D.b. Income Tax Appeal v. Asst. Commissioner

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR. D.B. INCOME TAX APPEAL NO.102/2007Smt. Prem Kumari Mudria versus Asst. Commissioner of Income Tax. Date of Order :18.07.2007. HON'BLE MR. P.B MAJMUDAR,J.HON'BLE MR.MUNISHWAR NATH BHANDARI,J. Mr. Anjay Kothari, for the appellants. By the Court (Per Mr.Majmudar,J.) We have heard the learned counsel for the appellant. By filing this appeal under Section 260A of theIncome Tax Act, 1961, the assessee has challenged thejudgment delivered by the Income Tax Appellate Tribunal,Jodhpur Bench, Jodhpur in appeal no. 347/2002 and348/2002. The Tribunal dismissed both the appeals bycommon judgment . In the present tax appeal, the appellant haschallenged the order of the Tribunal passed in AppealNo.348/2002 which relates to the assessment year 1995-1996. The appellant – assessee constructed a housein the city of Udaipur located at 9, Govindpura Colony. Theconstruction was completed during the financial year1993-1994 to 1997-1998. The said factual aspect has alsobeen incorporated by the Commissioner of Income Tax(Appeals) in his order. The cost of construction wasreferred to Valuation Cell, Ajmer by the A.M. And theValuation Officer has determined the cost of construction atRs.65,54,555/-, as per the details given in para 2 of thejudgment of the CIT (A) for assessment years 1994-1995,1996-1997 and 1998-1999 as against the declared cost ofRs.39,50,000/-. The Assessing Officer has made additions in threeassessment years on the basis of the difference betweenthe cost of construction determined by the ValuationOfficer and as declared by the appellant in the respectiveassessment year. Before the Commissioner of Income Tax(Appeals), the only ground which was pressed into servicewas regarding the addition made by the Assessing Officeron account of difference in the cost of construction as indicated in the order of the Commissioner of Income Tax(Appeals). It was argued on behalf of the presentappellant that the Valuation Officer has included the cost ofconstruction on the basis of CPWD rates and has ignoredthe local PWD rates. It was argued before theCommissioner of Income Tax (Appeals) that if cost ofconstruction is assessed on the basis of local PWD rates,there will not be any difference, for which reliance wasmade by the present appellant on the order of CIT (A),Udaipur dated 23.1.2001 in appeal No.1/IT/IDB/00-01 forassessment year 1997-1998. The Commissioner of Income Tax (Appeals)accepted the said submissions made on behalf of thepresent appellant and accordingly, 20% deduction wasgranted from the total cost of construction estimated bythe Assessing Officer. The Commissioner of Income Taxaccordingly, reduced Rs.3,61,158/- from the total additionof Rs.5,01,660/- and accordingly, granted relief ofRs.3,61,158/-. For the year i.e. 1995-1996, the said reliefwas given at Rs.4,67,732/-. The assessee thereafterchallenged the said order before the Income Tax Appellate Tribunal, Jodhpur Bench , Jodhpur in connection with twoassessment years i.e. 1998-1999 and 1995-1996. The twoappeals were preferred before the Tribunal. The Tribunaldismissed both the appeals by common judgment. The Commissioner of Income Tax (Appeals)accepted the said submissions made on behalf of thepresent appellant and accordingly, 20% deduction wasgranted from the total cost of construction estimated bythe Assessing Officer. The Commissioner of Income Taxaccordingly, reduced Rs.3,61,158/- from the total additionof Rs.5,01,660/- and accordingly, granted relief ofRs.3,61,158/-. For the year i.e. 1995-1996, the said reliefwas given at Rs.4,67,732/-. The assessee thereafterchallenged the said order before the Income Tax Appellate Tribunal, Jodhpur Bench , Jodhpur in connection with twoassessment years i.e. 1998-1999 and 1995-1996. The twoappeals were preferred before the Tribunal. The Tribunaldismissed both the appeals by common judgment. It was argued before the Tribunal that theAssessing Officer was not entitled to reject the books ofaccounts and refer the matter to the DVO. The Tribunalhas considered this aspect in para 4 of its judgment and ithas been found that the Assessing Officer has alreadypointed out in para 6 of the order that the assessee hadnot maintained proper details for expenses relating toconstruction and had maintained only self-made vouchersand that too only for wood, labour, gitti, sand and bricksetc. and no supporting vouchers were available for suchexpenses. Under these circumstances, the AssessingOfficer in order to find out the real value of cost ofconstruction, referred the matter to the DVO and madeaddition on the basis of report of DVO. It is required to be noted that in the instantcase, there was no evidence available in any mannerregarding the cost of construction and, therefore, in orderto find out the real value of cost of construction, the Assessessing Officer adopted such course. It is required tobe noted that on the basis of same, even theCommissioner (Appeals) upheld the only contention raisedby the appellant in connection with granting 20%deduction from total value of cost of construction asestimated by the DVO. In fact, the only argument whichwas canvassed by the assessee before the Commissionerof Income Tax (Appeals) was in connection with thevaluation on the basis of CPWD Rates. The First appellateauthority i.e. Commissioner of Income Tax (Appeals)accepted the said submission and 20% deduction was alsogranted. However, before the Tribunal for the first time,the appellant argued that the initiation of re-assessmentproceedings was not competent as this was not theproceedings initiated on the basis of search. The Tribunalhas found that no such ground was raised at any point oftime before the appellate authority nor any such issue wasraised before the Commissioner (appeals). The Tribunalspecially found in para 4 of the order that the CIT (A) hasaccepted the assessee's request with regard to theapplication of PWD rates and allowed deduction of 20%from the valuation made on the basis of CPWD rates toscale it down so as to be at part with the State PWD rates.The said procedure was found to be consistently followed by the Jodhpur Bench of the Tribunal. It is required to benoted that against the order of CIT (A), even the Revenuehad also preferred appeals as the Revenue was notsatisfied with the order of CIT (A) in connection withgranting deduction of 20% in the cost of construction. Theappeals of the Department came for hearing beforeJodhpur Bench of the Tribunal in connection withassessment years 1995-1996, 1996-1997 and 1998-1999. The Jodhpur Bench of the Tribunal vide orderdtd.23.7.2004 came to the following conclusion: “The only dispute involved in these revenueappeals is relating to the relief allowed by theld. CIT (A) in respect of cost of construction.The ld. CIT (A) has held that the revenue wasnot justified in applying the CPWD rates incomparison to PWD rates. A deduction of 20%has thus been directed to be allowed. The Jodhpur Bench of the Tribunal vide orderdtd.23.7.2004 came to the following conclusion: “The only dispute involved in these revenueappeals is relating to the relief allowed by theld. CIT (A) in respect of cost of construction.The ld. CIT (A) has held that the revenue wasnot justified in applying the CPWD rates incomparison to PWD rates. A deduction of 20%has thus been directed to be allowed. The issue is covered in favour of the assesseeby the decision of the Hon'ble Rajasthan HighCourt in the case of CIT V/s. Dinesh Talwar265 ITR 344. Respectfully following thedecision of the Hon'ble Jurisdictional HighCourt, the appeals of the revenue are herebydismissed.” It is not in dispute that the appeals of the revenuewere dismissed after hearing the present appellant whowas respondent in the aforesaid appeals whereby the orderin favour of the assessee was confirmed. It is surprising to note that at the time of hearing of the appeal, the assesseehad not pointed out that there were cross-appeals whichare required to be heard together. We are of the opinionthat when there are two cross appeals, pending before thedifferent authority or Tribunal or the Court, the effortsshould be made to see that such appeals are heardtogether so that by a common judgment, the same can bedecided. Be that as it may, it is not in dispute that againstthe very impugned order of CIT (A), the Revenue preferredthree appeals for different assessment orders which weredismissed by holding that deduction of 20% has beenrightly given in favour of the assessee. It is required to benoted that there is no material on record to show that anyrequest was made by the present appellants that hiscross-appeals should be heard and decided together andthe appellant allowed the Tribunal to decide revenue'sappeals which were decided prior in time and the samewere dismissed and the order of the CIT (A) wasconfirmed. In any case we are not dismissing this appealon the aforesaid ground as we are convinced thatreasoning given by the Tribunal in the impugned order isbased on finding of fact and it is a well reasoned order. TheCIT (A) has categorically found that the only point whichwas argued by the assessee was taken into consideration and the relief as prayed for by the appellant before the CIT(A) was granted by the Commissioner of Income Tax(Appeals). It is true that before the Tribunal the appellantcan raise question of law for the first time i.e. question oflaw can be raised at any stage. However, when on findingof fact, the appellate authority i.e. CIT (A) as well as theTribunal has found that valuation made on the basis ofgiving deduction of 20% from the valuation made by theDVO is the correct valuation and such findings of factcannot be disturbed by this Court as this tax appeal can beentertained only on a substantial question of law. In thisconnection reference is required to be made to theDivision Bench judgment of this Court in the case ofCommissioner of Income Tax V/s Dinesh Talwar reported in265 ITR 344. .In the aforesaid judgment, it has been heldby the Division Bench as under: “The Tribunal has valued the property adopting therate of PWD. What should be thevalue of theconstruction, is basically a question of fact and thatdepends upon the material used, the location and thequality of construction. Therefore, straightway,applying the PWD rate or CPWD rate is not justifiedin case of each house. What should be the cost ofconstruction, the Tribunal has applied the rate ofPWD that is on the facts and circumstances of thiscase, which is part of the finding of fact. Nointerference is called for.” “The Tribunal has valued the property adopting therate of PWD. What should be thevalue of theconstruction, is basically a question of fact and thatdepends upon the material used, the location and thequality of construction. Therefore, straightway,applying the PWD rate or CPWD rate is not justifiedin case of each house. What should be the cost ofconstruction, the Tribunal has applied the rate ofPWD that is on the facts and circumstances of thiscase, which is part of the finding of fact. Nointerference is called for.” The question of valuation is essentially aquestion of fact and even at the cost of repetition, we maysay that even that finding has been properly given by theauthorities below by giving cogent reasons. We see noreason to take different view in the matter. In our view,the impugned orders do not suffer from any infirmity. NOquestion of law much less any substantial question of lawarises for the determination of this Court as theCommissioner of Income Tax (Appeals) has decided theappeals on the basis of evidence and material on recordand on the basis of submission of the appellant before it.It has taken just and proper decision. In fact, the Revenuewhich was also aggrieved by the said decision haschallenged the same and as stated above, the Tribunaldismissed the appeals of the Revenue by accepting theview taken by the CIT (A). Considering the aforesaidaspect of the matter as well as considering the questionregarding consistency in the orders in connection with thesame assessee, in view of dismissal of Revenue's appealsand upholding the decision of CIT (A) as well asconsidering the fact that the finding arrived at by theCommissioner of Income Tax (Appeals) as well as theTribunal is a finding of facts, no interference of this Court iscalled for in this appeal. No other points were canvassed before this Court. Accordingly, the present appeal is dismissed.No order as to costs. (MUNISHWAR NATH BHANDARI)J. (P.B. MAJMUDAR)J. SS/-