TaxTMI 
TaxTMI 
2013 (7) TMI 938
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....ts are: The assessee lady carries on business in hilly area of Pithoragarh, Uttrakhand and deals in wholesale agency of grocery, cosmetics and general items. Regular books of account are maintained which are audited u/s 44AB and regular returns of income were filed. During the course of assessment for assessment year 2001-02 u/s 143(3) the assessing officer observed that the assessee had constructed a house property spread over 6 years for which construction account was maintained in the books of account. Assessee also filed a valuation report from registered valuer, which corroborated the cost of construction as per her books. Assessing officer was not satisfied and to verify the cost of construction, the issue was referred to the DVO who submitted the report reporting the cost of construction to be more than the one, shown by the assessee. Consequent thereof, the difference was spread over in all these years and the relevant additions were made in all these years. 3.1. Aggrieved, assessee preferred appeals, which reached up to the ITAT. ITAT Delhi Bench 'D' vide consolidated order dated 12-11-2008 observed that the valuation has been made by the DVO by applying CPWD floor area....
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....The assessing officer should examine this claim as to whether the PA rates as per UPPWD rates includes the cost of wire gauge shutter or not and then decide this objection of the assessee. The third objection is regarding addition of Rs. 31,429/- on account of cost of rolling shutter. Regarding this objection also, the assessing officer should decide afresh after hearing the Ld. AR of the assessee. In the nutshell, assessing officer should decide these issues afresh after providing adequate opportunity of being heard to the assessee." 3.2. While carrying out the ITAT directions, assessing officer issued notice dated 11-6-2009 asking for various informations. In reply thereof, the assessee submitted its explanation on 13-10-2009. 3.3. On 18-11-2009 the assessing officer issue notice u/s 133(6) to the Executive Engineer, Nirman Khand PWD Pithoragarh to submit valuation report on the basis of PWD rates. The letter was accompanied by the copy of assessee's registered valuer's report; CPWD valuation report; and copy of ITAT order. The report submitted by PWD was confronted to the assessee who vide submissions filed during the course of hearing dated 18 and 22-12- 2009 produced ....
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....Addl. CIT Vs. Swatantra Confectionary Works 104 ITR 291; - Addl. CIT Vs. Kedar Nath Ram Nath 106 ITR 172 (All.); - Addl. CIT Vs. Laxmi Industry &b Cold Storage Co. Ltd. 146 ITR 492 (All.) - Addl. CIT Vs. Brij Nandan Prasad Din Dayal 119 ITR 959 (All); - CIT Vs. Swroop Storage & General Mills 136 ITR 435 (All.). 3.7. Assessing officer, however, held that addition was not made on the basis of estimate but on the difference found in the value of house determined by the PWD consequent to ITAT directions, the same was based on realistic and scientific method. Thus penalties were imposed. 3.8. The assessee preferred first appeal, CIT(A) confirmed penalties by following observations: 4. I The issue of whether the estimation of cost of construction on the basis of DVO's report could be a sound ground for imposition of penalty u/s 271(1)(c) or not is a matter of fact. Thus in this case it is seen that the Hon'ble ITAT clearly directed to adopt the PWD rates for estimating cost of construction (apart from giving directions to dispose of other objections of the assessee in this regard) and those rates have been adopted leading to a lowering of ....
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....was added in all these years to assessee's income on spread over basis. ITAT held that CPWD rates will not be applicable to pithoragarh which is a remote hilly place and thought it fit to refer it to PWD. At the end of the directions the ITAT held that assessing officer should decide these issues afresh after providing proper opportunity of being heard to the assessee. Subsequently, assessing officer sent proposal of valuation to UPPWD and it seems that PWD sent a report albeit at a lesser estimate. Assessing officer made the addition in different years on the spread over basis over ruling the assessee's objections thereon. Assessee in order to settle the matter accepted the addition. The following facts emerge for my consideration: (i) Assessee maintains regular books of accounts in which date wise expenditure on construction is recorded and supported by vouchers which were produced before assessing officer and valuation officer from time to time and nothing adverse has been commented by the lower authorities on the genuineness of books. (ii) The returns of income were filed on the basis of these records and audited statements. Thus, it implies that assessee furn....