The Addl.CIT, Khandwa V. M/s. Prakash Ubeja Super Specialist Hospital, Indore

ITA 43/IND/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 5873 (ITAT-INDORE)
• Duration Of Justice: 40 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2010
• Appeal Filed By: Department
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Keywords: Unexplained investment; Additional evidence
• Section: 133A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.43/IND/2010 A.Y. 2006-07 ADDL. CIT, KHANDWA APPELLANT VS M/S. PRAKASH UBEJA SUPER SPECIALIST HOSPITAL KHANDWA RESPONDENT APPELLANT BY : SHRI P.K. MITRA, SR. DR RESPONDENT BY : SHRI MAHESH AGRAWAL, ADVOCATE O R D E R PER JOGINDER SINGH, JM THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A)-II, INDORE, DATED 27.10.2009 ON THE GROUND T HAT THE LD. FIRST APPELLATE AUTHORITY ERRED IN DELETING THE ADDITION OF RS.22,50,397/- MADE ON ACCOUNT OF DIFFERENCE IN VALUATION AS ESTIMATED BY THE DVO AGAINST ACTUAL COST OF BUILDING, FURNITURE AND FIXTURES. 2 2. DURING HEARING OF THIS APPEAL, WE HAVE HEARD SHR I P.K.MITRA, LD. SENIOR DR AND SHRI MAHESH AGRAWAL, LD. COUNSEL FOR THE ASSESSEE. THE CRUX OF ARGUMENT ON BEHALF OF THE REVENUE IS IDENTI CAL TO THE GROUND RAISED BY FURTHER SUBMITTING THAT SURVEY U/S 133A O F THE ACT WAS CARRIED OUT IN THE CASE OF THE ASSESSEE ON 31.9.2005 WHEREI N CERTAIN DISCREPANCIES, ON ACCOUNT OF CASH AND INVESTMENT IN BUILDING, FURNITURE AND FIXTURES, WERE FOUND, FOR WHICH, OUR ATTENTION WAS INVITED TO ANNEXURE-A1 (PAGE 2) WITH THE IMPUGNED ORDER. IT WA S CLAIMED THAT EVEN THE ASSESSEE ACCEPTED THAT THERE WAS UNDISCLOSED IN VESTMENT IN THE CONSTRUCTION OF BUILDING FOR WHICH EVEN SURRENDER W AS MADE BY THE ASSESSEE. THE ASSESSMENT ORDER WAS DEFENDED. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSE E CONTENDED THAT THE ASSESSEE IS A PARTNERSHIP CONCERN MADE INV ESTMENT IN THE CONSTRUCTION OF A HOSPITAL WHICH STARTED IN JULY, 2 004. IT WAS CLAIMED THAT SURVEY WAS CONDUCTED ON 21.9.2005 WHEREIN NOTHING I NCRIMINATING WAS FOUND AND SIMPLY TO AVOID LITIGATION AND TO MAINTAI N PEACE WITH DEPARTMENT, THE AMOUNT WAS SURRENDERED. THE YEAR-WI SE BREAKUP OF INVESTMENT MADE IN THE CONSTRUCTION WAS CLAIMED TO BE FURNISHED BEFORE THE REVENUE AUTHORITIES. IT WAS FURTHER SUBMITTED T HAT THE DVO INSPECTED THE SITE ON 15.10.2008 AND SUBMITTED HIS REPORT ON 22.12.2008. PLEA WAS ALSO RAISED THAT THE PAYMENTS WERE MADE AFTER DEDUC TING THE TDS. THE CRUX OF THE ARGUMENTS WAS THAT IT WAS A CONTRACT OF CONSTRUCTION OF 3 BUILDING WITH MATERIAL, THEREFORE, THE VALUATION AT RS.736/SQ. FT. ADOPTED BY THE DVO IS QUITE HIGH AGAINST THE RATE OF RS.330 TO 350/SQ. FT. AS AGREED THROUGH AN AGREEMENT/CONTRACT, ESPECIALLY WH EN NO FAULT WAS FOUND IN THE AGREEMENT. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MARTIAL AVAILABLE ON THE FILE. THOUGH THE ASSESSEE HAS TAKEN THREE GROUNDS OF APPEAL BUT THE EFFECTIVE GROUND IS ONLY NUMBER TWO AS THE REMAINING GROUNDS ARE GENERAL IN NATURE. BRIEF FACT S ARE THAT THE ASSESSEE IS A PARTNERSHIP CONCERN CARRYING ON THE B USINESS OF RUNNING A HOSPITAL STARTING CONSTRUCTION IN JULY, 2004. THE A SSESSEE ENTERED INTO AN AGREEMENT (WITH MATERIAL CONTRACT) WITH A CONSTR UCTION FIRM NAMELY, M/S. AYADI BUILDCON (P) LTD. FOR THE CONSTRUCTION O F THE HOSPITAL BUILDING. THE CONSTRUCTION WAS CLAIMED TO BE BETWEEN MARCH, 2 003 TO 31.3.2006. A SURVEY WAS CONDUCTED AT THE PREMISED OF THE ASSES SEE ON 22.9.2005 WHERE THE ASSESSEE HAS DECLARED A SUM OF RS.35 LAKH S (RS.27 LAKHS FOR BUILDING AND FURNITURE/FIXTURES AND RS.8 LAKHS CASH ) TOWARDS UNDISCLOSED SOURCE OF INCOME. THE ASSESSEE SHOWED TOTAL INCOME OF RS.34,21,050/-. HOWEVER, THE LD. ASSESSING OFFICER MADE AN ADDITION OF RS.22,50,397/- TO THE TOTAL INCOME OF THE ASSESSEE AS A DIFFERENCE BETWEEN THE VALUE ESTIMATED BY THE DVO AND DECLARED BY THE ASSESSEE. ON APPEAL, THE IMPUGNED ADDITION WAS DELETED BY THE LD. CIT(A) WHI CH IS UNDER 4 CHALLENGE BY THE REVENUE BEFORE THIS TRIBUNAL. THE FINDINGS OF THE LD. ASSESSING OFFICER ARE AS UNDER: THE REPLY OF THE ASSESSEE IS CONSIDERED. THERE IS DIFFERENCE OF RS.22,50,397/- INVESTMENT IN BUILDING & FURNITURE AS SHOWN BY THE ASSESSEE AND AS ESTIMATED BY DVO. SINCE ASSESSEE IS NOT MAINTAINING BILLS AND VOUCHERS FOR THESE EXPENSES, IT IS NOT POSSIBLE TO VERIFY THE CORRECTNESS OF THE EXPENDITURE INCURRED AT THIS STAGE. ASSESSEE HAS GIVEN CONTRACT WITH MATERIAL TO M/S. AYADI BUILDERS AND ASSESSEE HAS MADE PAYMENT TO CONTRACTOR ON THE BASIS OF BILLS ISSUED BY IT. ALTHOUGH ASSESSEE HAS RAISED OBJECTION ON THE REPORT OF DVO, BUT IT I S NOT POSSIBLE AT THIS STAGE TO REFER IT BACK TO DVO S COMMENTS. HENCE DIFFERENCE OF RS.22,50,397/- IS ADDED BACK TO THE TAXABLE INCOME OF THE ASSESSEE. IF THE CONCLUSION DRAWN IN THE ASSESSMENT ORDER, AR GUMENTS ADVANCED BY THE LD. RESPECTIVE COUNSEL AND THE DOCUMENTS AVA ILABLE ON RECORD ALONG WITH REPORT OF THE DVO DATED 2.9.2009 ARE ANA LYSED, IT IS FOUND THAT THE ASSESSEE ENTERED INTO AN AGREEMENT WITH MA TERIAL AND LABOUR FOR THE CONSTRUCTION OF THE BUILDING, THEREFORE, OB VIOUSLY THERE IS NO REQUIREMENT OF MAINTAINING ANY BILL OR VOUCHER PERT AINING TO LABOUR AND MATERIAL, CONSEQUENTLY, THE OBSERVATION OF THE ASSE SSING OFFICER REGARDING NON-MAINTENANCE OF BILLS AND VOUCHERS IS NOT THE CORRECT APPROACH AS THESE DOCUMENTS ARE NOT REQUIRED QUA TH E ASSESSEE. EVEN THE DVO ESTIMATED THE EXPENDITURE AT RS.29.3 LAKHS AGAINST THE VALUATION BY THE REGISTERED VALUER AT RS.20.34 LAKH S, THEREFORE, ANY ADDITION IS COVERED BY THE SURRENDER OF RS.27 LAKHS MADE BY THE 5 ASSESSEE. IN THE ASSESSMENT ORDER, IT HAS NOWHERE B EEN MENTIONED THAT CERTAIN EXTRA EVIDENCES WERE COLLECTED DURING SURVE Y OPERATION INDICATING ANY UNEXPLAINED OR ADDITIONAL INVESTMENT IN THE CONSTRUCTION OF THE BUILDING. THEREFORE, UNLESS IT IS ESTABLISHED T HAT THE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND THE CONTRACTO R IS A COLOURFUL DEVICE, NO FURTHER ADDITION IS REQUIRED TO BE MADE AS UNEXPLAINED INVESTMENT. ACCORDINGLY, THERE IS NO INFIRMITY IN T HE IMPUGNED ORDER ESPECIALLY WHEN THE LD. CIT(A) HAS DELIBERATED UPON THE ISSUE WITH THE HELP OF VARIOUS JUDICIAL PRONOUNCEMENTS INCLUDING C IT VS. PREMNATH MOTORS P. LTD. (265 ITR 331 ) (RAJ), CIT VS. HOTEL JOSHI (242 ITR 478) (RAJ), ITO VS. PRAKASH CHAND SONI (94 TLD 63), ITO VS. DC JAIN (8 ITJ 260) (INDORE), ITO VS. SMT. SANTOSH KHANNA (20 TAXM AN 15) (JP), OM BAGADIA (HUF), UJJAIN VS. ACIT (28 ITC 308), SHRI R AJEEV MEWADA (ITA NO.234/IND/2007) ETC. ESPECIALLY WHEN A DETAILED VA LUATION REPORT DETERMINING THE COST OF CONSTRUCTION, WAS FURNISHED BY THE ASSESSEE BEFORE THE REVENUE AUTHORITY/APPELLATE AUTHORITY. T HEREFORE, THERE IS NO JUSTIFICATION IN MAKING THE ADDITION ON THE BASIS O F ESTIMATION MADE BY THE DVO, THAT TOO, IN THE ABSENCE OF ANY CONTRARY M ATERIAL ON RECORD. NO FAULT WAS FOUND BY THE LD. ASSESSING OFFICER IN THE AGREEMENT, THEREFORE, IN THE ABSENCE OF ANY MATERIAL LEADING TO DISBELIEV E THE CREDIBILITY OF SUCH AGREEMENT, THE ASSESSING OFFICER IS NOT JUSTIF IED TO BE CARRIED AWAY MERELY BY THE REPORT OF THE DVO WHICH IS JUST AN ES TIMATION WHEREAS 6 CONSTRUCTION COST INCURRED IN TERMS OF AGREEMENT DU LY EXECUTED WITH CONSTRUCTION COMPANY IS A MATTER OF RECORD. ALL TH E PAYMENT TO CONSTRUCTION COMPANY WAS MADE AFTER DEDUCTING TAX A T SOURCE. NOTHING WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER TO S USPECT OR DISBELIEVE THE GENUINENESS OF THE CONSTRUCTION CONTRACT OR THE RATE AT WHICH IT WAS ENTERED INTO. SINCE THE AGREEMENT FOR CONSTRUCTION OF BUILDING WAS GIVEN ALONG WITH MATERIALS, THE ASSESSEE IS NOT SUPPOSED TO KEEP THE BILLS/VOUCHERS OF SUCH MATERIALS. THE ASSESSING OFF ICER HIMSELF RECORDED A FINDING TO THE EFFECT THAT ASSESSEE HAS MADE PAYM ENT TO CONSTRUCTION COMPANY ON THE BASIS OF BILLS ISSUED BY IT. ACCORD INGLY, THE ASSESSEE WAS TO KEEP THE BILLS ISSUED BY CONSTRUCTION COMPAN Y RATHER THAN BILLS OF INDIVIDUAL MATERIALS. THE RATIO LAID DOWN IN THE CA SE OF ACIT VS. C. SUBBA RADDI (2005) TAX LR 373 (MAD) FURTHER SUPPORT S THE CASE OF THE ASSESSEE. EVEN OTHERWISE, IF THE EXPLANATION FURNIS HED BY THE ASSESSEE IS NOT ACCEPTABLE TO THE REVENUE THEN THE ONUS ALSO SHIFTS TO THE REVENUE. THIS VIEW IS SUPPORTED BY CIT VS. DAYA CHA ND JAIN VAIDYA (98 ITR 280) (ALL). IN VIEW OF THESE FACTS AND JUDICIAL PRONOUNCEMENTS, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), T HEREFORE, IT IS AFFIRMED. FINALLY, THE APPEAL OF THE REVENUE IS HAVING NO ME RIT, THEREFORE, DISMISSED. 7 ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH NOVEMBER, 2010. (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18.11.2010 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE !VYAS!