Sri V.S.A.Arulmuthukumarasamy, Vaitheeswaran Koil v. DCIT, Kumbakonam

ITA 920/CHNY/2011 | 2004-2005
Pronouncement Date: 19-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 92021714 RSA 2011
Assessee PAN AETPA5472R
Bench Chennai
Appeal Number ITA 920/CHNY/2011
Duration Of Justice 2 month(s)
Appellant Sri V.S.A.Arulmuthukumarasamy, Vaitheeswaran Koil
Respondent DCIT, Kumbakonam
Appeal Type Income Tax Appeal
Pronouncement Date 19-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 19-07-2011
Assessment Year 2004-2005
Appeal Filed On 19-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH CHENNAI BEFORE SHRI N. S. SAINI ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN JUDICIAL MEMBER .. I.T.A. NOS. 918 919 920 & 921/MDS/2011 ASSESSMENT YEARS : 2002-03 2003-04 2004-05 & 2005 -06 SRI V.S.A. ARULMUTHUKUMARASAMY NO. 18 MILLADI STREET VAITHEESWARAN KOIL-609117. V. DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-I KUMBAKONAM. (PAN: AETPA5472R) (APPELLANT) (RESPONDENT) APPELLANT BY : MS. SARASWATI NAYAGAM CA RESPONDENT BY : SHRI K.E.B. RENGARAJAN JR. STANDING COUNSEL O R D E R PER GEORGE MATHAN JUDICIAL MEMBER : THESE ARE FOUR APPEALS FILED BY THE ASSESSEE AGAIN ST THE ORDER OF THE LEARNED CIT(APPEALS) TIRUCHIRAPALLI IN ITA NOS. 325 333 T O 335/09-10 DATED 23-03-2011 FOR THE ASSESSMENT YEARS 2002-03 2003-04 2004-05 AND 2005-06 RESPECTIVELY. 2. MS. SARASWATI NAYAGAM CA REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI K.E.B RENGARAJAN JR. STANDING COUNSEL REPRESENTED O N BEHALF OF THE REVENUE. I.T.A. NOS. 918-921/MDS/2011 2 3. THE LEARNED AUTHORISED REPRESENTATIVE FILED AN A PPLICATION REQUESTING FOR ADJOURNMENT TODAY I.E. 18-07-2011 ON THE GROUND TH AT THE ASSESSEE HAD GONE TO HIS NATIVE PLACE FOR A FAMILY FUNCTION. THE APPEAL S WERE FILED ON 19-05-2011 AND ON THE SAID DATE ITSELF THE DATE OF HEARING HAS BEE N INTIMATED AS 19-7-2011. CONSEQUENTLY THE APPLICATION FILED BY THE ASSESSEE WAS REJECTED AND THE APPEALS WERE HEARD ON MERITS. 4. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRE SENTATIVE THAT THE ASSESSEE IS AN INDIVIDUAL WHO IS A NADI ASTROLOGER. THE ASSESSEE HAD FILED HIS RETURN OF INCOME AND IN THE BALANCE SHEET ENCLOSED WITH THE R ETURNS THE ASSESSEE HAD DISCLOSED THAT HE WAS DOING THE CONSTRUCTION OF A KALYANAMANDAPAM AND LODGE AT DOOR NO. 26 TO 28 WEST CAR STREET. VAITHEESWARA NKOIL SIRKALI TALUK NAGAPATTINAM DISTRICT. IT WAS SUBMITTED BY THE LEA RNED AUTHORISED REPRESENTATIVE THAT THE ASSESSEE HAD DISCLOSED THE COST OF CONSTRU CTION FOR THE YEAR ENDED 31-03- 2002 AT ` 7 10 500/- FOR THE YEAR ENDED 31-03-2003 AT ` 24 99 500/- FOR THE YEAR ENDED 31-03-2004 AT ` . 44 10 000/- AND FOR THE YEAR ENDED 31-03-2005 AT ` 44 10 000/-. IT WAS THE FURTHER SUBMISSION THAT TH E TOTAL COST OF CONSTRUCTION IN REGARD TO THE PROPERTY WAS DISCLOSED BY THE ASSESSE E AT ` 44 10 000/-. THE ASSESSING OFFICER HAD VIDE A LETTER DATED 2-12-2003 REFERRED THE VALUATION OF THE PROPERTY TO THE DVO WHO HAD VIDE HIS VALUATION REPO RT DATED 16-08-2004 VALUED THE COST OF CONSTRUCTION AT ` 89 77 000/-. IT WAS THE SUBMISSION THAT THE DIFFERENCE BETWEEN THE AMOUNT DISCLOSED BY THE ASSE SSEE AT ` 44 10 000/- AND I.T.A. NOS. 918-921/MDS/2011 3 THE AMOUNT OF ` 89 77 000/- VALUED BY THE DVO BEING ` 45 67 000/- WAS TREATED AS THE UNDISCLOSED INVESTMENT OF THE ASSESSEE BY AP PLYING THE PROVISIONS OF SECTRION69 OF THE INCOME TAX ACT 1961 AND THE SAME WAS SPREAD OVER A PERIOD OF 38 MONTHS EQUALLY COMMENCING FROM APRIL 2001 TO M AY 2004. IT WAS THE SUBMISSION THAT ON FIRST APPEAL THE LEARNED CIT(A) HAD ACCEPTED THE CONTENTION OF THE ASSESSEE THAT PWD RATES WERE LIABLE TO BE ADOPT ED AND THAT THE REBATE TOWARDS SELF-SUPERVISION WAS LIABLE TO BE GIVEN. I T WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD CONSEQUENTLY BY FOLLOWING THE DE CISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF A. ABDUL RAHIM V. ITO REP ORTED IN 258 ITR 714 DIRECTED THAT THE VALUATION AS ARRIVED AT BY THE DVO WAS TO BE REDUCED BY 25% AND SELF- SUPERVISION WAS TO BE GRANTED AT 10%. IT WAS THE S UBMISSION THAT THE LEARNED CIT(A) HAD ALSO UPHELD THE RE-OPENING OF THE ASSESS MENTS. IT WAS THE FURTHER SUBMISSION BY THE LEARNED AUTHORISED REPRESENTATIVE THAT THE FINDING OF THE LEARNED CIT(A) THAT THE PWD RATE WAS LIABLE TO BE A PPLIED HAS NOT BEEN CHALLENGED BY THE REVENUE. IT WAS THE SUBMISSION T HAT THE REDUCTION AT 25% FOR ARRIVING AT THE CPWD RATE WAS NOT CORRECT AND THE R EDUCTION WAS LIABLE TO BE GRANTED AT A HIGHER RATE. IT WAS THE FURTHER SUBMI SSION THAT THE DEDUCTION TOWARDS SELF-SUPERVISION WAS LIABLE TO BE GIVEN AT 15%. IT WAS THE FURTHER SUBMISSION THAT NO ARCHITECTS FEE HAD BEEN PAID BY THE ASSESSEE AND CONSEQUENTLY THE ADDITION REPRESENTING THE SAME WAS LIABLE TO BE DELETED. IT WAS I.T.A. NOS. 918-921/MDS/2011 4 ALSO THE SUBMISSION THAT THE RE-OPENING OF THE ASSE SSMENT WAS BAD IN LAW AND WAS LIABLE TO BE ANNULLED. 5. IN REPLY THE LEARNED DR VEHEMENTLY SUPPORTED TH E ORDER OF THE LEARNED CIT(A). IT WAS FURTHER SUBMITTED THAT ADEQUATE REL IEF HAS BEEN GRANTED TO THE ASSESSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ORDER OF THE LEARNED CIT(A) SHOWS THAT THE LEARNED CIT(A) HAS RE LIED UPON THE DECISION IN THE CASE OF A. ABDUL RAHIM REFERRED TO SUPRA. HOWEVER THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE HON'BLE HIGH COURT HAS NOT PEG GED THE PERCENTAGE FOR CONFIRMING THE CPWD RATE TO PWD RATE AT 25%. WHAT IS SPECIFICALLY NOTICED HERE IS THAT THE HON'BLE HIGH COURT IN THE CASE OF A. AB DUL RAHIM HAS HELD THAT THE TRIBUNAL AFTER TAKING INTO ACCOUNT THE NATURE OF TH E BUILDING AND THE LOCATION OF THE BUILDING HAS HELD THAT 25% REDUCTION WAS LIABLE TO BE MADE. HERE IT IS FURTHER NOTICED THAT THE FINDING OF THE LEARNED CIT (A) THAT THE PWD RATE IS LIABLE TO BE APPLIED HAS NOT BEEN CHALLENGED BY THE REVENUE. ONCE THE FINDING THAT THE VALUATION IS TO BE DONE BY ADOPTING THE PWD RATES S TANDS CONFIRMED THEN IT IS THE VALUATION THAT IS TO BE DONE BY APPLYING THE PWD RA TES AND NOT BY REDUCING THE CPWD RATES BY AN AD HOC PERCENTAGE. IN THE CIRCUMS TANCES THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE STANDS MODIFIED AND TH E ASSESSING OFFICER IS DIRECTED TO HAVE THE PROPERTY VALUED BY APPLYING THE PWD RAT ES. I.T.A. NOS. 918-921/MDS/2011 5 7. IT IS FURTHER NOTICED THAT THE PERCENTAGE OF DED UCTION ON ACCOUNT OF SELF- SUPERVISION HAS BEEN ADOPTED BY THE LEARNED CIT(A) AT 10%. THIS WE FEEL IS ON THE LOWER SIDE. THIS IS ALSO BECAUSE IN THE DECISI ON OF THE HON'BLE JURISDICTIONAL HIGH COURT REFERRED TO BY THE LEARNED CIT(A) I.E. IN THE CASE OF A. ABDUL RAHIM THE HON'BLE HIGH COURT HAS UPHELD THE FINDING OF TH E TRIBUNAL IN FIXING THE PERCENTAGE OF DEDUCTION TOWARDS SELF-SUPERVISION AT 15%. IN THE CIRCUMSTANCES THE ASSESSING OFFICER IS DIRECTED TO GRANT THE ASSE SSEE A DEDUCTION TOWARDS SELF- SUPERVISION AT 15%. 8. IN REGARD TO THE ADDITION REPRESENTING THE ARCHI TECTS FEE AS THE ASSESSEE HAS CLAIMED THAT THE BUILDING WAS PUT UP UNDER SELF-SUP ERVISION AND THE DEDUCTION TOWARDS SELF-SUPERVISION HAS ALSO BEEN GRANTED TO T HE ASSESSEE OBVIOUSLY NO ADDITION TOWARDS THE ARCHITECTS FEE CAN BE MADE. IN THE CIRCUMSTANCES THE ASSESSING OFFICER IS DIRECTED TO HAVE THE PROPERTY VALUED BY APPLYING THE PWD RATES FOR THE PLACE WHERE THE BUILDING HAS BEEN PUT UP AND GRANT THE ASSESSEE 15% DEDUCTION TOWARDS SELF-SUPERVISION. IF THE SAME EXCEEDS THE COST OF CONSTRUCTION AS DISCLOSED THE DIFFERENCE IS TO BE ADDED IN PROPORTION TO THE INVESTMENT DECLARED BY THE ASSESSEE FOR EACH OF THE RELEVANT ASSESSMENT YEARS IN HIS BALANCE SHEET. 9. IN REGARD TO THE SUBMISSION OF THE LEARNED AUTHO RISED REPRESENTATIVE AGAINST THE RE-OPENING OF THE ASSESSMENT IT IS NOTICED THAT THE RETURNS FILED BY THE ASSESSEE HAVE BEEN ORIGINALLY UNDER SECTION 143(1) OF THE INCOME TAX ACT 1961. I.T.A. NOS. 918-921/MDS/2011 6 AS THE RETURNS HAVE BEEN PROCESSED UNDER SECTION 14 3(1) IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. RAJESH JHAVERI STOCK BROKERS P. LTD. REPORTED IN 291 ITR 500 THE RE-OPENING HAS TO BE UPHELD AND WE DO SO. IN THE CIRCUMSTANCES THE APPEALS OF THE ASSESSEE AR E PARTLY ALLOWED FOR STATISTICAL PURPOSES. 10. THE ORDER WAS PRONOUNCED IN THE COURT ON 19/07/ 2011. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI DATED THE 19 TH JULY 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE