Gujarat High Court
Commissioner Of Income Tax-Ii vs Vijaykumar D Gupta....Opponent(S) on 15 April, 2014
Author: Sonia Gokani
Bench: Akil Kureshi, Sonia Gokani
O/TAXAP/298/2014 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 298 of 2014
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COMMISSIONER OF INCOME TAX-II....Appellant(s)
Versus
VIJAYKUMAR D GUPTA....Opponent(s)
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Appearance:
MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1
MR B S SOPARKAR, ADVOCATE for the Opponent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MS JUSTICE SONIA GOKANI
Date : 15/04/2014
ORAL ORDER
(PER : HONOURABLE MS JUSTICE SONIA GOKANI)
1. Amendment is granted.
2. Revenue has preferred the present Tax Appeal against the order of the Incometax Appellate Tribunal ("the Tribunal", for short) dated 23.08.2013, raising the following substantial questions of law for the assessment year 200910.
"[A] Whether the Appellate Tribunal has substantially erred in law in deleting the addition of Rs.60,12,240/ made u/s. 69A being unexplained investment in silver articles/utensils?Page 1 of 9
O/TAXAP/298/2014 ORDER
[B] Whether the appellate tribunal has
substantially erred in law in deleting the addition of Rs.8,98,105/ made u/s. 69B being unexplained investment in house property?"
3. We have heard learned counsel Mrs.Mauna M. Bhatt for the Revenue and learned Senior Counsel Mr.Soparkar for the respondentassessee.
4. The first issue concerns the relief of the addition made of Rs.60.12 Lakh (rounded off) under section 69A being the unexplained investment in silver articles. The assessing officer when made such addition of silver articles found during the search proceedings at the residence of the respondent assessee, this was carried to the CIT (Appeals). CIT (Appeals) after elaborately examining all the facts concluded in favour of the assessee by holding that the assessing officer could not bring material on record to indicate unexplained investment over and above what had been shown in the form of the material that had been seized at the time of search. The correct weight of the silver articles/utensils in the second round of valuation by the Official Valuer when Page 2 of 9 O/TAXAP/298/2014 ORDER was concluded at 219.510 kilograms and not 545 kilograms as was assessed by the Assessing Officer, the addition made for excess silver articles/utensils for Rs.60.12 Lakh (rounded off) as unexplained under section 69A was held unsustainable.
5. This was challenged by the Revenue before the Tribunal and the Tribunal after examining all the facts in detail concurred with the findings of CIT (Appeals) by holding thus :
"17. We have heard both the sides. We have perused the relevant evidences placed in the compilation. Our attention has been drawn on two letters of the assessee through which the assessee had vehemently objected the manner in which the silver articles were measured by the first valuer. When the prohibitory orders were revoked on 26th of September, 2008 the silver articles were again measured by an another valuer in the presence of "panchas". That valuation report has also been placed on record. According to which the total weight of the silver articles was only 219.105 kg instead of 545 kg. Our attention has also been drawn on a statement of the assessee which was recorded during the lifting of the PO proceedings. As per question no.5 it was categorically mentioned that there Page 3 of 9 O/TAXAP/298/2014 ORDER were two government approved valuers, namely, Mr.Amrish Kothari and Mr.Darshan Kothari who were present and weighed the silver contents on actual basis. A question was asked whether the assessee had agreed on the said correct valuation and the assessee had answered in affirmative. A question has also been asked in respect of the rate of the silver per kg for determining the value of the articles and that too was confirmed by the assessee. So as per P.O. proceedings dated 26.09.2008 the ADIT unit has corrected the mistake. As per Question No.9, it was further clarified :
Q.9 As per your own claim your family owns only 260.642 Kgs. Whereas as per inventory of silver utensils made on 01/09/08 is 545 Kgs. Why silver utensils found today should not be seized as same is in excess of your own explained silver utensils.
An.9 Weight taken by the valuer on 01/09/08 was wrong and also value taken was wrong. It was only 220 kgs, which is seized by you today i.e. 26.09.2008.
17.1 Considering all these evidences and totality of the facts and circumstances of the case once the admitted factual position was that initially there was an error in the weighment of the silver articles therefore that was not reliable. At the first instance on objection, naturally, those articles were required to be rechecked when the sealed room was opened consequent thereupon the lifting of the prohibitory order. According to Page 4 of 9 O/TAXAP/298/2014 ORDER us, the Revenue Department has fairly proceeded in this regard and naturally thereafter arrived at the correct weight and silver articles. Since, the assessee had already disclosed the silver articles in the wealth tax returns along with his family members and there was no excessive silver was detected, hence, the relief was rightly granted by the learned CIT (A). We find no force in this ground of the Revenue; therefore, dismissed."
