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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Chandra Poojari, AM & Shri George George K, JM
Per George George K, JM
This appeal at the instance of the assessee is directed against the Commissioner of Income-tax’s order dated 27.03.2019 passed u/s 263 of the I.T.Act. The relevant assessment year is 2010-2011
Brief facts of the case are as follows: For assessment year 2010-2011, the assessment was completed in the hands of the assessee u/s 143(3) of the I.T.Act vide order dated 29.12.2016. In the assessment completed u/s 143(3) of the I.T.Act, the Assessing Officer made addition of Rs.50,22,770 in respect of unexplained investment in land and building.
2.1 Subsequently the CIT issued notice u/s 263 of the I.T.Act by holding that the assessment order passed u/s
ITA No.323/Coch/2019 2 Sri.K.P.Vijayan. 143(3) of the I.T.Act dated 27.12.2016 was prima facie erroneous and prejudicial to the interest of the Revenue, for the following reasons:-
(i) The wealth statement re-worked by the assessing officer during the assessment proceedings show variations from that worked out by the valuation officer.
(ii) It is seen that the assessing officer has arrived at a value of Rs.1,56,47,696/- on unexplained investment in land and properties for AYs 2009-10 and 2010-11 combined. However, the valuation officer has arrived at a value of Rs.1,60,75,117/- on unexplained investment in land and properties for AYs 2009-10 and 2010-11 combined. Therefore, there is a shortfall of Rs.4,27,421/- and the short assessment has occurred for the AY 2010-11.
2.2 To the notice issued u/s 263 of the I.T.Act, the assessee raised objections. However, the objections of the assessee were rejected by the CIT and he set aside the assessment for A.Y. 2010-2011. The relevant finding of the CIT in setting aside the assessment order for assessment year 2010-2011 reads as follow:- “4. The submissions of the assessee have been considered. The issue is that the report of the valuation officer was obtained only after the completion of the assessment proceedings. Therefore the assessment was completed provisionally. The assessing officer is directed to reconcile the differences between the unexplained investment arrived at by taking into consideration the wealth tax statement reworked during the assessment proceedings and the unexplained investment arrived at based on the report of the valuation report. Therefore, the assessment for the AY 2010-11 (sic) is hereby set aside for the limited purpose of reconciling the aforesaid differences as necessary examination / verification has not been made during the assessment.”
ITA No.323/Coch/2019 3 Sri.K.P.Vijayan.
The assessee being aggrieved by the CIT’s order passed u/s 263 of the I.T.Act, has filed the present appeal before the Tribunal raising the following grounds:-
“1. The order under section 263 passed by the principal commissioner of Income tax, Calicut is against the facts and circumstance of the appellant's case and hence opposed to the provisions of the Income tax Act.
Learned principal commissioner of Income tax has grossly erred in holding that there is unexplained investment in land and properties, that too for two assessment years being 2009- 10 and 2010-11, being Rs. 427421/- ,which is directed to be assessment for the assessment year 2010-11, by exercising the powers under section 263 of the Income tax Act. There is nothing on record to hold that the order passed by the assessing officer under section 143(3) by conducting extensive and detailed enquiry and verification, is erroneous and prejudicial to the interest of revenue, especially because the valuation report from the valuation cell is not a fresh information to conclude that there is un explained investment as presumed by the Principal Commissioner of Income tax.
The appellant submit that the assessment order passed for the assessment year is not "provisional order" as stated by the principal commissioner of Income tax. It is an order passed under section 143(3) of the Income tax Act. There is no provision under the Income tax Act which specify that the assessment shall be subject to revision, if the assessment of income is completed before the report of valuation from valuation cell is not received, in which case there is no finality to any assessment. Non availability of valuation report of valuation cell could by no stretch of imagination, be viewed as erroneous so as to make the assessment liable for revision under section 263 of the Income tax Act, especially because the order by assessing officer is passed by making arbitrary estimation, by scaling up the cast of construction to untold level.
The appellant humbly submit that revision powers cannot be exercised for directing alternative ways of completing the assessment and estimation of cost of construction when a view was already taken by assessing officer after enquiry. This would inevitably mean that every order of the lower authority would be susceptible to section
ITA No.323/Coch/2019 4 Sri.K.P.Vijayan. 263, which will cause unintended hardship to taxpayer concerned for no fault on his part. The appellant submit that this is not intended by the section 263 and the explanation appended to it. 5. For the above and for other reasons to be adduced at the time of hearing, it is prayed that justice be done to the appellant by setting aside the order appealed against.”
None was present on behalf of the assessee nor was there any letter received by the Registry of the ITAT seeking adjournment of the case. Hence, we proceed to dispose off the appeal on merits after hearing the learned Departmental Representative.
We have heard the learned DR and perused the material on record. At the very outset, we noticed that there is a defect in filing this appeal. The assessee has not enclosed in the appeal folder, the assessment order passed u/s 143(3) of the I.T.Act, which was the subject matter of revision u/s 263 of the I.T.Act. The assessee was intimated of the defect in filing the appeal vide notice dated 26.06.2019. In response to the defect notice issued by the Registry of the ITAT, the assessee replied as under:-
“Please refer to the above. In this regard please be informed that the above appeal is against an order under section 263 of the Principle Commissioner of Income tax, Calicut. We have hence enclosed the order passed under section 263 together with the appeal papers. Please note that there is no order under section 143(3) in this regard to be enclosed together with the appeal as required in the notice.”
5.1 Enclosing of the assessment order which was set aside in revision u/s 263 of the I.T.Act in the appeal folder before
ITA No.323/Coch/2019 5 Sri.K.P.Vijayan. the ITAT is mandatory. The assessee has not cured the defect inspite of notice being sent to him. Therefore, the appeal filed by the assessee being defective is dismissed.
5.2 Even otherwise, we see no infirmity in the order of the CIT passed u/s 263 of the I.T.Act. The additions were made by the Assessing Officer as unexplained investment in land and building. At the time of assessment, the matter was referred by the Assessing Officer for valuation to the DVO. The DVO’s report was obtained only after completion of the assessment. Therefore, necessarily, the Assessing Officer has to reconcile the difference between the unexplained investments arrived at by him and the value mentioned by the DVO in the valuation report. The CIT has only set aside the assessment for the limited purpose of reconciliation of the aforesaid difference. Hence, we see no infirmity in the order of the CIT and uphold the same as correct and in accordance with law. It is ordered accordingly.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced on this 20th day of August, 2019.
Sd/- Sd/- (Chandra Poojari) (George George K) ACCOUNTANT MEMBER JUDICIAL MEMBER
Cochin ; Dated : 20th August, 2019. Devdas*
ITA No.323/Coch/2019 6 Sri.K.P.Vijayan.
Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The Pr.CIT, Kozhikode. 4. The CIT(Appeals)-Kozhikode. 5. DR, ITAT, Cochin 6. Guard file.
BY ORDER,
(Asstt. Registrar) ITAT, Cochin