The ITO, Ward-2, Navsari V. Kailash Tower of Kasturi Park Co.Op.Hsg.So.Ltd., Navsari

ITA 975/AHD/2006

• Counselvise Citation: [2006] 113 COUNSELVISE.COM (IT) 8095 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2006
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-10-2009
• Assessment Year: 1997-1998
• Appeal Filed On: 21-04-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDHANSHU JHA
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained investment; Valuation report
• Section: 69B; 147; 131; 148; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BENCH C AHMEDABAD BENCH C AHMEDABAD BENCH C BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI N NN N. .. .S. SAINI S. SAINI S. SAINI S. SAINI, , , , ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER AND AND AND AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER SHRI MAHAVIR SINGH, JUDICIAL MEMBER SHRI MAHAVIR SINGH, JUDICIAL MEMBER SHRI MAHAVIR SINGH, JUDICIAL MEMBER DATE OF HEARING: 7.10.09 DRAFTED ON: 7.10.2009 ITA NO.975, 976, 977, 798/AHD/2006, ASSESSMENT YEAR : 1997-98, 1998-99, 1999-00, 2000-01 INCOME TAX OFFICER, WARD-2, NAVSARI VS. KAILASH TOWER OF KATURI PARK CO.OP. HSG. SOC. LTD. OPP. GARDA COLLEGE, SAYAJI ROAD, NAVSARI. PAN/GIR NO. : AAAAK 4760G (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI SUDHANSHU JHA RESPONDENT BY: SHRI M.K.PATEL O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE CONSOLIDATED ORDER OF THE LD.CIT(APPEALS)-VALSAD, DATED 31.01.2006. 2. IN ALL THE APPEALS THE REVENUE HAS TAKEN THE FOLLOWING COMMON GROUND AS GROUND NO.1 OF THE APPEAL. ITA NO.975 TO 978 /AHD/2009 KAILASH TOWER OF KATURI PARK CO.OP.HSG.SOC.LTD. ASST.YEAR -1997-98,98-99,99-00,00-2001 - 2 - 1. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, DUE T O TECHNICAL SNAG, THE A.O. COULD BE BARRED IN TAKING ACTION UNDER SECTION 147/UTILIZING INFORMATION REGARDING UNACCOUNTED INVESTMENT, AVAILABLE WITH THE A.O. AS THE ILLEGALITY OF A SEARCH DOES NOT VITIATE THE EVIDENCE COL LECTED DURING SUCH ILLEGAL SEARCH (REF. PRATAP SINGH V. DIREC TOR OF ENFORCEMENT (1985) 155 ITR 166 (SC). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CO- OPERATIVE HOUSING SOCIETY REGISTERED UNDER SECTION 10 OF THE GUJARAT CO-OPERATIVE SOCIETIES ACT, 1962. THE ASSESSEE WAS REGISTERED ON 20.02.1996, WITH AN OBJECT TO PROVIDE HOUSING TO ITS MEMBERS. DURING THE PREVIOUS YEAR 1996/97 TO 1999/2000 THE ASSESSEE SOCIETY CARRIED OUT/UNDERTOOK CONSTRUCTION ACTIVITY OF A RESIDENTIAL COMPLEX CALLED KAILASH TOWER, HAVING GROUND PLUS NINE UPPER FLOORS, SITUATED AT SAYAJI ROAD, NAVSARI, FOR ITS MEMBERS. THE CONTENTIONS OF THE ASSESSEE IS THAT THE ASSESSEE SOCIETY IS NOT CARRYING ON ANY BUSINESS ACTIVITY AND AS SUCH THERE IS NO PROFIT MOTIVE INVOLVED IN CASE OF SOCIETY FORMED ON THE CONCEPT OF MUTUALITY. SINCE, THE ASSESSEE NEVER HAD TAXABLE INCOME, THE PROVISIONS OF SEC.139(1)(B) ARE NOT APPLICABLE IN ITS CASE IN ANY OF THE ASSESSMENT YEAR UNDER APPEAL AND THEREFORE, IT WAS NOT ITA NO.975 TO 978 /AHD/2009 KAILASH TOWER OF KATURI PARK CO.OP.HSG.SOC.LTD. ASST.YEAR -1997-98,98-99,99-00,00-2001 - 3 - OBLIGATORY ON PART OF THE ASSESSEE TO FILE RETURN OF INCOME. HENCE, THE ASSESSEE NEVER FILED ITS RETURN OF INCOME. 4. THE LEARNED ASSESSING OFFICER REFERRED THE VALUATION OF THE PROPERTY TO DEPARTMENTAL VALUATION OFFICER (IN SHORT DVO) VIDE LETTER DATED 30.03.1999 BEARING NO. DCIT/CIRCLE-1/NAVSARI FOR DETERMINING THE FAIR COST OF CONSTRUCTION OF THE RESIDENTIAL COMPLEX BELONGING TO THE ASSESSEE. THE REPORT OF THE DVO WAS RECEIVED BY THE LEARNED ASSESSING OFFICER VIDE LETTER NO.2(18)/DVO/99- 2000/1087, DATED 04.02.2000. ACCORDING TO WHICH THE DEFERENCE OF COST OF CONSTRUCTION SHOWN BY THE ASSESSEE AND THAT DETERMINED BY THE DVOS REPORT WAS AS FOLLOWS: PERIOD OF CONSTRUCTION EXPENDITURE AS STATED BY THE ASSESSEE ASSESSED COST OF CONSTRUCTION BY DVO DIFFERENCE 1996/97 1997/98 1998/99 1999/2000 35,81,116/- 46,25,403/- 22,92,284/- 20,92,284/- 45,79,649/- 58,03,700/- 28,71,231/- 25,47,548/- 9,98,533/- 11,78,297/- 5,74,114/- 4,55,264/- TOTAL 1,25,95,920/- 1,58,02,128/- 32,06,208/- 5. IN VIEW OF THE ABOVE, A NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 WAS ISSUED ON 26.03.2004 TO FILE A TRUE AND ITA NO.975 TO 978 /AHD/2009 KAILASH TOWER OF KATURI PARK CO.OP.HSG.SOC.LTD. ASST.YEAR -1997-98,98-99,99-00,00-2001 - 4 - CORRECT RETURN OF INCOME AND SERVED UPON THE ASSESSEE ON 31.03.2004 THROUGH AFFIXTURE. 6. IN APPEAL, BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE ASSESSEE SUBMITTED THAT AS NO PROCEEDINGS WAS PENDING WHEN THE ITO ISSUED THE SUMMON TO THE DVO FOR VALUATION OF THE PROPERTY, THEREFORE, THE SUMMONS WERE LIABLE TO BE QUASHED. IT WAS ALSO SUBMITTED THAT ONLY ON THE BASIS OF VALUATION REPORT OF DVO, NO NOTICE UNDER SECTION 148 OF THE ACT CAN BE ISSUED. 7. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AFTER CONSIDERING THE SUBMISSIONS, OBSERVED THAT THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF JAMNADAS MADHAVJI & CO. (162 ITR 331) HAS HELD THAT THE LEARNED ASSESSING OFFICER CANNOT ISSUE SUMMONS UNDER SECTION 131 FOR THE PURPOSE OF MAKING INVESTIGATION FOR REOPENING OF THE ASSESSMENT. PENDENCY OF ANY PROCEEDINGS UNDER THE ACT IS A SINE-QUA-NONE FOR ISSUE OF SUMMONS UNDER SECTION 131 OF THE ACT. THE LEARNED ASSESSING OFFICER DID NOT HAVE JURISDICTION TO MAKE A REFERENCE TO THE DVO AND THE LEARNED ASSESSING OFFICER COULD HAVE EXERCISED THE POWER CONFERRED HIM UNDER SECTION ITA NO.975 TO 978 /AHD/2009 KAILASH TOWER OF KATURI PARK CO.OP.HSG.SOC.LTD. ASST.YEAR -1997-98,98-99,99-00,00-2001 - 5 - 131(1)(D) ONLY IF INDEPENDENT PROCEEDINGS WERE PENDING WITH HIM. THEREFORE, HE QUASHED THE NOTICES ISSUED UNDER SECTION 148 IN THE ALL THE 4 ASSESSMENT YEARS UNDER APPEAL AND CONSEQUENTLY THE ASSESSMENTS COMPLETED IN PURSUANCE TO THE SAID NOTICES, ISSUED UNDER SECTION 148 WERE ALSO QUASHED. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICER WHEREAS THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE ALSO RELIED ON THE DECISION OF AHMEDABAD BENCH OF TRIBUNAL IN THE CASE OF UMIYA CO- OP. HOUSING SOC. LTD. VS. ITO, (2005) 94 TTJ (AHD) 392, WHERE IT WAS HELD THAT LEARNED ASSESSING OFFICER WAS NOT COMPETENT TO REFER THE MATTER TO THE DVO AT THE TIME WHEN NO PROCEEDINGS WERE PENDING BEFORE HIM. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSMENTS FOR THE ASSESSMENT YEARS 1997-98, ITA NO.975 TO 978 /AHD/2009 KAILASH TOWER OF KATURI PARK CO.OP.HSG.SOC.LTD. ASST.YEAR -1997-98,98-99,99-00,00-2001 - 6 - 1998-99, 1999-00 AND 2000-01 WERE COMPLETED UNDER SECTION 147 OF THE ACT. IT IS NOT IN DISPUTE THAT NOTICES UNDER SECTION 147 WERE ISSUED ON THE BASIS OF THE REPORT OF THE DVO. THE ASSESSEE HAS CHALLENGED THE ISSUE OF NOTICE UNDER SECTION 148 ON THE BASIS OF THE REPORT OF DVO SUCCESSFULLY BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THE UNDISPUTED FACTS ARE THAT THE ASSESSEE SOCIETY CONSTRUCTED A RESIDENTIAL COMPLEX CALLED KAILASH TOWER, HAVING GROUND PLUS NINE UPPER FLOORS, SITUATED AT SAYAJI ROAD, NAVSARI. THE LEARNED ASSESSING OFFICER REFERRED THE MATTER TO DVO TO ASCERTAIN HIS ESTIMATE OF THE VALUE OF THE BUILDING ON 30.03.1999. THE DVO SUBMITTED HIS REPORT ON 4.02.2000 AND ACCORDING TO THAT REPORT THE ESTIMATE WAS RS.1,58,02,128/- AS AGAINST COST OF RS.1,25,95,920/- DECLARED BY THE ASSESSEE SOCIETY. ON THE BASIS OF THE SAID REPORT, THE LEARNED ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 148 ON 26.03.2004 FOR THE ASSESSMENT YEARS 1997-98, 1998-99, 1999-00 AND 2000-01. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OBSERVED THAT WHEN THE MATTER WAS REFERRED TO THE DVO, NO PROCEED INGS EITHER FOR ASSESSMENT OR REASSESSMENT WAS PENDING ITA NO.975 TO 978 /AHD/2009 KAILASH TOWER OF KATURI PARK CO.OP.HSG.SOC.LTD. ASST.YEAR -1997-98,98-99,99-00,00-2001 - 7 - BEFORE THE LEARNED ASSESSING OFFICER. THEREFORE, TH E REFERENCE WAS MADE WITHOUT JURISDICTION. THEREFORE, IN THE OPINION OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AS THE REFERENCE WAS INVALID CONSEQUEN TLY THE ISSUE OF NOTICES UNDER SECTION 148 WAS ALSO INV ALID AND REASSESSMENT FRAMED WAS ALSO BAD IN LAW. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT DISPUTED THE FACT OBSERVED BY THE LEARNED COMMISSIO NER OF INCOME TAX(APPEALS) THAT ON 30.03.1999 WHICH IS THE DATE ON WHICH REFERENCE WAS MADE TO THE DVO, NO INDEPENDENT PROCEEDINGS EITHER FOR THE ASSESSMENT O R REASSESSMENT IN THE CASE OF THE ASSESSEE WAS PENDIN G BEFORE THE LEARNED ASSESSING OFFICER. THE LEARNED DEPARTMENTAL REPRESENTATIVE HOWEVER, SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICER. ON THE OTHE R HAND, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND ALSO RELIE D UPON THE DECISION OF THIS TRIBUNAL IN THE CASE OF U MIYA ITA NO.975 TO 978 /AHD/2009 KAILASH TOWER OF KATURI PARK CO.OP.HSG.SOC.LTD. ASST.YEAR -1997-98,98-99,99-00,00-2001 - 8 - CO-OPERATIVE HOUSING SOCIETY LTD. (SUPRA). WE FIND THAT IN THE CASE OF UMIYA CO-OPERATIVE HOUSING SOCIETY L TD. (SUPRA), THE TRIBUNAL OBSERVED AS UNDER: ITA NO.975 TO 978 /AHD/2009 KAILASH TOWER OF KATURI PARK CO.OP.HSG.SOC.LTD. ASST.YEAR -1997-98,98-99,99-00,00-2001 - 9 - 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD N OT GIVE ANY REASON AS TO WHY THE ABOVE DECISION OF THE TRIBUNAL SHOULD NOT BE FOLLOWED IN THE INSTANT CASE . WE THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISIO N OF THE TRIBUNAL, FIND NO ERROR IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THEREFORE, THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ARE CONFIRMED ON THIS GROUND OF APPEAL IN ALL THE YEARS UNDER CONSIDERATION. 11. THE REVENUE HAS ALSO TAKEN THE FOLLOWING OTHER GROUND OF APPEAL WHICH ARE AS FOLLOWS: 2. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE THE LAW OF THE LAND I.E. INCOME TAX ACT AUTHORIZE MEMBERS OF THE SOCIETY TO POOL THEIR PART OF UNACCOUNTED MONEY AND INVEST IN THE CONSTRUCTION OF THE DWELLING UNITS, BY MISUSING THE PROVISIONS AVAILABLE FOR CONSTITUTING NON-TRADING CONCERN I.E . COOPERATIVE HOUSING SOCIETY. 3. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS JUSTIFIED IN QUASHING THE A.O.S ACTION OF REFERENCE UNDER SECTION 131 OF THE ACT TO VALUATION CELL AND CONSEQUENTLY QUASHING THE ITA NO.975 TO 978 /AHD/2009 KAILASH TOWER OF KATURI PARK CO.OP.HSG.SOC.LTD. ASST.YEAR -1997-98,98-99,99-00,00-2001 - 10 - ACTION UNDER SECTION 147 VIS--VIS ASSESSMENT OF UNEXPLAINED INVESTMENT UNDER SECTION 69B OF THE ACT, WITHOUT CONSIDERING THE MEMBERS OF THE CASE. SECONDLY, THE ACTION UNDER SECTION 131 IS NOT APPEALABLE BEFORE THE I.T. AUTHORITIES AND ONLY WRIT, BEFORE THE COURT, IS PERMISSIBLE. 12. IN VIEW OF THE FINDING GIVEN IN GROUND NO.1 OF THE APPEAL, THE ABOVE GROUNDS OF APPEAL TAKEN BY THE RE VENUE HAVE BECOME INFRUCTUOUS AND THEREFORE THEY ARE DISMISSED. 13 IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING IN THE PRESENCE OF THE PARTIES ON 06/10/2009. SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUN TANT MEMBER AHMEDABAD; DATED 06/10/2009 PARAS# COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-IV, AHMEDABAD. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD