TaxTMI 
TaxTMI 
2004 (12) TMI 301
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....ion of residential house constructed by the assessee to the Asstt. Valuation Officer (AVO), Hubli, under s. 133(6) of the IT Act, 1961 ('the Act' for short). It appears that the AVO proceeded to evaluate the cost of construction by applying CPWD rates and determined the cost of construction at Rs. 9,66,516. The AO, relying on the report, made an addition of Rs. 4,16,516. On first appeal, CIT(A) granted pertial relief to the assessee by order dt. 27th Nov., 2002, directing the AO to allow 10 per cent rebate on the cost of construction determined by the AVO for difference between CPWD and State PWD rates. Still aggrieved, the assessee is now in appeal before this Tribunal. 4. Learned counsel for assessee placed reliance on the decision of the Hon'ble Supreme Court in the case of Smt. Amiya Bala Paul vs. CIT (2003) 182 CTR (SC) 489 : (2003) 262 ITR 407 (SC) for the proposition that the AO is not competent to call for a report of the Valuation Officer to determine the cost of construction in terms of s. 133(6) of the Act. The learned counsel for assessee also submitted that in the place like Shimoga, construction materials like sand, cement, water are not as high as in other cities an....
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....nts completed before 30th Sept., 2004 and wherever the assessments have become final and conclusive. The assessment becomes final and conclusive once the order of assessment is passed. However, if the assessment is questioned in appeal before the CIT(A), the assessment proceedings can still said to be in motion till the disposal of the first appeal. This is because the first appeal is the continuance of the assessment proceedings and the powers of the CIT(A) are co-extensive and co-terminus with that of the AO. However, once the CIT(A) disposes of the matter, the assessment made becomes conclusive although appeal may have been filed before the Tribunal. Thus, s. 142A has no application in the instant case. He further submitted that there is another way of looking at the provisions of s. 142A of the Act. Sec. 142A makes a provision for the AO to obtain valuation report from the Valuation Officer. The learned counsel for assessee further contended that the power vested in terms of s. 142A is a new power which is different and distinct from the powers of the AO in terms of s. 133(6) of the Act. Thus, s. 142A confers a fresh power on the AO and the said provisions are not intended to ....
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....) 72 ITR 766 (All) laid down that there is no presumption in law that the person tendered as witness by the assessee would give false evidence to accommodate the assessee. This decision applies, a fortiori, to the facts of the assessee's case as Shri Rajashekarappa is the Department's witness and not witness tendered by the assessee in support of the cost of construction. Therefore, there is no justification for the Department to disbelieve or discard the evidence of its own witness i.e., Shri Rajashekarappa who had also stated that the cost of construction incurred by the assessee was Rs. 5,50,000. 6(i). The assessee has tendered a valuation report of a registered valuer, which is placed at p. 21 of the paper book. The registered valuer has estimated the cost of construction of the residential house at Rs. 5,52,020 which is near about the assessee's cost of Rs. 5,5.0,000. The registered valuer is a local person, who is residing at Shimoga and who is aware of the local rates prevailing in Shimoga. It is a well-settled principle that local rates must be preferred to CPWD rates while evaluating the cost of construction because the CPWD rates are generally higher and based on rates p....
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....lities. Further to this, for better appreciation, the relevant questions and answers as recorded from Shri Rajashekarappa are extracted hereunder: "Q. 42. Have you made any investment in any properties, on behalf of any other person? A. During the financial year 1996-97, Mr. S. Bangarappa requested me to construct his proposed house at site No. 19, Chennappa Layout, near Saolanga Road, Shimoga. The site had foundation already. I started the construction during 1997-98. The house construction was completed by January, 1999. Q. 43 What was the amount spent by you towards construction? A. The total cost of construction of the building was Rs. 5.5 lakhs upto January, 1999. Out of this, Mr. Bangarappa gave me Rs. 3 lakhs in 3 equal instalments of Rs. 1 lakh each during the financial year 1998-99. The balance of Rs. 2.5 lakhs was given by Mr. Bangarappa to me during the financial year 1999-2000 in instalments of Rs. 1 lakh and Rs. 1.5 lakhs. Q. 44 What was the progress of construction of the building year-wise? A. The work of cleaning the land and laying compound wall, making of water sump, clearing the debris of the old structure, was done in financial year 1996-97. For this about....