City Centre, Palakkad V. ACIT, Palakkad

ITA 624/COCH/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2520 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 08-04-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 22-12-2011
• Court: TRIBUNAL
• Department Lawyers: SUSAN GEORGE VARGHESE
• Assessee Lawyers: C R HARISH
• Keywords: Rejection of books of accounts; Principle of natural justice; Valuation report

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. NO. 624/COCH/2011 ASSESSMENT YEAR : 2007-08 CITY CENTRE, 817/11, ENGLISH CHURCH ROAD, PALAKKAD. [PAN:AAFC 7824P] VS. THE ADDL. COMMISSIONER OF INCOME-TAX, PALAKKAD RANGE, PALAKKAD. (ASSESSEE -APPELLANT) (REVENUE-R ESPONDENT) ASSESSEE BY SHRI C.R.HARISH, CA REVENUE BY SMT. SUSAN GEORGE VARGHESE, SR. DR DATE OF HEARING 08/04/2013 DATE OF PRONOUNCEMENT 28/06/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINS T THE ORDER DATED 01-11-2011 PASSED BY THE LD. CIT(A)-V, KOCHI AND IT RELATES TO THE AS SESSMENT YEAR 2007-08. 2. THE ASSESSEE IS ASSAILING THE DECISION OF THE LD . CIT(A) IN CONFIRMING THE ADDITION OF RS. 1.57 CRORES RELATING TO THE DIFFERENCE IN TH E COST OF CONSTRUCTION. 3. THE FACTS RELATING TO THE ISSUE, REFERRED ABOVE, ARE STATED IN BRIEF. THE ASSESSEE HEREIN FILED ITS RETURN OF INCOME FOR THE YEAR UNDE R CONSIDERATION ADMITTING A TOTAL INCOME OF RS.7,14,600/-. THE CASE WAS SELECTED FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAS CONSTRUCTED A BUILDING COMPLEX NAMED CITY CENTRE AT PALAKKAD. THE ASSESSING OFFICER REFERRED THE MATTER OF VALUATION OF COST OF CONSTRU CTION TO THE DISTRICT VALUATION OFFICER, (DVO) WHO DETERMINED THE COST OF CONSTRUCTION AT RS .6,89,67,000/-. THE COST OF I.T.A. NO. 624/COCH/2011 2 CONSTRUCTION DETERMINED BY THE DVO WAS MORE THAN TH E COST DECLARED BY THE ASSESSEE BY RS.1,57,32,990/-. THE AO FURNISHED A COPY OF TH E VALUATION REPORT TO THE ASSESSEE AND IT FILED A REPLY DATED 22-12-2009, RAISING VARI OUS OBJECTIONS TO THE VALUATION REPORT FURNISHED BY THE DISTRICT VALUATION OFFICER. THE AS SESSING OFFICER FORWARDED THE OBJECTIONS TO THE DISTRICT VALUATION OFFICER, BUT H E DID NOT RECEIVE ANY REPLY FROM HIM TILL THE FINALISATION OF THE ASSESSMENT. THE ASSESSEE A LSO OBJECTED TO THE ACTION OF THE ASSESSING IN MAKING REFERENCE TO THE VALUATION OFFI CER WITHOUT FINDING DEFECTS IN THE BOOKS OF ACCOUNT AND WITHOUT REJECTING THE BOOKS. T HE AO, HOWEVER, DID NOT MEET THE SAID OBJECTION AND PROCEEDED TO ASSESS THE ENTIRE D IFFERENCE OF RS.1,57,32,990/- DURING THE YEAR UNDER CONSIDERATION, EVEN THOUGH THE CONST RUCTION TOOK PLACE IN THE PRIOR YEARS ALSO. BEFORE THE LD. CIT(A), THE ASSESSEE AGAIN R AISED VERY SAME OBJECTIONS TO THE VALUATION REPORT GIVEN BY THE DISTRICT VALUATION OF FICER. THE ASSESSEE ALSO CONTENDED ABOUT THE ACTION OF THE ASSESSING OFFICER IN REFERR ING THE MATTER OF VALUATION TO THE VALUATION OFFICER, WITHOUT REJECTING THE BOOKS OF A CCOUNT. HOWEVER, THE LD. CIT(A) WITHOUT CALLING FOR ANY REPORT FROM THE ASSESSING O FFICER, CONFIRMED THE ADDITION. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFOR E US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. AS STATED EARLIER, THE ASSESSEE HAS RAISED VARIOUS OBJECTIONS TO THE VALUATION REPORT SUBMITTED BY THE DISTRICT VALUATION OFFICER WHICH, INTER ALIA, I NCLUDES THE DIFFERENCE IN THE AREA CONSIDERED FOR THE PURPOSE OF VALUATION, NON CONSID ERATION OF BOOKS AND VOUCHERS PRODUCED BEFORE THE DISTRICT VALUATION OFFICER, CON SIDERATION OF CPWD RATES INSTEAD OF STATE PWD RATES, INADEQUATE DEDUCTION FOR SELF SUPE RVISION, INCORRECT METHOD OF ESTIMATION OF ELECTRICAL INSTALLATION AND WATER SUP PLY PROVISIONS ETC. THOUGH THE SAID OBJECTIONS WERE SENT TO THE DVO SEEKING HIS REPLY, YET THE DVO DID NOT FURNISH ANY REPLY TO THE ASSESSING OFFICER BEFORE COMPLETION OF ASSESSMENT. BESIDES THE ABOVE, THE ASSESSEE HAS CONTENDED THE VERY REFERENCE TO THE VA LUATION OFFICER ON THE GROUND THAT THE ASSESSING OFFICER DID NOT REJECTED THE BOOKS OF ACCOUNT. 5. AS NOTICED EARLIER, NEITHER THE ASSESSING OF FICER NOR THE LD. CIT(A) HAS OBTAINED ANY REPLY FROM THE DVO TO VARIOUS OBJECTIONS RAISED BY THE ASSESSEE ON THE REPORT I.T.A. NO. 624/COCH/2011 3 SUBMITTED BY HIM. IN THE ABSENCE OF PROPER REPLY F ROM THE DVO TO THE OBJECTIONS RAISED BY THE ASSESSEE, WHICH ARE MOSTLY TECHNICAL IN NATURE, IT WOULD NOT BE POSSIBLE FOR THE TRIBUNAL TO ADJUDICATE THE ISSUES URGED BEF ORE US, WHICH ARE BASED ON THE OBJECTIONS RAISED BY THE ASSESSEE. FURTHER, IN OUR VIEW, THE ACTION OF BOTH THE TAX AUTHORITIES IN NOT ADDRESSING THE OBJECTIONS RAISED BY THE ASSESSEE IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. FURTHER, THE LD. C IT(A) HAS NOT ADDRESSED THE ISSUE RELATING TO THE CLAIM OF NON-REJECTION OF BOOKS OF ACCOUNTS BEFORE MAKING REFERENCE TO THE DISTRICT VALUATION OFFICER AND THE SAID ISSUE G OES TO THE ROOT OF THE MATTER. HENCE, IN OUR VIEW, LD. CIT(A) WAS NOT JUSTIFIED IN RENDER ING HIS DECISION AGAINST THE ASSESSEE WITHOUT CONSIDERING THE VITAL ISSUES DISCUSSED SUPR A. 6. ACCORDINGLY, IN OUR VIEW, THE ENTIRE MATTER NEEDS EXAMINATION AFRESH AT THE END OF THE LD. CIT(A). ACCORDINGLY, WE SET ASIDE THE ORDE R OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIS FILE WITH A DIRECTION TO CONSIDER THE MATTER AFRESH AFTER DULY ADDRESSING THE VARIOUS OBJECTIONS RAISED BY THE ASSESSEE AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 28-06-2013. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 28TH JUNE, 2013 GJ I.T.A. NO. 624/COCH/2011 4 COPY TO: 1. CITY CENTRE, 817/11, ENGLISH CHURCH ROAD, PALAKK AD. 2.THE ADDL. COMMISSIONER OF INCOME-TAX, PALAKKAD RA NGE, PALAKKAD. 3 THE COMMISSIONER OF INCOME-TAX(APPEALS)-V, KOCHI 4.THE COMMISSIONER OF INCOME-TAX, TRICHUR. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN