Smt.Suci P.I., Palakkad V. DCIT, Trichur

ITA 55/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61526 (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: 2002-2003
• Appeal Filed On: 01-02-2010
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Assessee Lawyers: T M SREEDHARAN

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. 54,55 & 56 /COCH/2010 ASSESSMENT YEARS : 2001-02, 2002-03 & 2003-04 SMT. SUCY P.I., RAJA AGENCIES, MARKET ROAD, BIG BAZAR, PALAKKAD. [PAN:AKWPS 02661] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, THRISSUR. (ASSESSEE-APPELLANT) (REVENUE-R ESPONDENT) 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 THREE APPEALS FILED BY THE ASSESSEE ARE DIRE CTED AGAINST THE COMMON ORDER DATED 29-10-2009 PASSED BY THE LD. CIT(A)-I, KOCHI AND THEY RELATE TO THE ASSESSMENT YEARS 2001-02, 2002-03 AND 2003-04. SINCE THE ISSU ES URGED IN THESE APPEALS ARE BASED UPON IDENTICAL SET OF FACTS, THEY WERE HEARD TOGETH ER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. IN THESE APPEALS, THE ASSESSEE HAS CHALLENGED TH E DECISION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION MADE ON ACCOUNT OF DIFFEREN CE IN THE COST OF CONSTRUCTION OF BUILDINGS. I.T.A. NOS. 54,55 & 56/COCH/2010 2 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. DURING THE YEARS UNDER CONSIDERATION, THE ASSESSEE HAS CONSTRUCTED THREE B UILDINGS. THE ASSESSING OFFICER REFERRED THE MATTER OF VALUATION TO THE DVO. ON TH E BASIS OF THE REPORT SUBMITTED BY THE DVO, THE ASSESSING OFFICER COMPUTED THE DIFFERENCE BETWEEN THE VALUE DETERMINED BY THE DVO AND THE COST OF CONSTRUCTION REPORTED BY TH E ASSESSEE AND ADDED THE SAME IN THE HANDS OF THE ASSESSEE. THE DETAILS ARE TABULATED B ELOW:- COST DECLARED BY THE ASSESSEE(RS.) COST FIXED BY D.V.O.(RS.) 1. RESIDENTIAL BUILDING 6,6 0,000/- 12,81,500/ - 2. SHOP 1,20,000/- 2,09,200/- 3. GODOWN 2,25,000/- 4,9 3,700/- BEFORE THE DVO, THE ASSESSEE FURNISHED THE VALUATIO N REPORT OBTAINED FROM A REGISTERED VALUER. THE COST DETERMINED BY THE REGISTERED VAL UER WAS MORE THAN THE COST DECLARED BY THE ASSESSEE BUT LOWER THAN THAT DETERMINED BY DVO. BY CONSIDERING THE REGISTERED VALUERS REPORT AS WELL AS THE SUBMISSIONS MADE BY THE ASSESSEE, THE DVO FIXED THE COST OF CONSTRUCTION OF THE BUILDINGS AS STATED ABOVE. AS STATED EARLIER, THE AO ADDED THE DIFFERENCE IN COST OF CONSTRUCTION IN THE YEARS UND ER CONSIDERATION IN PROPORTION TO THE COST DECLARED BY THE ASSESSEE IN EACH OF THE YEARS. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CHALLENGED THE ADD ITIONS BEFORE THE LD. CIT(A) BUT COULD NOT SUCCEED. HENCE, THE ASSESSEE IS IN APPEAL BEFO RE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. WE NOTICE THAT THE LD. CIT(A) HAS COMPARED THE VALUATION REPO RT GIVEN BY THE DVO AND BY THE REGISTERED VALUER AND FINALLY ACCEPTED THE COST OF CONSTRUCTION FIXED BY THE DVO. THE MAIN REASON FOR NOT ACCEPTING THE REPORT OF THE REG ISTERED VALUER WAS THAT THE REGISTERED VALUER SEEMS TO HAVE ADOPTED THE RATES PERTAINING T O THE YEAR 2003-04, WHEREAS THE BUILDINGS UNDER CONSIDERATION HAD BEEN CONSTRUCTED IN THE EARLIER PERIODS. I.T.A. NOS. 54,55 & 56/COCH/2010 3 5. BEFORE THE LD. CIT(A), THE ASSESSEE HAS FURNISHE D THE FOLLOWING EXPLANATIONS IN SUPPORT OF HER CLAIM THAT THERE WAS CONSIDERABLE SA VINGS IN THE COST OF CONSTRUCTION:- A) IT WAS SUBMITTED THAT THE ASSESSEE HAS USED TIMB ERS OBTAINED FROM THE LANDED PROPERTIES BELONGING TO THE FAMILY MEMBERS FOR MAKI NG DOORS, WINDOWS AND WARDROBES. B) THE FLOORING TILES AND SANITARY FITTINGS WERE OB TAINED FROM THE PROPRIETORY CONCERN OF THE ASSESSEES DAUGHTER-IN-LAW. IT WAS SUBMITTED THAT THE DEAD STOCK, UNUSED STOCK OF THAT CONCERN AND ALSO FREE SAMPLES GIVEN BY THE MANUFACTURERS TO THAT CONCERN WERE OBTAINED AT VERY MUCH LOWER RATES . IT WAS SUBMITTED THAT THIS FACT IS PROVED BY THE FACT THAT EACH ROOM IS FLOORE D WITH DIFFERENT FLOORING TILES. C) THE GODOWN AND SHOP HAD ONLY CEMENT FLOORING AND NO DOORS AND WINDOWS. THE CONSTRUCTION WAS ALSO HALL TYPE WHICH WOULD HAV E LESSER CONSTRUCTION COST. D) THE ASSESSEES SON, SHRI C.K. RAJU IS A QUALIFI ED CIVIL ENGINEER UNDER WHOSE MANAGEMENT AND SUPERVISION THE CONSTRUCTION WAS CA RRIED OUT. SINCE HE IS IN BUILDING MATERIALS BUSINESS, THERE WAS CONSIDERABL E SAVINGS IN COST OF MATERIALS. E) THE DVO HAS ADOPTED CPWD RATES WHEREAS THE HON BLE HIGH COURT OF KERALA HAS HELD THAT THE STATE PWD RATES ARE MORE APPROPRI ATE FOR VALUING THE COST OF CONSTRUCTION IN THE STATE OF KERALA. HOWEVER, WE NOTICE THAT THE LD. CIT(A) HAS NOT CONS IDERED THE ABOVE SAID EXPLANATIONS GIVEN BY THE ASSESSEE WHILE DECIDING THE ISSUE. 6. THE FACTS THAT THE ASSESSEES SON IS A QUALIF IED ENGINEER AND FURTHER HE IS IN THE BUSINESS OF DEALING IN BUILDING MATERIALS WERE NOT DENIED BEFORE US. WITH THESE FACTS, WE FIND MERIT IN THE SUBMISSION OF THE ASSESSEE THAT S HE COULD MAKE CONSIDERABLE SAVINGS IN THE PROCUREMENT COST OF MATERIALS AS WELL AS IN THE IR USE FOR CONSTRUCTION PURPOSE. THE VERY FACT THAT THE ASSESSEE HAS USED DIFFERENT FLOO RING TILES IN DIFFERENT ROOMS ALSO SUPPORT THE FACT THAT THE ASSESSEE HAS OBTAINED NON-MOVING STOCK FROM HER DAUGHTER IN LAWS CONCERN AT MUCH LOWER RATE. THE USAGE OF TIMBER O BTAINED FROM FAMILY PROPERTIES CANNOT ALSO BE RULED OUT. HENCE, IN OUR VIEW, THERE IS ME RIT IN THE SUBMISSION OF THE ASSESSEE THAT THE COST OF CONSTRUCTION ESTIMATED BY THE DVO CANNO T BE CONSIDERED AS REAL COST. HOWEVER, WE NOTICE THAT THE ASSESSEE HAS FAILED TO QUANTIFY THE SAVINGS MADE BY HER ON EACH OF THE EXPLANATIONS GIVEN ABOVE. HENCE WE HAV E NO OTHER OPTION BUT TO ESTIMATE THE I.T.A. NOS. 54,55 & 56/COCH/2010 4 PROBABLE COST OF CONSTRUCTION BY CONSIDERING THE EX PLANATIONS OF THE ASSESSEE LISTED ABOVE. HENCE, ON A CONSPECTUS OF THE MATTER, WE A RE OF THE VIEW THAT THE ISSUES UNDER CONSIDERATION WOULD MEET THE ENDS OF JUSTICE IF THE COST OF CONSTRUCTION OF THE THREE BUILDINGS STATED ABOVE IS DETERMINED AS UNDER:- I) RESIDENTIAL BUILDING : RS. 10,00,0 00/- II) SHOP : RS. 1,70,000/- III) GODOWN : RS. 3,80,000/- WE ORDER ACCORDINGLY. 7. IN VIEW OF THE FOREGOING DISCUSSIONS, WE SET ASI DE THE ORDER OF THE LD. CIT(A) ON THE ABOVE SAID ISSUES AND DIRECT THE ASSESSING OFFI CER TO MODIFY THE ADDITIONS BY RE- COMPUTING THE DIFFERENCE IN THE COST OF CONSTRUCTI ON OF THE ABOVE SAID BUILDINGS BY ADOPTING THE COST OF CONSTRUCTION DETERMINED ABOVE. 8. IN THE RESULT, THE APPEALS FILED BY 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: 25TH MAY, 2012 GJ COPY TO: 1. SMT. SUCY P.I., RAJA AGENCIES, MARKET ROAD, BIG BAZAR, 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