1. These are the appeals filed by the assessee against the consolidated order of the CIT(A), dt. 5th Sept., 2000.
2. Ground No. 1 in both the appeals are directed against reopening of the assessment under Section 147 of the Act after the lapse of four years.
3. Ground Nos. 2 to 2.4 in both the appeals is directed against addition of Rs. 1,39,219 and Rs. 1,26,299 as unexplained investments in house property in the asst. yrs. 1988-89 and 1989-90 under Section 69 of the Act.
4. Ground No. 2.5 of the appeal in both the years is directed against not allowing self-supervision charges @ 10 per cent while determining the estimated cost of construction of house property.
5. Since all these grounds of appeal are interconnected, they are being disposed of together for the sake of convenience.
6. The brief facts of the case as stated in the CIT(A)'s order are to quote as under: The brief facts of the case are that the assessee constructed a house property at plot No. R-11/12, Raj Nagar, Ghaziabad. The assessee declared investment in the construction year-wise as under in asst. yr. 1990-91: The issue of investment in the house property was considered in asst. yr. 1990-91. The AO referred the matter regarding the cost of construction in the house property to the DVO whose report is dt.
6th May, 1991, estimating the total cost of construction at Rs. 13,82,000 as under: The Valuation Officer computed this cost relevant for asst. yrs.
1988-89 and 1989-90 taking the period of construction of the house property from July, 1987 to March, 1989. Keeping all these facts in view, the AO completed the assessment for asst. yr. 1990-91 making addition on two accounts. Firstly, the AO noticed that the assessee has shown investment of Rs. 2,28,772 in asst. yr. 1990-91 but the investment as a whole in the construction of house property was not supported by any bills or vouchers and, therefore, the AO took this investment in asst. yr. 1990-91 at Rs. 3,00,000 and thus made an addition of Rs. 72,228 on this account. Subsequently, the AO referred to the report of the Valuation Officer and observed that the Valuation Officer has estimated the investment at Rs. 13,82,000 in the asst. yrs. 1988-89 and 1989-90 as against the declared investment of Rs. 3,23,111 + Rs. 4,01,171 in these two assessment years. The AO thus computed the difference of Rs. 6,57,518 and held that this was the unexplained investment made by the assessee in the asst. yrs. 1988-89 and 1989-90 but since the construction of the property was completed in asst. yr. 1990-91, this unexplained investment of Rs. 6,57,518 was added in the income for the asst. yr.
1990-91. Thus, the assessment for asst. yr. 1990-91 was completed on an income of Rs. 7,28,704 on these two accounts.
The assessee went in first appeal before the learned CIT(A), Muzaffarnagar, against the assessment passed for asst. yr. 1990-91 and this appeal was decided vide order dt. 29th Aug., 1997.
Considering the facts of the case, the learned CIT(A) observed that the Valuation Officer has valued the house property at Rs. 13,82,000 but committed an error by taking the cost of construction in two asst. yrs. 1988-89 and 1989-90 only, though this cost of construction should have been bifurcated in the three asst. yrs.
1988-89, 1989-90 and 1990-91. The learned CIT(A) further observed that as far as the asst. yr. 1990-91 is concerned the cost of construction should be taken at Rs. 2,50,000 against declared at Rs. 2,28,772 and taken by the AO at Rs. 3,00,000. The balance cost of construction as per the Valuation Officer was Rs. 11,32,000 (Rs. 13,82,000 - Rs. 2,50,000) and this cost was to be bifurcated in two asst. yrs. 1988-89 and 1989-90. The learned CIT(A) bifurcated this cost of construction in the ratio of investment by the assessee in these two assessment years. The learned CIT(A) computed the investment in the house property as under:--------------------------------------------------------------------------Asst. yr.
Investment shown by Investment as per DVO Difference the assessee as modified by CIT(A)--------------------------------------------------------------------------1988-89 3,23,111 5,28,644 2,05,533--------------------------------------------------------------------------1989-90 4,01,171 6,03,356 2,01,985--------------------------------------------------------------------------1990-91 2,28,772 2,50,000 21,228-------------------------------------------------------------------------- 9,53,254 13,82,000 4,28,786-------------------------------------------------------------------------- After bifurcating the cost of construction in the three years and holding that the cost of construction should be taken at Rs. 2,50,000 in asst. yr. 1990-91, the learned CIT(A) thereafter held that addition for unexplained investment relating to asst. yrs.
1988-89 and 1989-90 cannot be added in the asst. yr. 1990-91 because under Section 69, these additions should be made in those relevant assessment years. The learned CIT(A) accordingly deleted the additions relevant for asst. yrs. 1988-89 and 1989-90 and observed that the AO may take remedial action to tax the same in the relevant assessment years. The learned CIT(A) further observed that the issue of adjudication in the difference in valuation should be looked into in the assessment years where the assessee has made major investment and directed that the AO may consider the assessee's arguments regarding DVO's report in the earlier years and on the points of dispute, the AO may pass a speaking order so that the assessee may challenge the same in appeal.
On the basis of these findings of the learned CIT(A), the assessments for asst. yrs. 1988-89 and 1989-90 were reopened vide notices under Section 148 dt. 16th March, 1998. The assessee stated that the returns already filed should be taken in compliance. In asst. yr. 1988-89, the assessee stated that the investment in the construction of house property was at Rs. 3,27,783 and this was duly supported by the valuation report of the registered valuer which was furnished with the return of income. The assessee also submitted a fresh valuation report from another registered valuer dt. 11th May, 1995 showing the total investment in the house property at Rs. 9,59,300 as against Rs. 13,82,000 taken by the Valuation Officer.
The assessee stated that since the DVO has adopted the CPWD rates whereas the approved valuer has taken the UPPWD rates and since this issue has already been decided by the Hon'ble Tribunal in the case of Smt. Rekha Devi v. Asstt. CIT (1994) 49 TTJ (Jp) 530 : (1995) Taxman 30 (Jp)(Mag), the rates of UPPWD should be adopted. Further, the property was constructed under self-supervision, but the DVO has given no supervision discount. The AO considered these submissions but as not agreeable with the same. The AO observed that the cost of investment in the house property has to be looked into in asst. yrs.
1988-89 and 1989-90. The AO then referred to the valuation report of the registered valuer of the assessee dt. 11th May, 1995 working out the cost at Rs. 9,59,300 and also the report of the Valuation Officer estimating the cost at Rs. 13,82,000 and noticed that the registered valuer has applied a rate of 1,600 per sq. mtr. for ground floor while the DVO has applied a rate of Rs. 2,345 per sq.
mtr. As per the registered valuer's report, the first floor consisted of 229 sq. mtr. whereas the Valuation Officer has taken the plinth area at 242 sq. mtr. This difference was not explained.
The AO then noticed that the registered valuer did not include extra items like Kota stone, marble stone and Dholpur stone used at one or the other place. The AO, therefore, held that the valuation report of the Valuation Officer is reasonable. Regarding the self-supervision charges claimed @ 10 per cent by the assessee, the AO observed that there is nothing on record to say that the building was not constructed through contractor and, therefore, the self-supervision rebate is allowable, but this was allowed at 7.5 per cent. The total cost estimated by the Departmental Valuation Officer was Rs. 13,82,000 and after allowing self-supervision rebate @ 7.5 per cent (Rs. 1,03,650), the balance cost was taken at Rs. 12,78,350. Out of it, the cost to the extent of Rs. 2,50,000 was confirmed by the learned CIT(A) in asst. yr. 1990-91 and, therefore, deducting this cost, the balance remained at Rs. 10,28,350. This was bifurcated on the basis of the ratio of investment as directed by the learned CIT(A) and the investment was computed at Rs. 4,80,239 and Rs. 5,48,111 in asst. yrs. 1988-89 and 1989-90. Deducting the investment shown by the assessee, the unexplained investment was taken at Rs. 1,57,128 and Rs. 1,46,740 for the two assessment years under consideration and these were added in the respective assessment years as unexplained investment in the house property.
Coming to the asst. yr. 1989-90, the assessee stated before the AO that in the year 1989-90, the return of income was enclosed with the valuation report of the registered valuer and the sources of investment and these were duly considered by the AO vide order under Section 143(3), dt. 27th March, 1992. In this assessment, the AO made an addition of Rs. 49,600, went in appeal against the assessment framed before the Dy. CIT(A) who decided this appeal vide order dt. 6th Jan., 1993 and the addition made by the AO was deleted. It was submitted before the AO that since the facts are same and were considered at the original assessment, action under Section 148 cannot be taken on the same ground as has been done now.
The AO considered these submissions but observed that the addition was made for unexplained sources of investment and the AO did not make or rather consider the cost of investment in the house property and, therefore, action taken under Section 148 to consider the cost of investment is legal and justified. Further, this cost of investment has to be taken as per the direction of the learned CIT(A) given in asst. yr. 1990-91. The AO, therefore, did not accept this submission and as discussed in the preceding para, added an amount of Rs. 1,46,740 for unexplained investment in asst. yr.
1989-90. In view of the discussion made, the AO completed the two assessments for asst. yrs. 1988-89 and 1989-90 and also directed to charge the interest as per rules.
14. I have carefully considered the arguments of the learned Counsel and the papers filed in the paper book. I have also considered the reasons given by the AO in the assessment orders as well as in the remand reports. I have also tried to consult the relevant assessment records but only part covers have been made available. The brief facts of the two cases have already been outlined hereinabove. The assessee started constructing a house property from asst. yr.
1988-89 and declared its completion in asst. yr. 1990-91. In asst.
yr. 1990-91, the assessee declared an investment of Rs. 9,60,383 (wrongly taken at Rs. 9,53,254 by the AO in the assessment order) and its bifurcation in the three years was also given. The AO referred this issue to the Departmental Valuation Officer, but surprisingly, the Valuation Officer took the years of construction in asst. yrs. 1988-89 and 1989-90 and estimated the cost at Rs. 13,82,000. While completing the assessment for asst. yr. 1990-91, the AO made an addition of Rs. 7,28,704 for unexplained investment in the construction of house property. This addition consisted of two parts, firstly relating to an addition of Rs. 72,228 in the asst. yr. 1990-91 and secondly, an addition of Rs. 6,57,518 being the difference in the cost shown and estimated by the Valuation Officer. When the assessee went in first appeal before the learned CIT(A), Muzaffarnagar, this issue was settled vide order dt. 29th Aug., 1997. The learned CIT(A), Muzaffarnagar, held that the cost of construction taken by the Valuation Officer should be bifurcated in three years and for asst. yr. 1990-91, this should be taken at Rs. 2,50,000. The learned CIT(A) further deleted the addition relevant to asst. yrs. 1988-89 and 1989-90 holding that this addition cannot be made in asst. yr. 1990-91 but can only be made in the relevant assessment years under Section 69 and observed that it was for the AO to take necessary remedial action to tax the same in the relevant assessment years. In my view, this is clearly a direction by the learned CIT(A), relate back this investment in asst. yrs. 1988-89 and 1989-90 and to consider this in those assessment years. This is also evident from the observation of the learned CIT(A) that he did not adjudicate the question of cost of construction for any of the years and directed the AO to consider the cost of construction in asst. yrs. 1988-89 and 1989-90 and to pass a speaking order after considering the arguments of the assessee so that the assessee may challenge the same in appeal. This observation of the learned CIT(A) clearly points out that the assessments for asst. yrs. 1988-89 and 1989-90 were to be reopened for giving effect to this observation and to settle the issue of cost of construction in the house property and to make any addition on this account, if necessary, so that the assessee may challenge the same in appeal if aggrieved thereafter. In view of these clear observations and direction of the learned CIT(A) (supra), there was no other alternative with the AO except to reopen the assessments for asst. yrs. 1988-89 and 1989-90 and, therefore, the reopening of these two assessments is valid, legal and within limitation. As far as the powers of the learned CIT(A) to give such direction are concerned, this direction has been given while deciding the appeal for asst. yr. 1990-91 because the addition for earlier years was made in asst. yr. 1990-91 and it was deleted on the same ground. The learned CIT(A) has not gone beyond the issue involved in asst. yr. 1990-91 and any directions given thereto are, no doubt, binding on the AO. It is, therefore, held that the AO was perfectly justified in reopening the assessments under Section 148 in view of the direction of the learned CIT(A).
The merits of the arguments of the learned Counsel challenging the validity of the notices are, therefore, not discussed further.
15. Coming to the second issue determining the cost of construction of the house property in asst. yrs. 1988-89 and 1989-90, there are only two main arguments of the learned Counsel, firstly that the UPPWD rates should be applied and secondly that self-supervision rebate of, 10 per cent should be allowed against 7.5 per cent allowed by the AO The decision of the Hon'ble Allahabad High Court in the case of Raj Kumar (supra) has been perused. In fact, this decision is the result of reference application filed by the Department under Section 256 (2). The Hon'ble Allahabad High Court has confirmed the decision of the Hon'ble Tribunal and observed that the decision of the Hon'ble Tribunal has considered all the necessary facts for giving the decision including application of UPPWD rates and not CPWD rates.
16. I have considered the valuation report submitted by the registered valuer of the assessee and the Departmental Valuation Officer. There is a vast difference in estimating the cost of construction of the house property by the Departmental Valuation Officer and the registered valuer. In my view, whether the rates of UPPWD or CPWD or other rates are applied, the cost of construction should come out the same by applying any of the method. The registered valuers are supposed to apply the CPWD rates for arriving at the cost of the property, but if they think that this is not giving the correct cost of construction, they should give reasons for the same and should also compute the cost of construction by other methods which are giving the correct state of affairs. In the present case, the registered valuers have just gone by UPPWD rates and have not given as to why the CPWD rates cannot be applied to find out the correct cost of construction. In fact, the assessee has submitted two valuation reports from two registered valuers and both these reports vary in computing the cost of construction even by applying the UPPWD rates. It is seen that when a copy of the report of the Departmental Valuation Officer was given to the assessee, the assessee obtained the comments of Shri M.P. Agarwal, registered valuer, and these comments are dt. 29th Dec, 1991 and this forms part of the paper book. In these counter comments of the registered valuer, he has taken the ground floor at 356 sq. mtr. and applied a rate of Rs. 1,536 per sq. mtr. Similarly, in the first floor, the area has been taken at 229 sq. mtr. and a rate of Rs. 1,536 per sq.
mtr. has been applied. On the other hand, there is another report dt. 11th May, 1995 from Shri R.P. Agarwal, registered valuer, wherein the area of the ground floor and the first floor has been taken at 297 and 229 sq. mtrs. and a rate of Rs. 1,600 and Rs. 1,300 per sq. mtr. has been applied for the ground floor and the first floor. The second valuer, Shri R.P. Agarwal, has not included the cost of Dholpur stone, marble stone or Kota stone used by the assessee.
17. Coming to the report of the DVO, surprisingly, the Valuation Officer bifurcated the cost of construction in two asst. yrs.
1988-89 and 1989-90 though the construction period was three years.
The Valuation Officer has given no self-supervision rebate though such rebate is always allowed by the Valuation Officer in other cases. The Departmental Valuation Officer is, no doubt, bound to give the report on the basis of the CPWD but he should also compute the cost on the basis of the UPPWD rates and should give reasons as to which cost should be taken as correct state of affairs.
18. It is a common experience that the cost varies from one construction to another construction depending on the quality of material and the standard of fittings used. It is a common fact that the cost of construction of kitchen or a bathroom varies enormously depending on the type of fittings, their quality and the standard.
One bathroom may cost a thousand while another bathroom may cost lakhs of Rupees. The valuation reports using standard rates are bound to vary unless the cost is computed on the basis of the different material and the items used in the construction of the property. Considering all these facts and the fact that a part of the cost has already been confirmed by the learned CIT(A) in asst.
yr. 1990-91, considering that the UPPWD rates are somewhat lower than the CPWD rates and the fact that the AO has allowed a self-supervision rebate of 7.5 per cent, it would be justified if the total cost of construction is taken at Rs. 12,40,000 as against taken at Rs. 12,78,350 by the AO and declared at Rs. 9,60,383 by the assessee. Deducting from this cost, the cost already confirmed in asst. yr. 1990-91 at Rs. 2,50,000, the balance cost comes to Rs. 9,90,000 which is related to asst. yrs. 1988-89 and 1989-90. This cost is bifurcated in asst. yrs. 1988-89 and 1989-90 in the ratio already decided by the learned CIT(A) at 46.7 per cent and 53.3 per cent. Accordingly, the cost of construction comes to Rs. 4,62,330 and Rs. 5,27,670 for asst. yrs. 1988-89 and 1989-90 as against taken by the AO at Rs. 4,80,239 and Rs. 5,48,111. Thus, the assessee would be entitled for a relief of Rs. 17,909 and Rs. 20,441 for the asst.
yrs. 1988-89 and 1989-90.
8. The learned Authorised Representative of the assessee argued that for the asst. yr. 1988-89 the return of income was filed by the assessee on 21st Aug., 1989 showing income of Rs. 15,035. The assessee had shown income from shares, long-term capital gain which was invested in construction of house property against which exemption under Section 54F was claimed. Along with the return, the valuation report from the approved valuer was also submitted. The assessee had disclosed an investment of Rs. 3,27,283 in the assessment year. The return was accepted under Section 143(1) on 26th Oct., 1989. He further submitted that the assessment has been reopened by issue of notice under Section 148 on 16th March, 1998. No reasons for the same has been given in the assessment order. The AO has taken the action on the ground that the learned CIT(A) has so directed in the assessment for asst. yr. 1990-91.
It was submitted that a perusal of the order of the learned CIT(A) will show that he never directed the AO to take action under Section 148 for asst. yrs. 1988-89 and 1989-90. He simply observed that it is for the AO to take necessary remedial action to tax the same in the relevant assessment years. This cannot be said to be a direction to reopen the assessment for the earlier years. He further submitted that for asst.
yr. 1988-89 the unamended provisions of Section 147 would apply and relied on the decision of the Hon'ble Patna High Court in 156 Taxation Part II, p. 260 (Pat) in support of his argument. He submitted that the unamended provisions of Section 147(a) cannot be applied as there was no omission or failure on the part of the assessee to disclose all the material facts in the return of income. It was his submission that, at most, provisions of Section 147(b) can be applicable but after the expiry of four years no action under this sub-section can also be taken. The assessee had disclosed all necessary materials in the return of income filed and it was for the AO to draw inference from the same.
If the inference drawn is erroneous no action can be taken as it would amount to change of opinion. For this reliance was placed on the decision reported in Dy. CIT v. Naginimara Veneer & Saw Mills (P) Ltd. (2000) 163 CTR (Gau) 572 : (supra), 155 Taxation 179 (J&K), Arvind Mills Ltd. v. Dy. CIT (1999) 157 CTR (Gau) 156 : (2000) 242 ITR 173 (Gau). It was also the argument of the counsel for the assessee that where the assessee had disclosed all material facts and full disclosure was made in the return of income regarding construction of property and its investment was supported by report of registered valuer, it cannot be said that full disclosure was not made by the assessee. It was his alternate argument that even if the amended provisions of Section 147 are applied action after four years cannot be taken. It was, therefore, his submission that notice under Section 148 should be annulled as it is illegal and barred by limitation.
9. The learned Counsel for the assessee by referring to the reasons recorded before taking action under Section 147 submitted that reasons for the asst. yr. 1988-89 have not been recorded as they were not supplied to the assessee. However reasons for the asst. yr. 1989-90 were supplied which are vague, undated and unsigned and it is not clear from the reasons which authority had recorded the same. From the perusal of reasons it is evident that the AO sought permission of some authority for issue of notice under Section 148. It was his submission that the assessee was entitled for reasons so recorded. Since the reasons have not been recorded properly, assessment made on that basis should be annulled.
10. On merits it was submitted that addition was made for unexplained investment of Rs. 1,57,128. It was the argument of the learned Counsel of the assessee that assessee disclosed investment of Rs. 3,27,783 in the asst. yr. 1988-89 in support of which a report of the approved valuer was submitted showing cost at Rs. 3,23,113 for asst. yr.
1988-89. The AO has referred to the cost estimated by the Valuation Officer which is based on CPWD rates. It was submitted that in view of the decision of the Tribunal and the Hon'ble Allahabad High Court in the case of CIT v. Raj Kumar applicable in UP State and CPWD rates are not applicable. It was submitted that since the approved valuer has computed the cost of investment on the basis of UPPWD rates and the DVO has computed cost on CPWD rates, the valuation submitted by the assessee should be accepted.
11. It was also submitted that the report of Departmental Valuation Officer was wrong inasmuch as in spite of visiting the building on 6th May, 1991 after completion of the building the Valuation Officer took cost of construction in asst. yrs. 1988-89 and 1989-90 and not in three years. The defective valuation report should not be accepted.
12. It was also submitted that the Departmental Valuation Officer did not allow any self-supervision rebate which is generally allowed @ 10 per cent in all the cases completed in self-supervision. In the case of Raj Kumar (supra) the Hon'ble Tribunal allowed a rebate of 10 per cent for self-supervision which was followed in the case of Ganga Ram Ram Kishan also by the Tribunal. Although the Valuation Officer did not allow any self-supervision rebate but the AO has allowed self-supervision rebate of 7.5 per cent only against the rate of 10 per cent allowable on the basis of Tribunal decision.
13. The learned Authorised Representative of the assessee submitted that in the asst. yr. 1989-90 the assessee filed return on 26th Oct., 1989 declaring income of Rs. 20,030 and the assessment was completed under Section 143(3) on 27th March, 1992 at an income of Rs. 69,430.
14. In the assessment made, addition of Rs. 49,600 was made on account of investment in the construction of house property from undisclosed sources. The assessee disclosed all the necessary facts about the investment in the house property supported by the report of the registered valuer and also report of the Departmental Valuer and while completing the assessment for the asst. yr. 1989-90 both the reports were before the AO. The assessee filed appeal against the order of the AO, against addition of Rs. 49,600 which was deleted by the Dy. CIT(A) vide his order dt. 6th Jan., 1993. It was submitted by the counsel that on the same ground action under Section 147 cannot be taken once again.
He also referred to the reasons recorded for the asst. yr. 1989-90 and submitted that the reasons were vague, undated, unsigned and it was not known as to which authority recorded the reasons. He submitted that proper reasons were not recorded, therefore, on this ground itself the assessment should be annulled. He submitted that all material facts were disclosed and there was no basis for reopening of the assessment as held in 155 Taxation 179 (J&K) (supra) and (1999) 157 CTR (Gau) 156 : (2000) 242 ITR 173 (Gau) (supra). He submitted that amended provisions of Section 147, the proviso is applicable because the assessment was completed under Section 143(3) and there was complete disclosure of all facts. Therefore, action under Section 147 cannot be taken beyond four years. It was also his submission that the action has been taken in 1998 much beyond four years and, therefore, was barred by limitation. The assessee had not concealed the particulars of his income and it was merely a change of opinion which is not permissible as held in S. Sreeramachandra Murthy and Anr. v. Dy. CIT (supra), (supra), 155 ITR 579 (sic). Regarding the addition for unexplained investment in the construction of house property, the submission of the learned Counsel of the assessee were the same that were made for the asst. yr. 1988-89.
15. The learned Departmental Representative, on the other hand, justified the action of the AO and the CIT(A). He submitted that the reopening of the assessment for the asst. yrs. 1988-89 and 1989-90 were made on the direction of the learned CIT(A) given in the asst. yr.
1990-91 and, therefore, the reopening was valid in terms of Section 150(1) of the IT Act, 1961. He further submitted that the reasons for the reopening of the assessment were recorded by the AO before taking action under Section 148 and, therefore, the reassessment made under Section 147 was valid in the eye of law. It was also his submission that the learned GIT(A) did not decide about the valuation made by the Departmental Valuer in the asst. yr. 1990-91 and stated that the AO may take action as per law in asst. yrs. 1988-89 and 1989-90 for the amount invested in the construction of the house property in those years. It was, therefore, his submission that the addition made by the AO by making an assessment under Section 147/143(3) of the Act for the asst.
yrs. 1988-89 and 1989-90 were fully justified and, therefore, the order of the CIT(A) should be confirmed.
16. After hearing the submission made by both the parties and accordingly perusing the orders of the lower authorities and examining the materials available on record, we find from the order of the learned CIT(A) at p. 11 para 14 where he has observed to quote as under: The learned CIT(A) further deleted the addition relevant to asst.
yrs. 1988-89 and 1989-90 holding that this addition cannot be made in asst. yr. 1990-91 but can only be made in the relevant assessment years under Section 69 and observed that it was for the AO to take necessary remedial action to tax the same in the relevant assessment years.
17. From a reading of the above observation, we find that the deletion of the addition made by the AO in the asst. yr. 1990-91 was not made by the learned CIT(A) on a finding that the said addition must be made in the asst. yrs. 1988-89 and 1989-90, therefore, they are being deleted in the asst. yr. 1990-91. The Hon'ble Supreme Court in Rajinder Nath v.CIT observed that a direction by statutory authority is in the nature of an order requiring positive compliance. When it is left to the option and discretion of the ITO whether or not to take action it cannot be described as a "direction". Therefore, the direction of the CIT(A) contained neither a "finding" nor a "direction" within the meaning of Section 150(1) in consequence of which or to give effect to which, the impugned assessment proceedings can be said to have been taken.
18. We also observe from the learned CIT(A)'s order that the valuation made by the registered valuer for investment in the construction of the house property was Rs. 13,82,000. The AO allowed deduction for self-supervision charges at the rate of 7.5 per cent which comes to Rs. 1,03,650 and the cost of construction was taken at Rs. 12,78,350. We further observe that the learned CIT(A) had confirmed the addition of Rs. 2,50,000 out of this amount in the asst. yr. 1990-91. The balance thereafter remaining was Rs. 10.29 lakhs. We find that the assessee has relied on the decision of the Tribunal in the case of Mool Chand Subodh Kumar ITA No. 2257/Del/1990, asst. yr. 1985-86, order dt. 10th April, 1995 and Ganga Ram Kishan ITA No. 6962/Del/1989, asst. yr. 1984-85, order dt. 15th March, 1994 that deduction at the rate of 10 per cent had been allowed on account of self-supervision charges. If this is taken into consideration a further amount of Rs. 35,000 would be allowable deduction from Rs. 10.29 lakhs. Thereafter, the balance remaining would be Rs. 9.94 lakhs. The contention of the assessee is that the DVO has adopted CPWD rates while making the valuation and that in view of the Hon'ble Allahabad High Court judgment in CIT v. Raj Kumar in IT Appln. No. 248 of 1989, order dt. 2nd Jan., 1990, which is the jurisdictional High Court, UPPWD rates should be applied for making the valuation. Taking into consideration all these facts, we are of the view that there would be negligible difference between the cost of construction already declared by the assessee coupled with the addition of Rs. 2,50,000 made in 1990-91. It must be borne in mind that a report of the assessee regarding valuer is merely an opinion of an expert and it is not a conclusive evidence of the actual amount invested by the assessee. For the above, reliance is being placed on the decision of the Guwahati High Court in the case of Bhola Nath Majumdar v. ITO . Where two valuers will make valuation of the same property there is bound to occur a slight difference. Just because there is a slight difference it cannot be inferred that the assessee has made any undisclosed investment. In view of the reasons stated above, we are of the considered opinion that even on merits no addition can be sustained in the asst. yrs. 1988-89 and 1989-90. Therefore, the addition sustained by the learned CIT(A) requires to be deleted. Hence, we set aside the order of the AO and the CIT(A) and delete the addition of Rs. 1,39,219 and Rs. 1,26,299 made in the asst. yrs. 1988-89 and 1989-90, respectively. The grounds of appeal in both the years under consideration are allowed.
19. Ground No. 2.6 in both the years relates to charging of interest under Section 217 and Section 234B of the IT Act, 1961. The learned Counsel for the assessee argued that no interest under Section 217 and Section 234B of the IT Act could be charged in an assessment made under Section 147 of the Act.
20. The learned Departmental Representative relied on the orders of the authorities below.
21. We have considered the submissions of the parties and perused the orders of the lower authorities. We find the provisions of Section 217 of the Act state that where in making the regular assessment, the AO finds: (a) that any such person referred to in Clause (a) of Sub-section (1) of Section 209A has not sent the statement referred to in that clause or the estimate in lieu of such statement referred to in Sub-section (2) of that section or, (b) that any such person as referred to in Clause (b) of Sub-section (1) of Section 209A has not sent the estimate referred to in that clause, simple interest at the rate of 15 per cent per annum from the 1st day of April next following the financial year in which advance tax was payable in accordance with Sub-section (1) or Sub-section (2) upto the date of the regular assessment shall be payable by the assessee upon the amount equal to the assessed tax as defined in Sub-section (5) of Section 215.
22. In the asst. yr. 1988-89 interest has been charged under Section 217 of the Act in the reassessment made under Section 147 of the Act, which is not a regular assessment in terms of Section 2(40) of the Act.
Hence the interest levied in 1988-89 under Section 217 of the Act is deleted.
23. As regards charging of interest under Section 234B of the Act in the asst. yr. 1989-90, we find that the learned CIT(A) is remanding the matter back to the file of the AO as the AO has not given reasons for charging of interest. He has observed that the assessee has challenged the validity of charging interest and as such the assessee should file application under Section 154 of the Act before the AO regarding his objections to the charging interest and the AO would consider them and pass speaking order. In the circumstances we find that the assessee will get opportunity to explain its case before the AO. Hence, no grievance would be caused to the assessee. Therefore, the order of the CIT(A) is confirmed and the grounds of appeal are partly allowed.