1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR ORDER Commissioner of Income Tax-Central, Jaipur Vs. Ashok Kumar Govadia D.B.INCOME TAX APPEAL NO.82/2010 ... Date of Order :: 4th August 2010. PRESENT HON'BLE THE CHIEF JUSTICE MR. JAGDISH BHALLA HON'BLE MR. JUSTICE DINESH MAHESHWARI Mr.K.K.Bissa for the appellant. <><><> BY THE COURT: This appeal under Section 260-A of the Income Tax Act, 1961 ['the Act'] by the appellant (Revenue) is directed against the judgment and order dated 11.03.2010 passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur ['the Tribunal'] in IT(SS)A No.05/JU/2006 for the block period relevant for the assessment years 1997-1998 to 2002-2003 and upto 28.05.2002. Put in brief, the relevant background aspects of the matter are that the respondent assessee is an individual and a partner of the firm M/s. Govadia Jewellers. A search and seizure action was carried out under Section 132 of the Act on 28.05.2002 at the residential and business premises of the Govadia Group of which, the assessee is said to be a 2 member. A notice under Section 158BC of the Act was issued to the assessee who filed a return on 10.12.2002 declaring income of Rs.4,00,000/- for the block period assessment years 1997-1998 to 2002-2003 and upto 28.05.2002. The assessment proceedings were completed by the Asssessing Officer ('the AO') by the order dated 20.05.2004 while determining total undisclosed income of the assessee at Rs.16,73,650/-. Aggrieved by the aforesaid order dated 20.05.2004, the assessee preferred an appeal that was considered and partly allowed by the Commissioner of Income Tax (Appeals), Udaipur ['the CIT (A)'] by the order dated 18.10.2005 wherein the learned CIT (A) granted relief to the assessee on various scores, as noticed infra. Aggrieved by the order dated 18.10.2005 so passed by the CIT (A), the appellant (Revenue) filed an appeal before the Tribunal that has been partly allowed by the impugned order dated 11.03.2010. In the appeal before the Tribunal, the appellant (Revenue) raised different grounds, which have been summarised at the outset by the Tribunal and are reproduced hereunder for ready reference:- “1. On the facts and the circumstances of this case, the learned CIT (A), Udaipur has erred in deleting the addition of Rs.25101/- made on account of unexplained cash found from his residence as per annexure-C-1 to Panchnama dated 28/05/2002. 2. On the facts and the circumstances of this case, the learned CIT (A), Udaipur has erred in deleting the addition of Rs.505552/- made on account of unexplained investment in construction of residential house. 3 3. On the facts and in the circumstances of this case, the learned CIT (A), Udaipur has erred in deleting the addition of Rs.244447/- made in account of unexplained expenditure incurred for house expenses of the assessee. 4. On the facts and the circumstances of this case, the learned CIT (A) Udaipur, has erred in deleting the addition of Rs.75000/- out of total addition of Rs.100000/- made on account of unaccounted expenditure incurred on Ring Ceremony. 5. On the facts and the circumstances of this case, the learned CIT (A), Udaipur has erred in deleting the addition of Rs.100000/- made on account of unaccounted expenditure incurred on celebration of 25th marriage anniversary. 6. On the facts and the circumstances of this case, the learned CIT (A), Udaipur has erred in deleting the addition of Rs.74800/- made on account of unexplained deposits in bank account of silver jublee celebration. 7. On the facts and the circumstances of this case, the learned CIT (A), Udaipur has erred in deleting the addition of Rs.168000/- made on account of unaccounted expenditure incurred in purchase of valuable items. 8. On the facts and the circumstances of this case, the learned CIT (A), Udaipur has erred in deleting the addition of Rs.132000/- and Rs.88746/- made on account unexplained investment in FDRs and interest thereon respectively. 9. On the facts and the circumstances of this case, the learned CIT (A), Udaipur has erred in deleting the addition of Rs.30000/- and Rs.5000/- made on account unexplained investment in IVPs and interest thereon respectively. 10. On the facts and the circumstances of this case, the learned CIT (A), Udaipur has erred in deleting the addition of Rs.20000/- made on Protective basis on account unexplained investment in renovation of shop. 11. The learned CIT (A) has erred in law and facts while deleting the surcharge levied as the Finance Act clearly laid down that the surcharge is leviablee on rate prescribed U/s 113 of the Act, Section 113 prescribes rate for block period only. The rates for block period would be governed by charging section 4 of the act, which says that rate prescribed under Central Act would be applicable to income of previous year.” 4 So far as the grounds Nos.1, 4, 6, 8 and 9 aforesaid relating to the alleged unexplained items of cash, expenditure, deposit and investments are concerned, the Tribunal found the learned CIT (A) justified in accepting the explanations of the assessee with reference to the material on record and the customs of the family; and found no reason to interfere. So far as the ground No.2 aforesaid relating to investment in construction of residential house is concerned, the Tribunal found no reason to interfere with the discount allowed at 10% towards self supervision charges but then, considered it proper to modify the order passed by the CIT (A) in relation to the rebate for the difference between CPWD rates and PWD rates; and, instead of 20%, allowed this rebate at 15%. The Tribunal also found some incongruity in the statement of the assessee regarding the amount already brought to tax on account of unexplained investment in the house property by himself or as contribution by other members of family; and directed the Assessing Officer to carry out the necessary verification. In relation to this ground, the Tribunal said,- “6........The report of DVO elucidating cost of construction at Rs.7,94,600/- was brought to the notice of the assessee and put to him for making comments. The assessee, however, made general comments and the ld. CIT (A) finding that the DVO allowed only 7.5% discount towards self supervision charges, directed him to allow discount for 10%. Allowing of 10% discount, however, appears to be proper and in conformity with the practice prevalent at various benches in similar cases which the ld. CIT (A) is found to have stated in his order. The discount so allowed at 10% as against 7.5% allowed by the DVO, does not call for any interference. As regards allowing 5 rebate of 20% being difference between CPWD rate and PWD rates, the Hon'ble High Court of Judicature of Rajasthan has already expressed a view that PWD rates have to be allowed for the properties constructed in the State of Rajasthan. A reference to this may be made of the decision in the case of CIT vs. Raj Kumar (1990) 182 ITR 436 (All.). It however, remains that placing of rates of PWD is a question of fact which depends on various factors such as location of property, quality of construction and the material used etc. The ld. CIT (A), however, allowed a general rebate of 20% which appears to have excessive and irrelevant to the material on record. We, therefore, consider it proper to allow rebate of 15% for the difference between CPWD rates and PWD rates. The adjusted cost worked out after allowing the aforesaid adjustment shall be taken as cost of construction of the property. The expenditure incurred to the extent of Rs.4,49,138/- is found to have been met out of known sources by appreciating the facts on record before the ld. CIT (A), as against Rs.2,89,048/- accepted by the Assessing Officer. The action of the ld. CIT (A) in that respect does not call for any interference. In this view of the matter, the difference between adjusted cost worked out as aforesaid on the basis of DVO's report and the cost so estimated at Rs.4,49,138/- from the known sources shall be the amount of unexplained investment that has to be taken as undisclosed income. The assessee, however, has claimed that an amount of Rs.200000/- has already been offered for taxation as his undisclosed income covering the investment in construction of property, unexplained gold and silver jewellery, cash etc. That besides, we also find a whisper that the amount of Rs.1,50,000/- is stated to have been stated out of undisclosed income of the family members. These statements appear to be contradictory. The Assessing Officer shall verify this fact as to how much amount has factually be brought to tax as undisclosed income on account of unexplained investment in the house property in his hands or as contribution by other family members. Any amount as such that is found to have been taxed as undisclosed income shall further be reduced from the undisclosed investment worked out as aforesaid and balance thereof shall also be brought to tax as undisclosed income for the block period. The Assessing Officer, however, shall ensure that unexplained investment, if any, on this account, is not taxed twice, i.e., once as declaration of undisclosed income by the assessee in his return and again as difference between the cost worked out on appreciation of evidence and cost/investment found disclosed from known sources and met out from the declared sources. Accordingly, the order of the ld. CIT (A) stands modified for sustaining the addition as undisclosed income in construction of house.” 6 In ground No.3 relating to addition on low house hold withdrawals, though the Tribunal found CIT (A) not justified in deleting whole of the addition but at the same time, found the AO's estimate on undisclosed income to be excessive and unreasonable; and proceeded to work out the annual drawings on the basis of the facts on record so as to reach to the figure of undisclosed income; and modified the order of CIT (A) accordingly. The Tribunal, of course, allowed ground No. 5 as raised in the appeal relating to expenditure on 25th marriage anniversary celebrations but not the ground No.6 regarding deletion of addition of Rs.74,800/- out of cash gift received in those celebrations. In relation to ground No.7 pertaining to unaccounted expenditure on valuable items, the Tribunal partly accepted the submissions of the appellant (Revenue) and assessed the adjusted value of the items in question at Rs.1,28,000/- as against that assessed by the Assessing Officer at Rs.1,68,000/-. However, the Tribunal found the part of submissions of assessee towards the amount already disclosed requiring verification by the Assessing Officer and said,- “16........Taking all the facts into consideration, the adjusted value of household items works out to Rs.1,28,000/- as against Rs.1,68,000/- adopted by the Assessing Officer. Since the amount of Rs.26,683/- is found available for making investment in household goods, the same also is found to have fairly been accepted for financing the aforesaid items. The rest of the amount needs to be treated as unexplained. The assessee's case, however, is that he has already disclosed an income of Rs.35,000/- on account of 7 unexplained investment in such assets. The assessing officer needs to verify this fact and allow credit thereof for sustaining the addition as undisclosed income on account of unexplained investment. The order of the ld. CIT (A), accordingly, stands modified. The ground raised in appeal stands partly allowed.” In relation to ground No.10 pertaining to unexplained investment in renovation of shop also, the Tribunal found the matter requiring reconsideration by the AO and said,- “23. We have heard the parties and have perused the material on record. The assessee's case before the authorities below is that in the return of undisclosed income filed for the block period, the respondent-assessee himself has declared Rs.200000/- as his undisclosed income on account of investment in renovation of shop. That being so, the ld. CIT (A) could not have deleted the income so declared though stated to have been taxed by the Assessing Officer on protective basis. It, however, sounds reasonable that the same income cannot be taxed twice in the hands of the assessee – once as per disclosure of undisclosed income made in his return by him and again on protective basis. This fact needs to be verified by the Assessing Officer. We, therefore, restore the matter back to the Assessing Officer, who shall ensure inclusion of Rs. 2 lacs as assessee's undisclosed income on the basis of declaration made by him in the return of income and shall decide the issue accordingly.” The Tribunal further proceeded to allow ground No. 11 with reference to the decision of the Hon'ble Supreme Court in the case of CIT vs. Suresh N.Gupta: (2008) 214 CTR 274. The appellant (Revenue) seeks to question the order so passed by the Tribunal particularly in relation to the grounds that have not been allowed or that have been decided partly against it by the Tribunal and substantial questions of law have been suggested in that regard. Having heard the learned counsel for the appellant and having perused the material placed on record, we are clearly of opinion that none of the grounds suggested could be said to 8 be leading to any substantial question of law worth consideration in this case. Hereinabove, we have referred to all the grounds that were raised before the Tribunal and the summary of the findings of the Tribunal. In our considered opinion, every aspect sought to be questioned in this appeal essentially relates to the question of fact. The Tribunal in its considered decision has dealt with each and every item and ground in meticulous details; and we find absolutely no reason to show interference in this case at the instance of the appellant (Revenue) particularly when the matter relates only to the questions of fact and no case of perversity is made out. In relation to the grounds on which there are concurrent findings by the CIT (A) and the Tribunal, there does not arise any question of law what to say of a substantial one. In relation to some other items like expenditure on household, the Tribunal has consciously modified the order of CIT (A) after proper appreciation of the record. In relation to some of the other grounds like unexplained investments in construction of house and renovation of shop and valuable items, the Tribunal has consciously taken note of all the facts and after recording necessary findings, has remitted the issues to the Assessing Officer for necessary enquiry and findings. The matters therein also relate to the questions of fact. The contention sought to be urged in this appeal while questioning the rebate of 15% for conversion from CPWD to PWD rates is worthless. In fact, the CIT (A) allowed such 9 rebate at 20% that has been reduced by the Tribunal to 15%. The CPWD rates are neither of unquestionable standard nor are having statutory character so that the assessment has to be made on their basis alone. On the contrary, the Tribunal has taken conscious note of the earlier decisions to the effect that PWD rates have to be allowed for the purpose of construction in the State of Rajasthan. On the rebate as allowed by the Tribunal for the purpose of conversion to PWD rates from the estimate made on the basis of CPWD rates, no substantial question of law arises for consideration. Then, the order remitting some of the relevant questions for enquiry does not finally decide the rights of the parties. It has only afforded an opportunity to the assessee to place its case before the AO and to get the issues tried in accordance with law. It cannot be disputed that the Tribunal while exercising the appellate powers has the jurisdiction to remit the question/s to AO or to the First Appellate Authority as it may deem fit and proper depending upon the facts of each case. In such circumstances , if in the facts of this case, the Tribunal formed an opinion to remit some of the questions to AO for re-determination, no fault can be found in its approach. No substantial question of law is made out in this case within the meaning of Section 260-A of the Act. The appeal fails and is, accordingly, dismissed. (DINESH MAHESHWARI),J. (JAGDISH BHALLA),CJ. MK