In High Court of Judicature at Madras Dated: 22.09.2014 Coram Honourable Mr.JUSTICE R.SUDHAKAR and Honourable Mr.JUSTICE G.M.AKBAR ALI Tax Case (Appeal) Nos.362 to 369 of 2014 & connected M.P.Nos. T.C.(A)No.362 of 2014: Commissioner of Incometax Chennai Appellant in all TCA vs. 1.Shri.Shivlal 87, Mint Street, Chennai - 600 079. Respondent in TCA.362 & 363/14 2.Shri.Jarmalal 66,Mull Sahib St.,Chennai-79. Respondent in TCA.364 & 365/14 3.Shri Chandra Bai, 66.Mull Sahib St.,Chennai-79. Respondent in TCA.366 & 367/14 4.Shri Sadana Bai 87, Mint St.,Chennai-79. Respondent in TCA.368 & 369/14 APPEALs under Section 260 of Income Tax Act against order dated 11.10.2012 made in I.T.A.Nos.682,683,660 and 659/Mds/2012 and C.O.Nos.80,82,81 and 83/Mds/2012 on file of Income Tax Appellate Tribunal, Madras "C" Bench, Chennai for Assessment year 2004-2005 and Appeal against order of Commissioner of Income Tax (A)-IV 121 MG Road, Chennai-34, in I.A.No.96/10-11, 174/08-09 & 599/06-07/A-IV, dt.15/12/2011 & ITA.173/08-09/A-IV dt.13.12.11 respectively & Appeal against order of Income Tax Officer Business Ward-XII(3), Chennai-6 in PAN/GIR No.AASPS2516F, dt.29.12.06, AAFPJ7980F 18/12/08, AADPC6871E, AASPS2515G, 31.12.2010. For Appellant : Mr.J.Narayanasamy Standing counsel for Income Tax https:hcservices.ecourts.gov.in/hcservices/ COMMON JUDGMENT (Delivered by R.SUDHAKAR,J.) above Tax Case (Appeals) are filed by Revenue as against common order of Income Tax Appellate Tribunal in eight appeals - four by assessee and four by Revenue, for assessment year 2004-05. 2. brief facts are as follows: assessees Shri.Jhumarlal, Smt.Chandra Bai, Shri.Shivlal and Smt.Sadhana Bai had together purchased property during financial year 1999-2000 for total consideration of Rs.58,49,320/-. share of each of assessee in said consideration was Rs.14,62,330/-. building in said property was demolished and new house was constructed in land during April, 2001 to March, 2004. During course of regular assessment of Shri.Shivlal, Assessing Officer called upon him to submit details of cost of construction of building, namely, Door No.87, Mint Street, Chennai - 79. valuation made by registered valuer was furnished by assessee and in valuation report, value of building was shown as Rs.74.85 lakhs. details of construction expenses filed by all assessees gave figure of Rs.1,28,92,674/-, which includes value of land and incidental expenses. After excluding value of land, cost of construction admitted by assessee, as worked out by Assessing Officer, came to Rs.72,21,622/- against value of Rs.74.85 lakhs by registered valuer. assessee, Shri.Shivlal was examined, who had stated that no books were maintained for construction work. 3. Assessing Officer made reference to Departmental Valuation Officer (DVO) under Section 142A of Income Tax Act. Departmental Valuation Officer fixed cost of construction at Rs.1,74,20,000/-. Since property was owned by four assessees, cost of construction was worked out at Rs.43,55,000/- per assessee. However, as per assessees, cost of construction in respect of each of assessee would amount to Rs.17,70,041, totalling to Rs.72,21,625/-. difference amount was considered as unexplained investment by individual assessees under Section 69B of Income Tax Act. assessment in respect of Shri.Shivlal was completed under Section 143(3) of Income Tax Act and in respect of other assessees, proceedings under Section 147 of Income Tax Act was initiated and additions towards alleged unexplained investment were done in reassessment. 4. Aggrieved by such addition towards unexplained investment, assessees preferred appeal before Commissioner of Income Tax (Appeals), who reduced addition in respect of each of assessee to lesser amount and spread this addition to various https:hcservices.ecourts.gov.in/hcservices/ assessment years, namely, 2003-04 and 2004-05. Not satisfied with order of Commissioner of Income Tax (Appeals), both assessees as well as Revenue preferred appeals before Income Tax Appellate Tribunal. 5. Tribunal after considering rival contentions of both sides was of view that in determining cost of construction, which is main plank of assessees' case, issue was whether cost of construction should be based on CPWD rates or rates prescribed by State Public Works Department. Tribunal accepting contention of assessee remanded matter to Assessing Officer for re-consideration of this issue as to how cost of construction should be determined. Tribunal in paragraph 14 of order observed as follows: "We are, therefore, of opinion that for determining cost of construction, matter requires re-visit by Assessing Officer. He has to give cogent reason for arriving at cost of construction whether based on CPWD rates or State PWD rates, in accordance with law, and also give reason why books, in whatever form maintained by assessee, could not be considered. 6. In so far as Department's appeals challenging reduction of addition and spreading over of addition to various assessment years by Commissioner of Income Tax (Appeals), Tribunal did not accept argument of Revenue and remanded matter to Assessing Officer. 7. Aggrieved by order of Tribunal, Revenue is before this Court. 8. Learned counsel appearing for Revenue vehemently contended that Commissioner of Income Tax (Appeals) has no power to spread over addition to various assessment years and hence, Tribunal is not justified in remitting matter to Assessing Officer. 9. Heard learned Standing Counsel appearing for Revenue and perused materials placed before this Court. 10. only aspect that needs to be considered is whether Commissioner of Income Tax (Appeals) was justified in spreading over additions to various assessment years. We find that Tribunal has considered issue in paragraph Nos.15 and 16 of order, which reads as follows: "15. Coming to second aspect raised by Revenue in their appeals that CIT (Appeals) did not have any power for giving direction for another year, Hon'ble Apex Court in https:hcservices.ecourts.gov.in/hcservices/ case of Rajinder Nath (Supra), has clearly held at para 7 of its judgment as under:- "7. expressions "finding" and "direction" are limited in meaning. finding given in appeal revision or reference arising out of assessment must be finding necessary for disposal of particular case, that is to say, in respect of particular case assessee and in relation to particular assessment year. To be necessary finding, it must be directly involved in disposal of case. It is possible in certain cases that in order to render finding in respect of A, finding in respect of B may be called for. For instance, where facts show that income can be belong either to or B and no one else, finding that it belongs to B or does not belong to B would be determinative of issue whether it can be taxed as A's income. finding respecting B is intimately involved as step in process of reaching ultimate finding respecting A. If, however, finding as to A's liability can be directly arrived at without necessitating finding in respect of B, then finding made in respect of B is incidental finding only. It is not finding necessary for disposal of case pertaining to A. same principles seem to apply when question is whether income under enquiry is taxable in assessment year under consideration or any other assessment year. As regards expression "direction" in s.153(3) (ii) of Act, it is now well settled that it must be express direction necessary for disposal of case before authority or Court. It must also be direction which authority or Court is empowered to give while deciding case before it. expressions "finding" and "direction" in s. 153(3)(ii) of Act must be accordingly confined. Sec. 153(3)(ii) is not provision enlarging jurisdiction of authority or Court. It is provision which merely raises bar of limitation for making assessment order under s. 143 or s. 144 or s. 147: ITO vs.Murlidhar Bhagwan Das (1964) 52 ITR 2335 (SC): TC51R.2168 and N.K.T.Sivalingam Chettiar vs. CIT (1967) 66 ITR 586 (SC) : TC51R.2041. question formulated by Tribunal raises point whether AAC could convert provisions of s. 147(1) into those of s. 153(3)(ii) of Act. In view of s. 153(3)(ii) dealing with limitation https:hcservices.ecourts.gov.in/hcservices/ merely, it is not easy to appreciate relevance or validity of point." When assessee himself claims that construction was spread over to two to three years, in our opinion, finding of CIT(Appeals) that addition, if any, made for unexplained cost of construction, has to spread over to such years, is nothing but finding which is necessary for disposal of case. It is issue directly involved in appeals before him and such directions, in our opinion, were not beyond powers of CIT(Appeals). 16. As for decision of Hon'ble Apex Court in case of Foramer France (supra), relied on by learned A.R., question there was applicability of Section 153(3)(ii) of Act and whether observation of Tribunal was direction necessary for disposal of appeal, relating to concerned petitioners. In our opinion, this judgment of Hon'ble Apex Court do not circumscribe powers of CIT (Appeals) in any manner. In decision of Banwarilal & Sons, Hon'ble Delhi High Court was seized of issue whether directions given by AAC in said case, were necessary for disposal of appeal and whether such direction could be considered as one coming within ambit of Section 153(3)(ii) of Act. Here, issue before us is not question of any limitation or issue of notice. In case of Sun Metal Factory (I) P. Ltd. (Supra), decided by co-ordinate Bench of this Tribunal, CIT (Appeals) held that addition made by Assessing Officer was not based on any evidence found during search and, after giving such finding, directed Assessing Officer to reopen assessment for given assessment years. Here, neither assessments were based on any search, nor can it be said that CIT(Appeals) had enlarged scope of appeals by giving direction to split unexplained investment on cost of construction to period of construction." 11. On going through order of Commissioner of Income Tax (Appeals) and that of Tribunal, we find that issue as to whether addition should be spread over to various assessment years in admitted case of construction between 2001 and 2004 is academic and we are not inclined to interfere with order of Tribunal. 12. We find that reasoning of Tribunal relying on decision of Apex Court is justified. Accordingly, we find no question of law much less substantial question of law that arises for https:hcservices.ecourts.gov.in/hcservices/ our consideration in these appeals. Accordingly, all above Tax Case (Appeals) are dismissed. No costs. Consequently, connected Miscellaneous Petitions are closed. Sd/- Assistant Registrar(CS-IV) Dated: 3.11.2014 True Copy Sub Assistant Registrar To 1. Income Tax Appellate Tribunal, Madras "C" Bench, Chennai. 2. Commissioner of Income Tax (Appeals)-IV, Chennai - 34. 3. Income Tax Officer, Business Ward - XII(3), Chennai - 06. 4. Commissioner of Income Tax, Chennai. +8 cc's to M/s.J.Narayanaswamy, Advocate, SR.45822 to 45829. js(co) krd 5/11 T.C.(A) Nos.362 to 369 of 2014 & connected M.P.Nos. https:hcservices.ecourts.gov.in/hcservices Commissioner of Income-tax, Chennai v. Shivlal