The DCIT, Central Circle-1,, RAJKOT-GUJARAT v. Shri Atmaram J. Navani, L/H Smt. Gangaben Atmaram Navani,, GANDHIDHAM

ITA 605/RJT/2010 | 2003-2004
Pronouncement Date: 21-07-2011 | Result: Dismissed

Appeal Details

RSA Number 60524914 RSA 2010
Assessee PAN AATPN1652R
Bench Rajkot
Appeal Number ITA 605/RJT/2010
Duration Of Justice 1 year(s) 6 month(s) 3 day(s)
Appellant The DCIT, Central Circle-1,, RAJKOT-GUJARAT
Respondent Shri Atmaram J. Navani, L/H Smt. Gangaben Atmaram Navani,, GANDHIDHAM
Appeal Type Income Tax Appeal
Pronouncement Date 21-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 21-07-2011
Date Of Final Hearing 14-07-2011
Next Hearing Date 14-07-2011
Assessment Year 2003-2004
Appeal Filed On 18-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T (SS) A. NO.03/RJT/2010 (ASSESSMENT YEAR 2003-04) SMT. GANGABEN A NAVANI VS DY.CIT CENT.CIR.1 L/H OF LATE SHRI AMATMARAM J NAVANI CENT.CIR.I RA JKOT PLOT NO.406-407 WD.2B ADIPUR GANDHIDHAM PAN : AATPN1652R (APPELLANT) (RESPONDENT) I.T.A. NO.605/RJT/2010 (ASSESSMENT YEAR 2003-04) DY.CIT CENT.CIR.1 VS SMT. GANGABEN A NAVANI RAJKOT L/H OF LATE SHRI AMATMARAM J NAVANI RAJKOT (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIMAL DESAI REVENUE BY : SHRI LD BHARTI O R D E R PER N.R.S. GANESAN JM BOTH THE ASSESSEE AND THE REVENUE FILED THE APPEAL S AGAINST THE ORDER OF CIT(A)-IV AHMEDABAD DATED 30-10-2009 FOR THE ASSESSMENT YEAR 2003-04. THEREFORE WE HAVE HEARD BOTH THE APPEALS TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF C ONVENIENCE. ITA 03/RJT/2010 ASSESSEES APPEAL ITA NO.03 & 605/RJT/2010 2 2. LET US FIRST TAKE ASSESSEES APPEAL IN IT(SS) A NO.03/RJT/2010. THE FIRST GROUND OF APPEAL IS WITH REGARD TO ADDITION O F RS. 1 48 87 124 U/S 69B OF THE ACT. 3. SHRI VIMAL DESAI THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THOUGH THE CIT(A) HAVING FOUND THAT THE INVEST MENT DOES NOT RELATE TO THE ASSESSMENT YEAR UNDER CONSIDERATION STILL HE D IRECTED THE ASSESSING OFFICER TO TAKE A REMEDIAL ACTION U/S 150(1) OF THE ACT TO ASSESS THE INVESTMENT MADE BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2004-05. ACCORDING TO THE LD.REPRESENTATIVE WHEN THE CIT(A) FOUND THAT THE INVESTMENT DOES NOT RELATE TO THE ASSESSMENT YEAR U NDER CONSIDERATION HE OUGHT NOT TO HAVE DIRECTED THE ASSESSING OFFICER TO CONSIDER THE SAME IN THE ASSESSMENT YEAR 2004-05. THE LD.REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS FILED ALL THE MATERIALS BEFORE THE LOW ER AUTHORITIES. 4. ON THE CONTRARY SHRI LD BHARTI THE LD.DR SUBMI TTED THAT HE IS PLACING RELIANCE ON THE OBSERVATIONS MADE BY THE CI T(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE APPEARS TO HAVE PURCHASED A LAND BY MEANS OF A REGISTERED DOCU MENT DATED 28-11- 2003. THE ASSESSING OFFICER MADE ADDITION OF RS.1 48 87 124 FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. HOWEVER THE DATE OF PURCHASE WAS NOT TAKEN INTO CONSIDERATION. THEREFORE THE CIT(A ) FOUND THAT THE DATE OF PURCHASE IS 28-11-2003 AND THEREFORE THE INVESTMEN T FALLS IN THE FINANCIAL YEAR 2003-04 RELEVANT TO THE ASSESSMENT YEAR 2004-0 5 AND THEREFORE HELD THAT THE ADDITION MADE IN THE YEAR UNDER CONSIDERAT ION IS NOT JUSTIFIED. HOWEVER HE DIRECTED THE ASSESSING AUTHORITY TO CON SIDER THE SAME FOR THE ASSESSMENT YEAR 2004-05. ITA NO.03 & 605/RJT/2010 3 6. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIO NS OF SECTION 150(1) OF THE ACT. SECTION 150(1) EMPOWERS THE ASSESSING OFFICER TO ISSUE NOTICE U/S 148 FOR THE PURPOSE OF MAKING ASSESSMENT OR RE- ASSESSMENT OR TO GIVE EFFECT TO THE FINDINGS OR DIRECTIONS OF THE APPELLA TE AUTHORITY IN ANY PROCEEDINGS UNDER THE INCOME-TAX ACT. THE CIT(A) D IRECTED THE ASSESSING OFFICER TO CONSIDER THE INVESTMENT IN THE ASSESSMEN T YEAR 2004-05 AND TO TAKE A REMEDIAL MEASURE U/S 150(1) OF THE ACT. IN OUR OPINION THIS DIRECTION OF THE CIT(A) IS CONSEQUENT TO THE FINDIN G THAT THE INVESTMENT WAS MADE DURING THE ASSESSMENT YEAR 2004-05. THEREFORE WE CANNOT FIND FAULT WITH THE DIRECTION OF THE CIT(A). ACCORDINGL Y THE ORDER OF CIT(A) IS CONFIRMED ON THIS ISSUE. 7. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADDI TION OF RS. 42 287 U/S 69B OF THE ACT WITH REGARD TO THE COST OF CONST RUCTION. 8. WE HAVE HEARD SHRI VIMAL DESAI THE LD.REPRESENT ATIVE FOR THE ASSESSEE AND SHRI LD BHARTI THE LD.DR. THE MAIN C ONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE HAS SHOWN THE COST OF CONSTRUCTION AS PER THE BOOKS OF ACCOUNT. HOWEVER NO BOOKS OF ACCOUNT WERE PRODUCED BEFORE THE LOWER AUTHORITIES TO SUBSTANTIATE THE CL AIM THAT THE COST OF CONSTRUCTION WAS DISCLOSED IN THE BOOKS OF ACCOUNT. IN THE ABSENCE ANY BOOKS OF ACCOUNT THE REVENUE AUTHORITIES HAD NO AL TERNATIVE BUT TO ESTIMATE THE COST OF CONSTRUCTION ON THE BASIS OF V ALUATION REPORT. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODUCE HEAD-WISE AND YEAR- WISE EXPENSES. HOWEVER THE ASSESSEE COULD NOT DO SO. IN THE ABSENCE OF ANY OTHER MATERIAL TO FIND OUT THE COST OF CONST RUCTION IN OUR OPINION THE ASSESSING OFFICER HAS RIGHTLY TAKEN THE COST OF CON STRUCTION AS PER THE REPORT OF THE VALUATION OFFICER. THE LOWER AUTHORITY HAS ALSO PLACED RELIANCE ON THE ITA NO.03 & 605/RJT/2010 4 JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN CIT VS AMBICA CORPORATION 6 DTR (GUJ) 115 FOR THE PROPOSITION THAT THE DIFFERE NCE IN COST AS RECORDED IN THE BOOKS OF ACCOUNT AND THE COST DETERMINED BY THE DEPARTMENTAL VALUER CAN BE ADDED U/S 69B OF THE ACT. IN THE CASE BEFOR E US EVEN THOUGH THE ASSESSEE CLAIMED THAT THE COST WAS DISCLOSED AS PER THE BOOKS OF ACCOUNT THE BOOKS OF ACCOUNT WERE NOT PRODUCED BEFORE THE L OWER AUTHORITIES TO SUBSTANTIATE THE CLAIM. THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS C ONFIRMED. ITA NO. 605/RJT/2010 9. COMING TO THE DEPARTMENTAL APPEAL THE ONLY ISSU E ARISES FOR CONSIDERATION IS DELETION OF RS. 26 00 500 ADDED BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT IN RE-CONSTRUC TION OF SHOPPING COMPLEX. 10. WE HAVE HEARD SHRI LD BHARTI THE LD.DR AND SHR I VIMAL DESAI THE LD.REPRESENTATIVE FOR THE ASSESSEE. 11. THE ASSESSEE PURCHASED A SHOPPING COMPLEX AT PL OT NO.47 GANDHIDHAM IN THE YEAR 1995. THE ASSESSEE HAS SHOW N THE COST OF SHOPPING COMPLEX IN THE BALANCE-SHEET AT RS.6 71 32 0. FOR THE PURPOSE OF GIVING THE PROPERTY AS COLLATERAL SECURITY FOR OBTA INING CASH CREDIT FACILITY THE ASSESSEE OBTAINED A VALUATION REPORT WHICH SHOW RD THE VALUE OF PROPERTY AT RS.26 00 500. THE ASSESSING OFFICER TA KING THIS VALUATION AS COST OF BUILDING MADE THE ADDITION FOR THE ASSESSM ENT YEAR UNDER CONSIDERATION. THE CIT(A) ON VERIFICATION OF THE VALUATION REPORT FOUND THAT THE VALUER HAS NOT STATED ANYWHERE IN THE REPORT TH AT THE COST OF CONSTRUCTION WAS RS. 26 00 5000. HE FOUND THAT THE VALUER HAS SHOWN THE DEPRECIATED VALUE OF THE BUILDING AT RS.26 00 500 B EING @RS.3 500 PER ITA NO.03 & 605/RJT/2010 5 SQ.MTR. EVEN IF THE BUILDING WAS RENOVATED IN THE YEAR 2002 THE MARKET VALUE OF THE BUILDING AS ON 23-03-2005 CANNOT BE SU BSTITUTED AS COST OF RENOVATION IN THE YEAR 2002. THE ENTIRE ADDITION W AS BASED ON THE BASIS OF MARKET VALUE OF THE BUILDING AS ON 23-03-2005 AS CO ST OF CONSTRUCTION. SINCE THE VALUER DID NOT SAY ANYTHING ABOUT THE COS T OF CONSTRUCTION OR RE- CONSTRUCTION OF THE BUILDING AND IT WAS A VALUATION FOR THE PURPOSE OF GETTING CASH CREDIT FACILITY FROM THE BANK IN OUR OPINION SUBSTITUTING THAT VALUE FOR THE PURPOSE OF MAKING ADDITION IS NOT JUSTIFIED. I N THE ABSENCE OF ANY OTHER MATERIAL FOR PAYMENT OF ANY MONEY MORE THAN WHAT WA S DISCLOSED IN THE SALE DEED WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 12. IN THE RESULT BOTH THE APPEAL OF THE ASSESSEE AND THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21-07-2011. SD/- SD/- (A.L. GEHLOT) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT DT : 21 ST JULY 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-IV AHMEDABAD 4. THE CIT CENTRAL-II AHMEDABAD 5. THE DR I.T.A.T. RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT