Income Tax Appellate Tribunal - Indore
Smt. Nirmala Baxi vs Ito on 28 February, 2003
Equivalent citations: (2004)87TTJ(INDORE)627
ORDER
I.C, Sudhlr, J.M. In the aforesaid appeals one preferred by the assessee and another by the department, the same first appellate order is the subject-matter, hence, both appeals are being disposed of vide a consolidated order.
ITA No. 134/Ind/2001:2. The assessee has questioned the first appellate order mainly on the following grounds that the learned Commissioner (Appeals) has erred in:
(i) estimating income from pathology at Rs. 40,000 against Rs. 27,040 shown,
(ii) sustaining an addition of Rs. 10,000 under section 69 towards investments in purchase of plot,
(iii) sustaining an addition of Rs. 1,01,150 under section 69 towards investments in construction of house property,
(iv) sustaining the addition of Rs. 15,050 being cash credit in the name of Shri Kailashchandra, and
(v) not adjudicating the point about levy of interest under sections 234A and 234B.
3. Besides above, the learned authorised representative prays for allowing the following additional ground for consideration and adjudication of the Tribunal since the issue raised therein, is legal one and no fresh material is required for the adjudication:
"In the facts and under the circumstances of the case the notice issued under section 148 dated 6-3-1997, is without jurisdiction and non est in law".
3.1 The learned departmental Representative opposes the allowability of the additional ground on the basis that it has been raised by the assessee before the Tribunal for the first time.
3.2 We after considering the arguments advanced by the parties find substance in the submissions of the learned authorised representative and thus allow the additional ground for our consideration and adjudication. Since the additional ground is related to the root of the matter we will prefer to adjudicate it first before proceeding further.
3.3 In support of additional ground the learned authorised representative submits that while issuing notice under section 148 of the Act the assessing officer as required under the provisions of section 147 has not disclosed as to what was the reason before him to believe that income chargeable to tax against the assessee for the assessment year 1995-96 had escaped assessment. The learned authorised representative draws our attention to page No. 8 of the paper book, i.e., certified copy of the order sheet containing the order dated 10-2-1997, regarding the issuance of notice and points out that it is a sealed proforma for direction for issuance of 148 notice which has been filled in mentioning the assessment years only in handwriting of the assessing officer. It shows that there is complete lack of application of mind by the assessing officer while issuing notice under section 148 of the Act as the reasons for the belief of the assessing officer that any income chargeable to tax has escaped assessment for any assessment year must enist and must be recorded before any notice under section 148(1) is issued to the assessee and before making any assessment, reassessment or computation under section 147 of the Act. Reliance has been placed by him on the following judgments
(a) ITO v. Lakhmani Mewal Das (1976) 103 ITR 437 (SC).
(b) United Electrical Co. (P) Ltd. v. CIT & Ors. (2002) 178 CTR (Del) 192,
(c) Eveready Industries India Ltd. v. Jt. CIT & Ors. (2000) 243 ITR 540 (Gau), and
(d) Choudhary Construction Co. v. Dy Commr (A), Commercial Taxes department & Ors. (2002) 127 STC 47 (Raj).
He submits further that the case of assessing officer does not fall even under Expln. 2(a) to section 147 as there is no finding by the assessing officer that total income of the assessee had exceeded the maximum amount which was not chargeable to income-tax, though return of income was not filed by the assessee for the assessment year 1995-96 under section 139(1) of the Income Tax Act. The further submission of the learned authorised representative is that mere non-filing of return by the assessee for any assessment year does not confer jurisdiction upon the assessing officer to issue notice under section 148 unless there is ex facie material with the assessing officer to form a reasonable belief that the assessee had more income which has escaped assessment, and for initiating reassessment proceeding burden lies on the revenue to establish that :income has escaped assessment, which has not been discharged in the present case before issuing notice under section 148. He refers the following judgments in support:
(a) Tin Manufacturing Company of India v. CIT & Anr. (1996) 222 ITR 323(All), and
(b) Jogat Mohan Kapur v. WTO & Ors, (1995) 211 ITR 721 (Cal).
The learned authorised representative points out that assessee could have voluntarily filed return of her income for the assessment year 1995-96 under section 139(4) by 31-3-1997, i.e., before the expiry of one year from the end of relevant assessment year 1995-96, if she had taxable income. He invites our attention to the CBDT Circular No. 549, dated 31-10-1989, placed at page No. 10 of the paper book in support. He submits further that under the circumstances of the present case as narrated by the assessing officer in the order sheet while issuing the questioned notice under section 148, the only option left with the assessing officer was to issue notice under section 142(1) and issue of notice under section 148 was thus premature and illegal as by issuing notice under section 148 of the Act, the assessing officer has intended to extend the prescribed time-limit available for making the assessment under section 153(1) (a), i.e., two years from the end of the assessment year in which the income was first assessable i.e. till 31-3-1998. He points out that now after issuing notice under section 148 the time-limit available with the department for reassessment is 31-3-2000, as pet the provisions laid down under section 153(2) of the Act. The learned authorised representative submits further that the practice of the department in such cases to issue notice under section 142(1) is well borne out from assessment record for assessment year 1992-93 in assessee's own case and invites our attention to the contents of page No. 11 of the paper book i.e., notice under section 142(1) issued to the assessee for filing the return for the assessment year 1992-93 under the same circumstances. He also draws our attention to the contents of page No. I of the paper book, i.e., details of notice issued by the department for filing IT return for the asst, yrs. 1992-93 and 1995-96. He also refers provisions under section 142(1) (i).
4. The learned departmental Representative, on the other hand, justifies the orders of the lower authorities.
5. After considering the arguments advanced by the parties, in view of the materials available on record we find force in the submission of the learned authorised representative that the assessing officer while making order for issuance of notice under section 148 of the Act for the assessment year under consideration, has not noted this material finding that any income has escaped assessment. The English translation of the sealed proforma in Hindi is as under for a ready reference, wherein the blank portions have been left only to fill-up the assessment year in handwriting of the officer:
"From the perusal of record it appears that the assessee had got taxable income during the asst. yr . . . 1994-95. It has not filed return of income thereafter. Notice under section 148 be issued for the assessment year... 1995-96.... Sd/-
Assessing Officer Mandsaur 5.1 The provisions laid down in section 142(1) (i) read as under
"142. (1) For the purpose of making an assessment under this Act, the assessing officer may serve on any person who has made a return under section 139 or in whose case the time allowed under sub-section (1) of that section for furnishing the return has expired a notice requiring him, on a date to be therein specified,-
(i) where such person has not made a return within the time allowed under sub-section (1) of section 139 to furnish a return of his income or the income of any other person in respect of which he is assessable under this Act, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed, or".
Thus, it appears from the provisions of section 142(1) (i) that under the facts and circumstances of the present case at the most the assessing officer was supposed to issue notice under section 142(1) (i) of the Act to assessee requiring her to file the return of income and for this purpose the time-limit before the assessing officer under section 139(4) was till 31-3-1997, after the expiry of due date of filing return under section 139(1) of the Act, i.e., 31-8- 1995. The assessing officer has however issued the notice under section 148 on 6-3-1997, without invoking the provisions: of section 142 of the Act and has thus also extended the time-limit of the assessment till 31-3-2000, which was otherwise to expire on 31-3-1998, in the normal course, had the provisions of sections 147 and 148 not been invoked. It is also pertinent to mention over here that under the similar circumstances during the last assessment year the department had invoked the provisions of section 142, which was the correct procedure to deal with the present situation. While issuing notice under section 148 the assessing officer was supposed to record his reason to believe that any income chargeable to tax has escaped assessment for an assessment year and the assessee has not filed return of income although her total income or the total income of any other person in respect of which she is assessable under this Act during the previous. year exceeded the maximum amount which is not chargeable to income-tax. The assessing officer as it is evident from the basis recorded by him while instructing to issue notice under section 148 has failed to record the compliance of section 147 of the Act. The case of the assessing officer, therefore, does not fall even under Expln. 2(a) to section 147 of the Act. The Hon'ble Gauhati High Court in the case of Eveready Industries (India) Ltd. v. Jt. CIT & Ors. (supra), relied on by the learned authorised representative has been pleased to observe and hold as under. . . . : "From the language of section 147, it is clear that the power of the assessing officer under section 147 is to be exercised subject to the provisions of section 148 of the Act. Under sub-section (1) of section 148, the assessing officer is required to serve on the assessee a notice before making assessment, reassessment or recomputation under section 147 of the Act. Sub-sections (2) of section 148, however, provides that before issuing any notice under sub-section (1) of section 148, the assessing officer has to record his reasons for doing so. The reasons to be recorded by the assessing officer under sub-section (2) of section 148 must relate to his belief under section 147 that any income chargeable to tax has escaped assessment for any assessment year. Thus, the reasons for the belief of the assessing officer that any income chargeable to tax has escaped assessment for any assessment year must exist and must be recorded before any notice under section 148(1) is issued to the assessee and before making any assessment, reassessment or recomputation under section 147. "
5.2 The Hon'ble High Court of Delhi in the case of United Electrical Co. (P) Ltd, v. CIT (supra) relied on by the learned authorised representative on the identical issue was pleased to hold as under:
"........ The amended section 147 provides that where the assessing officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may apply the provisions of sub-sections 148 to 153 and assess or reassess the income which has escaped assessment. Sub-section (2) of section 148 mandates that before issuing notice to the assessee under sub-section (1), for filing the return, the assessing officer shall record his reasons for doing so. Therefore, formation of reason to believe and recording of reasons are imperative before the assessing officer can reopen the completed assessment. . . . Thus, existence of tangible material, for the formation of opinion is a prerequisite for initiation of action under section 147. Therefore, what section 147 postulates is that the assessing officer must have reason to believe that income has escaped assessment."
5.3 Both the Hon'ble High Courts in the aforesaid decisions have followed the law laid down by the Hon'ble Supreme Court in this regard in the cases of :
(a) Chhugarnal Rajpal v. S.P. Chaliha & Ors, (1971) 79 ITR 603 (SC).
(b) Income Tax Officer v. Lakhmani Mewal Das (supra),
(c) Gangasaran & Sons (P) Ltd. v. ITO & Ors, (1981) 130 ITR 1 (SC). and
(d) S. Narayanappa & Ors. v. CIT (1967) 63 ITR 219 (SC).
5.4 Ahd besides above, the Board Circular No. 549, dated 31-10-1989, placed at page No. 10 of the paper book is also very clear in this regard, the relevant extract thereof is being reproduced hereunder for a ready reference:
"....... The Amending Act, 1987 has further provided that where a return has not been filed voluntarily before the end of the relevant assessment year, the assessing officer can call for a return of income by issue of a notice under the said sub-section (1) of section 142. This provision, thus, enables the assessing officer to call for a return, and is a substitute for the provisions of section 139(2). However, a return can be called under section 142(1) only after the relevant assessment year has ended without the assessee having filed the return of income."
6. In view of the aforesaid judgments relied on by the learned authorised representative and his submissions, we hold that the reason shown in the notice issued under section 148 dated 6-3-1997, was at the most reason to suspect and not a reason to believe and thus the notice is without jurisdiction and non est in law. The additional ground is thus allowed in favour of the assessee.
7. Ground No. (i) : It is related to estimating of income from pathology at Rs. 40,000 against the declared amount of Rs. 27,040. The lower authorities have not accepted the declared income by the assessee on the basis that the laboratory was situated in prime location of Kala Khet at Mandsaur, and secondly the books of accounts were not maintained by the assessee. The submissions of the learned authorised representative are that in view of the provisions laid down in section 44AA(1) read with r. 6F of the IT Rules, the assessee was under no obligation to maintain books of accounts as receipt of assessee of previous three years did not exceed the limit prescribed under the aforesaid r. 6F. He refers page No. 12 of the paper book, i.e., statement showing professional receipts and income of last three years which were within the prescribed limit. The learned authorised representative submits further that the Kala Khet may be prime location for trading activities but profession of pathology depends on references made by doctors, reliability of results for tests conducted and, vicinity with hospital. He submits that in the daily test register maintained and produced during the assessment proceedings, no discrepancy has been noticed in it. He refers page No. 8 of the paper book in support, i.e., order sheet entry dated 6-9-1999, of the assessing officer. The learned authorised representative submits further that there was no basis for estimating income at Rs. 50,000 either by the assessing officer or estimating Rs. 40,000 by the learned Commissioner (Appeals), which is entirely based on surmises and conjectures only. While concluding his arguments the learned authorised representative submits that addition sustained to the extent of Rs. 12,960 by the learned Commissioner (Appeals) against Rs. 22,960 by the assessing officer for non-maintenance of books of accounts, is unwarranted which deserves to be deleted.
7.1 The learned departmental Representative Banks upon assessment order in opposition to the ground.
7.2 After careful consideration of the arguments advanced by the parties in view of the materials available on the record, we find force in the submissions of the learned authorised representative that additions made and sustained by the lower authorities are based on nothing but surmises and conjectures especially when the assessee as per the provisions of r. 6F read with section 44AA(1) was under no obligation to maintain books of accounts as per the receipts of previous three years which is evident from page No. 12 of the paper book. And besides this, it is very much evident from order sheet entry dated 6-9-1999, i.e., page No. 8 of the paper book that the assessee has produced register showing tests made during the year relevant for the assessment year under consideration wherein total receipt was shown at Rs. 48,453 and no defect has been pointed out by the assessing officer therein in his order for non-believing the same. Ground No. (i) is thus allowed in favour of the assessee with direction to assessing officer to delete the addition.
8. Ground No. (ii) : It is related to sustaining of an addition of Rs. 10,000 under section 69 of the Act towards investment in purchase of plot. The facts in brief are that the learned Commissioner (Appeals) has sustained the addition of Rs, 10,000 by way of gift from father-in-law Shri Shantilal Bakshi utilised towards purchase of plot on the basis that gift from father-in-law has not been satisfactorily explained. The learned authorised representative in support of this ground submits that the assessee had submitted a copy of declaration and acceptance of gift dated 16-4-1994 and refers page No. 21 of the paper book, wherein the donor had categorically explained that amount was gifted out of his income and that he was in service of Rajaram Brothers, Mandsaur. His further submission is that the assessing officer had never bothered to ask the assessee to explain the contents of declaration of gift of Rs. 10,000 by Shri Shantilal Bakshi when the gift-deed was produced before him. He points cut further that the amount in question was withdrawn by Shri Shantilal Bakshi from his Bank account. The learned departmental Representative, on the other hand, Banks upon the orders of the lower authorities.
8.1 After careful consideration of arguments advanced by the parties in view of the materials available on the record, we find force in the aforesaid submission, of the learned authorised representative especially the declaration and acceptance of gift dated 16-4-1994, wherein categorical explanation of source of gifted amount has been furnished by the donor. We do not find any reason to doubt the version of the donor nor the same has been pointed out by the lower authorities while sustaining the addition. We thus allow Ground No. (ii) in favour of the assessee with direction to the assessing officer to delete the addition.
9. Ground No. (iii) : This ground is related to sustaining addition of Rs. 1,01,150 under section 69 towards investment in construction of house property. The learned Commissioner (Appeals) has worked out this addition on the basis that valuation officer had estimated the value of the property at Rs. 1,96,200 out of which Rs. 80,000 taken as housing loan from Bank by the assessee and a loan of Rs. 15,050 taken by, the assessee from one Kailashchandra Jain, were allowed as explained. Against this addition the assessee is in appeal.
9.1 The learned authorised representative submits that the assessing officer has not recorded reason for referring the property for valuation to valuation cell, which is necessary in view of section 55A of the Act. He submits further that the assessing officer vide order sheet dated 30-9-1999, simply mentioned "referred to valuation cell". He invites our attention to the contents of page No. 9 of the paper book in support. The learned authorised representative cites the decision of Chennai Bench of the Tribunal in the case of M. Selvaraj v. ITO (2002) 258 ITR 82 (Chennai) (TM) (AT) and the decision of Hyderabad Bench of the Tribunal in the case of Assistant Commissioner v. Vinodkumar Agrawal & Ors. (2002) 77 TTJ (Hyd)(TM) 943: (2002) 257 ITR 65 (Hyd)(TM)(AT) and submits that reference should be made to the valuation cell only after proper application of mind by the officer concerned. His further submission is that writ of commission issued by the assessing officer was in favour of the valuation officer who was authorised by him under section 131(1) (d) to inspect the property and such investigation as it is necessary. He refers page No. 23 of the paper book in support. But the report was executed by the assistant valuation officer with two assistants which is not permissible as per the laws submits the learned authorized represantating our attention to the contents of page No. 24 of the paper book. The learned authorised representative submits further that commission to the valuation officer cannot be further delegated to the assistant valuation officer and his assistants without the authority of the assessing officer, thus the report of AVO is void ab intio. He cites the decision of this Bench of the Tribunal in the case of Asstt. CIT v. Omprakash Bagdi (2000) 28 ITC 308. He further points out that in the writ of commission no date has been mentioned on which or before which the commission was required to be returned which is also in violation of order 26, r. 18-B of the Code of Civil Procedure. The learned authorised representative contends that correct facts have not been narrated in the reference of commission by the assessing officer as at no point of time the assessee was confronted with this fact by the assessing officer during the proceedings that no investment in the construction of the said house was shown in the return filed by the assessee for the assessment year 1995-96 as admittedly nothing in this regard has been mentioned in the order sheet of the assessment proceedings. However, it is interesting to note that the AVO has himself showed in his report that the assessee had declared Rs. 1,13,595 as investment in the construction of house. The learned authorised representative refers page No. 34 of the paper book in support. His further contention is that request of assessee made on 21-2-2000, to give an opportunity to crossexamine the AVO was also denied by the assessing officer vide note sheet dated 21-2-2000, a copy whereof has been placed at page No. 9A of the paper book on the basis that it was a time barring case and there was no material lying with the assessee to counter the value determined by the AVO. The submission of the learned authorised representative is that there was sufficient time of more than one month to heed the request of the assessee for the cross-examination. The learned authorised representative submits that the assessee had constructed average type of building with second class material as mentioned by the AVO in his report placed at page No. 38 of the paper book. The assessing officer has referred the report of registered valuer that he had taken the value at the rate of Rs. 339 per sq. ft. but while framing the assessment, the assessing officer did not act upon the report of registered valuer and adopted the rate of Rs. 476.95 per sq. ft. as reported by the AVO. The AVO had valued cost of construction at Rs. 6,96,000, which was reduced on objection of the assessee at Rs. 6,27,000 by allowing 10 per cent supervision charges whereas the registered valuer had valued the cost at Rs. 4,45,000. The assessing officer even did not bother to call upon the counter comments from the AVO to meet the comments of the registered valuer upon the report of AVO nor the assessing officer has assigned any reason as to why the report of registered valuer was not acceptable who was equally competent to value the property. It was not possible for the registered valuer to give yearly break-up of investment in the construction as commented by the assessing officer since construction was done during the financial years 1994-95 to 1998-99 and the valuation was done in December, 1999 and any year-wise break-up by any expert would have been hollow formality without sound basis especially when the valuation of the registered valuer was based on the amount of investment shown by the assessee which was not relied upon by the AVO. The allegation of the assessing officer that documents for purchase of material were not produced before the AVO, is also baseless as the AVO did not complain for the same which is evident from page No. 28 of the paper book. The learned authorised re resentative refers page No. 9 of the paper book and submits that no fault was found by the assessing officer in the documents furnished by the assessee, His further contention is that the AVO has adopted CPWD rates applicable to Delhi which was not applicable for a small town like Mandsaur. He cites the following decisions in support:
(a) CIT v. Rajkumar (1990) 182 ITR 436 (All),
(b) Assistant Commissioner v. Vinod Kumar Agrawal & Ors. (supra),and
(c) Indore Bench of the Tribunal in ITA No. 11 72/IInd/1993 (assessment year 1990-91).
9.2 The AVO has not given any rates for calculation of plinth area which are hypothetical whereas registered valuer had given actual rate prevailing at Mandsaur while working out plinth area by taking actual rates of material prevalent at the relevant period. He refers page No. 43 of the paper book in support. There is vast difference in rates of material adopted by the AVO and that of registered valuer which is apparent from the comparative chart placed at page No. 25 of the paper book. The learned authorised representative submits that the report of Shri Anil Jain, Engineer, placed at page No. 49 of the paper book was tentative and it was prepared for obtaining Bank loan, and if this report was relied upon by the assessing officer it should have been relied upon in totality and not in part. The assessing officer has wrongly assumed that the amount of Rs. 1, 13,595 shown as invested for construction of house, was not for that purpose and was for the purchase of plot. He refers page No. 18 of the paper book, i.e., the balance sheet of the assessee for the assessment year under consideration wherein the amount of Rs. 1,13,595 has been referred on account of the property which in no case can be inferred as the cost of the land. While concluding his arguments the learned authorised representative submits that the learned Commissioner (Appeals) while disposing of the first appeal in this regard and sustaining the addition has failed to consider the aforesaid submissions. The learned departmental Representative, on other hand Banks upon the assessment order and submits that the assessing officer has discussed both the reports on the valuation of the property. He refers contents of point No. 5, p. 3 of the assessment order and submits that yearwise bifurcation of cost was not provided by the assessee. The learned departmental Representative also refers the contents of the page No. 2 of the assessment order with the submission that objections of the assessee have been Considered by the assessing officer. He further draws our attention to the contents of para Nos. 5, 9 and 10 of the first appellate order wherein the issue has been dealt with by him.
9.3 We have considered the arguments advanced by the parties in view of the materials available on the record and have gone through the orders of the lower authorities, valuation reports as well as the judgments relied on by the learned authorised representative. So far reference of the matter by the assessing officer to the valuation cell is concerned, it is evident from order dated 30-9-1999, placed at page No. 9 of the paper book that no reason has been assigned by him as to why the value declared by the assessee was not acceptable to him nor is it evident from the order sheet that the assessing officer had afforded opportunity to the assessee to counter the observation of the assessing officer that no investment in the construction of the house in question was shown in the return filed by the assessee for the assessment year 1995-96 especially when the AVO on the contrary has observed in his report that the assessee had declared Rs. 1,135,95 as investment in the construction of house as referred by the learned authorised representative at page No. 34 of the paper book. In the case of M Selvaraj v. ITO (supra) relied on by the learned authorised representative on the identical issue it was held by the Tribunal that the assessing officer has a duty to record the reasons for arriving at the conclusion that the cost of construction shown by the assessee is not correct. The Tribunal held further that the commission issued by the assessing officer under section 131(1) (d) of the Act without recording his satisfaction that the cost of construction shown by the assessee was not correct, was not valid and the valuation report given by the valuation officer upon an invalid order issuing commission was non est report and could not be relied upon. In the case of Assistant Commissioner v. Vinodkumar Agarwal (supra), the Hyderabad Bench of the Tribunal has mentioned the propositions of law laid down by various High Courts and Tribunals where properties had been referred to valuation like(1) reference should be made to the valuation cell only after proper application of mind by the officer concerned, (2) inspection of property should be done by giving adequate notice and opportunity to the assessee and preferably in his presence, (3) when there are more than one method to estimate the cost of construction, the method most favourable to the assessee should be followed -by the valuation cell, (4) when two sets of rates are prescribed, one by the CPWD and other by the State PWD and as none of these can be considered unrealistic and wrong, the rates that are more favourable to the assessee have to be applied by the valuation cell, and only local rates are to be adopted, (5) the valuation cell is confronted with the report of empanelled registered valuer and if the valuation officer is not in agreement with the report of the registered valuer, he should give itern-wise reasons for such disagreement. The quantities and rates should be necessarily controverted item-wise with evidence and reasons, after detailed investigation, and (6) it is obligatory on the part of the valuation officer to furnish to the assessee, in the interest of natural justice, his working of the cost of index and the rates adopted by him for various material considered in working out the cost index. We however do not agree with the submission of the learned authorised representative that report furnished by the AVO was in breach of the term of reference as in the reference the valuation officer were required to determine the value and report the same to the assessing officer. The "Valuation Officer" has been defined in section 2(r) of the Wealth Tax Act wherein the valuation officer appointed under section 12A includes a Regional Valuation Officer, a District Valuation Officer, and an Assistant Valuation Officer. We also do not agree with the submission of the learned authorised representative that the date on or before which the report was sought to be submitted has not been mentioned in the reference because as evident from page No. 23 of the paper book, the valuation report was required to be submitted by December, 1999, in other words, by 31-12-1999. There is no dispute that the report was submitted well within the prescribed time-limit as per the terms of the reference. Considering the totality of the facts and circumstances of the case discussed hereinabove, the valuation report was not worth relying as it was devoid of compliance of the principles of natural justice since the request of assessee made on 21-2-2000, to give an opportunity to cross-examine the AVO was denied by the assessing officer without any convincing reason. The rate of Rs. 476.95 per sq. ft. of construction adopted by AVO was highly excessive especially when he had himself observed that the construction was average type with second class material (page No. 38 of the paper book) and besides these the assessing officer while referring the matter to valuation cell has failed to discharge his duty to record the reasons for arriving at the conclusion that the cost of construction shown by the assessee was not correct. We thus delete the addition questioned by the assessee and allow Ground No. (iii) in her favour.
10. Ground No. (iv) : It is related to sustaining the addition of Rs. 15,050 being cash credit in the name of Shri Kailashchandra. The learned authorised representative submits that the lower authorities are not correct to make and sustain the addition on the basis that confirmation letter of Shri Kailashchandra, the creditor, was not furnished by the assessee before them, which is contrary to the record as the assessee in compliance of order sheet entry dated 6-9-1999, had filed the confirmation letter which is very much evident from the certified copy of the confirmation letter obtained from the department under the signature of Income Tax Officer, Mandsaur, as true copy, placed at page No. 50 of the paper book. The learned departmental Representative, on the other hand, Bank s upon assessment order.
10.1 After going through the submissions of the parties especially the certified copy of the confirmation letter obtained from the department placed at page No. 50 of the paper book, we find that there was no reason with the lower authorities to make and sustain the addition of Rs. 15,050 on the basis that confirmation of the creditor was not filed. The addition is thus deleted. Ground No. (iv) is allowed in favour of the assessee.
11. Ground No. (v) : This ground is related to levy of interest under sections 234A and 234B, in support of which the learned authorised representative refers the decisions of the different Benches of the Tribunal mentioned at page No. 9 of the paper book. We however in view of the decision of the Hon'ble Supreme Court in the case of Kalyankumar Ray v. CIT (1991) 191 ITR 634 (SC) do not find substance in this ground and the same is thus rejected.
12. In result the appeal is partly allowed.
ITA No. 178/Ind/2001 :13. The revenue has questioned the first appellate order on the following grounds that the learned Commissioner (Appeals) has erred in reducing unexplained investment in :
(i) purchase of plot at Rs. 10, 000 as against addition of Rs, 1, 13,595 made by the assessing officer accepting the arguments of the assessee that the FDRs were encashed on 16-4-1994 for making investment in purchase of plot, and
(ii) construction of house at Rs. 1,01,150 as against Rs. 1,96,200 made by the assessing officer.
14. Ground No. (i) : We have heard and considered arguments advanced by the parties. The learned Commissioner (Appeals) has dealt with the issue in details vide para Nos. 5, 6 and 7 of his order through which we have gone and find no infirmity therein. Relevant extract of the order is being reproduced hereunder for a ready reference "....... The assessing officer should have made enquiries from the Bank about the existence and time to time renewal of FDRs dated 1-12-1983, and their encashment on 16-4-1994, as certified-by the Bank . After considering the arguments of the learned counsel and documents/evidences filed before the assessing officer I am of the opinion that the assessing officer was not at all justified in not considering the encashment of FDRs worth Rs. 1,06,210 (Rs. 60,691 + Rs. 45,519). These FDRs were purchased in the year 1983 and were encashed on 16-4-1994 for making investment in purchase of plot. Therefore, the source of investment in plot to the extent of Rs., 1,06,210 is fully explained and no addition should have been made.
The order of the learned Commissioner (Appeals) is comprehensive and reasoned one wherein the assessment order has also been considered while granting relief to the assessee. We thus do not find reason to interfere with the same and it is confirmed. In result Ground No. (i) is rejected.
15. Ground No. (ii) : We have already dealt with this issue in the appeal of the assessee hereinabove vide Ground No. (ii); following the same the Ground No. (iii) of the present departmental appeal does not survive. The same is thus rejected.