Income Tax Appellate Tribunal - Hyderabad
Legend Estates Privat Ltd.,, Hyderabad vs Assessee on 8 February, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH 'A', HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER and
SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER
I.T.A. No. 1542/Hyd/2010
Assessment year : 2007-08
M/s. Legend Estates Pvt. Ltd. vs. Dy. Commissioner of Income-
Hyderabad tax, Circle-16(1),
PAN: AAACL9640A Hyderabad
Appellant Respondent
Appellant by: Shri A.V.Raghu Ram
Respondent by: Shri V. Srinivas
Date of hearing: 08.02.2012
Date of pronouncement: 30.03.2012
ORDER
PER CHANDRA POOJARI, AM:
This appeal by the assessee is directed against the order of the CIT(A)-V, Hyderabad dated 13.10.2010 for assessment year 2007-08.
2. The assessee raised the following revised grounds of appeal:
1. On the facts and in the circumstances of the case the order of the ld. Commissioner of Income-tax (Appeals) dismissing the appeal of the appellant is perverse, illegal and unsustainable in law.
2. The ld. CIT(A) failed to appreciate that at the very threshold reference to DVO by the AO u/s. 142A of the Income-tax Act is without jurisdiction and contrary to the ratio laid down by Supreme Court in the case of Amiya Bala Paul and consequently the addition made by the AO of Rs. 6,51,05,016 based on such report of the DVO is illegal and unsustainable in law as held by Supreme Court and thereby erred in confirming the addition holding the reference to valuation cell to be valid.
3. Without prejudice, the ld. CIT(A) failed to appreciate that whereas the cost of flats submitted by the appellant pertained to materials cost, the 2 I.T.A. No. 1542/Hyd/2010 M/s. Legend Estates Pvt. Ltd.
======================= cost determined by the DVO is inclusive of administrative and supervisory charges. The ld. CIT(A) therefore ought to have directed either to include administrative and supervisory charges to the cost submitted by the appellant or should have directed the deletion of administrative and supervisory charges from the value arrived at by the DVO.
4. On the facts and in the circumstances of the case since the difference in cost arrived at by the DVO and that of the cost submitted by the appellant (after taking into account administrative and supervisory charges) is below 10% of the total cost determined, the ld. CIT(A) ought to have directed for deletion of the addition made by the AO.
5. The learned CIT(A) further failed to appreciate the fact that in the earlier years the assessments were made after scrutiny and reference to valuation cell to estimate the expenditure of earlier year by reference to valuation cell tantamount to interfering with the concluded assessments for which he has no jurisdiction to do.
6. The learned CIT(A) erred in holding that the admission of additional income by the assessee towards day to day expenses without appreciating the fact that such huge amount could not be for day to day expenses and for a builder the day to day expenses could be only towards his business activity and not otherwise and thereby erred in not considering set off of such disclosed amount from the addition that is made.
3. The assessee raised the ground with regard to sustaining of addition made by the Assessing Officer u/s. 69C of the Income-tax Act, 1961, being the difference between cost of construction of flat as per books of account of the assessee and that of valuation made by the DVO as per reference made u/s. 142A of the Act, though the Assessing Officer had no such power in case of additions made u/s. 69C of the Act.
4. Brief facts of the case are that for the A.Y. 2007-08, the assessee file a revised return of income on 1.12.2007 declaring 3 I.T.A. No. 1542/Hyd/2010 M/s. Legend Estates Pvt. Ltd.
======================= total taxable income at Rs. 1,78,23,580 which was processed u/s. 143(1) of the Income-tax Act, 1961 on 6.2.2009. It is also on record that there was a survey u/s. 133A of the Act at the premises of the assessee on 23.8.2006. During the course of survey it was found that there were certain cash payments towards construction materials like, sand, bricks, etc., and other items, whose expenditure was not fully verifiable. The assessee has not maintained day to day stock register. The quantification of labour charges is also not available. Keeping in view all the discrepancies found during the course of survey, the matter was referred by the Assessing Officer u/s. 142A of the Act to the DVO. The DVO furnished the valuation report of construction at Rs. 55,83,06,733. According to the assessee's books of account the cost of construction was Rs. 38,58,53,602. The difference is worked out at Rs. 17,24,53,131. The difference was apportioned among the A.Ys. 2004-05 to 2008-09 and the amount attributable to the assessment year under consideration is at Rs. 6,51,01,056. Addition was made u/s. 69C of the Act. Against this addition the assessee is in appeal before us.
5. At the outset, the learned counsel for the assessee submitted that the Assessing Officer is having no power to refer the matter to the DVO. He submitted that u/s 142A of the Act, only investment referred to in sections 69, 69A, 69B can be referred to DVO and not the investment referred in section 69C of the Act For this purpose he relied on the following judgements:
a) CIT vs. AAR PEE Apartments (P) Ltd., 319 ITR 276 (Del)
b) Raj Hans Builders vs. DCIT, 41 SOT 331 (Ahd)
6. According to the learned counsel for the assessee the investment made by the assessee in construction has been shown as current asset and it is not an investment referred to in section 69, 69A and 69B of the Act. He drew our attention to the 4 I.T.A. No. 1542/Hyd/2010 M/s. Legend Estates Pvt. Ltd.
======================= dictionary meaning of the word 'investment' as per Law Lexicon "which means in economic terms, capital expenditure on physical productive assets for example, machinery, factory, building, roads, projects, houses and or stocks." Investment is an expenditure to acquire property or other assets. In order to produce revenue the assets were acquired. Placing of capital or laying out of money is intended to secure income or profits from its employment.
7. On the other hand, the learned DR submitted that the addition in this case was made u/s. 69C of the Act and there is no mention in the assessment order and even if it is made u/s. 69C it is not fatal. The provisions of section 292BB take care of such kind of mistakes and it does not make the assessment order null and void being it is a curable mistake. There is no difference between the investment and current assets for the purpose of application of section 142A. When the section requires to make any mention it is specifically made in that section. He drew our attention to the provisions of section 55A of the Act wherein the section is restricted to capital assets only. According to the him section 69C refers to unrecorded investment. Section 69B is applicable to under valuation of investment and in this case there is no under valuation of recorded investment. He distinguished the judgement of Delhi High Court in the case of 319 ITR 276 (supra). In countering the argument of the assessee's counsel, he relied on the decisions in the case of DCIT vs. Abdul Latif (53 DTR
250), Smt. Kiran Lata vs. ITAT (177 Taxman 420), Addl. CIT vs. Pinnacle Project & Infrastructure (P) Ltd. (104 ITD 122) and ACIT vs. Nalanda Housing Dev Ltd. (98 TTJ 518).
8. We have heard the rival contentions and gone through the facts and circumstances of the case. First of all, we have to go through the provision of Sec. 142A of the Act to consider the issue in hand.
5 I.T.A. No. 1542/Hyd/2010M/s. Legend Estates Pvt. Ltd.
======================= The relevant provision sub-section-1 of Sec.142A reads as under:-
"142A (1) For the purposes of making an assessment or reassessment under this Act, where an estimate of the value of any investment referred to in section 69 or section 69B or the value of any bullion, jewellery or other valuable article referred to in section 69A or Section 69B is required to be made, the Assessing Officer may require the Valuation Officer to make an estimate of such value and report the same to him."
9. We find from the facts of the case that there was a survey u/s 133A of the Income Tax Act on 23-08-2006. During course of survey, it was found that there were certain cash payments towards construction material like sand, bricks etc and other items whose expenditure was not fully verifiable. The assessee has not maintained day to day stock registers. The quantification of labour payments was also not available. Since the expenditure incurred by the assessee was not fully supported by vouchers and proper evidence, the assessee offered additional income to the tune of Rs. 1.60 crores. In mean time the Assessing Officer made reference to the District Valuation Officer on 04-09-2006 and the DVO submitted the valuation report on 14-09-2009 as per which the cost of construction of the 22 properties was arrived at Rs55,83,05,733/-. The assessee has disclosed the cost of construction of these properties in its books at Rs.38,58,53,602. The difference between these two was worked at Rs. 17,24,53,131/- which was spread over to 5 assessment years. The unexplained expenditure relating to this assessment year 2007-08 was worked out at Rs. 6,51,01,056/-. Perusal of the assessment order shows that there is no reference to any material/evidence/information on the basis of which it could be said that the cost of construction was shown by assessee was understated or anything above what was disclosed by assessee in the books of account. It is a clear cut case that the assessee has 6 I.T.A. No. 1542/Hyd/2010 M/s. Legend Estates Pvt. Ltd.
======================= produced the books of account but the Assessing Officer has not rejected or no defect was pointed out in the books of account regarding cost of construction of the project before reference to the DVO. We further find from the case records that even before verifying the books of account regularly maintained and without pointing out any defects in the books the cost of construction was referred to DVO. We are of the view, on the basis of evidences produced before us, that the assessee has regularly maintained books of account and various records along with supporting evidences of various raw materials like cement, steel, bricks, sand, wood, labour cost, sanitary wares etc. but the AO has not found out any defect in the books/records/bills etc. and has not rejected books of account. Without causing any defects in books regularly maintained and without rejecting the books u/s.145, of the Act there is no reason to add any amount on the presumption that the cost/investment in construction is low. Thus, without rejecting the books of account regularly maintained, the addition cannot be made only on the basis of the DVO's report. We further find that the assessee has supplied requisite information to DVO and also produced before Assessing Officer which he has seen and verified but has no commented on the genuineness of the bills and not pointed out any defects in the bills and hence not rejected the records maintained and produced by assessee.
10. In view of the above facts and circumstances, the provision of Sec.142A of the Act, we are of the view that no proceedings were pending at the time of reference made to the DVO i.e 04.09.2006 on regarding ascertainment of cost of construction of the project as the return of income in this case is filed only on 01.12.2007. We find from the starting words of the section that for the purpose of making an assessment or reassessment under this Act, once the process of assessment is initiated, the word 'making' should be presumed to be associated with both 'assessment' or 7 I.T.A. No. 1542/Hyd/2010 M/s. Legend Estates Pvt. Ltd.
======================= 'reassessment', the reference u/s. 142A of the Act can be made. When there is process of assessment, which is initiated after filing of the return of income or issuance of notice u/s. 142(1) and similarly, the process of reassessment could be initiated only after issuance of notice u/s.148(1) after duly fulfilling the formalities mentioned therein, the reference u/s.142A of the Act can be made. It clearly shows that the invoking of Sec. 142A is a process after the initiation of the assessment proceedings. Further, it is mentioned in this section that 'where estimate of the value of any investment referred to in Sec. 69 is required to be made. This also shows that a reference to DVO u/s. 142A can be made only when a requirement is felt by the AO for making such reference. Requirement would arise or could be felt only when there is some material with the AO to show that whatever estimate assessee has shown is not correct or not reliable. The use of word 'require' is not superfluous but signifies a definite meaning whereby some preliminary formation of mind by the AO is necessary which requires him to make a reference to the DVO u/s142A. It can only be during the course of pendency of assessment or reassessment that the AO frame his mind to refer the property to valuation cell of the Department. Such mind can be framed if there is a basis to think that the assessee may have understated the cost of construction or whatever is declared by him in this regard is not believable. Therefore, it is quite apparent that reference to valuation cell u/s.142A can be made during the course of assessment and reassessment and not for the purpose for initiating assessment. This view is clearly supported by the decision of Ahmedabad Bench in the case of Umiya Co-operative Housing Society Ltd. v ITO (2005) 94 TTJ 392 (Ahd), wherein it is held as under:-
"7. From the above, it is evident that s.142A empowers the AO to require the valuation officer for making the estimate of the value of any asset provided the AO, required the same for the purpose of making the 8 I.T.A. No. 1542/Hyd/2010 M/s. Legend Estates Pvt. Ltd.
======================= assessment or reassessment. He above provision does not empower the AO to refer the matter to the DVO for gathering information for reopening of assessment. Making the reassessment and reopening of assessment are two different things.
8. When the process of reopening of assessment ends and the assessment is validly reopened thereafter the process of making reassessment starts. Therefore even after the insertion of s.142A, the AO should have reason to believe that any income chargeable to tax has escaped assessment as provided under s. 147 and thereafter only the notice for reassessment can be issued under s. 148. Even after the insertion of s.142A, there is no amendment in the language of s. 147. Therefore, the condition prescribed under s. 147 for reopening of assessment still exits. The Hon'ble Gauhati High Court in the case of Bhola Nath Majumdar and the Tribunal, Jodhpur Bench, in the case of Vijay Kumar (supra) have taken the view that the valuation report is only an opinion of the valuer and an opinion of a third party cannot be a reason to believe of the ITO. The Hon'ble Bombay High Court in the case of Jamnadas Madhavji & Co. (supra) has held that the AO cannot issue summons under s. 131 for the purpose of making investigation for reopening of the assessment."
11. The above decision of the Tribunal has been confirmed by the Hon'ble jurisdictional High Court in the case of CIT v. Umiya Co-operative Housing Society Ltd. in Tax Appeals No.1496 to 1498 of 2005 dated 12-07-2006, wherein it is held as under:-
"The short controversy involved in these appeals whether the Assessing Officer can refer any matter for valuation of the property of an assessee though assessment and / or reassessment proceedings are not pending. The Tribunal is of the view that when the assessment proceedings are not pending the Assessing Officer has no jurisdiction and is not empowered to refer any property for valuation to the Valuation Officer. The Tribunal has discussed this issue as under:
8. When the process of reopening of assessment ends and the assessment is validly reopened thereafter, the process of making reassessment starts. Therefore, even after the insertion of section 142A, the Assessing 9 I.T.A. No. 1542/Hyd/2010 M/s. Legend Estates Pvt. Ltd.
======================= Officer should have reason to believe that any income chargeable to tax has escaped assessment as provided u/s.147 and thereafter only the notice for reassessment can be issued u/s.148. Even after the insertion of section 142A there is no amendment in the language of section 147. Therefore, the condition prescribed u/s.147 for reopening of assessment still exists. The Hon'ble Gauhati High Court in the case of Bhola Nath Majumdar and the ITAT Jodhpur Bench in the case of Vijay Kumar (supra) have taken the view that the valuation report is only an opinion of the valuer and an opinion of a third party cannot be a reason to believe of the ITO. The Hon'ble Bombay High Court in the case of Jamnadas Madhavji and Co.(supra) have held that the Assessing Officer cannot issue summons u/s. 131 for the purpose of making investigation for reopening of the assessment.
9. In view of the above, we are of the opinion that the issue of notices u/s.148 in all three years under consideration was not in accordance with law. We, therefore quash the notices issued u/s.148 and consequently the assessments completed in pursuance to notices u/s. 148 are also quashed. Since the assessment itself has been quashed, the grounds raised by both the parties with regard to the merits of the additions for undisclosed investments in the house property need no adjudication at this stage because once the assessment is cancelled, the addition does not survived.
Mr. Bhatt has mainly emphasized on Section 142A of the Act. He submits that the Assessing Officer at any time can make reference to the Valuation Officer for valuing the property for the purpose of assessment or reassessment, where the value of any investment referred to in Section 69 or Section 69B or Sections 69A & 69B is required to be made. Whether any income can be taxed by deeming the value of investment not disclosed, are issues where such types of questions arise while some proceedings are pending for assessment. In absence of such proceedings, the Assessing Officer cannot refer any property for valuation to Valuation Officer.
