P.P.S. Janarthana Raja, J.@mdashThis appeal is filed u/s 260A of the Income Tax Act, 1961, by the Revenue, against the order of the Income Tax Appellate Tribunal, Chennai Bench "C", Chennai in I.T.A. No. 1273/Mds/2006 dated September 28, 2006, raising the following substantial questions of law:
1. Whether, on the facts and in the circumstances of the case, the Income Tax Tribunal is right in law in restricting the addition u/s 69B to Rs. 9 lakhs after spreading it over the entire period of construction?
2. Whether, on the facts and in the circumstances of the case, the Income Tax Tribunal is right in restricting the addition to Rs. 9 lakhs without any basis in arriving at the same which is not proper?
2. The facts leading to the above substantial questions of law are as under:
The relevant assessment year is 1997-98 and the corresponding accounting year ended on March 31, 1997. The assessee filed the return of income on March 27,1998, admitting a total income of Rs. 99,620. The return was processed u/s 143(1)(a) of the Income Tax Act ("Act" in short) on June 11, 1998, and thereafter the case was taken up for scrutiny and the assessment was completed on March 27, 2000, on a total income of Rs. 99,620. Subsequently, the assessment was reopened u/s 147 of the Act and the assessment was completed u/s 143(3) read with Section 147 of the Act and determined the total income at Rs. 14,96,840. While completing the assessment, the Assessing Officer made addition of Rs. 13,97,221 under the head "Unexplained investment" u/s 69B of the Act. Aggrieved by the order, the assessee filed an appeal to the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) partly allowed the appeal and held as follows:
5. The Assessing Officer had made an addition of Rs. 13,97,221 u/s 69B for unexplained investment on account of difference in valuation estimated by the Departmental Valuation Officer and cost of construction admitted by the appellant in return of income filed by him. I therefore, after considering the further relief granted above, estimate the unaccounted investment in the building at Rs. 9,86,067 in the place of addition of Rs. 13,97,221. However, I find that the Assessing Officer has made addition u/s 69B for unexplained investment on account of difference in cost of construction only in the year 1997-98 even though the construction was carried out over a period of 5 years, i.e., from April, 1992, to April, 1997. In view of this the action of the Assessing Officer in considering the excess in cost of construction in one year is not correct. I am of the view that the addition u/s 69B for unexplained investment should be spread over the period of construction in proportion to investment made in the impugned building during the course of construction at the end of each year. The Assessing Officer is therefore directed to assess the difference in cost of construction as unexplained investment u/s 69B accordingly.
3. Aggrieved, the assessee filed an appeal to the Income Tax Appellate Tribunal ("Tribunal" in short). The Tribunal restricted the addition to the extent of Rs. 9 lakhs after spreading over the entire period of construction and modified the Commissioner of Income Tax (Appeals) order. Hence, the assessee''s appeal was allowed in part and the Commissioner of Income Tax (Appeals) order was modified to that extent. Hence, the present tax case.
4. Learned standing counsel appearing for the Revenue submitted that the Departmental valuer correctly valued the building and since the assessee has not submitted vouchers, invoices etc., towards purchase of construction materials, the Departmental Valuation Officer did not allow rebate towards self supervision. Hence, the cost of construction made by the Assessing Officer is in conformity with law.
5. Heard the counsel. The assessee admitted the cost of construction at Rs. 47,42,629, whereas the Departmental Valuation Officer estimated the same at Rs. 64,88,000. Hence there was a difference of valuation of Rs. 17,45,371. The Assessing Officer finally made an addition of Rs. 13,97,221 u/s 69B of the Act as unexplained investment. The authorities below had considered the valid materials and evidence and estimated the unaccounted investment in the building at Rs. 9 lakhs. It is a concurrent finding by both the authorities below. Learned standing counsel appearing for the Revenue is unable to produce any material evidence or compelling reason to interfere the orders of the lower authorities. The valuation is not a mathematical precision and there is bound to be difference between one valuer to another valuer and it is only a pure question of fact. Recently, the Supreme Court in the case of
In view of the foregoing reasons, no substantial questions of law arise for consideration of the this court and accordingly the tax case is dismissed. No costs.
