ACIT, Tirupathi V. M/s Raghavendra Urological Super Speciality Hospital Pvt. Ltd., Tirupathi

ITA 959/HYD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59238 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 25-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained investment; Search and seizure; Valuation report
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE CHANDRA POOJARI, ACCOUNTANT MEMBER & SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 959/HYD/2010 ASSESSMENT YEAR 2006-07 THE ACIT, CENTRAL CIRCLE, THIRUPATHI VS M/S RAGHAVENDRA UROLOGICAL SUPER SPECIALITY HOSPITAL PRIVATE LIMITED, TIRUPATHI (PAN AAPCR6474P) APPELLANT RESPONDENT APPELLANT BY : SHRI Y.V.S.T. SAI RESPONDENT BY : SHRI S. RAMA RAO DATE OF HEARING : 3.1.2012 DATE OF PRONOUNCEMENT : 17.2.2012 ORDER PER ASHA VIJAYARAGHAVAN, JM . THIS APPEAL PREFERRED BY THE REVENUE IS DIRECT ED AGAINST THE ORDER PASSED BY THE CIT(A)-TIRUPATHI DATED 24.3.201 0 AND PERTAINS TO THE ASSESSMENT YEAR 2006-07. 2. BRIEF FACTS OF THE CASE ARE THAT THIS APPEAL BY THE REVENUE IS AGAINST THE DELETION OF RS. 38.29 LAKHS ON ACCOU NT OF COST OF CONSTRUCTION OF HOSPITAL BUILDING BY THE ASSESSEE C OMPANY. SMT. C. SANTI SUBRAMANYAM IS THE MANAGING DIRECTOR OF THE ASSESSEE HOSPITAL . HER HUSBAND DR.C. SUBRAMANYAM IS ONE OF THE LEADING UROLOGIST IN TIRUPATI TOWN AND WORKS IN THIS HOSPITAL AS A CONSULTANT. DR.C. GOVINDA REDDY, FATHER OF DR .D. SUBRAMANAYAM IS THE OTHER DIRECTOR. DURING SEARCH I T IS NOTICED ITA NO.959/H/2010 M/S RAGHAVENDRA UROLOGICAL SUPER SPECIALITY HOSPITAL PRIVATE LTD., THIRUPATHI 2 THAT THE INVESTMENT MADE IN THE CONSTRUCTION OF THE HOSPITAL BUILDING WAS UNDERSTATED. AS PER REGISTERED VALUER S REPORT DATED 9.3.2006, THE VALUE WAS GIVEN AT RS 134,68,700/- AS SESSEE ADMITTED ANOTHER RS 13 LAKHS AS UNDISCLOSED INCOME TO MEET THE ADDITIONAL INVESTMENT IN THE BUILDING, IN THE RETUR N OF INCOME FILED FOR THE ASST. YEAR 2006-07 THE VALUE ADMITTED TOWARDS CONSTRUCTION IS AT RS 1,48,36,398/- THE PROPERTY IS REFERRED TO DEPARTMENTAL VALUATION OFFICER (DVO) TO DETERMINE T HE VALUE OF INVESTMENT IN THE SAID BUILDING U/S 142A OF I.T. AC T 1961. ACCORDINGLY THE DVO HAS VALUED THE PROPERTY AT RS. 2,04,54,000/- AS PER THE REPORT THE PERIOD OF CONST RUCTION WAS GIVEN AS FROM APRIL 2003 TO DECEMBER 2006. ASSESSE E RAISED OBJECTIONS ON THE VALUATION REPORT SUBMITTED BY DVO . THE SAME WAS REMITTED BACK TO DVO FOR HIS COMMENTS. VIDE HI S LETTER DATED 23.11.2007, S.E., VALUATION CELL, HYDERABAD H AS DEFENDED THE VALUE DETERMINED BY HIM AND FURTHER HE STATED T HAT THE OBJECTIONS RAISED BY THE ASSESSEE ARE LIABLE FOR RE JECTION. THE GIST OF THE COMMENTS OF THE DVO ON THE OBJECTIONS FILED BY THE ASSESSEE ARE REPRODUCED HEREUNDER: 3. THE COMMENTS ON THE OBJECTIONS FILED BY THE ASS ESSEE VIDE HIS LETTER DATED 13.11.2007 ARE GIVEN AS UNDER: (1) THE COST OF CONSTRUCTION OF THE PROPERTY HAS BEEN ESTIMATED BY VALUATION CELL AT RS 204.54 LAKHS WITH DATE OF COMPLETION AS DECEMBER 2006 BASED ON THE INFORMATIO N SUPPLIED BY THE CHARTERED ACCOUNTANT OF THE ASSESSE E VIDE HIS LETTER DATED 28.2.2007 (COPY ENCLOSED) WHEREIN HE HAS CLEARLY STATED THAT THE CONSTRUCTION OF THE COMPLEX COMMENCED DURING APRIL 2003 AND WAS COMPLETED IN AL L RESPECTS DURING DECEMBER 2006. THE CONTENTION OF T HE CHARTERED ACCOUNTANT NOW THAT HE HAS SPENT AN ADDIT IONAL AMOUNT O RS 30 LAKHS DURING JANUARY 2007 TO MARCH 2007 IS THEREFORE AN AFTERTHOUGHT FOR TWO REASONS. ITA NO.959/H/2010 M/S RAGHAVENDRA UROLOGICAL SUPER SPECIALITY HOSPITAL PRIVATE LTD., THIRUPATHI 3 (A) THE REGISTERED VALUERS (SHRI.B. SRINIVASAN) REPORT SUBMITTED TO THIS OFFICE EARLIER ESTIMATING THE COS T OF CONSTRUCTION AT RS.1,34,68,700/- COVERS THE PERIOD OF CONSTRUCTION FROM APRIL 2003 TO MARCH 2006. HIS REPORT IN TWO PAGES NOW RECEIVED VIDE YOUR LETTER DATED 16.11.2007 INDICATES THE COST OF COMPLETED WORKS AFTER 31.3.2006 AT RS. 17.12 LAKHS. THE REGISTERED VALUER THEREFORE SAYS THAT IN ONE COMPL ETE YEAR FROM APRIL 2006 TO 31.3.2007, THE ASSESSEE HAS SPENT RS 17.12 LAKHS WHEREAS ACCORDING TO C.A., THE ASSESSEE DURING JANUARY 2007 TO MARCH 2007 HAS SPENT RS 30 LAKHS. (B) THERE IS CONTRADICTION IN THE STATEMENTS OF THE REGISTERED VALUER AND THE C.A. 4. THOUGH THE INSPECTION WAS CARRIED OUT ON 19.7.2 007 THE COST WAS ESTIMATED BY CONSIDERING THE PHYSICAL COMP LETION IN DECEMBER 2006 AS PER THE STATEMENT OF THE C.A. THER E IS NO CORRELATION BETWEEN THE DATE OF INSPECTION AND THE PERIOD OF COMPLETION. 1. ALL THE DETAILS SUBMITTED BY THE ASSESSEE WERE TA KEN NOTE OF WHILE ARRIVING THE COST OF CONSTRUCTION BY THIS OFFICE. 2. ON PAGE 2 OF REGISTERED VALUERS REPORT DATED 4.10. 2007 HE SAYS THAT RS 25.60 LAKHS IS TO BE ADDED TO HIS REPO RT AS ON 31.3.2006. THEREFORE ACCORDING TO HIM THE COST OF CONSTRUCTION AS ON 31.3.2007 WORKS OUT TO 1,34,68,7 00 + 25,60,000 = RS 1,60,28,700/- THE ABOVE WOULD IMPLY THAT THERE IS NO CONSISTENCY IN WHAT THE CA OR THE REGISTERED VALUER ARE SAYING AND THEREFORE THEIR OBJECTIONS ARE REQUIRED TO BE REJEC TED OUTRIGHT. 5. DURING THE PREVIOUS YEAR RELEVANT TO THE ASST Y EAR UNDER CONSIDERATION THE ASSESSEE COMPANY OFFERED ADDITION AL INCOME OF RS 13,00,000 TOWARDS DEFICIENCY IN COST OF CONSTRUC TION OF THE BUILDING AND THE AMOUNT WAS CAPITALISED. AFTER CAPI TALISING THE ADDITIONAL INCOME OFFERED TOWARDS THE DEFICIENCY IN COST OF ITA NO.959/H/2010 M/S RAGHAVENDRA UROLOGICAL SUPER SPECIALITY HOSPITAL PRIVATE LTD., THIRUPATHI 4 CONSTRUCTION THE VALUE OF THE BUILDING CONSTRUCTION AS AT 31.3.2006 COMES TO RS 1,48,36,398. WITH REGARD TO THE FURTHER DIFFERENCE THE ASSESSEE COMPANY SUBMITTED THAT THIR D FLOOR OF THE BUILDING COMPRISING 6225 SQ.FT. WAS INCOMPLETE AS A T 31.3.2006 AND FURTHER AMOUNT WAS INCURRED TOWARDS THE INCOMPL ETE CONSTRUCTION. A VERIFICATION OF THE BALANCE SHEET SUBMITTED ALONGWITH THE RETURN OF INCOME FOR THE ASST. YEAR 2 007-08 . INDICATE THAT AN ADDITION O F RS 47,88,277 WAS MADE TOWARDS THE BUILDING CONSTRUCTION, THIS ADDITIONAL AMOUNT OF RS 47,88,277 IS INCLUSIVE OF ADDITIONAL INCOME OFFERED OF RS 30,00, 000 TOWARDS DIFFERENCE IN COST OF CONSTRUCTION, THEREBY THE ACT UAL EXPENDITURE INCURRED ON THE INCOMPLETE CONSTRUCTION COMES TO RS 17,88,277/-. ACTUALLY THE MAJOR CONSTRUCTION IS COMPLETED BY 31.3.2006 ITSELF THE DIFFERENCE IN COST OF CONST RUCTION IS TO BE CONSIDERED FOR THE ASST. YEAR UNDER CONSIDERATION L EAVE ALONE THE ACCURACY AND GENUINENESS OF THE CLAIM OF RS 17,88,2 77 CLAIMED IN THE ASST. YEAR 2007-08 WHICH CAN BE VERIFIED IN THE ASST PROCEEDINGS FOR THE ASS. YEAR 2007-08. SINCE THERE IS NO DOCUMENTARY EVIDENCE WITH THE ASSESSEE COMPANY IN S UPPORT OF ITS CLAIM THAT THE UNACCOUNTED MONEY WAS UTILISED D URING THE PERIOD RELEVANT TO THE ASST. YEAR 2007-08, THE DIFF ERENCE AMOUNT OF RS 38,29,325 (RS.2,04,54,000 -1,66,24,675) IS AD DED BACK TO THE INCOME RETURNED AS UNEXPLAINED INVESTMENT IN TE RMS OF SECTION 69 OF THE I.T. ACT FOR THE ASST. YEAR 2006- 07. PENALTY PROCEEDINGS U/S 271(1) ARE INITIATED SEPARATELY ON THIS COUNT. A. SRI.S. RAMA RAO ADVOCATE AND AR HAS APPEARED IN RESPONSE TO THE NOTICES AND SUBMITTED THAT THE AO HAD WRONGLY BROUGHT THE MONIES OFFERED IN AY 2007-08 IN TO THIS AY 2006-07 AND WITHOUT GIVING ANY REASONS FOR DOING SO, HE HAS POINTED OUT THAT THE SEARCH AND SEIZURE OPERATIONS AT THE PREMISES OF THE DIRECTORS TOOK PL ACE ON ITA NO.959/H/2010 M/S RAGHAVENDRA UROLOGICAL SUPER SPECIALITY HOSPITAL PRIVATE LTD., THIRUPATHI 5 28.1.2006 BY WHICH TIME THE BUILDING WAS STILL UNDE R CONSTRUCTION AND THE SAME WAS COMPLETED ONLY DURING DECEMBER 2006 WHICH FACT GAS ALSO BEEN CORROBORATED BY THE DVOS REPORT .THE TOTAL COST OF CONSTRUCTION AS ON 31.3.2006 AS PER BOOKS WAS REFLECTED AT RS 148,36,3 98 WHICH INCLUDES AN AMOUNT OF RS 13 LAKHS OFFERED AS ADDITIONAL INCOME FOR AY 2006-07 AND THE AGGREGATE COST OF CONSTRUCTION AS REFLECTED IN THE BOOKS OF ACCOUN T ON 31.3.2007 WAS RS 1,96,24,676. HE HAS ALSO POINTED T O THE CONTENTS OF REPORT BY REGISTERED VALUER DATED 9.3.2 006. WHEREIN THE REGISTERED VALUER HAS LISTED OUT THE INCOMPLETE WORKS. THUS THE ASSESSEE HAD SPENT RS 47,88,277 DURING THE FY 2006-07 RELEVANT FOR THE AY 2007-08 AND THIS INCLUDES AN AMOUNT OF RS 30 LAKHS AS UNDISCLOSED COST OF CONSTRUCTION FOR AY 2007-08. TH US HE HAS SUBMITTED THAT THE ASSESSEE COMPANY HAS REFLECT ED RS 1,96,24,676 AS COST OD CONSTRUCTION BY 31.3.2007 WH ICH INCLUDES UNDISCLOSED INCOMES OFFERED OF RS 43 LAKHS , IN BOTH THE ASSESSMENT YEARS. 6. IT WAS FURTHER SUBMITTED THAT THE INFERENCE OF THE AO THAT THE ASSESSEE WOULD NOT HAVE SPENT MAJOR AMOUNT ON CONSTRUCTION DURING AY 2007-08 WAS INCORRECT. THE A R HAS POINTED OUT THAT RS 30 LAKHS WAS OFFERED AS ADDITIO NAL INCOME BY CREDITING THE PROFIT AND LOSS ACCOUNT AND DEBITING THE SAME TO THE CONSTRUCTION ACCOUNT AND THUS THE ADDITIONAL IN COME WAS OFFERED ONLY FOR THE PURPOSE OF COST OF CONSTRUCTIO N OF THE BUILDING AND FURTHER THAT THERE IS NO EVIDENCE THAT THE SAID AMOUNT WAS SPENT FOR ANY OTHER PURPOSE. THUS IT IS INCORRECT BY THE AO TO ADOPT THE COST OF CONSTRUCTION OF THE BUI LDING AT RS 1,66,24,675. IT IS ALSO ARGUED THAT THE RELIANCE P LACED BY THE AO ITA NO.959/H/2010 M/S RAGHAVENDRA UROLOGICAL SUPER SPECIALITY HOSPITAL PRIVATE LTD., THIRUPATHI 6 ON THE LETTER OF THE CHARTERED ACCOUNTANT TO THE VA LUATION CELL WAS ASSAILED BY THE AR STATING THAT THE COMPLETION OF THE BUILDING AND INCURRING EXPENDITURE ON COMPLETION OF CONSTRUCTION ARE TWO DIFFERENT ASPECTS. THU THE AO IS NOT JUSTIFIED IN IGNORING THE ADDITIONAL INCOME OF RS 3 0 LAKHS OFFERED BY THE APPELLANT IN AY 2007-08. 7. THE APPELLANTS AR HAS ALSO ASSAILED THE REPOR T GIVEN BY THE VALUATION CELL FOR MANY TERMS HAVE NOT BEEN CON SIDERED PROPERLY BY THE DVO AS EXTRACTED BELOW. HE HAS PLEA DED THAT HAD ALL THESE ITEMS WERE CONSIDERED THERE WOULD NOT BE ANY ADDITION ON ACCOUNT OF DIFFERENCE IN THE COST OF CO NSTRUCTION. (I) THE ENTIRE BUILDING CONSISTS OF LOWER GROUND FLO OR, GROUND FLOOR, FIRST FLOOR AND THE SECOND FLOOR THE DEDUCTION FOR NOT DOING WATER PROOFING IS ALLOWED O NLY FOR 665.4 SQ.METERS I.E. FOR TWO FLOORS. THE VALUA TION CELL DID NOT ALLOW THE WATER PROOFING FOR THE TWO O THER FLOORS WHICH IS NOT JUSTIFIED. (II) THE VALUATION CELL ALLOWED 7.5% ONLY TOWARDS SE LF SUPERVISION WHEREAS THE APPELLATE AUTHORITIES ARE ALLOWING A DEDUCTION UPTO 10% OF THE COST OF CONSTRUCTION TOWARDS SELF SUPERVISION CHARGES. (III) THE APPELLATE AUTHORITIES ARE ALLOWING A DE DUCTION OF 15% TOWARDS DIFFERENCE IN THE RATES BETWEEN THE CPW D AND THE APWD RATES. THE ITAT IS ALLOWING SUCH RELIE F ON ACCOUNT OF DIFFERENCE IN THE PREVAILING RATES. THE SAME WAS NOT ALLOWED. (IV) THE VALUATION CELL CONSIDERED THE PUMPING ARRANG EMENT FOR CORPORATION WATER AND BOREWELLS AS A PART OF CONSTRUCTION OF THE BUILDING, THE SAID ITEMS ARE SEPARATELY SHOWN IN THE FIXED ASSET SCHEDULE OF THE BALANCE SHEET. (V) THE APPELLANT ADMITTED THE COST OF CIVIL PARTI TIONS OF RS 3,11,067 WHICH IS NOT CONSIDERED BY THE ASSESSING OFFICER AS A PART OF CONSTRUCTION COST ADMITTED IN THE BOOKS OF ACCOUNT. (VI) THE VALUATION CELL ADOPTED COST OF RS 50,000 F OR RECEPTION COUNTER. THE SAID COST IS SEPARATELY SHOW N UNDER THE HEAD RECEPTION COUNTER RS 55,750 IN THE BALANCE SHEET. ITA NO.959/H/2010 M/S RAGHAVENDRA UROLOGICAL SUPER SPECIALITY HOSPITAL PRIVATE LTD., THIRUPATHI 7 8. IN VIEW OF THE DISCREPANCIES POINTED OUT BY THE APPELLANTS AR IN THE REPORT OF THE VALUATION CELL AS WELL AS T HE TREATMENT GIVEN BY THE AO FOR THE ADDITIONAL INCOMES OFFERED IN AY 2007-08 THE MATTER WAS REFERRED TO THE AO FOR HIS COMMENTS. THE AO HAS FURNISHED HIS COMMENTS VIDE HIS LETTER DATED 28.1.2 010 REITERATING HIS STAND TAKEN IN THE ASSESSMENT. 9. THE CIT(A) ALLOWED THE ASSESSEES CLAIM OBSERVI NG AS UNDER: THE REGISTERED VALUER VIDE HIS REPORT DATED 9.3.20 06 HAS ESTIMATED THE COST OF CONSTRUCTION AT RS 1,34,68,630 AS PER THE VALUATION REPORT. AGAINST T HIS THE ASSESSEE HAS OFFERED AN AMOUNT OF RS 13 LAKHS A S UNDISCLOSED COST OF CONSTRUCTION FOR AY 2006-07 THU S MAKING A TOTAL OF RS 1,47,68,630. HOWEVER IT IS THE CONTENTION OF THE AO THAT NOT MUCH CONSTRUCTION HAS TAKEN PLACE AFTER 1.4.2006 AND HENCE THE ASSESSEE WOULD NOT HAVE SPENT RS 47,88,277 IN THE AY 2007-08 AND THUS HAS FELT THAT THE ENTIRE DIFFERENCE IN COS T OF CONSTRUCTION ARISING BETWEEN CONSTRUCTION OFFERED B Y THE ASSESSEE COMPANY AND THE VALUATION CELL MINUS THE ORIGINAL COST INCURRED IN AY 2007-08 BE TAKEN T O TAX IN AY 2006-07 ONLY. IT WOULD BE RELEVANT TO EXTRAC T WHAT THE AO HAS EXPRESSED WHILE ARRIVING AT SUCH A CONCLUSION AS BELOW, FROM HIS ORDER. ACTUALLY THE MAJOR CONSTRUCTION IS COMPLETED BY 31.3.2006 ITSELF THE DIFFERENCE IN COST OF CONSTRUC TION IS TO BE CONSIDERED FOR THE AY UNDER CONSIDERATION LEAVE ALONE THE ACCURACY AND GENUINENESS OF THE CLAIM OF RS 17,88,277 CLAIMED IN THE AY 2007-08 ITA NO.959/H/2010 M/S RAGHAVENDRA UROLOGICAL SUPER SPECIALITY HOSPITAL PRIVATE LTD., THIRUPATHI 8 WHICH CAN BE VERIFIED IN THE ASSESSMENT PROCEEDINGS FOR THE AY 2007-08. 10. IN THE FINDING THE AO STATES THAT THE MAJOR CO NSTRUCTION WAS COMPLETED BY 31.3.2006 ITSELF BUT HE HAS NOT GO T ANY MATERIAL OR EVIDENCE ON RECORD TO SUBSTANTIATE THE SAME. IT WAS ALSO OPINED THAT THE ACCURACY AND GENUINENESS OF TH E CLAIM FOR CONSTRUCTION MADE IN AY 2007-08 BE VERIFIED IN AY 2 007-08. HOWEVER IT WAS GATHERED THAT NO SUCH VERIFICATION H AS BEEN DONE BY THE AO IN AY 2007-08 BUT HAS ACCEPTED THE INCOME S OFFERED INCLUDING THE ADDITIONAL INCOMES OF RS 30 LAKHS. T HE AO HAS ALSO IGNORED THE NATURE OF INCOMPLETENESS OF THE WO RKS IN 3 RD FLOOR, 2 ND FLOOR AND STAIR CASE IN A REAR PORTION AS GIVEN IN THE REPORT OF THE REGISTERED VALUER AND EXTRACTED HERE: INCOMPLETE WORK INNER PORTION IN THIRD FLOOR-MOST OF THE WALLS, FLOORING, DOORS AND WINDOWS, TOILET WORK, ELECTRIC WORK ETC., EXCEPT MDS RESIDENCE IN THIRD FLOOR ALL WORKS ARE INCOMPLETE (NO FLOORINGS, NO WALL PLASTERING, NO WO OD WORK NO TOILET WORK ETC.,) SECOND FLOOR FRONT HALL INCOMPLETE A.C. SHED OVER OPEN TERRACE ABOUT 250 SQ.T. IS UNFINISHED. THERE IS NO WEATHERING COURSE. REAR PORTION STAIRCASE IN GROUND FLOOR IS INCOMPLETE. 11. THUS THERE IS AN INCONSISTENCY IN THE APPROACH OF THE AO TO THE WHOLE ISSUE AS THERE APPEARS TO BE A SERIOUS NON APPLICATION OF MIND TO THE ISSUE AT HAND THE REGIST ERED VALUER HAS VERY CLEARLY INDICATED IN HIS REPORT THAT THE S UBSTANTIAL ITA NO.959/H/2010 M/S RAGHAVENDRA UROLOGICAL SUPER SPECIALITY HOSPITAL PRIVATE LTD., THIRUPATHI 9 PORTION OF WORKS ARE YET TO BE COMPLETED AND IT IS HARD TO DISBELIEVE THAT THE ASSESSEE HAS COMPLETED THESE W ORKS WITHOUT SPENDING MONEY. EVEN THE VALUATION CELL HAD INDICA TED IN THEIR REPORT OF THE PROBABLE DATE OF COMPLETION AS DECEMB ER 2006. THUS THE INFERENCE OF THE AO THAT THE MAJORITY OF T HE WORKS WERE ACTUALLY COMPLETED BY MARCH 2006 IS ERRONEOUS AND L ACKING IN CONVICTION. 12. ON THE OTHER HAND THE TOTAL COST OF CONSTRUCTI ON DECLARED BY THE ASSESSEE COMPANY IS COMING TO RS 1,95,56,902 AS GIVEN BELOW: A. VALUE AS PER REGISTERED VALUAR AS ON 9.3.2006 R S 1,34,68,630 COST OF CONSTRUCTION IN FY 2006-07 RS. 17,88,272 ADDITIONAL INVESTMENTS OFFERED RS. 43,00,000 ___________________ RS. 1,95,56,902 =========== 13. AGAINST THIS, THE REGISTERED VALUER HAS ESTIMA TED THE VALUATION OF THE BUILDING AS ON DECEMBER 2006 AT RS 2,04,54,000 AND IT IS ALSO MENTIONED IN THE SAME RE PORT THAT THE CONSTRUCTION OF THE BUILDING MUST HAVE BEEN COMPLET ED BY DECEMBER 2006. HENCE THERE IS NOT MUCH LAPSE BETWE EN THE STATED COMPLETION OF CONSTRUCTION AND ESTIMATED DAT E OF COMPLETION HENCE THE ARGUMENT OF THE AO GATHERS NO CREDENCE. ON PERUSAL OF THE DIFFERENCE BETWEEN THE COST OF CO NSTRUCTION OFFERED BY THE ASSESSEE AND THE DVO INDICATES THAT THE DIFFERENCE OR THE DISPUTE IS ONLY ABOUT LESS THAN RS 9 LAKHS W HICH COULD HAVE BEEN EASILY EXPLAINED BY ACCEPTING THE CONCESS IONS BEING GIVEN UNDER THE COUNTS OF RATE DIFFERENCES AND PERS ONAL SUPERVISION. EVEN OTHERWISE THE AO SHOULD WELL RIGH T HAVE ITA NO.959/H/2010 M/S RAGHAVENDRA UROLOGICAL SUPER SPECIALITY HOSPITAL PRIVATE LTD., THIRUPATHI 10 CONSIDERED THE OBJECTIONS RAISED BY THE ASSESSEE ON THE VALUATION CELLS REPORT AS GIVEN IN AND ABOVE. HAD THEY BEEN CONSIDERED THE DIFFERENCE GETS EVEN SMALLER. THUS IT APPEARS THAT A HILL IS BEING MADE OUT OF MOLE IN THIS CASE BY ILLOGICALLY DRAGGING THE MONIES OFFERED FOR COST OF CONSTRUCTIO N IN AY 2007- 08 INTO AY 2006-07. IT IS MUCH DESIRABLE TO POINT OUT HERE THAT ASSESSMENT PROCEEDINGS SHALL NOT BE ADVERSARIAL PRO CEEDINGS MERELY TO CAUSE AGONY AND ANGUISH FOR THE ASSESSEE WITH AN OBJECTIVE OF COLLECTING UNDESERVING REVENUES. HENCE IT IS DIRECTED THAT THE ADDITION MADE TOWARDS DIFFERENCE IN COST O F CONSTRUCTION IS HELD TO BE IRREGULAR AND ILLOGICAL AND THUS TO B E DELETED. IN THE RESULT THE APPEAL IS ALLOWED. 14. AGGRIEVED THE REVENUE IS ON APPEAL. THE COST OF CONSTRUCTION OF THE HOSPITAL BUILDING, WHICH WAS IN SPECTED IN JULY 2007, WAS ARRIVED AT BY THE DVO AT RS. 204,54 ,000/-. THE REGISTERED VALUER APPOINTED BY THE ASSESSEE VALUED THE INCOMPLETE BUILDING AS ON 9.3.2006 AT RS. 1,34,58,6 30/-. THE ASSESSEE OFFERED ANOTHER ADDITION OF RS. 13 LAKHS A ND SHOWED THE COST OF CONSTRUCTION AT RS. 1,47,58,630/- THE A SSESSEE SHOWED FURTHER ADDITION TO CONSTRUCTION OF RS. 47,9 8,272/- AND SHOWED THE TOTAL COST OF CONSTRUCTION AT RS. 1,95, 56,902/- . THE AO CONTENDED THAT MAJOR WORKS WERE COMPLETED BY 31. 3.2006 AND HE WOULD TAKE THE COST OF BUILDING AS ON 31.3. 2006 AS PER THE VALUATION REPORT AT RS. 1,34,68,700. HE ADDED R S.25,60,000 TOWARDS POSSIBLE ADDITION TO COST OF CONSTRUCTION O F THE BUILDING IN THE NEXT YEAR SO THAT TOTAL COST OF CONSTRUCTION WORKS OUT TO RS 1,60,28,700/-. HE HAS THEREFORE ADDED A SUM OF R S. 38,29,325 ( COST BY THE DVO RS.2,04,54,000 THE ES TIMATED COST ITA NO.959/H/2010 M/S RAGHAVENDRA UROLOGICAL SUPER SPECIALITY HOSPITAL PRIVATE LTD., THIRUPATHI 11 OF CONSTRUCTION ON THE BASIS OF VALUERS REPORT AT RS.1,66,24,675) IS ADDED BACK TO THE INCOME RETURNED AS UNEXPLAINED INVESTMENT IN TERMS OF SECTION 69 OF THE I.T. ACT FOR THE ASST . YEAR 2006-07. 15. WE ARE UNABLE TO AGREE WITH THE REASONING OF T HE AO. THE ASSESSEE AT THE COMPLETION OF CONSTRUCTION HAS SHOW N THE COST AT RS. 1,95, 56,902/- LOWER BY APPROXIMATELY RS. 9 LAKHS ( ABOUT 4.5% OF THE COST OF CONSTRUCTION). AS THE CIT(A) HE LD THAT RELIEF FOR SELF SUPERVISION AND ADJUSTMENT FOR STATE PWD R ATES (AS AGAINST THE CENTRAL PWD RATES ADOPTED BY THE DVO) W ILL MORE THAN COVER THE DIFFERENCE. WE THEREFORE CONCUR WITH THE CIT(A) THAT THE COST OF CONSTRUCTION OF RS. 1,95,56,902/- ACCOUNTED BY THE ASSESSEE CAN BE ADOPTED AS THE CORRECT COST OF CONSTRUCTION OF THE HOSPITAL BUILDING. 16. THE NEXT ISSUE IS THE COST OF THE PORTION OF T HE BUILDING COMPLETED AS ON 31.3.2006 AND THE CORRESPONDING COS T THAT WOULD HAVE BEEN INCURRED BY THE ASSESSEE. BOTH THE DVO AND THE REGISTERED VALUER HAVE AGREED THAT THE CONSTRUC TION WAS COMPLETED IN DEC 2006. THE REGISTERED VALUER WHO HA D GIVEN THE REPORT IN MARCH 2006, HAS INDICATED UNFINISHED WORK WHICH APPEARS TO BE SUBSTANTIAL. THE DVO HAD GIVEN THE RE PORT AFTER THE BUILDING WAS COMPLETED. THEREFORE THE REGISTERE D VALIER WAS IN A BETTER POSITION TO DETERMINE UNFINISHED WORK A S ON 31.3.2006 THAN THE DVO. CONSIDERING THE AMOUNT OF WORK YET TO BE COMPLETED AS OF MARCH 2006, AS FOUND BY THE REGI STERED VALUER, WE CONCUR WITH THE CIT(A) THAT COST OF THE BUILDING COMPLETED AS ON 31.3.2006AT RS. 1,47,58,630/- AS SH OWN IN THE BOOKS BY THE ASSESSEE AND THE BALANCE WORK FOR RS. 47, 98,272/- WAS SPENT DURING THE AY 2007-08. AS A RESU LT WE CONFIRM THE ORDER OF THE CIT(A) DELETING THE ADDITI ON OF RS. ITA NO.959/H/2010 M/S RAGHAVENDRA UROLOGICAL SUPER SPECIALITY HOSPITAL PRIVATE LTD., THIRUPATHI 12 38,29,325 /- BY THE AP TOWARDS UNEXPLAINED INVESTME NT IN THE HOSPITAL BUILDING DURING THE AY 2006-07. 17. IN THE RESULT THE REVENUES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON : 17. 2.2012 SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER DATED THE 17 TH FEBRUARY, 2012 COPY FORWARDED TO: 1. THE ACIT, CENTRAL CIRCLE, AAYAKAR BHAVAN, HYDERABA D 2. M/S RAGHAVENDRA UROLOGICAL SUPER SPECIALITY HOSPITA L PRIVATE LIMITED, LST STREET, REDDY & REDDY COLONY, THIRUPATHI. 3. THE CIT(A)-THIRUPATHI 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/