Ita/109/2008 Of The Commissioner Of Income Tax v. Smt.s.vasantha

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER TUESDAY, THE 21ST OCTOBER 2008 / 29TH ASWINA 1930 I.T.A.No.109 of 2008 ----------------------------------- I.T.A.NO.1060/COCH//2005 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN - ORDER DATED 13.07.2006. (ASSESSMENT YEAR 1995-96) .................... APPELLANT/RESPONDENT:- ------------------------------------------ THE COMMISSIONER OF INCOME TAX,THIRUVANANTHAPURAM. BY ADV.SRI.P.K.R.MENON,SR.COUNSEL, GOVERNMENT OF INDIA (TAXES), SRI.GEORGE K. GEORGE, SC FOR IT, SRI.JOSE JOSEPH, SC FOR INCOME TAX RESPONDENT/APPELLANT:- ------------------------------------------- SMT.S.VASANTHA,SANKARAVILASOM BUNGALOW,TKM COLLEGE P.O.,KARICODE,KOLLAM. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 21/10/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:- H.L.DATTU, C.J. & A.K.BASHEER, J. ------------------------------------------- I.T.A.No.109 of 2008 ------------------------------------------ Dated, this the 21[st ] day of October, 2008 JUDGMENT H.L.Dattu, C.J. This appeal arises out of an order passed by the Income TaxAppellate Tribunal, Cochin Bench in I.T.A.No.1060 of 2005 dated 13[th]July, 2006. (2) The assessee's business premises as well as theresidential building were surveyed by the Department in exercise of theirpowers under Section 133-B of the Income Tax Act ('the Act' for short)sometime in the month of October, 1995. It was found that the assesseeowns 10 cents of land with a double storeyed building. Since the assesseehas no known source of income for investment in the construction ofresidential building, a notice under Section 148 of the Act came to beissued. In reply to the said notice the assessee had stated that the cost ofconstruction of the double storeyed building is in a sum of Rs.9,25,000/-and the source of income was sale proceeds of the gold ornaments worthRs.1,25,000/-, loan amounts of Rs.70,000/- and Rs.40,000/- borrowedfrom her two brothers and Rs.1,70,000/- advanced by her another brotherby name Sasidharan. She had also stated that a sum of Rs.5,20,000/-was advanced by one Sri.Sundara Rajan. (3) The assessing authority while completing theproceedings under Section 148 of the Act had noticed that neither theassessee's brothers had appeared before him nor had they confirmed thepayment of the loans to their sister. The assessing authority has furthernoticed that in addition to Rs.5,20,000/- said to have been advanced bySri.Sundara Rajan another sum of Rs.1,67,500/- was also advanced by himwhich was adjusted from the amount given by Sri.Sasidharan. (4) The assessing authority has further noticed that as per thevaluation report of the residential building done by the AssistantValuation Officer of the Income Tax Department, the value of thebuilding works out at Rs.15,03,200/-. This valuation report differs fromthe valuation report prepared by the registered valuer which was producedby the petitioner showing the cost of construction of the building asRs.9,41,700/- and, therefore, the total source available to the assessee wasRs.8,77,500/- plus the agricultural income of Rs.75,000/-. Accordingly,the assessing officer was of the opinion that the balance amount ofRs.5,50,700/- was found to be undisclosed income, and accordingly hadquantified the tax liability in a sum of Rs.1,95,280/- and also had leviedinterest under Sections 234A and 234B of the Act. Thus the total demandthat was made was in a sum of Rs.6,14,960/-. (5) The assessee had called in question the orders passed by (5) The assessee had called in question the orders passed by the assessing authority in exercise of his powers under Section 148 of theAct. The first appellate authority has granted partial relief to the assesseeby giving a deduction of Rs.75,000/- keeping in view that the Kerala PWDrates and CPWD rates vary and, therefore, the assessing authority was notjustified in relying upon the valuation report of the Valuation Officer ofthe Department who had valued the property taking into consideration theCPWD rates. (6) The assessee, being aggrieved by the orders passed bythe first appellate authority, had carried the matter in second appeal beforethe Tribunal. The Tribunal, by its orders dated 13.7.2006, had remandedthe matter to the assessing authority with a specific direction that theassessing authority will apply the PWD rates prevailing in the State ofKerala and quantify the tax liability. (7) Aggrieved by the said order passed by the Tribunal, the Department is before us in this Income Tax Appeal filed under Section260A of the Act. (8) The Department has raised the following questions of law for our consideration and decision. They are as under: “(1) Whether on the facts and in the circumstancesof the case and in the light of the contents in the annexuresto the assessment order the Tribunal is right in law and factin holding that the assessing officer has not given anyreason for rejecting the valuation report and is not thefinding perverse and without application of mind? (2) Whether on the fact and in the circumstances ofthe case the Tribunal is right in law in ignoring the detailedreasoning given in the assessment order and in directing theAssessing Officer to adopt the state PWD rate for valuationof the property and is not the order one without applicationof mind and hence perverse and nonest? (3) Whether on the fact and in the circumstances ofthe case did not the Tribunal erred in directing adoption ofthe state PWD rate for valuation based on decision ofunspecified orders of the Tribunal and High Court in othercase without examining the fact of the case in hand is notsuch direction in effect based on conjectures and surmises? (4) Whether on the fact and in the circumstances ofthe case did not the Tribunal erred in not upholding theorder of the Commissioner of Income Tax (Appeals)confirming the order of the Assessing Officer?” (9) Sri.Jose Joseph, learned counsel appearing for theRevenue, in support of the questions of law framed by him, would submitthat the Tribunal was not justified in directing the assessing authority totake only the PWD rates prevailing in the State of Kerala, and, therefore,the direction issued by the Tribunal to the assessing authority is arbitraryand violative of the statutory provisions. (10) The Tribunal while deciding the assessee's appeal has,in fact, relied upon number of case laws decided by various High Courtswherein the High Courts are of the opinion that there is variation betweenCPWD rates and PWD rates prevailing in the State and since the buildingthat is constructed is within the State, naturally, the Department isexpected to take into consideration the PWD rates prevailing in the State.Having come to that conclusion, as we have already noticed, the Tribunalhad remanded the matter to the assessing authority. (11) In view of the settled legal position that it is only thePWD rates that can be taken into consideration for the purpose ofvaluation of the building, in our opinion, the Tribunal was justified inallowing the assessee's appeal and issuing a specific direction to theassessing authority. (12) We do not find any error in the orders passed by theTribunal. Therefore, while answering the questions of law framed by the I.T.A.No.109 of 2008 Revenue against the Revenue and in favour of the assessee, we reject thisIncome Tax Appeal. Ordered accordingly. vns (H.L.DATTU) (A.K.BASHEER) JUDGE CHIEF JUSTICE