6. The issue is predominantly based on factual matrix. Both the CIT (Appeals) and the Tribunal have in detail examined the facts on the basis of the material presented before them. It is also noticed that from the valuation report that had been placed on the record, the weight of the silver article turned out to be 219.510 Kilograms and not 545 Kilograms, as was originally indicated by the Official Valuer. It can also be seen from the findings of both the authorities that the issue in respect of the error in weighing the silver articles had been clearly explained. There could be no perversity that can be noticed in the findings of these authorities. Therefore, no indulgence is required as the substantial question of law does not arise. Page 5 of 9
O/TAXAP/298/2014 ORDER
7. The second issue concerns the addition made of Rs.8.98 Lakh (rounded off) under section 69B for the unexplained investment in house property.
8. While deciding Tax Appeal No.293/2014, this issue has been held in favour of the assessee and against the Revenue upholding the versions of both CIT (Appeals) and the Tribunal, in the following manner :
"5. It is undisputed that the Assessing Officer made a reference to the DVO without rejecting the books of accounts. While retaining part of the additions even the CIT (Appeals) did not come to the conclusion that the Assessing Officer had rejected the books of accounts of the assessee. It was in this background that the Tribunal relied on the decision of the Supreme Court in the case of Sargam Cinema v. Commissioner of Income-tax, reported in (2010) 328 ITR 513 (SC) . This Court in the case of Goodluck Automobiles Pvt. Ltd. v. Assistant Commissioner of Income-tax, reported in 359 ITR 306, in the context of this issue referring to the decision of the Supreme Court in the case of Sargam Cinema (supra) had observed as under :
12. The facts of the present case may be examined in the light of the statutory scheme discussed hereinabove as well as the decision of the Supreme Court in Sargam Cinema (supra). In this regard, a perusal of Page 6 of 9 O/TAXAP/298/2014 ORDER the assessment order reveals that the Assessing Officer has categorically recorded a finding to the effect that the accounts are duly audited and complete details are available. From the tenor of the order of the Assessing Officer, it is apparent that he has made the reference to the Valuation Officer merely to seek expert advice regarding the cost of construction. There is nothing in the assessment order to suggest that the Assessing Officer had any doubt regarding the cost of construction or that he was not satisfied regarding the correctness or completeness of the books of account. Before making the reference to the Valuation Officer for ascertaining the fair price of construction, the Assessing Officer does not appear to have ascertained the correctness or otherwise of the cost of construction shown by the assessee in its books of account. Thus, prior to making the reference to the Valuation Officer, the Assessing Officer has not ascertained as to what was the defect in the cost of construction disclosed by the assessee in its returns of income. Moreover, it is apparent that the only reason for making the addition under section 69 of the Act is that there is a difference in the cost of construction as determined by the Valuation Officer and as shown by the assessee. At no stage of the assessment proceedings does the Assessing Officer appear to have mentioned that the books of account are defective or that the cost of construction as shown in the books of account is not the true cost of construction. Thus, while making the reference to the Valuation Officer, the Assessing Officer has not recorded any defect in the books of account nor has he rejected the same. Except for the difference in the estimated cost determined by the Valuation Officer and the actual cost as shown by the assessee, the Assessing Officer has not brought any material on record to establish that the assessee had made any Page 7 of 9 O/TAXAP/298/2014 ORDER unaccounted investment in the construction of the building in question and that the books of account do not reflect the correct cost of construction. Under the circumstances, there was no occasion for the Assessing Officer to make a reference to the Valuation Officer. As held by the Supreme Court in the case of Sargam Cinema (supra), unless the books of accounts are rejected, the Assessing Officer cannot make a reference to the Valuation Officer. The reference made to the Valuation Officer, not being in consonance with the provisions of law, was, therefore, invalid. Accordingly, the report made by the Valuation Officer pursuant to such an invalid reference could not have been made the basis for addition under section 69 of the Act.
6. We are informed that the decision of this Court in the case of Goodluck Automobiles (supra) was followed by the Punjab and Haryana High Court in the case of Nirpal Singh v. Commissioner of Incometax, reported in 359 ITR 398. We may notice that Allahabad High Court in the case of Commissioner of Incometax v. Lucknow Public Educational Society, reported in (2011) 339 ITR 588, had also taken a similar view.
7. We are not oblivious of the fact that the Andhra Pradesh High Court in the case of Simandhar Corporation Pvt. Ltd. v. CIT, reported in (2013) 33 taxmann.com 643, had taken a contrary view. However, following the decision of this Court in the case of Page 8 of 9 O/TAXAP/298/2014 ORDER Goodluck Automobiles (supra), we do not interfere in the findings arrived at by both the authorities. No substantial question of law arises."
9. This Tax Appeal does not deserve any further entertainment.
10. The Tax Appeal, resultantly, is dismissed.
(AKIL KURESHI, J.) (MS SONIA GOKANI, J.) Gaurav+ Page 9 of 9