COMMISSIONER OF INCOME TAX DEHRADUN vs. M/S KESHI BUILDERS

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ITA/45/2006HC UttarakhandUKHC01002975200621 February 2006Author: HON'BLE MR. JUSTICE P. C. VERMA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law was involved in the appeals. The Court noted that the ITAT had made a categorical finding that no defects were found in the books of account maintained by the assessee in the regular course of business in a systematic manner. Furthermore, the ITAT was of the view that there was no justification for sustaining additions based on the DVO's report. The Court found that the ITAT's decision was based on factual aspects which could not be re-examined in an appeal under Section 260-A. Consequently, the appeals filed by the revenue were found to be devoid of merit and were dismissed.

What were the facts?

The Commissioner of Income Tax, Dehradun, filed five appeals before the High Court against a common order dated July 29, 2005, passed by the Income Tax Appellate Tribunal (ITAT). The ITAT had allowed appeals filed by the assessee, M/s Keshi Builders, for assessment years 1996-97 to 2000-2001. The assessee, a developer of commercial buildings, maintained regular books of account supported by invoices and muster rolls. The Assessing Officer (AO) found no expenditure exceeding recorded amounts but referred the matter under Section 131(1)(d) for cost elucidation. The ITAT concluded that the report of the Departmental Valuation Officer (DVO) under Section 131(1)(d) could not be the basis for estimating the cost of stock-in-trade, finding no defects in the assessee's systematically maintained books.

What were the issues?

1. Whether the Income Tax Appellate Tribunal erred in holding that the report of the Departmental Valuation Officer (DVO) under Section 131(1)(d) of the Income Tax Act, 1961, could not be the basis for estimating the cost of stock-in-trade, thereby allowing the assessee's appeals? (Question of law) Assessee's Contention: The ITAT correctly found no defects in the systematically maintained books of account and that there was no justification for additions based on the DVO's report. Revenue's Contention: The revenue, through the Commissioner of Income Tax, appealed the ITAT's order, implying disagreement with the ITAT's findings regarding the DVO's report and the estimation of construction costs.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 131(1)(d)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
In the High Court of Uttaranchal, at Nainital. (1) Income Tax Appeal No. 43 of 2006 Commissioner of Income Tax, Dehradun ........ Appellant. Vs. M/S Keshi Builders, 75, Rajpur Road, Dehradun ........ Respondent (2) Income Tax Appeal No. 44 of 2006 Commissioner of Income Tax, Dehradun ...... Appellant Vs. M/S Keshi Builders, 75, Rajpur Road, Dehradun ....... Respondent. (3) Income Tax Appeal No. 45 of 2006 Commissioner of Income Tax, Dehradun ........ Appellant. Vs. M/S Keshi Builders, 75, Rajpur Road, Dehradun ...... Respondent. (4) Income Tax Appeal No. 46 of 2006 Commissioner of Income Tax, Dehradun ...... Appellant, Vs. M/S Keshi Builders, 75, Rajpur Road, Dehradun ....... Respondent (5) Income Tax Appeal No. 47 of 2006 Commissioner of Income Tax, Dehradun ...... Appellant, Vs. M/S Keshi Builders, 75, Rajpur Road, Dehradun ....... Respondent Sri P. Maulekhi, learned counsel for the applicant. Coram: Hon’ble P.C. Verma, J. Hon’ble B.C. Kandpal, J. Dated: 21st February, 2006 (Per: Hon’ble B.C. Kandpal, J.) All these income Tax appeals under Section 260-A of the Income Tax Act, 1961 arise out against the impugned order dated 29.7.2005, passed by the Income Tax Appellate Tribunal, by which the Tribunal was pleased to allow the appeals filed by the respondent/assessee. The impugned

order is common for all the assessment years – 1996-97, 1997-98, 1998-99, 1999-2000 and 2000-2001. 2- The department has filed five appeals against the impugned order, which is common for all the aforesaid assessment years. 3- As the common issue arises in all the appeals, therefore, all the appeals are being decided by the common judgment.

4.

The brief facts giving rise to the appeals are that the assessee firm carries on a business of developer of commercial buildings and 1996-97 was the first year of the assessee’s business. The assessee constructed a shopping complex during the assessment years 1996- 97 to 2001-2002. For these assessment years the assessee maintained regular books of account for each year, duly supported by purchase invoice, labour muster rolls, etc. The Assessing Officer (A.O.) did not find any expenditure incurred over and above that which was recorded in the books of accounts by the assessee. Therefore, the A.O. referred the matter under Section 131(1)(d) of the Act for elucidation of cost of construction. The Income Tax Appellate Tribunal came to the conclusion that the report of the D.V.O. under Section 131(1)(d)of the Act could not and should not have been made the basis for estimating the cost of stock-in-trade. The I.T.A.T. did not find any defect in the books of account maintained by the assessee in the regular course of its business in a systematic manner. The I.T.A.T. was also of the view that it does not appeal to reason that the assessee was incurred any expenditure over and above what it had recorded in the books of account, which might

result in the increase of cost, thereby giving loss to the asssessee, and disclosed in its books of account, was accepted by the A.O. The Income Tax

Apeellate Tribunal, therefore, partly allowed all the appeals filed by the assessee, vide impugned order dated 29.7.2005. 5- Feeling aggrieved by the aforesaid impugned order the Commissioner, Income Tax filed the appeals before this Court.

6- Heard the learned counsel for the appellant and perused the record.

7- Considering the impugned order passed by the Income Tax Appellate Tribunal, we are of the view that no substaintial question of law is involved in this case. The Income Tax Appellate Tribunal has given a categorical finding that no defects were found in the books of account maintained by the assessee in the regular course of business in a systematic manner. The Income Tax Appellate Tribunal was also of the view that there was no justification for sustaining the addition on the basis of the D.V.O.’s report. The finding of the Income Tax Appellate Tribunal is based on the factual aspect and the same cannot be gone into by way of this appeal.

8- The appeals being devoid of any merit, are liable to be dismissed.

9-

Accordingly all the appeals are dismissed. 10- Let a copy of this order be placed in the each file of I.T.A. Nos. 44/2006 to 47/2006. (B.C. Kandpal, J.) (P.C. Verma, J.)

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