ACIT (OSD), Dehradun v. Sh. Mohd. Ilyas, Dehradun

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E DELHI BEFORE SHRI I.P. BANSAL AND SHRI K.G. BANSAL I.T.A.NO. 610(DEL)/2010 ASSESSMENT YEAR: 2004-05 ASSTT. COMMISSIONER OF INCOME SHRI MOH D. ILYAS TAX RANGE-I DEHRADUN. VS. 101 RAJPUR ROAD DEHRADUN. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.S. SAHOTA SR. DR RESPONDENT BY: NONE ORDER PER K.G. BANSAL ; AM THIS APPEAL OF THE REVENUE EMANATES FROM TH E ORDER OF THE CIT(APPEALS)-I DEHRADUN PASSED ON 27.11.2009 IN APPEAL NO. 217/DDN/2006-07 PERTAINING TO ASSESSMENT YEAR 2004-05. WHILE NONE ATTENDED BEFORE US ON BEHALF OF THE ASSESSEE ON 6.4.2010 BEING THE DATE OF HEARING THE LD. DR EXPLAINED THE FACTS OF THE CASE TO US AND MADE THE SUBMISSIONS. THEREFORE THE APPEAL IS DECIDED E X-PARTE QUA THE ASSESSEE AND ON THE BASIS OF EVIDENCE AVAILABLE ON RECOR D. 2. GROUND NO. 1 IS THAT ON THE FACTS OF THE CA SE AND IN LAW THE LD. CIT(APPEALS) ERRED IN DELETING THE ADDITION O F RS. 3 05 682/- MADE BY ITA NO. 610(DEL)/2010 2 THE AO ON ACCOUNT OF DIFFERENCE IN VALUATION BE TWEEN COST OF CONSTRUCTION DETERMINED BY THE VALUATION OFFICER AND THE COST OF CONSTRUCTION SHOWN BY THE ASSESSEE. THE BRIEF FACTS IN THIS REGARD ARE THAT THE ASSESSEE CONSTRUCTED A COMMERCIAL COM PLEX AT 101 RAJPUR ROAD DEHRADUN. THE CONSTRUCTION OF THE HOTEL WA S STARTED IN DECEMBER 2000 AND COMPLETED IN SEPTEMBER 2003. IN ASSE SSMENT YEAR 2002-03 THE AO MADE A REFERENCE TO THE DVO FOR ASCERTA INING THE COST OF CONSTRUCTION OF THE PROPERTY. THE DVO DETERMINE D SUCH COST AT RS. 1 40 26 427/- AS AGAINST THE COST OF RS. 1 20 17 549/- DECLARED BY THE ASSESSEE. THE AO VALUED THE PROPERTY AT RS. 1 5 6 82 026/- AFTER MAKING ADJUSTMENT IN RESPECT OF COST OF TIMBER BULK PU RCHASE OF MATERIAL AND LABOUR COST. IN VIEW THEREOF UNEXPLAINED INVEST MENT FOR THAT YEAR WAS WORKED OUT AT RS. 17 70 117/- WHICH WAS ADDE D TO THE TOTAL INCOME OF THE ASSESSEE U/S 69. IN FIRST APPEAL THE ADDITION MADE BY THE AO OVER THE COST ESTIMATED BY THE DVO WAS DELETED. FUR THER THE LD. CIT(APPEALS) GRANTED RELIEF IN RESPECT OF SELF- SUPERVISION REDUCTION ON ACCOUNT OF BULK PURCHASES AND OTHER MISCELLANEOUS DISCREPANCIES BROUGHT TO HIS NOTICE. THE REDUCTION AMOUNTED IN ALL TO RS. 10 44 237/-. THE MATTER WAS AGITATED BY THE REVENUE BEFORE THE TRIBUNAL. HOWEVER IT CONFIRMED THE ORDER OF THE CIT(APPEALS) THE RESULT WAS T HAT THE COST OF CONSTRUCTION ITA NO. 610(DEL)/2010 3 STOOD AT RS. 1 29 82 250/- AGAINST THE VALUE OF RS. 1 40 26 427/- DETERMINED BY THE DVO. THE AO HAD MADE SIMILAR ADDITION OF RS. 10 35 345/- IN ASSESSMENT YEAR 2003-04. IN FIRST APPEAL THE LD. CIT(APPEALS) GRANTED RELIEF AS PER THE ORDER OF T HE TRIBUNAL. COMING TO THIS YEAR THE ASSESSEE HAD SHOWN THE COST OF CONSTRUCTION AT RS. 18 07 468/- AND THE DVO DETERMINED THE COST AT RS. 21 13 150/-. THE DIFFERENCE OF RS. 3 05 682/- WAS ADDED BY THE AO BY INVOKING THE PROVISION CONTAINED IN SECTION 69. THE LD. CIT (APPEALS) DIRECTED THE AO TO WORK OUT THE DIFFERENCE ON THE SAME BASIS A S DETERMINED BY THE TRIBUNAL IN EARLIER YEAR AND THUS ALLOWED PAR T RELIEF TO THE ASSESSEE. THE RELEVANT PORTION OF HIS ORDER CONTAINED IN P ARAGRAPH 5.4 IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE:- 5.4 DURING THE COURSE OF APPELLATE PROCEEDINGS THE LD. COUNSEL OF THE APPELLANT HAS REPEATED THE SIMILA R SUBMISSIONS AS HAVE BEEN ADVANCED DURING A.Y. 2002-03 AND 2 003-04. FURTHER THE ORDER PASSED BY HONBLE ITAT FOR A.Y. 2002- 03 AND 2003-04 IN THE CASE OF THE APPELLANT IN ITA NO. 576(DEL)/2006 AND 2401(DEL)/07 DATED 30.09.20 09 HAS BEEN FURNISHED WHEREIN THE HONBLE ITAT HAS UPHELD THE VALUATION DECIDED BY THE LD. CIT(A) BOTH IN A.Y . 2002-03 & 2003-04 RESPECTIVELY. RESPECTFULLY FOLLOWING T HE SAID JUDGMENT THE AO IS HEREBY DIRECTED TO WORK OUT THE PROPORTIONATE COST OF CONSTRUCTION FOR THE YEAR UNDER CONSIDERATION AFTER ALLOWING THE NECESSARY RELI EF AS HAVE BEEN AWARDED FOR A.Y. 2002-03 & 2003-04. THEREAFT ER THE DIFFERENCE BETWEEN SUCH PROPORTIONATE COST OF C ONSTRUCTION VIS--VIS THE ACTUAL COST DECLARED BY THE APPE LLANT MAY BE ITA NO. 610(DEL)/2010 4 WORKED OUT IN ORDER TO BRING THE SAME TO TAX ATION AS UNEXPLAINED INVESTMENT. 2.1 BEFORE US THE LD. DR COULD NOT DISTINGUISH THE FACTS OF THIS YEAR FROM THE FACTS OF EARLIER YEARS. THUS THE GROU ND TAKEN BY THE REVENUE STANDS COVERED BY THE ORDER OF THE TRIBUNAL IN I TA NOS. 576(DEL)/2006 AND 2401(DEL)/2007 DATED 30.9.2009 FOR ASSESSM ENT YEARS 2002-03 AND 2003-04 RESPECTIVELY. AS A COORDINATE BENCH OF THE TRIBUNAL HAS ALREADY DECIDED THE ISSUE AND NO DISTINCTION HAS BEEN SH OWN IN THE FACTS VIS--VIS THE EARLIER YEARS BY THE LEARNED DR THEREFORE WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(APPEA LS). THUS THIS GROUND IS DISMISSED. 3. GROUND NO. 2 IS AGAINST THE DELETION OF TWO ADDITIONS OF RS. 4.20 LAKH AND RS. 3 55 103/- MADE BY THE AO TO THE TOTA L INCOME OF THE ASSESSEE. 3.1 THE ADDITION OF RS. 4.20 LAKH IS IN RESPECT OF RENTAL INCOME IN RESPECT OF GROUND FLOOR OF HOTEL CLASSIC WHICH WAS LET OUT TO THE UTI BANK LTD. IN THIS CONNECTION THE LEASE DEED WAS EXECUTED BETWEEN THE ASSESSEE HIS WIFE AND THE UTI BANK LTD. ON 26 .9.2001 IN WHICH THE RENT WAS FIXED AT RS. 70 000/- PER MONTH. THE ASS ESSEE SHOWED RENTAL ITA NO. 610(DEL)/2010 5 INCOME OF RS. 4.20 LAKH ONLY BEING ONE-HALF OF THE TOTAL RENT OF RS. 8.40 LAKH RECEIVED OR RECEIVABLE FOR THIS YEAR. THE AO ADDED A SUM OF RS. 4.20 LAKH IN THE HANDS OF THE ASSESSEE BY STATING THAT INVESTMENT IN THE HOTEL WAS MADE BY THE ASSESSEE. IT APPEARS THA T ANOTHER PART OF THE PROPERTY WAS LET OUT TO UTI MUTUAL FUND. THE ASSESSEE DECLARED ONLY ONE-HALF OF THE RENT IN HIS RETURN AND THE INCOME WAS COMPUTED AT RS. 3 55 109/-. THE AO MODIFIED THE COMPUTATION OF I NCOME AND ALSO BROUGHT TO TAX THE WHOLE OF THE INCOME AT RS. 7 75 113/- IN THE HANDS OF THE ASSESSEE ON THE SAME GROUND AS STATED IN THE CASE OF RENT FROM UTI BANK LTD. IN FIRST APPEAL THE LD. CIT(APPEAL S) GRANTED RELIEF TO THE ASSESSEE IN THIS MATTER. THE ASSESSEE ALSO FIL ED A COPY OF THE ORDER OF ITAT IN ITA NO. 576(DEL)/2006 DATED 30.9.2009 IN WHICH THE ORDER OF THE CIT(APPEALS) WAS CONFIRMED. FOLLOWING HIS OW N ORDER AND THAT OF THE TRIBUNAL THE LD. CIT(APPEALS) ALLOWED THE APPE AL OF THE ASSESSEE FOR THIS YEAR ALSO BY MAKING FOLLOWING OBSERVATIONS: - AFTER CONSIDERING ABOVE SUBMISSIONS OF THE COUNSE L OF THE APPELLANT AND LOOKING INTO THE ORDER OF THE HO NBLE ITAT IT IS OBSERVED THAT THE ADDITION MADE BY THE AO O N ACCOUNT OF CLUBBING OF INCOME OF APPELLANTS WIFE IN THE HAN DS OF THE APPELLANT ON ACCOUNT OF RECEIPT OF RENT TO THE TUNE OF RS. 7 75 113/- IS NOT MAINTAINABLE AND RESPECTFULLY FOLLOWING THE AFORESAID JUDGMENT OF THE HONBLE ITAT THE AO IS HEREBY DIRECTED TO DELETE SUCH ADDITION. ITA NO. 610(DEL)/2010 6 3.2 IN RESPECT OF THIS GROUND ALSO THE LD. DR COULD NOT DISTINGUISH BETWEEN THE FACTS OF THIS YEAR AND THE EARLIER YEARS. THUS THE ISSUE STANDS COVERED BY THE ORDER OF THE TRIBUNAL REFE RRED TO BY THE LD. CIT(APPEALS). RESPECTFULLY FOLLOWING THAT ORDER THIS GROUND IS ALSO DISMISSED. 4. IN THE RESULT THE APPEAL IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 9 APRIL 2010. SD/- SD/- (I.P. BANSAL) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 09.04.2010. SP SATIA COPY OF THE ORDER FORWARDED TO:- 1. SHRI MOHD. ILYAS DEHRADUN. 2. ACIT RANGE-I DEHRADUN. 3. CIT(A) 4. CIT NEW DELHI. 5. DR ITAT NEW DELHI. ASSISTANT REGISTRA R.