Late C.P.Kunhu Kunhu rep by Smt.Suci P.I., Palakkad V. DCIT, Trichur

ITA 53/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61527 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 02-04-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 01-02-2010
• Court: TRIBUNAL
• Keywords: Search and seizure
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NOS. 52 & 53 /COCH/2010 ASSESSMENT YEARS : 2003-04 & 2004-05 LATE SHRI C.P. KUNHU KUNHU REP. BY SMT. SUCI P.I., RAJA STORES, MARKET ROAD, PALAKKAD. [PAN:AFMPK 6372G] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, THRISSUR. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI T.M. SREEDHARAN, SR. ADV. REVENUE BY SHRI S.R. SENAPATI, SR. DR DATE OF HEARING 02/04/2012 DATE OF PRONOUNCEMENT 25 /05/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECT ED AGAINST THE SEPARATE ORDERS DATED 04-11-2009 PASSED BY THE LD. CIT(A)-I, KOCHI AND THEY RELATE TO THE ASSESSMENT YEARS 2003-04 AND 2004-05. SINCE THE ISSUE URGED IN THESE TWO APPEALS ARE BASED ON IDENTICAL SET OF FACTS, THEY WERE HEARD TOGETHER A ND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. IN THESE APPEALS, THE ASSESSEE IS CHALLENGING TH E DECISION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION MADE ON ACCOUNT OF DIFFERE NCE IN THE COST OF CONSTRUCTION OF A BUILDING. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE HEREIN WAS ENGAGED IN THE BUSINESS OF FIREWORKS AND ALSO HE OPERATED A PETROL PUMP. THE DEPARTMENT CARRIED I.T.A.NOS.52 & 53 /COCH/2010 2 OUT SEARCH AND SEIZURE OPERATIONS U/S. 132 OF THE A CT IN HIS HANDS AND THE ASSESSMENTS WERE FRAMED U/S. 153A OF THE ACT. IT WAS NOTICED T HAT THE ASSESSEE HAD CONSTRUCTED A COMMERCIAL COMPLEX BY NAME SANY PEARL IN CHAKKANT HARA, PALAKKAD. THE ASSESSEE HAD DECLARED THE COST OF CONSTRUCTION THEREOF AT RS . 12,60,000/-, WHICH WAS SPREAD EQUALLY IN THE TWO YEARS RELEVANT TO THE ASSESSMENT YEARS 2 003-04 AND 2004-05. THE AO REFERRED THE MATTER OF VALUATION TO DVO WHO FIXED THE COST O F CONSTRUCTION AT RS. 19,71,400/-. THE DIFFERENCE BETWEEN THE DVO VALUATION AND THE CO ST DECLARED BY THE ASSESSEE AMOUNTING TO RS.7,11,400/- WAS ADDED EQUALLY IN THE TWO ASSESSMENT YEARS BY THE AO. THE ASSESSEE CHALLENGED THESE ADDITIONS BEFORE THE LD. CIT(A), BUT COULD NOT SUCCEED. HENCE, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORDS. THE LD. CIT(A) HAS CONFIRMED THE ADDITIONS IN BOTH THE YEAR S WITH THE FOLLOWING OBSERVATIONS:- I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS AND PROVISIONS OF LAW WITH REGARD TO THE ISSUE INVOLVED. I FIND THAT THE REPO RT OF THE REGISTERED VALUER WAS VERY MUCH MADE AVAILABLE BY THE APPELLANT DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS AS IS EVIDENT FROM THE FACT THAT THE DVO HAS DULY CONSIDERED THE REPORT OF REGISTERED VALUER WHEREIN THE PROPERTY HAS BEEN VALUED AT RS. 14,71,000/-. I FURTHER FIND THAT THE BASIC DIFFERENCE IN THE VALUATION BY THE DVO AND THE REGISTERED VALUER IS N OT ON ACCOUNT OF SUBSTANTIAL RATE DIFFERENCE BUT BECAUSE BUILT UP AR EA ADOPTED FOR VALUATION BY THE DVO IS 313.12 SQ. M., WHEREAS THE REGISTERED V ALUER HAS TAKEN THE BUILT UP AREA OF ONLY 270.2 SQ. MT. THE REGISTERED VALUER HAS ADOPTED THE RATE OF RS. 4885 PER SQ. MT., WHEREAS THE DVO HAS ADOPTED T HE RATE OF RS. 5287 PER SQ. MT. AND WITH THE REDUCTION OF 5% GIVEN BY THE D VO ON ACCOUNT OF SELF SUPERVISION, THE RATE ADOPTED BY THE DVO IS ALMOST AT PAR WITH THE REGISTERED VALUER AND THE SMALL DIFFERENCE IS TAKEN CARE BY TH E DVO IN HIS COMMENTS IN PARA 9 OF THE REPORT WHEREIN IT IS DULY POINTED OUT BY THE DVO THAT THE REGISTERED VALUER HAS ADOPTED THE RATES OF ONLY FI RST YEAR OF CONSTRUCTION WHEREAS THE CONSTRUCTION WAS SPREADS OVER IN TWO YE ARS. ANOTHER MAJOR FACTOR RESULTING INTO DIFFERENCE IN VALUATION IS ON ACCOUNT OF THE FACT THAT THE ELECTRIC INSTALLATION IS VALUED BY THE DVO AT RS. 1 ,22,375/- WHEREAS THE REGISTERED VALUER HAS VALUED THE SAME ONLY AT RS. 6 8,787/-. FURTHER TO ABOVE, THE REGISTERED VALUER FAILED TO INCLUDE VALUATION O F GYPSUM FALSE CEILING VALUED AT RS. 30,800/- AND STAINLESS TUBE HANDRAIL VALUED AT RS. 36,000/- AND MS LADDER CUM STAIR CASE VALUED AT RS. 20,000/-. I N FACT, THE GLASS PANELLING IS VALUED BY THE DVO AT ONLY RS. 38,196/- AS AGAINST R S. 50,000/- VALUED BY THE REGISTERED VALUER. I, THEREFORE, FIND THAT THE BAS IC REASONS FOR DIFFERENCE IN I.T.A.NOS.52 & 53 /COCH/2010 3 VALUATION ARE ON ACCOUNT OF MATERIAL FACTS AND NOT ON ACCOUNT OF THE RATES ADOPTED BY THE DVO OR THE REGISTERED VALUER. WITH A REDUCTION OF FLAT 5% GIVEN BY THE DVO ON ACCOUNT OF SELF SUPERVISION, TH E VALUATION MADE BY THE DVO IS A QUITE DETAILED ONE AND REASONABLE. IN VIE W OF THE SAME, THERE WAS NO ISSUE OF CPWD RATES OR PWD RATES INVOLVED IN THE APPELLANTS CASE BECAUSE FIRSTLY, THERE WAS NOT MUCH DIFFERENCE IN R ATES AND SECONDLY BECAUSE THE REGISTERED VALUER HAS NOT INDICATED THE SOURCE OF THE RATES ADOPTED BY HIM WHEREAS THE RATES ADOPTED BY THE DVO IS AREA SPECIF IC AND DULY TAKES INTO ACCOUNT THE AVERAGE COST INDEX. I, THEREFORE, HOLD THAT THE VALUATION BY THE DVO WAS QUITE JUDICIOUS AND REASONABLE AND THE ASSE SSING OFFICER WAS JUSTIFIED IN FOLLOWING THE SAME. THE CONSEQUENTIAL ADDITION OF RS. 3,55,700/- MADE BY THE ASSESSING OFFICER ON THIS ACCOUNT IS TH EREFORE, CONFIRMED. THIS GROUND OF APPEAL IS THEREFORE, REJECTED. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TAX AUTHORITIES HAVE FAILED TO CONSIDER THE DIFFERENCE IN THE AREA OF CONSTRUCTION , WHICH WAS ABOUT 43 SQ. MTRS., BETWEEN THE PLINTH AREA ADOPTED BY THE DVO AND THE REGISTER ED VALUER. HE ALSO SUBMITTED THAT THE REDUCTION OF 5% TOWARDS PERSONAL SUPERVISION IS NOT SUFFICIENT AS THE ASSESSEES SON IS A GRADUATE IN CIVIL ENGINEERING. HE FURTHER SUBMI TTED THAT THE BUILDING UNDER CONSIDERATION IS OCCUPIED BY THE ASSESSEES SON FOR CARRYING ON THE BUSINESS IN SANITARY WARES AND THE FACT THAT THE FLOORING WORK WAS SPONS ORED BY THE COMPANY NAMED SOMANI CERAMICS LIMITED WAS NOT CONSIDERED BY THE DVO. H E FURTHER SUBMITTED THAT THE BUILDING HAS GLASS PANES ON THREE SIDES OF THE BUIL DING IN ORDER TO HAVE DISPLAY OF MATERIALS, WHERE AS THE DVO HAS APPLIED THE RATES A PPLICABLE FOR BRICK AND MORTAR WALLS. 6. ON THE CONTRARY, IT WAS SUBMITTED ON BEHALF OF T HE DEPARTMENT THAT THE DVO HAS DULY CONSIDERED ALL THE PECULIAR FEATURES OF THE BU ILDING WHILE DETERMINING THE COST OF CONSTRUCTION. 7. WE NOTICE THAT THE DIFFERENCE IN THE PLINTH AREA OF 43 SQ. MTRS., POINTED OUT BY THE LD. AR HAS NOT BEEN ADDRESSED BY THE LD. CIT(A). F URTHER, IN OUR VIEW, THE REDUCTION OF 5% GIVEN FOR PERSONAL SUPERVISION DOES NOT APPEAR T O BE SUFFICIENT IN VIEW OF THE FACT THAT THE SUPERVISION HAS BEEN CARRIED OUT BY THE ASSESSE ES SON WHO IS A QUALIFIED ENGINEER. THE LD A.R HAS POINTED OUT THAT THE FLOORING WAS SP ONSORED BY A COMPANY AND THE I.T.A.NOS.52 & 53 /COCH/2010 4 BUILDING DOES NOT HAVE BRICK AND MORTAR WALLS ON TH REE SIDES. CONSIDERING ALL THESE FACTS, WE ARE OF THE VIEW THAT THE ISSUE UNDER CONSIDERATI ON WOULD MEET THE ENDS OF JUSTICE IF THE COST OF CONSTRUCTION OF THE BUILDING IS FIXED AT RS . 16.00 LAKHS. WE ORDER ACCORDINGLY. HENCE WE SET ASIDE THE ORDER OF THE LD. CIT(A) IN B OTH THE YEARS ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO COMPUTE THE DIFFERENCE IN THE COST OF CONSTRUCTION OF THE BUILDING BY TAKING THE COST OF CONSTRUCTION AT RS. 16.00 LAK HS AND THEN ADD THE DIFFERENCE EQUALLY IN THE TWO ASSESSMENT YEARS MENTIONED ABOVE. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. PRONOUNCED ACCORDINGLY ON 25-05-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 25 MAY, 2012 GJ COPY TO: 1. LATE SHRI C.P. KUNHU KUNHU REP. BY SMT. SUCI P.I ., RAJA STORES, MARKET ROAD, PALAKKAD. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL C IRCLE, THRISSUR. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE . BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN