Sh. Sachin Kapoor, Rohtak V. DCIT, Rohtak

ITA 4134/DEL/2009

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86945 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 31-12-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 21-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Keywords: Opportunity of being heard; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI B.C. MEENA ITA NO. 4134/DEL/2009 ASSESSMENT YEAR: 2001-02 SACHIN KAPOOR, VS. DEPUTY CIT, HARI LODGE, SANT NAGAR, CIRCLE, ROHTAK. ROHTAK. (PAN: AATPK3631L) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI GAUTAM J AIN, CA RESPONDENT BY: SHRI BRR KUMAR, SR. DR DATE OF HEARING : 31.12.2014 DATE OF PRONOUNCEMENT: 11:03.2015 ORDER PER I.C. SUDHIR: JUDICIAL MEMBER THE ASSESSEE HAS QUESTIONED ADDITION OF RS.8,61,132 MADE BY THE LEARNED CIT(APPEALS) AGAINST THE ADDITION OF RS.5,9 5,363 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVEST MENT IN CONSTRUCTION ( GROUND NOS. 1 TO 5.1). IN GROUND NO.6, WHICH IS WIT HOUT PREJUDICE TO THE ABOVE GROUNDS, THE ASSESSEE HAS QUESTIONED THE ACTI ON OF THE LEARNED CIT(APPEALS) IN ENHANCEMENT OF THE ADDITION WITHOUT ISSUING THE PROPOSED ENHANCEMENT NOTICE UNDER SEC. 251(2) OF THE ACT. 2 2. HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY T HE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILA BLE ON RECORD AND THE DECISIONS RELIED UPON. 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE HAD MAD E AN INVESTMENT OF RS.10,64,105 AND RS.1,58,132 IN ASSESSMENT YEARS 20 01-02 AND 2002-03 RESPECTIVELY IN CONSTRUCTION OF INDUSTRIAL SHED IN THE FACTORY, WHICH WAS SUPPORTED BY A VALUATION REPORT FROM REGISTERED VAL UER. THE REGISTERED VALUER VALUED THE PROPERTY AT RS.10,64,700. THE ASS ESSING OFFICER DID NOT AGREE AND ESTIMATED THE COST OF CONSTRUCTION AT RS. 16,92,600 BY APPLYING AN AVERAGE RATE OF RS.200 PER SQ. FT. ON DECLARED AREA OF 8436 SQ. FT. THE ASSESSING OFFICER THUS MADE ADDITION OF RS. 5,95,36 3. THE LEARNED CIT(APPEALS) THEREAFTER MADE REFERENCE TO THE VALUA TION OFFICER UNDER SEC. 142A READ WITH SEC. 131(1)(D) OF THE ACT FOR DETERM INATION OF COST OF CONSTRUCTION/PROPERTY. THE VALUATION OFFICER ASSESS ED THE COST OF CONSTRUCTION AT RS.19,58,369 FOR THE ASSESSMENT YEAR 2001-02. TH E LEARNED CIT(APPEALS) FOLLOWING THE SAID VALUATION MADE BY THE VALUATION OFFICER ENHANCED THE ADDITION FROM RS.5,95,363 MADE BY THE ASSESSING OFF ICER TO RS.8,61,132. THIS ACTION OF THE LEARNED CIT(APPEALS) HAS BEEN QU ESTIONED BY THE ASSESSEE. 3 4. THE LEARNED AR CONTENDED THAT ACTUAL INVESTMENT CAN BE KNOWN ONLY WHEN THE CONSTRUCTION IS COMPLETED. HE SUBMITTED TH AT THE INVESTMENT IN CONSTRUCTION CANNOT BE ASSUMED AS THERE WAS NO DATA AVAILABLE TO DETERMINE THE EXTENT OF CONSTRUCTION, PARTICULARLY WHEN NO AD DITION HAS BEEN MADE IN THE ASSESSMENT YEAR 2002-03. IN THIS REGARD, HE PLA CED RELIANCE ON THE DECISIONS IN THE CASES OF WTO VS. CHAMPA LAL SINGH PRAHALAD SINGH, 36 TTJ 205 (INDORE); & CIT VS. NABHA SOVEX (P) LTD. 343 ITR 178 ( P& H ). HE REITERATED THAT THERE IS NO DISPUTE THAT THE BUI LDING WAS COMPLETED IN THE ASSESSMENT YEAR 2002-03 AND, THEREFORE, ESTIMATION BY THE DVO IN THE YEAR UNDER CONSIDERATION IS NOT IN ACCORDANCE WITH LAW. 5. THE LEARNED AR SUBMITTED FURTHER THAT THE REPORT OF DVO IS BASED ON CPWD RATES WHEREAS PWD RATES SHOULD HAVE BEEN ADOPT ED BY THE DVO. IN THIS REGARD, HE PLACED RELIANCE ON SEVERAL DECISION S INCLUDING THE DECISION OF HON'BLE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. HARCHAND PALACE- 269 ITR 251 ( P&H ). THE LEARNED A R SUBMITTED FURTHER THAT EVEN OTHERWISE IT IS WELL SETTLED LAW THAT SIN CE THE EXPENDITURE INCURRED IS SUPPORTED BY BILLS AND REGISTERED VALUERS REPOR T, THE SAME COULD NOT BE DISREGARDED. HE REFERRED PAGE NOS. 9 TO 19, 88 TO 203 OF THE PAPER BOOK WHEREIN COPY OF REGISTERED VALUERS REPORTS SUPPORT ED BY BILLS AND VOUCHERS 4 HAVE BEEN MADE AVAILABLE. HE SUBMITTED THAT THESE DOCUMENTS WERE NOT FILED BEFORE THE ASSESSING OFFICER SINCE NO PROPER OPPORT UNITY WAS PROVIDED. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS IN SUPPO RT OF HIS CONTENTIONS THAT ISSUANCE OF NOTICE UNDER SEC. 251(2) IS MANDATORY F OR THE LEARNED CIT(APPEALS) BEFORE MAKING ENHANCEMENT: I) VEERAPPA T. SHETTY ITA NO. 5276/MUMBAI/2011 D ATED 30.5.2012; II) MANOJ JINDAL ITA NO. 242/JP/2011 DATED 22.7. 2011; & III) CIT VS. LOTTE INDIA CORPORATION LTD. 290 IT R 248 (MAD.). 5.1 THE LEARNED AR ALSO PLACED RELIANCE ON SEVERAL DECISIONS INCLUDING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F SERGAM CINEMA VS. CIT, 328 ITR 513 (S.C) IN SUPPORT OF HIS CONTENTION THAT SINCE THE EXPENDITURE INCURRED WAS SUPPORTED BY BILLS AND REG ISTERED VALUERS REPORT, THE SAME COULD NOT BE DISREGARDED. 6. THE LEARNED DR ON THE OTHER HAND PLACED RELIANCE ON THE FIRST APPELLATE ORDER. 7. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW, WE FIND THAT THEY HAVE ASSIGNED SEVERAL REASONS FOR NON-RELIANCE UPON THE REPORT OF 5 REGISTERED VALUER. WE, HOWEVER, FIND THAT THE LEARN ED CIT(APPEALS) WHILE ENHANCING THE ADDITION BASED UPON THE REPORT OF DVO REFERRED BY HIM, HAS NOT ISSUED NOTICE UNDER SEC. 251(2) OF THE ACT TO T HE ASSESSEE. AT PAGE NO.5, THE LEARNED CIT(APPEALS) HAS NOTED THAT THE REPRESE NTATIVE OF THE ASSESSEE DID NOT AVAIL THE OPPORTUNITY TO REBUT THE VALUATIO N REPORT. THUS, IT IS OBVIOUS THAT THE ASSESSEE WAS HAVING NO OCCASION TO CONFRON T THE VALUATION REPORT OF THE DVO OR THE PROPOSED ENHANCEMENT OF ADDITION BY THE LEARNED CIT(APPEALS) FROM AN AMOUNT ADDED ON THIS ACCOUNT B Y THE ASSESSING OFFICER. WE, THUS IN THE INTEREST OF JUSTICE REMAND THE MATTER BACK TO THE FILE OF THE LEARNED CIT(APPEALS) TO COMPLY WITH THE PROV ISIONS LAID DOWN UNDER SEC. 251(2) OF THE INCOME-TAX ACT, 1961 AND TO DECI DE THE MATTER ACCORDINGLY AFTER AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUND IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPO SES. 8. IN RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 11.03.2015 SD/- SD/- ( B.C. MEENA ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11/03/2015 MOHAN LAL 6 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR DATE DRAFT DICTATED ON COMPUTER 11.03.2015 DRAFT PLACED BEFORE AUTHOR 11.03.2015 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 11.03.2015 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 12.03.2015 KEPT FOR PRONOUNCEMENT ON FILE SENT TO THE BENCH CLERK 13.03.2015 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.