Full Judgment
S.R. Chauham, J.M.
This is an appeal by assessee for assessment year 1989-90 directed against the order of Commissioner (Appeals), Jodhpur dated 24-1-1997.
2. I have heard the arguments of both the sides and also perused the records including the written statements of the learned authorised representative of assessee furnished on record before me.
3. The assessee-appellant has raised as many as four grounds of appeal but they all constitute single issue disputing the learned Commissioner (Appeals)'s impugned order in not cancelling the assessment order and not deleting the addition of Rs. 50,650 made by the assessing officer in the cost of construction on the basis of valuation report of AVO. The learned authorised representative of assessee has contended that the assessee has maintained regular books of accounts in respect of the cost of construction of clinic building for the assessment year under appeal and the said accounts are in details and are duly supported by vouchers. He has contended that he had produced the aforesaid accounts together with the copies of the vouchers before assessing officer also. He has contended that the assessing officer has not considered the accounts and supportive vouchers furnished by assessee and has neither rejected the accounts nor has he found any defects in the accounts of assessee but has straightaway made reference to AVO for estimating the valuation/cost of construction of assessee's clinic building. He has contended that the assessing officer has made the addition on the basis of AVO's valuation report estimating the cost of construction. He has contended that this action of assessing officer is contrary to law and against the judicial pronouncement of Honble, Jurisdictional High Court in the case of CIT v. Pratap Singh Amrao Singh, etc. and CIT v. Hotel Joshi 22 TW 807 (Raj). He has contended that even otherwise there are a number of defects in the AVO's valuation report to which the assessee has objection and the same were also duly raised before assessing officer vide assessee's letter dated 21-8-1990 (pages 6 to 9 of paper book) and dated 5-10-1990 (pages 4 to 5 paper book), which has also been referred to by assessing officer in his order on page 2 of his assessment order. He has contended that before the learned Commissioner (Appeals) also the assessee raised the above contentions but the learned Commissioner (Appeals) has not decided the assessee's above contentions on merits and has simply disposed off the appeal by observing that the assessee may file rectification petition before assessing officer and if not satisfied by order rendered by assessing officer on assessee's rectification petition, the assessee may file appeal thereagainst or may take steps for revival of appeal before Commissioner (Appeals). He has contended that the learned Commissioner (Appeals) ought to have decided the appeal on merits and should have deleted the addition of Rs. 50,650 made by assessing officer in the cost of construction inasmuch as the addition made by assessing officer was uncalled for and not justified for the reason that the assessee had maintained regular and detailed accounts which were duly supported by vouchers. He has contended that the Honble Jurisdictional High Court has laid down the legal position, in the above mentioned cases, to the effect that when the assessee has maintained regular accounts of the cost of construction, which are supported by vouchers/evidence, and the assessing officer does not find defect therein, the action of the assessing officer in making reference to DVO/AVO for valuation of construction/building is not justified, nor is the action of assessing officer in making addition on the basis of such estimate made in the valuation report of DVO/AVO. He has contended that it has also been held by the Honble Jurisdictional High Court as also by various decisions of Tribunal that the cost of construction should be determined on the basis of local PWD rates and not on the basis of CPWD rates. He has contended that in the instant case the AVO has made valuation of the cost of construction/building in his valuation report on the basis of CPWD rates and not on the basis of State/PWD rates. He has also contended that the AVO has also not given any credit/benefit for self supervision and has also considered the expenditure on account of architect/engineer though the assessee had not availed the services of any such persons. He has accordingly contended that the AVO's action in making reference for valuation to AVO is legally not valid, and in turn, the addition made by assessing officer in the cost of construction is also legally not justified and so the addition should be deleted.
4. As against the above, the learned Departmental Representative of revenue has relied on the orders of authorities below contending that the said authorities have dealt with the issue properly and made the addition appropriately.
5. I have considered the rival contentions, the relevant material on record, as also the cited decisions. In (supra) the Hon'ble Jurisdictional High Court has held that when the assessee has maintained proper books of accounts and all the details are mentioned in such books of accounts which are duly supported by vouchers and no defects are pointed out and the books are not rejected, the figures shown therein have to be followed. It has also been held that the valuation report can be taken into consideration only when the books of account are not reliable or are not supported by vouchers or the Income Tax Officer is of the opinion that reliance cannot be placed thereon. It has also been observed that there may be a marginal difference in the actual investment and the report of Valuation Officer for a number of reasons including the fact that the valuation report is prepared on the basis of CPWD rates. The Hon'ble High Court accordingly held that the Tribunal was not justified in deleting the addition. Similarly, in the case of Hotel Joshi (supra) the Hon'ble High Court has held that when the cost of construction shown by assessee in the books of accounts are maintained regularly for the purpose and if the same do not show any serious infirmity, the same should be accepted. It has also been held therein that if the account books for the construction of the building are regularly maintained and the same are verifiable, there should be no reason for not accepting the same for assessing the value of the asset. It has also been held therein that there must. exist some strong reason with the assessing officer to disagree with the construction account furnished by the assessee. It has further been held that the State PWD rates should be adopted in preference to CPWD rates for estimating the cost of construction of a building. It has also been held that the assessing officer cannot exercise the power under section 55A for referring the matter to valuation cell, in a routine manner, but can exercise the discretion for above referring only after forming an opinion in writing on the basis of material on record for ascertaining the fair market value of the asset. The Tribunal Jaipur, has also held similarly in its decision dated 28-1-1999 rendered in the case of Ravi Mathur v. Asstt. Commissioner 22 TW 245 (Jp). The Tribunal Jaipur has held therein that the cost of construction should be determined on the basis of local PWD rates and further that PWD valuation should be scaled down by 20 per cent and also that 12 per cent as supervision allowance would be justified.
6. In the instant case, from the perusal of record I find that the assessing officer has not discussed the assessee's contention with respect to he detailed accounts of cost of construction of the clinic building maintained by the assessee in his books of accounts completely/properly, nor pointed out any defects therein nor any specific defect therein, nor has he expressly rejected the same by giving reasons for the purpose, but has simply made a passing reference to the assessee's reply-letters dated 21-8-1990 and 5-10-1990. It is also revealed that even in the cost of construction estimated by registered valuer, whose valuation report has been furnished by assessee, and the cost estimated by AVO in his valuation report, there is a vast difference as has also been mentioned in the written statement furnished by assessee. Be that as it may, considering the rival contentions as also the relevant material on record together with the legal position emanating from the above cited decisions, I am of the view that the assessing officer having not considered the accounts of cost of construction duly maintained by assessee in details and supported by vouchers, and having not pointed out any specific defects therein nor having rejected the same, the assessing officer was not justified in not accepting cost of construction shown by assessee in his books of accounts and making a reference to AVO in a routine manner. It may also be observed here that the AVO has estimated the cost of construction on the basis of CPWD rates and not on the basis of PWD rates, which, though have been adopted by AVO. As has been contended by the learned authorised representative of assessee, the AVO has also not considered the self- supervision charges allowable to assessee for self-supervision inasmuch as it has been the assessee's plea that it is he who purchased the raw material with his personal impressions in the vicinity and also it is he who made payments to the labour. In his impugned appellate order the learned Commissioner (Appeals) has no doubt directed the assessee-appellant to file rectification petition before assessing officer and if not satisfied with the rectification order of assessing officer, to file appeals there against or to take steps to revive this appeal, yet we find the learned Commissioner (Appeals) said order to be not proper nor justified inasmuch as the assessee's plea that the learned Commissioner (Appeals) ought to have decided the appeal on merits as also the issue as to whether the assessing officer was justified in making reference to AVO for valuation of cost of construction and in not accepting the cost of construction shown by the assessee in his accounts when the assessee had maintained detailed accounts in his regular books of accounts maintained for the purpose which were in details supported by vouchers. The said contention is specifically contained in para 10 on internal page 2 (page 5 of paper book) in assessee's reply/letter dated 5-10-1990, furnished to assessing officer, and is also contained in ground Nos. 1 to 3 raised before the learned Commissioner (Appeals). Similar contention/plea has also been raised by assessee-appellant in the grounds of appeal raised before the Tribunal. As such, the assessee- appellant having agitated the action of assessing officer in referring the valuation of cost of construction of assessee's clinic building to AVO and not accepting the cost of construction as shown by assessee in his account books duly maintained by him along with supportive vouchers and making addition in the cost of construction on the basis of AVO's valuation report based on CPWD rates, before the learned Commissioner (Appeals) as also before the Tribunal, I am of the view that considering all the facts and circumstances of the case in entirety, the action of assessing officer in making reference to AVO and, in turn, making addition in the cost of construction on the basis of valuation report of AVO, and accordingly the sustenance of the said addition by learned Commissioner (Appeals) is found to be not justified and uncalled for inasmuch as the assessee has duly maintained his detailed accounts in his books of accounts maintained regularly in respect of the cost of construction of the assessee's clinic and the accounts being supported by vouchers and the assessing officer has not pointed out any specific defect therein. Accordingly, I delete the addition made by assessing officer in the cost of construction.
7. In the result, this appeal of assessee is allowed.