S.V. Builders & Developers, Ratnagiri V. ITO, Ward-2, Ratnagiri

ITA 442/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85171 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 15-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Unexplained investment; Principle of natural justice; Corroborative evidences; Valuation report
• Section: 131; 69; 148; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO S. 439, 440, 441 & 442 /PN/20 1 3 ASSESSMENT YEAR S : 200 4 - 05 TO 2007 - 08 S V BUI LDERS & DEVELOPERS, C/O. M/S. S.V. JEWELLERS, SHIVAJI CHOWK, DEVRUKH, RATNAGIRI VS. INCOME TAX OFFICER, WARD 2, RATNAGIRI (APPELLANT) (RESPONDENT) PAN NO. ABQFS8750G REVENUE BY: SHRI B.C. MALAKAR ASSESSEE BY: SHRI SHARAD SHAH DATE OF HEA RING : 2 8 - 10 - 2014 DATE OF PRONOUNCEMENT : 26 - 11 - 2014 ORDER PER R.S . PADVEKAR , JM : - TH IS BATCH OF FOUR APPEALS ARE FILED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER S OF THE LD. CIT(A) , KOLHAPUR DATED 09 - 11 - 2012 FOR THE A.YS. 200 4 - 05, 2005 - 06, 2006 - 07 & 2007 - 08. THE ASSESSEE HAS TAKEN THE MULTIPLE GROUNDS IN ALL THE APPEALS WHICH ARE OTHERWISE VERBATIM , S AVE THE GROUND NO. 2, IN WHICH ONLY THE FIGURE OF QUANTUM ADDITION IS DIFFERENT . THE GROUNDS TAKEN BY THE ASSESSEE IN THE A.Y. 2004 - 05 READ AS UN DER: 1. THE LEARNED A.O. ERRED IN MAKING ASSESSMENT WITHOUT FOLLOWING THE PROCEDURE OF ASSESSMENT AS LAID DOWN BY THE INCOME TAX ACT, 1961 READ WITH PRINCIPLE OF NATURAL JUSTICE. 2. THE LEARNED A.O. ERRED IN ASSESSING THE INCOME OF THE ASSESSEE FIRM AT RS.11,7 9,660/ - FOR A.Y. 2004 - 05. 3. THE LEARNED A.O. ERRED IN CONSIDERING THE VALUE OF CONSTRUCTION TO BE RS.1,68,53,000/ - AS AGAINST THE VALUATION BY THE ASSESSEE OF RS.87,37,630/ - . 2 ITA NO S. 439, 440, 441 & 442/PN/2013, S V BUILDERS & DEVELOPERS, RATNAGIRI 4. THE LEARNED CIT - A ERRED IN NOT RELYING ON THE VALUATION MADE BY THE ASSESSEES EN GINEER AT RS.87,37,630/ - . 5. THE LEARNED CIT - A ERRED IN NOT RELYING ON THE VALUATION OF THE PROPERTY TO BE RS.94,08,632/ - AS VALUED BY REGISTERED VALUER. 2. THE CORE ISSUE IN CONTROVERSY IN THIS BATCH OF APPEALS IS THE ADDITION S MADE BY THE ASSESSING OFFIC ER U/S. 69 TOWARDS THE UNEXPLAINED INVESTMENT IN THE BUILDING CONSTRUCTED BY THE ASSESSEE FIRM AT DEVRUKH IN DISTT. - RATNAGIRI. THE ASSESSEE IS A PARTNERSHIP FIRM. THERE WAS A SURVEY ACTION IN THE CASE OF M/S. S V JEWELLERS, RATNAGIRI AND DEVRUKH ON 31 - 01 - 2008. IN THE SURVEY ACTION IT WAS REVEALED THAT THE PARTNERS OF M/S. S V JEWELLERS I.E. SH RI V M JAGUSHTE AND SHRI S V PATOLE HA VE UNDERTAKEN CONSTRUCT ION OF A RESIDENTIAL COMPLEX S V PLAZA AT DEVRUKH, DISTT. - RATNAGIRI WHICH WAS CLAIMED TO BE CONSTRUCT ED BY THE PRESENT ASSESSEE