The ACIT, Circle-1, Bharuch V. M/s. Jamadar Travels, Bharuch

ITSSA 238/AHD/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 1825 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 23-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R KAVITA
• Assessee Lawyers: B T THAKKAR
• Keywords: Unexplained investment; Valuation report

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT . . , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./ I.T.A(SS)NO.238/AHD/2015/SRT / A.Y. : 2004-05 ASST. COMMISSIONER OF INCOME TAX, CIRCLE-1, BHARUCH 392 001. VS. M/S.JAMADAR TRAVELS, DANDIA BAZAR, BHARUCH 392 001. PAN: AABFJ9426G APPELLANT /RESPONDENT /ASSESSEE BY SHRI B.T.THAKKAR , CA /REVENUE BY M R S. R.KAVITA, SR.DR / DATE OF HEARING: 05 .0 3 .2018 /PRONOUNCEMENT DATE 14 .0 3 .2018 /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER: THE APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3, VADODARA DATED 14.08.2015 FOR THE ASSESSMENT YEAR 2004-05. 2. THE SOLE GROUND OF APPEAL RELATES TO DELETING PENALTY OF RS.23,70,100/- BY HOLDING THAT ADDITION WAS MADE ON THE BASIS OF DVOS REPORT BEING ESTIMATE ONLY WITHOUT APPRECIATING THE FACT THAT DVO HAD GIVEN AMPLE OPPORTUNITY TO THE ASSESSEE BEFORE VALUATION OF THE PROPERTY AND THE ASSESSEE FAILED TO PRODUCE NECESSARY BILLS AND VOUCHERS ETC., BEFORE DVO. 3. BRIEF FACTS ARE THAT THE ASSESSMENT WAS COMPLETED ON 20.12.2011 U/S.143(3) R.W.S 153A(B) R.W.S 263 OF THE ACT BY DETERMINING THE TOTAL INCOME AT RS.78,94,64/- AFTER MAKING ADDITION FOR UNEXPLAINED INVESTMENT IN BANGLOW AT RS.52,77,701/-. THE ASSESSEE HAD SHOWN TOTAL EXPENDITURE AT RS.67,59,874/- IN THE BOOKS OF ACCOUNTS WHEREAS THE VALUATION OFFICER HAD ASSESSED THE COST OF CONSTRUCTION AT RS.1,20,37,575/-. HENCE, THE DIFFERENCE BETWEEN VALUATION AND PAGE 2 OF 4 REAL EXPENDITURE OF RS.52,77,701/- WAS TREATED AS CONCEALED INCOME, WHICH WAS ALSO CONFIRMED BY THE CIT(A). ACCORDINGLY, THE ASSESSING OFFICER LEVIED A PENALTY OF RS.23,70,100/- U/S.271(1)(C) ON THE AMOUNT OF TAX SOUGHT TO BE EVADED. 4. AGGRIEVED WITH THE ORDER, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) WHEREIN IT WAS OBSERVED THAT THE ASSESSING OFFICER HAS ANALYSED JUDICIAL OBSERVATION OF VARIOUS HONBLE HIGH COURTS IN HIS PENALTY ORDER. BUT, IT IS NOT EXPLAINED AS TO HOW THE DECISION OF SUCH HONBLE COURTS ARE APPLICABLE TO THE CASE OF THE APPELLANT. THE PROPERTY OF THE ASSESSEE HAS BEEN VALUED AT HIGHER FIGURE OF RS.1.20 CRORE BY THE DVO ON ESTIMATION BASIS AND THEREFORE IN THE OPINION OF THE CIT(A) THE SAID ADDITION MAY BE JUSTIFIED IN THE ASSESSMENT ORDER, BUT THE SAME CANNOT BE THE BASIS FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. THE ASSESSING OFFICER HAS MADE THE ADDITION MERELY ON THE BASIS OF VALUATION REPORT OF THE DVO FOR WHICH THE APPELLANT CANNOT BE HOLD AS DEFAULT OR WILLFUL NEGLIGENCE. THE CIT(A), FURTHER OBSERVED THAT THE HONBLE ITAT, AHMEDABAD IN THE CASE OF SMT. HEENA SHARMA VS. ITAT IN ITA NO.3415/AHD/2009 DATED 08.07.2011 HAS HELD THAT THE ADDITION IS MADE ON THE BASIS OF VALUATION REPORT AND VALUATION MADE BY THE DVO IS MERELY AN ESTIMATE, IT MAY BE MADE BASIS FOR MAKING ADDITION TO THE INCOME, BUT THE SAME CANNOT BE BASIS FOR HOLDING THAT THERE WAS CONCEALMENT FOR IMPOSING PENALTY U/S.271(1)(C) OF THE ACT. IT WAS FURTHER OBSERVED THAT NO INCRIMINATING MATERIAL HAVE BEEN REFERRED BY THE ASSESSING OFFICER IN RESPECT OF COST OF CONSTRUCTION OF THE HOUSE PROPERTY, THE ASSESSING OFFICER ALSO NOT POINTED OUT ANY MISTAKES IN THE BILLS AND VOUCHERS OF THE APPELLANT RELATED TO COST OF CONSTRUCTION OF THE PROPERTY. THEREFORE, THE CIT(A) HAS DELETED THE PENALTY OF RS.23,70,100/-. 5. BEING AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LD.SR.DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE HAS NOT DISCLOSED THE CORRECT COST OF CONSTRUCTION OF HOUSE PROPERTY. THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN LEVYING THE PENALTY ON THE QUANTUM WHICH WAS ALSO SUSTAINED BY THE CIT(A) IN THE APPEAL. 6. ON THE OTHER HAND, THE LD.COUNSEL FOR THE ASSESSEE RELYING ON THE CASE OF SMT.HEENA SHARMA VS. ACIT-CENTRAL CIRCLE-2(2) AHMEDABAD IN ITA PAGE 3 OF 4 NO.3415/AHD/2009 SUBMITTED THAT THE ADDITION MADE ON THE BASIS OF VALUATION REPORT CANNOT BE SUSTAINED AS THE VALUATION MADE BY THE DVO WAS ON ESTIMATE BASIS. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER DID NOT FIND ANY DISCREPANCY IN THE BILLS AND VOUCHERS SUBMITTED BY THE ASSESSEE AND MAINLY RELIED ON THE VALUATION DONE BY THE DVO BEING AN ESTIMATE. THEREFORE, THE CIT(A) HAS RIGHTLY DELETED THE PENALTY LEVIED ON THE BASIS OF DVOS REPORT. THE LD. AUTHORISED REPRESENTATIVE FURTHER PLACED RELIANCE IN THE CASE OF DCIT VS. JMB ADVISORS PVT. LTD. (2010) 124 ITD (223) (DEL) WHEREIN THE PENALTY IMPOSED ON ACCOUNT OF DIFFERENCE IN VALUATION REPORT WAS HELD NOT TO BE JUSTIFIED. 7. WE HAVE CONSIDERED FACTS AND MATERIAL ON RECORD AND FIND THAT THE ADDITION IS MADE ON THE BASIS OF VALUATION REPORT WHICH IS MERELY AN ESTIMATE WHICH MAY BE MADE THE BASIS OF MAKING ADDITION TO THE INCOME, BUT CANNOT BE THE BASIS FOR HOLDING THAT THERE WAS CONCEALMENT FOR IMPOSING PENALTY U/S.271(1)(C) OF THE ACT. WE ARE OF THE VIEW THAT COMPUTATION OF HIGHER INCOME BY SUBSTITUTING THE CONSTRUCTION COST ON THE BASIS OF DVOS REPORT CANNOT BE SUFFICIENT GROUND TO ALLEGED CONCEALMENT BY THE ASSESSEE AND THE IMPOSE PENALTY U/S.271(1)(C) AS HELD IN THE CASE OF CIT VS. APSARA TALKIES (19+85) 155 ITR 303 (MAD) AND IN THE CASE OF DILIP N.SHROFF VS. JCIT (2007) 210 CTR SC 228/291 ITR 519. THE PERUSAL OF ASSESSMENT ORDER SHOWS THAT THE DVO HAS ESTIMATED THE VALUE OF THE PROPERTY AT RS.1.20 CRORE AS AGAINST THE COST OF CONSTRUCTION SHOWN IN THE BOOKS OF ACCOUNTS AT RS.67.59 LAKHS. WE, FURTHER FIND THAT THE CIT(A) HAS OBSERVED THAT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY MISTAKES IN THE BILLS AND VOUCHERS OF THE APPELLANT REPORTED TO COST OF CONSTRUCTION OF THE PROPERTY. THE PENALTY IS SOLELY LEVIED BY RELYING UPON VALUATION REPORT OF THE DVO. THEREFORE, THE ADDITION BASED ON MERE ESTIMATED OF INCOME CANNOT BE CONSIDERED FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. WE ALSO PLACE RELIANCE IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PRIVATE LTD (2010) ITR 158 SC SUBMITTED THAT NEARLY BECAUSE THE ASSESSEES CLAIM OF EXPENDITURE WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE BY THE REVENUE, PENALTY U/S.271(1)(C) OF THE ACT CANNOT BE ATTRACTED. NOTWITHSTANDING, THE ASSESSING OFFICER DID NOT FIND ANY DISCREPANCY IN THE BILLS AND VOUCHERS SUBMITTED BY THE ASSESSEE. THEREFORE, THE PENALTY IMPOSED THEREON U/S.271(1)(C) OF THE ACT WAS TO BE DELETED AS THERE WAS NO CONCEALMENT OF INCOME BY THE ASSESSEE. IN THE LIGHT OF PAGE 4 OF 4 THE ABOVE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A), HENCE, SAME IS UPHELD. THUS, THIS GROUND OF APPEAL IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 14.03.2018 SD/- SD/- (C.M. GARG) (O.P. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER / SURAT, DATED: 14 TH MARCH 2018. COPY OF ORDER FORWARDED TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT