2014 (8) TMI 118

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....ssessee that construction of hotel was started during April, 2006 and completed in March, 2007. The assessee filed return of income for the assessment year 2007-08 electronically on 13.10.2007 admitting a total income of Rs. 9,12,613/-. The said return was processed under Section 143(1) of the Income Tax Act and was taken up for scrutiny and notice under Section 143(2) of the Income Tax Act was issued on 10.3.2008. The assessee was called upon to give details of the cost of construction and the source of income for the said construction vide Department's letter dated 06.11.2009. In response to the same, the assessee produced the bills, vouchers, documents and records and admitted initially a sum of Rs. 1,05,80,000/- towards cost of cons....

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....ed by the Central P.W.D. The net result of the Assessing Officer's finding as above results as follows: Total Cost of construction as reported by Valuation Cell Rs.2,13,60,000 Less: Deduction as discussed above Rs.1,92,445/- Net Cost of construction Rs.2,11,67,555/- Less: Cost of Construction as admitted by the assesse Rs.1,52,16,465/- Difference in cost of construction Rs.59,51,090/- Hence a sum of Rs. 59,51,090/- was treated as unaccounted investment in the cost of construction under Section 69 of the Income Tax Act for the assessment year 2007-08 and accordingly, the tax payable by the assessee was determined at Rs. 26,64,612/-. Penalty proceedings was to be initiated separately in terms of Section 27....

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....should be accepted in place of the cost determined by the Valuation Cell." 6. Aggrieved against the order of the Commissioner of Income Tax (Appeals), the Revenue has preferred an appeal before the Income Tax Appellate Tribunal. The Tribunal accepted the case of the assessee that the valuation should be based on the rates fixed by the State P.W.D. and after taking into consideration the materials placed, partly allowed the appeal holding that the difference between the cost of construction admitted by the assessee at Rs. 1,52,16,465/- and the cost of construction as per the rates fixed by the State P.W.D. at Rs. 1,58,60,068/- would amount to undisclosed investment under Section 69 of the Income Tax Act and hence a sum of Rs. 6,43,603/- w....

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....State of Tamil Nadu. Admittedly, the assessee's property, which is a subject matter of consideration, is in the State of Tamil Nadu. There cannot be a different yardstick adopted for valuation within the State. This will result in incongruous results, as one Officer is taking the rates fixed by the CPWD and another Officer is taking the rates fixed by State PWD. 12. In the case of T.M.P.N.Murugesan -vs- Commissioner of Income-tax reported in 217 Taxmann 40, this Court, while considering the similar issue whether the rates fixed by the CPWD alone could be taken into consideration towards arriving at a cost of construction, held as follows:  "7. It is seen from the narration of the facts that evidently, except for the bare acco....