FIRM. DURING THE COURSE OF ASSESSMENT IN THE CASE OF M/S. S V JEWELLERS, THE STATEMENT OF A PARTNER , SHRI S V PATOLE WAS RECORDED U/S. 131 OF THE ACT AND WHO STATED IN THE STATEMENT THAT THE FUNDS FOR CARRYING OUT CONSTRUCTION A CTIVITY WAS NOT CONTRIBUTED BY M/S. S V JEWELLERS BUT THE SAID ACTIVITY WAS CARRIED OUT ON THE BASIS OF THE ADVANCES COLLECTED FROM THE P ROSPECTIVE BUYERS OF THE FLATS /UNITS . THE ASSESSEE FIRM HAD NOT FILED THE RETURN OF INCOME IN ALL THESE FOUR ASSESSMEN T YEARS. THE ASSESSING OFFICER, THEREFORE, ISSUED THE NOTICES U/S. 148 OF THE ACT TO THE ASSESSEE FIRM FOR ALL THE FOUR ASSESSMENT YEARS BEFORE US. THE ASSESSEE EXPRESS HIS INABILITY TO FILE THE RETURN OF INCOME ON THE REASON THAT THE BOOKS OF ACCOUNT AN D CONNECTED RECORD OF THE ASSESSEE FIRM WHICH WAS MAINTAINED AT THE SITE OFFICE SITUATED NEAR THE RIVULET , WERE DESTROYED AS A RESULT OF FLOOD. THE ASSESSING OFFICER PROCEEDED TO COMPLETE THE ASSESSMENT S AND PUT HIS EFFORTS FOR GATHERING THE INFORMATION F ROM THE DIFFERENT SOURCES FOR DETERMINING THE INCOME OF THE ASSESSEE FIRM. THE ASSESSING OFFICER GATHERED THE INFORMATION FROM THE 20 FLAT BUYERS IN RESPECT OF THE ADVANCES RECEIVED BY THE ASSESSEE 3 ITA NO S. 439, 440, 441 & 442/PN/2013, S V BUILDERS & DEVELOPERS, RATNAGIRI FIRM. ON THE BASIS OF THE INFORMATION GATHERED , IT WAS N OTICED BY THE ASSESSING OFFICER THAT THE 20 FLAT BUYERS, WHO HAD BOOKED THE FLATS IN THE ASSESSEE RESIDENTIAL COMPLEX HAVE PAID RS.74,98,000/ - TO THE ASSESSEE FIRM. A S NO RECORD WAS PRODUCED BY THE ASSESSEE , T HE ASSESSING OFFICER REFERRED THE MATTER FOR V ALUATION OF S.V. PLAZA AT DEVRUKH TO THE DEPARTMENTAL VALUATION OFFICER (DVO), SOLAPUR, WHO COMPLETED THE VALUATION AND FURNISHED THE VALUATION REPORT OF S V PLAZA A RESIDENTIAL - CUM - COMMERCIAL COMPLEX , DETERMINING THE VALUE OF THE SAID COMPLEX AT RS.1,68 ,53,000/ - . THE COPY OF V ALUATION REPORT WAS FURNISHED TO THE ASSESSEE FOR THEIR RESPONSE. AS NOTED BY THE ASSESSING OFFICER THE ASSESSEE DID NOT FILE THE RETURN OF INCOME NOR PRODUCE THE BOOKS OF ACCOUNT WHEN THE ASSESSEES ASSESSMENT WAS TO BE COMPLETED . IT APPEARS THAT THE ASSESSEE FILED THE COST OF CONSTRUCTION OF BUILDING AS UNDER: F.YS. A.YS. COST FOR CONSTRUCTION OF BUILDING 2003 - 04 2004 - 05 RS.10,25,400/ - 2004 - 05 2005 - 06 RS.15,30,000/ - 2005 - 06 2006 - 07 RS.30,45,100/ - 2006 - 07 2007 - 08 RS.30 ,15,000/ - TOTAL RS.86,15,500/ - 3. THE ASSESSING OFFICER DID NOT ACCEPT THE COST OF CONSTRUCTION SUBMITTED BY THE ASSESSE AS THERE WAS NO SUPPORTING EVIDENCE TO THE WORKING GIVEN BY THE ASSESSEE FIRM. IT APPEARS THAT SITE ENGINEER OF THE A SSESSEE FIRM SHRI YOGESH R VANKAR PREPARED A VALUATION REPORT TOWARDS THE COST OF CONSTRUCTION OF THE SAID S V PLAZA , DETERMINING THE TOTAL COST AT RS. 87,37,630/ - . THE ASSESSING OFFICER ALSO RECORDED THE STATEMENT OF SHIR YOGESH R VANKAR, SITE ENGINEER . IN THE STATEMENT RECORD , HE STATED THAT THE TOTAL COST OF COMPLEX /PROJECT WAS RS.1,05,00,460/ - . A S SUBMITTED BY THE ASSESSEE BEFORE T HE ASSESSING OFFICER , THE PROJECT WAS NOT COMPLETED AND HENCE, THE TOTAL COST WAS INCURRED ON PARTLY 4 ITA NO S. 439, 440, 441 & 442/PN/2013, S V BUILDERS & DEVELOPERS, RATNAGIRI CONSTRUCTED COMPLEX AT RS.87,37,630/ - . THE ASSESSING OFFICER REJECTED THE VALUATION MADE BY SHRI VANKAR, SITE ENGINEER OF THE ASSESSEE AND PROCEEDED TO COMPLETE THE ASSESSMENT ON THE BASIS OF THE DVOS REPORT. THE DVO HAS VALUED THE COST OF S V PLAZA AT RS. 1,68,53,000/ - . THE ASSESSING OFFICER GAVE THE BENEFIT OF RS.74,98 , 000/ - WHICH WAS IN RESPECT OF THE ADVANCES COLLECTED FROM THE BUYERS OF THE FLATS IN THE SAID COMPLEX/ PROJECT AND DIFFERENCE OF RS.93,55,000/ - WAS TREATED AS INVESTMENT MADE BY THE ASSESSEE FROM UNEXPLAI NED SOURCES AND HE BIFURCATED SAID AMOUNT IN THE FOUR ASSESSMENT YEARS I.E. A.YS. 2004 - 05 TO 2007 - 08 AND MADE THE ADDITION AS UNEXPLAINED INVESTMENT U/S. 69 OF THE INCOME - TAX ACT. THE ASSESSING OFFICER MADE THE FOLLOWING ADDITIONS IN ALL FOUR ASSESSMENT Y EARS AS UNDER: ASSESSMENT YEARS AMOUNT 2004 - 05 RS.11,79,660/ - 2005 - 06 RS.16,01,580/ - 2006 - 07 RS.32,77,060/ - 2007 - 08 RS.32,96,700/ - TOTAL RS.93,55,000/ - 4. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDERS IN ALL FOUR ASSESSMENT YEARS BEF ORE THE LD. CIT(A). BEFORE THE LD. CIT(A) THE ASSESSEE REITERATED HIS CONTENTION THAT ALL THE RECORD OF THE ASSESSEE FIRM WAS LOST IN RESPECT OF THE S V PLAZA DUE TO FLOOD. THE ASSESSEE ALSO CONTENDED THAT THE PROJECT COULD NOT BE COMPLETED AND THERE W AS NO SALE OF ANY FLAT AND NO INCOME WAS EARNED. IT WAS CONTENDED BEFORE THE LD. CIT(A) THAT SHRI YOGESH R VANKAR, CIVIL ENGINEER WORKED OUT THE COST OF THE PROJECT AT RS. 87,37,630/ - BUT THAT WAS REJECTED BY THE ASSESSING OFFICER. BEFORE THE LD. CIT(A) T HE ASSESSEE SUBMITTED THE VALUATION REPORT PREPARED BY THE GOVT. APPROVED VALUER SHRI R D KARANDIKAR INDICATING THE VALUE OF THE PROPERTY AT RS.94,08,632/ - AND THE COST OF THE 5 ITA NO S. 439, 440, 441 & 442/PN/2013, S V BUILDERS & DEVELOPERS, RATNAGIRI CONSTRUCTION TO BE AT RS.87,66,138/ - . THE ASSESSEE ALSO POINTED OUT THE DEFECTS IN THE VALUATION REPORT OF THE DVO WHICH ARE AS UNDER: I. THE DVO HAD ADOPTED CPWD RATES WHEN PWD RATES WERE AVAILABLE. II. SELF - SUPERVISION REBATE WAS NOT CONSIDERED BY THE DVO. 5. THE ASSESSEE ALSO SUBMITTED THAT FOR MAKING THE VALUATION , THE LOCAL PWD RATES ARE TO BE ADOPTED. THE ASSESSEE PLACED HIS RELIANCE ON THE FOLLOWING DECISIONS FOR THE PROPOSITION THAT FOR MAKING THE VALUE OF LOCAL PWD RATES ARE TO BE ADOPTED: I. CIT VS. PREM KUMAR MURDIA 296 ITR 508 (RAJ.) II. ITO VS. VIMLA CHOUDHARY 1 SOT 418 6. THE ASSE SSEE ALSO CONTENDED THAT IN RESPECT OF THE VALUATION MADE BY SHRI R D KARANDIKAR, GOVT. APPROVED VALUER THE RATES ADOPTED THEREIN RECONCILED WITH THE STAMP DUTY VALUATION. THE LD. CIT(A) PASSED THE ORDER FOR THE REMAND REPORT OF THE ASSESSING OFFICER ON T HE VALUATION REPORT SUBMITTED BY THE ASSESSEE FOR THE FIRST TIME IN THE APPELLATE PROCEEDINGS . THE ASSESSING OFFICER FILED HIS REMAND REPORT DATED 12 - 07 - 2012. AFTER THE REMAND REPORT WAS RECEIVED THE LD. CIT(A) GAVE THE PART RELIEF BY HOLDING THAT A DEDUC TION OF 50% FROM THE VARIATION IN VALUATION MADE BY THE DVO WOULD BE SUFFICIENT TO TAKE CARE OF ANY INCONSISTENCIES IN ARRIVING AT VALUATION OF THE SAID BUILDING EVEN IF THE VALUATION OF THE GOVT. APPROVED VALUER I.E. SHRI R.D. KARANDIKAR WAS MADE ON THE S CIENTIFIC BASIS BUT IT WAS MERELY ESTIMATION. THE REASONS AND FINDINGS OF THE LD. CIT(A) ARE AS UNDER: 10. I HAVE GIVEN CAREFUL CONSIDERATION TO THE SUBMISSION OF THE APPELLANT WITH REFERENCE TO THE FACTS OF THE CASE. I HAVE ALSO PERUSED THE VALUATION REP ORTS AND OTHER DETAILS PLACED ON RECORD AND HAVE ALSO GONE THROUGH THE CASE LAWS RELIED UPON BY THE APPELLANT. 6 ITA NO S. 439, 440, 441 & 442/PN/2013, S V BUILDERS & DEVELOPERS, RATNAGIRI 11. THE FIRST ISSUE RELATES TO ACCEPTANCE OF THE VALUATION GIVEN BY THE GOVERNMENT APPROVED VALUER, SHRI R D KARANDIKAR UNDER RULE 46A OF THE INC OME - TAX ACT. VIDE THIS OFFICE LETTER NO. KOP/CIT(A)/45/2012 - 13 DATED 18/06/2012, THE ASSESSING OFFICER WAS REQUIRED TO COMMENT ON THE ADMISSIBILITY OF THE DOCUMENTS NOW SUBMITTED BY THE APPELLANT. THE APPELLANT HAD STATED THAT IT WAS UNABLE TO PROVIDE THE VALUATION REPORT DURING THE COURSE OF ASSESSMENT BECAUSE SUFFICIENT TIME WAS NOT AVAILABLE AT THAT TIME. THE - ASSESSING OFFICER HAS CALLED THE GOVERNMENT APPROVED VALUER, SHRI KARANDIKAR AND TAKEN A STATEMENT IN RESPECT OF THE VALUATION PROVIDED BY HIM. TH E ASSESSING OFFICER HAS NOT RAISED ANY OBJECTION TO ADMISSION OF THE SAME WHILE DECIDING THIS APPEAL. HENCE, THE SAME IS ACCEPTED UNDER RULE 46A. 12. THE WHOLE ISSUE PERTAINS TO VALUATION OF THE BUILDING CONSTRUCTED BY THE APPELLANT. THE ASSESSEE WAS UNABL E TO FILE THE RETURN OF INCOME FOR THE ASSESSMENT YEARS UNDER APPEAL FOR THE REASON THAT THE RECORDS, BILLS, VOUCHERS, BOOKS OF ACCOUNTS ETC. WERE WASHED AWAY BY FLOOD AND HENCE THE SAME COULD NOT BE MADE AVAILABLE DURING THE COURSE OF ASSESSMENT. ACCORDIN G TO THE APPELLANT, THE PROJECT IS NOT YET COMPLETE AND SINCE THEY WERE ADOPTING THE METHOD OF PROJECT COMPLETION METHOD TO ARRIVE AT INCOME FOR THE PURPOSE OF TAXES AND THE PROJECT WAS INCOMPLETE, NO INCOME HAD BEEN EARNED WHICH COULD BE OFFERED FOR TAXAT ION. HOWEVER, AS STATED EARLIER, THE ASSESSING OFFICER HAD OBTAINED THE VALUATION OF THE CONSTRUCTED PART OF S V PLAZA BY THE DVO AND CONCLUDED THAT TOTAL INVESTMENTS IN THE PROJECT OVER AND ABOVE THE PAYMENTS MADE BY THE FLAT OWNERS WAS RS.93,55,000/ - WHI CH WAS ASSESSED TO TAX IN ASSESSMENT YEARS 2004 - 05 TO 2007 - 08 AS STATED IN PARAGRAPH 5 SUPRA. THE APPELLANT HAS ASSAILED THE ADOPTION OF THE VALUATION MADE BY THE DVO ON THE FOLLOWING GROUNDS: I) INCOME ASSESSED ON PROPORTIONATE INVESTMENT, NO ALLOWANCE HAS BEEN GRANTED FOR THE AMOUNT GENUINELY SPENT ON THE CONSTRUCTION. II) THERE ARE DIFFERENT METHODS FOR ADOPTION OF POSSIBLE COST OF CONSTRUCTION AND THESE RATES ARE AVAILABLE IN THE GAZETTED RATES OF CONSTRUCTION FOR THE PURPOSES OF CHARGING STAMP DUTY COMPUTATION. THE RATES DECLARED BY THE GOVERNMENT OF MAHARASHTRA FOR THIS PURPOSE SHOWS THAT THE RATES OF 7 ITA NO S. 439, 440, 441 & 442/PN/2013, S V BUILDERS & DEVELOPERS, RATNAGIRI CONSTRUCTION PER SQ. MT. DURING THE CALENDAR YEAR 2005 WAS RS.5871/ SQ.MT., RS.6,200/SQ.MT. IN CALENDAR YEARS 2006 AND 2007 AND RS.11,700/SQ.MT. IN C ALENDAR YEAR 2012. THESE RATES WERE FOR THE PURPOSES OF COLLECTION OF STAMP DUTY. III) IN THE METHODOLOGY ADOPTED BY THE DVO, THE CPWD RATES HAVE BEEN CONSIDERED AND LOCAL PWD RATES HAVE NOT BEEN ADOPTED THOUGH THE SAME WAS AVAILABLE. IV) SELF - SUPERVISIO N REBATE HAS NOT BEEN CONSIDERED BY THE DVO V) THE VALUE ADOPTED FOR ARRIVING AT UNEXPLAINED INVESTMENT SHOULD BE BASED ON COST AND NOT ON MARKET VALUE. 13. I HAVE CONSIDERED ALL THE FACTS AND I FIND THAT THE DVO HAS SIMPLY ADOPTED THE PLINTH RATE METHOD FOR ARRIVING AT THE COST OF CONSTRUCTION. ALTHOUGH HE STATES THAT ADDITIONS/DEDUCTION FOR SUPERIOR INFERIOR SPECIFICATION HAS BEEN CONSIDERED ON LOCAL PWD RATES, THE SAME IS NOT APPARENT FROM THE DETAILS OF VALUATION ATTACHED ALONG WITH HIS VALUATION REP ORT. THE GOVERNMENT APPROVED VALUER HAS CONSIDERED THE CONSTRUCTION RATES PUBLISHED BY PWD FOR RATNAGIRI DISTRICT TO WORK OUT ESTIMATED COST. THE ESTIMATED COST IS BASED ON DETAILED MEASUREMENT SHEET AND THEREAFTER ADDED 10% OF VALUE PER ANNUM FOR ESCALATI ON TO THE COST FOR EVERY PREVIOUS YEAR FROM THE BASE YEAR 2004 - 05. THE MEASUREMENT SHEET HAS DETAILED DISCREPANCY OF WORK COMPLETED, INCLUDING THOSE INCURRED ON EXCAVATION CURING OF FOUNDATION FOR FORM WORK, PLINTH BED AND PCC BED, CONSTRUCTION OF STONE MA SONRY FOR FOUNDATION AND PLINTH, EXPENSES ON FILLING THE PLINTH WITH MURUM, WATER RAMMING, LAYING RUBBER, EXPENSES ON CONSTRUCTION OF RCC CONCRETE FOR THE FLOOR WORK AND REINFORCEMENT COST FOR FOOTING QUALMS, PLINTH BEAMS, SLAB BEAMS, FLOOR SLABS ETC. AND VARIOUS OTHER EXPENSES INCURRED ON REINFORCEMENTS, BRICK MASONRY, CEMENT PLASTERING, COATING WITH SAND PLASTER PROVIDING REAMS FOR DOORS AND WINDOWS, PROVISION FOR FLUSH DOORS AND SLIDING WINDOWS, FIXING OF POLISHED STONE FLOORING AND CERAMIC TILES, GLAZED TILES, WATER PROOFING, COLOUR WASHES, CEMENT WASHES ETC. AS STATED EARLIER, THESE EXPENSES HAVE BEEN PROVIDED FOR BY CONSIDERING THE DSR RATES MADE AVAILABLE BY THE PWD DEPARTMENT. ACCORDINGLY, THE TOTAL COST OF CONSTRUCTION HAS BEEN 8 ITA NO S. 439, 440, 441 & 442/PN/2013, S V BUILDERS & DEVELOPERS, RATNAGIRI ARRIVED AT RS.87,63,1 38/ - . I FIND THAT THE ESTIMATE OF CONSTRUCTION MADE BY THE REGISTERED VALUER IS MORE SCIENTIFIC AND IS IN ACCORDANCE WITH LOCAL CONDITIONS. HENCE, IN MY OPINION, THE VALUATION ARRIVED AT BY APPLYING THE LOCAL PWD RATES OF CONSTRUCTION CANNOT BE BRUSHED AS IDE. IT IS ALSO A FACTUAL POSITION THAT REBATE IS ALSO ALLOWED ON ACCOUNT OF SELF - SUPERVISION, WHICH HAS NOT BEEN DONE BY THE DVO. THE HONOURABLE HIGH COURT OF RAJASTHAN IN CIT V/S PREM KUMAR MURDIA (2008) 296ITR 508 HAS UPHELD THE ORDER OF THE TRIBUNAL, C ONFIRMING THE DECISION OF THE CIT(A) THAT THE APPROPRIATE RATE TO BE TAKEN INTO CONSIDERATION SHOULD BE THE PWD RATES AND NOT THE CPWD RATES. THE PRINCIPLES ENUNCIATED ARE APPLICABLE IN THE INSTANT CASE ALSO. SINCE BOTH THE VALUATION MADE BY THE VALUATION OFFICER AND THE DVO ARE ON ESTIMATES, IT IS NOT POSSIBLE TO APPLY EITHER RATES FOR THE PURPOSES OF COMING AT A FAIR VALUATION OF THE BUILDING 'S V PLAZA' AND ALSO CONSIDERING THE FACT THAT THE BUILDING IS CONSTRUCTION IN DEVRUKH, WHICH IS A REMOTE PLACE IN MAHARASHTRA, I HOLD THAT A DE DUCTION OF 50% FROM THE VARIATION IN VALUATION MADE BY THE DVO WOULD BE SUFFICIENT TO TAKE CARE OF ANY INCONSISTENCIES IN ARRIVING AT VALUATION OF THE SAID BUILDING. ACCORDINGLY, I HOLD THAT A REDUCTION OF 50% SHOULD BE GIVEN FROM THE COST OF CONSTRUCTION ADOPTED AS INCOME IN ALL THE FOUR ASSESSMENT YEARS. NOW, THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE GRIEVANCE FOR PARTLY SUSTAINING THE ADDITION. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RE CORD. THE LD. COUNSEL SUBMITS THAT THE SAID PROJECT IS SITUATED AT DEVRUKH, DISTT. - RATNAGIRI WHICH IS A VERY REMOTE PLACE. HE ARGUES THAT TILL THE 31 - 03 - 2007 , THE PROJECT WAS NOT COMPLETED. HE ARGUES THAT THE RECORD COULD NOT BE MADE AVAILABLE AS THE RE CORD WAS MAINTAINED AT PROJECT SITE WHICH IS VERY CLOSE TO THE RIVER AND THERE WAS A FLOOD SITUATION DUE TO HEAVY RAINS AND RECORD WAS WASHED AWAY. HE SUBMITS THAT WHEN LD. CIT(A) HELD THAT THE REGISTERED VALUERS REPORT IS MORE SCIENTIFIC AND IS IN ACCOR DANCE WITH LOCAL CONDITIO NS AS IT WAS PREPARED BY APPLYING THE LOCAL PWD RATES OF CONSTRUCTION T HEN THERE WAS NO 9 ITA NO S. 439, 440, 441 & 442/PN/2013, S V BUILDERS & DEVELOPERS, RATNAGIRI REASON TO PARTLY REJECT THE SAID VALUATION REPORT WHEN ADMITTEDLY THE DVOS REPORT IS BASED ON CPWD RATES. HE PLACED HIS RELIANCE ON THE DECISI ONS OF THE HON'BLE HIGH COURT OF RAJASTHAN IN THE CASE OF CIT VS. PREM KUMAR MURDIA (SUPRA) AND SUBMITS THAT THE VALUATION REPORT BY THE GOVT. APPROVED VALUER SHRI R D KARANDIKAR IS IN COMPLIANCE WITH THE LEGAL PRINCIPLES LAID DOWN IN THE CASE OF CIT VS. P REM KUMAR MURDIA (SUPRA) . H E PLEADED FOR DELETING THE ENTIRE ADDITION SUSTAINED BY THE LD. CIT(A). WE HAVE ALSO HEARD THE LD. DR, WHO SUPPORTED THE ORDER OF THE LD. CIT(A). 8. ADMITTEDLY, IN THE PRESENT CASE THE REVENUE HAS NOT FILED THE APPEAL AGAINS T THE RELIEF GIVEN BY THE LD. CIT(A) . MOREOVER, THERE IS A CATEGORICAL FINDING OF THE LD. CIT(A) THAT ESTIMATE OF THE CONSTRUCTION MADE BY THE REGISTERED VALUER IS MORE SCIENTIFIC AND IS IN ACCORDANCE WITH LOCAL CONDITIONS AND GOVT. APPROVED VALUER HAS MA DE VALUATION BY APPLYING THE LOCAL PWD RATES . THIS FINDING OF THE LD. CIT(A) REACHED THE FINALITY AS THERE IS NO APPEAL BY THE REVENUE. 9. NOW, THE NEXT QUESTION BEFORE US IS WHETHER THE ENTIRE ADDITION CAN BE DELETED IN THIS CASE. IT IS TRUE THAT THE F INDING OF THE LD. CIT(A) THAT THE VALUATION REPORT PREPARED BY THE GOVT. APPROVED VALUER IS MORE SCIENTIFIC AND IS IN ACCORDANCE WITH LOCAL CONDITIONS BUT AT THE SAME TIME ULTIMATELY IT IS AN ESTIMATE. WE, THEREFORE, CONSIDER IT REASONABLE TO DETERMINE TH E TOTAL INVESTMENT IN THE PROJECT TILL 31 - 03 - 2007 BY ENHANCING THE VALUATION MADE BY THE GOVT. APPROVED VALUER BY 15% I.E. RS.87,63,138/ - +RS. 13,1 4,470/ - = RS.1 , 00 , 77 , 609 / - SAY RS.1,00,77,600/ - AND AFTER REDUCING THE AMOUNT OF THE ADVANCES COLLECTED BY THE F LAT OWNERS I.E. RS.74,98,000/ - , W E SUSTAIN THE ADDITION TO THE EXTENT OF RS.25,79,600/ - WHICH IS TO BE BIFURCATED IN ALL FOUR ASSESSMENT YEARS AS DONE BY THE ASSESSING OFFICER ON THE SAME RATIO . WE, ACCORDINGLY, DIRECT 10 ITA NO S. 439, 440, 441 & 442/PN/2013, S V BUILDERS & DEVELOPERS, RATNAGIRI THE ASSESSING OFFICER TO RE - WORK OUT THE ADDITION U/S. 69 OF THE ACT IN THE LIGHT OF OUR ABOVE DIRECTIONS. 10. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 26 - 11 - 201 4 SD/ - SD/ - ( R.K. PANDA ) ( R.S. PADVEKAR ) ACCOUNTANT M EMBER JUDICIAL MEMBER PUNE, DATED : 26 TH NOVEMBER, 201 4 RK/PS COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) , KOLHAPUR 4 THE CIT - I I, KOLHAPUR 5 6 THE DR, ITAT, A BENCH, PUNE. GUARD FILE. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE