2014 (2) TMI 267 - AT - Income Tax

Addition u/s 69B - Held that - The assessee has submitted year wise details of cost of construction before AO - The books of accounts of the appellant have been produced before the AO during the course of assessment proceedings - The assessee has not hired any architect and constructed building on self supervision basis - DVO has granted deduction of self supervision charges of 5% of the cost of construction - Appellant has carried out construction activity in four assessment years, the DVO has taken CPWD rates, there is no defect in the books of accounts of the appellant and the expenses are supported by proper vouchers and bills - Further reduction of 10% of the valuation arrived by DVO is to be granted - The order of CIT(A) upheld - Decided against Revenue.

Summary

Issues Involved:
Appeal and Cross-Objection against CIT(A)'s order for AY 2006-07.

Analysis:
The judgment involves an appeal and cross-objection against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2006-07. The appeal was filed by both the Revenue and the Assessee. The Assessee decided not to press the cross-objection, which was subsequently dismissed. The Revenue's appeal focused on challenging the relief granted by the CIT(A) regarding the addition made under section 69B of the Income Tax Act, 1961, related to the difference in the cost of construction. The case originated from a search operation under section 132 and subsequent assessment under section 153A. The AO had made an addition of Rs. 8,95,531, which was partially allowed by the CIT(A) to the extent of Rs. 70,175. The Revenue contested this decision.

Regarding Ground No. 1 of the Revenue's appeal, the CIT-DR supported the AO's order, while the Assessee's counsel backed the CIT(A)'s decision based on the DVO's report. The CIT(A) analyzed the facts, construction costs, and DVO's inspection details. The CIT(A) found merit in the Assessee's arguments and reduced the addition by Rs. 6,50,056, considering various aspects such as self-supervision charges and construction expenses. The CIT(A) granted relief totaling Rs. 8,25,356 to the Assessee. The Tribunal upheld the CIT(A)'s decision, noting that the reasoning was supported by the DVO's report and not contradicted by the Revenue with contrary evidence. Therefore, the Tribunal rejected Ground No. 1 of the Revenue's appeal.

Ground Nos. 2 and 3, being general in nature, were not individually addressed but were considered as part of the overall decision. Consequently, the appeal of the Revenue was dismissed, and both the Revenue's appeal and the Assessee's cross-objection were ultimately dismissed. The judgment was pronounced in court following the detailed analysis and consideration of the arguments presented by both parties.

This comprehensive analysis of the judgment highlights the key issues, arguments, and decisions made by the authorities involved in the case, providing a detailed understanding of the legal proceedings and the final outcome.