ITO, BARAN vs. GANPATI PLAZA, ALWAR

`आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 466 & 467/JP/2016 fu/kZkj.k o"kZ@Assessment Year : 2011-12 & 2012-13 cuke M/s Ganpati Plaza The ITO, Vs. Near Police Station, Behror. Court Road, Behror, Alwar. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAJFG5801E vihykFkhZ@Appellant izR;FkhZ@Respondent vk;dj vihy la-@ITA No. 545/JP/2016 fu/kZkj.k o"kZ@Assessment Year : 2012-13 cuke The ITO, M/s Ganpati Plaza Vs. Behror. Near Police Station, Court Road, Behror, Alwar. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAJFG5801E vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Satish Gupta (C.A.) jktLo dh vksj ls@ Revenue by : Smt. A.S. Nehra (JCIT) lquokbZ dh rkjh[k@ Date of Hearing : 11/12/2017 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 16/02/2018 vkns'k@ ORDER

PER: VIJAY PAL RAO, J.M. These are two appeals by the assessee for the assessment years 2011-12 & 2012-13 and cross appeal by the Department for the

ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO

assessment year 2012-13are against two separate orders of the ld.

CIT(A) both dated 30.03.2016. The assessee has raised common

grounds in both appeals. The grounds raised for the assessment year

2011-12 as under:-

“1 On the facts & circumstances of the case Ld. Lower authorities grossly erred in initiating reassessment proceedings u/s 147 of the Income Tax Act, 1961, 2. On the facts & circumstances of the case & in law also A.O. grossly erred in passing the assessment order without proper & unlawful service of notice u/s 148,143(2) of the Act. 3. On the facts & circumstances of the case Ld CIT (A), Alwar grossly erred in holding that the reference to the DVO u/s 142 of the Act for estimating cost of construction was justified. 4. On the facts & circumstances of the case Ld CIT (A), Alwar grossly erred in i. Not accepting the cost of construction declared by the assessee in the books of accounts as in the remand proceedings Ld A.O. verified the books, Vouchers & supporting and were accepted and nothing incriminating material was found during the course of survey U/s 133 A of the Act. ii. Taking the total cost of construction as per PWD rates at Rs 2,81,71,198/- as against Rs 2,65,33,114/- calculated by assessee.

iii. Not allowing deduction for self supervision charges.

iv. Not allowing deduction for electrical fittings & paint cost incurred by the tenants. v. Considering the cost of purchases of lift in A.Y. 2011-12 to 2014-15 ignoring the fact that the said lift was purchased on 07/01/2015 i.e pertaining to A.Y. 2015-16.

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vi. Taking the value of lift at Rs. 19,03,500/- as estimated by DVO as against actual cost of purchases of lift for Rs. 3,78,420/-. vii. Taking the value of extra items at Rs 20,02,130/- as against the value of extra items taken by approved valuer at Rs 4,54,503/- viii Taking the Architect fees at Rs 3,20,768/- i.e.1% of total cost as against actual payment of Rs 2,00,000/- ix. Accepting the cost of construction for F.Y. 2013-14 at Rs 10,19,596/- only as against Rs 18,34,792/- declared by the assessee. x. Not accepting the cost of construction declared by the assessee in F.Y. 2014-15 (A.Y. 2015-16) for Rs 26,65,245/- in the books of accounts especially under the circumstances that the property was inspected by DVO on dated 09/03/2015 i.e at the end of F.Y. 2014-15. Moreover the division of total cost should have been made in 5 years & not in 4 years. xi. Holding that no books of accounts were produced before Ld. AO during the assessment proceedings. 5. Therefore Ld CIT(A) grossly erred in confirming the addition of Rs. 4,17,339/- for the year under consideration on account of unexplained investment in the cost of construction.” 2. Ground No. 1 is regarding the validity of reopening assessment. A

survey operation u/s 133A of the Act was carried out at the business

premises of the assessee firm on 29-30/08/2013. During the course of

survey proceedings, statements of Shri Anil Yadav the partner and

husband of Smt. Madhu Yadav other partner were recorded and certain

loose papers & documents were impounded. No books of account were

found at the business premises of the assessee firm. Since, none of the

ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO

partners were present at the time of survey proceedings, the statement

of partners were recorded u/s 131 of the Act in which they stated that

no regular books of accounts are maintained by the assessee firm. The

assessee did not file any return of income for the year under

consideration. The AO issued notice u/s 148 on 28.11.2013 after

recording the reasons for reopening of the assessment. In response the

assessee filed a copy of e –return dated 12.03.2014 and the AO

completed the reassessment vide order dated 20.03.2015 whereby an

addition was made on account of difference in valuation of investment

in shopping complex. The assessee challenged the validity of the

initiation of reassessment before the ld. CIT(A) and submitted that

there was no reason to belief that the income assessable to tax has

escaped assessment was no incriminating documents or materials were

found during the course of survey disclosing any escapement of

income. The AO has reopened the assessment only on the basis of the

statement of Shri Sunil Yadav recorded u/s 133A of the Act. Thus,

initiation of reassessment proceeding was simply on the basis of

suspicion and not on the basis of belief. The ld. CIT(A) did not accept

the contention of the assessee and upheld the initiation of proceedings

u/s 147/148 of the Act.

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the reasons recorded, the AO has formed to belief on the basis of the

statement of Shri Sunil Yadav partner of Ganpati Plaza recorded on

02.09.2013 wherein he has stated that a sum of Rs. 17 lacs has been

invested in the construction of shopping complex. However, simply the

investment in the shopping complex cannot be considered as income of

the assessee firm. He has further submitted that the source of

investment was explained in the statement and when there was no

taxable income during the year then, there was no question of filing the

return of income. Thus, non filing of return of income cannot be a

reason to believe that the income chargeable to tax has escaped

assessment. The ld. AR has further contended that there was no

business activity during the year and there was no income either

accrued or received by the firm during the year. Non maintenance of

books of accounts also cannot be the reason to believe that some

income chargeable to tax has escaped assessment. Thus, ld. AR has

submitted that when there was no material before the AO to whisper in

the form of investment in construction of building than how a belief was

formed by the AO. He has relied upon the decision of Hon’ble

Supreme Court in case of CIT vs. Khader Khan 352 ITR 480 and

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submitted that the statement made u/s 133A has no evidentiary value.

Thus, the statement recorded u/s 133A cannot be a basis for initiation

of reassessment proceedings. Further, the AO has framed the

assessment on the basis of the opinion of the DVO which cannot be the

basis for reopening u/s 147 as held by the Hon’ble Supreme Court in

case of ACIT vs. Dhariya Construction Company 328 ITR 515.

admittedly not maintaining the regular books of accounts and further

there was no return of income filed by the assessee for the year under

consideration. During the survey proceedings the assessee has

estimated the investment made in construction of the building namely

Ganpati Shopping complex. Therefore, in the absence of books of

account and return of income the fact found on the ground and

admitted by the assessee in the statement constitute a tangible

material to form the belief that the income assessable to tax to the

extent of investment in the building has escaped assessment. The AO

was having sufficient reasons to belief that the income assessable to

tax as escaped assessment. He has relied upon the orders of the

authorities below.

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material on record. A survey u/s 133A of the Act was carried out at the

business premises of the assessee firm on 29-30/08/2013. Undisputedly

no books of accounts were found at the business premises of the

assesses as the assessee did not maintain the regular books of

accounts till that date. Therefore, it is apparent that despite expiry of

more two and half years from the end of the financial year 2010-11

relevant to the assessment year under consideration the assessee did

not prepare and maintain the books of accounts of the firm. Further, no

accounts were maintained by the assessee firm regarding construction

of the shopping complex namely Ganpati Plaza. The statements of the

partners of the assessee firm were recorded during the course of

survey proceedings as well as post survey inquiry. On the specific

question of the amount of investment in construction of the shopping

complex and source of the investment, the partner of the assessee firm

in his statement recorded u/s 131 of the Act on 02.09.2013 had given

only estimated and general reply regarding the cost of

construction/amount of investment in the construction of shopping

complex and sources of the said investment. It was only a general

statement without giving specific details of source of investment and

ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO

further without any supporting documents. Shri Sunil Yadav partner of

the assessee firm has stated that he will furnish the relevant record

subsequently This is not a case of forming of opinion by the AO on the

basis of statement recorded u/s 133A of the Act but the statements

were recorded u/s 131 of the Act on the subject matter of shopping

complex did exist at the ground. Therefore, when a tangible asset was

found in existence and statements were regarding the investment and

source of the investment then the same cannot be held as a mere

statement without corroborating evidence. Where the facts of

construction of shopping complex is not undisputed or in doubt then,

the statement recorded about the investment and source of investment

of the shopping complex along with physical existence of the shopping

complex constitute a tangible material to form the belief that the

income to the extent of investment made in construction of shopping

complex has escaped assessment. It is not a matter of case of dispute

about the quantum of investment or the source of investment but the

assessee has neither maintain the books of accounts or accounts of the

construction of the shopping complex nor has filed the return of income

for the assessment year under consideration. Therefore, all these facts

are sufficient to form the belief that the income assessable to tax has

ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO

escaped assessment. At the stage of initiation of proceedings u/s

147/148 of the Act what is required is prima facie reasons to belief that

the income assessable to tax has escaped assessment and the AO is

not required to establish the correctness of the reasons at this stage.

Therefore, when the assessee firm has failed to produce a single

document during the course of survey proceedings and post survey

inquiry to show the source of investment which cannot be treated as

income of the assessee firm then, the vague statements giving

estimated details without supporting evidence would not help the case

of the assessee. The decision relied upon by the ld. AR are not

applicable in the facts of the case on hand because the investment in

the shopping complex its. Hence, in the facts and circumstances of the

case, we do not find any error or illegality in the initiation of

reassessment proceedings in the case of the assessee.

Ground Nos. 2 and 3:- At the time hearing, the learned counsel 6.

for assessee stated at bar that the assessee does not press ground nos.

2 and 3 and the same may be dismissed as not pressed. The ld. DR has

raised no objections if ground Nos. 2 and 3 of the assessee’s appeal are

dismissed as not pressed. Accordingly the ground Nos. 2 and 3 of the

assessee’s appeal are dismissed being not pressed. 9

ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO

AO on the basis of DVOs valuation report as against the cost declared

by the assessee. The assessee has declared the cost of construction for

the assessment year 2011-12 of Rs. 17,41,097/-. Since, the assessee

did not produce books of accounts in support of the claim, therefore,

the AO referred the valuation of cost of construction to the DVO u/s

142A of the Act. The DVO estimated the cost of investment at Rs.

52,336/- for the assessment year 2011-12 and accordingly, the AO

made an addition of the differential amount of Rs. 34,11,239/-. On

appeal the assessee produced the books of accounts and other records

in support of the cost of investment for construction of the shopping

complex consequently the ld. CIT(A) forwarded the additional evidence

filed by the assessee to the AO for examination and comments. The AO

submitted its remand report and pointed out that during the course of

remand proceedings the assessee produced the books of accounts

along with supporting bills and vouchers. The assessee also produce the

affidavit of the tenants to show that some work of finishing and

furnishing of shops were done by tenants. However, the AO observed

and stated that the assessee did not produce the complete books of

account along with supporting evidence during the course of

ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO

assessment proceedings despite numerous opportunities provided to it.

After considering the said remand report the ld. CIT(A) has granted

part relief to the assessee by applying State PWD rate instead of

CPWD rates adopted by the DVO for the purpose of determining the

value of construction of shopping complex. Thus, the ld. CIT(A) did not

accept the contention of the assessee regarding the cost of construction

as declared by the assessee and other deduction and rebates claimed

by the assessee.

books of accounts and construction accounts along with vouchers were

filed vide letter dated 02.01.2015. The assessee has also submitted

copy of balance sheet along with building account on 03.02.2015.

These documents were again submitted before the ld. CIT(A) as an

additional evidence which were examined by the Assessing Officer in

the remand proceedings. The AO after verification and examination of

books of accounts accepted the complete books of accounts along with

supporting bills and vouchers. Thus, once the AO has not rejected the

books of accounts produce by the assessee, the cost of construction as

declared by the assessee in the books of accounts should have been

accepted instead of referring the valuation to the DVO and adopting the

ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO

value estimated by the DVO. He has further contended that there is no

incriminating document found during the course of survey proceedings

and therefore, the investment shown in the books of accounts should

have been accepted by the authorities below. He has relied upon the

decision of Hon’ble jurisdiction High Court in case of CIT vs Hotel Joshi

242 ITR 478 as well as the decision of Hon’ble High Court in case of

Pratap Shingh Amro Singh Rajedra Singh 200 ITR 788 and contended

that when the books of account are not rejected the addition based on

valuation report is not sustainable. The ld. AR of the assessee has

further contended that the DVO has adopted the total cost by applying

CPWD rates however, the ld. CIT(A) has also not computed the correct

cost of construction even by applying the State PWD rates. He has

referred to the standing order of State PWD rates applicable for the

year under consideration and submitted that due to some calculation

mistake the value has been taken on higher side. Further, the deduction

on account of self-supervision charges has not been allowed by the

DVO as well as by the authorities below. Thus, the ld. AR has submitted

that the assessee is entitled for deduction for 12% on account of self-

supervision. In support of his contention he has relied upon the decision

of this Tribunal in case of ITO vs. Nitesh Maheshwari 138 TTJ 116 and

ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO

submitted that the Tribunal has granted 12% deduction for self-

supervision. The ld. AR has pointed out that the assessee produced the

affidavits of the tenants as well as some of the tenants were examined

by the AO during the course of remand proceedings wherein all the

tenants have accepted the fact that the electrical installations and paint

inside the shop were got done the by themselves and assessee has not

incurred any expenditure on electrical installation and inside paints of

the shops. Since, the DVO while determining the cost of construction

has not taken into consideration these factors.

allotted the next dispute is regarding the cost of lift. The ld. AR has

submitted that the assessee produce the purchase bill of lift of Rs.

3,78,420/- whereas the DVO took the values as per CPWD guidelines

rate at Rs. 19,03,500/-. Therefore, ignoring the actual cost of lift the

DVO has adopted the artificial rates which is not justified. The DVO has

taken the value of extra items of Rs. 20,02,130/- as against the value of

extra items taken by the approved valuer at Rs. 4,54,503/-. The ld. AR

of the assessee has submitted that since the ld. CIT(A) has accepted

the State PWD rates instead of CPWD rate therefore, the cost of extra

items should have been computed by applying the State PWD rates.

ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO

The ld. AR has then pointed out that the assessee has paid the actual

fee of architecture of Rs. 2,00,000/- whereas the DVO has adopted the

architecture fee @ 1% of total cost of Rs. 3,20,768/-. Therefore, the

actual fee paid by the assessee has to be taken into account instead of

estimation made by the DVO. The ld. AR has further submitted that the

DVO has also sifted the cost of construction declared in the books for

the assessment year 2014-15 at Rs. 18,34,792/- and the differential

amount was added for the year under consideration. Further, the DVO

has divided total cost of construction in 4 years instead of 5 years taken

by the assessee and thereby increase the cost of construction for the

year under consideration. Thus, the ld. AR has submitted that when the

books of accounts of the assessee were found to be correct, no addition

is called for in respect of cost of construction of shopping complex.

admittedly is not maintained the books of accounts as well as the

building accounts regularly. It was found during the course of survey

proceedings that the assessee was not maintaining the regular books of

accounts and further no records or details were produced by the

assessee even during the course of assessment proceedings. Only

during the appellate proceedings before the ld. CIT(A) the assessee

ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO

produced evidences which were forwarded to the AO for examination.

Thus, it is clear that the books of accounts prepared by the assessee

were not based on the actual details of expenditure but it is prepared

after gap of more than 3 years and therefore, the valuation adopted by

the assessee in the books of accounts cannot be accepted as correct.

He has relied upon the orders of the authorities below.

material on record. Though the assessee produced the books of

accounts before the AO during the remand proceedings and the same

were not found to be incorrect by the AO however, it is undisputed that

the books of accounts produce by the assessee were got prepared after

a gap of more than 3 years from the end of the financial year relevant

to the assessment year under consideration. Rejection of the books of

accounts is not a precedent of condition for rejecting the cost of

construction declared by assessee when the books of accounts were not

maintained by the assessee regularly but were prepared on a

subsequent date that too after more than 3 years. Therefore, the value

shown by the assessee in the books of accounts, need not necessarily

be accepted as correct. Thus, it was proper and justified on the part of

the AO to examine the valuation of cost of construction through

ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO

independent inquiry. Further, the reference to the DVO was made by

the AO during the assessment proceedings and in the absence of

relevant evidence and books of accounts. Therefore, the report of the

DVO was available before the additional evidence filed by the assessee

during the proceedings before the ld. CIT(A). Thus, once the DVO has

already determined the value of cost of construction then, this objection

of the assessee is devoid of merits. However, we find that some of the

issues like allowing the self supervision rebated/deduction, the cost of

electrical installations and paint inside the shops claimed to have been

incurred by the tenants as per the affidavits filed as well as statements

of the tenants recorded by the AO during the remand proceedings and

further, the cost of the lift was adopted by the DVO as per guidelines

value of CPWD rates instead of actual purchase price claimed by the

assessee have not been considered properly by the authorities below.

Further, the assessee has submitted that the cost of extra items were

taken by applying the CPWD rates instead of State PWD rates despite it

was accepted by the ld. CIT(A). We find that it is settled proposition of

law that when the assessee has claimed the deduction on accounts of

self supervision then appropriate deduction ought to have been given

on this account while determining the cost of construction. Further,

ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO

when certain expenditure were incurred by the tenants of the shops as

claimed in the affidavit as well as in their statements then, the said

claim should not have been denied without bringing contrary material

on record. Similarly the assessee has claimed that the ld. CIT(A) has

adopted incorrect State PWD prescribed rates therefore, all these

aspects require a proper verification and examination at the time of

determination of cost of construction of the shopping complex in

question. The other issues raised by the assessee are also required to

be considered in light of the relevant evidence produce by the assessee.

There is no points in adopting two separate rates when the ld. CIT(A)

has impermissible accepted the State PWD rates of determining the cost

of construction then the cost of extra items are also be determined by

applying the State PWD rates. The assessee has claimed to have paid

architecture fee of Rs. 2 lacs whereas the DVO has adopted the

estimated fee @ 1% of total cost. We are of the considered view that

estimation of fee is required only when the assessee has failed to

produce the evidence in support of the actual fee paid. Thus, if the

assessee has claimed to have made the payment of Rs. 2 lacs only on

account of architecture fee then, without examination of the correctness

of the payment and relevant evidence, the estimated value cannot be

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adopted. Therefore, the issue of determination of cost of construction is

remitted to the record of the Assessing officer to examine and decide

afresh after considerating various objections and relevant aspects as

discussed in the foregoing part of this order. The objection of the

assessee regarding division of cost construction in 5 years shall also be

taken into consideration. Needless to say the assessee be given an

appropriate opportunity of hearing before passing the fresh order on

this issue.

separate adjudication is required.

following grounds:-

“1 On the facts & circumstances of the case Ld. Lower authorities grossly erred in initiating reassessment proceedings u/s 147 of the Income Tax Act, 1961, 2. On the facts & circumstances of the case & in law also A.O. grossly erred in passing the assessment order without proper & unlawful service of notice u/s 148,143(2) of the Act.

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grossly erred in

i. Not accepting the cost of construction declared by the assessee in the books of accounts as in the remand proceedings Ld A.O. verified the books, Vouchers & supporting and were accepted and nothing incriminating material was found during the course of survey U/s 133 A of the Act.

ii. Taking the total cost of construction as per PWD rates at Rs 2,81,71,198/- as against Rs 2,65,33,114/- calculated by assessee.

iii. Not allowing deduction for self supervision charges.

iv. Not allowing deduction for electrical fittings & paint cost incurred by the tenants.

v. Considering the cost of purchases of lift in A.Y. 2011-12 to 2014-15 ignoring the fact that the said lift was purchased on 07/01/2015 i.e pertaining to A.Y. 2015-16.

vi. Taking the value of lift at Rs. 19,03,500/- as estimated by DVO as against actual cost of purchases of lift for Rs. 3,78,420/-.

vii. Taking the value of extra items at Rs 20,02,130/- as against the value of extra items taken by approved valuer at Rs 4,54,503/-

viii Taking the Architect fees at Rs 3,20,768/- i.e.1% of total cost as against actual payment of Rs 2,00,000/- ix. Accepting the cost of construction for F.Y. 2013-14 at Rs 10,19,596/- only as against Rs 18,34,792/- declared by the assessee.

x. Not accepting the cost of construction declared by the assessee in F.Y. 2014-15 (A.Y. 2015-16) for Rs 26,65,245/- in the books of accounts especially under the circumstances that the 19

ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO

property was inspected by DVO on dated 09/03/2015 i.e at the end of F.Y. 2014-15. Moreover the division of total cost should have been made in 5 years & not in 4 years.

xi. Holding that no books of accounts were produced before Ld. AO during the assessment proceedings.

and other grounds of the assessee are common to the grounds raised

for the assessment year 2011-12. Therefore, the appeal for the

assessment year 2011-12 is disposed off in the same terms as we have

decided the appeal of the assessee for the assessment year 2011-12.

Revenue has raised the following ground:-

“1. That the Ld. Commissioner of Income Tax (Appeals), Alwar has erred on the facts and circumstances of the case in restricting the addition of Rs. 93,80,094/- to Rs. 11,47,583/- made by AO on account of undisclosed investment on the basis of difference found in the cost of construction as shown by the assessee and as determined in DVO’s Report.”

relevant material on record. This issue is common to the issue raised by

the assessee regarding the estimation of cost of construction by 20

ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO

adopting State PWD rate by the ld. CIT(A) instead of CPWD rates

adopted by DVO. We find that this issue is covered by the various

decisions of this Tribunal as well as the decision of Hon’ble High Court

relied upon by the ld. CIT(A) as held in para 7.22 and 7.23 as under:-

“7.22 The appellant has placed reliance on the judicial decisions of Hon’ble Rajasthan High Court in the case of CIT vs. Hotel Hoshi ( 242 ITR 478), CIT vs. Elegant Homes Pvt Ltd ( 259ITR232). It is further submitted by the appellant that Hon’ble ITAT Jaipur have in the case of Sh Nirmal Kumar Agarwal in ITA No. 828, 829/JP/2013 vide order dated 15-01-2014, held after considering a number of decisions of the jurisdictional High Court that State PWD rates have to be applied for estimating the value of construction.

7.23 I have gone through the decisions of the Jurisdictional Hon’ble High Court and of Hon’ble ITAT, Jaipur Bench cited by the appellant and find that it has been categorically held that for the purposes of valuation of property, the rates of valuation as provided by the State PWD have to be applied apart from the factual matrix of each case. Therefore, following the same, as these decisions are found to be applicable to the facts of the present cases, I hold that for the purposes of valuation of property, State PWD rates have to be applied to the plinth area of construction for each floor as given by the DVO in the report. Having held that, it would also take care of the objections of the appellant on the issue of supervision expenses, no discounting in the valuation given by the DVO for the cost of windows, Almirahs, sanitary fittings, electric fittings, painting, false ceiling, finishing etc. as the expenses on these items were not incurred by the appellant and also the fact that construction material has been sourced locally.”

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Even the Hon’ble Supreme Court in case of CIT vs. Sunita Mansingha

393 ITR 121 has held in para 1 to 3 as under:-

“1. We have heard the learned counsel for the parties and perused the impugned judgment and order dated 2nd March, 2005 passed by the High Court of Judicature for Rajasthan at Jodhpur in Income Tax Appeal No. 3 of 2005 as also the order passed by the Income Tax Appellate Tribunal dated 20th May, 2004. 2. From the order of the Tribunal we find that the Tribunal has even though held that the reference to the Departmental Valuation Officer in question is not valid, in view of the decision of this Court in the Case of Amiya Bala Paul v. CIT [2003] 262 ITR 407/130 Taxman 511, but it has also held that it is settled principle of law that in place of Central Public Works Department rates local Public Works Department rates are to be applied and adopted to determine the cost of construction. In view of the fact that Section 142A was inserted by Finance (No.2) Act, 2014 (23 of 2004) w.e.f. 15th November, 1972 and subsequently again substituted by Finance Act, 2010 (14 of 2010) w.e.f. 1st July, 2010 and Finance (No.2) (225 of 2014) w.e.f. 1st October, 2014, as the proviso to sub-section (3) of Section 142A as it existed during the relevant period, reference to the Departmental Valuation Officer can be made because assessment in the present case had not become final and conclusive because the appeal preferred by the Revenue under section 260A of the Income Tax Act, 1961 was pending before the Rajasthan High Court. 3. However, in view of the finding recorded by the Tribunal that the local Public Works Department rates are to be applied and adopted in place of Central Public Works Department rates, we do not find any good ground to interfere in the impugned judgment on this issue on merits. The appeal fails and is dismissed.”

ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO Therefore, in view of the above decision of Hon’ble Supreme Court we do not find any error or illegality in the order of the ld. CIT(A) qua this issue.

In the result, the appeals of the assessee are partly allowed for statistical purposes and appeal of the Revenue for the assessment year 2012-13 is dismissed.

Order pronounced in the open court on 16/02/2018

Sd/- Sd/- ¼fot; iky jko½ ¼foØe flag ;kno½ (Vikram Singh Yadav) (Vijay Pal Rao) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 16/02/2018. *Santosh. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- M/s Ganpati Plaza, Behror, Alwar. 2. izR;FkhZ@ The Respondent- ITO, Behror. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 466, 467 & 545/JP/2016} vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत