Shri Hashmukhbhai K.Dhanani, Surat V. The Incom tax Officer,Ward-9(2), Surat

ITA 425/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60515 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 09-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: P M MEHTA
• Keywords: Unexplained investment; Valuation report
• Section: 69

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , .'# ,$% $ & BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A. NO.425/AHD/2010 ( # ( # ( # ( # ( / / / / ASSESSMENT YEAR : 2006-07) HASMUKHBHAI K.DHANANI 4, KAMAL PARK SOCIETY B/H HAKIM CHICHI PHARMACY, NR.SIDHDHA KUTIR VARACHHA ROAD, SURAT # # # # / VS. THE ITO WARD-9(2) SURAT ) $% ./*+ ./ PAN/GIR NO. : AAUPD 7539 B ( ), / // / APPELLANT ) .. ( -.),/ RESPONDENT ) ), / $/ APPELLANT BY : SHRI P.M. MEHTA, A.R. -.), 0 / $ / RESPONDENT BY : SHRI B.L.YADAV, SR.D.R. #1 0 %/ // / DATE OF HEARING : 30/05/12 2'( 0 % / DATE OF PRONOUNCEMENT : 15/6/12 $3/ O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE ARISING FROM THE ORDER OF LEARNED CIT(APPEALS)-V, SURAT DATED 12/11/2009 PASSED FOR A .Y. 2006-07 AND THE ONLY GROUND IS REPRODUCED BELOW:- 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CA SE, THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS.15,96,780 /- MADE BY THE A.O. UNDER SECTION 69 OF THE I.T. ACT IN RESPECT OF ALLE GED UNEXPLAINED INVESTMENT ON RENOVATION OF BUNGALOW. ITA NO .425/AHD/2010 HASMUKHBHAI K. DHANANI VS. ITO ASST.YEAR - 2006-07 - 2 - 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T. ACT, 1961 DATED 30/1 2/2008 WERE THAT THE ASSESSEE IN INDIVIDUAL CAPACITY IS IN THE BUSINESS OF PROVIDING DIAMOND LABOUR WORK. APART FROM THAT, IT WAS NOTICED BY TH E ASSESSING OFFICER THAT THE ASSESSEE HAS CONSTRUCTED A RESIDENTIAL BUI LDING AND INVESTMENT WAS SHOWN AT RS.33,00,220/-. THE ASSESSING OFFICER HAS REFERRED THE MATTER TO THE DVO. THE DVO HAS ARRIVED AT THE COST OF BUNGALOW AT RS.88,96,000/-. FROM THE SAID COST, THE DVO HAS RE DUCED A SUM OF RS.40 LACS BEING RELATIVE COST OF INVESTMENT OF THE STRUCTURE PERTAINING TO THE A.Y. 2000-01. AS PER DVO, THE COST OF CONSTRUC TION FOR THE YEAR UNDER CONSIDERATION WAS THUS ARRIVED AT RS.48,96,00 0/- (RS.88,96,000 RS.40,00,000). SINCE THE ASSESSEE HAS SHOWN THE IN VESTMENT FOR THE YEAR UNDER CONSIDERATION AT RS.33,00,220/-, THEREFORE TH E DIFFERENCE OF RS.15,95,780/- (RS.48,96,000 RS.33,00,220) WAS TA XED AS UNEXPLAINED INVESTMENT IN THE HANDS OF THE ASSESSEE. BEING AGG RIEVED THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 3. THE LEARNED CIT(APPEALS) HAS AFFIRMED THE ACTION OF THE ASSESSING OFFICER PRIMARILY ON THE GROUND THAT THE ASSESSING OFFICER HAS FOLLOWED THE VALUATION AS FINALIZED BY THE DVO AND THE ASSESSEE HAS NOT POINTED OUT ANY LACUNA IN THE SAID VALUATION REPORT , HENCE THE ADDITION WAS CONFIRMED. 4. FROM THE SIDE OF THE APPELLANT, LD.AR MR.P.M.MEH TA APPEARED AND INFORMED THAT THE ASSESSEE HAD TAKEN A LOAN OF RS.5 1,81,800/- FROM ICICI BANK. THE ASSESSEE HAD DECLARED THE INVESTMENT IN THE HOUSE PROPERTY INCLUDING FURNITURE AT RS.41,20,870-/- IN THE BOOKS OF ACCOUNT. THUS, THE ITA NO .425/AHD/2010 HASMUKHBHAI K. DHANANI VS. ITO ASST.YEAR - 2006-07 - 3 - LD.AR HAS ARGUED THAT BANK GENERALLY SANCTIONS A LO AN ONLY ON THE BASIS OF THE ACTUAL VALUE OF THE PROPERTY. THE BANK HAS ASSESSED THE VALUE AS PER THE ACTUAL POSITION AND THEREUPON GRANTED THE L OAN WHICH ITSELF PROVES THAT THE VALUE AS SHOWN BY THE ASSESSEE WAS TRUE AN D CORRECT. LD.AR HAS ALSO INFORMED THAT THE HOUSE WAS CONSTRUCTED UNDER THE PROVISION OF AN ARCHITECT AND THE AMOUNT WAS PAID AS PER THE BILLS RAISED AND, THEREFORE, THE PAYMENT MADE TO ARCHITECT ITSELF PROVED THAT TH E COST OF CONSTRUCTION WAS TRUE AND CORRECT. LD.AR HAS POINTED OUT THAT T HERE WERE SO MANY DEFECTS IN THE VALUATION REPORT, EVEN THE ITEM-WISE DESCRIPTION WAS INCORRECT. THE RATES WHICH WERE APPLIED WERE EXORB ITANT AND THE DVO HAS NOT GIVEN ANY BASIS FOR APPLYING SUCH AN EXORBI TANT RATES. HE HAS ALSO DRAWN OUR ATTENTION ON THE DISCREPANCY IN THE DVOS REPORT ABOUT THE AREA IN QUESTION AND IN THAT CONTEXT, RELEVANT PARA IS AS FOLLOWS:- (2) THE VALUATION OFFICER IS ALSO WRONG IN MAKING THE VALUATION BY DETERMINING THE AREA OF THE BUNGLOW ON APPROXIMATE & TENTATIVE BASIS, THE TOTAL AREA OF THE BUNGLOW IS 534.41 SQ.MTS. AS PER THE DRAWINGS OF THE ARCHITECT, WHEREAS THE VALUATION OFFICER HAS AP PROXIMATELY GIVEN THE MEASUREMENT OF 673.00 SQ.MTS SO THERE A GROSS MISTA KE OF 138.59 SQ.MTS. WHICH RESULT INTO OVER VALUATION OF RS.17,78,000/- THE SAID ERROR MAY BE TAKEN CARE OFF & EXACT MEASUREMENT OF THE PR OPERTY MAY PLEASE BE CALLED FOR IF YOUR GOODSELF IS NOT IN AGREEMENT WITH THE MEASUREMENT SHEET ENCLOSED HEREWITH. ALSO IT IS CORRECT TO SAY THAT THE TENTATIVE COST CANNOT BE MADE THE BASE FOR MAKING THE ASSESSMENT. 5. FROM THE SIDE OF THE REVENUE, LD.SR.DR MR.B.L.YA DAV APPEARED AND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE HAS PLEADED THAT ONCE A VALUATION HAS BEEN DONE BY THE DVO, THEN THE SAID REPORT SHOULD BE FOLLOWED BY THE ASSESSING OFFICER SINCE SUCH A R EPORT IS PREPARED BY A TECHNICAL PERSON. HE HAS ALSO PLEADED THAT ON ONE HAND, THE REVENUE HAS PLACED RELIANCE OF A TECHNICAL REPORT, HOWEVER, ON THE OTHER HAND, THE ITA NO .425/AHD/2010 HASMUKHBHAI K. DHANANI VS. ITO ASST.YEAR - 2006-07 - 4 - ASSESSEE HAS NOT FURNISHED ANY REPORT OF A SPECIALI ZED PERSON TO CONFIRM THE VALUATION OF THE CONSTRUCTION. 6. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF THE COMPILATION FILED. THE PROPERTY IN QUESTION IS SITUATED AT KAMAL PARK SOCI ETY, VARACHHA, KAPODARA ROAD, NEAR SAKAR SOCIETY, SURAT. AS PER THE STATEMENT OF FACTS, THE ASSESSEE HAD INCURRED EXPENDITURE TOWAR DS RENOVATION AMOUNTING TO RS.33,00,220/-. THE ASSESSEE HAS ALSO INCURRED AN EXPENDITURE OF RS.8,22,650/- TOWARDS FURNITURE. TH E ASSESSING OFFICER HAS REFERRED THE MATTER TO THE DVO BUT THAT VALUATI ON REPORT WAS VEHEMENTLY CONTESTED BY THE ASSESSEE. THE GLARING MISTAKE HAS BEEN POINTED OUT THAT THE DVO HAS WRONGLY ADOPTED THE AR EA AT 673 SQUARE METERS, HOWEVER THE CORRECT AREA OF CONSTRUCTION WA S 534.41 SQ.MTRS. BECAUSE OF THE SAID DIFFERENCE, THE DVO HAS TAKEN E XCESSIVE AREA OF 138.59 SQ.MTS. DUE TO WHICH AN OVER-VALUATION TO TH E EXTENT OF RS.17,78,000/- WAS TAKEN BY THE DVO. AN ANOTHER FE ATURE HAS BEEN POINTED OUT THAT THE DVO HAD ADOPTED THE VALUATION RATE AT RS.7,000/- FOR BASEMENT AND RS.14,000/- FOR GROUND, FIRST AND SECO ND FLOORS. HOWEVER, THE BASIS FOR ADOPTION OF SUCH RATE HAS NOT BEEN ME NTIONED BY THE DVO. FROM THE SAID REPORT DATED 24.12.2008, IT IS NOT CL EAR THAT HOW THE DVO HAS ADOPTED THE SAID RATE OF CONSTRUCTION AND FROM WHERE HE HAS PICKED UP THE SAID CONSTRUCTION RATE. AS AGAINST THAT, TH E ASSESSEE HAS VEHEMENTLY CLAIMED THAT ALL THE PAYMENTS WERE MADE TO AN ARCHITECT AND DETAILED COPY OF ACCOUNT IN RESPECT OF THE PAYMENTS MADE WAS VERY MUCH BEFORE THE REVENUE AUTHORITIES. IN RESPECT OF DATE -WISE PAYMENT TOWARDS ITA NO .425/AHD/2010 HASMUKHBHAI K. DHANANI VS. ITO ASST.YEAR - 2006-07 - 5 - RENOVATION OF THE PROPERTY PAID TO THE CONSULTANT, THE REVENUE AUTHORITIES HAVE NOT FOUND ANY DISCREPANCY. IN SUPPORT OF THE EXPENDITURE INCURRED AN INDIRECT EVIDENCE, I.E. LOAN TAKEN FROM THE BANK ON THE SAID PROPERTY HAS ALSO BEEN FURNISHED. ON THE BASIS OF THESE FAC TS, WE ARE OF THE VIEW THAT IN THE ABSENCE OF ANY DISCREPANCY NOTED BY THE REVENUE DEPARTMENT IN RESPECT OF THE DETAILS OF THE EXPENDITURE SUBMIT TED BY THE ASSESSEE, IT WAS NOT JUSTIFIABLE ON THE PART OF THE REVENUE AUTH ORITIES TO REJECT THE VALUATION OF THE PROPERTY AS SUBMITTED BY THE ASSES SEE. RATHER, IN THE CASE OF CIT VS. LUCKNOW PUBLIC EDUCATIONAL SOCIETY 339 ITR 588 (ALL.), THE HON'BLE ALLAHABAD HIGH COURT HAS EXPRESSED AN O PINION THAT THE ASSESSING OFFICER REFERRED MATTER TO THE DEPARTME NTAL VALUATION OFFICER WITHOUT FIRST REJECTING THE BOOKS OF ACCOUNT. WHIL E PRONOUNCING THE SAID JUDGEMENT, THE HON'BLE HIGH COURT HAS APPLIED THE R ATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF SARGAM CINEMA VS. CIT 328 ITR 513 (SC). UNDER THE TOTALITY OF THE CIRCUMSTANCES OF THE CASE, WE HEREBY REVERSE THE FINDINGS OF THE AUTHORITIES BELOW AND D IRECT TO DELETE THE ADDITION. GROUND IS ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . SD/- SD/- ( .'# ) ( ) $% ( A. MOHAN ALANKAMONY ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIA L MEMBER AHMEDABAD; DATED 15 / 6 /2012 4..#, .#../ T.C. NAIR, SR. PS ITA NO .425/AHD/2010 HASMUKHBHAI K. DHANANI VS. ITO ASST.YEAR - 2006-07 - 6 - $3 0 -5 6$5( $3 0 -5 6$5( $3 0 -5 6$5( $3 0 -5 6$5(/ COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT 3. 7 / CONCERNED CIT 4. 7() / THE CIT(A)-V, SURAT 5. 5:; -# , , / DR, ITAT, AHMEDABAD 6. ; <1 / GUARD FILE. $3# $3# $3# $3# / BY ORDER, .5 - //TRUE COPY// = == =/ // / * * * * ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION..11.6.12 & 12.6.12 (DICTATION-PA D PAGES 12 ATTACHED) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13.6.12 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S15.6.12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 15.6.12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER