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TMI Blog1985 (10) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... after the ITO referred the matter to the valuation cell. The Valuation Officer valued the cost of construction at Rs. 37,900. The ITO again referred the matter to the valuation cell on the ground that the sale deed, municipal sanction plan, etc., were not noticed by the valuation cell. Thereafter the Valuation Officer in his second report valued the cost of construction at Rs. 53,000. The ITO did not accept even this report. He resorted to his own estimate and determined the cost of construction at Rs. 90,111. Thus, he made an addition of Rs. 58,111 under 'other sources'. In this assessment he also added Rs. 7,801 towards income from property which was standing in the name of the assessee's wife Smt. V. Bharathi. Against this fresh assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dopted by the ITO in the first assessment order. Thus, he deleted the addition of Rs. 58,111. Against the same the revenue has preferred this appeal. 3. The learned departmental representative strongly urged that once the assessment is set aside, the ITO is at liberty to make a fresh assessment and in doing so, he can make any addition which was not considered in the first assessment order. In support of this contention, reliance has been placed on the decisions in J.K. Cotton Spg. Wvg. Mills Co. Ltd. v. CIT [1963] 47 ITR 906 (All.) and CIT v. Seth Manicklal Fomra [1975] 99 ITR 470 (Mad.). With regard to the cost of construction he strongly urged that the ITO has given very valid reasons for estimating the cost of construction at Rs. 90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of which neither the Commissioner gave any directions nor it was considered in the original assessment. The jurisdiction of the ITO is confined only to the directions of the Commissioner while making the fresh assessment and he cannot travel beyond those directions. In Pulipati Subbarao Co.'s case the AAC had set aside the assessment and directed the ITO to receive duplicate applications for registration and to deal with them according to law. Thereafter, the ITO issued notice to the assessee to produce the books of account. Against that the assessee filed a writ petition for restraining the ITO from making a de novo assessment. On those facts the Andhra Pradesh High Court held that in view of the specific directions by the AAC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the petitioner. As there is a clear and patent want of jurisdiction on the part of the second respondent to make a de novo assessment on the petitioner, a writ of prohibition shall be issued directing the second respondent not to make a de novo assessment..." This decision was followed by a Division Bench of the Andhra Pradesh High Court in Bandaru Sanyasi Raju's case. It was held therein that the AAC disposing of an appeal under section 251(1)(a) of the Act is within his jurisdiction to allow the appeal partly and partly remand the appeal with certain directions and the ITO is bound to complete the assessment in accordance with the directions given therein. In this case, the Andhra Pradesh High Court did not agree with the view expr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismantled and a new construction was started. In the second report there is nothing but the estimate by floor-wise. When the assessee purchased the old building in the sale deed description of the old building has been clearly given. In view of the above facts, the ITO was wrong in presuming that the entire ground floor was demolished and new construction of ground floor was completed. Since the ground floor was existing and only the tiled roof was replaced by R.C.C. roof after raising the walls by 2 ft., the Commissioner (Appeals) was justified in holding that it should be valued at 50 per cent of the cost of construction. He was also justified in holding that a higher percentage towards personal supervision and execution of the construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f construction of the ground floor as well as the first floor at the same rate. If that is deducted from Rs. 53,000 the balance will be Rs. 41,000. The Valuation Officer has allowed 7.5 per cent towards personal supervision. It would be reasonable to allow 12.5 per cent as that is the profit estimated in the case of contractor. By allowing the same, the assessee gets additional relief of Rs. 2,000. After deducting that the cost comes to Rs. 39,000. In the original assessment order, the ITO had estimated the cost of construction at Rs. 39,134 and made an addition of Rs. 7,134 as income from other sources since the assessee had shown the cost of construction at Rs. 32,000. Hence, it would be reasonable to adopt that figure in the fresh assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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