TMI Blog2006 (8) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... lot No. R-11/12, Raj Nagar,Ghaziabad. The assessee declared investment in the construction year-wise as under in asst. yr. 1990-91: Asst. yr. Amount 1988-89 Rs. 3,23,111 1989-90 Rs. 4,01,171 1990-91 Rs. 2,28,772 ------------ Rs. 9,53,254 ------------ The issue of investment in the house property was considered in asst. yr. 1990-91. The AO referred the matter regarding the cost of construction in the house property to the DVO whose report is dt.6th May, 1991, estimating the total cost of construction at Rs. 13,82,000 as under: Asst. yr. Amount 1988-89 Rs. 6,45,670 1989-90 Rs. 7,36,330 ------------- Rs. 13,82,000 ------------- The Valuation Officer computed this cost relevant for asst. yrs. 1988-89 and 1989-90 taking the period of construction of the house property from July, 1987 to March, 1989. Keeping all these facts in view, the AO completed the assessment for asst. yr. 1990-91 making addition on two accounts. Firstly, the AO noticed that the assessee has shown investment of Rs. 2,28,772 in asst. yr. 1990-91 but the investment as a whole in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,28,644 2,05,533 ----------------------------------------------------------- 1989-90 4,01,171 6,03,356 2,01,985 ----------------------------------------------------------- 1990-91 2,28,772 2,50,000 21,228 ----------------------------------------------------------- 9,53,254 13,82,000 4,28,786 ----------------------------------------------------------- After bifurcating the cost of construction in the three years and holding that the cost of construction should be taken at Rs. 2,50,000 in asst. yr. 1990-91, the learned CIT(A) thereafter held that addition for unexplained investment relating to asst. yrs. 1988-89 and 1989-90 cannot be added in the asst. yr. 1990-91 because under s. 69, these additions should be made in those relevant assessment years. The learned CIT(A) accordingly deleted the additions relevant for asst. yrs. 1988-89 and 1989-90 and observed that the AO may take remedial action to tax the same in the relevant assessment years. The learned CIT(A) further observed that the issue of adjudication in the difference in valuation should be looked into in the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Valuation Officer is reasonable. Regarding the self-supervision charges claimed @ 10 per cent by the assessee, the AO observed that there is nothing on record to say that the building Was not constructed through contractor and, therefore, the self-supervision rebate is allowable, but this was allowed at 7.5 per cent. The total cost estimated by the Departmental Valuation Officer was Rs. 13,82,000 and after allowing self-supervision rebate @ 7.5 per cent (Rs. 1,03,650), the balance cost was taken at Rs. 12,78,350. Out of it, the cost to the extent of Rs. 2,50,000 was confirmed by the learned CIT(A) in asst. yr. 1990-91 and, therefore, deducting this cost, the balance remained at Rs. 10,28,350. This was bifurcated on the basis of the ratio of investment as directed by the learned CIT(A) and the investment was computed at Rs. 4,80,239 and Rs. 5,48,111 in asst. yrs. 1988-89 and 1989-90. Deducting the investment shown by the assessee, the unexplained investment was taken at Rs. 1,57,128 and Rs. 1,46,740 for the two assessment years under consideration and these were added in the respective assessment years as unexplained investment in the house property. Coming to the asst. yr. 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timated the cost at Rs. 13,82,000. While completing the assessment for asst. yr. 1990-91, the AO made an addition of Rs. 7,28,704 for unexplained investment in the construction of house property. This addition consisted of two parts, firstly relating to an addition of Rs. 72,228 in the asst. yr. 1990-91 and secondly, an addition of Rs. 6,57,518 being the difference in the cost shown and estimated by the Valuation Officer. When the assessee went in first appeal before the learned CIT(A), Muzaffarnagar, this issue was settled vide order dt.29th Aug., 1997. The learned CIT(A), Muzaffarnagar, held that the cost of construction taken by the Valuation Officer should be bifurcated in three years and for asst. yr. 1990-91, this should be taken at Rs. 2,50,000. The learned CIT(A) further deleted the addition relevant to asst. yrs. 1988-89 and 1989-90 holding that this addition cannot be made in asst. yr. 1990-91 but can only be made in the relevant assessment years under s. 69 and observed that it was for the AO to take necessary remedial action to tax the same in the relevant assessment years. In my view, this is clearly a direction by the learned CIT(A), relate back this investment in ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble Tribunal and observed that the decision of the Hon'ble Tribunal has considered all the necessary facts for giving the decision including application of UPPWD rates and not CPWD rates. 16. I have considered the valuation report submitted by the registered valuer of the assessee and the Departmental Valuation Officer. There is a vast difference in estimating the cost of construction of the house property by the Departmental Valuation Officer and the registered valuer. In my view, whether the rates of UPPWD or CPWD or other rates are applied, the cost of construction should come out the same by applying any of the method. The registered valuers are supposed to apply the CPWD rates for arriving at the cost of the property, but if they think that this is not giving the correct cost of construction, they should give reasons for the same and should also compute the cost of construction by other methods which are giving the correct state of affairs. In the present case, the registered valuers have just gone by UPPWD rates and have not given as to why the CPWD rates cannot be applied to find out the correct cost of construction. In fact, the assessee has submitted two valuation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) in asst. yr. 1990-91, considering that the UPPWD rates are somewhat lower than the CPWD rates and the fact that the AO has allowed a self-supervision rebate of 7.5 per cent, it would be justified if the total cost of construction is taken at Rs. 12,40,000 as against taken at Rs. 12,78,350 by the AO and declared at Rs. 9,60,383 by the assessee. Deducting from this cost, the cost already confirmed in asst. yr. 1990-91 at Rs. 2,50,000, the balance cost comes to Rs. 9,90,000 which is related to asst. yrs. 1988-89 and 1989-90. This cost is bifurcated in asst. yrs. 1988-89 and 1989-90 in the ratio already decided by the learned CIT(A) at 46.7 per cent and 53.3 per cent. Accordingly, the cost of construction comes to Rs. 4,62,330 and Rs. 5,27,670 for asst. yrs. 1988-89 and 1989-90 as against taken by the AO at Rs. 4,80,239 and Rs. 5,48,111. Thus, the assessee would be entitled for a relief of Rs. 17,909 and Rs. 20,441 for the asst. yrs. 1988-89 and 1989-90." 8. The learned Authorised Representative of the assessee argued that for the asst. yr. 1988-89 the return of income was filed by the assessee on21st Aug., 1989showing income of Rs. 15,035. The assessee had shown income from sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f registered valuer, it cannot be said that full disclosure was not made by the assessee. It was his alternate argument that even if the amended provisions of s. 147 are applied action after four years cannot be taken. It was, therefore, his submission that notice under s. 148 should be annulled as it is illegal and barred by limitation. 9. The learned counsel for the assessee by referring to the reasons recorded before taking action under s. 147 submitted that reasons for the asst. yr. 1988-89 have not been recorded as they were not supplied to the assessee. However reasons for the asst. yr. 1989-90 were supplied which are vague, undated and unsigned and it is not clear from the reasons which authority had recorded the same. From the perusal of reasons it is evident that the AO sought permission of some authority for issue of notice under s. 148. It was his submission that the assessee was entitled for reasons so recorded. Since the reasons have not been recorded properly, assessment made on that basis should be annulled. 10. On merits it was submitted that addition was made for unexplained investment of Rs. 1,57,128. It was the argument of the learned counsel of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled appeal against the order of the AO, against addition of Rs. 49,600 which was deleted by the Dy. CIT(A) vide his order dt.6th Jan., 1993. It was submitted by the counsel that on the same ground action under s. 147 cannot be taken once again. He also referred to the reasons recorded for the asst. yr. 1989-90 and submitted that the reasons were vague, undated, unsigned and it was not known as to which authority recorded the reasons. He submitted that proper reasons were not recorded, therefore, on this ground itself the assessment should be annulled. He submitted that all material facts were disclosed and there was no basis for reopening of the assessment as held in 155 Taxation 179 (J K) and (1999) 157 CTR (Gau) 156 : (2000) 242 ITR 173 (Gau). He submitted that amended provisions of s. 147, the proviso is applicable because the assessment was completed under s. 143(3) and there was complete disclosure of all facts. Therefore, action under s. 147 cannot be taken beyond four years. It was also his submission that the action has been taken in 1998 much beyond four years and, therefore, was barred by limitation. The assessee had not concealed the particulars of his income and it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned CIT(A) on a finding that the said addition must be made in the asst. yrs. 198889 and 1989-90, therefore, they are being deleted in the asst. yr. 1990-91. The Hon'ble Supreme Court in Rajinder Nath vs. CIT (1979) 12 CTR (SC) 201 : (1979) 120 ITR 14 (SC) observed that a direction by statutory authority is in the nature of an order requiring positive compliance. When it is left to the option and discretion of the ITO whether or not to take action it cannot be described as a "direction". Therefore, the direction of the CIT(A) contained neither a "finding" nor a "direction" within the meaning of s. 150(1) in consequence of which or to give effect to which, the impugned assessment proceedings can be said to have been taken. 18. We also observe from the learned CIT(A)'s order that the valuation made by the registered valuer for investment in the construction of the house property was Rs. 13,82,000. The AO allowed deduction for self-supervision charges at the rate of 7.5 per cent which comes to Rs. 1,03,650 and the cost of construction was taken at Rs. 12,78,350. We further observe that the learned CIT(A) had confirmed the addition of Rs. 2,50,000 out of this amount in the asst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that no interest under s. 217 and s. 234B of the IT Act could be charged in an assessment made under s. 147 of the Act. 20. The learned Departmental Representative relied on the orders of the authorities below. 21. We have considered the submissions of the parties and perused the orders of the lower authorities. We find the provisions of s. 217 of the Act state that where in making the regular assessment, the AO finds: (a) that any such person referred to in cl. (a) of sub-s. (1) of s. 209A has not sent the statement referred to in that clause or the estimate in lieu of such statement referred to in sub-s. (2) of that section or, (b) that any such person as referred to in cl. (b) of sub-s. (1) of s. 209A has not sent the estimate referred to in that clause,simple interest at the rate of 15 per cent per annum from the 1st day of April next following the financial year in which advance tax was payable in accordance with sub-s. (1) or sub-s. (2) upto the date of the regular assessment shall be payable by the assessee upon the amount equal to the assessed tax as defined in sub-s. (5) of s. 215. 22. In the asst. yr. 1988-89 interest has been charged under s. 217 of the Act i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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