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TMI Blog2017 (6) TMI 1147X X X X Extracts X X X X X X X X Extracts X X X X ..... erence of assessee’s failure to comply with this notice in the assessment order. Thus, it leads to conclusion that the assessing officer was able to complete the assessment u/s 143(3) though assessee has not complied this notice and no prejudice caused to A.O. In our opinion, it is not appropriate to levy penalty mechanically for such technical breach of provisions of the act. Accordingly, we are of the opinion that this is not a fit case to levy penalty u/s 271(1)(b) of the act and we delete the penalty levied under Section 271(1)(b) of the Act by assessing officer and confirmed by the CIT(A). - I.T.A.No.306, 307, 308 & 309 /Mds/2011 - - - Dated:- 16-11-2016 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER, AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER For The Appellant : Shri G.Seetharaman, Chartered Accountant For The Respondent : Shri T.R.Senthil Kumar, Standing Counsel ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER ITA Nos. 306, 307 308/Mds/2011 are the appeals by the assessee directed against the common order of CIT(A) dated 15.11.2010 for the assessment years 1995-96, 1996-97 1997-98, wherein, the assessee challegenged the sustaining of additions made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aisal of the cost of construction and determine the unexplained investment. In view of this ruling, the action of the authorities below is not justified. Hence, we remit this matter back to the file of the assessing officer with a direction that he shall make independent enquiry and own appraisal regarding the cost of construction consider the DVO Report supportive document and not as primary material to determine the cost of construction and arrive at the quantum of unexplained investment in buildings. Regarding invoking the provisions of Section 69A of the I.T.Act, the Assessing Officer is within his jurisdiction as he has found unexplained investment in the construction of buildings and the explanation offered by the assessee was not satisfactory and hence, the unexplained investment shall be deemed to be income of the assessee Regarding the period of construction, the assessing officer shall ascertain from the current account maintained by the assessee for drawal of money for the purpose of construction and also from bills and vouchers pertaining to construction of these buildings. 5.2 As per the orders of the Hon ble ITAT, the appellant was given an opportunity an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the estimates by Valuation Officer with retrospective effect from 15.11.1972. In the present case, the reference for the valuation was made in 1999. INJAMBAKKAM PROPERTY: It is seen from the record that assessee accounted ₹ 28.57 lakhs as on 31.03.1997 towards cost of construction of the property at Injambakkam. It is seen from the record that assessee claimed rebate towards direct purchases and self supervision. Having regard to assessee s submissions, valuation report filed by assessee, valuation report and remand reports of DVO, findings made by assessing officer and CIT(A), directions of ITAT and in view of the fact that contemporaneous evidence is not produced by assessee, total cost of construction of assessee s property at Injambakkam is estimated at ₹ 80,00,000/-. SHOLINGANALLUR PROPERTY: In respect of sholinganallur property assessee accounted ₹ 61,70,000/- as on 31.03.1997 towards cost of construction. It is seen from the record that assessee claimed relief towards architect fee, marble flooring and service installations. Having regard to assessee s submissions, valuation report filed by assessee, valuation report a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 98-99. 7.5 He submitted that appellant s approved valuer (who had actually visited the spot in Oct. 1996) has in his Report dated 20.10.96 has estimated the value at ₹ 28.30 Lakhs as on October 1996, when the construction was stopped, this figure almost agrees with ₹ 28.57 Lakhs, reflected in the books of accounts. 7.6 The learned AR submitted that the following are the details of expenses incurred during the financial years 1998-99 and 1999-00 furnished to AO vide letter dated 13.03.2003, (accepted by AO in asst. year 1999-00 and 2000-01) which should also have been taken into account, particularly when the Hon ble Tribunal had directed the AO to determine the year of construction:- Year Ended 31st March Rs. Source 1999 13,00,000 From Partner by cheque 1999 4,75,125 Advance from Sastri Nuts Plates 2000 15,90,152 Advance from Sastri Nuts Plates Due to Krishnan, Engineer 1,42,748 Pending Bills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported in 262 ITR 407 (SC) * M.Selvaraj Vs. Income Tax Officer reported in 258 ITR (AT) 82 * K.K.Seshaiyer Vs. Commissioner of Income Tax reported in 246 ITR 351 (Mad. H.C.) * Commissioner of Income-tax Vs. Aur Pee Apartments P.Ltd. reported in 319 ITR 276 (Del. H.C.) * Commissioner of Income-tax Vs. S.R. Construction reported in 257 ITR 502 (Mad.H.C.) 8. On the other hand, the DR relied upon the order of the CIT(A) and also the following case laws: * Dr.Raghuvendra Singh Vs. Commissioner of Income Tax reported in [2014] 49 taxmann.com 504 (Punjab Haryana) Wherein, it was held that where the cost of construction shown in books of account was not proper, reference by Assessing Officer to DVO was justified. * Bharathi Cement Corporation (P.) Ltd. Vs. Commissioner of Income tax reported in [2013] 33 taxmann.com 643 (Andhra Pradesh) Wherein, it was held that the assessing officer has power under Section 142A to take up issue of valuation of investment in assessee s plant for reassessment, if necessary. 9. We heard both the parties and perused the material available on record. In this case, for the assessment year 1997-98, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into account such report in making such assessment or reassessment: Provided that nothing contained in this section shall apply in respect of an assessment made on or before the 30th day of September, 2004, and where such assessment has become final and conclusive on or before that date, except in cases where a reassessment is required to be made in accordance with the provisions of section 153A. 11. A plain reading of sub-section (1) makes it clear that for making an assessment or reassessment under the Act, an estimate is required to be made in respect of any investment referred to in section 69 or section 69B or the value of any bullion, jewellery or other valuable article, referred to in section 69A or section 69B, is required to be made, the Assessing Officer may refer the matter to the Valuation Officer for estimating the said value and reporting the matter to him. Sub-section (2) stipulates that the Valuation Officer to whom the reference is made under sub-section (1) shall, have all the powers similar to section 38A of the Wealth-tax Act, 1957, while dealing with such reference. According to subsection (3), the Assessing Officer on receipt of report from the Valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s law stood as on this assessment years under consideration, Section 142A of the Act cannot be applied and no reliance can be placed on that provisions for these assessment years. Consequently, the assessments framed on the said DVO s report cannot be upheld. In view of this, we are inclined to annul these assessments for all these three assessment years which is wholly based on DVO s report which was obtained under Section 142A of the Income Tax Act. Accordingly, all the three appeals for assessment years 1995-96, 1996-97 1997-98 are allowed. Since we have quashed the assessments itself, we are not going into the other arguments and grounds raised by the assessee as well as by department in these appeals. 13. In the result, all the three appeals in ITA Nos. 306, 307 308/Mds/2011 for assessment years 1995-96, 1996-97 1997-98 are allowed. ITA No. 309/Mds/2011 14. The only ground of appeal is levy of penalty under Section 271(1)(b) of the Act. The facts of the case are that during the scrutiny proceedings for the assessment year 2003-04, Notice under Section 142(1) of the Income Tax Act, 1961 was issued to the appellant calling for details of names and addresses o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e refers to several defaults, it was probably issued in a casual manner. As the Appellant was not aware of the alleged default committed by them, it had requested in its letters dated 25.08.2006 and 22.09.2006 exact details of default. No reply was received. It would be seen from the assessment order that notice under Section 142(1) was issued on 23.1.2004 for hearing. The case was heard on 14.06.2004, 07.12.2005 and 03.01.2006. However, the penalty order under Section 271(1) (b) refers to an alleged notice of hearing on 16.01.2006, which to be best of appellant s knowledge, was not received. The said date of 16.01.2006 does not find any reference either in the show-cause notice or assessment order. Therefore, the order of penalty has to be quashed, on the ground of an alleged default on 16.01.2006 for which no show cause notice was issued. In any case, the Income Returned, viz. ₹ 16,800/- has been accepted as per order dated 28.03.2006 and, therefore, the appellant submits that there was no default on its part. Even otherwise, no contumacious conduct or wilful neglect of law has been alleged. The appellant, therefore, prays from the penalty levied may be cancelled. 19. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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