Unexplained bank deposits and alleged unaccounted construction investmentdeletions where amounts were offered and valuation used market value.

Addition for unexplained bank deposits was deleted because the amount had already been offered in the return of income, precluding double taxation and negating the addition. Addition for alleged unaccounted investment in construction of flats was deleted because the valuer produced market value rather than cost of construction; the valuation officer failed to apply per square foot construction costing or bifurcate material and labour as per accepted construction costing guidelines, and no contemporaneous investment in the year was established, so market value could not be treated as construction cost, resulting in deletion of the addition.

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Issues: (i) Whether the addition of Rs. 27,05,519 made by the Assessing Officer on account of unexplained deposits in the bank could be sustained; (ii) Whether the addition of Rs. 4,19,16,000 made under Section 69 on account of alleged unaccounted investment in construction of flats could be sustained on the basis of the DVO report estimating market value.

Issue (i): Deletion of addition of Rs. 27,05,519 made on account of unexplained deposits in bank.

Analysis: The CIT(A) found and the Tribunal records that the amount of Rs. 27,05,519 was part of the sale consideration of flats and was offered to tax in the return filed by the assessee; Revenue failed to rebut the factual finding that the amount had already been included in income and that separate addition would amount to double taxation.

Conclusion: The deletion of the addition of Rs. 27,05,519 is upheld; decision is in favour of the assessee.

Issue (ii): Deletion of addition of Rs. 4,19,16,000 under Section 69 on account of unaccounted investment in flats based on DVO report.

Analysis: The Tribunal agrees with the CIT(A) that the DVO assessed fair market value rather than the cost of construction and did not compute per square feet construction cost or bifurcate material and labour costs as per CPWD/State PWD rates; the DVO report did not demonstrate that the construction cost claimed by the assessee was incorrect nor did it perform the required scientific exercise to determine cost of construction. The Tribunal also records that no construction/investment was made in the relevant year and that AOs addition based on market value is not sustainable for invoking Section 69.

Conclusion: The deletion of the addition of Rs. 4,19,16,000 is upheld; decision is in favour of the assessee.

Final Conclusion: The Revenue appeal is dismissed and the orders of the CIT(A) deleting the additions under challenge are confirmed.

Ratio Decidendi: A DVO report estimating market value cannot be equated with cost of construction for the purpose of making additions under Section 69; valuation for cost of construction requires a detailed, itemised assessment (per square feet rates, material and labour bifurcation) consistent with CPWD/State PWD guidelines and the absence of such methodology renders additions unsustainable.

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