Commissioner of Income Tax vs Smt. Diwari Ben Vagedia

In Tax Appeal No. 35 of 2000, following substantial question of law was framed on 1st Feb., 2001 :

Whether on the facts and in the circumstances of the case the Tribunal is justified in holding the substantive addition has to be made in the hands of the assessee Smt. Diwari Ben Vagadia and not in the hands of the firm for the asst. yr. 1992-93 when the facts of the case clearly indicated otherwise ?

In another appeal, there is a difference of amount and the year i.e. 1993-94.

The facts are not disputed that one piece of plot was purchased by the respondent-assessee and the area of that plot is 0.2 acres. The property was purchased on 3-9-1987 for a consideration of Rs. 2,00,000 and on half of the portion, a house was constructed and the assessee disclosed the investment to the tune of Rs. 1,12,832 in the asst. yr. 1992-93 and Rs. 6,51,223 for the asst. yr. 1993-94. The AO, after obtaining the opinion of the valuer held that the construction cost of the property cannot be Rs. 7,64,055, as disclosed by the assessee in her written submission submitted for the year 1993-94 but the actual construction cost of the property is Rs. 34,72,800. On the basis of this, the assessment order was passed by the AO on different dates of two different years, which were subjected to appeal before the Tribunal. It will be worthwhile to mention here that the AO also held that in fact, the said investment was made by the firm, M/s Natwarlal Sukhlal and Brothers, which was the firm of the assessees husband. It is further relevant to mention here that the order of the AO was challenged by the aforesaid firm also and the appeal of the firm was allowed by the CIT(A) by a brief order and in the light of the reasons given in the appeal of the firm, the CIT(A) decided other matters. The matter was then taken up to the Tribunal and the Tribunal dismissed the appeals preferred by the revenue. Hence these appeals have been preferred by the revenue.

Learned counsel for the appellant submitted that the Tribunal has committed serious error of law and the order passed by the Tribunal is perverse in as much as the Tribunal proceeded to decide the appeal by presuming that the AO had not rejected the report of the valuer, which was produced by the revenue and it is submitted that the Tribunal has also observed that the valuation report given by the assessee is not also complete. In view of the above reasons, the Tribunal has committed error of law by accepting the report given by the valuer whose report was produced by the assessee. Learned counsel for the appellant also submitted that the report of the valuer which was produced by the assessee was ante-dated and therefore, if that report was rejected on this ground also, the AO has not committed any illegality.

Learned counsel for the appellant also submitted that looking to the quality of the house, which was constructed, the addition by way of investing of only rupees seven lacs plus cannot be believed and therefore, the AO was justified in assessing the investment made of Rs. 34,72,800. It is also submitted that in view of the above facts, the investment could have been made only by the firm for which cogent reasons have been given by the AO.

We have considered the submissions of the learned counsel for the parties and perused the facts of the case. It is not in dispute that there were two valuation reports, one produced by the revenue and another by the assessee. The three authorities have considered the valuation report and the Tribunal considered the reasons given by the AO for arriving at the conclusion for accepting the revenues valuation report. But it appears from the reasons given in the order passed by the Tribunal that there was a complete application of mind by the Tribunal on the documentary evidence i.e. the valuation report produced by the two valuers and the Tribunal observed that the floor area worked out by the registered valuer is more authentic particularly because he has given the complete detail of each item of work which is absent in the valuation report of the Departmental valuer. Then the Tribunal also noticed that there is a difference of 156.71 sq. mtr. of the covered floor area and so if, it worked out the cost of construction of Rs. 740.23 sq. mtr., even adopting the cost of construction rate at Rs. 3200 per sq. mtr., which of course, is not correct, there would be difference of about rupees five lacs. The Tribunal had also observed that the rate of cost of construction at Rs. 3200 per sq. mtr., cannot also be said to be correct because only some part of the existing building were dismantled and some additions or alterations were made.

We have gone through the orders passed by the Tribunal so as to see that there is an application of mind by the Tribunal on the evidence produced by the parties and for rejection of the valuation report produced by the revenue. The reasons have been well given and it is not merely on the basis that since the AO has not given reasons for rejection of the report produced by the assessee, therefore, the Tribunal has proceeded to decide on the basis of the report submitted by the assessee.

So far as the contention of the learned counsel for the appellant that the report appears to be ante-dated etc. is concerned, this was considered by the fact finding authorities and therefore, we do not find any just reasons to interfere in the order passed by the Tribunal. There appears to be no question of law, in fact, involved and the question formulated above, is found to be a question of fact, which would not call for any interference in the appellate jurisdiction. The appeals (Tax Appeal No. 35 of 2000 with Tax Appeal No. 21 of 2000) are accordingly dismissed.