The Commissioner Of Income-Tax,Trichy v. Sri V.a.oli Mohammed

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 06.06.2007 Coram : THE HONOURABLE MR.JUSTICE P.D.DINAKARAN AND THE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJA Tax Case (Appeal) No.427 of 2007 The Commissioner of Income-tax,Trichy. ..Appellant Vs Sri V.A.Oli Mohammed ..Respondent Appeal under Section 260A of the Income-tax Act, 1961 againstthe order of the Income Tax Appellate Tribunal, Chennai Bench"C", Chennai in I.T.A. No.1273/Mds/2006 dated 28.09.2006 for theassessment year 1997-98. ITA.No.16/CIT (A) TRY/2003-2004 on thefile of the Commissioner of Income Tax Tiruchirapalli inGI/PA.No.8701/0/1997-1998/ on the file of the Asst Commissioner ofIncome Tax Circle I, Kumbakonnam. For Appellant :Mr.T.Ravi Kumar,Standing Counsel forIncome-tax Department JUDGMENT (Judgment of the Court was delivered by P.P.S.Janarthana Raja, J.) This appeal is filed under Section 260A of the Income TaxAct, 1961 by the Revenue, against the order of the Income TaxAppellate Tribunal, Chennai Bench "C", Chennai in I.T.A.No.1273/Mds/2006 dated 28.09.2006 raising the followingsubstantial questions of law:- 1. Whether on the facts and in thecircumstances of the case, the Income TaxTribunal is right in law in restricting theaddition under Sec.69D to Rs.9.00 lakhs afterspreading it over the entire period ofconstruction?2. Whether on the facts and in thecircumstances of the case, the Income Tax https://hcservices.ecourts.gov.in/hcservices/ Tribunal is right in restricting the addition to Rs.9.00 lakhs without any basis in arrivingat the same which is not proper? 2.The facts leading to the above substantial questions oflaw are as under: 1. Whether on the facts and in thecircumstances of the case, the Income TaxTribunal is right in law in restricting theaddition under Sec.69D to Rs.9.00 lakhs afterspreading it over the entire period ofconstruction?2. Whether on the facts and in thecircumstances of the case, the Income Tax https://hcservices.ecourts.gov.in/hcservices/ Tribunal is right in restricting the addition to Rs.9.00 lakhs without any basis in arrivingat the same which is not proper? 2.The facts leading to the above substantial questions oflaw are as under: The relevant assessment year is 1997-98 and the correspondingaccounting year ended on 31.03.1997. The assessee filed Return ofincome on 27.03.1998 admitting a total income of Rs.99,620/-. TheReturn was processed under Section 143(1)(a) of the Income-tax Act("Act" in short) on 11.06.1998 and thereafter the case was takenup for scrutiny and the assessment was completed on 27.03.2000 ona total income of Rs.99,620/-. Subsequently, the assessment wasreopened under Section 147 of the Act and the assessment wascompleted under Section 143(3) read with Section 147 of the Actand determined the total income at Rs.14,96,840/-. Whilecompleting the assessment, the Assessing Officer made addition ofRs.13,97,221/- under the head "Unexplained Investment" underSection 69B of the Act. Aggrieved by the order, the assesseefiled an appeal to the Commissioner of Income-tax (Appeals). TheC.I.T.(A) partly allowed the appeal and held as follows:-"5. The Assessing Officer had made an additionof Rs.13,97,221/- u/s 69B for unexplainedinvestment on account of difference invaluation estimated by the DepartmentalValuation officer and cost of constructionadmitted by the appellant in return of incomefiled by him. I therefore, after consideringthe further relief granted above, estimate theunaccounted investment in the building atRs.9,86,067/- in place of addition ofRs.13,97,221/-. However, I find that theAssessing Officer has made addition u/s 69B forunexplained investment on account of differencein cost of construction only in the year 1997-1998 eventhough the construction was carriedout over a period of 5 years, i.e. from theApril, 1992 to April, 1997. In view of thisthe action of the Assessing Officer inconsidering the excess in cost of constructionin one year is not correct. I am of the viewthat the addition u/s 69B for unexplainedinvestment should be spread over the period ofconstruction in proportion to investment madein the impugned building during the course ofconstruction at the end of each year. Theassessing officer is therefore directed toassess the difference in cost of constructionas unexplained investment u/s 69B accordingly."Aggrieved, the assessee filed an appeal to the Income-taxAppellate Tribunal ("Tribunal" in short). The Tribunal restrictedthe addition to the extent of Rs.9 lakhs after spreading over the entire period of construction and modified the C.I.T.(A)'s order.Hence the assessee's appeal was allowed in part and the C.I.T.(A)'s order was modified to that extent. Hence the present taxcase. 3.Learned Standing Counsel appearing for the Revenuesubmitted that the Departmental Valuer correctly valued thebuilding and since the assessee has not submitted vouchers,invoices etc. towards purchase of construction materials, theDepartmental Valuation Officer did not allow rebate towards selfsupervision. Hence the cost of construction made by the AssessingOfficer is in confirmity with law. entire period of construction and modified the C.I.T.(A)'s order.Hence the assessee's appeal was allowed in part and the C.I.T.(A)'s order was modified to that extent. Hence the present taxcase. 3.Learned Standing Counsel appearing for the Revenuesubmitted that the Departmental Valuer correctly valued thebuilding and since the assessee has not submitted vouchers,invoices etc. towards purchase of construction materials, theDepartmental Valuation Officer did not allow rebate towards selfsupervision. Hence the cost of construction made by the AssessingOfficer is in confirmity with law. 4.Heard the counsel. The assessee admitted the cost ofconstruction at Rs.47,42,629/-, whereas the Departmental ValuationOfficer estimated the same at Rs.64,88,000/-. Hence there was adifference of valuation of Rs.17,45,371/-. The Assessing Officerfinally made an addition of Rs.13,97,221/- under Section 69B ofthe Act as unexplained investment. The authorities below hadconsidered the valid materials and evidence and estimated theunaccounted investment in the building at Rs.9 lakhs. It is aconcurrent finding by both the authorities below. LearnedStanding Counsel appearing for the Revenue is unable to produceany material evidence or compelling reason to interfere the ordersof the lower authorities. The valuation is not a mathematicalprecision and there bound to be difference between one valuer toanother valuer and it is only a pure question of fact. Recently,the Supreme Court in the case of Commissioner of Income-tax Vs.P.Mohanakala (291 ITR 278), held that whenever there is aconcurrent factual finding by the authorities below, the sameshould be accepted and no interference should be called for by theHigh Court. Under these circumstances, we do not find any erroror legal infirmity in the order of the Tribunal so as to warrantinterference. 6.In view of the foregoing reasons, no substantialquestions of law arise for consideration of this Court andaccordingly the tax case is dismissed. No costs. Sd/Asst.Registrar /true copy/ Sub Asst.Registrar To 1. The Assistant Registrar, Income-tax Appellate Tribunal, Chennai Bench "C", Chennai. 2. The Secretary, Central Board of Direct Taxes, New Delhi. 3. The Commissioner of Income-tax (Appeals), Tiruchirapalli. 4. The Assistant Commissioner of Income-tax, Circle I, Kumbakonam. + 1 cc to Mr. N. Muralikumaran, Advocate SR No. 32177MBS(CO)SR/18.6.2007 T.C.(A) No.427 of 2007