Case Law Details
Case Name : CIT Vs Parminder Singh (Punjab & Haryana High Court)
Appeal Number : ITA No. 365/2013 & 368/2013
Date of Judgement/Order : 21/05/2013
Related Assessment Year :
Issue before the High Court:
- Whether the ITAT, not being an authority expert in valuation of property, is right in directing the AO to make an addition of Rs. 15 lacs ignoring the expert opinion of the Valuation Officer.
- Whether the ITAT could have held that in the facts and circumstances of the present case that the Assessing Officer should have applied PWD rates instead of CPWD rates.
Brief facts of the case:
- A search was conducted under Section 132 upon assessee, who is a builder, on 11.09.2007 and loose papers/documents were found.
- The assessee filed a return on 26.03.2009 declaring total income at Rs. 55,25,000/- in response to the notice under Section 142 of the Act, after claiming deduction under Section 80C to the tune of Rs. 1 lac. The income included the surrendered income.
- Various properties were under construction which had been purchased by the respondent and his brother, who has been arrayed as respondent in the other appeal. The 10 properties were referred for valuation. On the report being received from the Valuation Cell, they were confronted with the same.
- The assessees filed their written objections which were not accepted and the rebate for incomplete work was also not granted and the Assessing Officer assessed the amount of income at Rs. 1,12,25,326/- after giving the benefit of the amount disclosed.
- On appeal CIT (A) only gave the benefit of 5% of the total cost for the purchase of the material as the builder was doing the business of construction and was expected to get cheaper products from the market.
- The Tribunal noticed that the Departmental Valuation Officer had adopted the CPWD rates rather than the PWD rates and secondly a builder was able to get material at a cheaper rate, especially when he was constructing a large number of houses on account of wholesale purchase and also expected that very little margin were given for the semi-furnished houses. ITAT thus granted relief of Rs. 40 Lakhs but directed AO to add Rs. 15 Lakh on account of expenditure incurred on undisclosed income.
Contention of the Revenue:
- The assessee had not been maintaining any Books of Account with regard to the cost of construction and the matter was referred to the Departmental Valuation Officer.
Contention of the Assessee:
- The valuation has been done as if the houses were complete and some of the houses were sold as semi-finished houses and were completed by their respective buyers and the addition had been made in the hands of the assessee.
Held by the High court:
- Tribunal had rightly granted the benefit of the margin that some houses were half complete whereas the valuation had been done for the finished houses and additions were made accordingly.
- Question raised are not relates to law but to facts. Tribunal being final fact finding body rightly exercised this discretion by adding a sum of Rs. 15 lacs each, to both the brothers, over and above the income which was declared.
ITAT is the final fact finding body and high court cannot decide a question related to fact of the case. However can decide that whether ITAT has rightly decide a matter or not. If high court found that matter was not decided on facts then it can send back matter to ITAT for fresh examination but it is important to note that ITAT is the final authority to examine any matter on fact.