Dr. Shivaji Ramchandra Kolekar, Karad v. ITO, Satara

ITA 1584/PUN/2013 | 2002-2003
Pronouncement Date: 28-10-2013 | Result: Allowed

Appeal Details

RSA Number 158424514 RSA 2013
Assessee PAN AFCPK7524A
Bench Pune
Appeal Number ITA 1584/PUN/2013
Duration Of Justice 2 month(s) 9 day(s)
Appellant Dr. Shivaji Ramchandra Kolekar, Karad
Respondent ITO, Satara
Appeal Type Income Tax Appeal
Pronouncement Date 28-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 28-10-2013
Assessment Year 2002-2003
Appeal Filed On 19-08-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A PUNE BEFORE SHRI G.S. PANNU ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NOS.1583 TO 1585/PN/2013 (ASSESSMENT YEARS : 2001-02 TO 2003-04) DR. SHIVAJI RAMCHANDRA KOLEKAR SHANIWAR PETH KARAD TAL. KARAD DIST. SATARA. PAN : AFCPK7524A . APPELLANT VS. INCOME TAX OFFICER WARD 1 SATARA. . RESPONDENT APPELLANT BY : MR. M. K. KULKARNI RESPONDENT BY : MR. P. L. PATHADE DATE OF HEARING : 22-10-2013 DATE OF PRONOUNCEMENT : 28-10-2013 ORDER PER G. S. PANNU AM THE CAPTIONED THREE APPEALS RELATE TO SINGLE ASSESS EE AND ARE DIRECTED AGAINST A CONSOLIDATED ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III PUNE DATED 24.07.2013 WHICH IN TURN HAS ARISEN FR OM THE ORDERS DATED 29.11.2002 27.01.2005 & 17.03.2006 PASSED BY THE A SSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 (IN SHOR T THE ACT) PERTAINING TO THE ASSESSMENT YEARS 2001-02 2002-03 & 2003-04 RES PECTIVELY. 2. IN ALL THE THREE APPEALS THE SOLITARY ISSUE RELA TES TO THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INV ESTMENT MADE IN THE COST OF CONSTRUCTION OF THE HOSPITAL BUILDING BY INVOKIN G SECTION 69B OF THE ACT. THE FACTS GIVING RISE TO THE IMPUGNED DISPUTE ARE COMMO N IN ALL THE YEARS WHICH CAN BE SUMMARIZED AS FOLLOWS. IN THE ASSESSMENT YEA R 2001-02 THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD SHOWN A N EXPENSE OF RS.22 29 883/- TOWARDS COST OF CONSTRUCTION OF A HO SPITAL BUILDING WHICH STILL ITA NOS.1583 TO 1585/PN/2013 A.Y. 2001-02 TO 2 003-04 UNDER CONSTRUCTION. THE ASSESSING OFFICER MADE A RE FERENCE TO THE DEPARTMENTAL VALUATION OFFICER (IN SHORT THE DVO) FOR ESTIMATING THE COST OF CONSTRUCTION. THE DVO ESTIMATED THE COST OF CONSTRU CTION AT RS.1 02 00 000/- AS AGAINST THE VALUE DECLARED BY THE ASSESSEE AT RS .45 27 927/- IN RESPECT OF THE HOSPITAL BUILDING UNDER CONSTRUCTION AS ON 31.0 3.2002. FURTHER WITH REGARD TO THE CONSTRUCTION CARRIED OUT BY THE ASSES SEE AFTER THE PROPERTY WAS INITIALLY INSPECTED BY THE DVO ON 14.08.2002 THE D VO AGAIN SUBMITTED A REPORT VALUING THE INCREMENTAL COST OF CONSTRUCTION AT RS.06 95 000/- AS AGAINST RS.6 04 642/- SHOWN BY THE ASSESSEE AS PER BOOKS OF ACCOUNT IN ASSESSMENT YEAR 2003-04. ON THE BASIS OF THE AFORES AID TWO REPORTS OF THE DVO ESTIMATING THE COST OF CONSTRUCTION THE ASSESS ING OFFICER HAS MADE ADDITIONS UNDER SECTION 69B OF THE ACT IN THE CAPTI ONED THREE YEARS AS DETAILED BELOW WITH REGARD TO THE DIFFERENCE IN VA LUES AS PER THE COST OF CONSTRUCTION DEPICTED IN THE ACCOUNT BOOKS : - (I) A.Y. 2001-02 RS.28 70 117/- (II) A.Y. 2002-03 RS. 25 68 405/- (III) A.Y. 2003-04 RS.90 358/- THE AFORESAID ADDITIONS ARE CHALLENGED IN APPEAL BE FORE US. 3. BEFORE PROCEEDING FURTHER IT MAY BE NOTICED THAT INITIALLY FOR ASSESSMENT YEAR 2001-02 THE CIT(A) VIDE ORDER DATED 12.01.200 4 HAD SET-ASIDE THE ADDITION ON THE GROUND THAT THE ASSESSING OFFICER W AS NOT COMPETENT TO MAKE REFERENCE TO THE DVO IN THE LIGHT OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SMT. AMIYA BALA PAUL VS. CIT 262 ITR 407 (SC). THE SAID DECISION OF THE CIT(A) HAS SINCE BEEN SET-ASID E BY THE TRIBUNAL VIDE ORDER IN ITA NO.442/PN/2004 DATED 20.04.2007 IN VIEW OF T HE PROVISIONS OF SECTION 142A OF THE ACT INSERTED BY FINANCE (NO. 2) ACT 20 04 W.R.E.F. 15.11.1972 AND THE CIT(A) WAS DIRECTED TO RE-EXAMINE THE ISSUE ON MERITS OF THE CASE. THE ITA NOS.1583 TO 1585/PN/2013 A.Y. 2001-02 TO 2 003-04 IMPUGNED ORDER HAS BEEN PASSED BY THE CIT(A) FOLLOW ING THE DIRECTIONS OF THE TRIBUNAL. 4. THE FIRST ISSUE RAISED BEFORE US IS TO THE EFFEC T THAT THE ASSESSEE WAS MAINTAINING BOOKS OF ACCOUNT IN RESPECT OF THE COST OF CONSTRUCTION OF THE HOSPITAL BUILDING AND THE SAME WERE ALSO EXAMINED B Y THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. IT IS POINTED OU T THAT SUCH BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED AND THEREFORE THE MA TTER COULD NOT BE REFERRED TO THE DVO FOR ASSESSING THE COST OF CONSTRUCTION. IN THE ABSENCE OF THE REJECTION OF THE BOOKS OF ACCOUNT THE REFERENCE TO THE DVO WAS NOT JUSTIFIED AND IN SUPPORT RELIANCE WAS PLACED IN THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA VS. CIT (2010) 3 28 ITR 513 (SC). 5. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE POINTED OUT THAT THIS ASPECT OF THE MATTER HAS BEEN DEALT WITH BY THE CIT(A) BY WAY OF DISCUSSION IN PARA 14.2 OF THE IMPUGNED ORDER. ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIV E THE ASSESSING OFFICER DID NOT REJECT THE BOOKS OF ACCOUNT BUT HAS MADE AN OBSERVATION THAT THE BOOKS OF ACCOUNT WERE NOT MAINTAINED IN TERMS OF RU LE 6F OF THE INCOME TAX RULES 1962 (IN SHORT THE RULES) AND THUS THE BOO KS OF ACCOUNT WERE IMPLIEDLY REJECTED. THEREFORE ACCORDING TO HIM THE CONDITION NECESSARY FOR MAKING A REFERENCE TO THE DVO IN TERMS OF THE AMEND ED PROVISIONS OF SECTION 142A OF THE ACT WERE FULFILLED. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS ON THIS ASPECT. IN THE PRESENT CASE THE ASSESSING OFFICER HAS INVOKED SECTION 69B OF THE ACT TO TAX THE DIFFERENCE IN THE VALUE OF COST OF CONSTRUC TION AS ESTIMATED BY THE DVO AND THAT DECLARED BY THE ASSESSEE IN HIS BOOKS OF A CCOUNT. SECTION 69B OF THE ACT EMPOWERS THE ASSESSING OFFICER TO TAX AN AMOUNT INVESTED BY THE ASSESSEE WHICH IS FOUND TO BE OVER AND ABOVE THE AM OUNT RECORDED IN THE ITA NOS.1583 TO 1585/PN/2013 A.Y. 2001-02 TO 2 003-04 BOOKS OF ACCOUNT MAINTAINED. HOWEVER A CRUCIAL EXP RESSION IN SECTION 69B OF THE ACT IS THAT THE ASSESSING OFFICER OUGHT TO FIND THAT THE AMOUNT EXPENDED ON MAKING SUCH INVESTMENTS OR IN ACQUIRING . EXCEEDS THE AMOUNT RECORDED IN THIS BEHALF IN THE BOOKS OF ACCO UNT MAINTAINED BY THE ASSESSEE . THE AFORESAID WORDS APPEARING IN SECTION 69B OF TH E ACT IMPLY THAT BEFORE MAKING AN ADDITION UNDER THIS SEC TION ASSESSING OFFICER WAS REQUIRED TO REACH A POSITIVE FINDING THAT THE ASSES SEE HAS SPENT AN AMOUNT ON COST OF CONSTRUCTION WHICH IS MORE THAN THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNT. OSTENSIBLY THE ONLY BASIS BROUGHT OUT BY THE ASSESSING OFFICER TO MAKE THE IMPUGNED ADDITION UNDER SECTION 69B OF THE ACT IS THE REPORT OF THE DVO ESTIMATING THE VALUE OF CONSTRUCTION AT HIGHER FIGURE. THE REPORT OF THE DVO IS AT BEST AN ESTIMATE BUT NOT AN EVIDENCE TO PROVE ANY UNDISCLOSED INVESTMENT IN CONSTRUCTION BY THE ASSESSEE ESPECIA LLY IN A SITUATION WHERE NO INFIRMITY OR DISCREPANCY HAS BEEN ESTABLISHED BY TH E ASSESSING OFFICER IN THE ACCOUNT BOOKS MAINTAINED BY THE ASSESSEE. THE HONB LE SUPREME COURT IN THE CASE OF SARGAM CINEMA (SUPRA) HELD THAT NO ADDI TION CAN BE MADE ON THE BASIS OF THE REPORT OF THE DVO WITHOUT THE BOOKS OF ACCOUNT BEING REJECTED WHEREIN EXPENDITURE RELATING TO THE CONSTRUCTION IS RECORDED AND SUCH BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED BY THE ASSESSING OFF ICER UNDER SECTION 145 OF THE ACT. THUS ON THIS COUNT THE ADDITION DESERVES TO BE DELETED. 7. IN THE PRESENT CASE THE DISPUTE WITH REGARD TO THE COST OF CONSTRUCTION AROSE FOR THE FIRST TIME IN ASSESSMENT YEAR 2001-02 . WE HAVE PERUSED THE ASSESSMENT ORDER AND FIND THAT THE ASSESSING OFFICE R HAS NOT REJECTED THE BOOKS OF ACCOUNT UNDER SECTION 145 OF THE ACT. IN-F ACT IN PARA 3 OF THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS OBSERVE D THAT THE ASSESSEE EXPLAINED THE RETURN OF INCOME FILED BY PRODUCING B OOKS OF ACCOUNT SUCH AS CASH-BOOK LEDGER ETC. EVEN AFTER HIS EXAMINATION OF THE COST OF CONSTRUCTION OF THE HOSPITAL BUILDING THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DISCREPANCY IN THE COST OF CONSTRUCTION DECLARED IN THE BOOKS OF ACCOUNT. IN ITA NOS.1583 TO 1585/PN/2013 A.Y. 2001-02 TO 2 003-04 PARA 4 OF THE ASSESSMENT ORDER THE ONLY BASIS FOR M AKING OF REFERENCE TO THE DVO APPEARS TO BE LOCAL ENQUIRIES. AS PER THE ASSESSING OFFICER LOCAL ENQUIRIES REVEALED THAT EXPENSES SHOWN BY THE ASSESSEE ON CO NSTRUCTION OF THE HOSPITAL BUILDING WERE UNDERSTATED BY THE ASSES SEE. ON THIS BASIS THE ASSESSING OFFICER HAS JUSTIFIED THE REFERENCE TO TH E DVO FOR ESTIMATION OF THE COST OF CONSTRUCTION OF THE HOSPITAL BUILDING. IN O UR CONSIDERED OPINION THE MATERIAL ON RECORD DOES NOT SHOW WHAT WAS THE NATUR E OF LOCAL ENQUIRIES AND WHAT WAS THE MATERIAL GATHERED WHICH COULD SHOW ANY INFIRMITY/DISCREPANCY IN THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE I N THE ACCOUNT BOOKS MAINTAINED. THEREFORE CONSIDERING THE ENTIRE DISCU SSION IN THE ASSESSMENT ORDER WE FIND THAT THE ASSESSING OFFICER COULD NOT HAVE REFERRED THE MATTER TO THE DVO BECAUSE THE BOOKS OF ACCOUNT WERE NOT REJEC TED FOLLOWING THE PARITY OF REASONING LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA (SUPRA). 8. BEFORE US IT HAS BEEN EMPHASIZED THAT IN PARA 3 OF THE ASSESSMENT ORDER THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNT AS PER RULE 6F OF THE RULES AND TH US BY IMPLICATION IT SHOULD BE UNDERSTOOD AS REJECTION OF THE BOOKS OF ACCOUNT. RULE 6F OF THE RULES PRESCRIBES THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH ARE REQUIRED TO BE KEPT AND MAINTAINED BY A PERSON CARRYING ON CERTAIN PROFESSIONS. THE ASSESSING OFFICER HAS MADE A BALD ONE LINE ASSERTIO N THAT ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNT AS PER RULE 6F OF THE R ULES WITHOUT POINTING OUT AS TO WHAT WAS LACKING. NOTABLY IN PARA 3 OF THE A SSESSMENT ORDER ITSELF ASSESSING OFFICER HAS ACKNOWLEDGED THAT THE ASSESSE E PRODUCED THE BOOKS OF ACCOUNT SUCH AS CASH-BOOK LEDGER ETC. AND NO INFI RMITY OR DEFECTS IN THE SAME HAVE BEEN POINTED OUT. FURTHER IN THE SUBSEQUE NT PARAGRAPHS WHERE THE ASSESSING OFFICER HAS DISCUSSED THE ADDITION ON ACC OUNT OF COST OF CONSTRUCTION OF THE HOSPITAL BUILDING NO ADVERSE C OMMENTS HAVE BEEN MADE WITH REGARD TO ANY DEFECTS OR DISCREPANCY IN THE AC COUNT OF COST OF CONSTRUCTION ITA NOS.1583 TO 1585/PN/2013 A.Y. 2001-02 TO 2 003-04 MAINTAINED IN THE BOOKS OF ACCOUNT. MERELY DISAGREE ING WITH THE COST OF CONSTRUCTION DECLARED IN THE BOOKS OF ACCOUNT AND T HAT TOO ON THE BASIS OF UNSPECIFIED LOCAL ENQUIRIES DOES NOT REFLECT THAT THE ASSESSING OFFICER IMPLIED TO INVOKE HIS POWERS OF SECTION 145 OF THE ACT TO REJECT THE BOOKS OF ACCOUNT. 9. FURTHERMORE IN THE COMPUTATION OF FINALLY TAXED INCOME THE ASSESSING OFFICER HAS ADOPTED THE INCOME DECLARED AS PER THE RETURN OF INCOME AND THEREAFTER MADE CERTAIN ADDITIONS AND COMPUTED THE FINALLY ASSESSED INCOME. WE ARE ONLY TRYING TO POINT OUT THAT EVEN AT THE TI ME OF DETERMINING THE TOTAL INCOME THE ASSESSING OFFICER WAS FAR FROM REJECTING THE BOOKS OF ACCOUNT. THEREFORE CONSIDERING THE ENTIRE DISCUSSION IN THE ASSESSMENT ORDER IT IS NOT A CASE WHERE BY IMPLICATION IT CAN BE INFERRED THAT THE ASSESSING OFFICER INVOKED HIS POWER UNDER SECTION 145 OF THE ACT AND REJECTED THE BOOKS OF ACCOUNT. THEREFORE IN OUR VIEW IN THE PRESENT CAS E THE ASSESSING OFFICER COULD NOT HAVE MADE THE REFERENCE TO THE DVO FOR ES TIMATING THE COST OF CONSTRUCTION WITHOUT FIRST REJECTING THE BOOKS OF A CCOUNT AS LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA (SUPRA). 10. IN VIEW OF THE AFORESAID AS WE HAVE HELD THAT T HE REFERENCE MADE TO THE DVO WAS NOT IN CONFIRMITY WITH THE PROVISIONS OF LA W THEREFORE THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER ON THE BASIS OF SUCH REPORT UNDER SECTION 69B OF THE ACT IS LIABLE TO BE SET-ASIDE. W E HOLD SO. 11. IN THE RESULT WITHOUT GOING INTO OTHER ARGUMEN TS RAISED BY THE ASSESSEE TO ASSAIL THE ADDITION WE SET-ASIDE THE ORDER OF T HE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION A S THE SAME IS MERELY BASED ON THE REPORT OF THE DVO AND SUCH REFERENCE W AS IMPERMISSIBLE WHEN THE BOOKS OF ACCOUNT WERE NOT REJECTED. ITA NOS.1583 TO 1585/PN/2013 A.Y. 2001-02 TO 2 003-04 12. RESULTANTLY ALL THE CAPTIONED APPEALS OF THE A SSESSEE ARE ALLOWED AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 28 TH OCTOBER 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-III PUNE; 4) THE CIT-III PUNE; 5) THE DR A BENCH I.T.A.T. PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T. PUNE