ITO, SIROHI V. M/s. Shree Nath Hotel, SIROHI

ITA 423/JODH/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9448 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 03-07-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ARUN CHOW RASIA
• Keywords: Rejection of books of accounts; Unexplained investment; Valuation report

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI V.D. RAO, JUDICIAL MEMBER ITA NO: 423 / JU /2009 ASSTT. YEAR: 2006 -2007 INCOME TAX OFFICER, VS M/S SHREE NATH HOTEL, SIROHI. NEAR BUS STAND, SHEOGANJ, SIROHI. PAN: ABHFS 5257 M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AVADESH KUMAR, D.R., RESPONDENT BY : SHRI ARUN CHOW RASIA, A.R., ORDER PER V.D. RAO: JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER PASSED BY THE LD. CIT (APPEALS), JODHPUR, DATED 1-7-2009, REL ATING TO ASSESSMENT YEAR 2006-2007. THE REVENUE HAS RAISED THE SOLE GR OUND OF APPEAL. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT (A), JODHPUR HAS ERRED IN DELETION OF RS.8,17,699/- MADE ON ACCO UNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION OF HOTEL BUILDING. 2 2. THE FACTS ARE IN BRIEF THAT THE ASSESSEE IS IN T HE HOTEL BUSINESS AND CONSTRUCTED A HOTEL BUILDING. THE ASSESSEE FILED H IS RETURN OF INCOME AS PER HIS RETURN, HE HAS SHOWN THE INVESTMENT IN THE CONS TRUCTION OF HOTEL OF RS.12,29,775/-. AFTER VERIFICATION OF THE RETURN FI LED BY THE ASSESSEE, THE ASSESSING OFFICER OF THE OPINION THAT THE VALUATION SHOWN BY THE ASSESSEE FOR THE CONSTRUCTION OF THE HOTEL APPEARS TO BE LOW VAL UE AND HE REJECTED THE BOOKS OF ACCOUNTS FILED BY THE ASSESSEE AND HE REFE RRED THE MATTER TO THE VALUATION OFFICER TO ESTIMATE THE INVESTMENT OF THE ASSESSEE. THE VALUATION OFFICER ESTIMATED THE VALUATION OF THE PROPERTY ON THE BASIS OF CPWD RATES. THE ASSESSING OFFICER HAS CALLED THE COMMENTS OF TH E ASSESSEE WITH REGARD TO THE REPORT SUBMITTED BY THE VALUATION OFFICER. 3. THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE VALUATION OFFICER HAS NOT GIVEN SUFFICIENT OPPORTUN ITY AND FOLLOWED THE CPWD RATES WHICH IS NOT COVERED UNDER THE PLINTH AR EA RATES AND THE PWD RATES ARE SUITABLE TO THE ASSESSEES CASE. HOWEVER , THE ASSESSING OFFICER WITHOUT GIVING ANY SUFFICIENT REASON BY FOLLOWING T HE REPORT SUBMITTED BY THE VALUATION OFFICER, HE HAS ESTIMATED THE INVESTMENT OF THE ASSESSEE ON THE HOTEL CONSTRUCTION OF RS. 20,47,474/- AS AGAINST TH E DECLARATION MADE BY THE ASSESSEE OF RS.12,29,775/-. THE DIFFERENCE AMOUNT OF RS.8,17,699/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3 4. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE THE CIT (A) AND SUBMITTED THAT WITHOUT POINTING OUT ANY DEFECTS IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE, THE ASSESSI NG OFFICER HAS REJECTED THE BOOKS OF ACCOUNTS. THE ASSESSEE HAS MAINTAINED EACH AND EVERY EXPENDITURE PARTICULARS IN RESPECT OF CONSTRUCTION OF HOTEL AND, THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING TH E BOOKS OF ACCOUNTS OF THE ASSESSEE. IT WAS ALSO SUBMITTED BEFORE THE LD. CIT (A) THAT THE METHOD OF PWD FOR THE PURPOSE OF VALUATION IS MORE APPROPRIAT E THAN THE CPWD AND THE OBJECTION RAISED BY THE ASSESSEE, REQUEST TO AP PLY METHOD OF PWD WAS NOT ANSWERED BY THE ASSESSING OFFICER. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE LD. CIT (A) HAS DELETED THE ADDITION MADE BY THE ASSESSEE ON THE GR OUND THAT THE AO HAS REJECTED THE BOOKS OF ACCOUNTS WITHOUT ANY REASON A ND THE AO ALSO REFUSED THE REQUEST OF THE ASSESSEE WITH REGARD TO APPLICAT ION OF PWD RATES. ON BEING AGGRIEVED, REVENUE CARRIED THE MATTER IN APPE AL BEFORE THE TRIBUNAL. 6. THE LD. D.R. HAS SUBMITTED THAT THE INVESTMENT S HOWN BY THE ASSESSEE IS MUCH LOWER THAN WHAT ACTUALLY INVESTED AND THE A SSESSING OFFICER HAS RIGHTLY REFERRED FOR VALUATION TO THE VALUATION OFF ICER. THE VALUATION OFFICER CORRECTLY SUBMITTED HIS REPORT BY FOLLOWING THE CPWD METHOD. HE STRONGLY SUPPORTED THE ORDER PASSED BY THE ASSESSIN G OFFICER. 4 7. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESS EE STRONGLY SUPPORTED THE ORDERS PASSED BY THE LD. CIT (A) AND SUBMITTED THAT (I) THE BOOKS OF ACCOUNTS WERE PROPERLY MAINTAINED BY THE ASSESSEE A ND THE ASSESSING OFFICER HAS WRONGLY REJECTED THE BOOKS OF ACCOUNTS AND (II) THE ASSESSING OFFICER REFERRED ISSUE TO THE VALUATION OFFICER WIT HOUT ANY REASON. 8. WE HAVE HEARD BOTH THE SIDES, PERUSE THE RECORDS AND GONE TO THE ORDERS OF THE AUTHORITIES BELOW. 9. THE ASSESSEE HAS CONSTRUCTED A HOTEL. ACCORDING TO HIM HIS INVESTMENT FOR THE CONSTRUCTION OF HOTEL IS RS.12,2 9,775/- AND ACCORDING TO ASSESSING OFFICER IT IS A LOWER SIDE AND HE HAS REF ERRED THE MATTER TO VALUATION OFFICER WHERE THE VALUATION OFFICER, BY A PPLYING THE CPWD RATES, HAS ESTIMATED THE COST OF CONSTRUCTION WHICH THE A SSESSEE WAS OBJECTED. ACCORDING TO THE ASSESSEE, PWD RATES ARE MORE SUITA BLE TO THE ASSESSEES CASE. WHEN THE ASSESSEE HAS SUBMITTED THAT PWD RAT ES HAS TO BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF ESTIMATION OF VALU E, OBJECTED THE APPLICATION OF CPWD RATES. THE AO WITHOUT GIVING ANY REASONS A DOPTED THE CPWD RATES AND THE CONSTRUCTION COST WAS ADOPTED OF RS. 20,47,474/-. THE COST OF CONSTRUCTION IS DEPEND UPON VARIOUS FACTORS, PARTIC ULARLY RAW MATERIAL, LIKE CEMENT, IRON, SAND AND LABOUR AND IT DIFFERS FROM O NE PLACE TO ANOTHER. THE VALUATION OF PROPERTY IS BASICALLY DEPENDING UPON T HE MATERIAL USED, THE 5 LOCATION OF PROPERTY AND THE QUALITY OF CONSTRUCTIO N. THEREFORE, WE ARE OF THE OPINION THAT IN THE PRESENT CASE THE ASSESSING OFFI CER HAS WRONGLY ADOPTED THE CPWD RATES BY FOLLOWING THE VALUATION REPORT. T HE LD. COUNSEL FOR THE ASSESSEE BEFORE US RELIED ON THE HONBLE JURISDICTI ONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V/S SMT. PREM KUMARI MUR DIA (296 ITR 508) (RAJ), WHEREIN THE HONBLE JURISDICTIONAL HIGH COURT UPHE LD THE TRIBUNAL ORDER WHEREIN THE TRIBUNAL HAS DIRECTE D THE ASSESSING OFFICER TO ADOPT THE PWD RATES INSTEAD OF CPWD RATES. 10. WE, THEREFORE, BY TAKING INTO CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF SMT. PREM KUMARI MURDIA (SUPRA ), WE SET ASIDE THE ORDER PASSED BY THE CIT (A) AND DIRECT THE ASSESSIN G OFFICER TO REFER THE ISSUE TO THE VALUATION OFFICER FOR FAIR ESTIMATION OF VALUE AS PER PWD RATES AND WE ALSO DIRECT THE AO TO ADOPT THE PWD RATES IN STEAD OF CPWD, AFTER BEING GIVEN REASONABLE OPPORTUNITY TO THE ASSESSEE. IN THE RESULT, APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PUR POSE. 11. ORDER WAS PASSED IN THE OPEN COURT DATED ON 11 TH FEBRUARY, 2011. SD/- SD/- (S.V. MEHROTRA) (V.D. RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH FEBRUARY,2011 KAMAL KUMAR 6 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. INCOME-TAX OFFICER 4. CIT 5. D/R 6. GUARD FILE