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of <h1>Tribunal rules in favor of Assessee, overturns addition of unexplained investment on bungalow renovation.</h1> <h3>Hasmukhbhai K. Dhanani Versus The Income Tax Officer Ward-9(2) Surat</h3> Hasmukhbhai K. Dhanani Versus The Income Tax Officer Ward-9(2) Surat - TMI Issues:1. Addition of unexplained investment on renovation of bungalow under section 69 of the I.T. Act.Analysis:1. The appellant, engaged in diamond labor work, declared an investment in a residential building at Rs.33,00,220/-. The DVO valued the bungalow at Rs.88,96,000/- and after adjustments, the cost of construction for the year was Rs.48,96,000/-. The difference of Rs.15,95,780/- was taxed as unexplained investment by the AO.2. The CIT(A) upheld the AO's decision, stating that the valuation by the DVO was followed, and no discrepancies were pointed out by the assessee in the valuation report.3. The appellant argued that a loan was taken from ICICI Bank based on the property's actual value, supporting the declared investment. The appellant contended that payments to the architect for construction proved the cost was accurate. Discrepancies in the DVO's report were highlighted, including incorrect area measurement and exorbitant rates without proper basis.4. The Revenue supported the lower authorities, emphasizing reliance on the DVO's technical report and the absence of a specialized person's report from the assessee to confirm the valuation.5. The Tribunal found discrepancies in the DVO's valuation, including incorrect area measurement leading to over-valuation. The DVO's basis for adopting specific construction rates was unclear. The appellant provided detailed payment records to the architect, supported by a bank loan on the property. Citing legal precedents, the Tribunal held that in the absence of discrepancies in the expenditure details submitted by the assessee, rejecting the valuation was unjustified. Relying on case law, the Tribunal directed deletion of the addition, allowing the appeal.6. Consequently, the appeal of the Assessee was allowed, and the addition of unexplained investment on renovation of the bungalow was deleted.
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