J.Pankaj Mehta, CHENNAI V. DCIT, CHENNAI

ITA 400/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81132 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 24-07-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 18-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DURGESH SUMROTT
• Assessee Lawyers: D ANAND
• Keywords: Unexplained investment; Valuation report
• Section: 143(3); 153A; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . , ' $ % , & ' BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO.400/MDS/2014 ( / ASSESSMENT YEAR: 2001-02) MR. J.PANKAJ MEHTA, 69/41, DR.RADHAKRISHNAN SALAI,1 ST FLOOR, MYLAPORE, CHENNAI-600 004. VS DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II(1), CHENNAI-600 034. PAN: AERPM5156Q ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. D.ANAND, ADVOCATE /RESPONDENT BY : MR.DURGESH SUMROTT, CIT DR / DATE OF HEARING : 24 TH JULY, 2014 /DATE OF PRONOUNCEMENT : 13 TH AUGUST, 2014 / O R D E R PER CHALLA NAGENDRA PRASAD , JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS)(C)-II, CHE NNAI DATED 27.11.2013 FOR THE ASSESSMENT YEAR 2001-02. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL A ND THE CRUX OF THE ISSUE IN APPEAL IS THAT ASSESSING OFFIC ER ERRED IN MAKING ADDITION OF ` 2,50,500/- AS UNEXPLAINED INVESTMENT IN HOUSE PROPERTY. 2 ITA NO.400/MDS/2014 2. BRIEF FACTS ARE THAT ASSESSMENT FOR THE ASSESSME NT YEAR 2001-02 IN THE CASE OF THE ASSESSEE WAS COMPLETED O N 31.12.2007 UNDER SECTION 153A DETERMINING TOTAL IN COME AT ` 3,66,336/-. LATER ON THIS ASSESSMENT WAS REVISED UN DER SECTION 263 OF THE ACT BY THE COMMISSIONER OF INCO ME TAX, CENTRAL II, CHENNAI BY ORDER DATED 17.03.2010, AS T HE ASSESSING OFFICER OMITTED TO CONSIDER VALUATION REP ORT OF THE DVO WHICH WAS PASSED AFTER COMPLETION OF THE ASSES SMENT UNDER SECTION 153A OF THE ACT. PURSUANT TO THE ORD ER PASSED UNDER SECTION 263 OF THE ACT, ASSESSING OFFICER COM PLETED THE ASSESSMENT UNDER SECTION 153A READ WITH SECTIO N 143(3) READ WITH SECTION 263 OF THE ACT MAKING ADDITION OF ` 2,50,500/- AS UNEXPLAINED INVESTMENT IN HOUSE PROPE RTY STATING THAT THERE IS A DIFFERENCE OF ` 5,01,000/- BETWEEN THE COST OF CONSTRUCTION REPORTED BY THE VALUATION OFFI CER AND THE COST OF CONSTRUCTION ADMITTED BY THE ASSESSEE. SINC E THE ASSESSEE HOLDS SHARE OF THEIR PROPERTY ALONG WITH HIS FATHER, ASSESSING OFFICER TREATED THE SHARE OF DI FFERENCE IN COST OF CONSTRUCTION AS UNEXPLAINED INVESTMENT IN T HE HANDS OF THE ASSESSEE AT ` 2,50,500/-. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEA LS) 3 ITA NO.400/MDS/2014 AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER TOWARDS UNEXPLAINED INVESTMENT IN HOUSE PROPERTY. COMMISSI ONER OF INCOME TAX (APPEALS) DISMISSED THE APPEAL OF THE AS SESSEE HOLDING THAT ASSESSMENT ORDER IS NOT AN APPEALABLE ORDER AS THE SAID ORDER WAS PASSED ONLY FOR GIVING EFFECT TO THE ORDER OF THE COMMISSIONER OF INCOME TAX, CENTRAL II, WHO DIRECTED THE ASSESSING OFFICER TO REFRAME THE ASSESSMENT IN THE LIGHT OF THE VALUATION REPORT. THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT ASSESSEE SHOULD HAVE CHALLE NGED THE ORDER PASSED UNDER SECTION 263 OF THE ACT BEFOR E THE TRIBUNAL AND NOT THE ORDER PASSED PURSUANT TO THE D IRECTIONS GIVEN BY THE COMMISSIONER OF INCOME TAX, CENTRAL II . THEREFORE, HE DISMISSED THE APPEAL OF THE ASSESSEE HOLDING IT AS NOT MAINTAINABLE. AGGRIEVED BY THE ORDER OF T HE COMMISSIONER OF INCOME TAX (APPEALS), ASSESSEE CAME UP IN APPEAL BEFORE US. 3. COUNSEL FOR THE ASSESSEE SUBMITS THAT COMMISSION ER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN DISMISSING THE APPEAL OF THE ASSESSEE AS NOT MAINTAINABLE. AS FAR AS MERI TS ARE CONCERNED, COUNSEL FOR THE ASSESSEE REFERRING TO TH E 4 ITA NO.400/MDS/2014 ASSESSMENT ORDER PASSED UNDER SECTION 153A READ WIT H SECTION 143(3) DATED 31.12.2007 SUBMITS THAT ASSESS ING OFFICER HAVING EXAMINED BOOKS OF ACCOUNT WHICH WAS PRODUCED BY THE ASSESSEE AND WITHOUT POINTING OUT A NY DEFECTS IN THE BOOKS OF ACCOUNTS AND WITHOUT REJEC TING THE BOOKS OF ACCOUNTS REFERENCE WAS MADE TO THE VALUATI ON OFFICER WHICH IS BAD IN LAW. COUNSEL FURTHER SUBMIT S THAT THE ADDITION MADE BY THE ASSESSING OFFICER IN HIS FATHE RS CASE I.E. SHRI S.JASWANT SINGH, WHO WAS HAVING OF THE SHARE IN THE PROPERTY WAS DELETED BY THE COMMISSIONER OF INC OME TAX (APPEALS) BY ORDER DATED 30.03.2010, A COPY OF WHI CH IS PLACED ON RECORD BEFORE US. COUNSEL FOR THE ASSESSE E FURTHER SUBMITS THAT THE DECISION OF THE COMMISSIONER OF IN COME TAX (APPEALS) IN THE CASE OF ASSESSEES FATHER SHRI S.J ASWANT SINGH IN DELETING THE ADDITION OF ` 2,50,500/- REPRESENTING THE DIFFERENCE IN COST OF CONSTRUCTION WAS ACCEPTED BY THE REVENUE AND NO FURTHER APPEAL PREFERRED TO THE TRIB UNAL. THEREFORE, COUNSEL PRAYS THAT ADDITION MAY BE DELET ED IN THE CASE OF THE ASSESSEE FOR THE REASONS GIVEN BY THE COMMISSIONER OF INCOME TAX (APPEALS) BY ORDER DATED 30.03.2010. 5 ITA NO.400/MDS/2014 4. DEPARTMENTAL REPRESENTATIVE SUPPORTING THE IMPUG NED ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) S UBMITS THAT ASSESSMENT MADE BASED ON THE DIRECTION OF COMMISSIONER OF INCOME TAX, CENTRAL II IS NOT AN AP PEALABLE ORDER AS RIGHTLY HELD BY THE COMMISSIONER OF INCOME TAX (APPEALS). HE PLACES RELIANCE ON THE DECISION OF TH E MUMBAI BENCH OF THIS TRIBUNAL IN THE CASE OF HERDILLIA CHE MICALS LTD. VS. ITO (15 TTJ 331) IN SUPPORT OF HIS CONTENTIONS. 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES AND THE DECISION RELIED ON. IN THIS CASE THERE WAS A SEARCH AND IN THE COURSE OF SEARCH IT WAS FOUND THAT ASSES SEE HAS MADE INVESTMENT IN THE COST OF CONSTRUCTION IN THE PROPERTY DURING FINANCIAL YEAR 2000-01 RELEVANT TO THE ASSES SMENT YEAR 2001-02. THEREFORE, FOR THE PURPOSE OF BRINGIN G THE UNACCOUNTED INVESTMENT IN THE PROPERTY AT 34/4A, R AMAN STREET, T.NAGAR, CHENNAI-17 TO TAX, REFERENCE UNDER SECTION 142A WAS MADE TO THE VALUATION OFFICER TO DETERMINE THE VALUE OF THE PROPERTY SITUATED AT 34/4A, RAMAN STRE ET, T.NAGAR, CHENNAI. AS THE VALUATION REPORT WAS NOT R ECEIVED TILL 31.12.2007, WHICH WAS TIME BARRING DATE FOR CO MPLETION OF 6 ITA NO.400/MDS/2014 THE ASSESSMENT, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON 31.12.2007 UNDER SECTION 153A READ WI TH SECTION 143(3) OF THE ACT DETERMINING THE INCOME OF THE ASSESSEE AT ` 3,66,336/-. SUBSEQUENTLY, THIS ASSESSMENT WAS REVISED UNDER SECTION 263 OF THE ACT BY THE COMMISSIONER OF INCOME TAX, CENTRAL II BY ORDER DAT ED 17.03.2010 IN WHICH THE COMMISSIONER OF INCOME TAX DIRECTED THE ASSESSING OFFICER TO REFRAME THE ASSES SMENT IN THE LIGHT OF THE VALUATION REPORT OF THE VALUATION OFFICER AND OTHER MATERIALS PERTAINING TO THE ISSUE AFTER PROPE R VERIFICATION AND GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE O BSERVING AS UNDER:- IN VIEW OF THE ABOVE, I HOLD THAT THE A.O. HAS COMMITTED AN ERROR BY NOT CONSIDERING PROPERLY THE UNACCOUNTED INVESTMENT IN THE CONSTRUCTION OF THE BUILDING, WHICH IS PREJUDICIAL TO THE INTERE ST OF THE REVENUE. HENCE, I DIRECT THE A.O. TO FRAME THE ASSESSMENT ORDER IN THE LIGHT OF THE VALUATION REPORT OF THE V.O. AND OTHER MATERIALS PERTAINING TO THE ISSUE AFTER PROPER VERIFICATION AND GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE. 7 ITA NO.400/MDS/2014 6. ON A READING OF THE ABOVE ORDER OF THE COMMISSIO NER OF INCOME TAX, CENTRAL-II, IT IS CLEAR THAT THE COMMIS SIONER ONLY DIRECTED THE ASSESSING OFFICER TO REFRAME THE ASSES SMENT TO CONSIDER THE VALUATION REPORT OF THE VALUATION OFFI CER AND OTHER MATERIALS PERTAINING TO THE ISSUE AFTER PROPER VERI FICATION. THE COMMISSIONER OF INCOME TAX, CENTRAL-II DID NOT GIVE ANY SORT OF DIRECTION TO MAKE A PARTICULAR ADDITION WHILE R EFRAMING THE ASSESSMENT. THEREFORE, IN OUR CONSIDERED VIEW, THE DIRECTION GIVEN BY THE COMMISSIONER OF INCOME TAX, CENTRAL-II IS ONLY AN OPEN DIRECTION AND IT IS NOT A SPECIFIC DIRECTI ON TO MAKE ANY PARTICULAR ADDITION. IN THE CIRCUMSTANCES, WE H OLD THAT THE ORDER PASSED BY THE ASSESSING OFFICER PURSUANT TO T HE ORDER OF THE COMMISSIONER OF INCOME TAX, CENTRAL-II PASSE D UNDER SECTION 263 OF THE ACT IS AN APPEALABLE ORDER. THU S, WE REVERSE THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN HOLDING THAT ORDER PASSED BY THE ASSES SING OFFICER PURSUANT TO THE ORDER OF COMMISSIONER OF IN COME TAX, CENTRAL-II UNDER SECTION 263 IS NOT MAINTAINABLE. A S THE COMMISSIONER OF INCOME TAX (APPEALS) DID NOT DISPOS E OFF THE APPEAL ON MERITS, THIS MATTER HAS TO GO BACK TO THE FILE OF COMMISSIONER OF INCOME TAX (APPEALS) FOR CONSIDERAT ION ON 8 ITA NO.400/MDS/2014 MERITS. THUS, WE RESTORE THE APPEAL TO THE FILE OF COMMISSIONER OF INCOME TAX (APPEALS) FOR DISPOSING OFF ON MERITS. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDAY, THE 13 TH DAY OF AUGUST, 2014 AT CHENNAI. SD/- SD/- ( A.MOHAN ALANKAMONY ) ( CHALLA NAGEND RA PRASAD ) . ( ' )* ) ACCOUNTANT MEMBER / , JUDICIAL MEMBER/ ) , ) /CHENNAI, - /DATED, 13 TH AUGUST, 2014 SOMU /0 10 /COPY TO: 1. APPELLANT 2. /RESPONDENT 3. 2 () /CIT(A) 4. 2 /CIT 5. 0 6 /DR 6. /GF .