Delhi High Court

Commissioner Of Inocme Tax vs Nagrik Hotel (P) Ltd. on 25 August, 1999

Equivalent citations: (1999) 157 CTR Del 470

ORDER

By the Court:

By this application under section 256(2) of the Income Tax Act, 1961 (for short 'the Act') the, Revenue seeks a direction to the Tribunal to state the case and refer the following questions, in respect of assessment year 1992-93, for the opinion of this Court:

"(i) Whether, on the facts and in the circumstances of the case, Hon'ble Tribunal is correct in restoring the matter back to the assessing officer on the issue regarding addition of Rs. 17,98,636 being amount of addition made on account of unexplained investment under section 69 of the Act in the property bearing No. 50, Arakashan Road, Pabarganj, New Delhi.

(ii) Whether the Hon'ble Tribunal ought to have considered following facts before setting aside the above issue :

(a) The Valuation Officer submitted his valuation report after taking physical inspection of the property vide report dt. 28-2-1995, and after considering the submission etc. made before him by the assessee.

(b) The original building was three storeyed building with no mezzanine floor whereas the building constructed is given (5) storeyed.

(c) The assessee failed to produce any evidence at the time of assessment or at appellate stage to prove that the height of the ground floor was about 20 ft- and it converted ground floor in two floors by putting slab in the middle.

(d) The addition of a mezzanine floor by adding slabs only is not feasible as one full floor could not have been added without proper foundation. The assessee did not produce any evidence at the time of assessment or in the appeal to show that mezzanine floor was existing in the building at the time of the purchase of the building.

(e) From the sale deed it is clear that the building in question was more than 23 years old and as such i was not possible to add additional storey to the type of existing structure. On the contrary, the building which was 23 years old would not bear the load of 5 storeyed building.

(f) As per the sale deed the building was residential unit, therefore, it was not possible to covert the existing residential unit into hotel building because of the nature of services like water connection, water supply lines and electric installation are put T'

2. Material facts leading to the filing of this petition may briefly be noticed. While completing assessment for the relevant assessment year, the assessing officer made an addition of Rs. 24,01,662 under section 69 of the Act as unexplained investment made by the assessee during the relevant previous year on the property bearing No. 50, Arakashan Road, Paharganj, New Delhi. The addition was based on the valuation report obtained by the assessing officer from the District Valuation Officer, wherein he had observed that the assessee had put up an entirely new structure after demolishing the old one. Aggrieved, the assessee challenged the order in appeal to the Commissioner (Appeals), who, while sustaining the addition on merits granted some relief on the quantum of addition. While doing so the Commissioner (Appeals) concurred with the Valuation Officer to the effect that the assessee had constructed the entire building afresh. Dissatisfied with the relief granted by the Commissioner (Appeals) in quantum of said addition and in particular with the said observations of the CIT. with regard to the status of the construction of the building in question, the assessee carried the matter in further appeal to the Tribunal.

3. The Tribunal felt that the crucial point which required consideration was as to whether the old building was demolished in entirety and a new building was constructed or the assessee had merely carried the additions/alterations and renovations on the existing structure. Accepting the plea of the assessee that it had not been granted reasonable opportunity to satisfy the assessing officer that the report of the Valuation Officer in this behalf was incorrect, the Tribunal set aside the assessment and remanded the case back to the assessing officer for fresh decision on this aspect of the matter, after affording an opportunity of hearing to the assessee. Aggrieved by the said order, Revenue's application under section 256(1) of the Act having been rejected, it has preferred the present application.

4. At the outset it is pointed out by learned counsel for the assessee that pursuant to the said directions by the Tribunal the assessing officer has reconsidered the matter and after carrying out physical inspection of the building himself in the presence of the Valuation Officer, has accepted the stand of the assessee that it was a case of construction- cum-renovation and not a case of entirely new construction. It is submitted by the learned counsel that after the inspection, a fresh valuation was submitted by the Valuation Officer and on that basis a fresh assessment order has already been passed. It is, asserted that in view of the fresh assessment. The present petition has been rendered infructuous.

5. Having perused the fresh assessment order, placed on record by the assessee, we are inclined to agree with learned counsel for the assessee that the reference sought by the Revenue on the proposed questions is rendered infructuous and we deem it unnecessary to call for reference on academic questions.

Accordingly, the application is dismissed. No costs.