AI Drafter 
TaxTMI 
TaxTMI 
2024 (11) TMI 1189
X X X X Extracts X X X X
X X X X Extracts X X X X
....estment in construction of Hotel building without appreciating the fact that during the course of search proceedings, incriminating documents regarding investment in the construction of Hotel building were found and seized from the premises of the assessee and the valuation of building was done by DVO. 2. Whether on facts and in circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of Rs. 56,60,800/- made on account of undisclosed income from Garden Mahaveer Paradise without appreciating the fact that during the course of search proceedings, incriminating documents depicting the actual rate of booking per day were found and seized from the premises of the assessee, Furthermore, the ld. CIT(A) erred in not appreciating the statements of the employees regarding booking of the garden for different occasions. 3. Whether on facts and circumstances of the case, the Ld. CIT(A) is justified in deleting addition made by the AO by relying upon the judgment of Hon'ble Supreme Court in the case of Abhisar Buildwell and UK paint without appreciating the fact that judgment of Hon'ble Supreme Court in Abhisar Buildwell case is applicable where n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2024-A.Y. 2011-12 (Assessee) (1) That on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) grossly erred in not quashing the assessment order as well as the notice issued u/s 153A as illegal, barred by limitation and without jurisdiction. 2. That on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) grossly erred in not quashing the assessment order passed without mandatory Document Identification Number (DIN) as illegal and non est. C.O. No.8/JP/2024-A.Y. 2011-12 (Assessee) 1. That on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) grossly erred in not quashing the assessment order passed without mandatory Document Identification Number (DIN) as illegal and non est. 2. At the outset of hearing, the Bench noted that in both the respective Departmental appeals, there is delay of 13 days for which the Department has filed applications for condonation of delay with the reasons that ''However, due to voluminous time barring matters pending for disposal by 31-03-2024, this office was unable to file furt....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... are being discussed and decided as under:- I have decided the similar issue in the case of the appellant for the assessment year 2010-11 in the ground of appeal number two where the Ground of Appeal has been allowed. Material facts of the present appeal being para material with the fats of the appeal in the assessment year 2010-11, the findings of the appeal order in the case of assessment year 2010-11 in ground of appeal number two will apply mutatis mutandis to the present appeal for the assessment year 2011- 12 and it is held accordingly. Accordingly, this ground of appeal is hereby allowed. 3.3 During the course of hearing, the ld. DR supported the order of the AO and submitted that the ld. CIT(A) is not justified in deleting the addition of Rs. 1,87,93,584/- made on account of unexplained investment in construction of Hotel building without appreciating the fact that during the course of search proceedings, incriminating documents regarding investment in the construction of Hotel building were found and seized from the premises of the assessee and the valuation of building was done by DVO. He further vide his letter No. CIT(DR-II)/ITAT/JPR2024-25/466 date....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e AS-11 27 to 26 Copy of Ikrarnama of Hotel K Mahaveer AS-7 21-27 Copy of draft sale deed of Hotel K Mahaveer Thus, there was sufficient evidence in the form of incriminating documents to initiate proceedings u/s 153A of the Act. 3. Further, it is also submitted that the search proceedings were carried out at the premises of the assessee on 28.09.2017. Therefore, proceedings u/s 153A of the Act was initiated in compliance to provisions laid down in section 153A(1)(b) of the Act. 4. It is also submitted that the Id.CIT(A) has followed the same judgement in the appeal no. 1165/2019-20 for AY 2010-11 in the case of the assessee but involved tax effect was less than the prescribed limit for filing further appeal and also not falls under any exception clause as per CBDT's circular no. 17/2019 dated 08.08.2019 5. It is also submitted that the documents submitted by the assessee before Hon'ble bench in the form of paper book has already been entertained during the assessment as well as appellate proceedings. No new justification or evidence has been furnished by the assessee, therefore, no further comments o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bjections and reply but the AO proceeded ahead and framed the assessment directly without disposing off the objections by a separate speaking order. Even DIN was not quoted in the assessment order. In the hands of the assessee, an addition was made with regard to unexplained investment in construction of Hotel Building of M/s Kalyan Hotel And Resorts, a separate partnership firm in which the assessee is one of the partners. It is noticed from the records that objection in this regard was also filed with the AO during the pendency of the assessment proceedings but still the addition was made by the AO who completely relied upon the DVO's valuation report. It is noticed from the submissions of the assessee that no time was allowed by the AO to furnish registered valuer report or other evidences as the assessment was framed in a hurried manner by making addition of Rs. 1,87,93,584/- being the amount of alleged investment in construction of Hotel building. Further, addition of Rs. 50,60,800/- was also made as unexplained income from Mahaveer Paradise garden thereby completely ignoring the two important facts, first that Mahaveer Paradise was not even started during the year under consi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....evenue of Lawn-Garden. 3.7 As regards the quantum addition amounting to Rs. 1,87,93,584/- under section 69 as unexplained investment in construction in respect of construction of hotel property Hotel K. Mahaveer in the partnership firm M/s Kalyan Hotel And Resorts at Dr. Rajendra Prasad Nagar, Jaipur, it is noted that as against the declared construction of Rs. 1,25,07,551/- the AO relied on DVO valuation report estimating the construction cost at Rs. 6,01,40,900/-. Details are tabulated as under (CIT(A) order page 40) Financial Year Cost of Construction (Rs.) Difference Declared by the assessee (Rs.) Estimated by Valuation Cell (DVO) (Rs.) 2009-10 3285697 15798800 12513103 2010-11 4934816 23728400 18793584 2011-12 4287038.45 20613700 16326661.55 12507551.45 60140900 32935093 3.8 It is noted from the documents available before the Bench that the addition made by the AO was unjustified due to the following reasons:- 1 FIRST REASON : NO ADDITION IN SEARCH, IF NO INCRIMINATING MATERIAL FOUND DURING SEARCH : It is now a settled law that no addition can be made in search u/s 153A in respect of completed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....peal No. 173-176/2015 decided on 30.03.2015 wherein at para no. 4.1 & 5 it was held that as under :- "4.1 At the outset, it is required to be noted that in the present case, the Assessing Officer made additions with respect to the difference in the cost of construction based upon and/or relying upon the DVO's report in the case of one M/s.Manjusha Estate Pvt.Ltd. from whom, the assessee subsequently got the project. It is true that in the present case, copy of the DVO's report was furnished to the assessee during the reassessment proceedings. However, it is required to be noted that except the DVO's report, there was no further tangible material before the Assessing Officer. Therefore, solely on the basis of the DVO's report which, as per the catena of decisions of the Hon'ble Supreme Court as well as this Court, can be said to be the opinion of the DVO only, no addition can be made with respect to difference between the cost of construction determined by the DVO and shown by the assessee. 5. Under the circumstances and in the facts and circumstances of the case, it cannot be said that the learned Tribunal has committed any error in deleting th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing of Hotel K. Mahaveer was done by separate assessee M/s Kalyan Hotel & Resorts having PAN : AAJFK7695L, a partnership firm who is an independent assessee under the Income-tax Act, 1961. This firms runs business activities of Hotel K. Mahaveer after obtaining necessary licenses and earns room rent and other income incidental thereto. The construction was duly recorded in the regular books of account maintained by the partnership firm whose books of accounts were audited. Building was shown in the fixed assets chart of the said firm which was used for running a hotel by the said partnership firm whose income was being declared in the income tax return of the said firm. Assessee is merely a partner in that firm. In relation to the partnership firm M/s Kalyan Hotels & Resorts, partnership deed, audit report alongwith audited financial statements, income tax return, computation of total income, building/construction account in the books of M/s Kalyan Hotels & Resorts have been furnished in the paper book page no. 113 to 181 and reasons are best known to the A.O. regarding why notices were issued u/s 153A to the assessee and the impugned additions for construction were made in the han....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....O. made addition for unexplained stock of partnership firm in the hands of the partnership firm itself whereas on the other hand addition for construction in building of partnership firm was made by the ld. A.O. in the hands of one of the partner instead of the partnership firm, which is not justified and it tantamounts to blowing hot and cold at the same time which is not permissible. It seems that the. AO selected one of the partner instead of the partnership firm for issuing notice u/s 153A, keeping aside the provisions of law, for the reason that it was more beneficial from revenue viewpoint. The Bench noticed that the A.O. generally mentioned in the remand report that there are various discrepancies in the valuer report but no specific discrepancy is mentioned in the remand report except PWD rate. 3.9 The ld. CIT(A) considered all these aspect of the matter and allowed the ground of the assessee which is evident from Para No. 6.2 at page no. 47 of the ld. CIT(A) order for AY 11-12 and corresponding para no. 6.2 at page no. 57 of the ld. CIT(A) order for AY 2010-11. The ld. CIT(A) after considering the assessment order, documents and judgments on record, remand report and s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssioner in consequence of information in his possession, has reason to believe that- (a) anyperson to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or (b) anyperson to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, or (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not bee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the business, found as a result of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business; (iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom; (v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing : xxx xxx xxx Relevant part of Rule 112 of the Income-tax Rules'1962 112. (1) The powers of search and seizure under section 132 shall be exercised in accordance with sub-rules (2) to ^56[(14)]. ^57[(2) (a) The authorisation under sub-section (1) of section 132 (other than an authorisation under the proviso thereto) by the ^58[Director-General or Director] or the ^59[Chief Commissioner or Commissioner] or any such ^60[Deputy Director] or ^61[Deputy Commissioner] as is empowered by the Board in this behalf shall be in Form No. 45; (b) the authorisation under the proviso to sub-section (1) of section 132 by a ^59[Chief Commissioner or Commissioner] shall be in Form No. 45A; (c) the authorisation und....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., notice under section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mises and not of any other assessee. Therefore, on a conjoint noticeable provision of section 153A read with section 132 of the act and the judgment of the Delhi Court, in our considered opinion only the material unearthed during the course of a search by virtue of execution of a particular warrant of authorization qua a person can be used for framing assessment u/s 153A of the act in case of such a person. This view of the Delhi High Court has been confirmed by the apex court in the case of PCIT Vs. Abhisar Buildwell (P) Ltd. [ 149 taxmann.com 399 (SC)] wherein the apex court has held as under: 13. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. 14. In view of the above and for the reasons stated above, it is concluded as under: (i) that in case of search under section 132 or requisition under section 132A, the AO assumes the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecided in detailed in the appeal of the assessee for A. Y. 2010- 11 wherein the ld. CIT(A) categorically held that "if any income on this count, is liable to be assessed in the hands of the partnership firm and accordingly, the appellant succeeds on this issue in these terms."[ page 43 of order of the ld. CIT(A) ]. The Bench further noted that ld.CIT(A) considered the submission and allowed the ground of the assessee which is evident from Para No. 5.2 at page no. 39 of the ld. CIT(A) order for AY 11-12 and corresponding para no. 5.2 at page no. 41 of the ld. CIT(A) order for AY 10-11. Further, it is noticed that ld. CIT(A) after considering the assessment order, documents and judgments placed on record, remand report and submissions of the assessee passed a detailed and reasoned order. Moreover, the department has merely challenged the quantum addition and not decision of the ld. CIT(A) with respect to allowance of legal ground no. 1 of the assessee in Form No. 35 wherein the legal ground as to challenging the assessment order as time barred and without jurisdiction was decided by the learned CIT(A) in favour of the assessee (relevant paper book page no. 290 to 297). In the l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cently decided on 24.04.2023 wherein it was held as under :- i. that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii. all pending assessments/reassessments shall stand abated; iii. in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv. in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....earning any income. The first and only booking for which advance was charged was from a person named Hemant which was cancelled by him and the entire advance was refunded to him, resulting in no income. The seized document pertains not to the year under consideration but to the AY 2018-19 (paper book page no. 193) which contains the detail of Mr. Hemant. The booking was cancelled by him for the reasons best known to him. Another name of Mr. Sawariya is appearing on the seized documents. This booking is complementary booking without any rent and relates to Mr. Hoti Lal Sawariya (GST Department). During the assessment proceedings, the assessee requested the ld. AO to exercise her powers under law for verification of facts with Mr. Hemant and Mr. Sawariya but the ld. AO opted not to do so and passed the assessment order by making the impugned additions. Affidavit of Mr. Hoti Lal Sawariya was submitted before learned CIT(A) alongwith application of admission of additional evidence under Rule 46A wherein he has confirmed that the assessee has provided him the garden for his function free of cost on complimentary basis (paper book page no. 393 to 397). The caretaker Shr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... extrapolating a solitary transaction (though it was the first transaction which also was unfortunately cancelled and it pertains to AY 2018-19) to other earlier years in which the marriage garden was not functional. It is now a settled law that in case of search assessments, additions has to be made solely on the basis of incriminating material found during search and there is no scope for the AO to extrapolate and estimate undisclosed income. The additions are to be based solely on tangible material and not on the basis of estimation or extrapolation theory. In this regard, reliance is being placed on the following judgments in this regard :- A.Sivashankar Vs. DCIT, ITA No. 617 to 620/CHNY/2017 decided on 31.05.2022 (ITAT, Chennai Bench) (Para 8 & 9) "In this case, except agreement to sale for one plot with Mr.M.A.Salim, the AO does not have any other credible evidence to support his estimation of income by extrapolation of rate on the basis of agreement to sale with Mr.M.A.Salim to remaining plots sold during the block period. In our considered view, the estimation made by the AO towards undisclosed income of under reporting of sales Revenue from sale of plots,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n it was held that any presumption of transaction on some vague, tenuous and dubious entries in a sheet of paper is not rational unless there is corroboration by corresponding entry in regular accounts of both the parties to the transaction. .... 11. The Hon'ble High Court of Delhi in the case of CIT vs. Kulwant Rai (163 Taxman 585; 13.02.2017) held that since the assessee did not sign the agreement, no liability could be attributed qua the agreement towards the assessee and therefore, the additions made by AO was based on surmises, guess work and accordingly, liable to be deleted. The mere fact that the agreement was found from the possession of the assessee could not lead to any conclusion. While adjudicating the same, the Hon'ble Court relied on the decision of Hon'ble Supreme Court in the case of Dhakeswari Cotton Mills Ltd. (26 ITR 775) which held that AO was not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment order. Similar is the decision of same court in CIT vs. Akme Projects Ltd. (42 Taxmann.com 379) wherein it has similarly bee....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... do so, some material has to be brought on record to justify just projection. Mere presumption cannot be made the basis for any assessment. What is relevant is the nature of evidence/material discovered. If the materials discovered relate to any particular assessment year, those cannot be utilised for making assessment of other years unless the relevance to other years is established by the officer. This view was taken by the concerned Court in the decisions of Allahabad High Court in Babu Ram Vishnoi v. CST [1972] 29 STC 392 and Hukam Chand Mahendra Kumar v. CST [1972] 29 STC 394 and relied upon in the present case. Principal Commissioner of Income-tax v. Rameshbhai Jivraj Desai, High Court of Gujarat [2020] 121 taxmann.com 333 (Gujarat)] Section 153A of the Income-tax Act, 1961 - Search and seizure - Assessment in case of (Absence of incriminating material) - Assessment year 2008-09 - Pursuant to search, proceedings under section 153A were initiated against assessee - Whether since no incriminating material against assessee in respect of an earlier assessment year for which assessment had already attained finality was unearthed during course of proceedings under....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessment proceedings, the learned AO raised query about these draft agreements to which the assessee replied (paper book page no. 205) and explained the entire position which was accepted by the AO and no addition was made in this respect. These documents submitted by the department it its paper book are draft agreement for purchase-sale of immovable property and are not in the nature of any incriminating material for construction of building and thus are irrelevant for the issues under consideration in the present appeals. 4.5 From the entire conspectus of the case, the Bench considered all the documents and submissions of both the parties and noticed that the ld.CIT(A) duly considered all submissions, judgments, material on record, AO remand report and allowed the ground of the assessee which is evident from Para No. 8.2 at page no. 56 of the ld. CIT(A) order for AY 11-12 and corresponding para no. 8.2 at page no. 78 of the ld. CIT(A) order for AY 10- 11. The ld CIT(A) after considering the assessment order, documents and judgments on record, remand report and submissions of the assessee passed a detailed and reasoned order wherein we find no reason to interfere in his ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....otal income of Rs. 2,92,59,670/- by making addition of Rs. 1,52,531/- as unexplained investment u/s 69 construction of residential house property, addition of Rs. 26,853/- on account of undisclosed capital gain, addition of Rs. 62,37,040/- on account of undisclosed income from Garden Mahaveer Paradise and addition of Rs. 1,63,26,661/- on account of unexplained investment in construction of Hotel K Mahaveer. 6.3 Apropos to Ground No. 1 of the Department which relates to an addition of Rs. 152,531/- as unexplained investment u/s 69 in respect of construction of residential house property. It is noticed that the ld. CIT(A) has allowed this ground of appeal of the assessee by observing as under:- ''6.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the consideration. under year The contentions/submissions of the appellant are being discussed and decided as under: (i) A reference was made to the District Valuation Officer for valuation of construction expenses on the residence of the assessee i.e. Plot No. 21, 22, 33 and 34 Shree Gopal Nagar, Jaipur. The Dist....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... have directly asked queries by confronting the incriminating material. This was replied in negative by the appellant. In this regard, as noted in the assessment order, the appellant has declared total investment of Rs. 2,42,91,308/- in the records. The Id. A.O. in the remand report has mentioned that the income declared by the appellant is not commensurate with the investment made in the house property. However in this regard it is noticed that no addition has been done in the assessment in connection with the declared investment in the house property Further the appellant has stated that this observation of the Id. A.O. is erroneous as it does not consider the housing loan and other funds utilized for construction of house property. (iii) Having perused the material on record it is noticed that on the issue, a reference to the DVO was made and the report of DVO was received and following the due procedure of law addition was done by the learned assessing officer in the hands of the appellant with reference to the unexplained investment in the house property, considering the fact of higher valuation then the amount claimed to have been spent. There is no referenc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tax, Central-3 v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC)/[2023] 293 Taxman 141 (SC)/[2023] 454 ITR 212 (SC)[24-04-2023). The judgement has been carefully considered. In para 14 Hon'ble Supreme Court has held as under:- *14. In view of the above and for the reasons stated above, it is concluded as under: (i)... (ii).... (iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the total income taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns, and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 147/48 of the Act, subject to fulfilmenent of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy." (vii) The assessment order and submissions of the appellant in the appeal and the remand report on the issue and the rejoinder reply of the appellant on the remand report, all have been duly and carefully considered. The status of assessments before issuance of notice u/s 153A has been discussed in pre-paragraphs. There was no pending/abated assessment for the assessment years involved in the subject appeals. (viii) In the case of CIT v. Bimal Auto Agency [2009] 314 ITR 191 (Gauhati), Hon'ble Gauhati High Court has held as follows:- ''13. In the present case, admittedly, no evidence or materials was discovered in the course of the search of the premises of the group to whi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly agreed, in view of the aforesaid, we do not find any substantial question of law involved in this appeal" In the case of CIT v. Vinod Danchand Ghodawat [2001] 247 ITR 448 (Bom.) is held by the Hon'ble Bombay High Court as under "Question No. 3. Whether in law, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs. 2,49,350 made on account of unexplained expenses in construction of the residential bungalow at Jaysingpur, when the same was properly made by the Assessing Officer ? The said question refers to addition of Rs. 2.49,350 made on account of unexplained expenses in construction of residential bungalow by the assessee. Here also, Chapter XV Bhas no application. The Tribunal, rightly, found that the addition is made on the basis of the report of the department's valuer According to the Assessing Officer, during the search it was found that the assessee had constructed a bungalow. It was found that the assessee had incurred expenses of Rs. 4.16 lakhs. The Assessing Officer thereafter referred the matter to the departmental valuer, who valued the property at Rs. 6.66 lakhs and, according....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sed in the regular accounts maintained by him or return of income filed in the regular course of business. In view of the facts and legal positions as aforesaid, there was no justification in the action of the Assessing Officer in treating the undisclosed investment or profit in respect of the above two properties as well as the rest of the two properties bearing Nos. 13D/10, Sector 8, Rohini and 10D/12, Sector 8, Rohini whose valuation has been done by the Assessing Officer himself and treating the same as part of the peak for working out undisclosed income of the block period. The Assessing Officer himself is not an expert; the valuation of the property was a technical matter. The Assessing Officer is not entitled to make statements on technical matters for which there is no material on record, particularly when no evidence was found as a result of action under section 132(1) on the assessee regarding undisclosed income in respect of all the properties under consideration. Such a view stands fortified by the decision of the Apex Court in Saraswati Industrial Syndicate Ltd. v. CIT 237 ITR 1." 