Commissioner of Income Tax, Central vs Panchwati Builders

Dhirubhai Naranbhai Patel, J—This appeal has been preferred raising the following substantial questions of law:

"A. Whether on the facts and in the circumstances of the case the ITAT was right in relying on the judgment of the Hon''ble Apex Court decided in the case of Amiya Bala Paul Vs. Commissioner of Income Tax, Shillong, AIR 2003 SC 2702 : (2003) 182 CTR 489 : (2003) 262 ITR 407 : (2003) 5 JT 384 : (2003) 5 SCALE 122 : (2003) 6 SCC 342 : (2003) 1 SCR 388 Supp : (2003) AIRSCW 3319 : (2003) AIRSCW 4951 : (2003) 4 Supreme 577 : (2003) 7 Supreme 5 even after insertion of Section 142A of the Income Tax Act, 1961 by Finance (No. 2) Act, 2004 with retrospective effect from 15.11.72?

B. Whether on the facts and in the circumstances of the case the ITAT was correct in not relying on the Valuation Report in spite of the fact that the Valuation arrived was not challenged by the assessee?

C. Whether in the facts and in the circumstances of the case the Hon''ble ITAT has erred in not considering the provision of Clause (v) of Sub-Section (1) of Section 132 empowering the authorized officer to make an inventory of stock in the case of person being searched?

D. Whether in the facts and in the circumstances of the case the order passed by ITAT is perverse?"

Having heard counsels for both the sides and looking to the facts and circumstances of the case, we see no reason to entertain this Tax Appeal and no substantial question of law is involved in this appeal as submitted by the counsel for the appellant.

It appears that the Assessing Officer had seen the building in question which is known as Panchwati Plaza situated in the city of Ranchi. He was of the opinion that the cost of the building is much higher. Ultimately, search and seizure was carried out at the premises in question on 20th June, 2002 and the appellant arrived at conclusion with the help of the valuer appointed by the department that the value of the building in question is higher than what is shown in the books of account, by Rs. 68,00,000/-.

It further appears that the explanation has been given by the respondent, but, the Assessing Officer has heavily relied upon the valuation report and has arrived at a conclusion that the valuation of the building in question is shown much lessor i.e. by Rs. 68 lakhs and therefore, the said amount is added in the income of the respondent.

It appears that the appeal was preferred by the respondent before the Commissioner of Income Tax (Appeals), which was allowed and the so called report upon which the Assessing Officer is relying upon is absolutely absurd and baseless and similar is the finding of the Income Tax Appellate Tribunal. We have perused the said report which is at Annexure-A to the counter affidavit. Looking to the said report no head and tail could be matched by the counsel for the appellant about the so called higher valuation of Panchwati Plaza at Ranchi. The calculation of cost of ongoing construction of Panchwati Plaza assessed by the Assessing Officer is absolutely wrong and illegal. An absurd figure has been given by the valuer of the department. No scientific methodology has been adopted by the so called valuer.

Looking to the report which is at Annexure-A to the counter affidavit, it appears that such a valuer can never be given in future any such type of work to evaluate the cost of the building. The Engineer, who has given the valuation report, is simply nothing, but, whimsical approach of the said Engineer and he knows only multiplication. In the whole valuation report there is nothing, but, multiplication of some amount with the floor area, whether it is basement area or ground floor area etc. In fact, the valuer should have estimated the quantity of sand, cement, the work put by the labourers in hours, the cost of supervision etc. Nothing is mentioned about sand, cement, rod, cost of the labourers etc. More we read this valuation report more absurd appears to be and therefore, rightly Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal has decided the matter in favour of the respondent and no reliance was placed upon the said so called valuation report. If this type of attitude of the department is allowed then for every building any type of report can be given by the such valuer. In fact this valuer should never be appointed as a valuer. He do not know ABC of the valuation at all. There ought to be a Cost Accountant along with efficient Engineer. Hence, both the Authorities below viz. Commissioner of Income Tax and Income Tax Appellate Tribunal has rightly quashed and set aside the order passed by the Assessing Officer and the addition of the income of Rs. 68 lakhs has been quashed and set aside.

We see no reason to take any other view than what the view have been taken by the Commissioner of Income Tax and Income Tax Appellate Tribunal. There is no substantial question of law involved in this Tax Appeal and hence, it is hereby, dismissed.