2013 (1) TMI 1075 - AT - Income Tax

Condonation of Delay and Valuation Referral upheld; limited unexplained delay condoned and DVO reference with State PWD rates sustained.

Condonation of a 38 day delay was granted where the assessee's uncontroverted affidavit (counsel's cataract surgery) justified the delay, permitting ... Condonation of delay for sufficient cause - Reference to Director of Valuation Officer for construction valuation - Use of appropriate government schedule rates for valuationCondonation of delay for sufficient cause - Delay in filing the appeal and the condonation petition - HELD THAT: - The assessee explained the delay by affidavit stating that the counsel underwent a cataract operation; the Revenue did not controvert this. The Tribunal accepted the uncontested averments as sufficient explanation and exercised discretion to condone the delay and proceed to decide the appeal on merits. [Paras 3]Delay in filing the appeal was condoned.Reference to Director of Valuation Officer for construction valuation - Use of appropriate government schedule rates for valuation - Validity of the Assessing Officer's reference to the DVO for valuation and the CIT(A)'s direction to adopt State PWD rates instead of CPWD rates - HELD THAT: - The Tribunal found that the assessee failed to place on record Form 35 or other material to demonstrate that a distinct ground challenging the AO's reference to the DVO was taken before the CIT(A); in any event, the Assessing Officer was entitled to refer the matter to the DVO to ascertain the cost of construction. The CIT(A)'s modification-directing the AO to adopt State PWD rates rather than CPWD rates-was accepted by the Tribunal and there was no reason to interfere with those findings. [Paras 7, 8]The Assessing Officer's reference to the DVO was held to be lawful and the CIT(A)'s direction to adopt State PWD rates was upheld; the appeal was dismissed on this ground.Final Conclusion: The Tribunal condoned the delay in filing the appeal and dismissed the appeal on merits, holding that the Assessing Officer validly referred valuation to the DVO and upholding the CIT(A)'s direction to adopt State PWD rates for estimating construction cost. Issues: (i) Whether the delay of 38 days in filing the appeal is liable to be condoned. (ii) Whether the Assessing Officer's reference to the District Valuation Officer (DVO) for ascertaining construction cost and the resultant addition based on DVO valuation (and the choice of rate schedule) are sustainable.Issue (i): Whether the delay of 38 days in filing the appeal is liable to be condoned.Analysis: The assessee furnished an affidavit alleging that the assessee's counsel underwent cataract surgery, and the Revenue did not controvert the averments. The affidavit and condonation petition were examined on the record and not denied by the Revenue.Conclusion: The delay is condoned and the appeal is admitted for hearing.Issue (ii): Whether the Assessing Officer's reference to the DVO to determine construction cost and the consequent addition based on the DVO's valuation (including the choice of CPWD vs State PWD rates) are sustainable.Analysis: The record shows the Assessing Officer referred valuation to the DVO who used CPWD rates; the Commissioner (Appeals) adjusted the valuation directing use of State PWD rates. The assessee's primary contention that the AO had no power to refer to the DVO was not supported by material placed on record (Form 35 was absent from the paper book) and, in any event, the AO's reference to the DVO to ascertain construction cost was within the assessment framework. The CIT(A)'s direction on adopting State PWD rates addressed the rate-selection issue; there was no basis to interfere with the CIT(A)'s considered findings.Conclusion: The referral to the DVO and the CIT(A)'s modification (directing adoption of State PWD rates) are upheld; the assessee's challenge to the referral is rejected.Final Conclusion: The condonation of delay permitted adjudication on merits, and on merits the Assessing Officer's reference to the DVO and the CIT(A)'s valuation direction are sustained; the assessee's appeal is dismissed.Ratio Decidendi: Where an assessee's unexplained investment in construction is in issue, the Assessing Officer may refer valuation to the DVO to ascertain construction cost, and appellate modification of the rate schedule used by the DVO is a permissible corrective measure; unexplained or uncontroverted affidavit grounds suffice for condonation of limited delay in filing an appeal.