M/s. Fattu Dhinga Rice Mills, Kapurthala V. Additional Commissioner of Income Tax, Jalandhar

ITA 380/ASR/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5778 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 06-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: J S BHASIN
• Keywords: Valuation report
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.L. KARWA, VICE PRESIDENT AND SH. MEHAR SINGH, ACCOUNTANT MEMBER I.T.A. NO.380(ASR)/2010 ASSESSMENT YEAR:2005-06 PAN :AAAFF4122C M/S. FATTU DHINGA RICE MILLS, VS. THE ADDL. COMMR. OF INCOME-TAX, KAPURTHALA. RANGE-IV, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. J.S. BHASIN, ADV. RESPONDENT BY: SH. AMRIK CHAND, DR ORDER PER MEHAR SINGH, AM, BY THIS ORDER, WE SHALL DISPOSE OF THIS APPEAL BY T HE ASSESSEE AGAINST THE ORDER OF THE CIT(A), JALANDHAR, DATED 9 .6.2010, PASSED UNDER SECTION 250(6) OF THE INCOME-TAX ACT, 1961 (HEREINA FTER REFERRED TO IN SHORT THE ACT) FOR THE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL : 1. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLD ING THE REFERENCE MADE BY THE AO U/S 142(2A) WITHOUT FINDIN G ANY FAULT WITH THE BUILDING ACCOUNT MAINTAINED IN REGUL AR BOOKS OF ACCOUNT. 2. THAT THE LD. CIT(A) WAS ALSO NOT JUSTIFIED IN UP HOLDING THE IMPUGNED ESTIMATE OF ADDITIONS TO BUILDING AS D RAWN BY THE AVO AT RS.13,50,000/- AGAINST RS.2,52,504/- SHOWN BY THE ASSESSEE, BY WRONGLY REJECTING THE CONTENTIONS OF A SSESSEE 2 SUPPORTED BY CORROBORATIVE EVIDENCE FILED IN TERMS OF RULE 46A R.W.S.250(4). 3. THAT EVEN OTHERWISE, THE IMPUGNED REPORT OF THE AVO WAS LIABLE TO BE REJECTED HE BEING INCOMPETENT TO VALUE INVESTMENT BEYOND RS. 5 LACS. 4. THAT ALSO, THE LD. CIT(A) HAS ERRED IN NOT ALLOW ING ASSESSEES TWIN CLAIM OF REBATE OF 10% FOR SELF SUPERVISION AN D 1.5% TOWARDS BUILDERS EFFORTS. 5. THAT IN THE ALTERNATIVE, THE CLAIM OF DEPRECIAT ION ON ADDITIONAL COST OF BUILDING AS UPHELD BY THE CIT(A) OUGHT TO H AVE BEEN ALLOWED. 6. THAT THE DISALLOWANCE OF RS.17,848/- OUT OF BARD ANA REPAIRS HAS BEEN WRONGLY UPHELD BY THE LD. CIT(A). 7. THAT THE ORDERS OF THE AUTHORITIES BELOW, TO THE EXTENT DISPUTED HEREINABOVE, ARE AGAINST LAW AND FACTS OF THE CASE. 3. GROUND NOS. 1 TO 5 ARE INTER-LINKED, PERTAINING TO UPHOLDING THE REFERENCE MADE BY THE AO U/S 142(2A) OF THE ACT, WI THOUT FIRST PIN-POINTING SPECIFIC DEFECT IN THE ACCOUNT MAINTAINED IN REGULA R BOOKS OF ACCOUNT. THE BRIEF AND NEAT FACTS RELATING TO THESE GROUNDS, AS CULLED, OUT FROM THE RELEVANT RECORDS ARE THAT DURING THE ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAD SHOWN INVESTMENT OF RS.2,52,504/- AS A DDITION TO BUILDING. THE AO MADE REFERENCE TO THE V.O. U/S 142(2A OF THE ACT IN ORDER TO DETERMINE THE CORRECTNESS OF INVESTMENT MADE. THE AO DETERMIN ED THE COST OF CONSTRUCTION AT RS.13,50,000/-. WHEN THE REPORT OF THE VO WAS FORWARDED TO THE ASSESSEE, IT OBJECTED TO THE VALUATION OF THE V.O. AND CONTENDED THAT THE ASSESSEE HAD ONLY REPAIRED A 22 YEARS OLD STRUCTURE DURING THE YEAR BEING A BRICK PLATFORM. IT WAS CONTENDED THAT AT THE TIME O F VISIT OF THE VO THE BRICK PLATFORM WAS COVERED BY THE STOCKS OF PADDY AND THE WATER TANK WAS FILLED WITH WATER DUE TO WHICH THE VO THE VO COULD NOT NOTICE THE SAME. IT WAS CONTENDED THAT THE VO SHOULD REVISIT THE SITE AND R ESUBMIT HIS VALUATION REPORT. THE AO FORWARDED THE OBJECTION OF THE ASSES SEE TO THE V.O. , WHO 3 REJECTED THE SAME AND REPORTED THAT DURING THE INSP ECTION OF THE PROPERTY ON 6.12.2007 SH. JAI PAUL, PARTNER OF THE ASSESSEE-FIR M, HAD IDENTIFIED THE WORK EXECUTED BY HIM DURING THE RELEVANT PREVIOUS YEAR. HE ALSO SUBMITTED A MEASUREMENT SHEET AND INSPECTION NOTE ON WHICH SH. JAI PAUL HAD SIGNED AND ACCEPTED THE WORK MEASURED BY THE VO. AFTER CON SIDERING THE REJOINDER OF THE ASSESSEE, THE AO CAME TO THE CONCLUSION THAT THE OBJECTIONS RAISED BY THE ASSESSEE WERE AFTERTHOUGHTS AND WERE DEVOID OF ANY MERITS. THUS, HE ADDED THE DIFFERENCE IN COST OF CONSTRUCTION ESTIMA TED BY THE VO AND THAT DECLARED IN THE ASSESSEES BOOKS AT RS.10,97,496/-, AS UNEXPLAINED INCOME U/S 69 OF THE ACT. ON APPEAL, THE LD. CIT(A), UPHEL D THE ACTION OF THE A.O. NOW, AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSE SSEE IS IN APPEAL BEFORE THIS BENCH. 4. THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY CONT ENDED THAT IN THIS CASE, THE AO REFERRED THE CASE TO THE DVO, FOR THE PURPOSE OF ASCERTAINING THE INVESTMENT IN THE PREMISES. HOWEVER, THE AO FAI LED, TO PIN-POINT THE SPECIFIC DEFECT IN THE MAINTENANCE OF BOOKS OF ACCO UNT. THE AO IS NOT COMPETENT TO REFER SUCH KIND OF CASES UNDER SECTION 142(2A) OF THE ACT. HE PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPR EME COURT, IN THE CASE OF SARGAM CINEMA VS. COMMISSIONER OF INCOME-TAX, (2010 ) 328 ITR 513 (SC). 5. THE LD. DR, ON THE OTHER HAND, RELIED ON THE O RDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CAREFULLY PERUSED AND CONSIDERED THE RIV AL SUBMISSIONS, FACTS OF THE CASE AND OTHER RELEVANT MATERIAL PLACED ON R ECORD, INCLUDING THE CASE LAW RELIED UPON BY THE ASSESSEE, OF THE HONBLE SUP REME COURT, IN THE CASE OF SARGAM CINEMA VS. COMMISSIONER OF INCOME-TAX, (2010) 328 ITR 513 (SUPRA), WHEREIN IT HAS BEEN HELD AS UNDER: 4 HELD, THAT THE ASSESSING AUTHORITY COULD NOT REFER THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER IN A CASE WHERE THER E WAS A CATEGORICAL FINDING RECORDED BY THE TRIBUNAL THAT THE BOOKS OF ACCOUNT WERE NEVER REJECTED. 6.1. IN VIEW OF THE ABOVE DECISION OF THE HONBLE SUPREME COURT, WE ARE OF THE CONSIDERED OPINION THAT THE AO HAS FAILED T O REJECT THE BOOKS OF ACCOUNT BEFORE REFERRING THE CASE TO THE VALUATION CELL WITHIN THE MEANING OF SECTION 142(2A) OF THE ACT. THEREFORE, FACTS OF THE PRESENT CASE ARE COVERED BY THE DECISION OF THE HONBLE SUPREME COURT, IN TH E CASE OF SARGAM CINEMA VS. COMMISSIONER OF INCOME-TAX, (SUPRA). HE NCE, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 7. THE LD. COUNSEL FOR THE ASSESSEE, DID NOT PRESS GROUND NOS. 6 & 7, HENCE, THE SAME ARE DISMISSED AS NOT PRESSED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 16TH JUNE, 2011. SD/- SD/- (H.L. KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 16TH JUNE, 2011 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE:M/S. FATTU DHINGA RICE MILLS, KAPURTHA LA. 2. THE ADDL. CIT, RANGE-IV, JALANDHAR 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR DR, ASR. TRUE COPY BY ORDER 5 (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR.