TaxTMI 
TaxTMI 
2019 (3) TMI 905
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....n facts in passing the order which is illegal, improper and against the principles of natural justice. 2. The Ld. Commissioner of Income-tax (Appeals) has erred in law and on facts in passing the order without giving adequate opportunity of being heard. 3. The Ld. Commissioner of Income-tax (Appeals)has erred in law and on facts in sustaining the addition u/s 69 of Income-tax Act on account of unexplained investment in the following properties on the basis of report Ld. Valuation Officer, which itself suffers from various infirmities: i. Plot No. 28, 29, 30 &31, Gaura Bagh, Lucknow. ii. Plot No. 37 & 38, Gaura Bagh, Lucknow iii. Plot No. 25 & 26 Gaura Bagh, Lucknow iv. Plot No. 35, 45, 46 & Khasra No.45 situated at Gaurabagh, Kursi Road, Lucknow (1/2 share, other 1/2 share belonging to Shri Mahesh Singh Patel). 4. The Ld. Commissioner of Income-tax (Appeals) has erred in law and on facts in not giving full benefit of amount surrendered by Shri K. N. Singh Patel, 5. The Ld. Commissioner of Income-tax (Appeals) has erred in law and on facts in not granting relief sought by the appellant in appeal. 6. The....
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....gh, Smt. Rajni Patel, etc. The Assessing Officer during the assessment proceedings in the case of the assessee, required the assessee to prove and demonstrate the source of funds for making investment in various immoveable assets and in reply the assessee submitted that the plots were purchased by her in various years and construction was done by her father-in-law and the construction cost was duly covered by the declaration of surrender made by her father-in-law Shri. K. N. Singh Patel. The reply of the assessee to this effect as reproduced by the Assessing Officer at page 17 of his order is reproduced below:- 1. Plot No. 25 at Gaurabagh, Kursi Road, Lucknow. Purchased on 03.07.2007 for Rs. 2,29,760/- in cash. 2. Plot No. 26 at Gaurabagh, Kursi Road, Lucknow. Purchased on 02.06.2003 for Rs. 1,51,800/- vide demand draft no. 181040 dated 30.05,2003 for Rs. 1,28,000/- and balance in cash. It has further been stated by assessee that construction on both the above plots 25 & 26 was done by father-in-law of assessee Shri K.N. Singh Patel in the financial year 2007-08. The cost of construction has been included by him in the surrendered amount of Rs. 9....
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.... the Valuation Officer will have to be taken into account and, therefore, he added the difference in cost of construction between the cost of construction declared by the assessee and estimated by the Valuation Officer. When the Valuation reports were confronted to the assessee, the assessee submitted that the investment made in assessment year 2002-03 cannot be taken into account, as the same was beyond the period covered under search. However, the Assessing Officer did not accept the contention of the assessee and instead he divided the amount of investment in assessment year 2002-03 into six years and added back the proportionate amount from assessment years 2003-04 to 2008-09. After taking into account all these factors, the Assessing Officer held that the assessee had made total investments in various years as under:- A.Y. Total investment during the year 2003-04 99,77,772/- 2004-05 3,13,331/- 2005-06 71,02,423/- 2006-07 65,25,577/- 2007-08 48,97,496/- 2008-09 53,98,482/- 2009-10 12,65,195/- Total Rs.3,54,80,276/- 6. The Assessing Officer after noting down the investments made by the assessee on the basis of DVO's report....
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....ears. On the other hand, wherever as per Valuation Report, the assessee had made investment in a particular year which was not covered by the surrender of Shri K.N. Singh in that year he made the addition. This is what the grievance of the assessee is whereby it is aggrieved that the Assessing Officer and the ld. CIT(A) should have taken a holistic view of the issue and should have considered the entire surrender amount with respect to the declaration made by Shri K. N. Singh in the case of assessee irrespective of difference in years. 8. On appeal before the ld. CIT(A), the ld. CIT(A) deleted part additions made by the Assessing Officer which were made by the Assessing Officer in various six years starting from assessment year 2003-04 and which was based on the investments made before assessment year 2002-03 by holding that the investment made before assessment year 2002-03 were not covered by the search period and, therefore, the action of the Assessing Officer in dividing the investment of assessment year 2002-03 into six parts and allocating the same to six assessment years was not justified and, therefore, he deleted the same. The ld. CIT(A) also allowed relief to the as....
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.... Kursi Road, Lucknow is not justified and the unexplained investment in various year shall be estimated by considering the valuation as made by the Valuation Officer in the respective years. Further, it has been held in Income-tax Officer v. Ram Nath Aggarwal [2004] 2 SOT 471 (ITAT ASR. Bench) (SMC) that the valuation of an asset is not an exact science. Mathematical calculation 'is not possible. The valuation of the immovable property is also estimated on the basis of the facts and circumstances. Therefore, it could not be said that whatever the Valuation Officer had stated was final word in the matter. The word 'estimate' itself suggests that there is always possibility of some amount of inaccuracy and uncertainty. It was, therefore, obvious that report of the 'Valuation Officer could not be held as true and correct. There is always a room for error or omission. The Commissioner (Appeals) was justified in allowing 10 per cent relief on account of difference of opinion. Keeping in view the entire facts of the present case, the Commissioner (Appeals) had correctly decided the issue and, therefore, there was no reason to interfere with his order. ....
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....5552400 2003-04 2485258 2485258 2004-05 0 2005-06 2332200 4286242 6618442 2006-07 3543900 2394017 5937917 2007-08 2318200 2113458 4431658 2008-09 2141300 959090 3100390 2009-10 1174400 0 1174400 2010-11 2606599 260659& 2011-12 0 Total 1,151,0,000 80,37,658 1,23,59,406 2,93,00,465 3.7.6 Similarly, the share of the assessee in the building at Plot No. 35, 45 & 46, Khasra No. 45, Gaura Bagh, Kursi Road, Lucknow is taken as that shown by the assessee himself and assuming 50% share of the appellant as the difference in the estimate of the DVO and the investment shown by the assesses works out to 10.22% and can be ignored: TABLE-B A.Y. Total investment as shown by the assessee Share of Smt. Anju Singh Patel 2202-03 1750000 875000 2003-04 2030000 1015000 2004-05 276800 138400 2005-06 258000 129000 2006-07 257000 137500 2007-08 225000 112500 2008-09 3578200 17891....
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....e u/s 69 of the I. T. Act, 1961. (ii) Plot No. 28, 29 purchased for Rs. 3,03,600/- by the way of demand draft and stamp duty amounting to Rs. 47,600/-. It has not been made clear as to from which bank account this amount has been withdrawn. In the available bank accounts, no such entry is seen. This amount has, therefore, been paidout of the undisclosed income of the assessee and is, therefore, added to his total income u/s 69 of the I.T. Act, 1961. (iii) Plot No. 30 purchased for Rs. 1,28,000/- by the way of demand draft and stamp duty amounting to Rs,23,800/-. It has not been made clear as to from which bank account this amount has been withdrawn. In the available bank accounts, no such entry is seen. This amount has, therefore, been paid out of the undisclosed income of the assessee and is, therefore, added to his total income u/s 69 of the IT, Act, 1961. (iv) Plot No. 31 purchased for Rs. 1,28,000/- by the way of demand draft ana1 stamp duty amounting to Rs. 23,800/-. It has not been made clear as to from "which bank account this amount has been withdrawn. In the available bank accounts, no such entry is seen. This amount has, therefore, been paid out....
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....d .to the appellant. 4.4 Grounds no. 11 and 12 are general in nature and do not require any separate adjudication. 4.5 In the result, the appeal for A.Y. 2004-05 is partly allowed." 11. In assessment year 2005-06, the ld. CIT(A) allowed part relief by holding as under:- "5.1 Grounds no. 1, 2. 3, and 4 are rejected in view of the findings made in paras, 3.3, 3.4.1, 3.5 and 3.6 in respect of these grounds of appeal in the appeal for A.Y. 2003-04. 5.2 Grounds no. 5 and 6 are partly allowed in view of the finding in paras 3.7 to 3.7.7 and the addition is reduced to Rs. 6747442 in place of Rs. 7102423 made by the Assessing Officer resulting into consequential relief. Ground no. 7 is rejected as for the year under consideration, no amount had been offered as undisclosed investment by Shri K. N. Singh Patel relating to the investment made by the appellant. 5.3 Grounds No. 8 and 9 are against the addition of Rs. 286500 made by the .Assessing Officer by observing as under:- "The position of undisclosed investment in respect of above referred properties with regard to cost of acquisition is as under:- (i) Plot No. 418 &420 at ....
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.....7 to 3.7.7 and the addition is reduced to Rs. 60754I7 in place of Rs. 6525577 made by the Assessing Officer resulting into consequential relief. Ground no. 7 is rejected as for the year under consideration, no amount had as undisclosed investment by Shri K. N. Singh Patel relating to the investment made by the appellant. 6.3 Grounds No.8 & 9 are general in nature and do not require any separate adjudication. 6.5 In the result, the appeal for A.Y. 2006-07 is partly allowed." 13. In assessment year 2007-08, the ld. CIT(A) allowed part relief by holding as under:- "7.1 Grounds no. 1, 2. 3 and 4 are rejected in view of the findings made in paras 3.3, 3.4.1, 3.5 and 3.6 in respect of these grounds of appeal in the appeal for A.Y. 2003-04. 7.2 Grounds no. 5 and 6 are partly allowed, in view of the finding in paras 3.7 to 3.7.7 and the addition is reduced to Rs. 4544158 in place of Rs. 4897496 made by the Assessing Officer resulting into consequential relief. Ground no. 7 is rejected as for the year under consideration, no amount had been offered as undisclosed investment by Shri K. N. Singh Patel relating to the investment made by the appellant. . ....
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....of these household goods was furnished and the assets have been valued at Rs. 10,00,000/- and have been equally considered in the hands of all the four family members. Hence, both these grounds of appeal are rejected. 9.3 Ground no. 4 is rejected as the Assessing Officer had provided adequate opportunity to the appellant before making the assessment. 9.4 Grounds no. 5 and 6 (inadvertently mentioned as Grounds no. 8 and 9) are general in nature and do not require any separate adjudication. 9.5 In the result, the appeal for A.Y. 2009-10 is hereby dismissed." 16. At the outset, the ld. A.R. of the assessee invited our attention to the findings of the Assessing Officer and the ld. CIT(A), by which they have not allowed set off to the assessee for investments made by her in the years in which declaration of surrender made by Shri K. N. Singh was more than the investment declared by the assessee; whereas, on the other hand, the authorities below had made additions where the investments made by the assessee was more than the amount declared by Shri K. N. Singh in that particular year. The ld. A.R. of the assessee submitted that this action of the authorities ....
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....owed only to the extent of Rs. 35,00,358/- which was highly unjustified. 17. Arguing ground No.5 of the appeal in assessment year 2004-05 regarding addition of Rs. 8,06,600/- in respect of undisclosed investments made by the assessee, the ld. A.R. of the assessee submitted that the ld. CIT(A) has reduced the addition to Rs. 1,66,600/- by holding that such amount remained to be unexplained. The ld. A.R. of the assessee in this respect submitted that deletion made by the ld. CIT(A) in this respect was supported by withdrawals in capital account which the ld. CIT(A) has noted in para 4.3.2 of his order and the balance amount of Rs. 1,66,600/- should have been considered as part of surrender made by Shri K. N. Singh. 18. Arguing ground No.5 in assessment year 2005-06, the ld. A.R. of the assessee submitted that this addition was made by the Assessing Officer on account of property purchased on 18/2/2005 and explanation was submitted vide letter dated 26/8/2010 which the Assessing Officer has rejected merely by saying that the name of the bank has not been given; whereas the name of the bank i.e. Allahabad Bank was mentioned in the said letter. The ld. A.R. of the assessee submitt....
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....f the deponent gave a statement whereby an additional income of Rs. 10 Crores. (Ten crores) was agreed to be disclosed on behalf of various persons. A copy of the said statement dated 19.11.2008 is enclosed and the same has been marked as ANNEXURE - 1 hereto. 9. That the Authorized officers sought for ratification of the said statement, from other family members also namely (i) Shri Om Narain Singh Patel (second son of the deponent) (ii) Smt. Anita Singh wife of Shri Mahesh Singh Patel and (iii) Smt. Anju Singh wife of Shri Om Narain Singh Patel. Copies of the said statements are enclosed and the same have been marked as ANNEXURE - II, III, & IV hereto. 10. That it is clarified and submitted that all the statements referred to above i.e. the statements given by (i) Shri Mahesh Singh Patel, (ii) Shri Om Narain Singh Patel, (iii) Smt. Anita Singh and (iv) Smt. Anju Singh pertain to the disclosure of consolidated sum of Rs. 10 Crores (Ten crores), as additional income. 11. That looking to the fact that the deponent himself has been instrumental in setting up various "business entities" and/or creating various "source of income" acquisition of capital assets ....
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....he had developed a very strong sense for processing of herbs, blending, mixing and re-mixing of perfumes and perfumery products and in order to try his luck in this larger field, he shifted to Lucknow in early 1980's and continued the activities that were being carried on by him while at Kannauj, this time in a much wider area and diversified field. (iv) After he got settled at Lucknow, he continued to assist the inhabitants of his native place in the manner mentioned above and hi lieu number of the persons who felt benefited, both socially as well as economically by the advice and assistance rendered by the deponent. All these sources taken together constitute the ''manner" in which the deponent got enriched to the extent of the disclosure of Rs. 10 Crores (Ten) as made during the course of search that had commenced oh 19.11.2008. 15. That the sums so collected by the deponent from time and over a period of years, remained invested on the date of search as per details given below:- (a) Financial Year 2002-03 SI. No. Name. Head of Expenditure/Investment etc. Rs. (i) Anju Singh Construction & acquisition of Capital....
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....agh, Kursi Road, Lucknow 1,25,00,000 (ii) Mahesh Singh Construction & acquisition of Capital Assets at Gaura Bagh, Kursi Road, Lucknow 1,75,00,000 (iii) Om Narain Singh Farm House, IIM Road (Land Only) 30,00,000 (iv) PPPL Excess stock 60,00,000 (v) Baijnath Charitable & Educational Trust Construction & acquisition of Capital Assets 40,00,000 (vi) Sanatan Cold Storage Ltd. Construction & acquisition of Capital Assets 25,00,000 (vii) Cash Seiuzed At various places 25,00,000 (viii) Maa Sharda Buildtech Pvt. Ltd. Construction of Building 50,00,000 (ix) Other unexplained mvestment/Expenditure etc 20,00,000 5,50,00,000 10,00,00,000 16. That income aggregating Rs. 10 Crores (Ten) as spread over in different financial years and as stood reflected at the "relevant time" in the acquisition of capital asset/other investment and expenditure etc. remained undisclosed earlier, as the deponent has all along been under a bonafide belief that the sums (which come to be invested in the aforesaid manner) were not of taxabl....
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....nal provisions under the Act shall be granted not only to the deponent but also to other "persons" forming part of 'Patel Group* as a whole, wherever the additional income and/ or part thereof is accounted for or deemed to have been accounted for/accounted; (viii) complete immunity from prosecution and /or other such provisions shall be granted in the case of the deponent and/or other person(s) forming 'Patel Group' who are found/held to be affected by the said disclosures; and (ix) the conduct of the deponent, the matter of disclosure of income shall be duly reciprocated by the Income-tax Department and neither he himself nor any other person or persons belonging to Patel Group shall be subjected to any harassment and their assessment shall be completed expeditiously; 20. That it is further stated that the deponent is aggregating to all such adjustments as to the year of taxability of the additional income aggregating Rs. 10 Crores (Ten Crores) or part thereof as may be found to be pertinent at the stage of completion of assessment." 23. From the above contents of the affidavit along with facts about surrender of Shri K. N. Singh, it is ap....
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....ch should have been compared with the total surrender towards that particular property. The assessee in her reply to Assessing Officer, reproduced by us in earlier part of this order, had also confirmed that surrender was made by Shri K. N. Singh Patel on account of construction in various properties and there is no mention of yearwise construction. We further find that in the assessment of Shri K. N. Patel in various years the Assessing Officer himself has completed the assessment after holding that the total surrendered amount has to be compared with total cost of construction estimated by the Valuation Wing. The relevant findings of Assessing Officer in the case of Shri K. N. Patel are reproduced below:- "Several of the immovable properties owned by the family members of the assessee were referred to the valuation wing of the Department and the estimate of cost of construction was obtained. As a result, the value of investment in almost all the properties has been estimated on the higher side by the valuation wing. The assessees were confronted with the valuation report and their comments and counter comments of the valuation wing were obtained. Thereafter, the final....
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.... Alongwith the above chart, the assessee has furnished details of amount surrendered by Shri K.N. Singh Patel against construction and these are as under: F.Y. Particulars Amount Amount 2002-03 Construction of Anju Singh 7500000 Construction of Anju Singh & Mahesh Singh 2200000 9700000 2003-04 Construction of Mahesh Singh 7000000 2005-06 Construction of Rajni Patel 3000000 2007-08 Construction of Anju Singh 9000000 Out of unexplained investment/ Expenditure for Vikas Nagar 500000 Megha Bajaj 5000000 14500000 2008-09 Construction of Anju Singh 12500000 Construction of Mahesh Singh 17500000 Construction of Om Narain Singh 3000000 Construction of Baijnath Charitable trust 4000000 Construction of Maa Sharda Buildtech Pvt. Ltd. 5000000 Out of unexplained investment/ Expenditure 1000000 For Vikas Nagar 43000000 77200000 The a....
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....fore, these cannot be taken to be true. In this regard, reference is again drawn towards the case of Sri Krishna Vs CIT, Kanpur & Others reported in 142 ITR 618 (Alld.),. This is a judgment delivered by the jurisdictional High Court and the ratio laid down by this judgment is as under:- "It is neither a rule of prudence nor a rule of law that the statements made in an affidavit which remains uncontroverted, must invariably be accepted as true and reliable. Ordinarily, in the absence of denial, the statements may be accepted as true but if there are circumstances which suggest that the statements on affidavit should not be accepted as true, the absence of denial by the other side, would not by itself be sufficient to clothe the statements .on .affidavit. with truthfulness and reliability." In view of above facts, all the arguments made by the assessee e again disposed off and rejected. The various details and documents submitted by the counsel of assessee have been examined. After examination of all details and documents, including the seized/impounded documents, the assessment in the case of assessee for this year is completed on total income of Rs. 1,00,....