Madhya Pradesh H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs. 55,677 particularly when the assessee had consented to the addition of Rs. 1 lakh, which was spread over by the Dy. CIT(A) over a period of three years ?

High Court Of Madhya Pradesh : Indore Bench

CIT vs. Smt. Aparajitha Shantilal Mahajan

Section 69

A.M. Sapre & Ashok Kumar Tiwari, JJ.

IT Ref. No. 19 of 1997

29th November, 2004

Counsel Appeared

None, for the Revenue : R. Gilda, for the Assessee

JUDGMENT

A.M. Sapre, J. :

This is an income-tax reference made under s. 256(1) of the IT Act by the Tribunal at the instance of Revenue (CIT) in RA No. 347/Ind/1993 arising out of an order dt. 6th Oct., 1993, passed by Tribunal in ITA Nos. 677 and 678/Ind/1990 to answer the following question of law : “Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs. 55,677 particularly when the assessee had consented to the addition of Rs. 1 lakh, which was spread over by the Dy. CIT(A) over a period of three years ?”

The question arises on these facts. For the assessment year in question, the dispute arose in regard to the actual expenditure incurred by an assessee on his building. There was some difference in the amount disclosed by the assessee and what the DVO to whom the case was referred for valuation had worked out. So, the question arose, what figure should ultimately be accepted for determining the cost of construction of the building belonging to assessee, i.e., the one disclosed by assessee or the one determined by DVO (Rs. 6,06,000). It is essentially this question which was the subject-matter of controversy in this case which was reopened by AO by taking recourse to the provisions of s. 148 of IT Act on the strength of DVO’s report. The AO made additions of Rs. 1,27,436 but spread over in three assessment years, i.e., 1984-85, 1985-86 and 1986-87. This order of AO was subject-matter of appeal before CIT(A). In appeal, there was some additional inquiry conducted. The assessee submitted some bills amounting to Rs. 1,62,468 for adjustment saying that this liability was not taken note of by DVO. The CIT(A) then went into all mathematical calculation and also took into consideration certain concessions made by assessee through his lawyer and eventually while sustaining the additions made by AO, also added Rs. 1 lakh and then spread over in three assessment years. It is this order which was challenged by the Revenue as also by the assessee. The Tribunal dismissed the appeal filed by the Revenue and allowed the cross-objection filed by the assessee. It is against this decision of the Tribunal, the Revenue prayed for reference which was initially declined by the Tribunal but later made as directed by this Court. None for the Revenue. Heard Shri Gilda, learned counsel for the assessee.

Having heard learned counsel for the assessee and having perused record of the case, we are of the view that the question referred to this Court should be answered against the Revenue and in favour of assessee.

As observed supra, the only question involved in this case is in relation to actual amount spent in construction by the assessee. This question had assumed significance because of some difference between the figure shown by assessee and that of one shown by DVO. It is in this course of debate, the Tribunal on facts came to a conclusion that a sum of Rs. 55,677 should not have been added by CIT(A) when assessee had consented for addition of Rs. 1,00,000. We find no error in such approach if resorted to by the Tribunal. In other words, the question as to what should be in such cases added or deleted, is a matter of discretion and based on facts of each case. In this view, ifthe Tribunal came to a conclusion that Rs. 55,677 is not a sum to be added and if added by CIT(A), the same be deleted, there arises no case for holding that it was not in accordance with law.

We, therefore, do not find any case to take a different view on the question except to answer the question against the Revenue and in favour of assessee.

[Citation : 272 ITR 470]

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