TaxTMI 
TaxTMI 
TaxTMI 
2014 (11) TMI 213
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....the assessee in the Statement recorded u/s 133A, which was subsequently confirmed by the assessee in writing vide letter dated 16.04.2009. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), Kolhapur erred in accepting the Valuation Report given by the Government Approved Valuer whereas under the provisions of section 142A for assessing value of any investment u/s 69 of the I.T. Act, 1961, report is required to be obtained from the Departmental Valuation Officer." 3. The only issue in the appeal of the Revenue arises on account of the order of the CIT(A) in deleting the addition of Rs. 36,30,082/- made by the Assessing Officer on account of unexplained investment in the hospital building. 4. In brief, the relevant facts are that assessee is a medical practitioner and is running a hospital. On 20.02.2009 a survey action u/s 133A(3) of the Act was conducted at the professional premises viz. the hospital of the assessee. In the course of survey action, apart from other incomes, a sum of Rs. 36,30,082/- was declared as additional income on account of investment made in the hospital building. It has been explained before us that at the time of the survey ....
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....a Government Approved Valuer. The said Valuer had certified the cost of construction of building at Rs. 85,46,575/-. The assessee submitted that if the said estimated cost of construction is compared with cost of construction recorded in the books of account till 31.03.2009, it would show a very marginal difference meaning thereby that there was no undisclosed investment in the hospital building. 6. The CIT(A) has considered the 4a foresaid submissions and has found it fit to delete the addition of Rs. 36,30,082/- made by the Assessing Officer. The operative part of the order of the CIT(A) reads as under :- "11. I have considered the above submission of the appellant. I find that the Shri Madhukar Dhere, who prepared the valuation report dt. 20/02/2009, is not an Approved Registered Valuer, and the valuation made by him is made on estimate basis, by adopting a current flat rate of Rs. 800/- per sq. ft. as cost of construction. It is seen that he has not taken into account the fact that the construction was started in the A. Y. 2005-06 and the building was still under construction at the time of valuation. His report also does not specify the details such as specifications of cons....
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....ch is 6.14% of the total valuation figure. Since the margin between the value as given by the appellant as per books and the value as per the approved valuer's report is less than 10%, as held by Hon'ble J & K High Court in the case of Honest Group of Hotels (P) Ltd. V/s CIT (2002) 177 CTR (J&K) 232, this difference is liable to be ignored. In view of the above facts, I direct the A.O. to delete the addition of Rs. 36,30,082/- made by him on this count. In the result, this ground of appeal stands allowed." 7. Against the aforesaid finding of the CIT(A), Revenue is in appeal before us. According to the learned Departmental Representative, the addition of Rs. 36,30,082/- was made by the Asses5s ing Officer on the basis of declaration made by the assessee in the course of survey action u/s 133A of the Act, and therefore, the CIT(A) erred in deleting such addition. It has also been submitted that the CIT(A) erred in accepting the valuation report obtained by the assessee from a Government Approved Valuer, Shri Ajit Patil in deleting the impugned addition. 8. On the other hand, the learned Representative for the assessee vehemently pointed out that the CIT(A) made no mistake i....
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....before us. In-fact, the CIT(A) has referred to the report and noted that it reflected estimation of the present value of the building and not the estimate of the cost of construction of the building. The CIT(A) has noted that the construction of the building started in the assessment year 2005-06 was still continuing on the date of survey and therefore it was imperative for the Valuer to take into consideration the cost of construction in the respective periods. The absence of such an approach in the report of the Valuer, in our view, justifiably renders such report as unreliable in order to establish the estimated cost of construction of the building in the present case. Moreover, the total investment in the hospital building was adopted by the Assessing Officer at Rs. 49,13,918/- which was reflected in the books of account maintained for assessment year 2007-08 and it did not take into consideration the expenditure incurred by the assessee for the period from 01.04.2007 upto the date of survey. At the time of assessment proceedings, assessee pointed out that the total cost of construction recorded in the books of account upto 31.03.2009 was Rs. 80,21,408/-. The assessee also furn....
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....ional income was not declared in the return of income filed. Therefore, the Assessing Officer added a sum of Rs. 3,00,000/- to the returned income. The CIT(A) has also affirmed the addition, against which assessee is in appeal before us. 14. Before us, the learned Representative for the assessee submitted that the declaration of additional income made during the course of survey on account of Rs. 3,00,000/- was retracted by the assessee because it was declared under a mistaken belief of facts. According to the learned counsel, the relevant data was not available in the absence of the books of account being complete. According to the learned counsel, assessee had furnished relevant material to say that the amount of expenditure on furniture recorded in the books of account was more than the amount declared and therefore, there was no necessity for making a separate addition and the declaration made during the survey was wrong. 15. On the other hand, learned Departmental Representative has relied upon the following findings of the CIT(A) in support of the case of the Revenue :- "19. I have considered the submission of the appellant and evidences furnished. I find from the answer t....