Asstt. Commisssioner Of Income Tax Central Circle-I, Kanpur V. Smt. Nirmal Kumar Arora, Kanpur

ITA 537/LKW/2013

• Counselvise Citation: 53723714 RSA 2013
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-08-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 12-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRADEEP KAPOOR
• Keywords: Unexplained investment; Opportunity of being heard; Source of fund; Valuation report
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.537 & 538/LKW/2013 ASSESSMENT YEAR:2005-06 & 2006-07 ACIT CENTRAL CIRCLE I KANPUR V. SMT. NIRMAL ARORA KANPUR TAN/PAN:AALPA1311R (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. A. K. SINGH, CIT (DR) RESPONDENT BY: SHRI. PRADEEP KAPOOR, C.A. DATE OF HEARING: 17 08 2015 DATE OF PRONOUNCEMENT: 27 08 2015 O R D E R PER SUNIL KUMAR YADAV: THESE APPEALS ARE PREFERRED BY THE REVENUE AGAINST THE RESPECTIVE ORDERS OF THE LD. CIT(A) ON COMMON GROUNDS EXCEPT THE DIFFERENCE IN QUANTUM OF ADDITIONS. FOR THE SAKE OF REFERENCE, WE EXTRACT THE GROUNDS RAISED IN I.T.A. NO. 537/LKW/2013 AS UNDER:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.39,65,300/- U/S 69B OF THE ACT ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PROPERTY OWNED BY THE ASSESSEE AT 120/865 RANJEET NAGAR, KANPUR, WHICH WAS PROPERLY MADE ON THE BASIS OF DVO'S REPORT AFTER GIVING THE ASSESSEE SUFFICIENT OPPORTUNITY OF BEING HEARD. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.39,65,300/- U/S 69B OF THE ACT BY RELYING UPON THE DECISION OF HON'BIE SUPREME COURT IN THE CASE OF :- 2 -: SARGAM CINEMA {328 ITR 513(SC)} IGNORING THE FACT THAT THE ASSESSEE DOES NOT MAINTAIN ANY BOOKS OF ACCOUNT IN RESPECT OF HER SOURCES OF INCOME AND THEREFORE THE RATIO OF DECISION OF SARGAM CINEMA {328 ITR 513(SC)} IS NOT APPLICABLE TO THE FACTS OF THE CASE. 3. THAT THE ORDER OF THE LD. CIT(A) BEING ERRONEOUS IN LAW AND ON FACTS WHICH NEEDS TO BE VACATED AND THE ORDER OF THE A.O. BE RESTORED. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE ASSESSMENT ORDER AS WELL AS THE GROUNDS RAISED BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT THE ASSESSEE HAS TAKEN A PLEA THAT REFERENCE WAS MADE TO THE DVO WITHOUT REJECTING THE BOOKS OF ACCOUNT, THEREFORE, THE REFERENCE ITSELF IS NOT VALID IN THE LIGHT OF THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF SARGAM CINEMA VS. CIT, 328 ITR 513 (SC). IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER INVITED OUR ATTENTION TO THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER THROUGH WHICH THE ASSESSEE WAS ASKED TO PRODUCE THE BOOKS OF ACCOUNT. THE QUESTIONNAIRE DATED 21.9.2007 IS PLACED ON RECORD AT PAGES 19 TO 22 OF THE COMPILATION OF THE ASSESSEE. IN RESPONSE TO THIS QUESTIONNAIRE, THE ASSESSEE HAS FILED A REPLY DATED 5.10.2007 STATING THEREIN THAT THE BOOKS OF ACCOUNT AND VOUCHERS ARE PRODUCED FOR VERIFICATION. THEREAFTER THE ASSESSEE HAS RECEIVED ANOTHER NOTICE FROM THE ASSESSING OFFICER ALONG WITH QUESTIONNAIRE DATED 21.11.2007 FIXING THE DATE FOR 27.11.2007 THROUGH WHICH THE ASSESSEE WAS AGAIN ASKED TO PRODUCE THE BOOKS OF ACCOUNT, BILLS AND VOUCHERS FOR EXAMINATION. BUT WITHOUT WAITING FOR THE REPLY, THE ASSESSING OFFICER HAS MADE A REFERENCE TO THE DVO ON 25.10.2007. COPY OF THE DVOS REPORT IS PLACED ON RECORD IN WHICH A REFERENCE OF THE ACITS LETTER IS MENTIONED. THE LD. COUNSEL FOR THE :- 3 -: ASSESSEE HAS FURTHER INVITED OUR ATTENTION TO THE ORDER PASSED UNDER SECTION 263 OF THE ACT BY THE LD. COMMISSIONER OF INCOME-TAX AGAINST THE ORIGINAL ASSESSMENT ORDER, IN WHICH THE LD. COMMISSIONER OF INCOME- TAX HIMSELF HAS MENTIONED THAT THE ISSUE OF LEGALITY OF REFERENCE UNDER SECTION 142A OF THE ACT AND INFIRMITIES IN THE VALUATION REPORT IS TO BE DECIDED BY THE ASSESSING OFFICER WHILE GIVING EFFECT TO THIS ORDER. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT IN THE LIGHT OF THESE FACTS, THE REFERENCE WAS MADE TO THE DVO WITHOUT REJECTING THE BOOKS OF ACCOUNT, THEREFORE, THE REFERENCE ITSELF IS BAD AND THE REPORT SUBMITTED CONSEQUENT THERETO IS NOT SUSTAINABLE IN THE EYES OF LAW. THUS, THE INVESTMENT IN THE PROPERTY CANNOT BE VALUED ON THE BASIS OF THE VALUATION REPORT. 3. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER PLACED RELIANCE UPON THE JUDGMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. RAJESH MAHAJAN, 50 TAXMANN.COM 206 (P&H). RELIANCE WAS ALSO PLACED UPON THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. LUCKNOW PUBLIC EDUCATIONAL SOCIETY, 339 ITR 588. 4. THE LD. D.R., ON THE OTHER HAND, HAS PLACED RELIANCE UPON THE JUDGMENT OF THE HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF BHARAT CEMENT CORPORATION PVT. LTD. VS. CIT & OTHERS, 253 CTR 98, IN WHICH IT HAS BEEN HELD THAT THE REJECTION OF THE BOOKS OF ACCOUNT OF THE ASSESSEE REGARDING VALUATION IS NOT A PRECONDITION FOR ENQUIRING INTO THE SAME UNDER SECTION 142A OF THE ACT. THEREFORE, THE REFERENCE WITHOUT REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE DOES NOT INVALIDATE THE VALUATION REPORT. 5. THE LD. COUNSEL FOR THE ASSESSEE, IN REJOINDER, HAS CONTENDED THAT THE JUDGMENT OF THE HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF BHARAT CEMENT CORPORATION PVT. LTD. VS. CIT & OTHERS (SUPRA) WAS CONSIDERED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF :- 4 -: CIT VS. RAJESH MAHAJAN (SUPRA) AND BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. VIJAYKUMAR D GUPTA IN TAX APPEAL NO.293 OF 2014 WITH TAX APPEAL NO.294 OF 2014 DATED 15.4.2014. IN THIS JUDGMENT, THE HON'BLE GUJARAT HIGH COURT HAS TAKEN INTO ACCOUNT THE JUDGMENT OF HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF BHARAT CEMENT CORPORATION PVT. LTD. VS. CIT & OTHERS (SUPRA), IN WHICH A CONTRARY VIEW WAS EXPRESSED AND THEIR LORDSHIPS HAVE CONSISTENTLY HELD THE JUDGMENT IN THE CASE OF SARGAM CINEMA VS. CIT (SUPRA) IS TO BE FOLLOWED AND WITHOUT REJECTING THE BOOKS OF ACCOUNT, THE REFERENCE IS NOT VALID. 6. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS MADE A REFERENCE TO THE DVO UNDISPUTEDLY WITHOUT REJECTING THE BOOKS OF ACCOUNT AND BEFORE RECEIPT OF THE VALUATION REPORT, THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT WHICH WAS SET ASIDE BY THE LD. COMMISSIONER OF INCOME-TAX HAVING EXERCISED HIS JURISDICTION UNDER SECTION 263 OF THE ACT. BUT WHILE PASSING THE ORDER UNDER SECTION 263 OF THE ACT, THE LD. COMMISSIONER OF INCOME-TAX HAS OBSERVED THAT VALIDITY OF REFERENCE AND VALUATION REPORT CAN BE EXAMINED IN CONSEQUENTIAL ORDER. DURING THE COURSE OF PROCEEDINGS IN CONSEQUENTIAL ASSESSMENT, THE ASSESSING OFFICER HAS EMPHATICALLY DISPUTED THE VALIDITY OF REFERENCE AND DURING THE COURSE OF HEARING BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS SUCCESSFULLY DEMONSTRATED THAT THE ASSESSING OFFICER HAS INITIALLY ASKED THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT AND IN RESPONSE THERETO THE ASSESSEE HAS FURNISHED THE BOOKS OF ACCOUNT. THEREAFTER AGAIN THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT, BILLS AND VOUCHERS AND FIXED THE DATE FOR HEARING, BUT BEFORE THAT DATE HEARING THE ASSESSING OFFICER HAS MADE A REFERENCE TO THE DVO FOR VALUATION OF THE COST OF CONSTRUCTION OF THE :- 5 -: IMMOVABLE PROPERTY, MEANING THEREBY THAT THE REFERENCE TO THE DVO WAS MADE WITHOUT REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE. 7. UNDISPUTEDLY, THE HON'BLE APEX COURT IN THE CASE OF SARGAM CINEMA VS. CIT (SUPRA) HAS HELD THAT WITHOUT REJECTING THE BOOKS OF ACCOUNT, REFERENCE TO THE DVO IS NOT VALID AND THIS JUDGMENT OF THE HON'BLE APEX COURT WAS FOLLOWED BY THE SUBORDINATE COURTS THROUGHOUT THE COUNTRY. EVEN THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. LUCKNOW PUBLIC EDUCATIONAL SOCIETY (SUPRA) HAS CATEGORICALLY HELD THAT REFERENCE TO THE VALUATION OFFICER UNDER SECTION 142A(1) OF THE ACT CANNOT BE MADE WITHOUT REJECTING THE BOOKS OF ACCOUNT. 8. RECENTLY THE HON'BLE ANDHRA PRADESH HIGH COURT HAS TAKEN A CONTRARY VIEW AND HAS HELD THAT REJECTION OF THE BOOKS OF ACCOUNT OF THE ASSESSEE REGARDING VALUATION IS NOT A PRECONDITION FOR ENQUIRY INTO THE SAME UNDER SECTION 142A OF THE ACT. A HEAVY RELIANCE WAS PLACED UPON THIS JUDGMENT BY THE REVENUE, BUT CONTRARY JUDGMENTS WERE PASSED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT AND HON'BLE GUJARAT HIGH COURT IN THE CASES OF CIT VS. RAJESH MAHAJAN (SUPRA) AND CIT VS. VIJAYKUMAR D GUPTA (SUPRA) RESPECTIVELY. WHILE PASSING THE JUDGMENT IN THESE CASES, THE HON'BLE HIGH COURTS HAVE TAKEN COGNIZANCE OF THE DECISION OF THE HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF BHARAT CEMENT CORPORATION PVT. LTD. VS. CIT & OTHERS (SUPRA). MOREOVER, THE HON'BLE ALLAHABAD HIGH COURT, IN THE CASE OF CIT VS. LUCKNOW PUBLIC EDUCATIONAL SOCIETY (SUPRA) FOLLOWING THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF SARGAM CINEMA VS. CIT (SUPRA), HAS CATEGORICALLY HELD THAT BEFORE REJECTING THE BOOKS OF ACCOUNT, REFERENCE TO THE DVO IS NOT POSSIBLE. WE, THEREFORE, FIND NO JUSTIFICATION IN FOLLOWING THE JUDGMENT OF HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF BHARAT CEMENT CORPORATION PVT. LTD. VS. CIT & OTHERS (SUPRA) IN THE LIGHT OF THE FACT THAT THE JURISDICTIONAL HIGH COURT HAS EXPRESSED A CONTRARY VIEW. :- 6 -: THUS, FOLLOWING THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT, WE HOLD THAT THE REFERENCE TO THE DVO WITHOUT REJECTING THE BOOKS OF ACCOUNT IS BAD AND THEREFORE THE VALUATION REPORT SUBMITTED CONSEQUENT THERETO CANNOT BE RELIED ON FOR MAKING AN ADDITION. THUS, NO ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IS SUSTAINABLE IN THE EYES OF LAW. WE, THEREFORE, FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND WE ACCORDINGLY CONFIRM THE SAME. 9. IN THE RESULT, THE APPEALS OF THE REVENUE STAND DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH AUGUST, 2015 JJ:1708 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR