Ess En Organisors Pvt.Ltd.,, Surat v. The ACIT.,Cent.Circle-4,, Surat

ITA 1551/AHD/2010 | 2006-2007
Pronouncement Date: 29-07-2011 | Result: Allowed

Appeal Details

RSA Number 155120514 RSA 2010
Assessee PAN AABCE1069K
Bench Ahmedabad
Appeal Number ITA 1551/AHD/2010
Duration Of Justice 1 year(s) 2 month(s) 18 day(s)
Appellant Ess En Organisors Pvt.Ltd.,, Surat
Respondent The ACIT.,Cent.Circle-4,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 29-07-2011
Date Of Final Hearing 21-07-2011
Next Hearing Date 21-07-2011
Assessment Year 2006-2007
Appeal Filed On 11-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HONBL E SHRI A.N.PAHUJA A.M.) I.T.A. NO. 1551/AHD./2010 ASSESSMENT YEAR : 2006-2007 ESS EN ORGANISORS PVT. LTD. SURAT -VS- ACIT CENTRAL CIRCLE-4 SURAT (PAN : AABCE 1069K) (APPELLANT) (RES PONDENT) APPELLANT BY : SHRI RAMESH MALPANI A.R. RESPONDENT BY : SHRI SANJAY DHARIWAL SR.D..R . O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 18-02-2010 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-II AHM EDABAD FOR THE ASSESSMENT YEAR 2006-07. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE IS A COMPANY. A SEARCH UNDER SECTION 132 OF THE I.T. ACT 1961 WAS CONDUCTED ON 14.12.2005 AT THE PREMISES OF SHRI BHUPENDRA C. POPAT. DURING THE COURSE OF SEARCH OPE RATIONS AT THE PREMISES OF SHRI BHUPENDRA C. POPAT CERTAIN DOCUMENTS BELONGING TO THE ASSESSEE COMPANY WERE FOUND AND SEIZED VIDE ANNEXURE-2 (PAGES 2 TO 3 AND 47 TO 54). FOR THE ASSESSMENT YEAR UNDER APPEAL THE ASSESSEE FILED THE RETURN OF INCOME ON 20.11.2007 DECLARING THE TOTAL INCOME AT RS.82 693/-. THE AO FRAMED THE ASSE SSMENT UNDER SECTION 143(3) OF THE I.T. ACT ON 31.12.2007 WHEREIN HE MADE ADDITION OF RS.15 95 695/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PROJECT AT RATHI PALA CE. THE ASSESSEE HAS SHOWN COST OF CONSTRUCTION AT RS.72 44 209/- FOR THE ASSESSMENT Y EAR 2006-07. ON A REFERENCE TO DVO VIDE VALUATION REPORT DATED 15.12.2007 THE AO DETERMINED THE COST OF CONSTRUCTION AT RS.88 39 904/- FOR THIS YEAR WHICH IS RS.50 96 695/- HIGHER THAN THE ITA NO.1551/AHD/2010 2 COST SHOWN. ACCORDINGLY THE AO MADE THE ADDITION O F DIFFERENCE AMOUNTING TO RS.15 96 695/- AS UNEXPLAINED INVESTMENT. 3. ON APPEAL BEFORE THE LD. CIT(A) THE ASSESSEE MA DE THE FOLLOWING SUBMISSIONS: A) THE REFERENCE MADE TO THE DEPARTMENTAL VALUATIO N OFFICER U/S.142A OF THE I.T.ACT WAS NOT PROPER. THE REFERENCE WAS NOT MADE BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS BUT WAS MADE BY T HE ADIT(INV.) BEFORE COMMENCEMENT OF THE ASSESSMENT PROCEEDINGS. THE ADI T(INV.) IS NOT AUTHORIZED OR EMPOWERED TO MAKE ANY REFERENCE FOR V ALUATION TO DVO U/S.142A OF THE ACT. HENCE THE REFERENCE MADE TO T HE DVO AND THE CONSEQUENT VALUATION REPORT OBTAINED FROM THE DVO ARE TOTALLY OUTSIDE THE PROVISIONS OF THE LAW AND NO ADDITION CAN BE MADE ON THE BASIS OF THIS REPORT. FOR THIS THE ASSESSEE HAS RELIED ON THE CASE LAW OF SMT. AMIYA B ALA PAUL VS CIT 262 ITR 407 (SC) AND CIT VS STAR BUILDERS 294 ITR 338 (GUJ). B) THE REFERENCE WAS MADE TO THE DVO BEFORE FIND ING ANY DEFECT AND WITHOUT REJECTING THE BOOKS OF ACCOUNTS WHICH IS INVALID AN D INCORRECT HENCE NO ADDITION CAN BE MADE. C) THE VALUATION MADE BY THE DVO IS NOT CORRECT. T HE DVO HAS MADE VALUATION OF PROPERTY CONSTRUCTED FROM 2000-01 TO 2 005-06 ON THE BASIS OF INSPECTION MADE BY HIM ON 07.08.2007. THE INSPECTIO N AT SUBSEQUENT DATE AFTER THE ACTUAL PERIOD OF CONSTRUCTION IS OVER CANNOT G IVE THE CORRECT VALUATION. FURTHER THE DVO HAS APPLIED THE RATE FOR COST OF C ONSTRUCTION AT HIGHER PRICE WHICH IS NOT REASONABLE. HE HAS APPLIED THE RATE IN A.Y. 2006-07 WHEREAS THE 60% OF THE CONSTRUCTION WAS COMPLETED IN FIRST 2 YE ARS. THUS THE RATE APPLIED BY THE DVO IS EXCESSIVE AND ALSO VALUATION DONE IS NOT CORRECT HENCE NO ADDITION IS JUSTIFIED. THE DVO HAS TAKEN CPWD RATES WHICH FOR HEAVY STRUCTURE AND HE HAS NOT APPLIED THE STATE GOVT. RA TES. D) NO ADDITION CAN BE MADE ONLY ON THE BASIS OF D VO'S REPORT. FOR THIS THE ASSESSEE HAS RELIED ON THE DECISION OF AMIT ESTATE ORGANIZERS VS ITO 113 ITD 255 (AHD). ITA NO.1551/AHD/2010 3 3.1 AFTER CONSIDERING THE AFORESAID SUBMISSIONS IN THE IMPUGNED ORDER THE LD. CIT(A) UPHELD THE ACTION OF THE AO FOR MAKING REFER ENCE TO DVO AS WELL AS HE CONFIRMED THE ADDITION OF RS.15 96 695/-. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING BEFORE US SHRI RAMESH MA LPANI A.R. APPEARED ON BEHALF OF THE ASSESSEE AND EXPLAINED THAT ON THE LA ST DATE OF HEARING THE BENCH DIRECTED TO FURNISH DETAILS OF SPECIFIC GROUND OF A PPEAL IN LIEU OF GROUND NO.1 OF APPEAL. THE SPECIFIC GROUND NO.1 OF APPEAL AS SUBMI TTED BY THE ASSESSEE READS AS UNDER: 1.A) THAT THE REFERENCE MADE TO THE DEPARTMENTAL V ALUATION OFFICER (DVO) U/S 142A OF THE INCOME TAX ACT 1961 (THE ACT) IS W RONG AND BAD-IN-LAW AS THE SAME WAS NOT MADE BY THE ASSESSING OFFICER (AO) OF THE APPELLANT BUT WAS MADE BY THE ADIT (INV)-III SURAT WHO WAS NOT HOLD ING THE JURISDICTION AS THE ASSESSING OFFICER OF THE APPELLANT AND THUS R EFERENCE MADE TO THE DVO WAS WITHOUT ANY JURISDICTION AND THEREFORE THE REP ORT OF DVO OBTAINED BY SUCH INVALID REFERENCE IS BAD-IN-LAW AND BEYOND THE LAW AND COULD NOT BE ADMITTED IN EVIDENCE FOR MAKING ANY ADDITION IN THE ASSESSME NT ORDER. HON'BLE CIT (A) HAS ERRED IN UPHOLDING THE VALIDITY OF THE SAME. B) THAT THE REFERENCE MADE TO THE DVO U/S. 142A OF THE ACT IS WRONG AND BAD- IN-LAW AS THE SAME WAS NOT MADE DURING THE COURSE O F ANY ASSESSMENT OR RE- ASSESSMENT PROCEEDINGS OR FOR THE PURPOSE OF MAKING AN ASSESSMENT OR RE- ASSESSMENT UNDER THE ACT. NO ASSESSMENT OR RE-ASSES SMENT PROCEEDINGS WERE PENDING BEFORE THE ADIT (INV.)-III SURAT AT THE TI ME OF MAKING THE REFERENCE AND THEREFORE THE REFERENCE MADE TO THE DVO AND T HE VALUATION REPORT OBTAINED THEREBY ARE WRONG BAD-IN-LAW AND BEYOND T HE LAW AND COULD NOT BE ADMITTED IN EVIDENCE FOR MAKING ANY ADDITION IN THE ASSESSMENT ORDER. HON'BLE CIT (A) HAS ERRED IN UPHOLDING THE VALIDITY OF THE SAME. C) THAT THE REFERENCE MADE TO THE DVO U/S. 142A OF THE ACT IS WRONG AND BAD- IN-LAW AS THE SAME WAS MADE WITHOUT FINDING ANY DEF ECTS IN THE ACCOUNTS OF THE APPELLANT AND WITHOUT REJECTING THE SAME AND THERE FORE THE REFERENCE MADE TO THE DVO AND THE VALUATION REPORT OBTAINED THEREBY A RE WRONG AND BAD-IN-LAW AND COULD NOT BE ADMITTED IN EVIDENCE FOR MAKING AN Y ADDITION IN THE ASSESSMENT ORDER. HONBLE CIT(A) HAS ERRED IN UPHOL DING THE VALIDITY OF THE SAME. 4.1 REFERRING TO THE AFORESAID SPECIFIC GROUND OF A PPEAL THE COUNSEL OF THE ASSESSEE POINTED OUT THAT IN THIS CASE REFERENCE UN DER SECTION 142A OF THE I.T. ACT WAS ITA NO.1551/AHD/2010 4 MADE TO DVO BY THE ADIT (INV.)-III SURAT WHO WAS N OT HOLDING THE JURISDICTION AS THE AO. THIS REFERENCE MADE TO DVO IS BAD IN LAW AN D IT WAS MADE BEFORE THE END OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. THE ADIT(INV.) IS NOT THE AO. EVEN WHEN THE REFERENCE WAS MADE NO ASSES SMENT WAS PENDING. THE REFERENCE TO DVO UNDER SECTION 142A CAN BE MADE ONL Y WHEN THE ASSESSMENT IS PENDING. SINCE NO ASSESSMENT WAS PENDING REFERENCE MADE TO DVO BY THE ADIT(INV.) IS BAD IN LAW. ON THIS GROUND THE ADDIT ION OF RS.15 96 695/- MADE ON THE BASIS OF THE DVOS REPORT BE DELETED. IN SUPPORT OF THIS RELIANCE IS PLACED IN THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT-VS- UMIYA COOPERATIVE HOUSING SOCIETY LTD. REPORTED IN 314 IT R 272. 5. ON THE OTHER HAND SHRI SANJAY DHARIWAL SR.D.R. APPEARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A) AND CONTENDED THAT THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION MAD E BY THE AO. 6. AFTER HEARING BOTH THE SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT THE ADIT(INV.) MADE THE REFERENCE TO DVO UNDER SECTION 142A ON 24.3.2006. THE HONBLE GU JARAT HIGH COURT IN THE CASE OF UMIYA COOPERATIVE HOUSING SOCIETY LTD. ( SUPRA ) REPORTED IN 314 ITR 272 HELD THAT WHEN NO ASSESSMENT AND/OR RE-ASSESSMENT PROCEEDINGS ARE PENDING THE AO CANNOT REFER ANY MATTER FOR VALUATION OF PROPERTY OF AN AS SESSEE UNDER SECTION 142A. ADMITTEDLY IN THIS CASE WHEN REFERENCE TO DVO BY THE ADIT(INV.) WAS MADE ON 24.03.2006 NO ASSESSMENT WAS PENDING AS THE PREVIO US YEAR ENDED ON 31.03.2006. THE ITAT LUCKNOW A BENCH IN THE CASE OF GOPI AP ARTMENTS VS- ACIT REPORTED IN 132 TTJ 249 (LUCKNOW) ALSO HELD THAT REFERENCE T O VALUATION CELL UNDER SECTION 142A CAN BE MADE ONLY WHEN THE PROCEEDINGS OF ASSES SMENT OR REASSESSMENT ARE PENDING BEFORE THE AO AND NOT OTHERWISE. 6.1 FOR THE AFORESAID REASON WE HOLD THAT REFERENC E MADE BY THE ADIT(INV.) TO DVO WHEN NO ASSESSMENT FOR THE ASSESSMENT YEAR WAS PENDING ON 24.03.2006 IS BAD IN LAW AND ON THIS GROUND WE DELETE THE ADDITION OF RS. 15 96 695/- MADE BY THE AO ITA NO.1551/AHD/2010 5 AND CONFIRMED BY THE LD. CIT(A) IN THE IMPUGNED OR DER. THEREFORE THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER PRONOUNCED IN THE COURT ON 29.07.2011 SD/- SD/- (A.N.PAHUJA) (T.K. S HARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29/07/2011 COPY OF THE ORDER IS FORWARDED TO:- (1) THE ASSESSEE (2) THE DEPARTMENT. (3) CIT (A.) CONCERNED. (4) CIT CONCERNED. (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT AH MEDABAD. TALUKDAR/ SR. P.S.