Income Tax Appellate Tribunal - Jaipur
Ganpati Plaza, Jaipur vs Ito, Behror on 16 February, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k
BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No. 466 & 467/JP/2016
fu/kZkj.k o"kZ@Assessment Year : 2011-12 & 2012-13
M/s Ganpati Plaza cuke The ITO,
Near Police Station, Vs. Behror.
Court Road, Behror, Alwar.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAJFG5801E
vihykFkhZ@Appellant izR;FkhZ@Respondent
vk;dj vihy la-@ITA No. 545/JP/2016
fu/kZkj.k o"kZ@Assessment Year : 2012-13
The ITO, cuke M/s Ganpati Plaza
Behror. Vs. Near Police Station,
Court Road, Behror, Alwar.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAJFG5801E
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj l@
s Assessee by : Shri Satish Gupta (C.A.)
jktLo dh vksj ls@ Revenue by : Smt. A.S. Nehra (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 11/12/2017
mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 16/02/2018
vkns'k@ ORDER
PER: VIJAY PAL RAO, J.M. These are two appeals by the assessee for the assessment years 2011-12 & 2012-13 and cross appeal by the Department for the ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO assessment year 2012-13are against two separate orders of the ld. CIT(A) both dated 30.03.2016. The assessee has raised common grounds in both appeals. The grounds raised for the assessment year 2011-12 as under:-
"1 On the facts & circumstances of the case Ld. Lower authorities grossly erred in initiating reassessment proceedings u/s 147 of the Income Tax Act, 1961,
2. On the facts & circumstances of the case & in law also A.O. grossly erred in passing the assessment order without proper & unlawful service of notice u/s 148,143(2) of the Act.
3. On the facts & circumstances of the case Ld CIT (A), Alwar grossly erred in holding that the reference to the DVO u/s 142 of the Act for estimating cost of construction was justified.
4. On the facts & circumstances of the case Ld CIT (A), Alwar grossly erred in i. Not accepting the cost of construction declared by the assessee in the books of accounts as in the remand proceedings Ld A.O. verified the books, Vouchers & supporting and were accepted and nothing incriminating material was found during the course of survey U/s 133 A of the Act.
ii. Taking the total cost of construction as per PWD rates at Rs 2,81,71,198/- as against Rs 2,65,33,114/- calculated by assessee.
iii. Not allowing deduction for self supervision charges.
iv. Not allowing deduction for electrical fittings & paint cost incurred by the tenants.
v. Considering the cost of purchases of lift in A.Y. 2011-12 to 2014-15 ignoring the fact that the said lift was purchased on 07/01/2015 i.e pertaining to A.Y. 2015-16.2
ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO vi. Taking the value of lift at Rs. 19,03,500/- as estimated by DVO as against actual cost of purchases of lift for Rs. 3,78,420/-. vii. Taking the value of extra items at Rs 20,02,130/- as against the value of extra items taken by approved valuer at Rs 4,54,503/-
viii Taking the Architect fees at Rs 3,20,768/- i.e.1% of total cost as against actual payment of Rs 2,00,000/-
ix. Accepting the cost of construction for F.Y. 2013-14 at Rs 10,19,596/- only as against Rs 18,34,792/- declared by the assessee.
x. Not accepting the cost of construction declared by the assessee in F.Y. 2014-15 (A.Y. 2015-16) for Rs 26,65,245/- in the books of accounts especially under the circumstances that the property was inspected by DVO on dated 09/03/2015 i.e at the end of F.Y. 2014-15. Moreover the division of total cost should have been made in 5 years & not in 4 years.
xi. Holding that no books of accounts were produced before Ld. AO during the assessment proceedings.
5. Therefore Ld CIT(A) grossly erred in confirming the addition of Rs. 4,17,339/- for the year under consideration on account of unexplained investment in the cost of construction."