In opening part of Section 142A the words used are for the purposes of making an assessment or reassessment under the Act. The intent of the legislation is that the matter can be referred to the 10 I.T.A. No. 1542/Hyd/2010 M/s. Legend Estates Pvt. Ltd.
======================= Valuation Officer only when the proceedings of assessment or reassessment are pending before the Assessing Officer. When no such proceedings are pending, the Assessing Officer has no jurisdiction to refer any property for assessment.
When the notice u/s.148 has been issued, and addition has been made by adopting the value estimated by the Valuation Officer, and when we fond that the Assessing Officer is not empowered to refer any property for valuation in a case where no assessment proceedings or reassessment proceedings of the assessee is pending before him, we see no justification to make any addition in such cases."
Even the Hon'ble Apex Court has also dismissed the SLP of the Revenue in this case and affirmed the judgment of Hon'ble High Court in SLP No. CC 187 of 2007 dated 07-03-2007. As the issue in these appeals of the present assessee before us is exactly identical, what was before the Hon'ble High Court in the case of Umiya Cooperative Housing Society Ltd.(supra), respectfully following the same, we are of the considered opinion that the reference u/s.142A of the Act can be made only when the proceedings under this Act is pending and not otherwise. Accordingly, this legal issue, we decide in favour of the assessee and against the Revenue".
12. We further find from the case records that even if a reference u/s. 142A is made by the Assessing Officer on certain consideration such as anything find during the course of survey u/s 133A of the Act or on the basis of a tax evasion petition or a reference is required to be made during the course of other proceedings or a report of the DVO is available to the AO before making an assessment or reassessment then same can be utilized only in accordance with sub-Sec.(3) of Sec. 142A i.e., the assessee has to be given an opportunity of being heard before such a report is utilized and in accordance with Sec.145 where books of account are required to be rejected by pointing out some apparent defects. In our considered view the provisions of Sec. 142A cannot be read in isolation to Sec.145. In other words, if books of account are 11 I.T.A. No. 1542/Hyd/2010 M/s. Legend Estates Pvt. Ltd.
======================= found to be correct and complete in all respect and no defect is pointed out therein and cost of construction of building is recorded therein, then the addition on account of difference in cost of construction could not be made even if a report is obtained within he meaning of Sec.142A from the DVO. It is because the use of the report of the DVO obtained u/s.142A is not mandatory but is discretionary as the word used is 'may' therein. Accordingly, we are of the considered view that in the present case when AO has not rejected the books of account by pointing out any defects reference to the DVO will not be valid and, therefore, DVO's report could not be utilized for framing assessment even if such a report is considered to be obtained u/s.142A. Since reference to DVO being held as invalid, the assessment/ reassessment framed thereafter would also be invalid. Even otherwise, the issue of unexplained expenditure u/s.69C of the Act is not covered under the powers of Sec.142A of the Act and this issue is squarely covered in favour of the assessee and against the Revenue by the decision of Hon'ble Delhi High Court in the case of AAR PEE Apartments (P) Ltd. (supra). The Hon'ble Delhi High Court held as under:-
"6. Before we advert to the interpretation to the aforesaid provision we deem it proper to reproduce the following discussions detained in the order of Tribunal on this aspect:-
"The next point to be determined is whether the AO is justified in referring to the DVO for computing cost of construction claimed as revenue expenditure. Prior to insertion of Sec. 142A by Finance (No.2) Act, 2004 with retrospective effect from 15th Nov. 1972, the reference to DVO in assessment proceedings other than as permissible under s. 55A was held to be invalid as held by Hon'ble Supreme Court in the case off Smt. Amiya Bala Paul vs. CIT (2003) 182 CTR (SC) 489 : (2003) 262 ITR 407 (SC). Sec. 142A, was inserted with retrospective effect from 15th Nov., 1972, however, even under s. 142A, a reference can be made for assessment or reassessment where an estimate of value of any investment referred to in s. 69 or s. 69B or 12 I.T.A. No. 1542/Hyd/2010 M/s. Legend Estates Pvt. Ltd.
======================= the value of any bullion, jewellery or other valuable articles referred in s. 69A or 69B is required to be made. The AO may require the Valuation Officer to make an estimate of such value and report under s. 142A(1), for the purpose of making as assessment under Act, where an estimate of the value of any investment referred to in s. 69A or s. 69B or the value of any bullion, jewellery or other valuable article referred to in s. 69A or s.69B is required to be made, the Assessing Officer may require the Valuation Officer to make an estimate of such value and report the same to him. Thus the power available under s. 142(1) is requiring the Valuation Officer to value any investment or bullion, jewellery or other valuable article referred in s.69, s 69A or s.69B of the Act,. These powers do not extend to estimate the amount of unexplained expenditure referred in s. 69C of the Act. Admittedly, in the present case the expenditure on construction are claimed and allowed as revenue expenditure and cannot be considered as an investment or bullion, jewellery etc. referred in s. 69, s. 69A or s.69B, of the Act. We accordingly hold that the reference to DVO is not in accordance with the provisions of s. 142A. Hence the decision of Hon'ble Supreme Court in the case of Smt. Amiya Bala Paul (supra) will still apply to hold that no addition can be made merely relying upon the value arrived at by DVO. In view of the above discussion, addition of Rs.19,69,881 is directed to be deleted."
7. We are in agreement with the aforesaid interpretation given by the Tribunal to Sec. 142(A) of the Act. Our discussion on this aspect proceeds as under:
8. Sec. 142(A) is to the following effect:-
"142A. For the purposes of making an assessment of reassessment under this Act, where an estimate of the value of any investment referred to in s 69 or s. 69B or the value of any bullion, jewellery or other valuable article referred to in s. 69A or s. 69B is required to be made, the AO may require the Valuation Officer to make an estimate of such value and report the same to b him."
9. It is clear from the reading of sub-s.(1) of this provision that it enables the AO to get the valuation done from the Valuation Officer in certain specific types of cases. These would be the cases wherein an 13 I.T.A. No. 1542/Hyd/2010 M/s. Legend Estates Pvt. Ltd.
======================= estimate of the value of any investment referred to in s. 69 or s. 69B or the value of any bullion, jewellery or other valuable articles referred to in s. 69A or 69B is required. There is no mention about s. 69C of the Act. As is clear from the above, s 69A deals with unexplained money. Sec. 69B likewise relates to the amount of investment etc. not fully disclosed in books of accounts. On the other hand, the provision relates to unexplained expenditure is in s. 69C.
10. In the present case the AO had doubts about the expenditure incurred on the project. As pointed out above the assessee had shown the expenditure on the at Rs. 38,58,53,602. Since AO had doubted this expenditure, he referred the matter to DVO for the purpose of determining the cost of construction of said project. However, as pointed out above, for the purpose of getting himself satisfied about the purported unexplained expenditure under s. 69C powers under s. 1142A could not be invoked.
11. Learned Counsel for Revenue submitted that such a power could be traced to s. 69B of the Act which relates to amount of investment etc. not full disclosed in the books of accounts.
12. Her submission was that the expenditure" incurred should be considered as coming within the expression 'investment'.13. We cannot agree with this submission of learned counsel for Revenue. If investments could include within its fold he expenditure as well which is incurred by a businessman during the course of his business, there was no necessity of having a separate provision under s. 69C of the Act which deals With unexplained 'expenditure' and reads as under:
"69C. Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of he AO satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year."
14. The scope and ambit of ss. 69B and 69C are altogether different. The connotation to the investment appearing in s. 69B has to be in the context of investments made in some property or any other type of 14 I.T.A. No. 1542/Hyd/2010 M/s. Legend Estates Pvt. Ltd.
======================= investment and it could not be the business expenditure. The word 'investment' contained in s. 69B deals with investment in bullion, jewellery or other valuable articles, etc. if the contention of learned counsel for Revenue is accepted and the is given wider meaning as sought to be made out, the provisions of s. 69C shall be rendered otiose.
15. The learned counsel for Revenue however took another plea to buttress her submission. He submitted that having regard to the circumstances under which s. 142A was inserted by the Finance Act, 2004, it be deemed that the intention of legislature was to include even those un-explained expenditure stipulated in s. 69C. No doubt the need behind inserting s. 142A was to empower the AO to make a reference to the Valuation Officer as there was no such specific powers and existing provision contained in s. 131 were inadequate. However, even this statement of object and reason clearly confined and limited the reference "to hold a scientific, technical and expert investigation etc." Learned counsel for the assessee has drawn our attention to CBDT circular issued by it explaining the Finance Bill, 2004 which specifically omits the word 'expenditure' as well as s. 69C. It is on this basis that the s. 142A was inserted in the form as it appears on the statute book now. If the intention was to include unexplained expenditure as contemplated in s. 69C of the Act as well this provision should have been specifically mentioned in s. 142A of the Act.
16. From the reading of sub-s.(1) of s. 142A, it is clear that the legislature referred to the provisions of ss. 69, 69A and 69B but specifically excluded 69C. The principle of casus omissus becomes applicable in a situation like this. What is not included by the legislature and rather specifically excluded, cannot be incorporated by the Court through the process of interpretation. The only remedy is to amend the provisions. It is not the function of the Court to legislate or to plug the loopholes in the law.
17. In the present case except the report of DVO on which the AO relied upon, there was nothing on record to suggest that there was any Of the evidence to disbelieve the expenditure shown by the assessee. In fact during the course of arguments, learned counsel for the assessee produced the assessment order which clearly demonstrates that the expenditure shown by the 15 I.T.A. No. 1542/Hyd/2010 M/s. Legend Estates Pvt. Ltd.
======================= assessee from the time, when it was an on-going project, was examined and accepted by, the AO
13. In view of the above facts and the judgment of Hon'ble Delhi High Court in the case of AAR PEE Apartments Pvt. Ltd. (supra) we are of the considered view that the Legislature has not included unexplained expenditure stipulated in Sec.69C of the Act for invocation of provisions of Sec.142A of the Act. We further find that even the CBDT Circular issued by it, explaining the Finance Bill, 2004, specifically omitted the word 'expenditure' as well as Sec.69 from the ambit of Sec.142A of the Act as inserted in the form as it appears on the statue book. If the intention of the Legislature to include unexplained expenditure as contemplated in Sec.69C of the provision of Sec.142A should have been specifically mentioning the same. Further the cost of flat being shown by the assessee as current assets not as an investment, it cannot be subject matter of reference u/s. 142A. Even otherwise, the Assessing Officer referring the matter to the DVO for valuation of current assets in one assessment year, he cannot disturb the concluded assessments of other assessment years. Accordingly, we decide this issue in favour of the assessee and against the Revenue.
14. In view of the above decision on both the legal issues, we decide this appeal of the assessee in favour of the assessee and the issues on merits have become academic and needs no adjudication.
15. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 30th March, 2012.
Sd/- Sd/-
(ASHA VIJAYARAGHAVAN) (CHANDRA POOJARI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, dated the 30th March, 2012
16 I.T.A. No. 1542/Hyd/2010
M/s. Legend Estates Pvt. Ltd.
=======================
Copy forwarded to:
1. M/s. Legend Estates Pvt. Ltd., c/o. M/s. K. Raghunath & Co., Chartered Accountants, 3-6-102/A/B & C, 1st Floor, Near Old Vijaya Diagnostic Centre, Himayatnagar, St. No. 25, Hyderabad-500 029.
2. The Deputy Commissioner of Income-tax, Circle-16(1), Aayakar Bhavan, Hyderabad.
3. The CIT(A)-V, Hyderabad.
4. The CIT-IV, Hyderabad.
5. The DR - A Bench, ITAT, Hyderabad tprao