The ITO, Ward-1, Gudivada v. Sri Kothuru Satish, Mudenepalli

ITA 320/VIZ/2009 | 2006-2007
Pronouncement Date: 05-05-2010 | Result: Allowed

Appeal Details

RSA Number 32025314 RSA 2009
Assessee PAN AQAPK6384L
Bench Visakhapatnam
Appeal Number ITA 320/VIZ/2009
Duration Of Justice 11 month(s)
Appellant The ITO, Ward-1, Gudivada
Respondent Sri Kothuru Satish, Mudenepalli
Appeal Type Income Tax Appeal
Pronouncement Date 05-05-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 05-05-2010
Date Of Final Hearing 27-04-2010
Next Hearing Date 27-04-2010
Assessment Year 2006-2007
Appeal Filed On 05-06-2009
Judgment Text
ITA NO. 317/VIZAG/2009 KOTHURU SATHISH PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO.317/VIZAG/2009 ASSESSMENT YEAR 2006-07 KOTHURU SATISH VS. ITO WARD-1 MUDINEPALLI GUDIVADA (APPELLANT) (RESPONDENT) (PAN NO: AQAPK 6384 L) ITA NO: 320/VIZAG/2009 ASSESSMENT YEAR 2006-07 ITO WARD-1 VS. KOTHURU SATISH GUDIVADA MUDINEPALLI (APPELLANT) (RESPONDENT) (PAN NO: AQAPK6384 L) ORDER PER SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER: THESE ARE THE CROSS APPEALS PREFERRED BY THE ASS ESSEE AS WELL AS THE REVENUE AGAINST THE ORDER OF THE CIT (A). SINCE THE SE APPEALS WERE HEARD TOGETHER THESE ARE BEING DISPOSED OFF BY THIS COMM ON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ISSUE INVOLVED IN BOTH THE APPEALS IS WITH R EGARD TO DETERMINATION OF COST OF CONSTRUCTIONS OF THE SHOPP ING COMPLEX THOUGH VARIOUS GROUNDS WERE RAISED BY THE ASSESSEE AS WELL AS THE REVENUE IN THEIR RESPECTIVE APPEALS. 3. ON PERUSAL OF THE RECORD WE FIND THAT THE ASSESS EE HAS CONSTRUCTED A COMMERCIAL COMPLEX AND AS PER THE BALANCE SHEET AS ON 31-3-2006 THE COST OF CONSTRUCTION WAS SHOWN AT RS.43 20 606/-. ALONG WITH THE RETURN OF ITA NO. 317/VIZAG/2009 KOTHURU SATHISH PAGE 2 OF 4 INCOME THE VALUATION REPORT OBTAINED BY THE REGISTE RED VALUER ESTIMATING THE COST OF CONSTRUCTION WAS RS.39 15 000/- WAS FIL ED. AFTER ALLOWING REBATE FOR SELF SUPERVISION ADDITION OF PREPARATION PLANS AND MUNICIPAL FEES THE PROBABLE INVESTMENT IN THE COMPLEX WAS ESTIMATED AT RS.36 58 000/-. THE AO MADE A REFERENCE TO THE DVO WHO ESTIMATED THE CO ST OF CONSTRUCTION AT RS.72 99 458/-. THE AO ACCORDINGLY WORKED OUT THE U NEXPLAINED INVESTMENT AT RS.29 78 850/- AND MADE THE ADDITION OF THE SAME . 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) AND CIT (A) HAS ALLOWED THE PART RELIEF TO THE ASSESSEE AND DIRECTE D THE AO TO RECALCULATE THE DIFFERENCE IN COST OF CONSTRUCTION BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF SAIMA A. MEHDI . AGGRIEVED WITH THE ORDER OF THE CIT (A) BOTH THE PARTIES ARE BEFORE US. 5. DURING THE COURSE OF THE HEARING OF THE APPEAL T HE LD COUNSEL HAS INVITED OUR ATTENTION TO THE BALANCE SHEET AS ON 31 -3-2006 APPEARING AT PAGE NOS. 3 TO 5 OF THE COMPILATION OF THE ASSESSEE WITH THE SUBMISSION THAT THE ASSESSEE HAS MAINTAINED PROPER BOOKS OF AC COUNTS WITH REGARD TO THE COST OF CONSTRUCTION OF THE PROPERTY IN WHICH A TOTAL COST OF CONSTRUCTION WAS SHOWN AT RS.43 20 606/- THE AO FIRST TIME ISSUE D A NOTICE TO THE ASSESSEE ON 13-10-2008 ASKING THE ASSESSEE TO FURNI SH COMPLETE CONSTRUCTION ACCOUNTS IN RESPECT OF CONSTRUCTION OF SHOPPING COMPLEX. THE ASSESSEE WAS ALSO ASKED TO APPEAR ALONG WITH THE BO OKS OF ACCOUNTS ON 24- 10-2008. THOUGH THE ASSESSEE HAS FILED A VALUATION REPORT OF THE REGISTERED VALUER ALONG WITH THE RETURN OF INCOME AND OTHER EV IDENCE BUT THE AO MADE A REFERENCE TO THE DVO ON 20-11-08 WITHOUT REJ ECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. A COPY OF THE NOTICE IS A VAILABLE AT PAGE NOS. 6 AND 8 OF THE COMPILATION AND THE DVOS REPORT AT PAG E NO.34 OF THE COMPILATION SHOWING THE DATE OF REFERENCE. LD COUNS EL FOR THE ASSESSEE FURTHER CONTENDED THAT THE AO HAS NOT GIVEN PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE FOR EXPLAINING THE DETAILS OF THE COST OF CONSTRUCTION AND MADE A REFERENCE TO THE DVO EVEN WITHOUT REJECT ING THE BOOKS OF ITA NO. 317/VIZAG/2009 KOTHURU SATHISH PAGE 3 OF 4 ACCOUNTS. SINCE THE REFERENCE WAS MADE TO THE DVO W ITHOUT REJECTING THE BOOKS OF ACCOUNTS THE REFERENCE IS NOT VALID IN TH E EYES OF LAW AND THE DVOS REPORT PREPARED CONSEQUENT THERETO CANNOT BE RELIED ON FOR ESTIMATING THE COST OF CONSTRUCTION. IN SUPPORT OF H IS CONTENTION HE PLACED RELIANCE UP ON THE ORDER OF THE TRIBUNAL IN THE CAS E OF DCIT VS. M/S DTE EXPORTS PVT. LTD. VIDE ITA NO.82/V/2002 DATED 10-1 2-2007. LD COUNSEL FOR THE ASSESSEE FURTHER CONTENDED IN THE ALTERNATIVE T HAT IF THE ASSESSMENT FRAMED ON THE BASIS OF THE DVOS REPORT WHICH IS NOT VALID IN THE EYES OF LAW CANNOT BE ANNULLED THE MATTER MAY BE SENT BACK TO THE AO FOR READJUDICATION OF THE ISSUE AFRESH AS PER THE PROVI SIONS OF THE LAW AND THE RATIO LAID DOWN THROUGH VARIOUS JUDICIAL PRECEDENCE . 6. LD DR ON THE OTHER HAND HAS SUBMITTED THAT THE A SSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNTS NOR THE DETAILS BEFORE T HE LOWER AUTHORITIES AND THEY WERE RIGHTLY ESTIMATED THE DIFFERENCE IN COST OF CONSTRUCTION. 7. HAVING HEARD THE RIVAL SUBMISSIONS AND ON PERUSA L OF THE RECORD WE FIND THAT THE AO ISSUED A NOTICE FOR PRODUCING THE DETAILS OF COST OF CONSTRUCTION VIDE HIS LETTER DATED 13-10-2008 AND T HE DATE OF HEARING WAS FIXED ON 24-10-2008 AND THEREAFTER REFERENCE WAS MA DE TO THE DVO ON 20 TH NOVEMEBER 2008. ON A CAREFUL PERUSAL OF THE ORDER OF THE AO WE DO NOT FIND ANY INKLING THAT THE AO HAS EVER EXAMINED THE BOOKS OF ACCOUNTS OF THE ASSESSEE OR THE DETAILS OF CONSTRUCTION FILED BY IT . THERE IS ALSO NO EVIDENCE TO ESTABLISH THAT THE AO HAS REJECTED THE BOOKS OF ACCOUNTS BEFORE MAKING A REFERENCE TO THE DVO. SINCE THE AO HAS MADE A REFER ENCE WITHOUT VERIFYING THE DETAILS OF COST OF CONSTRUCTION AND ALSO WITHOU T AFFORDING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE OR TO PR ODUCE PROPER BOOKS OF ACCOUNTS WE FIND NO JUSTIFICATION IN THE REFERENCE MADE TO THE DVO. WE THEREFORE OF THE VIEW THAT THE AO HAS FRAMED THE A SSESSMENT HASTILY WITHOUT AFFORDING AN PROPER OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE. WE THEREFORE OF THE VIEW THAT THE ENTIRE MATTER REQUI RES A FRESH LOOK BY THE AO. ACCORDINGLY WE SET ASIDE THE ORDERS OF THE CIT (A) ON THIS ISSUE AND ITA NO. 317/VIZAG/2009 KOTHURU SATHISH PAGE 4 OF 4 RESTORE THE MATTER TO THE FILE OF THE AO WITH A DIR ECTION TO RE-EXAMINE THE DETAILS OF CONSTRUCTION AND THE BOOKS OF ACCOUNTS M AINTAINED BY THE ASSESSEE AND TO FRAME THE ASSESSMENT AS PER THE PRO VISIONS OF LAW AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. 8. IN THE RESULT BOTH THE APPEALS ARE ALLOWED FOR ST ATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 5 TH MAY 2010. SD/ SD/- (B R BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PVV/SPS VISAKHAPATNAM DATE:05-05-2010. COPY TO 1 SHRI KOTHURU SATISH C/O PURNACHANDRA RAO & CO. C AS. SIVALAYAM STREET GOWRISANKARAPURAM GUDIVADA 532 301 2 ITO WARD-1 GUDIVADA 3 4 THE CIT VIJAYAWADA THE CIT (A) VIJAYAWADA 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM