Sri J Venkata Rao, Gudivada V. The ITO, Ward-2, Tenali

ITA 72/VIZ/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50134 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 08-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Assessee Lawyers: Y SURYACHANDRA RAO
• Keywords: Unexplained investment
• Section: 143(3); 133A; 144

Judgement Text

ITA NOS.72&73 OF 10 J. VENKATA RAO, GUDIVADA 1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 72&73 /VIZAG/ 20 10 ASSESSMENT YEAR : 2005 - 06 & 2006 - 07 J. VEN KATA RAO GUDIVADA VS. ITO WARD - 2 TENALI (APPELLANT) (RESPONDENT) PAN NO.ABJPJ 6320Q APPELLANT BY: SHRI Y. SURYACHANDRA RAO, CA RESPONDENT BY: SHRI G. MALLIKARJUNA, SR. D.R. ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THESE APPEALS ARE PREFERRED BY THE ASSESSEE AGAIN ST THE RESPECTIVE ORDER OF THE CIT(A) PERTAINING TO THE ASSESSMENT YE ARS 2005-06 & 2006-07 ON COMMON GROUNDS. THOUGH VARIOUS GROUNDS ARE RAIS ED IN THESE APPEALS BUT THEY ALL RELATE TO THE UNEXPLAINED INVESTMENT M ADE IN CONSTRUCTION OF PROPERTY/BUILDING AT TENALI. 2. THE FACTS BORNE OUT IN THIS REGARD ARE THAT DURI NG THE COURSE OF SURVEY CONDUCTED U/S 133A OF THE I.T. ACT ON 1.3.2005, IT WAS NOTICED BY THE A.O. THAT THE ASSESSEE HAS CONSTRUCTED A 5 STORIED BUILD ING AT TENALI DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2005- 06 AND 2006-07. AS THE ASSESSEE DID NOT FILE HIS RETURN OF INCOME FOR THES E YEARS WITHIN THE DUE DATE PRESCRIBED U/S 139(1) OF THE ACT, NOTICES U/S 142(1 ) WERE ISSUED CALLING THE RETURN OF INCOME FOR THESE ASSESSMENT YEARS. INITI ALLY, THE NOTICE WAS NOT RESPONDED BUT LATER ON THE RETURN OF INCOME WAS FIL ED WHICH WAS PROCESSED U/S 143(3) OF THE ACT. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS REFERRED THE PROPERTY TO DETERMINE THE COST OF CONSTRUCTION TO THE DVO. THE D.V.O. HAS ACCORDINGLY DETERMINED THE COST OF C ONSTRUCTION FOR THE PROPERTY AT RS.1,14,04,000/-. THE ASSESSEE WAS ASK ED TO EXPLAIN THE SOURCE ITA NOS.72&73 OF 10 J. VENKATA RAO, GUDIVADA 2 OF INVESTMENTS AND ASSESSEE WAS ABLE TO SUBSTANTIAT E THE SOURCE TO THE EXTENT OF RS.22,86,000/- IN A.Y. 2005-06. THE A.O. HAS OPINED AT THAT THE 90% OF THE CONSTRUCTION HAVE BEEN COMPLETED BY THE END OF THE ASSESSMENT YEAR 2005-06. ACCORDINGLY, 90% OF THE TOTAL COST W AS DETERMINED AT RS.1,02,63,600/- IN A.Y. 2005-06. AFTER ALLOWING A CREDIT OF RS.20,86,000/-, THE A.O. MADE THE ADDITION OF RS.79,77,600/- IN A.Y . 2005-06. SIMILARLY, IN A.Y. 2006-07, AN ADDITION OF RS.11,40,400/- WAS MAD E ON ACCOUNT OF UNEXPLAINED INVESTMENT FOR THE PROPERTY. BEFORE TH E ASSESSING OFFICER THE ASSESSEE DID NOT APPEAR AND THE ASSESSMENT ORDER WA S PASSED U/S 144 OF THE ACT. 4. BEFORE THE CIT(A), THE ASSESSEE HAS FILED THE RE GISTERED VALUERS REPORT AS WELL AS THE OBJECTIONS TO THE DVOS REPORT AND T HE CIT(A) CALLED A REMAND REPORT FROM THE ASSESSING OFFICER. IN REMAND PROCE EDINGS, THE ASSESSING OFFICER HAS NOT DEALT WITH THE OBJECTIONS TO THE DV OS REPORT RAISED BY THE ASSESSEE. HE HAS SIMPLY EXAMINED THE SOURCE OF INV ESTMENT IN THE PROPERTY. THE CIT(A) RELYING UPON THE DVOS REPORT GRANTED SO ME PART RELIEF TO THE ASSESSEE. 5. BEING AGGRIEVED WITH THE ORDER OF THE CIT(A), TH E ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SU BMISSION THAT CIT(A) HAS NOT EXAMINED THE OBJECTIONS TO THE DVOS REPORT EIT HER BY HIMSELF OR THROUGH THE ASSESSING OFFICER IN REMAND PROCEEDINGS. HE HA S SIMPLY GRANTED A RELIEF OF 20% (15% ON ACCOUNT OF DIFFERENCE IN RATES AND 5 % TOWARDS SELF- SUPERVISION) ONLY WITHOUT LOOKING TO THE FACTS THE DETERMINATION OF THE COST OF CONSTRUCTION MADE BY THE DVO IS NOT PROPER. THE LD . COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT IN THE INTEREST OF JUSTICE, THE MATTER MAY BE SENT BACK TO THE A.O. FOR RE-ADJUDICATION OF THE OB JECTIONS TO THE DVOS REPORT RAISED BY THE ASSESSEE. THIS PROPOSITION WAS NOT O BJECTED TO BY THE REVENUE. 6. HAVING CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES, WE FIND THAT ADMITTEDLY THE ASSESSEE DID NOT CO-OPERATE TO THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE A SSESSMENT ORDER WAS PASSED U/S 144 OF THE ACT. BUT BEFORE THE CIT(A), ASSESSEE HAS FILED THE ITA NOS.72&73 OF 10 J. VENKATA RAO, GUDIVADA 3 OBJECTIONS AS WELL AS REGISTERED VALUERS REPORT BU T THE SAME WAS NOT PROPERLY EXAMINED EITHER BY THE CIT(A) OR BY THE ASSESSING O FFICER IN REMAND PROCEEDINGS. WE THEREFORE, OF THE VIEW THAT WHATEV ER OBJECTIONS WERE RAISED BY THE ASSESSEE WITH RESPECT TO THE DVOS REPORT, T HE ASSESSING AUTHORITIES WERE REQUIRED TO EXAMINE THE SAME BEFORE TAKING A F INAL VIEW. SINCE THE LOWER AUTHORITIES HAVE NOT DEALT WITH THE ISSUE IN ACCORDANCE WITH LAW, WE ARE OF THE OPINION THAT MATTER SHOULD BE SENT BACK TO T HE FILE OF THE ASSESSING OFFICER FOR RE-ADJUDICATION OF THE IMPUGNED ISSUE I N THE LIGHT OF THE OBJECTIONS TO THE DVOS REPORT AND REGISTERED VALUERS REPORT FILED BY THE ASSESSEES. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND R ESTORE THE MATTER TO THE A.O. TO ADJUDICATE THE ISSUE IN TERMS INDICATED AS ABOVE. 7. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 13.4.2011 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 13 TH APRIL, 2011 COPY TO 1 M/S. V. RAO & GOPI, CHARTERED ACCOUNTANTS, 26 - 1 - 77, 1 ST FLOOR, NAGARAMPALEM MAIN ROAD, GUNTUR-4. 2 ITO WARD - 2, TENALI 3 THE CI T, GUNTUR 4 THE CIT (A) , GUNTUR 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM