ITO, Cuddalore V. M/s. Sneha Mahal, Cuddalore

ITA 949/CHNY/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68787 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 23-10-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 27-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: V SRINIVASAN
• Keywords: Unexplained investment; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO. 949/MDS/2012 (ASSESSMENT YEAR: 2007-08) INCOME TAX OFFICER, WARD-I(4), S.N.CHAVADI, CUDDALORE. VS. M/S. SNEHA MAHAL, CHENNAI SALAI, L.N.PURAM, PANRUTI T.K. CUDDALORE DIST. PAN:ABJFS9208G (APPELLANT) (RESPONDENT) APPELLANT BY : MR. N.MADHAVAN JCIT RESPONDENT BY : MR. V.SRINIVASAN, A.R. DATE OF HEARING : 23 RD OCTOBER, 2013 DATE OF PRONOUNCEMENT : 25 TH OCTOBER, 2013 O R D E R PER CHALLA NAGENDRA PRASAD : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XII, CHENN AI DATED 23.01.2012 FOR THE ASSESSMENT YEAR 2007-08. 2. THE ONLY GRIEVANCE OF THE REVENUE IN THIS APPE AL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN REJECTING THE VALUATION ADOPTED BY THE DEPARTMENTA L VALUATION OFFICER IN ESTIMATING THE COST OF CONSTR UCTION OF THE PROPERTY. THE REVENUE ALSO CONTENDED THAT COMMISS IONER ITA NO.949/MDS//2012 2 OF INCOME TAX (APPEALS) FAILED TO NOTE THAT APPROVE D VALUER HAS NOT QUOTED STATE PWD RATES TO BE APPLIED FOR TH E IMPUGNED CONSTRUCTION. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT MADE ADDITION OF ` 97,63,780/- TOWARDS DIFFERENCE IN COST OF CONSTRUCTION DETERMIN ED BY THE DEPARTMENTAL VALUATION OFFICER AND THE VALUE REPORT ED BY THE ASSESSEE THROUGH APPROVED VALUER. THE ASSESSING OFF ICER NOTED THAT THE ASSESSEE RETURNED THE COST OF CONSTR UCTION AT ` 1,28,46,220/- IN ITS BOOKS OF ACCOUNT. THE ASSESSI NG OFFICER REFERRED THE VALUATION OF PROPERTY TO THE VALUATION OFFICER AND OBTAINED A REPORT IN RESPECT OF THE PROPERTY I.E. K ALYANA MANDAPAM BUILDING AT CHENNAI SALAI, L.N.PURAM, PANR UTI AT ` 2,26,10,000/-. THE ASSESSING OFFICER ADDED THE DIFF ERENCE AS UNEXPLAINED INVESTMENT. ON APPEAL, THE COMMISSIONE R OF INCOME TAX (APPEALS) FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SM T. V.GAJALAKSHMI (11 TAXMANN.COM 173) (MAD) HELD THAT THE VALUATION OFFICER SHOULD ADOPT STATE PWD RATES INST EAD OF CPWD RATES FOR THE PROPERTY SITUATED IN RURAL PLACE S. THEREFORE, THE COMMISSIONER OF INCOME TAX (APPEALS ) HELD ITA NO.949/MDS//2012 3 THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN ADOP TING THE COST OF CONSTRUCTION AT ` 2,26,10,000/- BASED ON THE DEPARTMENTAL VALUATION OFFICERS REPORT WHICH WAS DONE ON CPWD R ATES. THE COMMISSIONER OF INCOME TAX (APPEALS) CONCLUDED THAT THE ASSESSEE HAS OBTAINED REPORT FROM APPROVED VALU ER WHO ESTIMATED THE VALUE BASED ON THE STATE PWD RATES AN D DELETED THE ADDITION MADE BY THE ASSESSING OFFICER, AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 3. THE DEPARTMENTAL REPRESENTATIVE PLACING RELIANCE ON THE ORDER OF THE ASSESSING OFFICER AND THE REPORT O F THE DVO SUBMITS THAT HE HAS STRONG REASONS TO ADOPT CPWD RA TES IN PLACE OF STATE PWD. HE VEHEMENTLY SUPPORTS THE ORD ER OF THE ASSESSING OFFICER. THE DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITS THAT THOUGH THE COMMISSIONER OF INCOME TAX (APPEALS) HAS STATED THAT THE ASSESSEE HAD OBTAINED REPORT FROM REGISTERED VALUER SAID TO HAVE BEEN APPLIED ST ATE PWD RATES, THE APPROVED VALUER SEEMS TO HAVE NOT ADOPTE D STATE PWD RATES. THEREFORE, THE DEPARTMENTAL REPRESENTATI VE SUBMITS THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) IS ITA NO.949/MDS//2012 4 NOT JUSTIFIED IN HOLDING THAT REGISTERED VALUER HAS ADOPTED STATE PWD RATES . 4. ON THE OTHER HAND, THE AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUPPORTS THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). HE ALSO PLACES RELIANCE ON TH E DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ITO VS. SMT. P.ARCHANABAI IN ITA NO.2459/MDS/200 6 DATED 19.1.2012 TO CONTEND THAT IN THE ABSENCE OF R EJECTION OF BOOKS OF ACCOUNT OF THE ASSESSEE, THE ASSESSING OFF ICER CANNOT MAKE ADDITION IN RESPECT OF DIFFERENCE IN TH E COST OF CONSTRUCTION BASED ON VALUATION OFFICERS REPORT. H E SUBMITS THAT IN THE ABSENCE OF REJECTION OF BOOKS OF ACCOUN T, REFERENCE MADE BY THE ASSESSING OFFICER TO DVO ITSELF IS BAD IN LAW. 5. HEARD BOTH SIDES. PERUSED THE ORDERS OF THE LOWE R AUTHORITIES AND THE CASE LAW RELIED ON BY THE PARTI ES. THE COMMISSIONER OF INCOME TAX (APPEALS) AS A MATTER OF FACT FOUND THAT PROPERTY CONSTRUCTED BY THE ASSESSEE WAS IN RURAL PLACE AND THEREFORE, BY FOLLOWING THE JURISDICTIONA L HIGH COURT DECISION IN THE CASE OF V.GAJALAKSHMI (SUPRA) HELD THAT THE ITA NO.949/MDS//2012 5 VALUATION OFFICER SHOULD ADOPT ONLY STATE PWD RATES . HE HAS ACCEPTED THAT THE VALUATION REPORT OF THE APPROVED VALUER OF THE ASSESSEE IS BASED ON STATE PWD RATES AND THE D VOS REPORT WAS BASED ON THE CPWD RATES. THEREFORE, THE COMMISSIONER OF INCOME TAX (APPEALS) CONCLUDED THA T REPORT OF THE DVO WHO ESTIMATED THE COST OF CONSTRUCTION BASED ON CPWD RATES CANNOT BE APPLIED. THE DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THE REGISTERED VALUER H AS NOT ADOPTED THE STATE PWD RATES. REFERRING TO THE GROUN DS OF APPEAL, THE DEPARTMENTAL REPRESENTATIVE SUBMITS THA T APPROVED VALUER OF THE ASSESSEE HAS OMITTED CERTAIN ITEMS WHICH WERE CONSIDERED BY THE DVO. 6. ON GOING THROUGH THE ORDER OF THE ASSESSING OFFI CER, WE FIND THAT IT IS NOT THE CASE OF THE ASSESSING OFFIC ER THAT THE REGISTERED / APPROVED VALUER OF THE ASSESSEE HAS NO T ADOPTED ANY STATE PWD RATES. IT IS ALSO NOT THE CASE OF THE ASSESSING OFFICER THAT ANY OF THESE ITEMS WERE OMITTED BY THE APPROVED VALUER OF THE ASSESSEE. IT IS THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT ACTUAL COST OF CONSTRU CTION SHOWN BY THE ASSESSEE IS ` 1,28,46,220/- AND IS HIGHER THAN ITA NO.949/MDS//2012 6 THE ESTIMATED RATE OF ` 1,28,32,000/- BASED ON STATE PWD RATES. IN ANY CASE, THE ASSESSING OFFICER SHOULD AD OPT ONLY VALUE WHICH IS ESTIMATED BASED ON THE STATE PWD RAT ES. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO VERIF Y THE REPORT OF THE APPROVED VALUER OF THE ASSESSEE AS TO WHETH ER STATE PWD RATES ARE APPLIED OR NOT AND IN CASE, THE STATE PWD RATES ARE APPLIED, SUCH VALUATION HAS TO BE ACCEPTE D BY THE ASSESSING OFFICER. WE, THEREFORE REMIT THE MATTER B ACK TO THE ASSESSING OFFICER FOR LIMITED PURPOSE OF VERIFICATI ON AS DIRECTED ABOVE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 25 TH DAY OF OCTOBER, 2013 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY ) (CHALLA NAGENDRA PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 25 TH OCTOBER, 2013. SOMU COPY TO: (1) APPELLANT (4 ) CIT(A) (2) RESPONDENT (5 ) D.R. (3) CIT (6 ) G.F.