TMI Blog2009 (3) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... s explanation for delay and the settled legal position, we are of the view that there was sufficient cause, which prevented the assessee from filing the appeal before the Tribunal within time. Therefore, we condone the delay in filing the appeal. Jurisdiction to any authorities mentioned in the definition by the CBDT under the provisions of section 120 of the Income-tax Act, 1961, to act as an AO - DDIT made reference to the DVO before completing the construction of the house property - no proceeding was pending in the case of the assessee before making reference to the DVO by the DDIT - Validity of assessment order passed on the basis of such valuation report - HELD THAT:- The authorities mentioned in the definition of AO in section 2(7A), must be assigned the jurisdiction to any authorities mentioned in the definition by the CBDT under the provisions of section 120, to act as an AO. Only in that circumstances that Assistant Commissioner or Dy. Director of Income-tax, other authorities mentioned in the definition u/s 2(7A), can act as AO. In this case, the DDIT (Investigation II), Indore, who issued the commission u/s 131(1)( d ) has not been assigned jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at all. It is further argued that the DVO has worked out the cost of construction at the rate of Rs. 582 per sq.ft. After allowing deduction at the rate of 20 per cent by AO, the cost of construction comes at Rs. 466 per sq.ft. We agree with the submission of the ld AR in view of the infrastructure used by the assessee of his own business in the construction of the house property under consideration. Therefore, further deduction of Rs. 25 per cent is allowable. Thus, the difference arrived only at 6.9 per cent, which is negligible. Hence, the additions sustained by the ld. CIT(A) are deleted. Thus, all the three grounds of appeal are allowed. In the result, the appeal of the assessee is allowed both on account legality and on merits. - BHAVNESH SAINI AND M.L. GUSIA, JJ. Prakash Jain for the Appellant. Smt. Suneeta Singh for the Respondent. ORDER M.L. Gusia, Accountant Member. - This appeal of the assessee is directed against the order passed by the CIT(A)-II, Indore, on 20-9-2005, for assessment year 1999-2000. 2. The appeal of the assessee was filed late by one year and ninety two days. The assessee filed an application for condonation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee thereupon asked for those appeal papers. However, Shri Rajesh told that they were lost. Thereafter, the assessee filed a FIR in Tukoganj Police Station at Indore. A copy of FIR lodged on 22-11-2006 has also been enclosed with the application for condonation of delay. It is further submitted that after obtaining copy of order of CIT(A), the same appeal is filed before this Bench. In view of the above, it was pleaded that there was reasonable cause for filing the appeal late. However, the learned Departmental Representative argued that the delay in filing of appeal is of one year and 92 days, which is inordinate delay and for condonation of delay, the entire matter has been cooked up. 3. After hearing the rival contentions and going through the copy of FIR along with statement of Shri Ramesh Vaishnav given in Police Station on 16-12-2006, we are of the view that the assessee is partner in M/s. Mewara Construction Company and he has to frequently visit to Khargone to look after the construction work carried out by the firm M/s. Mewara Construction Company. It is also not disbelieved that due to his pre-occupation with the work of the firm, he might have handed over the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the FIR has been lodged by the assessee and also considering the assessee s explanation for delay and the settled legal position, we are of the view that there was sufficient cause, which prevented the assessee from filing the appeal before the Tribunal within time. In view of the above discussion, we condone the delay in filing the appeal. 6. During the course of hearing before us, the learned counsel for the assessee has not pressed ground Nos. 1, 2 7. Therefore, the same are dismissed. 7. Ground No. 3 is that on the facts and in the circumstances of the case, the CIT(A) has erred in maintaining the assessment framed by the ld. Assessing Officer, which was based on the report of the DVO and that too the said report was forwarded to ld. Assessing Officer by DDIT. 8. Facts of the case are that the assessee filed return of its total income on 23-3-2000. The Dy. Director of Income-tax (Investigation-II), Indore, issued commission under section 131(1)( d ) of the Income-tax Act, 1961, on 24-3-1999 to the Valuation Officer, Indore, to value the house property constructed at BG-165, Scheme No. 74-C, Vijay Nagar, Indore. The DVO vide his report dated 4-5-1999 comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act." Section 120 reads as under : "120. Jurisdiction of income-tax authorities. (1) Income-tax authorities shall exercise all or any of the powers and perform all or any of the functions conferred on, or, as the case may be, assigned to such authorities by or under this Act in accordance with such directions as the Board may issue for the exercise of the powers and performance of the functions by all or any of those authorities. [Explanation. For the removal of doubts, it is hereby declared that any income-tax authority, being an authority higher in rank, may, if so directed by the Board, exercise the powers and perform the functions of the income-tax authority lower in rank and any such direction issued by the Board shall be deemed to be a direction issued under sub-section (1).] (2) The directions of the Board under sub-section (1) may authorise any other income-tax authority to issue orders in writing for the exercise of the powers and performance of the functions by all or any of the other income-tax authorities who are sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be references to such higher authority and any provision of this Act requiring approval or sanction of any such authority shall not apply. (6) Notwithstanding anything contained in any direction or order issued under this section, or in section 124, the Board may, by notification in the Official Gazette, direct that for the purpose of furnishing of the return of income or the doing of any other act or thing under this Act or any rule made thereunder by any person or class of persons, the income-tax authority exercising and performing the powers and functions in relation to the said person or class of persons shall be such authority as may be specified in the notification.]" 9. From the above provision, it is clear that the authorities mentioned in the definition of Assessing Officer in section 2(7A) of the Income-tax Act, 1961, must be assigned the jurisdiction to any authorities mentioned in the definition by the CBDT under the provisions of section 120 of the Income-tax Act, 1961, to act as an Assessing Officer. Only in that circumstances that Assistant Commissioner or Dy. Director of Income-tax, other authorities mentioned in the definition under section 2(7A) of the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch person or class of persons are pending before him or any other income-tax authority.]" 10. From the above, it is noted that none of the condition mentioned in sub-clauses ( i ) to ( v ) of sub-section (1) of section 132 of the Income-tax Act, 1961. The relevant provision of section 132 is reproduced as under : "132. (1) Where the [Director General or Director] or the [Chief Commissioner or Commissioner] [or any such [Joint Director] or [Joint Commissioner] as may be empowered in this behalf by the Board], in consequence of information in his possession, has reason to believe that ( a )any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or ( b )any person to whom a summons or notice as aforesaid h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther documents;] ( iii )seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search : [ Provided that bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business;] ( iv )place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom; ( v )make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing :" 11. From the above, it is noted that none of the condition mentioned in sub-clauses ( i ) to ( v ) of sub-section (1) of section 132 has been mentioned for reference to the Valuation Officer to value a house property as has been done in the instant case by the ld. DDIT (Investigation - II), Indore. It is also noted that the Assessing Officer has mentioned in the assessment order that the Departmental Valuation Officer has mentioned that the construction of the house was started in the financial year 1993 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d their accounts during the assessment proceedings which had been completed. Besides, the requirement of giving a show-cause notice, the requirement which has to be read into section 55A, the Assistant Director, Income-tax, was bound to disclose the reasons for forming the opinion that the property was over valued so that the assessee could meet the objection. For the aforesaid reason alone, the impugned orders, by which reference was made to the Valuation Officer, were quashed and the writ petition allowed." 12. The Hon ble Allahabad High Court in the case of Dr. Avinash Kumar Agarwal v. Asstt. DIT [2004] 269 ITR 388, has held that the Assistant Director of Income-tax (Investigation) had no power under section 131 to refer the valuation of the property to the Valuation Officer. 13. In view of the above facts and circumstances, relevant provisions and decisions referred to above, we hold that reference made by the Dy. Director of Income-tax (Investigaiton-II), Indore, for valuation of the house property to the Departmental Valuation Officer under section 131(1)( d ) is itself illegal and beyond the power of the Dy. Director of Income-tax (Investigation), Indore. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that the assessee has constructed the property at Indore, where the rates are much cheaper. ( iv )That the property has been constructed over a period of 7 years and major portion of investment were made in earlier years. ( v )That the report of D.V.O. suffers from various arithmetical mistake such as ( a )While determining CI rates the Valuation Officer took the product of 10897 100 as 94757 as against 9475.70. ( b )On page 9 para 8, the DVO has added 1.5 per cent for builders efforts while it should have been deducted. ( vi )The DVO added the value of various items given in Annexure C which are included in CPWD, Delhi rates and hence separate addition should not have been made. ( vii )That the DVO also separately added Rs. 18,568 on account of Brass Fittings, which is on a higher side. ( viii )That the DVO added Rs. 16,218 on account of Water supply, sanitary and Rs. 57,029 for electrification which are already included while adopting CPWD rates. ( ix )That the DVO added Rs. 62,697 on account of external services without pointing out the nature of single external service. ( x )That the Valuation Officers allowed deduction at the rate of 7.5 per cent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of this Bench in the case of T.M. Thanewalla v. ITO, 26 ITC 292, and decision of Madras High Court in the case of A. Abdul Rahim v. ITO [2002] 258 ITR 714 . In this case, it is held by the Hon ble Court that State PWD rate should be adopted instead of CPWD and, accordingly, the Court has allowed reduction at 25 per cent from the cost of construction determined by the DVO. In the instant case, the CPWD rates were adopted. Therefore, it is claimed that separate deduction at the rate of 25 per cent should have been allowed. However, instead of that, according to the learned Authorized Representative, the DVO has further added following amounts to the cost of the house property determined by adopting CPWD rates at Rs. 12,53,941 : ( i ) Items available in DSR as per Annexure C Rs. 1,57,133 ( ii ) For compound wall as per Annexure E Rs. 8,560 ( iii ) Tube Well Rs. 15,000 ( iv ) Parts fitted in doors and windows Rs. 13,568 ( v ) Water supply and sanitary Rs. 6,280 ( vi ) Electrification Rs. 57,029 ( vii ) Extra services on Rs. 12,53,941 Rs. 62,697 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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