Appeals challenging Tribunal's construction expense addition for builders dismissed. Factual issues affirmed.

The Court dismissed the appeals challenging the Income Tax Appellate Tribunal's decision to add Rs. 15 lakhs each towards undisclosed construction expenses for two brothers who were builders. The Tribunal's adjustment in valuation based on incomplete properties was deemed appropriate, considering surrendered income and factors like wholesale material purchase. The Court found the issues to be factual rather than legal, affirming the Tribunal's discretion in the matter.

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Issues:
Challenge to order of Income Tax Appellate Tribunal regarding addition of expenditure on undisclosed construction and valuation of property.

Analysis:
The judgment pertains to ITA Nos. 365 & 368 of 2013, with common legal questions. The challenge under Section 260A of the Income Tax Act, 1961, questions the Tribunal's order in ITA No. 453/CHD/2012 for the assessment year 2008-09. The substantial questions of law raised include the correctness of the ITAT's direction to the Assessing Officer to add Rs. 15 lakhs for undisclosed construction expenses instead of the amount sustained by the CIT(A), the ITAT's expertise in property valuation, and the application of CPWD rates by the Valuation Cell.

A search under Section 132 of the Act was conducted on the respondent, a builder, leading to the assessment of income at Rs. 1,12,25,326 after objections were raised and not accepted. The CIT(A) confirmed an addition of Rs. 49,43,391 based on valuation of one property. The Tribunal modified the orders, adding Rs. 15 lakhs each towards undisclosed income expenditure for both brothers, considering surrendered income and factors like wholesale material purchase by builders. The Tribunal's decision was based on the understanding that some properties were incomplete, warranting adjustments in valuation.

The Court observed that the Tribunal rightly considered the varying stages of construction and granted margin benefits for incomplete houses. It concluded that the issues raised were factual in nature rather than legal questions, as the Tribunal's discretion in adding Rs. 15 lakhs to each brother was appropriate. Consequently, the appeals were dismissed, affirming the Tribunal's decision.

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