Late K.L.Sachdeva ,L/H Anil Kumar Sachdeva,, Allahabad v. ITO,, Allahabad

ITA 616/ALLD/2014 | 2005-2006
Pronouncement Date: 30-04-2015 | Result: Partly Allowed

Appeal Details

RSA Number 61620714 RSA 2014
Bench Allahabad
Appeal Number ITA 616/ALLD/2014
Duration Of Justice 4 month(s) 14 day(s)
Appellant Late K.L.Sachdeva ,L/H Anil Kumar Sachdeva,, Allahabad
Respondent ITO,, Allahabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2015
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 30-04-2015
Assessment Year 2005-2006
Appeal Filed On 16-12-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH: ALLAHABAD BEFORE SHRI D. KARUNAKARA. RAO ACCOUNTANT MEMBER AND SHRI C. N. PRASAD JUDICIAL MEMBER I.T.A .NO.-616 TO 619/ALLD/2014 ASSESSMENT YEAR : 2005-06 TO 2008-09. LATE K.L. SACHDEVA THROUGH VS. ITO L/H ANIL KUMAR SACHDEVA RANGE-1(2) 5-B N K MUKHERJI ROAD ALLAHABAD 211001 ALLAHABAD. 211001 (APPELLANT) (RESPONDENT) I.T.A .NOS.-620 TO 622/ALLD/2014 ASSESSMENT YEARS : 2005-06 2007-08 & 2008-09. ANIL KUMAR SACHDEVA VS. ITO 5-B N. K. MUKHERJI ROAD RANGE-1(1) ALLAHABAD. 211001 ALLAHABAD 211001 (APPELLANT) (RESPONDENT) I.T.A .NOS.-623 TO 625/ALLD/2014 ASSESSMENT YEARS : 2005-06 2007-08 & 2008-09. ASHOK KUMAR SACHDEVA VS. ITO 5-B N. K. MUKHERJI ROAD RANGE-1(1) ALLAHABAD. 211001 ALLAHABAD 211001 (APPELLANT) (RESPONDENT) ITA NOS. 616 TO 629/ALLD/2014 2 I.T.A .NOS.-626 TO 629/ALLD/2014 ASSESSMENT YEARS : 2005-06 TO 2008-09. SMT. CHAND RANI VS. ITO 5-B N. K. MUKHERJI ROAD RANGE-1(1) ALLAHABAD. 211001 ALLAHABAD 211001 (APPELLANT) (RESPONDENT) ASSESSEE BY: SH. SANJAY KUMAR ADV. REVENUE BY:-SH. UMESH PATHAK SR. DR. DATE OF HEARING: 29/04/2015 DATE OF PRONOUNCEMENT:30/04/2015 ORDER PER BENCH: ALL THESE APPEALS ARE FILED BY FOUR ASSESSEES OF A FAMILY AGAINST THE COMMON ORDER OF LD. CIT(A) ALLAHABAD FOR THE ASSES SMENT YEARS 2005- 06 TO 2008-09. SINCE THE ISSUE IN ALL THESE APPEAL IS SAME AND CONNECTED ALL THESE APPEALS ARE HEARD AND DISPOSED OFF BY THI S COMMON ORDER. 2. IN ALL THESE APPEALS THE ASSESSEES ARE CHALLENGI NG THE ORDER OF THE LD. CIT(A) IN UPHOLDING THE REOPENING OF ASSESSMENT U/S 147 OF THE INCOME TAX ACT AND ALSO CONFIRMING THE ADDITIONS MA DE BY THE AO BASED ON THE DISTRICT VALUATION OFFICERS REPORT TH E INVESTMENT MADE BY THE ASSESSEES ON HOUSE PROPERTY. 3. BRIEF FACTS ARE THAT THE ASSESSMENTS OF THE ASSE SSEES FOR ALL THESE ASSESSMENT YEARS WERE REOPENED U/S 148 OF THE ACT A ND REASSESSMENTS ITA NOS. 616 TO 629/ALLD/2014 3 WERE COMPLETED MAKING ADDITION U/S 69 IN RESPECT OF UNEXPLAINED INVESTMENT IN THE HOUSE PROPERTY. ALL THE FOUR ASSE SSEES ARE CO-OWNERS OF THE RESIDENTIAL PROPERTY AND THEREFORE THE AO DIVID ED THE INVESTMENT AMONG ALL THESE FOUR ASSESSEES @ 25% AND ADDED THE DIFFERENCE IN COST OF CONSTRUCTION WHILE COMPLETING THE ASSESSMENT. TH E ASSESSEES CHALLENGED THE REOPENING OF ASSESSMENTS U/S 148 OF THE ACT AND ALSO THE ADDITIONS WHICH WERE MADE BASED ON THE DVOS REPORT BEFORE THE LD. CIT(A). THE LD. CIT(A) CONFIRMED THE ORDER OF THE A O IN REOPENING THE ASSESSMENT U/S 148 AND THE ADDITIONS MADE BY THE AO IN RESPECT OF DIFFERENCE IN COST OF CONSTRUCTION. 4. COUNSEL FOR THE ASSESSEES SUBMITS THAT THE REOPE NING OF ASSESSMENT U/S 147 BASED ON THE VALUATION REPORT IS NOT PERMIS SIBLE AND IS BAD IN LAW. COUNSEL FOR THE ASSESSEES REFERRING TO PAGE 31 OF THE PAPER BOOK WHICH IS THE COPY OF REASONS FOR INITIATION OF PROC EEDINGS U/S 147/148 IN THE CASE OF SMT. CHAND RANI FOR THE ASSESSMENT YEAR 2005-06 SUBMITS THAT THE ASSESSMENTS WERE REOPENED ONLY BASED ON TH E VALUATION REPORT OF THE DVO. HE SUBMITS THAT DVO VALUED THE PROPERTY DETERMINING THE INVESTMENT AT RS.1 78 10 596/- AS AGAINST THE COST OF CONSTRUCTION OF RS.1 53 19 766/-RECORDED BY THE ASSESSEE IN THE BOO KS OF ACCOUNTS. ITA NOS. 616 TO 629/ALLD/2014 4 5. PLACING RELIANCE ON THE JUDGMENTS OF THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS. DHARIYA CONSTRUCTION CO. 328 I TR 515 COUNSEL SUBMITS THAT REOPENING OF ASSESSMENT U/S 147 BASED ON VALUATION REPORT OF THE DVO IS NOT PERMISSIBLE. HE SUBMITS THAT THE DVOS REPORT CANNOT BE A BASIS FOR REOPENING THE ASSESSMENT. HE ALSO PL ACED RELIANCE ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CAS E OF CIT VS. AMAN COLD STORAGE PVT. LTD. ITA NO.297/2013 DATED 31.10. 2013 FOR THE SAME PROPOSITION. 6. THE LD. DR VEHEMENTLY SUPPORTS THE ORDERS OF LOW ER AUTHORITIES IN REOPENING THE ASSESSMENT U/S 147 AND TREATING THE D IFFERENCE IN COST OF CONSTRUCTION AS UNEXPLAINED EXPENDITURE U/S 69 OF T HE ACT. 7. HEARD BOTH THE SIDES AND PERUSED THE ORDERS OF L OWER AUTHORITIES THE REASONS FOR REOPENING THE ASSESSMENTS AND THE J UDGMENT RELIED ON BY THE ASSESSEE. APPARENTLY IN ALL THESE CASES THE AO REOPENED THE ASSESSMENTS BASED ON THE VALUATION OFFICERS REPORT OF THE DVO. THIS IS VERY MUCH EVIDENT FROM THE REASONS RECORDED IN ONE OF THESE ASSESSEES SMT. CHAND RANI AS UNDER: REASON FOR INITIATION OF PROCEEDING U/S 147/148 IN THE CASE OF SMT. CHAND RANI 5-B N. K. MUKHERJEE ROAD ALLAHAB AD A.Y. 2005-06. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE A.Y. 2008- 09 IT WAS FOUND THAT THE ASSESSEE HAS INVESTED IN THE HOUSE PROPERTY AT 5-B N.K. MUKHERJEE ROAD RAJAPUR ALLA HABAD ITA NOS. 616 TO 629/ALLD/2014 5 WITH THREE OTHER FAMILY MEMBERS NAMELY SHRI K.L. SA CHDEVA SHRI ASHOK KUMAR SACHDEVA AND SHRI ANIL KUMAR SACHD EVA. THE ASSESSEE DECLARED THAT THE TOTAL INVESTMENT OF RS.1 53 19 766/- HAS BEEN MADE FROM THE A.Y. 2005-0 6 TO A.Y. 2008-09 AND HIS SHARE OF INVESTMENT IS 25%. THE MAT TER WAS REFERRED TO THE VALUATION OFFICER U/S 142A OF THE I .T. ACT. THE VALUATION OFFICER VIDE REPORT DATED 30.03.2011 RECE IVED IN THIS OFFICE 04.04.2011 ESTIMATED THE COST OF CONSTRUCTIO N/INVESTMENT FROM THE A.Y. 2005-06 TO A.Y. 2008-09 IN THE PROPER TY AT RS.1 78 10 600/-. THE VALUATION OFFICER HAS ESTIMATED THE COST OF CONSTRUCTION/INVESTMENT IN THE A.Y. 2005-06 AT RS.9 3 61 462/-. CONSIDERING THAT THE ASSESSEES' SHARE IS 25% OF THE TOTAL INVESTMENT WHICH WORKS OUT TO RS.23 40 365/-. I HAVE REASON TO BELIEVE THAT THE AMOUNT OF RS.23 4 0 365/- INVESTED IN CONSTRUCTION OF THE PROPERTY AT 5-B N. K. MUKHERJEE ROAD RAJAPUR ALLAHABAD BY THE ASSESSEE IN THE A.Y . 2005-06 HAS ESCAPED ASSESSMENT. ISSUE NOTICE U/S 148 OF THE I.T. ACT. 8. ON GOING THROUGH THE REASONS GIVEN FOR REOPENING THE ASSESSMENTS AND ASSESSMENT ORDERS WE FIND THAT THE ASSESSMENTS WERE REOPENED ONLY BASED ON THE DVOS REPORTS AND NOTHING ELSE. AO HAS NOT BROUGHT ON RECORD ANY OTHER TANGIBLE MATERIAL TO SUGGEST THAT THE INCOME HAD ESCAPED ASSESSMENTS IN ALL THESE ASSESSMENT YEARS. THE LD. CIT(A) SUSTAINED THE REOPENING OF ASSESSMENT STATING THAT IN THE COURSE OF ASSESSMENTS PROCEEDINGS U/S 143(3) ASSESSEES WERE R EQUIRED TO FURNISH THE DETAILS OF INVESTMENTS AND THE ASSESSEE COULD N OT PROVIDE COMPLETE DETAILS. THEREFORE AO REFERRED THE MATTER TO VALUAT ION OFFICER THUS LD. CIT(A) WAS OF THE OPINION THAT THE ASSESSMENTS WERE NOT REOPENED ITA NOS. 616 TO 629/ALLD/2014 6 MERELY ON THE BASIS OF DVO THEREFORE HE SUSTAINED T HE REOPENING OF ASSESSMENT. 9. ON A PERUSAL OF REASONS IT IS VERY MUCH EVIDENT THAT THESE ASSESSMENTS WERE REOPENED ONLY BASED ON THE DVOS R EPORT WHERE IN THE DVO VALUED THE INVESTMENT MORE THAN THE INVESTMENT RECORDED IN THE BOOKS OF ACCOUNTS. WE ALSO FIND THAT THE DIFFERENCE IN VALUE OF INVESTMENT AS PER DVO AND AS RECORDED BY THE ASSESS EE IN THE BOOKS OF ACCOUNTS IS LESS THAN 10%. WE DO NOT FIND ANY OTHER REASON OTHER THAN THE DVOS REPORT FOR REOPENING OF ASSESSMENT. 10. THE HONBLE SUPREME COURT IN THE CASE OF ACIT V S. DHARIYA CONSTRUCTION CO. (SUPRA) HELD AS UNDER: 1. HAVING EXAMINED THE RECORD WE FIND THAT IN THI S CASE THE DEPARTMENT SOUGHT REOPENING OF THE ASSESSMENT BASED ON THE OPINION GIVEN BY THE DISTRICT VALUATION OFFICER (DV O). THE OPINION OF THE DVO PER SE IS NOT AN INFORMATION FOR THE PURPOSES OF REOPENING ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT 1961. THE ASSESSING OFFICER HAS TO APPLY HIS MIND TO THE INFORMATION IF ANY COLLECTED AND MUST FORM A DEPARTMENT WAS NOT ENTITLED TO REOPEN THE ASSESSMEN T. 11. THE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. AMAN COLD STORAGE PVT. LTD. (SUPRA) HELD AS UNDER: WE HAVE GONE THROUGH THE ASSESSMENT ORDER AND FIND THAT ENTIRE PROCEEDINGS FOR REASSESSMENT WERE INITIATED ON THE BASIS ITA NOS. 616 TO 629/ALLD/2014 7 OF THE COST ESTIMATED BY DVO. THE A.O. FOUND THAT S INCE NO PROPER EVIDENCE WITH REGARD TO DEFECTS ALLEGED IN T HE REPORT OF DVO WERE FURNISHED DESPITE AMPLE OPPORTUNITIES AND WHATEVER DETAILS FURNISHED BEFORE THE DVO WHILE EVALUATING THE COST HAVE DULY BEEN CONSIDERED AND THUS THERE DOES NOT APPEAR TO BE ANY GROUND TO DEVIATE FROM THE VALUE DETERMINED BY THE VALUATION OFFICER AND THEREFORE DIFFERENCE WAS UNEX PLAINED /UNDISCLOSED INVESTMENT IN THE CONSTRUCTION OF COLD STORAGE INVOKING THE PROVISIONS OF SECTION 69 OF THE ACT I T WAS OBSERVED BY THE AO THAT SINCE THE ASSESSEE HAS FURNISHED INA CCURATE PARTICULARS OF INVESTMENT IN CONSTRUCTION OR RATHER INACCURATE PARTICULARS OF INCOME PENAL PROVISIONS UNDER SECTI ON271(1)(C) ARE ALSO ATTRACTED. WE DO NOT FIND ANY ERROR OF LAW IN THE ORDER OF ITA T RELYING UPON THE JUDGMENT OF THE SUPREME COURT IN ACIT VS. DHARIYA CONSTRUCTION CO. (SUPRA). THE OPINION OF DVO PER SE T IS NOT AN INFORMATION FOR THE PURPOSE OF REOPENING OF ASSESSM ENT UNDER SECTION 147 OF THE ACT. THERE IS NOTHING TO SHOW TH AT THERE WAS ANY MATERIAL OTHER THAN DVOS REPORT WHICH IS ONLY AN ESTIMATION TO ISSUE NOTICE UNDER SECTION 148 OF THE ACT. THE A.O. MAY BE JUSTIFIED IN ASSESSMENT PROCEEDINGS TO OBTAIN REPORT OF DVO TO MEET THE ESTIMATION OF THE COST OF CONSTRUCTION MADE BY THE ASSESSEE. HAVING COMPLETED ASSESSMENT I T WAS NOT OPEN FOR THE AO IN THE ABSENCE OF ANY MATERIAL WH ICH INCLUDES INFORMATION TO DOUBT ON THE COMPLETED ASSESSMENT A ND TO REASSESS THE ASSESSEE ON THE BASIS OF THE REPORT OF DVO WHICH IS OBTAINED BY HIM FOR MAKING A REFERENCE UNDER SEC TION 142A OF THE ACT. THE JUDICIAL OPINION IS CONSISTENT THAT IN THE ABSE NCE OF ANY POSITIVE MATERIAL OF CONCEALMENT OR ESCAPEMENT OF I NCOME THE AO CANNOT REASSESS THE ASSESSEE ON THE BASIS OF THE REPORT OF DVO. THE GROUND RAISED IN THESE INCOME TAX APPEALS DO NOT HAVE ANY MERIT. 12. AS COULD BE SEEN FROM THE ABOVE THE JURISDICTIO NAL HIGH COURT AND ALSO THE HONBLE SUPREME COURT WHEREIN IT WAS HELD THAT THE DVO ITA NOS. 616 TO 629/ALLD/2014 8 REPORT CANNOT BE BASED FOR REOPENING ASSESSMENT. I N THE CASES ON HAND ALL THESE ASSESSMENTS WERE REOPENED ONLY BASED ON T HE DVO REPORT. 13. IN THE CIRCUMSTANCES RESPECTFULLY FOLLOWING THE ABOVE DECISIONS WE HOLD THAT REOPENING OF ASSESSMENTS U/S 147 IS BAD I N LAW. GROUND RAISED BY THE ASSESSEES CHALLENGING THE REOPENING OF ASSES SMENT U/S 147 IS ALLOWED. AS WE HAVE HELD THAT THE REOPENING OF ASSE SSMENT IS BAD IN LAW ADJUDICATION OF THE GROUNDS ON MERITS BECOMES ACADE MIC AND THEREFORE WE ARE NOT GOING INTO THESE GROUNDS. 14. IN THE RESULT APPEALS OF THE ASSESSEES ARE PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/04/2015. SD/- SD/- ( D. KARUNAKARA RAO ) (C. N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30/04/2015 *AK VERMA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. 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