2. Ground No. 1 is regarding the validity of reopening assessment. A survey operation u/s 133A of the Act was carried out at the business premises of the assessee firm on 29-30/08/2013. During the course of survey proceedings, statements of Shri Anil Yadav the partner and husband of Smt. Madhu Yadav other partner were recorded and certain loose papers & documents were impounded. No books of account were found at the business premises of the assessee firm. Since, none of the 3 ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO partners were present at the time of survey proceedings, the statement of partners were recorded u/s 131 of the Act in which they stated that no regular books of accounts are maintained by the assessee firm. The assessee did not file any return of income for the year under consideration. The AO issued notice u/s 148 on 28.11.2013 after recording the reasons for reopening of the assessment. In response the assessee filed a copy of e -return dated 12.03.2014 and the AO completed the reassessment vide order dated 20.03.2015 whereby an addition was made on account of difference in valuation of investment in shopping complex. The assessee challenged the validity of the initiation of reassessment before the ld. CIT(A) and submitted that there was no reason to belief that the income assessable to tax has escaped assessment was no incriminating documents or materials were found during the course of survey disclosing any escapement of income. The AO has reopened the assessment only on the basis of the statement of Shri Sunil Yadav recorded u/s 133A of the Act. Thus, initiation of reassessment proceeding was simply on the basis of suspicion and not on the basis of belief. The ld. CIT(A) did not accept the contention of the assessee and upheld the initiation of proceedings u/s 147/148 of the Act.
4
ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO
3. Before us, the ld. AR of the assessee has submitted that as per the reasons recorded, the AO has formed to belief on the basis of the statement of Shri Sunil Yadav partner of Ganpati Plaza recorded on 02.09.2013 wherein he has stated that a sum of Rs. 17 lacs has been invested in the construction of shopping complex. However, simply the investment in the shopping complex cannot be considered as income of the assessee firm. He has further submitted that the source of investment was explained in the statement and when there was no taxable income during the year then, there was no question of filing the return of income. Thus, non filing of return of income cannot be a reason to believe that the income chargeable to tax has escaped assessment. The ld. AR has further contended that there was no business activity during the year and there was no income either accrued or received by the firm during the year. Non maintenance of books of accounts also cannot be the reason to believe that some income chargeable to tax has escaped assessment. Thus, ld. AR has submitted that when there was no material before the AO to whisper in the form of investment in construction of building than how a belief was formed by the AO. He has relied upon the decision of Hon'ble Supreme Court in case of CIT vs. Khader Khan 352 ITR 480 and 5 ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO submitted that the statement made u/s 133A has no evidentiary value. Thus, the statement recorded u/s 133A cannot be a basis for initiation of reassessment proceedings. Further, the AO has framed the assessment on the basis of the opinion of the DVO which cannot be the basis for reopening u/s 147 as held by the Hon'ble Supreme Court in case of ACIT vs. Dhariya Construction Company 328 ITR 515.
4. On the other hand, ld. DR has submitted that the assessee is admittedly not maintaining the regular books of accounts and further there was no return of income filed by the assessee for the year under consideration. During the survey proceedings the assessee has estimated the investment made in construction of the building namely Ganpati Shopping complex. Therefore, in the absence of books of account and return of income the fact found on the ground and admitted by the assessee in the statement constitute a tangible material to form the belief that the income assessable to tax to the extent of investment in the building has escaped assessment. The AO was having sufficient reasons to belief that the income assessable to tax as escaped assessment. He has relied upon the orders of the authorities below.
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ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO
5. We have considered the rival submissions as well as relevant material on record. A survey u/s 133A of the Act was carried out at the business premises of the assessee firm on 29-30/08/2013. Undisputedly no books of accounts were found at the business premises of the assesses as the assessee did not maintain the regular books of accounts till that date. Therefore, it is apparent that despite expiry of more two and half years from the end of the financial year 2010-11 relevant to the assessment year under consideration the assessee did not prepare and maintain the books of accounts of the firm. Further, no accounts were maintained by the assessee firm regarding construction of the shopping complex namely Ganpati Plaza. The statements of the partners of the assessee firm were recorded during the course of survey proceedings as well as post survey inquiry. On the specific question of the amount of investment in construction of the shopping complex and source of the investment, the partner of the assessee firm in his statement recorded u/s 131 of the Act on 02.09.2013 had given only estimated and general reply regarding the cost of construction/amount of investment in the construction of shopping complex and sources of the said investment. It was only a general statement without giving specific details of source of investment and 7 ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO further without any supporting documents. Shri Sunil Yadav partner of the assessee firm has stated that he will furnish the relevant record subsequently This is not a case of forming of opinion by the AO on the basis of statement recorded u/s 133A of the Act but the statements were recorded u/s 131 of the Act on the subject matter of shopping complex did exist at the ground. Therefore, when a tangible asset was found in existence and statements were regarding the investment and source of the investment then the same cannot be held as a mere statement without corroborating evidence. Where the facts of construction of shopping complex is not undisputed or in doubt then, the statement recorded about the investment and source of investment of the shopping complex along with physical existence of the shopping complex constitute a tangible material to form the belief that the income to the extent of investment made in construction of shopping complex has escaped assessment. It is not a matter of case of dispute about the quantum of investment or the source of investment but the assessee has neither maintain the books of accounts or accounts of the construction of the shopping complex nor has filed the return of income for the assessment year under consideration. Therefore, all these facts are sufficient to form the belief that the income assessable to tax has 8 ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO escaped assessment. At the stage of initiation of proceedings u/s 147/148 of the Act what is required is prima facie reasons to belief that the income assessable to tax has escaped assessment and the AO is not required to establish the correctness of the reasons at this stage. Therefore, when the assessee firm has failed to produce a single document during the course of survey proceedings and post survey inquiry to show the source of investment which cannot be treated as income of the assessee firm then, the vague statements giving estimated details without supporting evidence would not help the case of the assessee. The decision relied upon by the ld. AR are not applicable in the facts of the case on hand because the investment in the shopping complex its. Hence, in the facts and circumstances of the case, we do not find any error or illegality in the initiation of reassessment proceedings in the case of the assessee.
6. Ground Nos. 2 and 3:- At the time hearing, the learned counsel for assessee stated at bar that the assessee does not press ground nos. 2 and 3 and the same may be dismissed as not pressed. The ld. DR has raised no objections if ground Nos. 2 and 3 of the assessee's appeal are dismissed as not pressed. Accordingly the ground Nos. 2 and 3 of the assessee's appeal are dismissed being not pressed. 9
ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO
7. Ground No. 4 is regarding the cost of construction adopted by the AO on the basis of DVOs valuation report as against the cost declared by the assessee. The assessee has declared the cost of construction for the assessment year 2011-12 of Rs. 17,41,097/-. Since, the assessee did not produce books of accounts in support of the claim, therefore, the AO referred the valuation of cost of construction to the DVO u/s 142A of the Act. The DVO estimated the cost of investment at Rs. 52,336/- for the assessment year 2011-12 and accordingly, the AO made an addition of the differential amount of Rs. 34,11,239/-. On appeal the assessee produced the books of accounts and other records in support of the cost of investment for construction of the shopping complex consequently the ld. CIT(A) forwarded the additional evidence filed by the assessee to the AO for examination and comments. The AO submitted its remand report and pointed out that during the course of remand proceedings the assessee produced the books of accounts along with supporting bills and vouchers. The assessee also produce the affidavit of the tenants to show that some work of finishing and furnishing of shops were done by tenants. However, the AO observed and stated that the assessee did not produce the complete books of account along with supporting evidence during the course of 10 ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO assessment proceedings despite numerous opportunities provided to it. After considering the said remand report the ld. CIT(A) has granted part relief to the assessee by applying State PWD rate instead of CPWD rates adopted by the DVO for the purpose of determining the value of construction of shopping complex. Thus, the ld. CIT(A) did not accept the contention of the assessee regarding the cost of construction as declared by the assessee and other deduction and rebates claimed by the assessee.
8. Before us, the ld. AR of the assessee has submitted that the books of accounts and construction accounts along with vouchers were filed vide letter dated 02.01.2015. The assessee has also submitted copy of balance sheet along with building account on 03.02.2015. These documents were again submitted before the ld. CIT(A) as an additional evidence which were examined by the Assessing Officer in the remand proceedings. The AO after verification and examination of books of accounts accepted the complete books of accounts along with supporting bills and vouchers. Thus, once the AO has not rejected the books of accounts produce by the assessee, the cost of construction as declared by the assessee in the books of accounts should have been accepted instead of referring the valuation to the DVO and adopting the 11 ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO value estimated by the DVO. He has further contended that there is no incriminating document found during the course of survey proceedings and therefore, the investment shown in the books of accounts should have been accepted by the authorities below. He has relied upon the decision of Hon'ble jurisdiction High Court in case of CIT vs Hotel Joshi 242 ITR 478 as well as the decision of Hon'ble High Court in case of Pratap Shingh Amro Singh Rajedra Singh 200 ITR 788 and contended that when the books of account are not rejected the addition based on valuation report is not sustainable. The ld. AR of the assessee has further contended that the DVO has adopted the total cost by applying CPWD rates however, the ld. CIT(A) has also not computed the correct cost of construction even by applying the State PWD rates. He has referred to the standing order of State PWD rates applicable for the year under consideration and submitted that due to some calculation mistake the value has been taken on higher side. Further, the deduction on account of self-supervision charges has not been allowed by the DVO as well as by the authorities below. Thus, the ld. AR has submitted that the assessee is entitled for deduction for 12% on account of self- supervision. In support of his contention he has relied upon the decision of this Tribunal in case of ITO vs. Nitesh Maheshwari 138 TTJ 116 and 12 ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO submitted that the Tribunal has granted 12% deduction for self- supervision. The ld. AR has pointed out that the assessee produced the affidavits of the tenants as well as some of the tenants were examined by the AO during the course of remand proceedings wherein all the tenants have accepted the fact that the electrical installations and paint inside the shop were got done the by themselves and assessee has not incurred any expenditure on electrical installation and inside paints of the shops. Since, the DVO while determining the cost of construction has not taken into consideration these factors.
9. Therefore, the Fair Market Value determined by DVO cannot be allotted the next dispute is regarding the cost of lift. The ld. AR has submitted that the assessee produce the purchase bill of lift of Rs. 3,78,420/- whereas the DVO took the values as per CPWD guidelines rate at Rs. 19,03,500/-. Therefore, ignoring the actual cost of lift the DVO has adopted the artificial rates which is not justified. The DVO has taken the value of extra items of Rs. 20,02,130/- as against the value of extra items taken by the approved valuer at Rs. 4,54,503/-. The ld. AR of the assessee has submitted that since the ld. CIT(A) has accepted the State PWD rates instead of CPWD rate therefore, the cost of extra items should have been computed by applying the State PWD rates. 13
ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO The ld. AR has then pointed out that the assessee has paid the actual fee of architecture of Rs. 2,00,000/- whereas the DVO has adopted the architecture fee @ 1% of total cost of Rs. 3,20,768/-. Therefore, the actual fee paid by the assessee has to be taken into account instead of estimation made by the DVO. The ld. AR has further submitted that the DVO has also sifted the cost of construction declared in the books for the assessment year 2014-15 at Rs. 18,34,792/- and the differential amount was added for the year under consideration. Further, the DVO has divided total cost of construction in 4 years instead of 5 years taken by the assessee and thereby increase the cost of construction for the year under consideration. Thus, the ld. AR has submitted that when the books of accounts of the assessee were found to be correct, no addition is called for in respect of cost of construction of shopping complex.
