ITO, CHENNAI V. Smt. Sadhana Bai, CHENNAI

ITA 683/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64446 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 17-09-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 02-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: T BANUSEKAR
• Keywords: Unexplained investment; Value adopted by valuation officer; Valuation report
• Section: 143(3); 147; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A. NO. 682/MDS/2012 (ASSESSMENT YEAR : 2004-05) THE INCOME TAX OFFICER, BUSINESS WARD - XII(3), KANNAMMAI BUILDING, 7 TH FLOOR, 611, ANNA SALAI, CHENNAI - 600 006. (APPELLANT) V. SHRI SHIVLAL, NO.87, MINT STREET, CHENNAI - 600 079. PAN : AASPS2516F (RESPONDENT) I.T.A. NO. 683/MDS/2012 (ASSESSMENT YEAR : 2004-05) THE INCOME TAX OFFICER, BUSINESS WARD - XII(3), KANNAMMAI BUILDING, 7 TH FLOOR, 611, ANNA SALAI, CHENNAI - 600 006. (APPELLANT) V. SMT. SADHANA BAI, NO.87, MINT STREET, CHENNAI - 600 079. PAN : AASPS2513G (RESPONDENT) I.T.A. NO. 660/MDS/2012 (ASSESSMENT YEAR : 2004-05) THE INCOME TAX OFFICER, BUSINESS WARD - X(2), KANNAMMAI BUILDING, 3 RD FLOOR, 611, ANNA SALAI, CHENNAI - 600 006. (APPELLANT) V. SHRI JHUMARLAL, NO.66, MULLA SAHIB STREET, CHENNAI - 600 079. PAN : AAEPJ7980F (RESPONDENT) I.T.A. NOS.682, 683, 660 & 659/MDS/12 C.O. NOS.80 TO 83/MDS/12 2 I.T.A. NO. 659/MDS/2012 (ASSESSMENT YEAR : 2004-05) THE INCOME TAX OFFICER, BUSINESS WARD - X(3), KANNAMMAI BUILDING, 3 RD FLOOR, 611, ANNA SALAI, CHENNAI - 600 006. (APPELLANT) V. SMT. CHANDRA BAI, NO.66, MULLA SAHIB STREET, CHENNAI - 600 079. PAN : AADPC6871E (RESPONDENT) C.O. NO. 80/MDS/2012 (IN I.T.A. NO. 682/MDS/2012) ASSESSMENT YEAR : 2004-05 SHRI SHIVLAL, NO.87, MINT STREET, CHENNAI - 600 079. (CROSS-OBJECTOR) V. THE INCOME TAX OFFICER, BUSINESS WARD - XII(3), CHENNAI - 600 006. (RESPONDENT) C.O. NO. 82/MDS/2012 (IN I.T.A. NO. 683/MDS/20120 ASSESSMENT YEAR : 2004-05 SMT. SADHANA BAI, NO.87, MINT STREET, CHENNAI - 600 079. (CROSS-OBJECTOR) V. THE INCOME TAX OFFICER, BUSINESS WARD - XII(3), CHENNAI - 600 006. (RESPONDENT) C.O. NO. 81/MDS/2012 (IN I.T.A. NO. 660/MDS/2012) ASSESSMENT YEAR : 2004-05 SHRI JHUMARLAL, NO.66, MULLA SAHIB STREET, CHENNAI - 600 079. (CROSS-OBJECTOR) V. THE INCOME TAX OFFICER, BUSINESS WARD - X(2), CHENNAI - 600 006. (RESPONDENT) I.T.A. NOS.682, 683, 660 & 659/MDS/12 C.O. NOS.80 TO 83/MDS/12 3 C.O. NO. 83/MDS/2012 (IN I.T.A. NO. 659/MDS/2012) ASSESSMENT YEAR : 2004-05 SMT. CHANDRA BAI, NO.66, MULLA SAHIB STREET, CHENNAI - 600 079. (CROSS-OBJECTOR) V. THE INCOME TAX OFFICER, BUSINESS WARD - X(3), CHENNAI - 600 006. (RESPONDENT) REVENUE BY : SHRI S. DASGUPTA, JCIT ASSESSEES BY : SHRI T. BANUSEKAR, CA DATE OF HEARING : 17.09.2012 DATE OF PRONOUNCEMENT : 11.10.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THESE ARE APPEALS AND CROSS-OBJECTIONS OF THE REV ENUE AND THE ASSESSEES, RESPECTIVELY, ALL DIRECTED AGAINST O RDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-IV, CHENNAI, D ATED 13.12.2011 IN RESPECT OF THE ASSESSEE SMT. CHANDRA BAI AND ORDER DATED 15.12.2011 IN RESPECT OF OTHER ASSESSEES. 2. FACTS GIVING RAISE TO THESE ASSESSMENTS AND THE APPEALS ASRE AS UNDER:- ASSESSEES SHRI JHUMARLAL, SMT. CHANDRA BAI, SHRI S HIVLAL AND SMT. SADHANA BAI HAD TOGETHER PURCHASED A PROPERTY DURING FINANCIAL I.T.A. NOS.682, 683, 660 & 659/MDS/12 C.O. NOS.80 TO 83/MDS/12 4 YEAR 1999-2000 FOR A TOTAL COST OF ` 58,49,320/-. SHARE OF EACH OF THE ASSESSEE IN THE SAID COST WAS ` 14,62,330/-. IT SEEMS THERE WAS A BUILDING STANDING THEREIN WHICH, AS PER THE ASSESSI NG OFFICER, WAS DEMOLISHED. A HOUSE WAS CONSTRUCTED IN THE SAID LA ND DURING THE PERIOD APRIL, 2001 TO MARCH, 2004. DURING THE COUR SE OF THE REGULAR ASSESSMENT PROCEEDINGS OF ONE OF THESE ASSESSEES, N AMELY, SHRI SHIVLAL, ASSESSING OFFICER REQUIRED FROM HIM DETAIL S OF COST OF CONSTRUCTION OF THE BUILDING. ADDRESS OF THE BUILD ING WAS DOOR NO.87, MINT STREET, CHENNAI-79. A VALUATION MADE BY A REG ISTERED VALUER WAS FURNISHED BY THE ASSESSEE AND IN SUCH VALUATION REPORT, VALUE OF THE BUILDING WAS SHOWN AS ` 74.85 LAKHS. AS AGAINST THIS, THE DETAILS OF CONSTRUCTION EXPENSES FILED BY THE ASSESSEES GAV E A FIGURE OF ` 1,28,92,674/- WHICH INCLUDED VALUE OF THE LAND AND INCIDENTAL CHARGES. AFTER EXCLUDING VALUE OF THE LAND, THE CO ST OF CONSTRUCTION ADMITTED BY THE ASSESSEE AS WORKED OUT BY THE A.O. CAME TO ` 72,21,622/- AGAINST THE VALUE OF ` 74.85 LAKHS FIXED BY THE REGISTERED VALUER. ASSESSING OFFICER EXAMINED SHRI SHIVLAL, W HEREUPON IT SEEMS HE ADMITTED THAT NO BOOKS WERE MAINTAINED FOR THE CONSTRUCTION WORK. ASSESSING OFFICER THEN MADE A R EFERENCE TO DEPARTMENTAL VALUATION OFFICER (DVO) UNDER SECTION 142A OF INCOME- TAX ACT, 1961 (IN SHORT 'THE ACT'). THE DVO FIXED THE COST OF I.T.A. NOS.682, 683, 660 & 659/MDS/12 C.O. NOS.80 TO 83/MDS/12 5 CONSTRUCTION AT ` 1,74,20,000/-. SINCE THE PROPERTY WAS OWNED BY FOUR ASSESSEES TOGETHER, ASSESSING OFFICER WORKED O UT THE COST OF CONSTRUCTION PER ASSESSEE AT ` 43,55,000/-. THE ADMITTED COST OF CONSTRUCTION BEING ` 72,21,625/-, PER ASSESSEE COST CAME TO ` 17,70,041/- AS PER THEIR VERSION. DIFFERENCE WAS C ONSIDERED AS UNEXPLAINED INVESTMENT OF THE ASSESSEE UNDER SECTIO N 69B OF THE ACT. 3. THOUGH THE ASSESSMENT OF SHRI SHIVLAL WAS COMPLE TED UNDER SECTION 143(3) OF THE ACT ON THE ABOVE LINES, IN TH E CASE OF OTHER ASSESSEES, THE ADDITIONS FOR ALLEGED UNEXPLAINED IN VESTMENT WERE DONE IN A RE-ASSESSMENT. SUCH RE-ASSESSMENT PROCEE DINGS WERE INITIATED BY THE A.O. CONSIDERING HIS FINDING IN TH E ASSESSMENT DONE IN THE CASE OF SHRI SHIVLAL. 4. ALL THE ASSESSEES MOVED IN APPEAL BEFORE CIT(APP EALS). ONE OF THE GROUNDS TAKEN BEFORE THE CIT(APPEALS) ASSAIL ED THE VALIDITY OF THE REOPENING DONE, EXCEPT IN THE CASE OF SHRI SHIV LAL. SHRI SHIVLALS ASSESSMENT, AS ALREADY MENTIONED, WAS CULMINATION O F A REGULAR ASSESSMENT PROCEEDINGS AND THE HARBINGER FOR THE RE OPENING DONE IN OTHER CASES. CIT(APPEALS), IN THE FIRST ROUND OF P ROCEEDINGS, IN SUCH ASSESSEES APPEALS, HELD THAT THE REOPENINGS BASED ON DVO REPORT I.T.A. NOS.682, 683, 660 & 659/MDS/12 C.O. NOS.80 TO 83/MDS/12 6 WERE NOT VALID, AND THEREFORE, DID NOT DEAL WITH TH E MERITS OF THE CASE. DEPARTMENT, THEREAFTER, MOVED IN APPEAL BEFORE THIS TRIBUNAL AND THIS TRIBUNAL, VIDE ITS ORDER DATED 20.11.2009 IN I.T.A. NO. 1370/MDS/2009 AND 1371/MDS/2009 HELD THE REOPENING TO BE VALID AN D THE APPEALS WERE REMITTED BACK TO THE CIT(APPEALS) FOR ADJUDICA TING THE ISSUE RELATING TO COST OF CONSTRUCTION. 5. THEREUPON THE CIT(APPEALS) TOOK UP THE ISSUE OF VALUATION AND ADDITION MADE ON THAT BASIS. ARGUMENT OF THE ASSES SEES WAS THAT STATE PWD RATES HAD TO BE ADOPTED AND NOT CPWD RATE S BASED ON WHICH DVO HAD ARRIVED AT THE COST OF CONSTRUCTION. ACCORDING TO ASSESSEES, THE REGISTERED VALUER HAD FOLLOWED STATE PWD RATES AND VIDE THE DECISION OF CO-ORDINATE BENCH OF THIS TRIB UNAL IN THE CASE OF PRABHU DEVA V. ITO IN I.T.A. NO. 651/MDS/2009 DATED 13.8.2009, THE VALUES BASED ON CPWD RATES HAD TO BE TONED DOWN BY 20% FOR ARRIVING AT THE VALUE BASED ON STATE PWD RATES. 6. LD. CIT(APPEALS) WAS APPRECIATIVE OF THE CONTENT IONS OF THE ASSESSEES. ACCORDING TO HIM, JURISDICTIONAL HIGH C OURT AS WELL AS THE TRIBUNAL HAD IN SIMILAR CASES HELD THAT COST OF CON STRUCTION SHOULD BE WORKED OUT BASED ON STATE PWD RATES ONLY. IN THIS VIEW OF THE MATTER, HE DIRECTED THE ASSESSING OFFICER TO ADOPT STATE PWD RATES I.T.A. NOS.682, 683, 660 & 659/MDS/12 C.O. NOS.80 TO 83/MDS/12 7 FOR WORKING OF THE COST OF CONSTRUCTION. NEVERTHEL ESS, FOR ARRIVING AT SUCH STATE PWD RATES, HE HELD THAT THE VALUE FIXED BY DVO BASED ON CPWD RATES COULD BE ADOPTED AS THE BASE AND A 20% R EDUCTION THEREON IF GIVEN, WOULD SUFFICE. CIT(APPEALS) ALSO FOUND THAT CONSTRUCTION WAS SPREAD OVER TO TWO ASSESSMENT YEAR S 2003-04 AND 2004-05, BASED ON THE REPORT OF DVO. CONSIDERING T HE COST ADMITTED BY THE ASSESSEES FOR THESE YEARS, HE DIRECTED THE A .O. TO APPLY THE RATIO OF 63.63% AND 36.37% FOR THE TWO ASSESSMENT Y EARS 2003-04 AND 2004-05 RESPECTIVELY. IN OTHER WORDS, HE DIREC TED THE A.O. TO SPREAD THE COST OF CONSTRUCTION TO TWO YEARS IN THE ABOVE RATIO AFTER CONSIDERING VALUE FIXED BY THE DVO LESS 20% REDUCTI ON FOR ARRIVING AT THE VALUE OF STATE PWD RATES WERE FOLLOWED. CIT(AP PEALS) ALSO WORKED OUT THE EXCESS OF COST OF CONSTRUCTION, THAT WAS TO BE ASSESSED UNDER SECTION 69B OF THE ACT, AS ` 14,05,700/- FOR ASSESSMENT YEAR 2003-04 AND AS ` 8,03,374/- FOR ASSESSMENT YEAR 2004-05 IN RESPECT OF THE ASSESSEE SMT. CHANDRA BAI . IN RESPECT OF OTHER ASSESSEES, THE SUSTAINABLE ADDITIONS WERE WOR KED OUT BY CIT(APPEALS) FOLLOWING A SIMILAR FORMULA, AND THESE WERE AS UNDER:- SMT. SADHANA BAI ASST. YEAR 2002 - 03 ` 1,71,747 ASST. YEAR 2003 - 04 ` 6,33,455 ASST. YEAR 2004 - 05 ` 2,41,356 I.T.A. NOS.682, 683, 660 & 659/MDS/12 C.O. NOS.80 TO 83/MDS/12 8 SHRI SHIVLAL ASST. YEAR 2002 - 03 ` 5,80,989 ASST. YEAR 2003 - 04 ` 8,46,529 ASST. YEAR 2004 - 05 ` 2,86,439 SHRI JHUMARLAL ASST. YEAR 2003-04 ` 12,63,339 ASST. YEAR 2004 - 05 ` 5,16,820 7. NOW BEFORE US, REVENUE IN ITS APPEALS IS AGGRIEV ED THAT CIT(APPEALS) BLINDLY FOLLOWED THIS TRIBUNAL ORDER I N THE CASE OF PRABHU DEVAH (SUPRA). ACCORDING TO THE LEARNED D.R ., THE ADDITION WAS RIGHTLY DONE BY THE CIT(APPEALS) FOR THE LAST O F THE ASSESSMENT YEARS INVOLVED AND COULD NOT SPLIT OVER TWO YEARS, IN VIEW OF THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE O F SAKTHI TOURIST HOME V. CIT (308 ITR 028). FURTHER, ACCORDING TO L EARNED D.R., THERE WAS NO REASON WHY THE UNEXPLAINED INVESTMENT WAS RE QUIRED TO BE DISTRIBUTED AND APPORTIONED OVER A PERIOD OF TWO YE ARS. ONCE UNEXPLAINED INVESTMENT WAS PROVED, IT HAD TO BE CON SIDERED AS INCOME OF THE CONCERNED YEAR. LEARNED D.R. FURTHER SUBMITTED THAT VALUATION DONE BY DVO WAS BASED ON COST INDICES OF CHENNAI CITY AND THEREFORE, SUCH VALUATION COULD NOT BE DILUTED AND TONED DOWN. 8. PER CONTRA, AND IN SUPPORT OF HIS APPEALS, LEARN ED A.R. SUBMITTED THAT IN THE FIRST PLACE, CIT(APPEALS) HAD FAILED TO CONSIDER THE COST OF CONSTRUCTION ACCOUNTED BY THE ASSESSEES . ACCORDING TO I.T.A. NOS.682, 683, 660 & 659/MDS/12 C.O. NOS.80 TO 83/MDS/12 9 HIM, ACTUAL AMOUNT SPENT FOR CONSTRUCTION WAS DULY REFLECTED IN THE ACCOUNTS AND BALANCE SHEETS WERE ALSO FILED BY THE ASSESSEES. FURTHER, ACCORDING TO HIM, FINDING OF THE CIT(APPEA LS) THAT A 20% REDUCTION WHEN GIVEN ON THE VALUE FIXED AS PER CPWD RATES, THEN IT WOULD AUTOMATICALLY BE ON PAR WITH THE VALUE APPLYI NG STATE PWD RATES, WAS WITHOUT ANY BASIS. HENCE, ACCORDING TO HIM, NO ADDITIONS OUGHT HAVE BEEN MADE UNDER SECTION 69B OF THE ACT. FINDING OF THE CIT(APPEALS) THAT AN ADDITION WAS REQUIRED IF STATE PWD RATES WERE FOLLOWED, WAS ILL FOUNDED. LEARNED A.R. POINTED TH E REGISTERED VALUERS REPORT WAS WITH ASSESSING OFFICER AND IN S UCH REPORT, REGISTERED VALUER HAD FOLLOWED STATE PWD RATES FOR ARRIVING AT THE COST OF CONSTRUCTION. 9. FOR ARGUING THAT STATE PWD RATES ALONE COULD BE FOLLOWED, LEARNED A.R. PLACED RELIANCE ON THE DECISIONS OF HO NBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. D. SUBRAMANIAN (29 6 ITR 348) AND THAT OF THIRD MEMBER DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M. SELVARAJ V. ITO (2004) 2 SOT 330 (CH ENNAI) (TM). 10. FOR HIS SUBMISSION THAT IN AN APPEAL FOR A PART ICULAR YEAR, DIRECTION FOR ANOTHER YEAR COULD NOT BE GIVEN, LEAR NED D.R. RELIED ON THE DECISIONS OF HONBLE APEX COURT IN THE CASE OF RAJINDER NATH V. I.T.A. NOS.682, 683, 660 & 659/MDS/12 C.O. NOS.80 TO 83/MDS/12 10 CIT (120 ITR 14) AND CIT V. FORAMER FRANCE (264 ITR 566), THAT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. BANW ARILAL & SONS (P) LTD. (257 ITR 518), THAT OF A CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SUN METAL FACTORY (I) P LTD. V. ACIT (2010) 124 ITD 14 AND ELGI EQUIPMENTS LTD. V. ACIT IN I.T.A. NO. 1454 TO 1456/MDS/2006. 11. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. GRIEVANCE OF THE REVENUE IS THAT THE CIT(APPEALS) D IRECTED ADOPTION OF STATE PWD RATES FOR DETERMINING THE COST OF CONS TRUCTION OF THE BUILDING AND DIRECTED SPREADING OF SUCH INVESTMENT OVER TWO YEARS. AS AGAINST THIS, GRIEVANCE OF THE ASSESSEES IN THEI R CROSS-OBJECTIONS ARE THAT CIT(APPEALS) OUGHT NOT HAVE GIVEN ANY DIRE CTION OTHER THAN FOR THE IMPUGNED ASSESSMENT YEAR AND ALSO FAILED TO APPRECIATE THAT THE ACTUAL AMOUNT SPENT WAS REFLECTED IN THE BOOKS AND ALSO IN THE BALANCE SHEET FILED. CIT(APPEALS) HAD GIVEN A CLEA R FINDING IN ALL THESE ASSESSEES CASE THAT IF 20% IS REDUCED FROM T HE VALUE FIXED BY THE DVO BASED ON CPWD RATES, IT WOULD GIVE A VALUE AT PAR WITH STATE PWD RATES. FOR THIS, CIT(APPEALS) RELIED ON THE DECISION OF CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF PRAB HU DEVAH (SUPRA). NO DOUBT, IN THE CASE OF PRABHU DEVAH (SUPRA), THIS TRIBUNAL, VIDE ITS ORDER DATED 13 TH AUGUST, 2009, HAS GIVEN FOLLOWING FINDING AT PARA 5 OF ITS ORDER:- I.T.A. NOS.682, 683, 660 & 659/MDS/12 C.O. NOS.80 TO 83/MDS/12 11 IT IS WELL SETTLED POSITION OF LAW THAT FOR NEUTRAL IZING THE DIFFERENCE 20% ALLOWANCE HAS TO BE GIVEN ON CPWD RA TES. 12. HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F D. SUBRAMANIAN (SUPRA), RELIED ON BY THE LEARNED A.R., HELD THAT D ETERMINATION OF COST OF CONSTRUCTION, WHETHER ON THE BASIS OF REPORT OF REGISTERED VALUER OR ON THE BASIS OF DVO, WAS PURELY A QUESTION OF FACT. IT WAS ALSO HELD BY THEIR LORDSHIP THAT APPLICATION OF DIFFERENT RAT ES FOR ARRIVING AT COST OF CONSTRUCTION WOULD ALWAYS GIVE DIFFERENT RESULTS SINCE VARIATIONS WERE BOUND TO BE THERE BETWEEN THE RATES. THEIR LO RDSHIP REFUSED TO INTERFERE WITH THE ORDER OF THIS TRIBUNAL WHEREBY T HE TRIBUNAL REMANDED THE MATTER BACK TO THE ASSESSING OFFICER F OR A REASON THAT CIT(APPEALS) HAD NOT COMPARED THE REGISTERED VALUER S REPORT AND DVOS REPORT WHILE ARRIVING AT COST OF CONSTRUCTION . IN THE CASE OF M. SELVARAJ (SUPRA), A THIRD MEMBER DECISION OF THIS T RIBUNAL, NO DOUBT, ASSESSEES PLEA REGARDING STATE PWD RATES TO BE ADO PTED IF AT ALL COST OF CONSTRUCTION WAS TO BE DETERMINED, WAS ACCE PTED. HOWEVER, SUCH DIRECTIONS WERE GIVEN IN A SCENARIO WHERE THE ASSESSEE CONCERNED HAD MAINTAINED BOOKS FOR CONSTRUCTION COS T AND THE REVENUE HAD NOT REJECTED THE BOOKS. REGISTERED VAL UERS REPORT WAS PRODUCED BY THE ASSESSEE IN SUPPORT OF THE COST SHO WN BY IT IN ITS BOOKS FOR THE CONSTRUCTION. I.T.A. NOS.682, 683, 660 & 659/MDS/12 C.O. NOS.80 TO 83/MDS/12 12 13. AS HELD BY HONBLE APEX COURT IN THE CASE OF CI T V. SUN ENGINEERING WORKS PVT. LTD. (1992) (198 ITR 297) (S C), DECISION OF A COURT SHALL NOT BE CONSIDERED DIVORCED FROM THE FAC TS BASED ON WHICH SUCH DECISIONS WERE GIVEN. DECISION OF A COURT TAK ES ITS COLOUR FROM THE QUESTIONS INVOLVED IN SUCH CASES. THEREFORE, I N OUR OPINION, THE OBSERVATION MADE BY THE THIRD MEMBER DECISION ON M. SELVARAJS CASE (SUPRA) THAT VALUATION BASED ON STATE PWD RATE S HAD TO BE FOLLOWED INSTEAD OF VALUATION BASED ON CPWD RATES, CANNOT BE TAKEN AS A UNIVERSAL RULE. SUCH DIRECTIONS WERE GIVEN BA SED ON THE FACTS OF THAT PARTICULAR CASE. HERE ALSO, WHAT WE FIND FRO M THE ORDERS OF ASSESSING OFFICER THAT ALL THE ASSESSEES, EXCEPT SH RI SHIVLAL, HAD FILED A TRIAL BALANCE WHERE THE VALUE OF THE BUILDING WAS REPORTED. NO DOUBT, IN THE CASE OF SHRI SHIVLAL, IT HAS BEEN NOT ED BY THE ASSESSING OFFICER THAT NO BOOKS WERE MAINTAINED FOR CONSTRUCT ION ACTIVITIES. NEVERTHELESS, IN AN ANSWER TO A SPECIFIC QUERY PUT BY THE A.O., IT WAS REPLIED BY THE SAID ASSESSEE THAT HE WAS DEBITING T HE EXPENSES TO HIS PERSONAL BOOKS. WHETHER BOOKS ARE PERSONAL OR NOT, AS LONG AS THE EXPENSES ARE ACCOUNTED, IT IS A BOOK OF RECORD WHIC H IS AVAILABLE FOR VERIFICATION. I.T.A. NOS.682, 683, 660 & 659/MDS/12 C.O. NOS.80 TO 83/MDS/12 13 14. WE ARE, THEREFORE, OF THE OPINION THAT FOR DETE RMINING THE COST OF CONSTRUCTION, THE MATTER REQUIRES A RE-VISIT BY THE ASSESSING OFFICER. HE HAS TO GIVE COGENT REASON FOR ARRIVING AT THE CO ST OF CONSTRUCTION WHETHER BASED ON CPWD RATES OR STATE PWD RATES, IN ACCORDANCE WITH LAW, AND ALSO GIVE REASON WHY THE BOOKS, IN WH ATEVER FORM MAINTAINED BY THE ASSESSEE, COULD NOT BE CONSIDERED . 15. COMING TO THE SECOND ASPECT RAISED BY THE REVEN UE IN THEIR APPEALS THAT CIT(APPEALS) DID NOT HAVE ANY POWER FO R GIVING DIRECTION FOR ANOTHER YEAR, HONBLE APEX COURT IN THE CASE OF RAJINDER NATH (SUPRA), HAS CLEARLY HELD AT PARA 7 OF ITS JUDGMENT AS UNDER:- 7. THE EXPRESSIONS FINDING AND DIRECTION ARE LI MITED IN MEANING. A FINDING GIVEN IN AN APPEAL REVISION OR REFERENCE ARISING OUT OF AN ASSESSMENT MUST BE A FINDING NECE SSARY FOR THE DISPOSAL OF THE PARTICULAR CASE, THAT IS TO SAY, IN RESPECT OF THE PARTICULAR CASE ASSESSEE AND IN RELATION TO THE PAR TICULAR ASSESSMENT YEAR. TO BE A NECESSARY FINDING, IT MUS T BE DIRECTLY INVOLVED IN THE DISPOSAL OF THE CASE. IT IS POSSIB LE IN CERTAIN CASES THAT IN ORDER TO RENDER A FINDING IN RESPECT OF A, A FINDING IN RESPECT OF B MAY BE CALLED FOR. FOR INSTANCE, W HERE THE FACTS SHOW THAT THE INCOME CAN BELONG EITHER TO A OR B AN D NO ONE ELSE, A FINDING THAT IT BELONGS TO B OR DOES NOT BELONG T O B WOULD BE DETERMINATIVE OF THE ISSUE WHETHER IT CAN BE TAXED AS AS INCOME. A FINDING RESPECTING B IS INTIMATELY INVOLVED AS A STEP IN THE PROCESS OF REACHING THE ULTIMATE FINDING RESPECTING A. IF, HOWEVER, THE FINDING AS TO AS LIABILITY CAN BE DIR ECTLY ARRIVED AT WITHOUT NECESSITATING A FINDING IN RESPECT OF B, TH EN A FINDING MADE IN RESPECT OF B IS AN INCIDENTAL FINDING ONLY. IT IS NOT A FINDING NECESSARY FOR THE DISPOSAL OF THE CASE PERT AINING TO A. THE SAME PRINCIPLES SEEM TO APPLY WHEN THE QUESTION IS WHETHER I.T.A. NOS.682, 683, 660 & 659/MDS/12 C.O. NOS.80 TO 83/MDS/12 14 THE INCOME UNDER ENQUIRY IS TAXABLE IN THE ASSESSME NT YEAR UNDER CONSIDERATION OR ANY OTHER ASSESSMENT YEAR. AS REG ARDS THE EXPRESSION DIRECTION IN S. 153(3)(II) OF THE ACT, IT IS NOW WELL SETTLED THAT IT MUST BE AN EXPRESS DIRECTION NECESS ARY FOR THE DISPOSAL OF THE CASE BEFORE THE AUTHORITY OR COURT. IT MUST ALSO BE A DIRECTION WHICH THE AUTHORITY OR COURT IS EMPO WERED TO GIVE WHILE DECIDING THE CASE BEFORE IT. THE EXPRESSIONS FINDING AND DIRECTION IN S. 153(3)(II) OF THE ACT MUST BE ACC ORDINGLY CONFINED. SEC. 153(3)(II) IS NOT A PROVISION ENLAR GING THE JURISDICTION OF THE AUTHORITY OR COURT. IT IS A PR OVISION WHICH MERELY RAISES THE BAR OF LIMITATION FOR MAKING AN A SSESSMENT ORDER UNDER S. 143 OR S. 144 OR S. 147 : ITO VS. MU RLIDHAR BHAGWAN DAS (1964) 52 ITR 335 (SC) : TC51R.2168 AND N.K.T. SIVALINGAM CHETTIAR VS. CIT (1967) 66 ITR 586 (SC) : TC51R.2042. THE QUESTION FORMULATED BY THE TRIBUNA L RAISES THE POINT WHETHER THE AAC COULD CONVERT THE PROVISIONS OF S. 147(1) INTO THOSE OF S. 153(3)(II) OF THE ACT. IN VIEW OF S. 153(3)(II) DEALING WITH LIMITATION MERELY, IT IS NOT EASY TO A PPRECIATE THE RELEVANCE OR VALIDITY OF THE POINT. WHEN ASSESSEE HIMSELF CLAIMS THAT THE CONSTRUCTION WAS SPREAD OVER TO TWO TO THREE YEARS, IN OUR OPINION, THE FINDING OF THE CIT(APPEALS) THAT ADDITION, IF ANY, MADE FOR UNEXPLAINED COST OF CONSTRUCTION, HAS TO SPREAD OVER TO SUCH YEARS, IS NOTHING BUT A FINDING WHICH IS NECESSARY FOR DISPOSAL OF THE CASE. IT IS AN ISSUE DIRECTLY INVOLVED IN THE APPEALS BEFORE HIM AND SUCH DIRECTIONS, IN OUR OPINION, WER E NOT BEYOND THE POWERS OF CIT(APPEALS). 16. AS FOR THE DECISION OF HONBLE APEX COURT IN TH E CASE OF FORAMER FRANCE (SUPRA), RELIED ON BY LEARNED A.R., THE QUESTION THERE WAS APPLICABILITY OF SECTION 153(3)(II) OF THE ACT AND WHETHER I.T.A. NOS.682, 683, 660 & 659/MDS/12 C.O. NOS.80 TO 83/MDS/12 15 OBSERVATION OF THE TRIBUNAL WAS A DIRECTION NECESSA RY FOR DISPOSAL OF THE APPEAL, RELATING TO THE CONCERNED PETITIONERS. IN OUR OPINION, THIS JUDGMENT OF HONBLE APEX COURT DO NOT CIRCUMSCRIBE THE POWERS OF CIT(APPEALS) IN ANY MANNER. IN THE DECISION OF BAN WARILAL & SONS, HONBLE DELHI HIGH COURT WAS SEIZED OF THE ISSUE WH ETHER DIRECTIONS GIVEN BY AAC IN THE SAID CASE, WERE NECESSARY FOR D ISPOSAL OF THE APPEAL AND WHETHER SUCH DIRECTION COULD BE CONSIDER ED AS ONE COMING WITHIN THE AMBIT OF SECTION 153(3)(II) OF TH E ACT. HERE, THE ISSUE BEFORE US IS NOT THE QUESTION OF ANY LIMITATI ON OR ISSUE OF NOTICE. IN THE CASE OF SUN METAL FACTORY (I) P. LTD. (SUPRA ), DECIDED BY CO- ORDINATE BENCH OF THIS TRIBUNAL, THE CIT(APPEALS) H ELD THAT ADDITION MADE BY THE ASSESSING OFFICER WAS NOT BASED ON ANY EVIDENCE FOUND DURING SEARCH AND, AFTER GIVING SUCH A FINDING, DIR ECTED THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT FOR GIVEN ASSESSME NT YEARS. HERE, NEITHER ASSESSMENTS WERE BASED ON ANY SEARCH, NOR C AN IT BE SAID THAT CIT(APPEALS) HAD ENLARGED THE SCOPE OF APPEALS BY GIVING A DIRECTION TO SPLIT THE UNEXPLAINED INVESTMENT ON CO ST OF CONSTRUCTION TO THE PERIOD OF CONSTRUCTION. 17. IN THE RESULT, WE ARE NOT AGREEING WITH THE ARG UMENT OF LEARNED D.R. THAT CIT(APPEALS) HAD NO SUCH POWER TO DIRECT SPREADING OF THE I.T.A. NOS.682, 683, 660 & 659/MDS/12 C.O. NOS.80 TO 83/MDS/12 16 UNEXPLAINED PORTION OF INVESTMENT, IF ANY, TO THE P ERIOD OF CONSTRUCTION. 18. NEVERTHELESS, IN VIEW OF THE FACTUAL SITUATION OF THE CASE, WE ARE SETTING ASIDE THE ORDERS OF AUTHORITIES BELOW AND R EMITTING THE ISSUE BACK TO THE FILE OF THE A.O. FOR CONSIDERATION AFRE SH. THE A.O. HAS TO CONSIDER THE ASPECT OF COST OF CONSTRUCTION IN ACCO RDANCE WITH LAW AND HE HAS TO GIVE AN OPPORTUNITY TO THE ASSESSEES TO EXPLAIN THEIR CASE AND JUSTIFY THE COST OF CONSTRUCTION AS RETURN ED BY THEM. 19. IN THE RESULT, APPEALS OF THE REVENUE AS WELL A S CROSS- OBJECTIONS OF THE ASSESSEES ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ORDER WAS PRONOUNCED IN THE COURT ON THURSDAY, THE 11 TH OF OCTOBER, 2012, AT CHENNAI. SD/- SD/- (V.DURGA RAO) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 11 TH OCTOBER, 2012. KRI. COPY TO: ASSESSEE/ASSESSING OFFICER/CIT(A)-IV, CHE NNAI-34/ CIT-IX, CHENNAI/D.R./GUARD FILE