ITO, Tuticorin V. A.G.Plaza, Kovilpatti

ITA 338/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5752 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 13-07-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 06-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR S PANDIAN
• Assessee Lawyers: K BALASUBR AMANIAN
• Keywords: Unexplained investment; Unexplained expenditure; Valuation report

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . , ' , % & BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ./ ITA NO.338/MDS/2017 %' ' /ASSESSMENT YEAR: 2013-14 THE INCOME TAX OFFICER, WARD-1, TUTICORIN. VS. M/S.A.G.PLAZA, NO.436, MAIN ROAD, KOVILPATTI-628 501, TUTICORIN DISTRICT. [PAN: AATFA 2714 J ] ( ( /APPELLANT) ( )*( /RESPONDENT) DEPARTMENT BY : DR.S.PANDIAN, JCIT ASSESSEE BY : MR.K.BALASUBRAMANIAN, ADV. , /DATE OF HEARING : 07.12.2017 , /DATE OF PRONOUNCEMENT : 08.12.2017 / O R D E R PER GEORGE MATHAN , JUDICIAL MEMBER : ITA NO.338/MDS/2017 IS AN APPEAL FILED BY THE REVE NUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1 , MADURAI, IN ITA NO.224/2015-16 DATED 30.11.2016 FOR THE AY 2013-14. 2. DR.S.PANDIAN, JCIT, REPRESENTED ON BEHALF OF THE REVENUE AND SHRI K.BALASUBRAMANIAN, ADV. REPRESENTED ON BEHALF OF TH E ASSESSEE. ITA NO.338/MDS/2017 :- 2 -: 3. IN THE REVENUES APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE CIT(A) IS OPPOSED TO LAW, ON TH E FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2.1 THE CIT(A) HAS ERRED IN HOLDING THAT THE COST AD MITTED BY THE ASSESSEE UP TO 24.02.2016 IN THE BOOKS OF ACCOUNTS HAS TO BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF DETERMINING THE UNEXPLAINED INVESTMENT IN THE CONST RUCTION OF THE BUILDING. 2.2 THE CIT(A) FURTHER ERRED IN HOLDING THAT THE BUI LDING REVA PLAZA WAS COMPLETED DURING THE F.YS 2014-15 AND 2015-16 WHEREAS THE BUILDING W AS COMPLETED IN THE F.Y. 2012-13 RELEVANT TO THE AY 2013-14 AS IS EVIDENT FROM THE P ROPERTY TAX PAID IN THE FINANCIAL YEAR 2012-13 ITSELF. 2.3 THE CIT(A) OUGHT TO HAVE SEEN THAT DURING THE SU RVEY PROCEEDINGS THE SURVEY TEAM COLLECTED THE PHOTOGRAPH OF THE BUILDING FROM THE S URVEY PREMISES WHICH REVEALED THE BUILDING WAS COMPLETED DURING THE F.Y. 2012-13 RELE VANT TO AY 2013- 14. 2.4 THE CIT(A) OUGHT TO HAVE FURTHER SEEN THAT THE DEPARTMENT HAD REQUIRED THE DISTRICT VALUATION OFFICER TO DETERMINE THE COST OF CONSTRUCT ION AS ON 31.03.2013 AND THE DISTRICT VALUATION OFFICER ALSO ESTIMATED THE COST OF THE INV ESTMENT OF THE ABOVE SAID BUILDING ONLY UP TO 31.03.2013 AND HENCE OUGHT TO HAVE SUSTAINED THE ADDITION OF RS.98,43,379/- TOWARDS UNEXPLAINED INVESTMENT. 2.5 THE CIT(A) HAS ERRED IN RELYING ON THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS S. KHADER KHAN SONS [300 ITR 157] SINCE TH E FACTS ARE DISTINGUISHABLE. IN THE INSTANT CASE ADDITION HAS BEEN MADE AFTER CONSIDERI NG ALL RELEVANT MATERIAL EVIDENCES COLLECTED DURING THE SURVEY. 3. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE ADD UCED AT THE TIME OF HEARING IT IS PRAYED THAT THE ORDER OF THE CIT(A) MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER RESTORED. 4. IT IS SUBMITTED BY THE LD.DR THAT THERE WAS A SU RVEY ON THE PREMISES OF THE ASSESSEE WHICH IS A PARTNERSHIP FIR M. THE SURVEY WAS CONDUCTED ON 13.12.2012. IN THE COURSE OF THE SURV EY, A SWORN STATEMENT WAS RECORDED FROM ONE OF THE PARTNERS OF THE ASSESS EE FIRM, WHEREIN, THE PARTNER HAS DISCLOSED THAT THE TOTAL INVESTMENT IN THE BUILDING PUT UP BY THE ASSESSEE UP TO 31.03.2012 WAS RS.2.66 CRS. AND THE INVESTMENT IN THE BUILDING UP TO THE DATE OF SURVEY I.E. 13.12.2012 W AS RS.3.41 CRS. IT WAS A SUBMISSION THAT THE PARTNER HAS SUBMITTED THAT TH E COST OF CONSTRUCTION WAS APPROXIMATELY RS.2,000/- PER SQ.FT. AND THE TOT AL AREA 22,531 SQ.FT. ITA NO.338/MDS/2017 :- 3 -: THE ACTUAL COST OF THE CONSTRUCTION WAS DETERMINED AT RS.4,50,62,000/- AFTER REDUCING THE COST OF CONSTRUCTION DISCLOSED B Y THE ASSESSEE UP TO THE DATE OF SURVEY OF RS.3.41 CRS., A DIFFERENCE OF RS. 1,25,00,000/- HAD BEEN DETERMINED ALONG WITH THE COST OF RENOVATION OF TWO BARS BEING RUN BY THE ASSESSEE. IT WAS STATED IN THE STATEMENT RECORDED THAT THE TOTAL DIFFERENCE IN THE COST OF CONSTRUCTION REPRESENTING THE EXCESS EXPENDITURE WOULD BE TO AN EXTENT OF RS.1.25 CRS. AND THAT THE SAME WOULD BE ADMITTED FOR THE AY 2013-14. IT WAS SUBMITTED BY T HE LD.DR THAT THE ASSESSEE DID NOT PRODUCE ANY DAY-BOOK, LEDGER OR BI LLS & VOUCHERS IN RESPECT OF THE BUSINESS OF THE ASSESSEE AS ALSO THE CONSTRUCTION. CONSEQUENTLY, THE AO HAD AFTER TAKEN INTO CONSIDERA TION THE TOTAL INVESTMENT IN THE BUILDING FOR THE RELEVANT AY DETE RMINED THE DIFFERENCE IN THE COST OF CONSTRUCTION AT RS.98,43,379/- AND ADDE D THE SAME AS AN UNEXPLAINED EXPENDITURE. IT WAS A SUBMISSION THAT, ON APPEAL, THE LD.CIT(A) HAD DELETED THE ADDITION BY HOLDING THAT THE COST OF CONSTRUCTION DISCLOSED BY THE ASSESSEE FOR THE AY 2015-16, WAS T O AN EXTENT OF RS.5,23,92,661/- AND THE COST OF CONSTRUCTION AS ES TIMATED BY THE DISTRICT VALUATION OFFICER (IN SHORT DVO) WAS RS.5,68,43,0 00/-. AS THE DIFFERENCE BETWEEN THE VALUATION AS DONE BY THE DISTRICT VALUA TION OFFICER AND AS DISCLOSED BY THE ASSESSEE FOR THE AY 2015-16 VARIED BY ONLY LESS THAN 10%, NO ADDITION WAS CALLED FOR. 5. IT WAS A SUBMISSION THAT THE DVO HAD ESTIMATED T HE COST OF INVESTMENT AS ON 31.03.2013. IT WAS A SUBMISSION T HAT ADMITTEDLY, THE ITA NO.338/MDS/2017 :- 4 -: DVO HAD INSPECTED THE PROPERTY ONLY ON 24.02.2016. IT WAS A SUBMISSION THAT AS OF 31.03.2013, THE DVO HAD ESTIMATED THE CO ST OF CONSTRUCTION AT RS.5,68,43,000/-. IT WAS ALSO A SUBMISSION THAT TH E DVO SPECIFICALLY MENTIONED THAT THE EXISTENCE OF THE BUILDING HAS BE EN VERIFIED AS PER THE GOOGLE MAP AND AS THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO PROVE ANY CONSTRUCTION AFTER MARCH, 2013, THE PERIOD OF C ONSTRUCTION IS TAKEN AS BETWEEN APRIL, 2010 AND 2013. FOR THIS, THE LD.DR DREW OUR ATTENTION TO PARA NO.3.4 OF THE DVOS REPORT. IT WAS A SUBMISSIO N THAT THE DVO HAD VALUED THE PROPERTY AS ON 31.03.2013 AT RS.5,68,43, 000/-. THE LD.CIT(A) ERRED IN CONSIDERING SUCH VALUATION FOR COMPARISON FOR THE AMOUNT DISCLOSED BY THE ASSESSEE TOWARDS THE COST OF CONST RUCTION TILL 31.03.2015. IT WAS A SUBMISSION THAT THE ORDER OF THE LD.CIT(A) WAS LIABLE TO BE REVERSED. 6. IN REPLY, THE LD.AR SUBMITTED THAT THE DVO HAD I NSPECTED THE PREMISES ONLY ON 24.02.2016, BY WHICH TIME, THE CON STRUCTION WAS COMPLETED. IT WAS A SUBMISSION THAT THE VALUATION DONE BY THE DVO WAS IN RESPECT OF THE COMPLETED BUILDING, WHEREAS FOR T HE YEAR ENDED 31.03.2013, THE BUILDING WAS INCOMPLETE. IT WAS A SUBMISSION THAT THE ORDER OF THE LD.CIT(A) WAS LIABLE TO BE CONFIRMED. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ORDER OF THE LD.CIT(A) SHOWS THAT THE LD.CIT(A) HAS FOUND TH AT THE DIFFERENCE BETWEEN THE VALUATION REPORT PROVIDED BY THE DVO AN D THE COST OF ITA NO.338/MDS/2017 :- 5 -: CONSTRUCTION DISCLOSED BY THE ASSESSEE AS ON 31.03. 2015 TO VARY BY DIFFERENCE OF LESS THAN 10%. HERE, IT IS NOTICED T HAT THE LD.CIT(A) FELL INTO ERROR IN COMPARING THE VALUATION REPORT OF THE DVO WHICH HAS BEEN SPECIFICALLY GIVEN IN RESPECT FOR 31.03.2013 WITH T HE COST OF CONSTRUCTION DISCLOSED BY THE ASSESSEE IN ITS ACCOUNTS FOR THE Y EAR ENDED 31.03.2015. A PERUSAL OF THE DVOS REPORT CLEARLY SHOWS THAT TH E ASSESSEE HAS NOT PROVIDED THE DETAILS SUCH AS DRAWINGS OF THE BUILD ING, PLAN APPROVAL, TEMPORARY EB CONNECTION, PERMANENT EB CONNECTION, C OMPLETION CERTIFICATE, PROPERTY TAX, ASSESSMENT ORDER, ETC., AS HAS BEEN MENTIONED IN PARA NO.1.4 OF THE DVOS REPORT. FURTHER, IN PA RA NO.3.4 OF THE DVOS REPORT, AGAIN THE DVO HAS SPECIFICALLY SUBMITTED TH AT THE ASSESSEE HAS NOT SUBMITTED THE PLAN APPROVAL OR THE TEMPORARY EB CONNECTION DETAILS OR THE PERMANENT EB CONNECTION DETAILS. HE, FURTHER, SPECIFICALLY RECORDS THAT NO DOCUMENTARY EVIDENCE LIKE PROOF OF PURCHASE OF M ATERIALS WERE SUBMITTED, NO EXPENDITURE WAS SHOWN DURING THE AY 2 013-14 EITHER. EVEN BEFORE US, THE ASSESSEE HAS NOT PRODUCED ANY EVIDEN CE TO SHOW THAT THE ASSESSEE HAS MADE ANY INVESTMENT BEYOND 31.03.2013. THIS BEING SO, WE ARE OF THE VIEW THAT THE ORDER OF THE LD.CIT(A) IN COMPARING THE COST OF CONSTRUCTION DETERMINED BY THE DVO TILL THE YEAR EN DING 31.03.2013 WITH THE COST OF CONSTRUCTION DISCLOSED BY THE ASSESSEE IN ITS RETURN FOR THE YEAR ENDED 31.03.2015 IS ERRONEOUS AND CONSEQUENTLY, SET -ASIDE. 8. AS IT IS NOTICED THAT THE DVOS REPORT HAS BEEN OBTAINED ONLY AFTER THE ASSESSMENT ORDER HAS BEEN PASSED, THE ISSUES IN RESPECT OF THE ITA NO.338/MDS/2017 :- 6 -: ADDITION REPRESENTING THE COST OF CONSTRUCTION IS R ESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION. THE AO SHALL EXAMINE THE COST OF CONSTRUCTION AS DISCLOSED BY THE ASSESSEE IN RESPECT OF THE SAID BU ILDING TILL 31.03.2013 AND TO SUCH EXTENT THAT WHICH IS FALLING SHORT WHEN COMPARE TO THE COST OF CONSTRUCTION AS ESTIMATED BY THE DVO, THE ADDITION SHALL BE MADE. THE AO SHALL GRANT THE ASSESSEE LIBERTY TO PRODUCE EVID ENCES TO SHOW THAT THERE HAS BEEN CONSTRUCTION ACTIVITY IN RESPECT OF THE SAID BUILDING BEYOND 31.03.2013, IF IT IS SUBMITTED ALONG WITH THE SATIS FACTORY EXPLANATION AS TO WHY THE SAME WAS NOT PRODUCED BEFORE THE AO IN THE COURSE OF THE ORIGINAL ASSESSMENT AND BEFORE THE DVO IN THE COURS E OF THE VALUATION BY THE DVO. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 08, 2017, AT CHENNAI. SD/- SD/- ( . ) ( ABRAHAM P GEORGE ) /ACCOUNTANT MEMBER ( ' ) (GEORGE MATHAN) % /JUDICIAL MEMBER /CHENNAI, 1 /DATED: DECEMBER 08, 2017. TLN , )%23 43 /COPY TO: 1. ( /APPELLANT 4. 5 /CIT 2. )*( /RESPONDENT 5. 3 )%% /DR 3. 5 ( ) /CIT(A) 6. ' /GF