF VALUE OF RS. 59,50,000/- ALONG WITH RAW-STRUCTURE FOR A CONSTRUC TION OF JUST RS. 28,08,000/-. JUSTIFICATION IN THIS RESPECT WAS ALSO CALLED FOR VIDE THIS OFFICE LETTER DATED 04.12.2008. THEREFORE, THE ASSESSEES PLEA AND ARGUMENT ON THIS ACCOUNT WERE NOT ACCEPTABLE TO THE AO. ITA NOS 445 TO 447(ASR)/2012 9 3.3. IN VIEW OF THE EXPLANATION SUBMITTED BY THE AR OF THE ASSESSEE AND THE OTHER FACTS OF THE CASE I.E. THE AFFIDAVIT FILE D BY SH. BHUPINDERJIT SINGH, THE CONTENTION OF THE ASSESSEE WAS NOT FOUND TO BE GENUINE AND ACCORDINGLY THE CASE WAS REFERRED TO THE ADDL. CIT, RANGE-II, A MRITSAR VIDE AOS OFFICE LETTER DATED 09.12.2008 FOR ISSUING NECESSARY DIREC TIONS U/S 144A. 4. NECESSARY DIRECTIONS ISSUED BY THE ADDL. CIT, RA NGE-II, VIDE OFFICE LETTER NO.3391 DATED 29.12.2008 ARE REPRODUCED AT A OS ORDER AT PAGES 4 TO 6. AFTER AFFORDING PERSONAL HEARING TO THE ASSESSEE AND KEEPING IN VIEW THE DIRECTIONS ISSUED BY THE ADDL. CIT, THE AO WAS OF T HE OPINION THAT THERE WAS NO RAW-STRUCTURE ON THE LAND PURCHASED BY THE ASSES SEE FOR WHICH THE V.O. HAS DETERMINED THE VALUE AT RS.33,65,253/- ON THE B ASIS OF AFFIDAVIT FILED BY THE ASSESSEE. IT WAS OBSERVED BY THE AO AT PAGE 6 OF THE ORDER THAT KEEPING IN VIEW THE DIFFERENCE IN VALUATION REPORT AS DETER MINED BY THE VALUATION OFFICER AND SHOWN BY THE ASSESSEE, BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE ARE NOT COMPLETE AND CORRECT AND ACCORDING LY BOOKS OF ACCOUNT WERE REJECTED BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. 5. IT WAS OBSERVED BY THE A.O. THAT THE VO HAS DET ERMINED THE VALUE OF THE HOTEL BUILDING AT RS. 1,03,06,617/- AND HAS ALL OWED REBATE ON ACCOUNT OF ITA NOS 445 TO 447(ASR)/2012 10 SELF SUPERVISION @ 7.5%. THE JURISDICTIONAL I.T.A.T ., AMRITSAR BENCH, AMRITSAR, HAS ALLOWED SELF SUPERVISION REBATE @ 10 % AS PER THEIR DECISIONS IN THE CASE OF M/S D.D. COTTON PVT. LTD., BATHINDA IN I.T.A. NO. 67 (ASR)/2002 ORDER DATED 03.05.2005 ITO, BATHINDA VS. BAHIA FORT IN I.T.A. NO. 37(ASR)/2002 ORDER DATED 20.06.2005. ACCORDINGL Y, IN THE INTEREST OF NATURAL JUSTICE, SELF-SUPERVISION REBATE @ 10% WERE ALLOWED TO THE ASSESSEE FOR THE PURPOSE OF VALUATION OF THE HOTEL BUILDING AND TOTAL VALUATION OF THE BUILDING WAS COMPUTED AS UNDER:- TOTAL VALUATION AS DETERMINED BY THE A.O. BEFORE RE BATE FOR SELF-SUPERVISION 1,11,42,289 LESS:-SUPERVISION REBATE @ 10% 11,14,229 BALANCE 1,00,28,060 AS STATED ABOVE THAT THE ASSESSEE HAS MADE THE CONS TRUCTION OF THE HOTEL BUILDING DURING THE FINANCIAL YEARS 2005- 06 TO 2007-08. THE VO HAS ALSO DETERMINED THE YEAR-WISE ASSESSED COST OF CONSTRUCTION AT RS. 69,56,400/- IN THE VALUATION REPORT SUBMITTED B Y HIM WHICH IS REPRODUCED AS UNDER :- PERIOD OF CONSTRUCTI ON EXPENDITURE AVG. COST INDEX OF THE PERIOD EXP. IN BASE 100 AS ON 1.1.92 = (2)/(3)X100 % PROGRE SS (4)/E4 X 100 YEAR-WISE ASSESSED COST OF CONSTRUCTION =B/239.74X1 00X(5)/100X( ITA NOS 445 TO 447(ASR)/2012 11 3)/100 1 2 3 4 5 6 2005-06 (06/05 TO 03/06 7,85,025.00 215.50 3,64,280.74 25.26 % RS.15,79,189 .00 2006-07 16,62,083.00 237.00 7,01,300.84 48.63 % RS.33,43,537 .00 2007-08 10,10,692.00 268.00 3,76,421.60 26.11 % RS.20,33,674 .00 RS. 34,57,800 RS.14,42,003. 18 100% RS.69,56,400 .00 5.1. AS STATED ABOVE THE TOTAL VALUATION OF THE HOTEL BU ILDING AFTER SELF SUPERVISION HAS BEEN DETERMINED AS RS.1,00,28,060/- . THE V.O. HAS DETERMINED THE AMOUNT OF INVESTMENT MADE IN THE CON STRUCTION OF THE HOTEL FOR THE F.Y. 2005-06 RELEVANT TO ASSESSMENT YEAR UN DER CONSIDERATION AT RS. 15,79,189/-. AS DISCUSSED IN THE FOREGOING PARAGRAP H, THE ASSESSEE HAS MADE ALLEGED CLAIM OF RAW STRUCTURE BUILDING AT THE TIME OF PURCHASE OF LAND, THE VALUE OF WHICH WAS SEPARATELY DETERMINED BY THE V.O . AT RS. 33,65,253/-, THE SAID CLAIM OF THE ASSESSEE HAS BEEN REJECTED THEREF ORE, WHOLE AMOUNT OF RS. 33,65,253/- AS DETERMINED BY THE V.O. IS ALSO ASSES SABLE DURING THE YEAR UNDER CONSIDERATION AS ASSESSEES UNDISCLOSED INCOM E INVESTED IN THE CONSTRUCTION OF THE HOTEL BUILDING. ITA NOS 445 TO 447(ASR)/2012 12 6. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED HI S PRELIMINARY WRITTEN SUBMISSIONS DATED 21.02.2012 AND THE AO SUBMITTED H IS REMAND REPORT DATED 21.05.2012, WHICH IS REPRODUCED AT PAGES 4 TO 8 AT PARA 5 OF CIT(A)S ORDER. THE LD. COUNSEL FOR THE ASSESSE ALSO FILED WRITTEN SUBMISSIONS WHICH ARE REPRODUCED AT PARA 6 AT PAGES 8 TO 27 OF CIT(A)S O RDER. THE LD. CIT(A) VIDE PARA 7 TO 10 OF HIS ORDER CONFIRMED THE ACTION OF THE A.O. WHICH FOR THE SAKE OF CLARITY IS REPRODUCED AS UNDER: 7. I HAVE CAREFULLY CONSIDERED THE APPELLANTS WRI TTEN SUBMISSIONS, REBUTTAL TO THE A.O.S REMAND REPORT, A.O.S FINDIN GS CONTAINED IN HIS IMPUGNED ASSESSMENT ORDER AS WELL AS PRESENT A.O.S REMAND REPORT. THE PRESENT APPEAL IS HEREBY DISPOSED OF BY GIVING GROU ND OF APPEAL WISE ADJUDICATION AS UNDER, ALL THE SIX GROUNDS OF APPEA L BEING INTER- CONNECTED AND DEALING WITH THE ONLY ADDITION U/S 69 AMOUNTING TO RS. 40,35,805/-, THE SAME IS TAKEN UP AND DISPOSED OFF IN A CONSOLIDATED MANNER FOR THE SAKE OF CONVENIENCE. 8. PERUSAL OF THE A.O.S ASSESSMENT ORDER REVEALS T HAT THE APPELLANT WAS AFFORDED AMPLE OPPORTUNITY OF BEING HEARD AND THE P ROCEEDINGS WERE ATTENDED BY THE APPELLANTS LEARNED COUNSEL, SH. RA MAN ARORA, CA FROM TIME TO TIME. FURTHER, IT HAS BEEN CLEARLY FORTHCOM ING FROM PERUSAL OF THE A.O.S IMPUGNED ASSESSMENT ORDER THAT THE APPELLANT S OBJECTIONS WERE DULY CONSIDERED BY THE V.O. WHILE DETERMINING THE C OST OF CONSTRUCTION OF THE APPELLANTS HOTEL BUILDING. MOREOVER, SUCH OBJE CTIONS RAISED BEFORE THE ADDL. CIT, RANGE II, AMRITSAR AS WELL AS BEFORE THE A.O. WERE ALSO DULY MET WITH INCLUDING THE VALUE OF THE SO-CALLED RAW-STRUCTURE OF THE PREVIOUS STRUCTURE CLAIMED AT RS. 33,65,253/- BUT C ONFIRMED BY THE PREVIOUS OWNER TO THE EXTENT OF RS. 4,10,000/- ONLY BY WAY OF A SPECIFIC AFFIDAVIT. WHEREAS THE APPELLANTS APPROVED REGISTE RED VALUER HAS DETERMINED THE APPELLANT HOTELS COST OF CONSTRUCTI ON ONLY AT RS. 34,57,800/-, THE LEARNED A.O. MAKE A REFERENCE TO T HE DEPARTMENTAL VALUATION CELL FOR ASCERTAINED HIS EXPERT REPORT AB OUT THE REAL COST OF CONSTRUCTION OVER THE SAID HOTEL BUILDING WHICH HAS BEEN DETERMINED BY THE V.O. AT RS. 1,03,06,617/- AFTER MEETING OUT ALL THE APPELLANTS ITA NOS 445 TO 447(ASR)/2012 13 OBJECTIONS AND COUNTER OBJECTIONS RAISED BEFORE HIM FROM TIME TO TIME. FURTHER, IN PURSUANT TO HIS RANGE HEADS DIRECTIONS CONVEYED UNDER SECTION 144A, THE A.O. FURTHER ALLOWED REBATE TOWAR DS SELF-SUPERVISION @ 10% AS AGAINST 7.5% ALLOWED BY THE V.O. IT IS A M ATTER OF RECORD THAT THE APPELLANTS BOOK VERSION BEING UNRELIABLE, INCO MPLETE, INACCURATE WAS DULY REJECTED BY ATTRACTING THE PROVISIONS OF S ECTION 145(3) OF THE I.T.ACT, 1961 MUCH BEFORE MAKING THE IMPUGNED ADDIT ION OF RS. 40,35,805/- U/S 69 OF THE IT ACT, 1961. 9. AS REGARDS THE APPELLANTS PLEA THAT REJECTION O F BOOKS U/S 145(3) OUGHT TO HAVE BEEN MADE PRIOR TO MAKING REFERENCE U /S 142A TO THE VALUATION OFFICER AFTER CONSIDERING THE TOTALITY OF FACTS, IT IS EVIDENT THAT THE A.O. HAS MADE REFERENCE TO THE V.O. BECAUSE HE WAS NOT SATISFIED ABOUT THE CORRECTNESS OF THE BOOKS OF ACCOUNTS AND FACTS AND FIGURES SHOWN THEREIN AND THIS ITSELF BY IMPLICATION LEAD T HE A.O. TO THE DECISION OF REFERRING THE SAME FOR VALUATION TO THE DEPARTME NTAL VALUATION OFFICER. 10. IT IS NOT CORRECT ON THE PART OF THE APPELLANT THAT THE A.O. HAS INVOKED PROVISIONS OF SECTION 50C FOR DETERMINING T HE COST OF LAND AT RS. 59,50,000/- AS AGAINST SHOWN AT RS. 28,08,000/- INCLUDING EARLIER EXISTING COST OF RAW-SUPERSTRUCTURED PART. AFTER TA KING STOCK OF THE MATTER AS A WHOLE, I FIND THAT THESE ARE ONLY OF PA SSING REMARKS AND HAVE NO DIRECT BEARING AND/OR OF SIGNIFICANT EFFECT /VALUE ON THE COST OF CONSTRUCTED FINALLY DETERMINED BY THE A.O. PROPORTI ONATELY PERTAINING TO THE ASSESSMENT YEAR IN HAD AT RS. 40,35,805/-. A CCORDINGLY, THESE CONTENTIONS ARE OF LITTLE HELP TO THE APPELLANT. SH OWING UTMOST REGARD AND RESPECT TO THE CASE LAWS OF THE APEX COURT CITE D BY THE LEANED A.R. RELIED UPON BY HIM IN SUPPORT OF HIS CONTENTIO N, I AM OF THE CONSIDERED OPINION THAT THESE ARE BEING DISTINGUISH ABLE AND AT VARIANCE TO THE FACTS OF THE INSTANT CASE, ARE OF L ITTLE HELP TO THE APPELLANT. I FIND THAT THE ADDITION U/S 69 OF RS. 4 0,35,805/- HAS BEEN MADE BY THE A.O. QUITE ON SOUND FOOTING AFTER CONSI DERING THE APPELLANTS VARIOUS SUBMISSIONS/OBJECTIONS IN ACCOR DANCE WITH THE DIRECTIONS U/S 144A SOUGHT FROM HIS RANGE HEAD AND AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD FROM TIME TO TI ME AND FROM STAGE TO STAGE. THE DIFFERENCE AND VARIATION BETWEEN THE COST OF CONSTRUCTION SHOWN BY THE APPELLANT AND AS DETERMINED BY THE A.O . HAS BEEN CLEARLY AND WELL ESTABLISHED. FURTHER, IN SUCH CONS TRUCTIONS, COMMERCIAL RATES ARE APPLICABLE. UNDER THE FACTS AN D CIRCUMSTANCES OF THE CASE, DISCUSSED (SUPRA) AT LENGTH, THE ADDIT ION U/S 69 AT RS. ITA NOS 445 TO 447(ASR)/2012 14 40,35,805/- BEING QUITE SUSTAINABLE IN THE EYE OF L AW, IS HEREBY CONFIRMED/UPHELD,. THE APPELLANT FAILS ON HIS ALL T HE FIRST FIVE GROUNDS OF APPEAL. 7. THE LD. COUNSEL FOR THE ASSESSEE, MR. PADAM BAHL , CA AT THE OUTSET ARGUED THAT THE AO HAS REFERRED TO THE D.V.O. WITHO UT REJECTING THE BOOKS OF ACCOUNT I.E. WITHOUT BEING DIS-SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE OR METHOD OF ACCOUN TING AS PROVIDED U/S 145(1) OR ACCOUNTING STANDARD AS NOTIFIED UNDER SEC TION 145(2) AND ALSO WITHOUT POINTING OUT THAT THE CASE IS COVERED UNDE R SECTION 69 OR 69-A OR 69B OF THE ACT. HE ARGUED THAT THE PROVISIONS OF SE CTION 142A ARE WITH REFERENCE TO THE ESTIMATES WHEN MADE OF ANY INVESTM ENT REFERRED TO IN SECTION 69A OR 69B FOR WHICH THE AO IS SATISFIED W ITH REGARD TO INVOKING OF THE PROVISIONS OF SECTION 145(3) OR APPLICATION UND ER SECTION 69A OR 69B IS REQUIRED, WHICH IN THE PRESENT CASE IN THE ASSESSM ENT YEAR 2006-07 IS MISSING, AS IS EVIDENT AT PAGE 1 OF AOS ORDER DUR ING THE IMPUGNED YEAR. HE ARGUED THAT DVO OF HIS OWN MADE THE VALUATION FOR THE ASSESSMENT YEARS 2007-08 & 208-09 WITHOUT EVEN REFERRING THE MATTER TO HIM,WHICH IS ALSO AGAINST THE PROVISIONS OR SPIRIT OF LAW. MR. PADAM BAHL, CA ARGUED THAT IN THE IMPUGNED YEAR I.E. FOR THE A.Y.2006-07, THE AO APPLIED THE PROVISIONS OF SECTION 145(3) OF THE ACT ONLY ON THE DIRECTION U/S 144 OF ADDL. CIT. KEEPING IN VIEW THE DIRECTIONS OF SUCH ADDL. CIT AN D DIFFERENCE IN VALUATION ITA NOS 445 TO 447(ASR)/2012 15 REPORT DETERMINED BY THE DVO AND AS DECLARED BY THE ASSESSEE, THE AO INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT , WHICH IS NOT PERMISSIBLE. THE REFERENCE ITSELF IS ILLEGAL IN VI EW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA VS. CIT REPORTED IN 328 ITR 513 (SC) WHERE IT HAS BEEN HELD THAT ASSESS ING AUTHORITY COULD NOT REFER THE MATTER TO THE DVO WITHOUT BOOKS OF ACCOUN T BEING REJECTED. THE RELIANCE PLACED ON THE REPORT OF THE DVO IS MISCONC EIVED. THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED UPON THE DECISION OF H ONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. CHOHAN RESORTS R EPORTED IN (2012) 76 DTR (P&H) 163, A COPY PLACED ON RECORD, WHERE IT HA S BEEN HELD THAT WHEREVER THE BOOKS OF ACCOUNT ARE MAINTAINED WITH R ESPECT TO THE COST OF CONSTRUCTION, THE MATTER CAN BE REFERRED TO THE DV O AFTER BOOKS OF ACCOUNT ARE REJECTED BY THE REVENUE ON SOME LEGAL OR JUSTI FIED BASIS. IN THE ABSENCE OF THE SAME, THE REFERENCE TO THE DVO CANNOT BE UPH ELD. 7.1. MR. PADAM BAHAL, CA THE LD. COUNSEL FOR THE AS SESSEE FURTHER RELIED IN THE CASE OF CIT VS.TULSIANI CONSTRUCTIONS & DEVELOP ERS LTD. (2012) 83 CCH 002 AIIHC, A COPY PLACED ON RECORD, WHERE IT HAS BE EN HELD THAT AO WITHOUT REJECTING THE ACCOUNT, STRAIGHTWAY REFERRED THE MAT TER TO THE DVO AND ADOPTED AN EASIER COURSE FOR ARRIVING AT THE FAIR MARKET VALUE OF THE ITA NOS 445 TO 447(ASR)/2012 16 PROPERTIES CONSTRUCTED BY THE ASSESSEE. BEFORE MAKI NG REFERENCE TO DVO, THE AO NEITHER EXPRESSED ANY DOUBT OVER THE CORRECTNES S OF THE ACCOUNTS BOOKS NOR REJECTED THE BOOKS OF ACCOUNT AND ACCORDINGLY REVENUES APPEAL WAS DISMISSED. 7.2. MR. PADAM BAHL, CA FURTHER RELIED UPON THE SUB MISSIONS MADE BEFORE THE LD. CIT(A) ON MERIT AND PRAYED TO ALLOW THE GR OUNDS OF APPEAL ON LEGAL AS WELL AS ON FACTS. 8. THE LD. DR, MR. R.L.CHHANALIA, ON THE OTHER HAND , RELIED UPON THE ORDERS OF BOTH THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. ON PERUSAL OF THE ASSESSMENT ORDER FOR THE ASSESSM ENT YEAR 2006-07, IT IS EVIDENT THAT THE AO FOUND THAT THE ASSESSEE HAS IN VESTED IN THE PURCHASE OF PLOT AND CONSTRUCTION OF THE HOTEL BUILDING, ASKED THE ASSESSEE TO FURNISH VALUATION REPORT OF THE APPROVED VALUER ALONG WITH COMPLETION CERTIFICATE ISSUED BY THE COMPETENT AUTHORITY. THE SAME WAS FUR NISHED BY THE ASSESSEE. ON RECEIPT OF THE VALUATION REPORT OF THE APPROVED VALUER FROM THE ASSESSEE STRAIGHTWAY, THE AO REFERRED THE MATTER TO THE DVO FOR DETERMINING THE COST THE COST OF CONSTRUCTION OF THE HOTEL BU ILDING. THE DEPARTMENTAL VALUATION OFFICER SUBMITTED HIS REPORT VIDE LETTER NO.181 DATED 04.12.2008 ITA NOS 445 TO 447(ASR)/2012 17 DETERMINING THE COST OF CONSTRUCTION AT RS.1,03,06, 617/- AS AGAINST RS.34,57,800/- VALUED BY THE APPROVED VALUER OF THE ASSESSEE. IT IS ALSO NOT UNDER DISPUTE THAT THE AO SOUGH INSTRUCTION FROM TH E ADDL. CIT AND ON HIS INSTRUCTION ONLY THE AO INVOKED THE PROVISIONS OF S ECTION 145(3) OF THE ACT. KEEPING IN VIEW THE DIRECTIONS OF THE ADDL. CIT AND KEEPING IN VIEW THE DIFFERENCE IN THE VALUATION REPORT AS DETERMINED B Y THE DVO AND THE AMOUNT DECLARED IN THE BOOKS OF ACCOUNT, WHICH IS E VIDENT AT PARA 5 PAGE 6 OF AOS ORDER IS NOT UNDER DISPUTE. IN THE FACTS AN D CIRCUMSTANCES OF THE CASE, THE LAW IS VERY CLEAR BY THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF SARGAM CINEMA VS. CIT (SUPRA), WHERE THE AO COULD NOT HAVE REFERRED THE MATTER TO THE DVO WITHOUT BOOKS OF ACC OUNT BEING REJECTED AND THEREFORE, RELIANCE PLACED ON THE REPORT OF THE DV O WAS MIS-CONCEIVED IN THE PRESENT CASE AS WELL. THE A.O. HAS NOT APPLIED HIS MIND AS TO THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE AND NO DIS- SATISFACTION HAS BEEN RECORDED BY THE AO. NOTHING H AS BEEN BROUGHT ON RECORD AS REGARDS TO THE CONDITIONS LAID DOWN IN S ECTION 145(3) OF THE ACT. THEREFORE, IN THE PRESENT FACTS AND CIRCUMSTANCES AND IN VIEW OF THE DECISIONS RELIED UPON BY THE ASSESSEE MENTIONED HE REINABOVE, NO REFERENCE COULD HAVE BEEN MADE BY THE AO AND SUCH REFERENCE MADE BY THE A.O. IS ITA NOS 445 TO 447(ASR)/2012 18 NOT LEGAL AND ASSESSMENT SO FRAMED ON SUCH VALUATI ON REPORT IS BAD IN LAW AND ACCORDINGLY ASSESSMENT SO MADE IS DIRECTED TO B E QUASHED. 10. ON MERITS AS WELL, THE ASSESSEE HAS SUBMITTED HIS VALUATION REPORT AND ALSO THE SUBMISSIONS AS MENTIONED HEREINABOVE, WHE RE THE OBJECTION RAISED BY THE ASSESEE BEFORE THE DVO WITH REGARD TO THE CP WD RATES WHICH ARE 30% HIGHER THAN THE MARKET RATE, IN DVOS REPORT T HE PLINTH AREA RATE WAS NOT VALID, DUCT AREA WAS NOT PROPERLY FINISHED AND WAS KEPT OPEN UPTO FOURTH FLOOR WHICH WAS APPROXIMATELY 200 SQ.YDS. THE CONT RACT RATE WAS RS.650/- PER SQ.FT. IN SUCH TYPE OF CONSTRUCTION OF THE ASSE SSEE. THE DVO HAS CONSIDERED A-CLASS CONSTRUCTION WHEREAS THE ASSESSE E HAS MADE C-CLASS CONSTRUCTION AND THAT TOO AT 238 SQ.YDS OF LAND, DV O HAS GIVEN BENEFIT OF SELF-SUPERVISION OF 7.5% WHERE THE ASSESSEE IS ELIG IBLE TO SELF SUPERVISION REBATE @ 15%, SINCE ALL THE MATERIALS HAS BEEN PURC HASED BY THE ASSESSEE. ABOVE ALL, VALUATION REPORT OF THE APPROVED VALUER, M/S. A-ONE CONSULTANTS, WAS NOT CONSIDERED AND NO DEFECT HAS B EEN POINTED OUT. THE ASSESSEE HAS GIVEN THE COUNTER COMMENTS OF THE VALU ATION OFFICERS REPORT. THE ASSESSEE HAS GIVEN THE AFFIDAVIT THAT THERE EX ISTED RAW-STRUCTURE AT THE TIME OF PURCHASE OF LAND BY THE ASSESSEE, WHICH IS DECLARED AS OPENING BALANCE OF THE IMPUGNED YEAR, WHICH HAS NOT BEEN CO NSIDERED. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, THE VALUATIO N OFFICER AND THE ITA NOS 445 TO 447(ASR)/2012 19 AUTHORITIES BELOW HAVE NOT TAKEN THE SUBMISSIONS O F THE ASSESSEE IN RIGHT PERSPECTIVE. IN SUCH CIRCUMSTANCES AND FACTS OF THE CASE, IF THE OBJECTION OF THE ASSESSEE MENTIONED IN HIS WRITTEN SUBMISSIONS A ND EXPLANATION PUT BEFORE THE LD. CIT(A) AND THE A.O. ARE TAKEN INTO CONSIDERATION, THE DIFFERENCE IN COST OF CONSTRUCTION DECLARED BY THE ASSESSEE OR AS VALUED BY THE VALUATION OFFICER WILL BE CORRECT AMOUNT OF INV ESTMENTS MADE BY THE ASSESSEE. MOREOVER, AS PER OUR FINDINGS HEREINABO VE, NO DEFECT HAS BEEN POINTED OUT BY ANY OF THE AUTHORITIES BELOW WITH RE GARD TO THE INVESTMENTS MADE BY THE ASSESSEE AND THEREFORE, NO ADDITION IS REQUIRED TO BE MADE UNDER SECTION 69 OF THE ACT. THEREFORE, ADDITION SO MADE IS DIRECTED TO BE DELETED. THEREFORE, ALL THE GROUNDS OF THE ASSESSEE ARE ALLO WED. 11. NOW, WE TAKE UP THE APPEALS OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2007-08 & 2008-09 IN ITA NOS. 447(ASR)/2012 & 446( ASR)/2012. SINCE THE FACTS IN THE PRESENT APPEALS ARE IDENTICAL TO THE F ACTS IN ASSESSEES OWN APPEAL FOR THE ASSESSMENT YEAR 2006-07 IN ITA NO.445(ASR)/ 2012 AND ALSO IN THE PRESENT YEAR EVEN NO REFERENCE WAS MADE TO THE DVO BUT THE DVO HAS MADE THE VALUATION FOR THE PRESENT YEARS. NO BOOKS OF AC COUNT HAVE BEEN REJECTED IN THE PRESENT YEAR BEFORE THE MATTER WAS REFERRED TO THE DVO OR EVEN AFTER THAT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AN D OUR FINDINGS HEREINABOVE, ITA NOS 445 TO 447(ASR)/2012 20 FOR THE ASSESSMENT YEAR 2006-07, OUR ORDER IN THE S AID APPEAL FOR THE A.Y. 2006-07 IN ITA NO.445(ASR)/2012 IS APPLICABLE IN T HE PRESENT YEARS AND ACCORDINGLY ALL THE GROUNDS IN BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. 12. IN THE RESULT, ALL THE APPEAL FILED BY THE ASSE SSEE IN ITA NOS. 445, 446 & 447(ASR)/2012 ARE ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 23RD MAY, 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23RD MAY, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH.RAJESH MAHAJAN, AMRITSAR. 2. THE ITO WARD 2(2)/ ITO (TECH)/ACIT CIR.II, ASR. 3. THE CIT(A), ASR 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.