Sri G Subhash Chandra Bose, Visakhapatnam., V. The DCIT, Cent Cir-1, Visakhapatnam., Visakhapatnam

CO 2/VIZ/2008

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6012 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 1 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 01-09-2010
• Assessment Year: misc
• Appeal Filed On: 28-02-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: TH LUCAS PETER
• Assessee Lawyers: I KAMA SASTRI
• Keywords: Unexplained investment; Valuation report; Block assessment; Condonation of delay
• Section: 132; 15

Judgement Text

ITSSA 76 OF 2002 & CO 2 OF 2008 OF G SUBHASH CHANDR A BOSE VISAKHAPATNAM PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER IT(SS)A NO. 76/VIZAG/2002 BLOCK PERIOD: 26.11.1998 DY.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1 VISAKHAPATNAM VS. G. SUBHASH CHANDRA BOSE (HUF), VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO:ACYPG 6086 R C.O NO.2/VIZAG/2008 BLOCK PERIOD: 26.11.1998 G. SUBHASH CHANDRA BOSE (HUF), VISAKHAPATNAM VS. DY.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1 VISAKHAPATNAM (APPELLANT) PAN NO:ACYPG 6086 R (RESPONDENT) DEPARTMENT BY: SHRI T.H. LUCAS PETER, CIT (DR) ASSESSEE BY: SHRI I. KAMA SASTRI, CA ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION F ILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 07.02 .2002 PASSED BY LEARNED CIT(A)-I, HYDERABAD AND IT RELATES TO THE BLOCK PERI OD FROM 1.4.1988 TO 26.11.1998. 2. THE CROSS OBJECTION IS TIME BARRED BY 1268 DAYS. THE INSTANT APPEAL RELATES TO THE HUF STATUS OF THE ASSESSEE. THE ASS ESSEE AS WELL AS THE REVENUE HAS FILED APPEALS IN THE INDIVIDUAL STATUS A LSO. THE ASSESSEE HAS FILED A PETITION FOR CONDONATION OF DELAY WHEREIN I T IS STATED THAT THE ITSSA 76 OF 2002 & CO 2 OF 2008 OF G SUBHASH CHANDR A BOSE VISAKHAPATNAM PAGE 2 OF 12 ASSESSEE DID NOT RECEIVE THE COPIES OF MEMORANDUM O F APPEAL FILED BY THE REVENUE AND IT COULD COME TO KNOW OF THE SAME ONLY ON 6.2.2008 I.E. ON THE DAY ON WHICH THE APPEALS FILED IN THE INDIVIDUAL ST ATUS OF THE ASSESSEE WERE POSTED. THEN THE CROSS OBJECTION HAS BEEN FILED BY THE ASSESSEE IMMEDIATELY THEREAFTER. ACCORDINGLY IT IS PRAYED TH AT THE DELAY MAY BE CONDONED. WE HAVE VERIFIED THE RELEVANT ORDER SHEET NOTING MADE IN THE APPEAL OF THE REVENUE. WE NOTICE THAT THE MEMORAND UM OF APPEAL WAS SENT BY THE REGISTRY TO THE ASSESSEE ON 5.8.2004. HOWEVER, THE SAME WAS RETURNED UN-SERVED BY THE POSTAL AUTHORITIES WITH T HE NOTING ADDRESSEE LEFT. THEREAFTER THE REGISTRY HAS FORWARDED THE ME MORANDUM OF APPEAL TO THE DY.COMMISSIONER OF INCOME TAX, CC-1, VISAKHAPATN AM WITH A DIRECTION TO SERVE THE SAME UPON THE ASSESSEE. HOWEVER, THE D ETAILS OF SERVICE OF THE SAME BY THE DEPARTMENT ARE NOT AVAILABLE ON RECORD. IN THESE CIRCUMSTANCES, THERE IS CONSIDERABLE FORCE IN THE S UBMISSION OF THE ASSESSEE. ACCORDINGLY WE CONDONE THE DELAY AND ADM IT THE CROSS OBJECTION FILED BY THE ASSESSEE. 3. THE REVENUE IS ASSAILING THE DECISION OF LEARNED CIT(A) IN GRATING RELIEF IN RESPECT OF THE ADDITION OF RS.11,06,357/- PERTAINING TO UNEXPLAINED INVESTMENT IN THE CONSTRUCTION OF HOUSE PROPERTY. 4. IN THE CROSS OBJECTION AND IN THE ADDITIONAL GROU ND FILED BY THE ASSESSEE, FOLLOWING EFFECTIVE GROUNDS ARE URGED. A) THE ASSESSING OFFICER IS NOT AT ALL CORRECT IN M AKING THE ASSESSMENT UNDER SECTION 158BC OF THE ACT, AS THERE WAS NO SEARCH ACTION UNDER SECTION 132 OR REQUISITION UNDE R SECTION 132A IN THE CASE OF THE ASSESSEE. B) THE COMMISSIONER OF INCOME TAX (APPEALS)-I HYDERAB AD IS NOT CORRECT IN SUSTAINING AN ADDITION OF RS.3,05,00 0/- FOR ITSSA 76 OF 2002 & CO 2 OF 2008 OF G SUBHASH CHANDR A BOSE VISAKHAPATNAM PAGE 3 OF 12 DIFFERENT YEARS COMPRISED IN THE BLOCK PERIOD UNDER THE HEAD AGRICULTURAL INCOME. 5. THE FACTS RELATING TO THE CASE ARE STATED IN BRIEF. AS STATED EARLIER, THE APPEAL AND CROSS OBJECTION IN THE INSTANT CASE RELA TES TO THE HUF STATUS OF THE ASSESSEE. SHRI G. SUBHASH CHANDRA BOSE IS ALSO ASSESSED IN THE INDIVIDUAL STATUS. THE REVENUE CARRIED OUT SEARCH A ND SEIZURE OPERATIONS UNDER SECTION 132 OF THE ACT IN THE BUSINESS AND RE SIDENTIAL PREMISES OF THE ASSESSEE AND HIS FAMILY MEMBERS ON 26.11.1998. PRIO R TO THE DATE OF SEARCH, THE ASSESSEE HEREIN, (I.E HUF STATUS) HAD FILED HIS RETURN OF INCOME RELATING TO THE ASSESSMENT YEARS 1991-92, 1992-93 A ND 1993-94 WITH ITO, WARD-1, KAKINADA. AT THE TIME OF SEARCH, THE ASSES SEE WAS RESIDING IN A HOUSE LOCATED AT MURALI NAGAR, VISAKHAPATNAM. DURI NG THE COURSE OF SEARCH, THE DEPARTMENT ENQUIRED ABOUT THE INVESTMEN T MADE IN THE HOUSE PROPERTY CITED ABOVE, BUT THE ASSESSEE COULD NOT GI VE CONVINCING REPLIES. HENCE THE ASSESSING OFFICER TREATED THE COST OF INV ESTMENT MADE IN THE ABOVE SAID HOUSE PROPERTY AS THE UNDISCLOSED INCOME OF THE ASSESSEE. BESIDES THE ABOVE, THE ASSESSING OFFICER HAS TREATE D THE AGRICULTURAL INCOME CLAIMED BY THE ASSESSEE IN VARIOUS YEARS ALSO AS TH E UNDISCLOSED INCOME OF THE ASSESSEE. IN THE APPEAL PREFERRED BY THE ASSESS EE, THE LEARNED CIT(A) DELETED THE ADDITION RELATING TO THE COST OF HOUSE PROPERTY AND GRANTED PARTIAL RELIEF WITH REGARD TO THE ADDITION PERTAINI NG TO THE AGRICULTURAL INCOME. HENCE, THE REVENUE IS IN APPEAL BEFORE US CHALLENGING THE RELIEF GRANTED AND THE ASSESSEE, IN ITS CROSS OBJECTION IS CHALLENGING THE ADDITION SUSTAINED BY LEARNED CIT(A). 6. BEFORE GOING INTO THE GROUNDS RELATING TO TH E MERITS, WE SHALL FIRST ADDRESS THE LEGAL ISSUE RAISED BY THE ASSESSEE IN T HE CROSS OBJECTION. ACCORDING TO THE ASSESSEE, THE DEPARTMENT HAS CONDU CTED SEARCH ONLY IN ITSSA 76 OF 2002 & CO 2 OF 2008 OF G SUBHASH CHANDR A BOSE VISAKHAPATNAM PAGE 4 OF 12 THE HANDS OF INDIVIDUAL, I.E. THE CLAIM OF THE ASSE SSEE IS THAT THERE IS NO SEARCH WARRANT IN THE NAME OF HUF. ACCORDINGLY IT IS CONTENDED THAT THE ASSESSING OFFICER SHOULD NOT HAVE ISSUED NOTICE UND ER SECTION 158BC TO THE ASSESSEE HUF AND CONSEQUENTLY THE ASSESSMENT MADE I N THE HANDS OF HUF IS NOT CORRECT. IN THIS REGARD, RELIANCE WAS PLACED ON THE DECISION RENDERED IN THE CASE OF RAVI PRAKASH AGARWAL (67 TTJ 234 (DE L)). DURING THE COURSE OF ARGUMENTS, THE LEARNED A.R ALSO CONTENDED THAT T HE DEPARTMENT DID NOT SEIZE ANY MATERIAL CONCERNING THE IMPUGNED HOUSE PR OPERTY AND HENCE THE ADDITION COULD NOT HAVE BEEN MADE IN THE BLOCK ASSE SSMENT PROCEEDINGS. HOWEVER, THE LEARNED D.R PLACED RELIANCE ON THE SWO RN STATEMENT TAKEN FROM THE ASSESSEE DURING THE COURSE OF SEARCH AND S UBMITTED THAT THE DEPARTMENT HAS NOTICED THAT THE ASSESSEE HAS NOT DI SCLOSED THE CONSTRUCTION OF THE IMPUGNED HOUSE PROPERTY TO THE DEPARTMENT. LATER THE ASSESSEE HAS ITSELF HAS CLAIMED THAT THE IMPUGNED P ROPERTY BELONG TO THE HUF. HENCE THE ASSESSING OFFICER HAS FRAMED THE BL OCK ASSESSMENT IN THE HANDS OF HUF. 6.1 WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE AND CAREFULLY PERUSED THE RECORD. DURING THE COURSE OF SEARCH, THE ASSESSEE WAS RESIDING AT THE HOUSE PROPERTY LOCATED AT MURALI NA GAR, VISAKHAPATNAM AND IT WAS CLAIMED TO BE HIS OWN PROPERTY. HENCE THE D EPARTMENT HAS ASKED ABOUT THE DETAILS OF THE SAID HOUSE PROPERTY. THE R ELEVANT QUESTIONS AND ANSWERS IN THIS REGARD HAVE BEEN EXTRACTED BELOW FR OM THE ASSESSMENT ORDERS OF INDIVIDUAL AND HUF STATUS. Q.2 YOU HAVE NOT DISCLOSED ABOUT YOUR HOUSE AT MUR ALINAGAR WHERE YOU ARE PRESENTLY RESIDING IN YOUR RETURNS OF INCOM E FILED FOR THE LAST 3 YEARS. WHY? ANS. I DO NOT KNOW ABOUT THIS. I WILL TELL AFTER CON SULTING THE AUDITOR. ITSSA 76 OF 2002 & CO 2 OF 2008 OF G SUBHASH CHANDR A BOSE VISAKHAPATNAM PAGE 5 OF 12 Q.3, WHEN YOU HAVE CONSTRUCTED THE HOUSE AT MURALIN AGAR?. HOW AMOUNT WAS SPENT FOR THE HOUSE?. ANS. I HAVE CONSTRUCTED THIS HOUSE IN THE YEAR 1990 . FOR THE SITE AND CONSTRUCTION OF THE HOUSE, I HAD SPENT ABOU T RS.7.5 LAKHS. Q.4 WHAT ARE YOUR SOURCES FOR RS.7.5 LAKHS FOR CONS TRUCTION OF YOUR HOUSE? ANS. I DO NOT REMEMBER THOSE DETAILS NOW. Q. 7. I AM SHOWING THE BAL.SHEET FILED BY YOU AS ON 31.3.97 TO THE DEPARTMENT WHEREIN YOU HAVE NOT DISCLOSED YO UR RESIDENTIAL PROPERTY BEARING D.NO.39-11-42/6, MURAL INAGAR, VISAKHAPATNAM. PLEASE EXPLAIN WHY YOU HAVE NOT DISC LOSED THIS PROPERTY TO THE DEPARTMENT?. ANS. I HAVE SEEN THE RECORDS SUBMITTED TO THE DEPAR TMENT. IN THIS, THE PROPERTY WAS NOT DISCLOSED. I DO NOT KNOW HOW IT HAS HAPPENED. SO FAR, I AM UNDER THE IMPRESSION THAT TH E PROPERTY WAS DECLARED TO THE DEPARTMENT. THUS IT HAS COME TO THE KNOWLEDGE OF THE DEPARTMENT THAT THE ASSESSEE WAS THE OWNER OF THE IMPUGNED HOUSE PROPERTY AND TH E ASSESSEE ALSO COULD NOT CONFIRM ABOUT ITS DISCLOSURE IN THE RETURNS OF INCOME FILED BY HIM. IN THAT CASE, IN OUR VIEW, THE VERY EXISTENCE OF THE U NDISCLOSED HOUSE PROPERTY CONSTITUTES SUFFICIENT MATERIAL, ON THE BASIS OF WH ICH THE INVESTMENT PERTAINING TO SAID HOUSE PROPERTY COULD BE TREATED AS THE UNDISCLOSED INCOME OF THE ASSESSEE. HENCE WE ARE UNABLE TO AGR EE WITH THE CONTENTION OF THE ASSESSEE THAT THERE IS NO SEARCH MATERIAL PE RTAINING TO THE IMPUGNED HOUSE PROPERTY. 6.2 THE NEXT CONTENTION OF THE ASSESSEE IS THAT THE ASSESSING OFFICER SHOULD NOT HAVE MADE THE BLOCK ASSESSMENT IN THE AB SENCE OF A SEARCH ITSSA 76 OF 2002 & CO 2 OF 2008 OF G SUBHASH CHANDR A BOSE VISAKHAPATNAM PAGE 6 OF 12 WARRANT IN THE NAME OF THE ASSESSEE. HOWEVER, WE NOTICE THAT THE ASSESSEE ITSELF HAS VOLUNTARILY FILED THE BLOCK RET URN IN THE STATUS OF HUF ALONG WITH A CASH FLOW STATEMENT ON 05-07-1999. IN THAT CASH FLOW STATEMENT THE ASSESSEE HAS SHOWN THE SOURCES FOR TH E INVESTMENT MADE IN THE IMPUGNED HOUSE PROPERTY. THEREAFTER, THE ASSES SING OFFICER HAS ISSUED THE NOTICE UNDER SECTION 158BC ON 22-09-2000 AND HA S REGULARIZED THE RETURN SO FILED VOLUNTARILY. 6.3 THE DEPARTMENT HAS NOTICED THE EXISTENCE OF THE IMPUGNED HOUSE PROPERTY DURING THE COURSE OF SEARCH. SINCE THE SE ARCH WARRANT HAS BEEN ISSUED IN THE INDIVIDUAL STATUS OF THE ASSESSEE, NOR MALLY THE ASSESSING OFFICER SHOULD HAVE ASSESSED THE COST OF THE IMPUGN ED HOUSE PROPERTY IN THE HANDS OF THE INDIVIDUAL. HOWEVER, IF THE ASSES SING OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO ANY OTHER PE RSON, THEN HE SHALL HAND OVER THE RECORD TO THE ASSESSING OFFICER WHO I S HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED UNDER SECTION 158BC OF THE ACT AGAINST SUCH OTHER PERSON. THIS I S SO PROVIDED UNDER SECTION 158BD OF THE ACT. IT IS PERTINENT TO NOTE T HAT THE SAID SECTION 158 ONLY PROVIDES METHODOLOGY TO ASSUME JURISDICTION OV ER SUCH OTHER PERSONS. HOWEVER THE NOTICE SHALL BE ISSUED UNDER SECTION 15 8BC OF THE ACT ONLY EVEN IF THE JURISDICTION IS ASSUMED UNDER SECTION 1 58BD OF THE ACT. 6.4 IN THE INSTANT CASE, THE ASSESSEE ITSELF HAS CLAIMED THAT THE SAID PROPERTY BELONGS TO HIS HUF AND HAS ACCORDINGLY FIL ED THE BLOCK RETURN VOLUNTARILY EVEN PRIOR TO THE ISSUE OF NOTICE UNDER SECTION 158BC. IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSING OFFICER IS THE SAME BOTH FOR THE INDIVIDUAL AND HUF STATUS OF THE ASSESSEE. HENCE T HE QUESTION OF TRANSFER OF RECORD FROM ONE ASSESSING OFFICER TO ANOTHER ASS ESSING OFFICER DID NOT ITSSA 76 OF 2002 & CO 2 OF 2008 OF G SUBHASH CHANDR A BOSE VISAKHAPATNAM PAGE 7 OF 12 ARISE IN THIS CASE. THE ASSESSING OFFICER HAS ACCE PTED THE SAID CLAIM OF THE ASSESSEE BY ACCEPTING THE SAID VOLUNTARY RETURN, ME ANING THEREBY THERE IS DEEMED SATISFACTION ON THE PART OF THE ASSESSING OF FICER TO THE EFFECT THAT UNDISCLOSED INCOME PERTAINING TO THE IMPUGNED HOUSE PROPERTY DOES BELONG TO THE HUF STATUS OF THE ASSESSEE. ACCORDINGLY THE ASSESSING OFFICER HAS ISSUED THE NOTICE UNDER SECTION 158BC. THOUGH THE ASSESSING OFFICER HAS NOT EXPRESSED EXPLICITLY, HE HAS ACTUALLY ASSUMED J URISDICTION OVER THE ASSESSEE UNDER SECTION 158BD OF THE ACT. ACCORDING LY THE COST OF THE IMPUGNED HOUSE PROPERTY WAS NOT ASSESSED IN THE HAN DS OF THE INDIVIDUAL. 6.5 THUS IT COULD BE SEEN THAT THE ASSESSEE ONL Y HAS VOLUNTARILY DECLARED THAT THE IMPUGNED HOUSE PROPERTY BELONG TO THE HUF. THE ASSESSING OFFICER, HAVING SATISFIED WITH THE SAID CLAIM, HAS ASSUMED JURISDICTION OVER THE ASSESSEE UNDER SECTION 158BD OF THE ACT. HAVIN G ACTED VOLUNTARILY IN THE MANNER CITED ABOVE AND MADE THE ASSESSING OFFIC ER TO ASSUME JURISDICTION, IN OUR VIEW, IT IS NOT FAIR ON THE PA RT OF THE ASSESSEE TO RAISE SUCH A LEGAL ISSUE BEFORE THE TRIBUNAL, THAT TOO BY COMPLETELY HIDING THE FACTS SURROUNDING THE CASE. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THE SAID OBJECTION OF THE ASSESSEE AS TO THE JUR ISDICTION AND ACCORDINGLY DISMISS THE SAME. 7. NOW WE SHALL TAKE UP THE GROUNDS RAISED BY T HE REVENUE IN ITS APPEAL. THE REVENUE IS OBJECTING TO THE RELIEF GRANTED IN R ESPECT OF THE INVESTMENT MADE IN THE HOUSE PROPERTY LOCATED AT MURALI NAGAR, VISAKHAPATNAM. ACCORDING TO THE ASSESSEE, IT HAD DISCLOSED THE EXI STENCE OF THE SAID PROPERTY BY WAY OF A NOTE, IN THE RETURNS FILED FOR THE ASSESSMENT YEARS 1991-92 AND 1992-93. THE DETAILS OF SAID NOTE ARE GIVEN BELOW: ITSSA 76 OF 2002 & CO 2 OF 2008 OF G SUBHASH CHANDR A BOSE VISAKHAPATNAM PAGE 8 OF 12 (A) ASSESSMENT YEAR 1991-92:- COST OF SITE, FOUNDATION, PILLERS ETC. - 2,56,000/- SOURCES:- SALE OF AGRI. LAND - 1,80,000 SALE OF HOUSE SITE - 35,000 AGRICULTURAL SAVINGS - 41,000 ------------- 2,56,000 ======= (B) ASSESSMENT YEAR : 1992-93:- AMOUNT SPENT ON CONSTRUCTION OF HIS HOUSE - 2,85,000/- SOURCES:- LOAN FROM LIC 1,00,000 TRACTOR SALE PROCEEDS 1,75,000 OUT OF SAVINGS 10,000 ------------- 2,85,000 ======= IN THE CASH FLOW STATEMENT FILED DURING THE COURSE O F BLOCK ASSESSMENT PROCEEDING, THE ASSESSEE, HOWEVER, CLAIMED TO HAVE SPENT A SUM OF RS.10.75 LAKHS ON THE CONSTRUCTION OF THE HOUSE PRO PERTY IN VARIOUS YEARS AS DETAILED BELOW: F.Y. 1990-91 CONSTRUCTION INCLUDING COST OF SITE - 2,56,000 F.Y 1991-92 CONSTRUCTION OF HOUSE - 4,35,000 F.Y. 1992-93 - DO - - 1,50,000 F.Y. 1993-94 - DO - - 50,000 F.Y. 1993-94 - DO - - 1,84,000 TOTAL = 10,75,000 ======= THE SOURCES FOR THE ABOVE SAID CONSTRUCTION WAS CLA IMED MAINLY AS THE AGRICULTURAL INCOME. HOWEVER, THE ASSESSING OFFICE R REFERRED THE MATTER OF VALUATION TO THE DVO, WHO DETERMINED THE COST OF SI TE AND BUILDING AT RS.11,06,357/-. WE NOTICE FROM THE ASSESSMENT ORDER THAT THE ASSESSING ITSSA 76 OF 2002 & CO 2 OF 2008 OF G SUBHASH CHANDR A BOSE VISAKHAPATNAM PAGE 9 OF 12 OFFICER HAS SUPPLIED A COPY OF THE VALUATION REPORT ON 1.11.2000 AND CALLED FOR OBJECTION FROM THE ASSESSEE, BUT THE ASSESSEE H AS FAILED TO RESPOND. ACCORDINGLY, BY REJECTING THE CLAIM OF SOURCES MADE IN THE CASH FLOW STATEMENT, THE ASSESSING OFFICER TREATED THE ABOVE SAID INVESTMENT OF RS.11,06,357/- AS THE UNDISCLOSED INCOME OF THE ASS ESSEE. HOWEVER, THE LEARNED CIT (A) DELETED THE SAID ADDITION ON THE GR OUND THAT THE ASSESSEE HAS ALREADY DISCLOSED THE IMPUGNED HOUSE PROPERTY, OBVIOUSLY BY TAKING COGNIZANCE OF RETURNS OF INCOME FILED BY THE ASSESS EE FOR THE ASSESSMENT YEARS 1991-92 & 1992-93. 7.1 WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISS UE AND CAREFULLY PERUSED THE RECORD. THE LEARNED DEPARTMENTAL REPRES ENTATIVE MAINLY CONTENDED THAT THE DISCLOSURE MADE BY THE ASSESSEE IN THE RETURNS OF INCOME FILED FOR THE ASSESSMENT YEAR 1991-92 AND 19 92-93 CANNOT BE TREATED AS PERTAINING TO THE IMPUGNED PROPERTY AS T HE ADDRESS OF THE PROPERTY FOR WHICH THE SAID INVESTMENTS WERE MADE H AVE NOT BEEN DISCLOSED IN THE SAID RETURNS. HOWEVER, WE ARE UNABLE TO AGRE E WITH THE SAID CONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATI VE. THE ASSESSING OFFICER HAS ASSESSED THE COST OF HOUSE PROPERTY LOC ATED AT MURALI NAGAR, VISAKHAPATNAM AS THE UNDISCLOSED INCOME OF THE ASSE SSEE AND HE HAS NOT POINTED OUT EXISTENCE OF ANY OTHER HOUSE PROPERTY I N THE HANDS OF HUF. ALL OTHER IMMOVABLE PROPERTIES THAT CAME TO THE NOTICE OF THE DEPARTMENT DURING THE COURSE OF SEARCH HAVE BEEN ASSESSED IN T HE HANDS OF THE INDIVIDUAL. THE LEARNED AUTHORISED REPRESENTATIVE A LSO SUBMITTED DURING THE COURSE OF HEARING THAT THE HUF IS POSSESSED OF THE IMPUGNED HOUSE PROPERTY ONLY. IN THESE CIRCUMSTANCES, IT CANNOT BE HELD THAT THE HUF COULD HAVE MADE INVESTMENT IN ANY OTHER PROPERTY OTHER TH AN THE HOUSE PROPERTY LOCATED AT MURALINAGAR, VISAKHAPATNAM. ITSSA 76 OF 2002 & CO 2 OF 2008 OF G SUBHASH CHANDR A BOSE VISAKHAPATNAM PAGE 10 OF 12 7.2 WE HAVE ALREADY HELD THAT THE VERY EXISTENCE OF THE IMPUGNED HOUSE PROPERTY CONSTITUTES MATERIAL SUFFICIENT TO TREAT T HE UNDISCLOSED INVESTMENT THEREIN AS THE UNDISCLOSED INCOME OF THE ASSESSEE. THE LEARNED CIT(A) HAS DELETED THE IMPUGNED ADDITION BY TREATING THE H OUSE PROPERTY AS A DISCLOSED ASSET. HOWEVER, THE QUESTION HERE IS NOT WITH REGARD TO THE DISCLOSURE OF EXISTENCE OF HOUSE PROPERTY, BUT IT R ELATES TO THE UNDISCLOSED INVESTMENT MADE IN THE CONSTRUCTION OF THE SAID PRO PERTY. IN THIS REGARD THE STATEMENTS MADE BY THE ASSESSEE AT VARIOUS STAG ES ARE CONTRADICTING WITH EACH OTHER. IN THE SWORN STATEMENT, THE ASSESS EE HAS STATED THAT THE COST OF INVESTMENT IN THE IMPUGNED PROPERTY IS RS. 7.50 LAKHS. HOWEVER, IN THE CASH FLOW STATEMENT FILED ALONG WITH THE BLOCK RETURN, THE ASSESSEE HAS STATED THE COST TO BE RS.10.75 LAKHS. WHILE THE AM OUNT SPENT ON CONSTRUCTION MADE DURING THE FINANCIAL YEAR 1991-92 WAS SHOWN AT RS.2,85,000/- IN THE RETURN OF INCOME, THE SAME WAS SHOWN AT RS.4,35,000/- IN THE CASH FLOW STATEMENT. IT APPEAR S THAT THE ASSESSEE HAS NOT PRODUCED ANY MATERIAL TO SUBSTANTIATE ITS CLAIM OF COST OF CONSTRUCTION. IN THESE CIRCUMSTANCES, THE ASSESSING OFFICER HAD NO OTHER OPTION EXCEPT TO REFER THE MATTER OF VALUATION TO THE DVO. HENCE, I N OUR VIEW, THE COST OF CONSTRUCTION DETERMINED BY THE DVO (INCLUDING THE C OST OF SITE) AT RS.11,06,357/- HAS TO BE CONSIDERED FOR THE PURPOSE OF ASSESSMENT. 7.3 NEXT, WE HAVE TO DETERMINE THE AMOUNT OF IN VESTMENT ALREADY DECLARED BY THE ASSESSEE TO THE DEPARTMENT. THE ASS ESSEE HAS DISCLOSED FOLLOWING AMOUNT IN ITS RETURN OF INCOME FILED FOR THE ASSESSMENT YEARS 1991-92 AND 1992-93 AS RELATING TO THE COST OF CONS TRUCTION: ASSESSMENT YEAR 1991-92 - RS.2,56,000 ASSESSMENT YEAR 1992-93 - RS.2,85,000 --------------- TOTAL = RS.5,41,000 ======== ITSSA 76 OF 2002 & CO 2 OF 2008 OF G SUBHASH CHANDR A BOSE VISAKHAPATNAM PAGE 11 OF 12 THOUGH THE ASSESSEE FILED THE RETURN OF INCOME FOR ASSESSMENT YEAR 1993- 94, NO FURTHER INVESTMENT ON CONSTRUCTION WAS DECLA RED THEREIN. ONLY AFTER THE SEARCH, THE ASSESSEE HAS FILED CASH FLOW STATEM ENTS IN SUPPORT OF THE IMPUGNED INVESTMENT. HENCE, IN OUR VIEW, THE SAID CASH FLOW STATEMENT CANNOT BE TAKEN COGNIZANCE OF. THUS, IN OUR VIEW, T HE TOTAL AMOUNT OF INVESTMENT ALREADY DECLARED BY THE ASSESSEE ON THE IMPUGNED HOUSE PROPERTY WORKS OUT TO ONLY RS.5,41,000/- AND THE SA ID AMOUNT ONLY COULD BE GIVEN CREDIT AGAINST THE COST OF CONSTRUCTION OF RS .11,06,357/- DETERMINED BY THE ASSESSING OFFICER. ACCORDINGLY WE SET ASIDE THE ORDER OF LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFIC ER TO ALLOW CREDIT OF RS.5,41,000/- AGAINST THE UNEXPLAINED INVESTMENT DE TERMINED FOR MURALI NAGAR HOUSE PROPERTY AND TREAT THE DIFFERENCE AS TH E UNDISCLOSED INCOME OF THE ASSESSEE. 8. IN THE CROSS OBJECTION, THE ASSESSEE IS ASSA ILING THE DECISION OF LEARNED CIT(A) IN CONFIRMING THE ADDITION PERTAININ G TO THE AGRICULTURAL INCOME TO THE EXTENT OF RS.3,05,000/-. THE ASSESSI NG OFFICER DETERMINED THE UNDISCLOSED INCOME PERTAINING TO AGRICULTURAL I NCOME AT RS.8,30,000/- AND THE SAME WAS CONFIRMED BY LEARNED CIT(A) TO THE EXTENT OF RS.3,05,000/-. HOWEVER, ON A CAREFUL PERUSAL OF TH E ASSESSMENT ORDER, WE NOTICE THAT THE ASSESSING OFFICER HAS CULLED OUT TH E FIGURES PERTAINING TO THE AGRICULTURAL INCOME FROM THE CASH FLOW STATEMENTS F ILED BY THE ASSESSEE ALONG WITH THE BLOCK RETURN FILED BY IT. THE ASSESS EE HAD SHOWN AN AGGREGATE AMOUNT OF RS.8,30,000/- AS AGRICULTURAL I NCOME FOR THE ASSESSMENT YEARS 1991-92 TO 1998-99. THUS THE VERY BASIS FOR ASSESSING THE ABOVE SAID AMOUNT OF RS.8,30,000/- IS THE CASH FLOW STATEMENT FILED BY THE ASSESSEE SUBSEQUENT TO THE DATE OF SEARCH. IT IS WELL SETTLED PROPOSITION OF LAW THAT THE BLOCK ASSESSMENT CAN BE MADE ONLY O N THE BASIS OF MATERIAL ITSSA 76 OF 2002 & CO 2 OF 2008 OF G SUBHASH CHANDR A BOSE VISAKHAPATNAM PAGE 12 OF 12 FOUND DURING THE COURSE OF SEARCH AND THERE IS NO D ISPUTE THAT THE DEPARTMENT DID NOT UNEARTH PERTAINING TO THE AGRICU LTURAL INCOME. HENCE, THE SAID ADDITION OF RS.8,30,000/- IS LIABLE TO BE DELETED IN THE ABSENCE OF ANY SUCH INCRIMINATING MATERIAL. ACCORDINGLY, WE SET ASIDE THE ORDER OF LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSI NG OFFICER TO DELETE THE IMPUGNED ADDITION OF RS.8,30,000/-. 9. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 7 TH APRIL, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE:07-04-2011 COPY TO 1 THE DY.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1 , VISAKHAPATNAM 2 SHRI G. SUBHASHCHANDRA BOSE, PENT HOUSE, JANANI R ESIDENCE, MYTREYI NAGAR, PANDURANGAPURAM, VISAKHAPATNAM 530 003 3 4. THE CIT CENTRAL, HYDERABAD THE CIT(A)-I, HYDERABAD, 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM