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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) – 5, Chennai, dated 03.02.2016 and pertains to assessment year 2010-11.
Sh. N. Devanathan, the Ld.counsel for the assessee, submitted that the only issue arises for consideration is cost of construction. The assessee has admitted the cost of construction at `22,00,000/-. However, the Assessing Officer determined the cost of construction at `41,82,000/-. In fact, the Departmental Valuation Officer estimated the cost of construction by his report dated 30.03.2013. The Assessing Officer without giving any opportunity to the assessee, passed the impugned assessment order next day, i.e. on 31.03.2013. The CIT(Appeals) without considering the factual aspects, confirmed the order of the Assessing Officer. According to the Ld. counsel, reference to valuation cell itself is defective.
Therefore, the valuation report cannot be a basis for making any addition. Moreover, for valuing the cost of construction, only State PWD rates has to be taken and not Central PWD. Apart from that, 10% allowance has to be given for purchasing the material by the assessee and another 10% for self-supervision. These factors need to be considered by the Assessing Officer. The CIT(Appeals) has simply confirmed the order of the Assessing Officer without considering the material available on record.
On the contrary, Shri A.V. Sreekanth, the Ld. Departmental Representative, submitted that the assessee during the course of survey operation, claimed that the cost of construction was `22,00,000/-. However, the Assessing Officer referred the matter to the valuation cell under Section 142A of the Income-tax Act, 1961 (in short 'the Act'). The valuation officer by his report dated 30.03.2013, determined the value of construction at `41,82,000/-.
The difference in the cost was taken as undisclosed income of the assessee. Referring to the order of the Assessing Officer, the Ld. D.R. submitted that an opportunity was given to the assessee subsequent to receipt of valuation report. Therefore, according to the Ld. D.R., it is not correct to say that opportunity was not given to the assessee.
We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that the Departmental Valuation Officer’s report itself was dated 30.03.2013. It is not known when the Assessing Officer received the valuation report from the Departmental Valuation Officer. If it is presumed that the valuation report was received on the same day i.e. on 30.03.2013, this Tribunal is of the considered opinion that the Assessing Officer had no opportunity to give a copy of the valuation report to the assessee to get his response. In such circumstances, this Tribunal is of the considered opinion that the Assessing Officer has not given any opportunity to the assessee.
Moreover, a statement was said to be recorded from the assessee under survey proceeding. In view of the above factual situation, this Tribunal is of the considered opinion that the Assessing Officer shall serve a copy of the valuation report to the assessee and thereafter decide the same in accordance with law. Accordingly, the orders of the authorities below are set aside and the entire issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the issue afresh after serving a copy of the valuation report to the assessee. The Assessing Officer shall give sufficient opportunity to the assessee to file the objection to the valuation report, including the validity of reference to valuation cell. The Assessing Officer shall thereafter consider the objection of the assessee and decide the issue in accordance with law, after giving a reasonable opportunity to the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on 23rd November, 2016 at Chennai.