ACIT, BARMER v. Shri Gopal Das S/o Shri Darumal, BARMER

1 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH JODHPUR BEFORE SHRI S.V. MEHROTRA ACCOUNTANT MEMBER AND SHRI V.D. RAO JUDICIAL MEMBER ITA NO: 194 / JU / 2010 ASSTT. YEAR: 2007 2008 ACIT CIRCLE-BMR V/S SHRI GOPAL DAS SANGJI BHAWAN S/O SHRI DARUMAL BARMER. PROP. M/S GOPAL HOTEL NEHRU NAGAR BARMER. ( PAN: AAOPD 1867 C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMIT N IGAM D.R. RESPONDENT BY : SHRI AMIT KOT HARI A.R. ORDER PER V.D. RAO: JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDERS OF THE LD. CIT (A) JODHPUR DATED 16 TH FEBRUARY 2010 RELATING TO ASSESSMENT YEAR 2007 2008. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL BEFORE THE TRIBUNAL. 2 GROUNDS OF APPEL: 1. DELETING THE TRADING ADDITION OF RS. 50 000/- IGNO RING THE FACTS AND DEFECTS POINTED OUT BY ASSESSING OFFICER THAT T HE ADDITION WAS MADE ON ACCOUNTS OF EXCESSIVE AND EXPLAINED SAL ARY PAYMENT AND FOR NOT SUPPLYING THE COMPLETE & PROPER EVIDENCE OF CAR RENT. 2. DELETING THE ADDITION OF RS. 8 88 540/- MADE IN REL ATION TO INVESTMENT IN SHOPS IGNORING THE FACTS THAT THE ASS ESSING OFFICER MADE THE ADDITION ON THE BASIS OF DVOS REP ORT AND AFTER CONFRONTING THE ASSESSEE AND CONSIDERING THE VALUES OF COMPARABLE PROPERTIES OF THAT AREA. 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS IN HOTEL BUSINESS FILED THE RETURN FOR THE YEAR UNDER CONSIDERATION DECLARI NG A TOTAL INCOME OF RS.5 99 420/- SUBSEQUENTLY THE ASSESSING OFFIC ER U/S 143 (3) OF THE ACT ASSESSED THE TOTAL INCOME OF THE ASSESSE E AT RS. 15 37 960/- BY MAKING THE FOLLOWING ADDITIONS. 3. THE FIRST GROUND OF APPEAL RELATING TO ADDITION IN RESPECT OF RS. 50 000/-. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS OBSERVED THAT ON PERUSAL OF H E PROFIT & LOSS 3 ACCOUNT FILED BY THE ASSESSEE THE ASSESSEE HAS SHO WN SALARY OF RS. 3 98 700/-. THE ASSESSEE HAS NOT MAINTAINED PROPER VOUCHERS OF FOR THE SALARY. THE ASSESSEE HAS SHOWN RECEIPT OF RS. 38 901/- AS A CAR RENT IT IS ALSO NOT SUPPORTED BY THE LOG BOOK. ACCORDINGLY THE ASSESSING OFFICER MADE AN ADDITION OF RS. 50 000/- AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL THE LD. CIT (A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER BY OBSERVING THAT THE ASSESSING OFFICER FAILED TO MENT ION ANY BASIS FOR DETERMINING THE ADDITION AND THEREFORE IT WAS NOT JUSTIFIED AS AGAINST THE DELETION OF THE ADDITION MADE BY THE LD . CIT (A). REVENUE CARRIED THE MATTER IN APPEAL BEFORE THE TRI BUNAL. 4. WE HAVE HEARD BOTH THE SIDES PERUSE THE RECORDS AND GONE TO THE ORDERS OF THE AUTHORITIES BELOW. 5. THE ASSESSING OFFICER HAS MADE THE ADDITION WITH OUT ANY PROPER REASON. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE AMOUNTS IN DISPUTE ARE NOT GENUINE. THE ASSESSING OFFICER WITHOUT MAKING ANY INVESTIGATION SIMPLY MADE AN AD-HOC ADDI TION WHICH IS NOT SUSTAINABLE IN THE EVE OF LAW. WE THEREFORE CONFIRMED THE 4 ORDER OF THE LD. CIT (A) AND THIS GROUND OF APPEAL FILED BY THE REVENUE IS DISMISSED. 6. THE SECOND GROUND OF APPEAL RELATING TO ADDITION OF RS. 8 88 540/-. DURING THE COURSE OF THE ASSESSMENT PR OCEEDINGS THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HA S PURCHASED PLOT AT RATNAMANI COMPLEX SHOP NO. 434 435 436 4 37 & 440. IN THIS REGARD THE CASE WAS REFERRED FOR VALUATION OFFICER AHMEDABAD. THE VALUATION OFFICER HAS REPORTED TO T HE ASSESSING OFFICER VIDE LETTER DATED 9 TH DECEMBER 2009 AND THE ESTIMATION OF THE VALUATION OFFICER IS EXTRACTED AS UNDER. SL.NO. SHOP NO. DATE OF INVESTMENT VALUE BY ASSESSEE ESTIMATED VALUE BY THIS OFFICE. 1. 434 06.04.2006 1 17 600/- RS. 3 02 610/- 2. 435 06.04.2006 1 10 000/- RS. 2 84 130/- 3. 436 06.04.2006 1 09 200/- RS. 2 81 050/- 4. 437 06.04.2006 1 08 200/- RS. 2 77 970/- 5. 440 06.04.2006 1 19 600/- RS. 3 07 700/- 5 7. THE ASSESSING OFFICER BY CONSIDERING THE ABOVE ESTI MATION THE VALUATION OFFICER CAME TO THE CONCLUSION THAT THE ASSESSEE HAS PAID ADDITIONAL AMOUNT OF RS. 8 88 540/- AND THIS A MOUNT IS UNDISCLOSED INCOME OF THE ASSESSEE AND ADDITION WAS MADE ACCORDINGLY. ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT (A). IT WAS SUBMITTED BEFORE THE LD. CIT (A) T HAT THE ESTIMATION MADE BY THE VALUATION OFFICER IS NOT COR RECT AND HE WAS ALSO RAISED AN OBJECTION BEFORE THE ASSESSING OFFIC ER THAT THE ESTIMATION MADE BY THE VALUATION OFFICER BASED ON T HE PROPERTIES SITUATED IN DIFFERENT PLACES. AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE THE LD. CIT (A) DELETED THE ADDITION THE RELEVANT PORTION IN THE ORDER OF THE LD. CIT (A) EXTRACTED A S UNDER. UPON CONSIDERATION OF THE RELEVANT FACTS AND THE A PPELLANTS SUBMISSION I FIND THAT THE ASSESSING OFFICER HAS A DOPTED THE VALUE ON THE BASIS OF VALUATION REPORT COPY OF WHICH HAS BEEN FURNISHED BY THE APPELLANT DURING THE APPELLATE PROCEEDING. ON GOING THROUGH THIS VALUATION REPORT I FIND THAT THE VALU ATION OFFICER HAD 6 ADOPTED THE RATE OF RS. 11 000/- PER SQ.MT. FOR ES TIMATING THE VALUE OF THE ASSESSEES PROPERTY ON THE BASIS OF CERTAIN SALE INSTANCES WHICH HAVE BEEN CONSIDERED AS COMPARABLE CASES BY T HE VALUATION OFFICER. FROM THE STATEMENT OF COMPARABLE SALE INS TANCES PREPARED BY THE VALUATION OFFICER I FIND THAT THES E INSTANCES REFLECT RATE RANGING FROM RS. 6 411/- PER SQ.MT. TO 13 369/- PER SQ.MT. AND THE VALUATION OFFICER HAS ADOPTED THE RA TE OF RS. 11 000/- PER SQ.MT. HOWEVER I FIND THAT NO BASIS OR JUSTIFICATION FOR ADOPTING THE RATE AT RS. 11 000/- PER SQ.MT HAS BEEN MENTIONED IN THIS VALUATION REPORT EXCEPT GENERAL OBSERVATION THAT CONSIDERING ALL THE FEATURES AND THE LOCALITY OF TH E MARKET AS WELL AS THICKLY POPULATED AREA AND MAKING ALL ADJUSTMEN TS OF LOCATION AND SITUATION AND TIME LAG ETC. THE RATE COMES TO R S. 11 000/- PER SQ.MT. HOWEVER THE VALUATION OFFICE HAD NOT STATE D ANY REASON WHY THE RATE AT RS. 6 411/- IN RESPECT OF SHOP NO.3 22 SITUATED AT THE THIRD FLOOR IN RATNAMANI COMPLEX (BEING THE SAM E AS THAT IN WHICH THE ASSESSEES SHOPS ARE LOCATED) AND RS. 6 4 12/- IN RESPECT OF SHOP NO.315 LOCATED IN THIRD FLOOR OF RATNAMANI COMPLEX AS 7 APPEARING IN STATEMENT OF COMPARABLE INSTANCES RELI ED UPON BY THE VALUATION OFFICER HIMSELF AS ENCLOSED WITH THE VAL UATION REPORT BE NOT ADOPTED. THE ASSESSEES CONTENTION IN THIS REG ARD THAT THE RATE OF HIS SHOPS LOCATED ON 4 TH FLOOR OF RATNAMANI COMPLEX WILL CERTAINLY BE LESS THAN THAT OF THE SHOPS LOCATED ON 3 RD FLOOR OF RATNAMANI COMPLEX REMAINS UNDENIED OR UNCONTROVERTE D BY THE ASSESSING OFFICER AS THE ASSESSING OFFICER HAS NOT MADE ANY DISCUSSION ON THIS REGARD IN THE ASSESSMENT ORDER. AS THE VALUATION OFFICER HAS NOT STATED THE REASON FOR ADO PTING THE VALUE AT RS. 11 000/- PER SQ.MT. WHEREAS PER THE RATS OF THE SALE INSTANCES COLLECTED BY HIM RATS OF RS. 6 411/- AND RS. 6 422/- PER SQ.MT. IS NOT JUSTIFIED. FURTHER FROM THE VALUATI ON REPORT I FIND THAT THE VALUATION OFFICER HAD ALSO NOT SENT HIS ES TIMATE TO THE ASSESSEE INVITING HIS OBJECTIONS AND THEREFORE HAS NOT DEALT WITH THE ASSESSEES OBJECTION DUE TO WHICH THE VALUATION REPORT SUFFERS WITH GRAVE INFIRMITY. IN THE CONCLUSION I HOLD THA T WHEN THE SALE INSTANCES OF SHOPS IN THE SAME PREMISES I.E. RATNA MANI COMPLEX IN WHICH THE ASSESSEES SHOPS WERE ALSO LOCATED WER E AVAILABLE THE 8 VALUATION OFFICER HAS GRAVELY ERRED IN NOT CONSIDER ING THESE SALE INSTANCES FOR THE PURPOSE OF ESTIMATING THE VALUE O F THE PROPERTY REFERRED TO HIM. THE ESTIMATE MADE BY THE ASSESSIN G OFFICER IS THEREFORE NOT JUSTIFIED. AS THE ASSESSING OFFICER HAS MADE THE ADDITION SOLELY ON THE BASIS OF THE ESTIMATE MADE B Y THE VALUATION OFFICER WITHOUT BEING ABLE TO REBUT THE APPELLANTS CONTENTION THAT THE VALUE OF HIS SHOPS LOCATED ON 4 TH FLOOR OF RATNAMANI COMPLEX WILL CERTAINLY BE LESS THAN THE VALUE OF SHOPS ON T HE 3 RD FLOOR OF THE SAME COMPLEX WHICH HAS BEEN MENTIONED IN THE VALUAT ION REPORT I FIND THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED I N MAKING THE ADDITION. THE ASSESSING OFFICER WAS ALSO UNJUSTIF IED IN PLACING RELIANCE UPON UNFOUNDED PRESUMPTION THAT PREMIUM MO UNT HAD BEEN PAID TO THE PURCHASER FROM THE UNDISCLOSED INC OME WITHOUT BEING ABLE TO BRING ON RECORD ANY EVIDENCE REGARDIN G SUCH UNACCOUNTED PAYMENT. THE FOR THIS REASON I HOLD T HAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE A DDITION OF RS. 8 88 540/- WHICH IS THEREFORE DELETED. 9 8. THE LD. D.R. SUPPORTED THE ORDER PASSED BY THE ASSE SSING OFFICER ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS PURCHASED A PROPERT Y SITUATED IN RATNAMANI COMPLEX 4 TH FLOOR AND IN THE SAME PROPERTY SOME OF THE SHOPS WERE SOLD TO THIRD PARTIES AND THE SAME C AN BE APPLIED TO THE ASSESSEES CASE ALSO. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS WR ONGLY APPLIED THE RATES AS PER THE VALUATION OFFICERS REPORT TH E VALUATION OFFICER HAS TAKEN THE RATES FROM DIFFERENT LOCALITI ES AND IT CANNOT BE COMPARED WITH THE PROPERTIES PURCHASES BY THE ASSES SEE. 9. WE HAVE HEARD BOTH THE SIDES PERUSE THE RECORDS AND GONE TO THE ORDERS OF THE AUTHORITIES BELOW. 10. THE ASSESSEE HAS PURCHASED A PROPERTY IN RATNAM ANI COMPLEX. IN THE SAME COMPLEX IN RESPECT OF SHOP NO . 332 SITUATED IN 3 RD FLOOR WAS PURCHASED BY ANOTHER PARTY @ 6 411/- PER SQ.MT. THIS WAS BEING THE FACT WE ARE NOT ABLE TO UNDERSTAND THAT WHY THE VALUATION OFFICER HAS TAKEN FOR THE COMPARI SON OF DIFFERENT PROPERTY AND ESTIMATED ACCORDINGLY. WE F IND NO 10 JUSTIFICATION HOW HE HAS TAKEN ANOTHER PROPERTY FOR THE PURPOSE OF THE ESTIMATION. THE LD. CIT (A) HAS CONSIDERED THE ISSUE ELABORATELY AND BY TAKING INTO CONSIDERATION OF THE VALUE OF THE PROPERTY IN THE SAME RATNAMANI COMPLEX WHERE THE A SSESSEE HAS ALSO PURCHASED A PROPERTY DELETED THE ADDITION MAD E BY THE ASSESSING OFFICER. WE FIND NO INFIRMITY FROM THE O RDER OF THE LD. CIT (A). WE THEREFORE THIS GROUND OF APPEAL FILE D BY THE REVENUE IS DISMISSED. 11. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DI SMISSED. 12. O RDER WAS PASSED IN THE OPEN COURT DATED ON 11 TH FEBRUARY 2011. SD/- SD/- (S.V. MEHROTRA) (V.D. RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH FEBRUARY 2011 KAMAL KUMAR COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. INCOME-TAX OFFICER 4. CIT 5. D/R 6. GUARD FILE