TaxTMI 
TaxTMI 
2024 (12) TMI 895
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.... nine cross objections filed by the assessee, for the assessment years 2011-12 to AY: 2019-20, (both years inclusive), against the orders of the Ld. CIT (A) - 5, Ludhiana, passed u/s 250 of the Act 61, which has emanated from the orders of the ACIT- Central Circle - 1, Jalandhar, passed u/s 153A of the Act 61. 2. The factual aspect of the matter are almost identical in all the years, and for the sake of convenience, all the appeals and cross appeals, are taken up together for disposal. Assessment year 2011-12, is taken as the lead case. 3. The facts of this case in brief are that a search was conducted u/s 132 of the Act 61, at the business and residential premises of the assessee on 29th October, 2020 located at Noormahal, Jalandhar, Ludhiana, Phagwara, Mohali, Patiala, Moga, and Ferozpur. 4. The assessee is a business man engaged in the business of real estate, as promoter developer and engaged in other trading activities, and is regularly assessed to tax. Regular return has been filed u/s 139(1) along with copies of audited accounts and assessed accordingly. However, it is pertinent to note that in-spite of a thorough search being conducted at the business and reside....
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....e entire block period, year to year, and as such the entire income arising out of the four different manufacturing units, factually, belongs to the assessee and should be brought to tax in the hands of the assessee alone on substantive basis. 7. It is seen that the premises on which the four cigarette manufacturing units, were installed, are legally owned by the assessee, but the said premises where already let out / leased out to the above four concerns, vide rental agreements, since their inception of business, and the assessee derived rental income from such concerns, and the said rental income has been duly disclosed by the assessee, in his regular returns, year to year, under the head " income from house property ", which proves the fact that, the said premises are let out/leased out, on rent to the above tenants/ lessees, are already in the knowledge of the department, since inception, and the rental income disclosed in regular returns are duly accepted by the department in normal course. 8. It is also seen that all the above four concerns, are legally owned by the respective persons, under respective PAN, and cigarette manufacturing being under the control of Central e....
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....s operandi of manufacturing of cigarettes, which are processed in two shifts, (working eight hours per shift) and which according to the deponents has remained un - recorded in regular books of accounts, and it has been further alleged that the said goods are transported out of the premises, and sold, without compliance with central excise guidelines and GST compliance. 11.1 In the back drop of such facts, proceedings were initiated against the assessee u/s 153A of the Act 61, on 22nd November, 2021, in response to which return of income was filed on 12th December, 2021, declaring total income of Rs. 21,55,210/-. 11.2 During course of assessment proceedings, in response to notice u/s 142(1) of the Act 61, full compliance has been made by the assessee, and all documents and explanations, as called for has been filed before the AO, without giving any cognizance to such explanations and submissions, proceeded to determine the total income, in his own way. 11.3 In course of assessment proceedings the AO, made his own workings and computations as contained in the body of the assessment order, on the basis of statements and depositions of the employees and the other persons, rec....
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....ized any incriminating material found during search whereas AO made addition based on the statement recorded during search which constitutes incriminating document? 2. Whether the decision of ld. CIT(A) that addition made on the basis of statement of employees and other persons recorded during the course of search which are not corroborated with any evidence cannot be said to be based on incriminating material, is in contradiction to the decision of Hon'ble Gujrat High Court in the case of Saumya Construction (P) Ltd. [2017] 81 taxmann.com 292 (Gujarat) where the Hon'ble Court has defined incriminating material to be material found during search or requisition which reveals undisclosed income? 3. Whether the statement of employees and other persons recorded during the course of search constitutes incriminating material as defined by Hon'ble Gujarat High Court in the case of Saumya Construction (P) Ltd. (2017] 81 taxmann.com 292 (Gujarat) where the Hon'ble Court has defined incriminating material to be material found during search or requisition which reveals undisclosed income? 4. Whether on facts and circumstances of the case and in law, the Id. ....
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....voice of cut tobaccos), A-8 (evidence of double shift production), A-13 (documents bearing signatures and stamp of Excise officials), to support the calculation and computation made by the AO on the basis of such deposition and statements, to arrive at the undisclosed quantity of production and subsequent sales of such goods and for determination of suppressed income on such undisclosed sales, which is the subject matter of addition in the assessment order. 17. In other words the crux of his argument is that, even though no incriminating materials has been found in this search at the premises of the assessee, the deposition and the statements, as recorded by the search and survey team at the premises of the assessee and other four parties, given by the employees and other person, present at the search and survey premises, can be considered as incriminating material, for the purpose of initiating proceedings u/s 153A of the Act 61, and the Ld CIT(A) was not legally justified in deleting the addition of Rs. 22.41 crores, relying on the judgment of the Hon'ble Supreme court in the case of " Abhisar Buildwell Pvt Ltd ", and in support of his contention the Ld DR relied upon the judg....
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....AT NO INCRIMINATING MATERIAL WAS FOUND DURING SEARCH: 23. During the year assessee was engaged in the Trading and real estate business and has filed his original returns for all the years and declared his income which is assessed and processed u/s 143(1) of the Act by the department before the date of search. 24. A search /seizure operation was conducted on business as well as at the residential premises of IJM Group wherein the contention was raised against the assessee that he is engaged in the alleged business of manufacturing cigarettes / filters during the year and the same has been unaccounted by the assessee in his returned income. Sir it is submitted that no incriminating material was found during the course of search. The addition is made on the basis of estimation and assumption and on the basis of alleged statement of employees of the assessee recorded at the time of search during the FY. 2020-21 whereas no documents pertaining the years under consideration were found during the search and seizure operation. Sir, the entire addition was made on account of alleged unaccounted production of cigarettes/filter that too on the basis of the statement of....
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.... sum was only for year of search and not for earlier years-As already noticed, books of accounts maintained by Assessee in present case was accepted by AO-In case of Commissioner of Income Tax (Central-III) v. Kabul Chawla (2016) 380 ITR 573 (Del) Court held that completed assessments could be interfered with by AO while making assessment under Section 153 A only on basis of some incriminating material unearthed during course of search or requisition of documents or undisclosed income or property discovered in course of search which were not produced or not already disclosed or made known in course of original assessment-Assessment in respect of each of six assessment years was separate and distinct assessment-U/s.153A, assessment had to be made in relation to search or requisition, namely, in relation to material disclosed during search or requisition-If in relation to any assessment year, no incriminating material was found, no addition or disallowance could be made in relation to that assessment year in exercise of powers under section 153A and earlier assessment should have to be reiterated-There was no such statement in present case which said to constitute an admission by Ass....
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....ver proceedings are not justifiable wholly on the basis of sworn statement recorded in the course of search/survey in the absence of any other tangible evidence available with the Assessing Officer as the material collected and the statement obtained u/s 131 would not automatically bind upon the assessee. This issue had been considered in the case of CIT, Salem v. M/s.S.Khader Khan Son (2012) 254 CTR (SC) 228 : (2013) 352 ITR 480 (SC) : (2012) 210 TAXMAN 248 (SC) wherein the Bench stated that the word "may" used in Section 133A(3)(iii) of the Act, viz., "record the statement of any person which may be useful for, or relevant to, any proceeding under this Act, made it clear that the materials collected and the statement recorded during the survey under Section 133A were not conclusive piece of evidence by itself. Following the circular F.No.286/2/2003 of the Central Board of Direct Taxes dated 10.3.2003, it was concluded that the materials collected and the statement obtained under Section 133A would not automatically bind the assessee. 27. In the instant case there was not a shread of material apart from the statement recorded during search. 27.1 In this regard the law is ver....
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....of R in the past assessment years. The assessee was being assessed to tax right from asst. yr. 1984-85. If the income was earned in the earlier assessment years relating to 1984-85 to 1990-91, the assessee could have disclosed such income in those assessment years rather than disclosing the same for the asst. yr. 1991-92. Moreover, the Department has not brought any evidence on record to show which particular transaction of land in the name of minor sons resulted in income disclosed by the assessee under s. 132(4). This only shows that the assessee was indeed in a confused state of mind. Further, the Revenue has not placed any material or evidence to show that income disclosed in the names of minor sons was based on positive evidence found during the course of search. Thus, in the absence of evidence, the CIT(A) was justified in referring to the investments made in the names of minor sons during the relevant assessment years and restricting the addition to the amounts equal of such investment. In fact, the assessee had even contested these additions before the CIT(A), but such submission of the assessee was rejected. In the light of these facts and circumstances of the case and in ....
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.... Since assessment in the present case is framed on the basis of statement of employees recorded, which has no evidentiary value in the eyes of law it is requested that considering the facts and circumstances of the cases and the judicial precedents, cited above and also considering the facts of the present case, addition made by the Ld. Assessing Officer may kindly be deleted. 3) SUBMISSIONS ON LEGAL ISSUE THAT NO EXPLORATION CAN BE MADE IN SEARCH CASES: 29. It is submitted that addition is made on the basis of statement of employees recorded during search and there is no other incriminating material against the assessee and the same is evident from the assessment order itself which refers to only statements of employees recorded during search. Sir, the statements recorded in the year 2020 has been utilized for making addition for AY 2011-12 (FY 2010-11) and other years. Even in the year 2020 there is no material against the assessee which could lead to the conclusion that there is unaccounted production/receipt/sale in the hands of assessee or family, which is totally against the principles of natural justice. 30. As regards the extrapolation concept, it....
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....books cannot be simply rejected. No such diary or any other material is found for pre survey period and therefore it is difficult to hold that the appellant has affected unrecorded sales prior to period covered by the diary. When one material for a specific period is found, the discrepancy on the basis of that material should be confined to that period only unless the material itself or any other evidence or the circumstances giving rise to a finding indicate discrepancy for the other period. The Hon'ble Allahabad High Court in the case of Ashok Kumar Rastogi v. CIT 100 CTR (All) 204 in support of the finding of the CIT(A) that in the absence of any corroborating evidence no addition u/s. 69 could be made as unexplained investment in the sales estimated on discovery of certain documents. In the case of Anjaneya Brick Works v. ACIT (Inv) 74 TTJ (Bang) 921 for the proposition that mere existence of evidence to support concealment of income in the next assessment year cannot be made a basis to estimate the income for the current year or any other assessment year for that matter. In the case of Dolphin Builders Pvt. Ltd (356 ITR 420), Hon'ble High Court o....
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....evidence. It is only elementary to say that estimation of unaccounted money cannot be made only on the basis of contemplation. The order of the AO in making additions of Rs. 3.28 Crores is thus clearly arbitrary and unsustainable in law. It is well settled that the Revenue authorities cannot base its findings on suspicions, conjunctures or surmises nor should it act on no evidence at all or on vague considerations partly on evidence and partly on suspicion, conjunctures or surmises. The Revenue could not demonstrate any material except unsupported statements of two persons. Such unverified statements without any proof towards its assertions are not a good evidence and do not raise any estoppel against the assessee. Therefore, the addition made by the AO is in the realm of speculation without any basis whatsoever. Hence, we decline to interfere with the order of the CIT(A) in so far as appeal of the Revenue is concerned." The Hon'ble High Court of Delhi in the case of Principal Commissioner of Income Tax vs. Pilot Industries Ltd. reported at [2023] 146 taxmann.com 233 (Delhi), wherein, it has been held as under: "Where assessment of assessee for relevant assessment....
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.... Kolkata reported at [2020] 118 taxmann.com 452 (Kolkata - Trib.), in which it has been held as under:- "Cash credits (Immovable properties) - Assessment years 2013-14 to 2017-18 - Whether theory of extrapolation cannot be applied on mere theoretical or hypothetical basis in absence of any incriminating and corroborative evidence or material brought on record by Assessing Officer to warrant same - Held, yes - Assessing Officer made additions under section 68 in case of assessee by extrapolating unaccounted sales across all units sold by assessee in its project on account of on-monies alleged to have been received against sale of flat and sale of car park to SB (HUF) - However, Assessing Officer had made independent enquiries from all flat purchasers in assessee's project and despite such enquiries, Assessing Officer did not find any statement/material or transaction which would in any manner suggest let alone prove that other flat purchasers had paid any part of consideration in cash/on-monies over and above declared sale consideration - Whether in absence of any such material Commissioner (Appeals) rightly deleted addition made on ground that extrapolation made by Assessi....
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....services and has also brought greater transparency in the functioning of the tax administration. Presently, almost all notices and orders are being generated electronically on the Income Tax Business Application (ITBA) platform. However, it has been brought to the notice of the Central Board of Direct Taxes (the Board) that there have been some instances in which the notice, order, summons, letter and any correspondence (hereinafter referred to as "communication") were found to have been issued manually, without maintaining a proper audit trail of such communication. 2. In order to prevent such instances and to maintain proper audit trail of all communication, the Board in exercise of power under Section 119 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), has decided that no communication shall be issued by any income tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etc. to the assessee or any other person, on or after the 1st day of October, 20 19 unless a computer-generated Document Identification Number (DIN) ha....
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..../any other person as per electronically generated pro-forma available on the System. 6. An intimation of issuance of manual communication for the reasons mentioned in para 3(v) shall be sent to the Principal Director General of Income-tax (Systems) within seven days from the date of its issuance. 7. Further, in all pending assessment proceedings, where notices were issued manually, prior to issuance of this Circular, the Income-tax authorities shall identify such cases and shall upload the notices in these cases on the Systems by 31th October, 2019." 38. It is submitted that Paragraph 3 of the Circular sets out five exceptional circumstances where the aforementioned mandatory requirement may not be adhered to, but requires that if an order/communication is to be issued without a DIN, it can be done only after recording reasons in writing in the file and with the prior written approval of the Chief Commissioner/Director General of Income Tax. Further, paragraph 3 requires that if such exceptional circumstances are claimed, the orders/communication issued without a DIN must state this fact in a specific format set out in paragraph 3 of the Circular. In the presen....
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.........................therefore, in the instant case, we find that assessment order and notice of demand are two separate communications qua the assessee and carry separate physical existence and identity, even though issued on the same date by the same Assessing officer pertaining to same assessment year and therefore, necessarily have to carry separate DIN on the body of the said communications. In view of the admitted position that there is no DIN on body of the assessment order (even though there is DIN on body of the notice of demand), the same will continue to be noncompliant with paragraph 2 of the CBDT Circular no. 19/2019 and carry the same consequences in terms of paragraph 4 of the CBDT Circular and will be held as invalid and never been issued." Reliance is also placed on the decision of Hon'ble Amritsar ITAT in the case of M/s Shreeji Bihariji Colonisers and Builders pvt ltd. v/s ACIT, dated 22.07.2024, ITA48/ASR/2023 in which it was held as under: 14. We find that there are certain factual and legal distinguishing features in case of matters before Hon'ble Allahabad High Court, Hon'ble Kerela High Court and Hon'ble Jharkhand High Court relied by the d....
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....) cannot be upheld and deserve to be set-aside as the same has been passed in violation of CBDT Circular no 19/2019 r/w CBDT and Circular No 27/2019 and the same is hereby treated as non-est in eyes of law. Thus considering the settled legal position, it is requested that addition made in the hands of assessee may kindly be deleted. d) Assessee arguments on merits of the case : Sir, it is submitted that addition has been made in the hands of assessee for the reason that as per Ld. AO assessee carried unaccounted production of cigarettes/filter during the year under consideration but there is reference in the assessment order to substantiate the fact that there was any unaccounted production for the year under consideration. There was no material found during the search which could prove/show that assessee carried unaccounted production. Sir, during the course of assessment proceedings notices were issued to the assessee to which assessee stated as under: "Neither I nor my family have any business interest in the companies/firm dealing in manufacturing of cigarettes. In this connection it is submitted as follows: * It is fact tha....
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....inery when they leave the factory premises and deseal the same only on our request for production. This fact can be verified from the RG 1 register of the respective firms/companies which was filed before the assessment and appellate proceedings. * Ld. AO during assessment proceedings made enquiry from Central Excise department wherein the sale/ production had been confirmed. * That Ld. AO during post search enquiry issued hundreds of letter to different persons to enquire about the purchase and sales made out of books of accounts but failed to establish that any transaction of sales or purchases made outside the books of accounts. * That assessee and related respective concerns are regularly filing income tax return and assessee has disclosed and filed true facts to all the authorities. * That your attention is drawn to the fact that M/s IJM International, M/s Inayat Global Pvt. Ltd, M/s Karsh Enterprises, M/s Nagahia Sons were in cigarette manufacturing and since beginning of this there was round the clock presence of Central Excise Officer, so that there is no unauthorized removal of goods and there is proper supervision and control over opera....
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.... in four units is 7,28,00,000 packets or more as per the relelvant year which is totally baseless and without considering the fact that neither assessee nor his family members have interest in these firms. They have only given factory premises on rent which has been evident from the rent deeds seized during the course of search. Further the facts contradictory to the allegations made against assessee is given as follows: * All the four unit where the business of cigarette is being run were monitored by Central Excise department till June, 2017. * Time to time inspection was made by the superintendent level officer of these units and during search your goodself seized record of the same wherein no officer from 2012 to 2017 ever made any comment about the ownership of these business at the time of inspection or audit. * All the time, when manufacturing process were undertaken from 2012 to 2017, it was mandatory as per para 10 of instructions dated 24.12.2008 issued vide F. No. 224/37/2005 by CBEC that round the clock presence of central excise office in the factory is required to control and supervise the operation of cigarettes. Copy of said circular is en....
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....oof the contention that assessee has actually spend amount of Rs 10,00,000/- as marriage expenditure neither any documents were found at the time of search which could proof the same. So, the addition made in the hands of assessee on account of marriage expenses should kindly be deleted. Thus, considering the facts and circumstances of the case and case laws cited above, it is requested that no adverse inference may kindly be drawn against the assessee and addition made in the hands of assessee may kindly be deleted. Assessee submission for AY 2013-14, AY 2017-18 and AY 2018-19 additions 2,00,000/- The Ld. AO. has made addition amounting to Rs 2,00,000/-on estimate basis in the hands of assessee on account of foreign tour expenses without considering the following facts: * That at the time of search no documents were found on the basis of which such addition is made in hands of assessee. * That no documentary evidence were brought in record by Ld. AO. which could question the genuineness that assessee has actually incurred expenses of Rs 2,00,000/- on his foreign tour. * That assessee during his response at the time of assessment proceedings has ....
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....he Act by the department." Sir, the Ld. AO without considering the above submission has made the alleged addition in the hands of assessee. * That Ld. AO. has considered and accepted the receipts amounting to Rs. 21,55,210/- received by the assessee on account of sale and purchase of property for the AY. 2011-12 and no addition were made in the hands of assessee for the relevant year. * That during the AY.2017-18, the assessee was also engaged in the same business that is, trading of Sale and purchase of property and the receipts from such business amounting to Rs 1,27,92,160/- has been accepted by the Ld. AO. in the Assessment order passed u/s 143(3) dated 31/12/2019. 46. It is settled in law that AO cannot sit on the chair of assessee to decide the sales as per his choice to categorize into so called bogus sales and non- bogus sale. In the case of 'S. A. builders Ltd vs. CIT(A) (Supra) it is held that it is for the assessee to take care his business exigency and assessee is on his free will to do business, as per his wisdom and his arm cannot be twisted to do the business, as per the choice of anybody else. In our case A.O tried to twist the arm of t....
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....ank payments, which proves that the transaction is genuine, moreover the balance sheet of the company has been already placed on record. The copy of confirmed ledger account of the company as appearing in the books of the assessee has been already placed on record during assessment proceedings. 3. Creditworthiness- The transaction was carried through bank account. The company earned interest income and revenue from its operations, which is duly reflected in the balance sheet, which proves the creditworthiness of the company. Advesrse observation by Ld. AO Remarks The assessee has failed to explain the genuineness and creditworthiness of the creditor. The assessee had provided complete information regarding the company, which proves their genuineness and creditworthiness. It is not a mistake of assessee if the company had not provided details as asked for, in notice issued u/s 133(6). But the assessee has furnished complete details available with it. The failure on the part of the assessee to prove the genuineness and creditworthiness of the creditor results in the treating the transaction as unexplained within the meaning of section 68 of the Act. The ass....
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....in this regard for dismissing the explanation and corroborative evidence adduced by the assessee-Once there is proof of taking and repaying the loan, the addition in this regard is not called for." 48. The Hon'ble Gauhati High Court in the case of Nemi Chand Kothari v/s CIT (2003) 264 ITR 254 (Gau) has held as under: Income-Cash credit under s. 68-Genuineness-Onus of proof-Identity of creditors established by assessee and the amounts were paid through account payee cheques-Failure of creditors to establish creditworthiness of sub-creditors cannot be a ground for addition in the hands of assessee Held: A person May have funds from any source and an assessee, on such information received, May take loan from such a person. It is not the business of the assessee to find out whether the source or sources from which the creditor had agreed to advance the amounts were genuine or not. If a creditor has, by any undisclosed source, a particular amount of money in the bank, there is no limitation under the law on the part of the assessee to obtain such amount of money or part thereof from the creditor, by way of cheque in the form of loan and in such a case, if the credit....
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....erned, he has established the identity of the creditors, namely, Nemichand Nahata and Sons (HUF) and Pawan Kumar Agarwalla. The appellant had also shown, in accordance with the burden, which rested on him under s. 106 of the Evidence Act, that the said amounts had been received by him by way of cheques from the creditors aforementioned. In fact, the fact that the assessee had received the said amounts by way of cheques was not in dispute. Once the assessee had established that he had received the said amounts from the creditors aforementioned by way of cheques, the assessee must be taken to have proved that the creditor had the creditworthiness to advance the loans. Thereafter the burden had shifted to the AO to prove the contrary. On mere failure on the part of the creditors to show that their subcreditors had creditworthiness to advance the said loan amounts to the assessee, such failure, as a corollary, could not have been and ought not to have been, under the law, treated as the income from the undisclosed sources of the assessee himself, when there was neither direct nor circumstantial evidence on record that the said loan amounts actually belonged to, or were owned by, the as....
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.... ITR 217 (Raj) has held as under :- Income-Cash credit-Genuineness-While the assessee has to prove as special knowledge i.e. from where he has received the credit and once he disclosed the source from which he has received money, he must also establish that so far as his transaction with his creditor is concerned, the same is genuine and his creditor had the creditworthiness to advance the loan which the assessee had received-When the assessee discharges the burden so placed on him, onus then shifts to the AO, if the AO assesses the said loan as the income of the assessee from undisclosed source he has to prove either by direct evidence or indirect/circumstantial evidence that the money which the assessee received from the creditor actually belong to and was owned by the assessee himself-There is no clinching evidence in the present case nor the AO has been able to prove that the money actually belonged to none but the assessee himself-Action of the AO appears to be based on mere suspicion-Addition under s. 68 was not therefore sustainable 51. The above stated case of Hon'ble Rajasthan High Court squarely covers the present issue as:- 1. Assessee has received c....
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....on is made merely on the basis of DVO valuation report only, without bringing on record any material, to show or establish that unaccounted investment has been made by the assessee. The law has been settled by various courts that addition cannot be made only on the basis of valuation report, which is just a tool for guidance of the AO and is just an opinion of a technical expert, and without any evidence or material brought on record by the AO, an addition u/s 69B cannot be sustained simply on the basis of an opinion. Reliance is placed on the case of CIT v. Berry Plastics P. Ltd. (2013) 35 taxmann.com 296 (Guj), the Hon'ble Gujarat High Court has made the follwing observations: 7. Revenue carried the matter in appeal. CIT(A) dismissed the Revenue's appeal in following terms : "6. After hearing the parties and perusing the record we find that there is no dispute about the fact that in this case addition has been made by the AO on the basis of DVO report obtained by him during the assessment proceedings. learned CIT(A) has given relief to the assessee by placing reliance on the decision of the Hon'ble apex Court in the case of K. P. Varghese vs. IT....
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....eport of the DVO and, therefore, the same cannot be relied upon for making an addition. In these circumstances, the question which has been framed is decided in favour of the assessee and against the Revenue. The appeal is dismissed." 59. Decision of Hon'ble High Court of Delhi in the case of CIT v/s Puneet Sabharwal Source (2011) 338 ITR 485 (Del) in which it was held as under: "Income from Undisclosed Sources-Unexplained or undisclosed investment-Addition towards on-money based on report of valuation officer-AO made the addition in the income of the assessee on the basis of DVO report-Apart from the said report of the DVO, there was no evidence on record that some extra consideration was paid by the assessee for acquiring the property over and above the consideration stated in the sale deeds-Opinion of the DVO per se was not sufficient and other corroborated evidence is required-Notwithstanding the report of the DVO, the Revenue had to prove that the assessee had in fact received extra consideration over and above the declared value of the sale-Therefore deleting the addition by the Tribunal was right" 60. Decision of Hon'ble High Court of Karnataka in the case of ....
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....minating material on record. Thus the addition made is to be quashed on this ground alone. 64. The valuation reported by the valuation officer of the said property has been done for Rs. 263.99 lacs for total area of 21257 sq feet. The cost of area per sq feet comes to Rs. 1241/- which is totally hypothetical and not based upon the actual PWD rates for the year 2016 to 2020. Till date, only civil work has been completed on the said property and as per PWD standards, normal rate for civil structure work is Rs. 650/- per sq feet. Total cost considering the normal rate of Rs. 650/- x 21,257 sq feet area comes to Rs. 138.17 lacs against which assessee alongwith his family members has invested Rs. 157.72 lacs. Apart from civil structure other expenditure on elevation and exterior work are still pending to be incurred. The valuation officer has wrongly taken rate per sq feet for determining the amount incurred on the construction which is even more than the actual cost per sq feet for fully furnished property. It is further submitted by the assessee as follows: a) The valuation officer has adopted the rate as per CPWD whereas the rates of PWD of respective state should have....
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....on of property was yet to be completed. We find merit into the contentions of the learned counsel for the assessee as it is well settled that State PWD rate is better guiding factor for arriving at cost of construction of the property. Moreover, the Revenue has not rebutted the claim of the assessee that the property in question was yet to be completed and the DVO took the value of completed property coupled with fact that no evidence is brought on record by the AO suggesting that any expenditure more than what was booked by the assessee in its books of accounts has been incurred. In the absence of such evidence, the cost adopted by the AO is merely an estimation and pure guess work. Therefore, following our decision in the case of Ecstasy Buildcon (P) Ltd. In ITA No. 1127/Del/2021 (supra), we hold that the action of AO for making addition partly on the basis of a report by DVO who has failed to take note of the judicial pronouncements, adopted CPWD rate for the purpose of estimation of cost of construction cannot be sustained. We, therefore, direct the AO to delete the impugned addition. The Ground of Assessee's appeal is allowed and corresponding ground and Revenue's appeal is di....
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....s in this cases are ruled out, without any documentary evidences, being brought to the contrary. 67.3 We are also in agreement with the objection of the assessee on the issue of DIN not being mentioned in the body of the assessment order and notice of demand, separately, as per provisions of the Board Circular no - 19 of 2019. In the instant case DIN has been generated by issue of separate intimation by way of a common DIN, for order, Notice (Demand Notice) and letter of approval u/s 153D of the Act 61. This generation is technically defective, because the assessment order u/s 153A and demand notice u/s 156 is a communication meant for the assessee from the concerned AO and the approval u/s 153D, is a communication from the Ld JCIT / CR, Jalandhar to the AO / ACIT/ CC/ Jalandhar, and in both the instances, the sender of the communication and recipient of the communications are different persons in two separate cause of action, and generation of a common DIN cannot be in accordance with the board circular - 19 of 2019, and in such a case the assessment order and the demand notice will be held to be never to have been issued. 68. However, we are also in agreement with the decis....
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....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 AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. 72. As such the appeal of the revenue is dismissed being devoid of merits. 73. Assessment years : 2012-13 to 2019-20 : The factual and legal issue for all the above years, relating to estimation of income alleged to have arisen from unaccounted / undisclosed, manufacturing activity of cigarettes and cigarette filters, and consequent sales thereof, determined by the AO, solely on the basis of recorded depositions and....
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....ich documentary evidences has been filed by the assessee providing details establishing the identity, genuineness and credit worthiness of the parties. In absence of any incriminating materials gathered in course of search, this addition is deleted. 78. Asst Years: 2017-18, 2018-19 and 2019-20: (Addition of Rs. 27,61,732/- in each of the years, on the basis of Department Valuer report): This issue is discussed in details in earlier paragraphs vis a vis assessee submission. The entire addition on investments made in immovable property, has been made on the basis of valuers report (obtained post search). The investment made by the assessee in usual course are duly reflected in his regular books of accounts and in returns filed in normal course. In absence of any incriminating material or any documentary evidences gathered in course of search proceedings, to prove investment in building, no addition can be made simply on the basis of a valuers report, and as such this addition is deleted. 79. As such considering the entire factual aspect of the matter, we are of the opinion that in absence of any incriminating materials gathered in search proceedings, we are bound by the judg....