2. The above is in tune with the decision of this Court in CIT v. Ravi ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Nagar, Gopalpura Bypass, Jaipur. As against the declared construction of Rs. 2,42,91,308/-, the AO relied on DVO valuation report estimating the construction cost at Rs. 5,72,26,401/-. Details are tabulated as under:- Financial Year Cost of Construction (Rs.) Difference Assessee's Share 25% Declared by the assessee (Rs.) Estimated by Valuation Cell (DVO) (Rs.) 2011-12 450000 1060127 610127 152531 2012-13 7372136 17367561 9995425 2498856 2013-14 11077609 26097060 15019451 3754863 2014-15 5391563 12701653 7310090 1827523 24291308 57226401 32935093 8233773 It is noted that AO failed in appreciating the facts of the case as well as the provisions of law in this regard. The impugned addition made is unjustified due to the following reasons :- FIRST REASON : NO ADDITION IN SEARCH, IF NO INCRIMINATING MATERIAL FOUND DURING SEARCH : It is now a settled law that no addition can be made in search u/s 153A in respect of completed/unabated assessments, if no incriminating document found during search. Reliance is being placed on the judgment of Hon'ble Supreme Court in the cas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t, it is required to be noted that in the present case, the Assessing Officer made additions with respect to the difference in the cost of construction based upon and/or relying upon the DVO's report in the case of one M/s.Manjusha Estate Pvt.Ltd. from whom, the assessee subsequently got the project. It is true that in the present case, copy of the DVO's report was furnished to the assessee during the reassessment proceedings. However, it is required to be noted that except the DVO's report, there was no further tangible material before the Assessing Officer. Therefore, solely on the basis of the DVO's report which, as per the catena of decisions of the Hon'ble Supreme Court as well as this Court, can be said to be the opinion of the DVO only, no addition can be made with respect to difference between the cost of construction determined by the DVO and shown by the assessee. 5. Under the circumstances and in the facts and circumstances of the case, it cannot be said that the learned Tribunal has committed any error in deleting the additions made by the Assessing Officer on account of difference of the cost of construction which was solely based upon the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is as under:- 1. Boundary Wall - DVO has covered this as an extra item but it is part of construction and should be covered under standing calculation sheet. Rates of the Boundary have been taken by the above mentioned valuers as per PWD standard order X-3/2011 and are not in Extra items category. 2. Marble Flooring:- White Marble, Italian Marble, Indian marble and wooden flooring is separately being mentioned in the valuation sheets by the above mentioned valuer but no base has been provided by DVO as to how he had arrived at this lump sum amount. Wooden flooring is being used by the Assessee which is much cheaper then marble flooring but that is not mentioned in the calculation sheet of the DVO. 3. Wooden Cabinets:- The Assessee is himself in the business of Timber and plywood. The estimated cost taken by the DVO for the wooden cabinet is of high class plywood of renowned companies as against material of less value which has actually been used by the assessee. The dead stock of laminates which was not being sold has also been used by the assessee. With regard to timber, the assessee has done direct procurement as relevant from the bills. The assessee be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e are placing reliance on the decision of the ITAT, Jaipur Bench "B", Jaipur in the case of ITO, Kota v. Nitesh Maheshwari, Kota reported in 44 Tax World 131 in which the ITAT has allowed a deduction of 12% for self-supervision (judgment compilation page no. 49 to 54). It is also pertinent to mention here that the assessee is engaged in the business of sale of construction material viz. Timer, Plywood, Sunmica etc, hence, the assessee is well conversant with various construction persons/business viz. Architects, Builders, Contractors, Carpenters, Other Construction material suppliers etc. As a result, the assessee has taken good advantage of his contacts in construction line, material goods as well as construction services, resulting in further reduction in construction costs to a significant extent. Hence the assessee is further able to save around 10% of the construction costs in this regard. It is further noted that no discrepancy was pointed out by the AO in the registered valuer report, meaning thereby, it was duly accepted otherwise discrepancies have been pointed therein. Moreover, no further opportunity of being heard was provided in respect of variations pointed out in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the Department relates to addition on account unexplained investment of Rs. 1,63,26,661/- in respect of construction of Hotel property in the partnership firm M/s.Kalyan Hotel and Resorts. 8.2 While adjudicating this ground of appeal of the Revenue, the Bench noted that the ld. CIT(A) has allowed the ground of the assessee by observing as under:- ''9.2 I have considered the facts of the case and written submissions of the appellant as against the observations findings of the AO in the assessment order for the year under consideration. The contentions / submissions of the appellant are being discussed and decided as under:- I have decided the similar issue in the case of the appellant for the assessment year 2010-11 in the ground of appeal number 2 where the Ground of Appeal has been allowed and relevant issue also decided in ground of appeal no.1 in the case of the appellant for the assessment year 2010-11. Material facts of the present appeal being para material with the facts of the appeal in the assessment year 2010-11, the findings of the appeal order in the case of assessment year 2010-11 in ground of appeal number 1 & 2 will apply mutatis mutandis to ....