Smt. Swaroop Sekhon, Pathankot V. The Income Tax Officer, Pathankot

ITA 535/ASR/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5620 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 19-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAMEER AGARWAL
• Keywords: Unexplained investment; Opportunity of being heard; Valuation report

Judgement Text

ITA NO.535(ASR)/2015 ASST. YEAR 2009-10 PAGE - 1 - OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (SMC) BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER I.T.A. NO. 535 (ASR)/2015 ASSESSMENT YEAR: 2009-10 PAN: AQVPS0968C SMT. SWAROOP SEKHON PATHANKOT. VS. I.T.O, WARD 3, PATHANKOT. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SAMEER AGARWAL, (C. A.) RESPONDENT BY: SH. RAHUL DHAWAN, (D. R.) DATE OF HEARING: 18.04.2017 DATE OF PRONOUNCEMEN T: 20.04.2017 ORDER PER DIVA SINGH : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A SSAILING THE CORRECTNESS OF THE ORDER DATED 31.07.2015 OF CIT (A ) AMRITSAR, PERTAINING TO ASST. YEAR 2009-10 ON VARIOUS GROUNDS. 2. HOWEVER, AT THE TIME OF HEARING GROUNDS NO. 1 AN D 2 ON THE VALIDITY OF THE ASSESSMENT WERE NOT AGITATED AND THE LD. AR CONFINE D HIS PRAYER TO THE ISSUES AGITATED IN GROUND NO. 4 & 5 OF THE PRESENT APPEAL, THESE GROUNDS ARE REPRODUCED HEREINAFTER. 4. THAT THE LD. CIT (A) HAS RIGHTLY HELD THAT IN T HE INSTANT CASE THE LOCAL PUNJAB PWD RATES HAD TO BE ADOPTED FOR ESTIMATING THE COST OF CONSTRUCTION AS AGAINST THE CPWD RATES CONSIDERED BY THE DVO. HOWEVER, THE LD. CIT (A) GRO SSLY ERRED IN OBSERVING THAT THE PUNJAB PWD RATES WERE NOT AVAILABLE IN THE CASE OF THE ASS ESSEE WHILE IGNORING THE FACT THAT THEREFORE REPORT OF THE REGISTERED VALUER PREPARED IN ACCORDANCE WITH THE PUNJAB PWD RATES WITH COPY OF THE SCHEDULE OF RATES WAS FILED BEFORE THE ASSESSING OFFICER AS WELL AS THE LD. CIT (A). 5. THAT IN THE CIRCUMSTANCES OF THE CASE THE LD. CI T (A) HAS ERRED IN SCALING DOWN THE CPWD VALUATION BY AN ADDITON-HOC 15% TO DRAW PARITY WITH THE PUNJAB PWD RATES AND IGNORING THE ACTUAL VALUATION REPORT AS PER PUNJAB PWD RATES OF THE IMPUGNED PROPERTY FILED BY THE ASSESSEE ACCORDING TO WHICH THERE AS N O UNEXPLAINED INVESTMENT IN CONSTRUCTION. 3. THE RELEVANT FACTS OF THE CASE, ARE THAT THE ASS ESSEE HAD CONSTRUCTED A RESIDENTIAL HOUSE AS PRABHU HOUSE ON DALHOUSIE RO AD, PATHANKOT DURING THE YEAR 2008. THE SAID HOUSE WAS CONSTRUCTED BY CONTRA CTOR SHRI RAJINDER SINGH ITA NO.535(ASR)/2015 ASST. YEAR 2009-10 PAGE - 2 - OF 4 S/O SHRI HARBANS SINGH. THE SAID FACT WAS ACCEPTED BY WAY OF AN AFFIDAVIT DATED 01.03.2012 BY HIM AFFIRMING THAT HE HAD ACCEPTED HA VING RECEIVED ON DIFFERENT DATES THE FEES FOR TOTAL CONTRACT WORK OF RS. 26,41 ,750. HOWEVER HE COULD NOT PRODUCE THE BILLS OF CONSTRUCTION MATERIAL PURCHASE D AND OTHER RECORDS RELATED TO THE CONSTRUCTION OF THE HOUSE. THE EVIDENCE WAS ACCORDINGLY CONSIDERED TO BE INSUFFICIENT. THE ASSESSEE ALSO SUBMITTED A VALUATI ON REPORT DATED 21.05.2012 OF THE APPROVED VALUER SHRI VED PRAKASH SAINI, WHO MAD E THE VALUATION OF THE HOUSE AT RS. 26,22,000/- I.E. RS. 15,64,500/- FOR F . Y. 2008-09 AND RS. 10,57,000 IN F. Y. YEAR 2009-10. THE ASSESSING OFFI CER NOT CONVINCED MADE A REFERENCE TO THE VALUATION OFFICER AND THE DVO SUBM ITTED HIS VALUATION REPORT DATED 10.12.2012 AND VALUED THE CONSTRUCTION COST A T RS. 38,64,150/- BIFURCATED THE AMOUNT AS RS. 32,06,100/- IN 2008-0 9 RS. 86,98,732/- IN 2009- 10 F Y THEREBY ADDING THE DIFFERENCE OF RS. 11,74,4 18/- AS UNEXPLAINED INVESTMENT. 3.1 THE ASSESSEE ASSAILED THE ADDITION BEFORE THIS CIT (A) WHO CONSIDERING ARGUMENTS PRINCIPALLY AGREED WITH ASSESSEES CLAIM HOLDING AS UNDER:- CONSIDERING THE ASSESSMENT ORDER AND THE SUBMISSION OF THE APPELLANT, I AM IN AGREEMENT WITH THE APPELLANT THAT THE LOCAL PUN JAB PWD RATES AND NOT THE CPWD RATES WERE REQUIRED TO BE ADOPTED FOR ESTIMATIN G THE COST OF CONSTRUCTION OF THE RESIDENTIAL HOUSE OF THE APPELLANT . BY NOW IT IS A SETTLED LAW, IN VIEW OF THE HON'BLE. RAJASTHAN HIGH COURT DECISION IN THE CASE OF CIT VS. HOTEL JOSHI (1999) 157 CTR (RAJ) 369 AND OTHER HIGH COURTS THAT FOR THE VALUAT ION PURPOSE, THE RATES OF LOCAL PWD HAS TO BE ADOPTED AND NOT THAT OF THE CPWD. EVEN THE HO N'BLE ITAT, BENCH AMRITSAR IN THE CASE OF DR. RAMESH KUMAR ANAND VS. ITO (REPORTED IN 109 TTJ 568) HAD HELD THAT WHILE ESTIMATING THE COST OF CONSTRUCTION, THE LOCAL PWD RATES SHOULD BE PREFERRED OVER THE CPWD RATES BECAUSE THE RATES PREVAILING AT THE PLACE WHE RE THE PROPERTY HAS BEEN CONSTRUCTED ARE MORE REALISTIC AND SCIENTIFIC. EVEN THE DECISIO N OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE O CIT VS. HARCHAND PALACE SUPPORT S THIS VIEW. 3.1.1. HOWEVER, PARTIAL RELIEF WAS GRANTED NOT BY APPLYING OF PUNJAB PWD RATES AS HELD BY HIM BUT BY WAY OF AN AD HOC ESTIMA TE OF THE CPWD RATES BY SCALING THEM DOWN BY 15%. 4. AGGRIEVED BY THIS, THE ASSESSEE IS IN APPE AL BEFORE THE ITAT. IT WAS THE PRAYER OF THE LD. AR THAT THE PUNJAB PWD RATES WERE RELIED UPON AND MADE AVAILABLE TO THE ASSESSING OFFICER AND THUS THE CIT (A) SINCE HE HAD AGREED WITH THE ASSESSEES PRAYER HE OUGHT TO HAVE GRANTED RELI EF. ATTENTION WAS INVITED TO THE REPORT OF THE APPROVED VALUE COPY PLACED AT PAG ES 18 TO 21 SPECIFIC PAGE 20 ITA NO.535(ASR)/2015 ASST. YEAR 2009-10 PAGE - 3 - OF 4 OF THE PAPER BOOK FILED. ACCORDINGLY IT WAS HIS SUB MISSION THAT ON THE BASIS OF THE SAID EVIDENCE ADDITION SUSTAINED BY THE CIT(A) SHOULD BE DELETED. 5. THE LD. SENIOR DR, THOUGH RELIED UPON THE IMPUGN ED ORDER FURTHER SUBMITTED THAT THE REPORT OF THE APPROVED VALUER WA S FILED BEFORE THE ASSESSING OFFICER AND CAN BE SAID TO BE AVAILABLE BEFORE THE CIT (A) HOWEVER THE ASSESSING OFFICER HAS NOT ACCEPTED IT IN VIEW OF THE DISCREPA NCY NOTED IN THE PERIOD OF CONSTRUCTION AND THUS CONSIDERED IT, TO BE, NOT REL IABLE. ACCORDINGLY IN THESE CIRCUMSTANCES THE IMPUGNED ORDER MAY BE SET ASIDE I N THE LIGHT OF THE CONCLUSION OF THE CIT (A) BACK TO HIM FOR APPLYING THE CORRECT RATES. 6. I HAVE HEARD THE RIVAL SUBMISSION AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. I FIND THAT IN THE PECULIAR FACTS AND CIRCU MSTANCES OF THE PRESENT CASE WHERE RELYING UPON THE JUDICIAL PRECEDENT CITED IN THE IMPUGNED ORDER, THE CIT (A) CAME TO THE CONCLUSION THAT IT WAS THE PUINJAB PWD RATES, I.E. THE LOCAL PWD RATES WHICH OUGHT TO HAVE BEEN APPLIED. HENCE THE DECISION TO THEN PROCEED TO ESTIMATE THE CPWD RATES BY SCALING THEM DON BY 15% CANNOT BE SAID TO BE A DECISION IN ACCORDANCE WITH LAW. THE RATES ARE STATED TO BE AVAILABLE AND EVEN IF THEY WERE NOT READILY AVAILABLE IN THESE CIRCUMSTANCES ALSO IT WAS INCUMBENT UPON HIM TO CALL FOR THOSE OR DIRECT THE ASSESSEE TO PLACE THEM ON RECORD. THE DECISION TO RESORT TO AD-HOC ESTIMATING BY SCALING DOWN CPWD RATES BY 15% CANNOT BE UPHELD IN THE PECULIAR FACTS OF TH E INSTANT CASE. THE PUNJAB PWD RATES ARE STATED TO BE AVAILABLE IN THE REPORT OF THE APPROVED VALUED AT SPECIFIC PAGE 20 OF THE PAPER BOOK. THE LD. CIT (A) IS DIRECTED TO APPLY THE SAME AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. ACCORDINGLY, THE IMPUGNED ORDER IS SET ASIDE TO THE FILE OF THE CIT (A) TO THE LIMITED EXTENT AND THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTIC AL PURPOSES. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20.04.2017. SD/- (DIVA SINGH) JUDICIAL MEMBER DATED: 20.04.2017 /GP/SR.PS ITA NO.535(ASR)/2015 ASST. YEAR 2009-10 PAGE - 4 - OF 4 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: 2. THE ACIT, 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER