Sri A.V.Krishna Koundinya, Learned Counsel V.

ITTA/531/2010

AI Insights

This case involves an appeal under Section 260-A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Hyderabad, which upheld the addition of Rs.17,00,800 as unexplained investment by the assessing officer. The appellant had invested in various properties, and the Departmental Valuation Officer (DVO) assessed these investments at a higher value than reported by the appellant. The ITAT's decision, which partially relieved the appellant regarding some properties but upheld the addition for others, was challenged in the High Court. The court found that the ITAT's decision was based on a thorough examination of the objections and valuations presented, and no substantial question of law was found to warrant interference.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 796992 (HC-HYDERABAD)
• Appeal Type: Others
• Pronouncement Date: 01-01-2011
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Respondent
• Court: HIGH COURT
• Keywords: Departmental Valuation Officer; Income tax appellate tribunal; Undisclosed income; Unexplained investment; Valuation
• Section: 260-A

Judgement Text

"THE HON'BLE SRI JUSTICE V.V.S.RAO AND THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN I.T.T.A.No.531 OF 2010 ORDER: (Per Hon’ble Sri Justice Ramesh Ranganathan) This appeal, under Section 260-A of the Income Tax Act, 1961, (hereinafter called the “Act”), has been preferred against the order dated 6.3.2009 of the Income Tax Appellate Tribunal, Hyderabad Bench ‘B’, Hyderabad in I.T.(SS)A. No.43/Hyd/2002, relating to the block period 1989-90 to 1999-2000, to the limited extent the addition of Rs.17,00,800/- by the assessing officer was upheld. The appellant – assessee had shown a total investment of Rs.84,73,882/- towards construction of buildings i.e., a residential house at Banjara Hills, a shopping complex at Gulmohar Park, a Commercial complex at Punjagutta, and row houses at Sanali Ville. The assessing officer referred the matter to the Departmental Valuation Officer (DVO) who valued the total cost of these four buildings at Rs.1,89,51,000/-. The objections raised by the appellant, against the valuation of the DVO, were rejected by the assessing officer who held that all these objections were considered by the DVO while estimating the value. The difference in cost of Rs.1,04,77,117/- was treated as unexplained investment, and as the undisclosed income of the appellant herein. In appeal, the Commissioner of Income Tax (Appeals)-I {CIT(A)}, Hyderabad gave partial/full relief in respect of each of the four properties. Before the Income Tax Appellate Tribunal (ITAT) the appellant contended that if the administrative expenses, which were recorded separately, had been considered there would then have been no difference between the cost shown by him, and the value arrived at by the DVO; once the buildings were sold they could have undergone certain changes; hence the valuation of the DVO was not justified; and, therefore, the addition upheld by the CIT (A) should be deleted. The ITAT held that the additions made by the assessing officer, in respect of the Punjagutta property and the row houses at Sanali Ville, had been completely deleted by the CIT (A); and the appellant had not raised any grievance about the valuation made by the DVO in respect of these two properties. In so far as the Gulmohar Park property was concerned, the ITAT observed that the CIT (A) had gone by the computation given by the appellant- assessee himself; wherever he felt necessary the CIT (A) had deleted the additions like those made on account of strong foundation, and for preparation of drawings; and the addition of Rs.12,15,976/- upheld by the CIT(A) was reasonable. With regards the property at Banjara Hills the ITAT noted that the CIT (A) had granted rebate of 25% towards rates and self-supervision; this itself had resulted in a reduction of Rs.10,07,500/-; and the addition sustained by the CIT (A) of a meager amount of Rs.4,84,824/- was not unreasonable. The additions, to the extent of Rs.17,00,800/-, was upheld by the ITAT. Before this Court Sri A.V.Krishna Koundinya, Learned Counsel for the appellant – assessee, would reiterate the submissions made on behalf of the appellant-assessee before the ITAT. Learned counsel would submit that, if the expenses recorded separately were considered, there would not have been any difference between the cost shown by the appellant and the valuation of the DVO; and the ITAT had erred in holding that the addition of Rs.17,00,800/-, upheld by the CIT (A), was reasonable. An appeal lies to the High Court, under Section 260-A of the Act, only on a substantial question of law. The ITAT is the final fact finding authority and, even if its order suffers from an error in exercise of its jurisdiction or the finding of fact recorded by it is erroneous, an appeal would still not lie to this Court under Section 260-A of the Act as no substantial question of law can be said to have arisen thereby. It is only if the finding of fact recorded by the ITAT is based on no evidence, or is perverse, or the ITAT fails to consider the relevant material on record in arriving at a finding would it give rise to a substantial question of law necessitating interference by this Court in an appeal filed under Section 260-A of the Act. The order of the ITAT does not suffer from any such infirmity. The ITAT has rightly observed that the appellant – assessee had not raised any grievance on the valuation of the DVO with regards the Commercial Complex at Punjagutta and the row houses at Sanali Ville; it is only in respect of the residential house at Banjara Hills, and the building at Gulmohar Park, were objections raised regarding such valuation; the CIT (A) had gone by the computation given by the appellant - assessee himself in respect of the Gulmohar property, had upheld the same, and had deleted the additions made on account of strong foundation, and for preparation of drawings; likewise, in the case of the residential house at Banjara Hills, the CIT (A) had granted rebate of 25% towards rates and self-supervision which had resulted in a reduction of over Rs.10-00 lakhs; and, consequently, the addition was merely of Rs.4,84,824/-. The conclusions arrived at by the ITAT are on the basis of the material on record, and cannot be said to be either perverse or based on no evidence. No substantial question of law arises in this appeal necessitating interference by this Court under Section 260-A of the Act. The ITTA is, accordingly, dismissed. _____________ V.V.S.RAO, J ___________________________ RAMESH RANGANATHAN,J .01.2011 asp "