Asstt. Commissioner of Income Tax-III, Kanpur V. Shri Jitendra Kumar, Kanpur

ITA 616/LKW/2013

• Counselvise Citation: 61623714 RSA 2013
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-06-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 05-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: M L GUPTA
• Keywords: Unexplained investment; Valuation report
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 616/LKW/2013 ASSESSMENT YEAR: 2004 - 05 ASSTT. CIT - III KANPUR V. SHRI. JITENDRA KUMAR C /O M/S FIELD MARSHAL AGENCIES 77/151, LATOUCHE ROAD KANPUR PAN: AAZPK2264R (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. ALOK MITRA, D.R. RESPONDENT BY: SHRI. M. L GUPTA, ADVOCATE DATE OF HEARING: 09 0 6 2014 DATE OF PRONOUNCEMENT: 18 0 6 2014 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) ON A SOLITARY GROUND THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.22,82,424/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED INVESTMENT UNDER SECTION 69B OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER. 2 . THE FACTS IN BRIEF CULLED OUT FROM THE ORDERS OF THE LOWER AU THORITIES ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME AT RS.37,45,778/ - . THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT AT AN INCOME OF RS.37,45,780/ - , BUT VIDE ORDER DATED 2.1.2007 THE ASSESS MENT WAS SET ASIDE BY THE LD. COMMISSIONER OF INCOME - TAX UNDER SECTION 263 OF THE ACT ON A LIMITED ISSUE OF VERIFICATION OF COST OF CONSTRUCTION OF PROPERTY NO.7/50(6), TILAK NAGAR, KANPUR. ACCORDINGLY NOTICE S UNDER SECTION 143(2)/142(1) OF THE ACT WERE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : I SSUED IN ORDER TO MAKE VERIFICATION OF COST OF CONSTRUCTION. IN RESPONSE THERETO , ASSESSEE FILED REGISTERED VALUERS REPORT DECLARING THE COST OF CONSTRUCTION AT RS.49.67 LAKHS, WITH THE SUBMISSION THAT THE PROPERTY WAS CONSTRUCTED FOR SELF AND HIS FAMILY RESIDENCE AND NO BOOKS OF ACCOUNT WERE MAINTAINED. THE ASSESSING OFFICER MADE A REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER (DVO) BY WAY OF ISSUING COMMISSION UNDER SECTION 131(1)(D) OF THE ACT ON 20.8.2007. SUBSEQUENTLY THE DVO SUBMITTED HIS VALUAT ION REPORT DATED 22.12.2007 ESTIMATING THE COST OF CONSTRUCTION AT RS.61,70,700/ - AS AGAINST THE COST OF RS.56,81,917/ - DECLARED BY THE ASSESSEE BEFORE THE DVO. THE COST OF CONSTRUCTION WAS ALSO REVISED BY THE ASSESSEE AT RS.51,81,917/ - DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER ESTIMATED THE COST OF CONSTRUCTION AT RS.74,64,341/ - AGAINST THE COST OF CONSTRUCTION ESTIMATED BY THE DVO AT RS.61,70,700/ - AND MADE ADDITION OF RS.22,82,324/ - BEING THE DIFFERENCE IN THE COST OF CONSTRUCT ION ESTIMATED BY THE ASSESSING OFFICER AND DECLARED BY THE ASSESSEE (RS.74,64,341 RS.51,81,917). 3 . AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT THE DVO HAS NOT ALLOWED SELF SUPERVISION CHARGES @ 10% AND ARCHITE CT FEE @ 1%. HE HAS ALSO FILED WRITTEN SUBMISSION BEFORE THE LD. CIT(A) , WHICH WAS TAKEN INTO ACCOUNT BY HIM AND HE DELETED THE ADDITION HAVING OBSERVED THAT IF THE VALUATION AS MADE OUT BY THE DVO VIS - - VIS THAT SHOWN BY THE ASSESSEE IN THE BOOKS IS COMP ARED, THE DIFFERENCE WAS ONLY RS.4,88,783/ - (RS.61,70,700 RS.56,89,917) WHICH IS MUCH LESS THAN 10% AND HENCE THE DIFFERENCE CAN BE EXPLAINED FROM VARIOUS ACCOUNTS LIKE SELF SUPERVISION CHARGES AND THE DIFFERENCE BETWEEN THE CPWD AND PWD RATES. THE LD. CIT(A) ACCORDINGLY DELETED THE ADDITION. 4 . NOW THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND PLACED HEAVY RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER. 5 . THE LD. COUNSEL FOR THE ASSESSEE, BESIDES PLACING RELIANCE UPON THE ORDER OF THE LD. CIT (A), HAS SUBMITTED THAT THE ASSESSING OFFICER I S NOT AN EXPERT TO DETERMINE THE COST OF CONSTRUCTION OF THE PROPERTY , THEREFORE, THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : COST OF CONSTRUCTION ESTIMATED BY HIM AT RS.74,64,341/ - CANNOT BE ACCEPTED. HE HAS IGNORED THE ESTIMATION MADE BY THE DVO WITHOUT ASSIGNING ANY REASON. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT THE DIFFERENCE BETWEEN THE COST OF CONSTRUCTION ESTIMATED BY THE DVO AND DECLARED BY THE ASSESSEE IS EVEN LESS THAN 10%. THEREFORE, NO ADDITION CAN BE MADE ON ACCOU NT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION OF HOUSE PROPERTY. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: - 1 . DR. RAKESH KUMAR ANAND VS. INCOME TAX OFFICER [2007] 109 TTJ (A SR) 568. 2 . KISHINCHAND CHELLARAM VS. CIT [1980] 125 ITR 713 (SC). 3 . SAHARA INDIA (FIRM) VS. CIT & ANOTHER [2008] 300 ITR 403 (SC). 4 . GARGI DIN JWALA PRASAD VS. CIT [1974] 96 ITR 97 (ALL) 6 . DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO INV ITED OUR ATTENTION THAT THE VALUATION REPORT WAS NOT AT ALL CONFRONTED TO THE ASSESSEE BEFORE ESTIMATING THE COST OF CONSTRUCTION BY THE ASSESSING OFFICER. HE HAS INVITED OUR ATTENTION TO THE LETTER WRITTEN TO THE ASSESSING OFFICER FOR SUPPLY OF THE VALUA TION REPORT. 7 . WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND WE FIND THAT THE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNT AND HAS DECLARED THE COST OF CONSTRUCTION AS PER REGISTER ED VALUERS REPORT AT RS.56,81,917/ - , WHEREAS THE DVO HAS ESTIMATED THE COST OF CONSTRUCTION AT RS.61,70,700/ - . THE DIFFERENCE BETWEEN THE COST OF CONSTRUCTION ESTIMATED BY THE DVO AND DECLARED BY THE ASSESSEE IS RS.4,88,783/ - , WHICH IS MUCH LESS THAN 10% OF THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE . IT IS ALSO IMPORTANT TO MENTION HERE THAT THE ASSESSING OFFICER HAS NOT ADOPTED THE COST OF CONSTRUCTION ESTIMATED BY THE DVO. HE HAS ESTIMATED THE COST O F HIS O WN WITHOUT ASSIGNING ANY REASON OR GIV ING OUT ANY DETAIL OR CRITERIA , AT PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : RS.74,64,341/ - AGAINST THE COST OF CONSTRUCTION ESTIMATED BY THE DVO AT RS.61,70,700/ - . UNDENIABLY , THE ASSESSING OFFICER IS NOT AN EXPERT TO DETERMINE THE COST OF CONSTRUCTION OF THE PROPERTY, WHEREAS THE DVO IS AN EXPE RT IN THIS FI E L D AND IF THE ASSESSING OFFICER DOES NOT WANT TO FOLLOW THE COST OF CONSTRUCTION DETERMINED BY THE DVO, HE COULD HAVE BROUGHT SOME MATERIAL ON RECORD IN SUPPORT OF THE ESTIMATION MADE BY HIM. BUT IN THE INSTANT CASE, THE ASSESSING OFFICER HA S ESTIMATED THE COST OF CONSTRUCTION O F HIS OWN WITHOUT ASSIGNING ANY JUSTIFICATION. THEREFORE, ONLY DVOS REPORT CAN BE TAKEN INTO ACCOUNT TO DETERMINE THE COST OF CONSTRUCTION OF THE PROPERTY . THE DIFFERENCE BETWEEN THE COST OF CONSTRUCTION ESTIMATED B Y THE DVO A ND DECLARED BY THE ASSESSEE ON THE BASIS OF REGISTERED VALUERS REPORT, IS EVEN MUCH LESS THAN 10% OF THE COST OF CONSTRUCTION. THE ASSESSEE HAS ALSO CONTENDED THAT DVO HAS NOT GIVEN SELF SUPERVISION CHARGES @ 10% AND ARCHITECT EXPENDITURE @ 1% . IF B OTH THE THINGS ARE T AKEN INTO CONSIDERATION, THE DECLARED VALUE WOULD NOT BE LESS THAN THE COST OF CONSTRUCTION ESTIMATED BY THE DVO. UNDER SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT NO ADDITION IS CALLED FOR UNDER THE HEAD UNEXPLAINED INVESTMENT IN THE HOUSE PROPERTY. 8 . WE HAVE ALSO CAREFULLY EXAMINED THE ORDER OF THE LD. CIT(A) AND WE FIND NO INFIRMITY THEREIN AS HE HAS TAKEN INTO ACCOUNT ALL THE RELEVANT ASPECTS WHILE ADJUDICATING THE IMPUGNED ISSUE. WE ACCORDINGLY CONFIRM HIS ORDER. 9 . IN THE RESU LT, APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.6.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18 TH JUNE , 2014 JJ: 0906 PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : 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/ )