10. On the other hand, ld. DR has submitted that the assessee admittedly is not maintained the books of accounts as well as the building accounts regularly. It was found during the course of survey proceedings that the assessee was not maintaining the regular books of accounts and further no records or details were produced by the assessee even during the course of assessment proceedings. Only during the appellate proceedings before the ld. CIT(A) the assessee 14 ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO produced evidences which were forwarded to the AO for examination. Thus, it is clear that the books of accounts prepared by the assessee were not based on the actual details of expenditure but it is prepared after gap of more than 3 years and therefore, the valuation adopted by the assessee in the books of accounts cannot be accepted as correct. He has relied upon the orders of the authorities below.
11. We have considered the rival submissions as well as relevant material on record. Though the assessee produced the books of accounts before the AO during the remand proceedings and the same were not found to be incorrect by the AO however, it is undisputed that the books of accounts produce by the assessee were got prepared after a gap of more than 3 years from the end of the financial year relevant to the assessment year under consideration. Rejection of the books of accounts is not a precedent of condition for rejecting the cost of construction declared by assessee when the books of accounts were not maintained by the assessee regularly but were prepared on a subsequent date that too after more than 3 years. Therefore, the value shown by the assessee in the books of accounts, need not necessarily be accepted as correct. Thus, it was proper and justified on the part of the AO to examine the valuation of cost of construction through 15 ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO independent inquiry. Further, the reference to the DVO was made by the AO during the assessment proceedings and in the absence of relevant evidence and books of accounts. Therefore, the report of the DVO was available before the additional evidence filed by the assessee during the proceedings before the ld. CIT(A). Thus, once the DVO has already determined the value of cost of construction then, this objection of the assessee is devoid of merits. However, we find that some of the issues like allowing the self supervision rebated/deduction, the cost of electrical installations and paint inside the shops claimed to have been incurred by the tenants as per the affidavits filed as well as statements of the tenants recorded by the AO during the remand proceedings and further, the cost of the lift was adopted by the DVO as per guidelines value of CPWD rates instead of actual purchase price claimed by the assessee have not been considered properly by the authorities below. Further, the assessee has submitted that the cost of extra items were taken by applying the CPWD rates instead of State PWD rates despite it was accepted by the ld. CIT(A). We find that it is settled proposition of law that when the assessee has claimed the deduction on accounts of self supervision then appropriate deduction ought to have been given on this account while determining the cost of construction. Further, 16 ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO when certain expenditure were incurred by the tenants of the shops as claimed in the affidavit as well as in their statements then, the said claim should not have been denied without bringing contrary material on record. Similarly the assessee has claimed that the ld. CIT(A) has adopted incorrect State PWD prescribed rates therefore, all these aspects require a proper verification and examination at the time of determination of cost of construction of the shopping complex in question. The other issues raised by the assessee are also required to be considered in light of the relevant evidence produce by the assessee. There is no points in adopting two separate rates when the ld. CIT(A) has impermissible accepted the State PWD rates of determining the cost of construction then the cost of extra items are also be determined by applying the State PWD rates. The assessee has claimed to have paid architecture fee of Rs. 2 lacs whereas the DVO has adopted the estimated fee @ 1% of total cost. We are of the considered view that estimation of fee is required only when the assessee has failed to produce the evidence in support of the actual fee paid. Thus, if the assessee has claimed to have made the payment of Rs. 2 lacs only on account of architecture fee then, without examination of the correctness of the payment and relevant evidence, the estimated value cannot be 17 ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO adopted. Therefore, the issue of determination of cost of construction is remitted to the record of the Assessing officer to examine and decide afresh after considerating various objections and relevant aspects as discussed in the foregoing part of this order. The objection of the assessee regarding division of cost construction in 5 years shall also be taken into consideration. Needless to say the assessee be given an appropriate opportunity of hearing before passing the fresh order on this issue.
12. Ground No. 5 is consequential to the ground No. 4 and no separate adjudication is required.
13. For the assessment year 2012-13 the assessee has raised the following grounds:-
"1 On the facts & circumstances of the case Ld. Lower authorities grossly erred in initiating reassessment proceedings u/s 147 of the Income Tax Act, 1961,
2. On the facts & circumstances of the case & in law also A.O. grossly erred in passing the assessment order without proper & unlawful service of notice u/s 148,143(2) of the Act.
3. On the facts & circumstances of the case Ld CIT (A), Alwar grossly erred in holding that the reference to the DVO u/s 142 of the Act for estimating cost of construction was justified.
4. On the facts & circumstances of the case Ld CIT (A), Alwar 18 ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO grossly erred in i. Not accepting the cost of construction declared by the assessee in the books of accounts as in the remand proceedings Ld A.O. verified the books, Vouchers & supporting and were accepted and nothing incriminating material was found during the course of survey U/s 133 A of the Act.
ii. Taking the total cost of construction as per PWD rates at Rs 2,81,71,198/- as against Rs 2,65,33,114/- calculated by assessee.
iii. Not allowing deduction for self supervision charges.
iv. Not allowing deduction for electrical fittings & paint cost incurred by the tenants.
v. Considering the cost of purchases of lift in A.Y. 2011-12 to 2014-15 ignoring the fact that the said lift was purchased on 07/01/2015 i.e pertaining to A.Y. 2015-16.
vi. Taking the value of lift at Rs. 19,03,500/- as estimated by DVO as against actual cost of purchases of lift for Rs. 3,78,420/-.
vii. Taking the value of extra items at Rs 20,02,130/- as against the value of extra items taken by approved valuer at Rs 4,54,503/-
viii Taking the Architect fees at Rs 3,20,768/- i.e.1% of total cost as against actual payment of Rs 2,00,000/-
ix. Accepting the cost of construction for F.Y. 2013-14 at Rs 10,19,596/- only as against Rs 18,34,792/- declared by the assessee.
x. Not accepting the cost of construction declared by the assessee in F.Y. 2014-15 (A.Y. 2015-16) for Rs 26,65,245/- in the books of accounts especially under the circumstances that the 19 ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO property was inspected by DVO on dated 09/03/2015 i.e at the end of F.Y. 2014-15. Moreover the division of total cost should have been made in 5 years & not in 4 years.
xi. Holding that no books of accounts were produced before Ld. AO during the assessment proceedings.
5. Therefore Ld CIT(A) grossly erred in confirming the addition of Rs. 11,47,583/- for the year under consideration on account of unexplained investment in the cost of construction."
14. Ground No. 1 is regarding the validity of initiation of proceedings and other grounds of the assessee are common to the grounds raised for the assessment year 2011-12. Therefore, the appeal for the assessment year 2011-12 is disposed off in the same terms as we have decided the appeal of the assessee for the assessment year 2011-12.
15. In the cross appeal for the assessment year 2012-13 the Revenue has raised the following ground:-
"1. That the Ld. Commissioner of Income Tax (Appeals), Alwar has erred on the facts and circumstances of the case in restricting the addition of Rs. 93,80,094/- to Rs. 11,47,583/- made by AO on account of undisclosed investment on the basis of difference found in the cost of construction as shown by the assessee and as determined in DVO's Report."
16. We have heard the ld. DR as well as ld. AR and considered the relevant material on record. This issue is common to the issue raised by the assessee regarding the estimation of cost of construction by 20 ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO adopting State PWD rate by the ld. CIT(A) instead of CPWD rates adopted by DVO. We find that this issue is covered by the various decisions of this Tribunal as well as the decision of Hon'ble High Court relied upon by the ld. CIT(A) as held in para 7.22 and 7.23 as under:-
"7.22 The appellant has placed reliance on the judicial decisions of Hon'ble Rajasthan High Court in the case of CIT vs. Hotel Hoshi ( 242 ITR 478), CIT vs. Elegant Homes Pvt Ltd ( 259ITR232). It is further submitted by the appellant that Hon'ble ITAT Jaipur have in the case of Sh Nirmal Kumar Agarwal in ITA No. 828, 829/JP/2013 vide order dated 15-01-2014, held after considering a number of decisions of the jurisdictional High Court that State PWD rates have to be applied for estimating the value of construction.
7.23 I have gone through the decisions of the Jurisdictional Hon'ble High Court and of Hon'ble ITAT, Jaipur Bench cited by the appellant and find that it has been categorically held that for the purposes of valuation of property, the rates of valuation as provided by the State PWD have to be applied apart from the factual matrix of each case. Therefore, following the same, as these decisions are found to be applicable to the facts of the present cases, I hold that for the purposes of valuation of property, State PWD rates have to be applied to the plinth area of construction for each floor as given by the DVO in the report. Having held that, it would also take care of the objections of the appellant on the issue of supervision expenses, no discounting in the valuation given by the DVO for the cost of windows, Almirahs, sanitary fittings, electric fittings, painting, false ceiling, finishing etc. as the expenses on these items were not incurred by the appellant and also the fact that construction material has been sourced locally."21
ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO Even the Hon'ble Supreme Court in case of CIT vs. Sunita Mansingha 393 ITR 121 has held in para 1 to 3 as under:-
"1. We have heard the learned counsel for the parties and perused the impugned judgment and order dated 2nd March, 2005 passed by the High Court of Judicature for Rajasthan at Jodhpur in Income Tax Appeal No. 3 of 2005 as also the order passed by the Income Tax Appellate Tribunal dated 20th May, 2004.
2. From the order of the Tribunal we find that the Tribunal has even though held that the reference to the Departmental Valuation Officer in question is not valid, in view of the decision of this Court in the Case of Amiya Bala Paul v. CIT [2003] 262 ITR 407/130 Taxman 511, but it has also held that it is settled principle of law that in place of Central Public Works Department rates local Public Works Department rates are to be applied and adopted to determine the cost of construction. In view of the fact that Section 142A was inserted by Finance (No.2) Act, 2014 (23 of 2004) w.e.f. 15th November, 1972 and subsequently again substituted by Finance Act, 2010 (14 of 2010) w.e.f. 1st July, 2010 and Finance (No.2) (225 of 2014) w.e.f. 1st October, 2014, as the proviso to sub-section (3) of Section 142A as it existed during the relevant period, reference to the Departmental Valuation Officer can be made because assessment in the present case had not become final and conclusive because the appeal preferred by the Revenue under section 260A of the Income Tax Act, 1961 was pending before the Rajasthan High Court.
3. However, in view of the finding recorded by the Tribunal that the local Public Works Department rates are to be applied and adopted in place of Central Public Works Department rates, we do not find any good ground to interfere in the impugned judgment on this issue on merits. The appeal fails and is dismissed."22
ITA No.466,467& 545/JP/2016 M/s Ganpati Plaza vs. ITO Therefore, in view of the above decision of Hon'ble Supreme Court we do not find any error or illegality in the order of the ld. CIT(A) qua this issue.
In the result, the appeals of the assessee are partly allowed for statistical purposes and appeal of the Revenue for the assessment year 2012-13 is dismissed.
Order pronounced in the open court on 16/02/2018 Sd/- Sd/-
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(Vikram Singh Yadav) (Vijay Pal Rao)
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Tk;iqj@Jaipur
fnukad@Dated:- 16/02/2018.
*Santosh.
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- M/s Ganpati Plaza, Behror, Alwar.
2. izR;FkhZ@ The Respondent- ITO, Behror.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur.
6. xkMZ QkbZy@ Guard File {ITA No. 466, 467 & 545/JP/2016} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar 23