TMI Blog2017 (11) TMI 1705X X X X Extracts X X X X X X X X Extracts X X X X ..... al JUDGMENT 1. By way of this appeal, the appellant has assailed the judgment and order of the tribunal whereby tribunal has dismissed the appeal preferred by the department and modified the order of CIT(A). 2. This court while admitting the appeal on 18.11.2009 framed following substantial questions of law:- (1) Whether the learned ITAT being a last fact finding body has erred in law and on facts in deleting, addition of ₹ 99,04,578/- towards construction of factory as unexplained investment on the basis of Valuation Officer s report given u/s 142A when the same was not rebutted by any evidence, document during the course of assessment before the Assessing Officer? (2)Whether the learned ITAT was justified on facts and in law, in observing that AO was not justified in giving the directions to examine the issue in the hands of Directions which were issued properly under the facts of the case? 3. The facts of the case are that the assessee is a private limited company and was incorporated on 7.8.2003, as per the Certificate of Incorporation. There was no business activity of the assessee company during the year under consideration. The return of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure incurred towards it. 3. As per the details submitted, expenditure to the tune of ₹ 9,32,399/- has been shown towards electrical fittings which has not been considered towards the declared cost by the assessee. As per the report of the District Valuation Officer, there is a difference of ₹ 98,87,076/- in the cost of construction of building in the F.Y. 2003-04. Likewise, there is a difference of ₹ 17,502/- in the valuation of land in the F.Y. 2003-04. In compliance to the above, the AR of the assessee vide his letter dated 25.12.2006 has stated that- Both the directors of the company viz. Shri Siddik Hussain and Smt. Rabia Bi Shaikh had left for Haj Pilgrimage on 15th December, 2006 and they are expected to be back on 8th January, 2007. Due to the strict conditions applicable at Mecca, it has not been possible to contact both the directors, it is not possible to furnish any reply as only directors are the authorized persons in case of a company to give the necessary explanation. The valuation of a property is a highly technical matter and so far as the report of the valuation officer is concerned, necessary comments can be made only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upporting evidence to show cause letter, dt. 19.12.2006 of the AO could not be given at the time of assessment proceedings because the appellant was prevented by sufficient cause from producing the same before the AO. After due consideration and obtaining the comments of the AO, the request of ld. AR for admission of the said additional evidences, under Rule 46A, was found acceptable. Accordingly, the ld. AR of the assessee was given opportunity to submit explanation and supporting evidences with reference to the difference in the value of land and building, as per the valuation report of the DVO and as shown by the assessee. Consequently, this ground of appeal is to be treated as partly allowed. 4.3 I have carefully considered the facts of the case and submissions of the ld. AR. I have also perused the case laws relied upon by the ld. AR in support of his contentions raised with reference to the grounds of appeal. On perusal of the records and the assessment order, it is seen that there is no dispute regarding the fact that the appellant company was incorporated on 7.8.2003 and that during financial year 2003-04, relevant to the assessment year under consideration of this app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty under section 142A to the DVO on 27.2.2006. The report of the DVO, dated 15.12.2006, was received by the AO and the AO found the following differences in the value of the land and building, as valued by the DVO and as declared by the assessee in the books of accounts. COST OF CONSTRUCTION OF THE BUILDING F.Y. Declared by the assessee Estimated by DVO 2003-04 72,94,742/- 1,71,81,818/- 2004-05 12,96,519/- 30,53,782/- Total 85,91,261/- 2,02,35,6000/- Land value 2003-04 26,05,248/- 26,22,750/- In view of the above, as there was a difference of ₹ 98,87,076/- in the cost of construction of the building and of ₹ 17,502/- in the value of the land in the financial year 2003-04, the AO issued a show cause letter dated 19.12.2006 to the assessee to explain as to why the said difference in the cost of onstruction of the building and the land should not be treated as undisclosed investment and add ..... X X X X Extracts X X X X X X X X Extracts X X X X
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