Income Tax Officer-II, Faizabad V. M/s. Trimurti Guest House., Faizabad

ITA 506/LKW/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83353 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-09-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 19-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: P K KAPOOR
• Keywords: Unexplained investment; Valuation report
• Section: 142(1); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 506/LKW/2012 ASSESSMENT YEAR: 2006 - 07 INCOME TAX OFFICER II FAIZABAD V. M / S TRIMURTI G UEST HOUSE GANESH GANJ, MAKBARA FAIZABAD PAN: AAEFT5632R (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. ALOK MITRA, D.R. RESPONDENT BY: SHRI. P. K. KAPOOR, C.A. DATE OF HEARING: 11 09 2014 DATE OF PRONOUNCEMENT: 15 10 2014 O R D E R PER SUNIL KU MAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) MAINLY ON TWO GROUNDS, WHICH ARE AS UNDER: - 1 . THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 17,30,991/ - BY ACCEPTING ADDITIONAL GROUND AND DOCUMENTS WITHO UT CONSIDERING REMAND REPORT FURNISHED BY THE AO. IN REMAND REPORT IT HAS BEEN CATEGORICALLY MENTIONED BY THE AO THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FAILED TO FURNISH VOUCHERS FOR EXPENSES IN INVESTMENT CLAIMED. THE COPY OF LEDGER AND VOUCHERS ATTACHED WITH THE PAPER BOOK FURNISHED BEFORE LD. CIT(A) ACTUALLY PERTAINS TO F.Y.2003 - 04 AND NOT TO THE F.Y. 2005 - 06 WHICH WAS THE RELEVANT PERIOD UNDER CONSIDERATION. 2 . THAT THE LD. CIT(A) HAS ERRED IN ALLOWING RELIEF OF ADDITION OF RS.14,240 / - WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE WAS PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : NOT ABLE TO PRODUCE PROPER BILLS AND VOUCHERS FOR THE EXPENSES CLAIMED UNDER DIFFERENCE HEADS EXCEPT SOME HAND MADE VOUCHERS WHICH WERE FOUND NOT VERIFIABLE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 2 . THE FACTS IN BRIEF WITH REGARD TO GROUND NO.1 BORNE OUT FROM THE RECORD ARE THAT THE ASSESSING OFFICER HAS MADE AN ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PROPERTY UNDER SECTION 69 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') AT RS.17,30,991/ - , AGAINST WHICH AN APPEAL WAS FILED BEFORE THE LD. CIT(A) AND THE LD. CIT(A) HAS DELETED THE ADDITION MADE ON ACCOUNT OF DIFFERENCE IN THE VALUATION OF PROPERTY FOR UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT ON THE GROUND TH AT THE ASSESSING OFFICER HAS MADE REFERENCE TO THE DVO WITHOUT REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE. THEREFORE, THE REFERENCE TO THE DVO WAS NOT VALID IN THE LIGHT OF THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF SARGAM CINEMA VS. CIT [2 010] 328 ITR 513 (SC). 3 . AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED TO PRODUCE THE BOOKS OF ACCOUNT AND THE VALUATION REPORT. WHEN THE ASSESSEE HAS FAILED TO PRODUCE THE SAME, THE ASSESSING OFFICER WAS LEFT WITH NO OPTION BUT TO MAKE REFERENCE TO THE DVO TO ASCERTAIN THE COST OF CONSTRUCTION AND THEREAFTER THE ASSESSING OFFICER HAS RIGHTLY MADE ADDITION OF THE DIFFERENCE IN VALUATION SHOWN BY THE ASSESSEE AND DETERMINED BY THE DVO. IN SUPPORT OF HIS CONTENTION, THE LD. D.R. HAS INVITED OUR ATTENTION TO THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 142(1) OF THE ACT ON 4.9.2006 AND THE QUESTIONNAIRE ISSUED ALONG WITH IT TO ESTABLISH THAT THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO FURNISH THE BOOKS OF ACCOUNT THROUGH HIS FIRST NOTICE, BUT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT. THEREFORE, THE JUDGMENT OF THE HON'BLE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : APEX COURT IN THE CASE OF SARGAM CINEMA VS. CIT (SUPRA) W OULD NOT APPLY, AS IN THAT CASE THE BOOKS OF ACCOUNT WE RE PRODUCED AND THE ASSESSING OFFICER , WITHOUT REJECTING THE BOOKS OF ACCOUNT , HAS MADE REFERENCE TO THE DVO. 4 . PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE HAS EMPHATICALLY ARGUED THAT THE ASSESSING OFF ICER ASKED THE ASSESSEE ONLY ON C E T O PRODUCE THE BOOKS OF ACCOUNT. THEREAFTER THE ASSESSING OFFICER DID NOT ASK THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT. MOREOVER, THE ASSESSEE SOUGHT TIME FOR PRODUCTION OF THE VALUATION REPORT, BUT THE ASSESSING OFF ICER , WITHOUT WAITING FOR THE DATE FIXED FOR PRODUCTION, HAS MADE A REFERENCE TO THE DVO WITHOUT REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE. THEREFORE, THE REFERENCE MADE TO THE DVO IS BAD IN LAW AND THE REPORT SUBMITTED CONSEQUENT THERETO CANNOT BE R ELIED ON FOR MAKING THE ADDITION. HE AGAIN PLACED RELIANCE UPON THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF SARGAM CINEMA VS. CIT (SUPRA). THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER INVITED OUR ATTENTION THAT VIDE NOTICE DATED 4.9.2006 ISSUED UNDER SECTION 143(2) AND 142(1) OF THE ACT , THE DATE OF HEARING WAS FIXED FOR 15.9.2006. IN COMPLIANCE THERETO, THE ADVOCATE OF THE ASSESSEE ATTENDED THE OFFICE OF THE ASSESSING OFFICER AND REQUESTED FOR ADJOURNMENT FOR 3.10.2006. ON 3.10.2006, THE MATT ER WAS FURTHER ADJOURNED TO 2.11.2006 FOR FURNISHING THE VALUATION REPORT, BUT THE ASSESSING OFFICER INSTEAD OF WAITING UPTO 2.11.2006 , HAS MADE REFERENCE TO THE DVO ON 30.10.2006 WITHOUT REJECTING THE BOOKS OF ACCOUNT. THEREFORE, ONCE THE ASSESSING OFFIC ER HAS GIVEN TIME TO THE ASSESSEE FOR PRODUCING THE VALUATION REPORT OR THE BOOKS OF ACCOUNT, THE ASSESSING OFFICER SHOULD HAVE WAITED UPTO THAT DATE AND THEREAFTER HE CAN MAKE REFERENCE TO THE DVO AFTER REJECTING THE BOOKS OF ACCOUNT. BUT THE ASSESSING O FFICER HAS CHOSEN TO MAKE REFERENCE TO THE DVO EVEN BEFORE THE DATE WHICH WAS FIXED FOR PRODUCING THE VALUATION REPORT. THEREFORE, THE REFERENCE MADE TO THE DVO PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : BY THE ASSESSING OFFICER IS BAD IN LAW AND THE REPORT OBTAINED CONSEQUENT THERETO CANNOT BE RE LIED ON. 2 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT WAS CHALLENGED BEFO RE THE LD. CIT(A) AND THE LD. CIT(A) HAS DELETED THE ADDITION HAVING OBSERVED THAT REFERENCE MADE TO THE DVO WAS WITHOUT REJECTING THE BOOKS OF ACCOUNT BY THE ASSESSING OFFICER , T HEREFORE, REFERENCE MADE TO THE DVO IS BAD IN THE LIGHT OF THE JUDGMENT OF TH E HON'BLE APEX COURT IN THE CASE OF SARGAM CINEMA VS. CIT (SUPRA) AND O NCE REFERENCE IS BAD, THE VALUATION REPORT OBTAINED CONSEQUENT THERETO CANNOT BE RELIED ON FOR MAKING THE ADDITION. 3 . NOW THE SHORT QUESTION ARISES BEFORE US IS WHETHER THE REFERENCE WA S MADE WITHOUT REJECTING THE BOOKS OF ACCOUNT OR REJECTION OF THE BOOKS OF ACCOUNT WA S NOT POSSIBLE IN THE INSTANT CASE. UNDISPUTEDLY ON THE DATE FIXED FOR PRODUCTION OF THE BOOKS OF ACCOUNT, THE ASSESSEE SOUGHT ADJOURNMENT AND THE ADJOURNMENT WAS GRANTED . ON THE NEXT DATE OF HEARING, ASSESSEE MADE A REQUEST FOR PRODUCTION OF VALUATION REPORT AND THE ASSESSING OFFICER HAS ACCEDED TO THE REQUEST OF THE ASSESSEE AND ADJOURNED THE HEARING FOR 2.11.2006, BUT WITHOUT WAITING FOR 2.11.2006, THE DATE FIXED FOR P RODUCTION OF THE VALUATION REPORT, THE ASSESSING OFFICER HAS MADE A REFERENCE TO THE DVO FOR VALUATION OF THE COST OF CONSTRUCTION IN THE IMPUGNED PROPERTY. AS PER PROVISIONS OF SECTION 142A OF THE ACT , REFERENCE CAN BE MADE TO THE DVO FOR ESTIMATION OF T HE VALUATION OF ANY INVESTMENT REFERRED TO IN SECTION 69 OR 69B OF THE ACT. BUT BEFORE DOING SO, THE ASSESSING OFFICER SHOULD HAVE REASON FOR DOUBTING THE VALUATION DECLARED BY THE ASSESSEE. IN THE INSTANT CASE, WHEN THE ASSESSEE WAS ASKED TO FURNISH THE VALUATION REPORT UPTO A PARTICULAR TIME AND THE ASSESSING OFFICER , EVEN PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : WITHOUT WAITING FOR THE TIME OR EXPIRY OF THE DATE , HAS MADE A REFERENCE TO THE DVO, MORE SO WITHOUT REJECTING THE BOOKS OF ACCOUNT. 4 . IN THE CASE OF SARGAM CINEMA VS. CIT (SUPRA), THEI R LORDSHIPS OF THE HON'BLE APEX COURT HAVE CATEGORICALLY HELD THAT WITHOUT REJECTING THE BOOKS OF ACCOUNT, REFERENCE TO THE DVO IS NOT VALID. IN THE INSTANT CASE, THOUGH THE REVENUE COULD PLACE ONLY ONE DOCUMENT I.E. NOTICE UNDER SECTION 142(1) OF THE ACT DATED 4.9.2006 FIXING THE DATE FOR HEARING ON 15.9.2006 ALONG WITH QUESTIONNAIRE , THROUGH WHICH ASSESSEE WAS ASKED TO PRODUCE THE BOOKS OF ACCOUNT, BUT NO OTHER EVIDENCE WAS PLACED TO ESTABLISH THAT ON OTHER DATES ALSO THE ASSESSEE WAS ASKED TO PRODUCE TH E BOOKS OF ACCOUNT. AS IS EVIDENT FROM THE ASSESSMENT ORDER THAT ON OTHER DATES, ASSESSEE WAS ASKED TO PRODUCE THE VALUATION REPORT ONLY. FROM THE ASSESSMENT ORDER, IT IS EVIDENT THAT THE ASSESSING OFFICER HAS FIXED ONLY THREE DATES FOR HEARING I.E. 15.9 .2006; 3.10.2006 AND 2.11.2006. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND BEFORE 2.11.2006 , THE ASSESSING OFFICER HAS MADE REFERENCE TO TH E DVO. THEREFORE, THE ARGUMENT OF THE LD. D.R. CANNOT BE ACCEPTED THAT THE REFERENCE WAS MAD E TO THE DVO WHEN THE ASSESSEE W AS FAILED TO PRODUCE THE BOOKS OF ACCOUNT DESPITE REPEATED DEMANDS OR REQUEST OF THE ASSESSING OFFICER , AS THE ASSESSING OFFICER HIMSELF HAS EXTENDED TIME UPTO 2.11.2006 FOR PRODUCING THE VALUATION REPORT. ATLEAST THE ASSESSING OFFICER SHOUL D HAVE WAITED UPTO 2.11.2006 AND THEREAFTER TO TAKE A DECISION WHETHER THE ASSESSEE IS ABLE TO MAKE COMPLIANCE OF THE DIRECTIONS OF THE ASSESSING OFFICER WITH REGARD TO THE PRODUC TION OF THE BOOKS OF ACCOUNT AND FILING OF THE VALUATION REPORT. IF THE ASSE SSEE H AS FAILED TO PRODUCE THE BOOKS OF ACCOUNT DESPITE CLEAR DIRECTIONS, THE ASSESSING OFFICER THEN CAN TAKE A DECISION WITH REGARD TO MAKING REFERENCE TO THE DVO TO ASCERTAIN THE COST OF INVESTMENT IN THE PROPERTY. BUT WITHOUT WAITING FOR THE DATE FIXED FOR, HE MADE A REFERENCE TO THE DVO WHICH , IN OUR VIEW , IS NOT PROPER AND ALSO IN THE LIGHT OF THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF SARGAM CINEMA VS. CIT (SUPRA), AS IT WAS DONE WITHOUT REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE. WE ARE, THEREFORE, OF THE VIEW THAT THE LD. CIT(A) HAS RIGHTLY HELD THAT IN THE LIGHT OF THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF SARGAM CINEMA VS. CIT (SUPRA), REFERENCE TO THE DVO IS NOT VALID AND THEREFORE, THE VALUATION REPORT SUBMITTED CONSE QUENT THERETO CANNOT BE RELIED ON FOR MAKING THE ADDITION. WE ACCORDINGLY CONFIRM THE ORDER OF THE LD. CIT(A) IN THIS REGARD. 5 . THE NEXT GROUND RELATES TO THE DELETION OF ADDITION OF RS.14,240/ - MADE ON AD HOC BASIS. THE LD. CIT(A) DELETED THE ADDITION FOR THE REASON THAT THIS ADDITION WAS MADE WITHOUT POINTING OUT ANY DEFECT IN THE MAINTENANCE OF BILLS AND VOUCHERS. SINCE THE ADDITION WAS MADE ON AD HOC BASIS, WE FIND NO MERIT IN THE ADDITION. ACCORDINGLY WE CONFIRM THE ORDER OF THE LD. CIT(A) IN THIS RE GARD ALSO. 6 . IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENT I ONED ON THE CAPTION PAGE. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15 TH OCTOBE R , 2014 JJ: 1109 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )