The ACIT, Circle-5(1), Visakhapatnam v. Sri Y Ram Prasad, Visakhapatnam

ITA 456/VIZ/2005 | 2001-2002
Pronouncement Date: 02-07-2010 | Result: Dismissed

Appeal Details

RSA Number 45625314 RSA 2005
Assessee PAN AAIPY9861B
Bench Visakhapatnam
Appeal Number ITA 456/VIZ/2005
Duration Of Justice 4 year(s) 8 month(s) 12 day(s)
Appellant The ACIT, Circle-5(1), Visakhapatnam
Respondent Sri Y Ram Prasad, Visakhapatnam
Appeal Type Income Tax Appeal
Pronouncement Date 02-07-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted Not Allotted
Tribunal Order Date 02-07-2010
Assessment Year 2001-2002
Appeal Filed On 21-10-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO.456/VIZAG/2005 ASSESSMENT YEAR : 2001-02 ACIT CIRCLE-5(1) VISAKHAPATNAM SMT. YARLAGADDA MUTYAVATHI W/O LATE Y. RAM PRASAD VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) PAN NO.AAIPY 9861B APPELLANT BY: SHRI G.S.S. GOPINATH DR RESPONDENT BY: SHRI Y. SURYA CHANDRA RAO ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF THE CIT(A) ON A SOLITARY GROUND THAT CIT(A) HAS ERRED IN WORKI NG OUT THE COST OF CONSTRUCTION BY APPLYING THE RATIO OF INVESTMENT MA DE BY BOTH THE HUSBAND AND WIFE WITHOUT LOOKING TO THE VALUATION MADE BY T HE D.V.O. THE SECOND ISSUE IN THIS APPEAL RELATE TO THE DIRECTION TO THE A.O. TO ALLOW INTEREST OF HOUSING LOAN ON THE BASIS OF EVIDENCE OF PAYMENT OF INTEREST ON HOUSING LOAN. 2. DURING THE COURSE OF HEARING THE ASSESSEE HAS PA SSED AWAY AND HIS L.RS ARE BROUGHT ON RECORD. 3. THE BRIEF FACTS BORNE OUT FROM THE ORDER OF THE LOWER AUTHORITIES ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF FA BRICATION WORK UNDER THE NAME AND STYLE OF LAKSHMI FABRICATORS. A SURVEY U/ S 133A WAS CONDUCTED ON THE BUSINESS PREMISES OF THE ASSESSEE AND IT WAS NO TICED BY THE A.O. THAT THE ASSESSEE HAD CONSTRUCTED RESIDENTIAL HOUSE WHEREIN HE ADMITTED HAVING INVESTED RS.12.85 LAKHS. THE MATTER RELATING TO TH E DETERMINATION OF THE COST OF CONSTRUCTION WAS REFERRED TO THE D.V.O. WHO ESTI MATED THE ASSESSEES SHARE OF INVESTMENT AT RS.19.85 LAKHS. A COPY OF T HE REPORT WAS FORWARDED TO THE ASSESSEE BY THE A.O. FOR OBJECTIONS AND IN RESP ONSE THERETO ASSESSEE OBJECTED THE METHOD OF VALUATION I.E. THE PLINTH AR EA RATE ADOPTED BY THE 2 VALUATION CELL. THE OBJECTION WAS SENT TO THE VALU ATION CELL FOR THEIR COMMENTS AND BASED UPON THE COMMENTS THE A.O. ACCE PTED THE COST OF CONSTRUCTION ESTIMATED BY THE D.V.O. AT RS.19.85 LA KHS BEING THE ASSESSEES SHARE OF INVESTMENT. CONSEQUENTLY THE DIFFERENCE OF RS.6 34 485/- WAS CONSIDERED TO BE UNDISCLOSED INCOME OF THE ASSESSEE S AND ADDITION OF THE SAME WAS MADE. THE A.O. ALSO DISALLOWED THE INTERE ST OF RS.84 722/- REPRESENTING THE INTEREST ON HOUSE BUILDING LOANS F OR WANT OF EVIDENCE. 4. THE ASSESSEE APPROACHED THE CIT(A) WITH THE SUBM ISSION THAT HOUSE PROPERTY WAS JOINTLY CONSTRUCTED BY THE ASSESSEE AN D HIS WIFE SMT. Y. MUTYAVATHI. THE TOTAL INVESTMENT IN THE SAID PROPE RTY AND DISCLOSED BY BOTH OF THEM IS RS.19.85 LAKHS OUT OF WHICH RESPECTIVE S HARE OF INVESTMENT WERE OF RS.12.85 LAKHS AND RS.7 LAKHS RESPECTIVELY. AS AGA INST THIS THE VALUATION CELL ESTIMATED THE COST OF CONSTRUCTION AT RS.28 LAKHS. THEREFORE IT IS NOT KNOWN ON WHAT BASIS THE A.O. HAS STATED THAT VALUATION CE LL HAD ESTIMATED THE COST OF CONSTRUCTION AT RS.19.85 LAKHS. NEVERTHELESS T AKING THE COST OF CONSTRUCTION AT RS.28 LAKHS AS DETERMINED BY THE VA LUATION CELL THE DIFFERENCE WORKED OUT TO BE RS.8.15 LAKHS. IF AT ALL THE DIFFE RENCE TO BE TREATED AS UNDISCLOSED INCOME THE SAME HAS TO BE CONSIDERED I N THE HANDS OF THE OWNERS AT RS.5.28 LAKHS AND RS.2.87 LAKHS RESPECTIV ELY IN THE RATIO OF THE INVESTMENT MADE BY THEM. THEREFORE IT IS NOT KNOWN ON WHAT BASIS THE A.O. HAD ARRIVED AT A FIGURE OF RS.6 34 485/- AND TREATE D THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEES. IT WAS FURTHER CONTENDED THAT AS PER THE ORDER OF THE HYDERABAD BENCH IN THE CASE OF SMT. SALMA A MEH IDI SELF-SUPERVISION CHARGES HAS TO BE ALLOWED @ 10% TO 15%. THE ASSESS EE HAS ALSO REQUESTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT AD DITIONAL INCOME DECLARED AT RS.3.5 LAKHS WAS UTILIZED FOR THE CONSTRUCTION O F THE HOUSE IN A.Y. 2001-02 INSTEAD OF ASSESSMENT YEAR 2002-03 AS THE CONSTRUCT ION WAS COMPLETED IN THE PREVIOUS YEARS RELEVANT TO THE ASSESSMENT YEAR 2001 -02. THE ASSESSING OFFICER DID NOT GIVE THE CREDIT OF THIS MUCH OF INV ESTMENT. IT WAS FURTHER CONTENDED THAT THROUGH LETTER THE ASSESSEE HAS DECL ARED IN TOTAL RS.7.5 LAKHS AS ADDITIONAL INCOME CONSISTING OF RS.3.5 LAKHS REP RESENTING UNDISCLOSED INCOME FROM HOUSE PROPERTY AND RS.4 LAKHS TOWARDS T HE BUSINESS INCOME. BUT THE ASSESSING OFFICER DID NOT GIVE A CREDIT OF THE SAME. SO FAR AS CLAIM OF INTEREST OF RS.84 722/- IS CONCERNED THE ASSESSEE HAS SUBMITTED COPY OF THE 3 ACCOUNT OBTAINED FROM THE BANK DULY SIGNED BY THE M ANAGER. THE CIT(A) RE- EXAMINED THE CLAIM OF THE ASSESSEES IN THE LIGHT OF THESE FACTS AND BEING CONVINCED WITH IT THE CIT(A) HAS HELD REDUCED THIS UNEXPLAINED INVESTMENT FROM RS.6 34 485/- TO RS.1 59 742/-. WITH REGARD T O THE PAYMENT OF INTEREST THE CIT(A) HAS HELD THAT THIS BANK STATEMENT CLEARL Y SHOWS THAT THE INTEREST HAS BEEN DEBITED ON QUARTERLY BASIS THEREFORE THE TOTAL INTEREST CLAIMED BY THE ASSESSEE IS NOTHING BUT THE SUM OF THE TOTAL OF THIS QUARTERLY INTEREST. HE ACCORDINGLY ALLOWED THE SAME. THE RELEVANT OBSERVA TION OF THE CIT(A) IS EXTRACTED HEREUNDER: I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE AUTHORISED REPRESENTATIVE OF THE APPELLANT AND ALSO PERUSED THE CASE RECORDS. DURING THE YEAR UNDER CONSIDERATION THE APPELLANT CONSTRUCTED A HOUSE PROPERTY AT MIG 207 MADHAVADHAR A VUDA COLONY VISAKHAPATNAM JOINTLY WITH HIS WIFE SMT. Y . MUTYAVATHI. THE ADMITTED INVESTMENT IN THE SAID PROPERTY WAS RS .19.85 LAKHS THE SHARE OF THE APPELLANT BEING RS.12.85 LAKHS AND THE SHARE OF HIS WIFE BEING RS.7 LAKHS. INFACT THE WIFE OF THE APPE LLANT HAS FILED HER RETURN FOR THE ASSESSMENT YEAR 2001-02 IN RANGE -2 ON 17.11.2001 DISCLOSING THE ABOVE INVESTMENT OF RS.7 LAKHS. THE CONSTRUCTION OF THE SAID HOUSE WAS COMPLETED ON MAR CH 2001. AS AGAINST THIS THE VALUATION CELL OF THE DEPARTMENT HAS ESTIMATED THE COST OF CONSTRUCTION AT RS.28 LAKHS. WITH RESPECT TO THE VALUATION CELLS ESTIMATION INTERALIA THE APPELLANT ARGUED THAT FROM THE ESTIMATION MADE BY THE VALUATION CELL THE APPELLAN T IS ENTITLED TO FURTHER DEDUCTION OF 10% TOWARD SELF SUPERVISION CH ARGES AND 15% TOWARDS RATE DIFFERENCE. THE APPELLANTS ABOVE ARG UMENT IS SQUARELY COVERED BY THE DECISION OF THE ITAT IN THE CASE OF SALMA A MEHIDI AND HENCE THE APPELLANT IS ENTITLED TO SUCH DEDUCTIONS. AS STATED EARLIER THE VALUATION CELL HAS ESTIMATED TH E COST OF CONSTRUCTION AT RS.28 LAKHS AS AGAINST RS.19.85 LAK HS ADMITTED BY THE APPELLANT. IF THE RATIO OF INVESTMENT SHOWN BY THE APPELLANT AND HIS WIFE I.E. RS.12.85 LAKHS AND RS.7 LAKHS RES PECTIVELY IS TAKEN AS THE BASIS AND THE INVESTMENT ESTIMATED BY THE VA LUATION CELL AT RS.28 LAKHS IS BIFURCATED IN THE SAME RATIO THE SH ARE OF THE APPELLANT WILL BE RS.18 12 440/- AND THAT OF HIS WI FE WILL BE RS.9 87 560/- RESPECTIVELY. THUS THE DIFFERENCE I N THE ADMITTED INVESTMENT AND THE INVESTMENT ESTIMATED BY THE VALU ATION CELL WILL BE AS UNDER: 4 VALUATION AS PER THE VALUATION CELL RS.28 00 000 ADD: SELF SUPERVISION ALLOWED BY THE VALUATION CELL RS. 1 75 935 ---------------- RS.28 75 935 LESS: 10% FOR SELF SUPERVISION:2 97 593 15% FOR RATE VARIATION:4 46 390 RS.7 43 983 AS DISCUSSED IN THIS ORDER -------------- -- RS.22 31 952 THE RATIO OF THE APPELLANT INVESTMENT WILL BE RS.14 44 742 LESS: INVESTMENT ADMITTED BY THE APPELLANT RS.12 8 5 000 --------------- DIFFERENCE RS. 1 59 742 --------------- THE ABOVE DIFFERENCE HAVE TO BE TREATED AS UNEXPLA INED INVESTMENT IN THE HANDS OF THE APPELLANT WHILE ARRI VING AT THE ABOVE DIFFERENCE THE APPELLANTS MOST OF THE OBJECTIONS TO THE ESTIMATION OF COST OF CONSTRUCTION BY THE VALUATION CELL HAS B EEN TAKEN CARE OF BY ALLOWING HIGHER DEDUCTION TOWARDS SELF SUPERVISI ON AND RATE VARIATIONS. THE APPELLANTS CONTENTION THAT AN AMO UNT OF RS.3.5 LAKHS OFFERED AS ADDITIONAL INCOME TOWARDS INVESTM ENT IN HOUSE CONSTRUCTION IN THE ASSESSMENT YEAR 2002-03 SHOULD BE TAKEN INTO ACCOUNT IN THE PRESENT ASSESSMENT YEAR I.E. 2001-02 CANNOT BE ACCEPTED. FROM THE RECORDS IT IS SEEN THAT AFTER T HE SURVEY THE APPELLANT VIDE A LETTER DATED 18.3.2002 INTIMATED T HE ASSESSING OFFICER THAT THE APPELLANT PAID AN ADVANCE TAX OF R S.2 00 000/- FOR THE FINANCIAL YEAR 2001-02 FOR THE FOLLOWING INCOME S: (I) INCOME GENERATED OF RS.3 50 000/- DURING THE COURSE OF BUSINESS OPERATIONS ON WHICH EARLIER ADVANCE TAX IN STALMENTS DUE FOR SEPTEMBER AND DECEMBER WERE NOT PAID DUE TO THE ILL HEALTH OF THE APPELLANT AND (II) ADDITIONAL INCOME OF RS.4 00 000/- TOWARDS INVESTME NT IN BUILDING IN EXCESS OF AMOUNT ALREADY SHOWN BY THE APPELLANT. THUS THE APPELLANT FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2002-03 SHOWING AN INCOME OF RS.3 75 970/- BAS ED UPON BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT AND AN ADDITIONAL INCOME OF RS.3 50 000/-. FROM THE ABOVE IT COULD B E SEEN THAT THE APPELLANT IN THE RETURN FILED FOR ASSESSMENT YEAR 2002-03 SHOWED REGULAR INCOME OF RS.3 75 970/- AND ADDITIONAL INCO ME OF RS.3 50 000/- FOR WHICH ADVANCE TAX OF RS.2 00 000/ - WAS PAID. WHILE THE RETURN FOR ASSESSMENT YEAR 2000-01 WAS FI LED BEFORE THE SURVEY. THE HOUSE CONSTRUCTION WAS COMPLETED IN TH E FINANCIAL YEAR 2000-01 RELEVANT TO ASSESSMENT YEAR 2001-02. FOR THE ASSESSMENT YEAR 2000-01 THE ASSESSING OFFICER ISSU ED NOTICE U/S 5 148 OF THE ACT ON 22.4.2003. IN RESPONSE THE APPELL ANT VIDE LETTER DATED 7.8.2003 STATED THAT THE RETURN FILED ON 31.1 0.2001 MAY BE TREATED AS IF FILED IN RESPONSE TO NOTICE U/S 148. HAD IT BEEN THE INTENTION OF THE APPELLANT TO DISCLOSE AN ADDITIONA L INCOME OF RS.3 50 000/- TOWARDS INVESTMENT IN HOUSE CONSTRUCT ION HE COULD HAVE FILED A FRESH RETURN FOR THE ASSESSMENT YEAR 2 001-02 IN RESPONSE TO NOTICE U/S 148 INCORPORATING THE ADDITI ONAL INCOME OF RS.3 50 000/-. THUS THE SAID AMOUNT CAN NOT BE TAK EN AS ADDITIONAL INCOME OF FOR THE PURPOSES OF EXPLAINING THE INVESTMENT IN HOUSE CONSTRUCTION. THEREFORE THE AMOUNT OF RS .1 59 742/- IS TREATED AS UNEXPLAINED INVESTMENT IN THE HANDS OF T HE APPELLANT INSTEAD OF RS.6 34 485/- TREATED BY THE ASSESSING O FFICER. IN SO FAR AS INTEREST OF RS.84 722/- ON HOUSING LOA N IS CONCERNED THE ASSESSING OFFICER DISALLOWED THE SAM E ON THE GROUND OF LACK OF EVIDENCE. THE SAME DISALLOWANCE IS NOT CALLED FOR. THE APPELLANT AVAILED A LOAN OF RS.6 LAKHS FR OM STATE BANK OF HYDERABAD SURYABAGH BRANCH VISAKHAPATNAM FOR THE CONSTRUCTION OF THE HOUSE. IN SUPPORT OF THE INTEREST PAYMENT TH E APPELLANT SUBMITTED THE ACCOUNT COPY DULY CERTIFIED BY THE MA NAGER OF THE BANK. THE SAID BANK STATEMENT CLEARLY SHOWS THAT I NTEREST HAVE BEEN DEBITED QUARTERLY BASIS. THE TOTAL INTEREST C LAIMED BY THE APPELLANT IS NOTHING BUT THE SUM TOTAL OF THESE QUA RTERLY INTEREST. THIS IS AN ALLOWABLE DEDUCTION AND THE SAME IS TO B E ALLOWED. 5. AGGRIEVED THE REVENUE HAS PREFERRED AN APPEAL B UT DURING THE COURSE OF HEARING NO DEFECT WAS POINTED OUT BY THE LD. D.R . IN THE ORDER OF THE CIT(A). THE LD. COUNSEL FOR THE ASSESSEE HAS PLACE D HEAVY RELIANCE UPON THE ORDER OF THE CIT(A). 6. HAVING CAREFULLY EXAMINED THE ORDER OF THE CIT(A ) IN THE LIGHT OF RIVAL SUBMISSIONS WE FIND THAT THE A.O. HAS NOT CONSIDER ED ALL RELEVANT FACTS WHILE MAKING THE ADDITIONS ON ACCOUNT OF UNEXPLAINED INVE STMENT. WHEREAS THE CIT(A) HAS EXAMINED ALL ASPECTS AND HAS GIVEN A REA SONABLE CREDIT OF THE DISCLOSED INCOME. SINCE THE CIT(A) HAS PROPERLY AD JUDICATED THE ISSUE AND NO INFIRMITY IS POINTED OUT IN HIS ORDER WE CONFIRM T HE SAME. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. PRONOUNCED IN THE OPEN COURT ON 2.7.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 2 ND JUL 2010 6 COPY TO 1 DCIT CIRCLE-5(1) VISAKHAPATNAM 2 SMT. T. MUTYAVATHI W/O LATE Y. RAM PRASAD LAKSHM I FABRICATORS AUTONAGAR GAJUWAKA VISAKHAPATNAM 3 THE CIT VISAKHAPATNAM 4 THE CIT(A) VISAKHAPATNAM 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM