Smt. Vidyawati Educational Society, Jhansi V. ITO Ward 6(3), Jhansi

ITA 383/AGR/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0601 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 6 month(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-02-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 06-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: NAVIN GARGH
• Keywords: Rejection of books of accounts; Value adopted by valuation officer; Valuation report
• Section: 143(3); 234B; 69; 145; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 383/AGRA/2012 ASSESSMENT YEAR: 2007-08 M/S. SMT. VIDYAWATI EDUCATIONAL SOCIETY, VS. INCOME TAX OFFICER, OPP. MLB MEDICAL COLLEGE GATE NO.3, WARD 6(3) JHANSI (U.P.). JHANSI . (PAN AAABV 0145 R) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVIN GARGH, ADVOCATE RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 26.02.2013 DATE OF PRONOUNCEMENT : 08.03.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 10.02.2012 PASSED BY THE LEARNED CIT(A)-II, AGRA FOR THE ASSES SMENT YEAR 2007-08. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1.1 BECAUSE IN ANY VIEW, THE ADDITION U/S. 69 CONFI RMED BY LD. CIT (A) OF RS.34.51,400/-, FOR THE SO CALLED UNEXPLAINED INVES TMENT IN CONSTRUCTION OF BUILDING IS PERVERSE, ARBITRARY, WRONG AND ILLEGAL. 1.2 BECAUSE IN ANY VIEW, THE REFERENCE U/S 142A FOR VALUATION OF PROPERTY CONFIRMED BY THE LD., CIT (A) IS WRONG AND ILLEGAL. 2 ITA NO.383/AGR/2012 A.Y. 2007-08 1.3 BECAUSE IN ANY VIEW, LD. CIT (A) ERRED IN DISMISSING THE GROUND OF CHALLENGING THE IMPUGNED ADDITION MADE U/ S 69. 1.4 BECAUSE IN ANY VIEW, THE CPWD RATES HAVE WRONGLY BEEN APPLIED BY THE D.V.O. IN PLACE OF THE UPPWD RATES AS HELD BY HONBLE ALLAHABAD HIGH COURT 182 ITR, 436 C.I.T.-VS .-RAJ KUMAR. 1.5 BECAUSE IN ANY VIEW, THE CIT (A) HAS GROSSLY ER RED IN NOT ACCEPTING THE ITEM-WISE VALUATION REPORT OF THE GOV ERNMENT APPROVED REGISTERED VALUER. 2. BECAUSE IN ANY VIEW AND WITHOUT ADMITTING THE AFORE SAID IMPUGNED ADDITION, THE LD. CIT (A) HAS ERRED IN NOT ALLOWING THE EXEMPTION U/S 11 ON THE IMPUGNED ADDITION FOR SO CA LLED EXPENDITURE MADE ON CONSTRUCTION OF BUILDING OF EDUCATIONAL INS TITUTION. 3. BECAUSE IN ANY VIEW AND WITHOUT ADMITTING THE AFORE SAID IMPUGNED ADDITION THE LD. CIT(A) HAS ERRED IN NOT ALLOWING THE EXEMPTION U/S 10(23C)(IIIAD) ON THE TOTAL INCOME FI NALLY ASSESSED INCLUDING THE IMPUGNED ADDITION. 4. BECAUSE IN ANY VIEW AND WITHOUT PREJUDICE TO THE AB OVE GROUNDS, ADDITIONS MADE, INTEREST CHARGED U/S 234B, AND THE ASSESSMENT ORDER PASSED ARE WRONG, ILLEGAL, WITHOUT PROPER OPPORTUNI TY, BAD IN LAW AND AGAINST THE FACTS AND LAW OF THE CASE. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE RUNS AN EDUCATIONAL INSTITUTION. A SURVEY UNDER SECTION 133 (A) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) WAS CARRIED OUT ON 11.01.2007. DURING THE COURSE O F SURVEY PROCEEDINGS, IT WAS STATED ON BEHALF OF THE ASSESSEE THAT COLLEGE BUILD ING WAS TWO STOREY BUILDING AND THIRD FLOOR WAS UNDER CONSTRUCTION. AS PER SCHEDUL E 6 OF THE BALANCE SHEET FILED WITH THE RETURN OF INCOME, DEPRECIATED VALUE OF BUI LDING HAS BEEN DISCLOSED AT RS.64,34,969/- AS ON 01.04.2006 AND ADDITION IN THE BUILDING FOR RS.18,88,402/- WAS MADE DURING THE YEAR. IN ORDER TO VERIFY COST O F CONSTRUCTION, MATTER WAS 3 ITA NO.383/AGR/2012 A.Y. 2007-08 REFERRED TO THE VALUATION OFFICER, INCOME TAX DEPAR TMENT, AGRA UNDER SECTION 142A OF THE ACT. THE VALUATION OFFICER, AGRA HAS FU RNISHED HIS REPORT DATED 23.12.2009 AND HE HAS ESTIMATED YEAR-WISE VALUE OF THE COLLEGE BUILDING AS UNDER:- (PAGE NO.2) FINANCIAL YEAR COST DECLARED BY THE ASSESSEE COST ESTIMATED BY THE VALUATION OFFICER 2001-02 768058 2171825 2002-03 2755678 7792185 2003-04 1153692 3262276 2004-05 1326732 3751578 2005-06 1178919 3333610 2006-07 1888402 5339803 2007-08 1032466 2919487 2008-09 186243 526636 TOTAL 10290190 29097400 4. THE A.O. NOTICED THAT THERE WAS CONSIDERABLE DIF FERENCE BETWEEN THE VALUE DECLARED BY THE ASSESSEE AND ESTIMATED MADE BY VALU ATION OFFICER. THE A.O. SENT A COPY OF VALUATION REPORT TO ASSESSEE AND ASKED FOR EXPLANATION. 5. AFTER CONSIDERING SUBMISSIONS OF THE ASSESSEE, T HE A.O. MADE ADDITION OF RS.34,51,401/- AS UNDER :- (PAGE 3 & 4) 4 ITA NO.383/AGR/2012 A.Y. 2007-08 APPLICATION OF THE ASSESSEE HAS BEEN CONSIDERED. A SSESSEE HAS BEEN INFORMED THAT ASSESSMENT IS TO BE COMPLETED BE FORE 31.12.2009 AS PER LIMITATION PRESCRIBED IN THE ACT AND NO FURT HER TIME IS ALLOWED. ASSESSEES OBJECTION THAT VALUATION REPORT WAS NOT IN CONFORMITY WITH THE REFERENCE MADE U/S.142A AND AS SUCH IT WAS NOT VALID DOES NOT STAND AS THERE IS NO BAR IN THE SECTION 142A TO RES TRICT THE VALUATION FOR ONE YEAR ONLY. AS MENTIONED ABOVE, DEPARTMENTAL VALUER HAS DETERMINED THE VALUE OF COLLEGE BUILDING YEAR WISE FROM THE FINANCIAL YEAR 2001-02 TO THE FINANCIAL YEAR 2008-09 WHICH IN CLUDE VALUATION FOR THE PERIOD FROM 01.04.06 TO 31.07.07 SEPARATELY . ASSESSEE HAS NOT POINTED OUT ANY OTHER SPECIFIC DEFECT IN THE VALUAT ION REPORT COMMUNICATED TO THE ASSESSEE WITH THE ABOVE NOTICE EXCEPT SEEKING 10 DAYS TIME FOR OBTAINING OBJECTION TO THE VALUATION REPORT FROM HIS VALUER. AS PER DEPARTMENTAL VALUATION REPORT, ASSES SEE HAS MADE INVESTMENT OF RS.53,39,803/- IN THE COLLEGE BUILDIN G DURING THE FINANCIAL YEAR 2006-07. AS PER SCHEDULE 6 OF THE BA LANCE SHEET FILED WITH THE RETURN OF INCOME ASSESSEE HAS DISCLOSED IN VESTMENT IN THE COLLEGE TO THE TUNE OF RS.18,88,402/-. THUS THERE I S DIFFERENCE OF RS.34,51,401/- BETWEEN THE INVESTMENT SHOWN BY THE ASSESSEE AND VALUE DETERMINED BY THE VALUATION OFFICER. CONSIDER ING THE HUGE DIFFERENCE, IT HAS BEEN CONCLUDED THAT ASSESSEE HAS NOT DISCLOSED ACTUAL INVESTMENT IN THE COLLEGE BUILDING IN THE BO OKS OF ACCOUNT AND ASSESSEES BOOKS OF ACCOUNT ARE NOT RELIABLE. ASSES SEE HAS MADE INVESTMENT IN THE COLLEGE BUILDING OUT OF UNDISCLOS ED SOURCES FOR WHICH NO EXPLANATION HAS BEEN FILED. HENCE AN ADDIT ION OF RS.34,51,401/- IS MADE U/S 69 OF THE INCOME TAX ACT ,1961 IN THE NET TAXABLE INCOME OF THE ASSESSEE. INCOME OF THE ASSES SEE IS COMPUTED AS UNDER :- TOTAL INCOME AS PER PARA 26 OF PART B OF THE ITR-7 RS. ZERO ADDITION U/S 69 OF THE INCOME TAX ACT, 1961 RS.34,5 1,401/- TOTAL RS.34,51,401/- 6. BEFORE THE CIT (A) THE ASSESSEE RAISED MANY ISSU ES WHICH WERE DECIDED BY THE CIT(A) AFTER OBTAINING REPORT FROM THE A.O. 5 ITA NO.383/AGR/2012 A.Y. 2007-08 7. REFERENCE TO VALUATION OFFICER, ISSUE HAS BEEN D ECIDED BY THE CIT (A) AS UNDER :- (PARAGRAPH NO.4.4, PAGE NO.6) 4.4 I HAVE CONSIDERED THE RIVAL CONTENTIONS. THE AO HAS MADE THE REFERENCE TO THE VALUATION OFFICER AS PER THE PROVI SIONS OF SECTION 142A OF THE ACT. MOREOVER, THE ASSESSEE WAS NOT MAI NTAINING ITEM WISE DETAILS OF MATERIAL USED IN THE CONSTRUCTION O F THE BUILDING WITH SUPPORTING BILLS/VOUCHERS. THE AO HAS ALSO OBSERVED IN THE ASSESSMENT ORDER THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE NOT RELIABLE WHICH TANTAMOUNTS TO REJECTION OF BOOKS OF ACCOUNTS. THEREFORE, I DONT FIND ANY MERIT IN THE GROUND OF APPEAL AND THE SAME IS DISMISSED. 8. THE OBJECTION REGARDING APPLYING CPWD RATE FOR E STIMATION, THE CIT (A) REJECTED THE ASSESSEES CONTENTION AS HE DID NOT FI ND ANY MERIT IN THAT CONTENTION. 9. THE ISSUE RELATED TO EXEMPTION UNDER SECTION 11 OR UNDER SECTION 10(23C) (IIIAD) OF ADDITION MADE, THE CIT (A) RELIED UPON A JUDGMENT OF THE APEX COURT IN THE CASE OF O RISSA STATE WAREHOUSING CORPORATION VS. CIT, 237 IT R 589 (SC) AND I.T.A.T., HYDERABAD BENCH IN THE CASE OF DCIT VS. S MT. SOEDA EDUCATIONAL SOCIETY, ITA NO. 237 & 238/H/2010, ORDER DATED 21.0 4.2011. 10. THE CIT(A) HELD THAT NO EXEMPTION WOULD BE AVAI LABLE TO THE ASSESSEE UNDER SECTION 10(23C)(IIIAD) OR SECTION 11 OF THE ADDITIO NS MADE ON ACCOUNT OF UNEXPLAINED COST OF CONSTRUCTIONS. 6 ITA NO.383/AGR/2012 A.Y. 2007-08 11. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THA T IN THIS CASE THE BOOKS OF ACCOUNT HAVE BEEN DULY MAINTAINED, AUDITED AND THE AUDIT REPORT HAS BEEN DULY FILED. THE BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED AND ASSESSMENT HAS BEEN COMPLETED UNDER SECTION 143(3) OF THE ACT. THE COM PLETE DETAILS OF BUILDING ACCOUNTS HAVE BEEN MAINTAINED, THUS THE REFERENCE T O DVO NOT VALID. 12. THE LEARNED AUTHORISED REPRESENTATIVE HAS ALSO MADE SUBMISSION AND OBJECTION REGARDING VALUATION REPORT OF THE DEPARTM ENT. THE D.V.O. HAS APPLIED CPWD RATES WHEREAS RATES ENLISTED OF UPPWD ARE 15% TO 20% LESSER. HE FURTHER SUBMITTED THAT SUPERVISION CHARGES SHOULD BE ALLOWE D AT 10% INSTEAD OF 7%. THE LD. AUTHORISED REPRESENTATIVE REITERATED THE OBJECT IONS WHICH WERE MADE BEFORE THE CIT (A). 13. THE LD. AUTHORISED REPRESENTATIVE IN SUPPORT OF THIS CONTENTION RELIED UPON FOLLOWING JUDGMENTS. I) CIT VS. LUCKNOW PUBLIC EDUCATIONAL SOCIETY, 339 ITR 588 (ALL) II) CIT VS. PRATAP SINGH AMRO SINGH, 200 ITR 788 (R AJ.) III) ITO VS. VIJETA EDUCATIONAL SOCIETY, 118 ITD 38 2 (ITAT LUCKNOW B BENCH) IV) CIT VS. RAJ KUMAR, 182 ITR 436 (ALL.) V) SHEIKHAR CHAND JAIN & SONS VS. INSPECTING ACIT, 32 TTJ 570 (ITAT DELHI D BENCH) VI) CIT VS. SHEIKHAR CHAND AND SONS, 186 ITR 269 (A LL.) VII) M/S HARCHARAN ICE & COLD STORAGE VS. ACIT, ITA NO.445/DEL/94 (ITAT AGRA BENCH) 7 ITA NO.383/AGR/2012 A.Y. 2007-08 VIII) ITO VS. M/S SHAKUNTLA SHEET GRAH (PVT.) LTD., ITA NO.6635/DEL/1995 (ITAT AGRA BENCH) IX) DIRECTOR OF INCOME TAX VS. RAUNAQ EDUCATION FOU NDATION, 294 ITR 76 (DEL.) X) ACIT VS. MUSLIM EDUCATIONAL SOCIETY, 1 ITR (TRIB ) 527 (ITAT COCHIN BENCH) XI) DCIT VS. SMT. SARADA EDUCATIONAL SOCIETY, ITA N OS.237 & 238/HYD/2010 (ITAT HYDERABAD B BENCH) 14. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTH ER HAND, RELIED UPON THE ORDER OF CIT(A). 15. WE HAVE HEARD THE LEARNED REPRESENTATIVE OF PAR TIES AND RECORDS PERUSED. THE LD. AUTHORISED REPRESENTATIVE HAS NOT PRESSED GROUN D NO.1.3, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 16. THE GROUND NO. 1.1. & 1.2. ARE IN RESPECT OF RE FERENCE U/S. 142A OF THE ACT. THE CONTENTION OF THE ASSESSEE THAT THE A.O. IS NOT EMPOWERED TO REFER THE MATTER TO VALUATION OFFICER U/S 142A OF THE ACT UNLESS BOOKS OF ACCOUNT IS REJECTED. IN THE CASE UNDER CONSIDERATION, WE NOTICED THAT BOOKS OF ACCOUNT HAS NOT BEEN REJECTED BY THE A.O. THOUGH MENTION WAS MADE IN HIS ORDER TH AT CONSIDERING HUGE DIFFERENCE IN VALUATION REPORT AND BOOKS OF ACCOUNT, BOOK IS N OT RELIABLE. THE CIT(A) CONFIRMED THE VIEW OF THE A.O. ON THE GROUND THAT T HE ASSESSEE HAS FAILED TO FURNISH ITEM-WISE DETAILS. BUT THESE FINDINGS ARE NOT SUFF ICIENT FOR INVOKING SECTION 145 (3) 8 ITA NO.383/AGR/2012 A.Y. 2007-08 OF THE ACT. THE COST ESTIMATED BY THE VALUATION OF FICER IS SIMPLY AN OPINION AND BASED ON WHICH IT CAN NOT BE SAID THAT BOOK IS NOT RELIABLE. THE DETAILS ARE AVAILABLE IN BOOKS OF ACCOUNTS MAINTAINED REGULARLY ON DAY-TO-DAY BASIS. MERELY ON NON-FURNISHING OF BIFURCATION/OR DETAILS, IT CANNOT BE HELD THAT BOOK IS NOT RELIABLE. FOR REJECTING BOOKS OF ACCOUNT THE A.O. HAS TO GIVE REASONS AS REQUIRED UNDER SECTION 145(3) OF THE ACT. SINCE THERE IS NO REASO NS AND FACTS ON RECORD, UNDER THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT ASSESSEES B OOKS OF ACCOUNT WAS NOT REJECTED EFFECTIVELY AS REQUIRED UNDER SECTION 145( 3) OF THE ACT. THE APEX COURT IN THE CASE OF SARGAM CINEMA VS. CIT, 328 ITR 513 ( SC) WHEREIN THE HONBLE SUPREME COURT HAS HELD THAT THE A.O. CANNOT REFER T HE MATTER TO THE DEPARTMENTAL VALUATION OFFICER WITHOUT REJECTING BOOKS OF ACCOUN T. THE HONBLE ALLAHABAD HIGH COURT IN VIEW OF THE LAW LAID BY THE APEX COURT, RE JECTED THE REVENUES CONTENTION IN THIS REGARD IN THE CASE OF CIT VS. LUCKNOW PUBLI C EDUCATIONAL SOCIETY, 339 ITR 588 (ALL.) 17. IN THE LIGHT OF LAW LAID DOWN BY THE APEX COURT IN THE CASE OF IN THE CASE OF SARGAM CINEMA VS. CIT, 328 ITR 513 (SC) AND CIT VS. LUCKNOW PUBLIC EDUCATIONAL SOCIETY, 339 ITR 588 (ALL.), IN THE CAS E UNDER CONSIDERATION, WE FIND THAT REFERENCE UNDER SECTION 142A OF THE ACT BY THE A.O. IS NOT IN ACCORDANCE WITH LAW AS HE REFERRED THE MATTER UNDER SECTION 142A WI THOUT REJECTING BOOKS OF 9 ITA NO.383/AGR/2012 A.Y. 2007-08 ACCOUNT. THE ORDER OF A.O. ON THE ISSUE IS LIABLE TO BE QUASHED AND ACCORDINGLY WE QUASH THE SAME. 18. AS REGARDS GROUNDS NO.1.4 & 1.5, WE FIND THAT T HE CONTENTION OF THE ASSESSEE ARE GENERAL IN NATURE WITHOUT QUANTIFICATION, WE, T HEREFORE, DO NOT FIND SUBSTANCE IN THE GROUNDS RAISED BY THE ASSESSEE. 19. NOW COMING TO GROUNDS NOS.2 & 3, THE CASE OF TH E ASSESSEE IS THAT EVEN IF ADDITION IS SUSTAINED, THE ASSESSEE IS ENTITLED TO BENEFIT OF SECTION 11 OR UNDER SECTION 10(23C) OF THE ACT. THE CIT(A) BY RELYING UPON A JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF ORRISA STATE WAREHOUSI NG CORPORATION VS. CIT, 237 ITR 589 (SC) AND ORDER OF I.T.A.T. HYDERABAD BENCH IN THE CASE OF DCIT VS. SMT. SOEDA EDUCATIONAL SOCIETY, ITA NO. 237 & 238/H/2010 , ORDER DATED 21.04.2011, REJECTED THE ASSESSEES CONTENTION. ON THE OTHER HAND, THE ASSESSEE RELIED UPON A JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX VS. RAUNAQ EDUCATION FOUNDATION, 294 ITR 76 (DELHI) WHE RE AFTER CONSIDERING THE JUDGMENT OF THE APEX COURT IN THE CASE OF ORISSA ST ATE WAREHOUSING CORPORATION VS. CIT, 237 ITR 589 (SC), IT HAS BEEN HELD AS UNDE R :- THE WORDS DERIVED FROM (OR SOME OTHER SIMILAR WO RDS) DO NOT OCCUR IN SECTION 10(22) OF THE INCOME-TAX ACT, 1961, AND, THEREFORE, THE WORD INCOME AS OCCURRING IN SECTIO N 10(22) CANNOT 10 ITA NO.383/AGR/2012 A.Y. 2007-08 BE GIVEN A RESTRICTIVE MEANING AND MUST BE GIVEN IT S NATURAL MEANING OR THE MEANING ASCRIBED TO IT IN SECTION 2(24). HE NCE, AN ASSESSEE WHO IS ENTITLED TO EXEMPTION UNDER SECTION 10(22) C AN CLAIM THE BENEFIT THEREOF FOR THE PURPOSE OF INCOME DEEMED TO BE CHARGEABLE TO TAX UNDER SECTION 68. 20. IN THE LIGHT OF JUDGMENT OF HONBLE DELHI HIGH COURT, THE ORDER OF I.T.A.T. HYDERABAD BENCH CITED ABOVE DOES NOT HELP THE REVEN UE. WE FOLLOW THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX VS. RAUNAQ EDUCATION FOUNDATION, 294 ITR 76 (DELHI). WE SET A SIDE THE ORDERS OF REVENUE AUTHORITIES AND CONTENTION OF THE ASSESSEE IS ALLOW ED THAT IF ANY ADDITION IS SUSTAINED, THE ASSESSEE IS ENTITLED TO BENEFIT OF S ECTION 11/10(23C) OF THE ACT. THE A.O. IS DIRECTED ACCORDINGLY. 21. GROUND NO.4 IS IN RESPECT OF CHARGING OF INTERE ST UNDER SECTION 234B OF THE ACT WHICH IS CONSEQUENTIAL IN NATURE. THE A.O. IS DIRECTED ACCORDINGLY. 22. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* 11 ITA NO.383/AGR/2012 A.Y. 2007-08 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY