Gulmohar Embroideries Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(2), Surat

CO 56/AHD/2009

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 8075 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-12-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 31-10-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 24-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: IS A COM
• Keywords: Unexplained cash credit; Rejection of books of accounts; Bogus Share capital; Unexplained investment; Source of fund; Valuation report
• Section: 143(3); 133(6); 68; 69

Judgement Text

ITA NO 300 & CO.56/AHD/2009 A.YR.. 2005 -06. 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AH MEDABAD (BEFORE SHRI MUKUL KR.SHRAWAT JM & SHRI ANIL CHATUR VEDI A.M.) I.T.A. NO. 300/AHD/2009. (ASSESSMENT YEAR: 2005-06) INCOMETAX OFFICER, WARD 1(2), ROOMNO.112, AAYAKAR BHAVAN, MAJURA GATE, SURAT. (APPELLANT) VS. M/S.GULMOHAR EMBROIDEIRES PRIVATE LTD., PLOT O.A-1/4 HAUZIWALA INDL.ESTATE, SACHIN UDYOG, SACHI, SURAT. (RESPONDENT) C.O. NO. 56/AHD/2009. (ARISIG OUT OF ITA NO .300/AHD/2009) (ASSESSMENT YEAR: 2005-06) M/S.GULMOHAR EMBROIDEIRES PRIVATE LTD., PLOT O.A-1/4 HAUZIWALA INDL.ESTATE, SACHIN UDYOG, SACHI, SURAT. (APPELLANT) VS. INCOMETAX OFFICER, WARD 1(2), ROOMNO.112, AAYAKAR BHAVAN, MAJURA GATE, SURAT. (RESPONDENT) PAN: AACCG 1630R ON BEHALF OF REVENUE : MR. T.SHANKAR,SR. D.R. O BEHALF OF ASSESSEE : MR. SAPNESH SHETH. ( )/ ORDER DATE OF HEARING : 31-10 -2012 DATE OF PRONOUNCEMENT : 28-12-2012 PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. ITA NO 300 & CO.56/AHD/2009 A.YR.. 2005 -06. 2 THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF THE LD. CIT (A)-I, SURAT DATED 28-11-2008 FOR THE ASSESSMENT YE AR 2005-06 WHEREAS THE CROSS OBJECTION IS FILED BY THE ASSESSEE. 2. ASSESSEE IS A COMPANY WHICH HAD NOT STARTED ITS BUSINESS ACTIVITIES BUT ONLY CERTAIN PURCHASES WERE MADE DURING THE YEA R UNDER CONSIDERATION. ASSESSEE FILED ITS RETURN OF INCOME ON 26-9-2005 DE CLARING TOTAL INCOME OFRS. NIL. THE CASE WAS SELECTED FOR SCRUTINY AND T HEREAFTER THE ASSESSMENT WAS FRAMED U/S. 143(3) VIDE ORDER DATED 31-12-2007 AND THE TOTAL INCOME WAS DETERMINED AT RS.38,09,390/- AFTER MAKING ADDITIONS ON ACCOUNT OF UNEXPLAINED CASH CREDITS AND UNEXPLAINED INVESTMENTS IN LAND. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE CA RRIED THE MATTER BEFORE CIT (A). CIT (A) VIDE HIS ORDER DATED 28-11-2008 G RANTED PARTIAL RELIEF TO THE ASSESSEE. IT IS AGAINST THE AFORESAID ACTION OF CIT (A), THE REVENUE IS NOW IN APPEAL BEFORE US AND THE ASSESSEE HAS ALSO F ILED CROSS OBJECTION FOR NOT DELETING THE ENTIRE ADDITION MADE BY A.O. THE GROUNDS RAISED IN REVENUES APPEAL READ AS UNDER:- 1. ON THE FACT AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (A)-I, SURAT HAS ERRED IN DELETING THE ADDITION MADE BY A.O. OF RS.27,13,300/- ON ACCOUNT OF UNEXPLAINED CASH CRED ITS AND SHARE APPLICATION MONEY HOLDING THAT BY FURNISHING CONFI RMATORY LETTER AND PERMANENT ACCOUNT NUMBER OF THE CREDITORS, THE ASSE SSEE HAS DISCHARGED ITS PRELIMINARY OBLIGATION LIES UPON IT, IGNORING THE MATERIAL FACTS THAT INSPITE OF REPEATED REQUESTS MADE BY THE A.O.DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FAILED TO FURNISH ANY OF THE CREDITORS FOR CROSS VERIFICATION WITH REGARD TO THEIR CREDIT WORTHINESS WHICH CANNOT BE VERIFIED ONLY FRO M THE CONFIRMATORY LETTER AND MERE PAN PARTICULARLY WHEN MAJOR CREDITO RS WERE IN CASH. 2. ON THE FACT AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A)-I, SURAT HAS ERRED IN RESTRICTING T HE ADDITION MADE BY ITA NO 300 & CO.56/AHD/2009 A.YR.. 2005 -06. 3 THE A.O. OFRS.10,72, TO RS.6,57,595/- ON ACCOUNT OF SUPPRESSION OF INVESTMENT MADE IN LAND RELYING UPON THE BILL FOR C ONSTRUCTION OF WALL [AN AFTERTHOUGHT CREATION ON THE PART OF THE ASSESS EE] CLAIMED TO HAVE BEEN INCURRED IN NEXT YEAR FURNISHED BY THE AS SESSEE DURING THE COURSE OF CROSS EXAMINATION OF THE AVO AND NOT DURI NG THE COURSE OF VALUATION PROCEEDINGS OR DURING THE COURSE OF AS SESSMENT PROCEEDINGS, IGNORING THE MATERIAL FACT THAT THE A VO HAS VERY CLEARLY ADMITTED THAT NO SUCH BILLS WERE PRODUCED BEFORE HI M DURING THE COURSE OF VALUATION PROCEEDINGS. 3. THE CROSS OBJECTION OF ASSESSEE READS AS UNDER:- 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT, THE LD. CIT (A) HAS ERRED IN PARTLY CO NFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING ADDITION OF RS.6,57,595 /-OUT OF RS.10,72,200/- ON ACCOUNT OF SUPPRESSION OF INVESTM ENT IN LAND. I.T.A. NO.300/AHD/2009 (BY REVENUE). WE FIRST TAKE UP THE APPEAL OF THE REVENUE. 4. FIRST GROUND IS WITH RESPECT TO THE ADDITION OF RS.27,13,300/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT AND SHARE APPLIC ATION MONEY. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE COMPANY WAS INCORPORATED ON 25-6-2004 AND HAD SHOWN THE RECEIPT OF SHARE CAPITAL OF RS.29,00,000/- ALONG WI TH SHARE APPLICATION MONEY OF RS.15,52,100/- APART FROM UNSECURED LOAN O F RS.10,02,200/-.THE RECEIPT OF SHARE APPLICATION MONEY WAS IN CASH. THE DETAILS OF THE SAME ARE REPRODUCED AT PAGE 9 OF THE ASSESSMENT ORDER. THE A SSESSEE WAS DIRECTED TO DISCHARGE ITS ONUS AND PROVE THE GENUINENESS OF THE TRANSACTIONS, IDENTITY AND CREDIT WORTHINESS OF THE SHAREHOLDERS AND THE LENDERS. ASSESSEE SUBMITTED COPIES OF ACKNOWLEDGEMENT OF RET URN FILED IN SOME OF THE CASES, GAVE BANK STATEMENTS IN SOME CASES AND T HE PAN NUMBERS. THE ASSESSEE ALSO REQUESTED A.O. TO ISSUE NOTICES U /S. 133(6) DIRECTLY TO ITA NO 300 & CO.56/AHD/2009 A.YR.. 2005 -06. 4 THE LENDERS. SINCE MOST OF THE FUNDS WAS INTRODUCED IN CASH AND SINCE THE ASSESSEE FAILED TO PROVE THE CREDIT WORTHINESS OF T HE SHAREHOLDERS, THE A.O. TREATED THE AMOUNT RECEIVED AS CASH CREDIT U/S. 68 AND ADDED RS.27,13,300/- TO THE TOTAL INCOME. AGGRIEVED BY T HE ACTION OF A.O., THE ASSESSEE CARRIED THE MATTER BEFORE CIT (A). CIT (A) DELETED THE ADDITION BY HOLDING AS UNDER:- 2.3.1. I HAVE CONSIDERED THE SUBMISSION MADE BY TH E APPELLANT AND THE OBSERVATION OF THE A.O. FROM, THE ABOVE DI SCUSSION, IT IS CLEAR THAT THE ASSESSEE HAD FILED CONFIRMATIONS ALO NG WITH NAMES, ADDRESSES AND PANS. IT HAD ALSO GIVEN COPIES OF ACK NOWLEDGEMENTS OF RETURNS OF INCOME FILED IN RESPECT OF EVERY PART Y, EXCEPT SHRI RAHUL R. GUPTA. THE APPELLANT HAD ALSO REQUESTED THE A.O. A NUMBER OF TIMES TO MAKE INQUIRIES FROM THE RESPECTIVE PARTIES , EITHER BY ISSUING NOTICE DIRECTLY TO THEM OR BY SENDING COMMISSION IN SOME OFFICES IN DELHI. FROM THE ABOVE, IT IS CLEAR THAT THE APPELLA NT HAD DISCHARGED ITS ONUS IN RESPECT OF ALL THE PARTIES, EXCEPT IN THE C ASE OF SHRI RAHUL R. GUPTA THEREFORE, AS PER THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS PVT. LTD. (SUPRA ), NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE COMPANY IN RES PECT OF SHARE CAPITAL AND SHARE APPLICATION MONEY. AS REGARDS SHR I RAHUL R. GUPTA ALSO THE APPELLANT HAD GIVEN PAN, NAME AND ADDRESS AND THEREFORE, AS PER THIS DECISION OF THE HONBLE SUPREME COURT, IF ANY CASH IS TO BE TAKEN THEN IT HAS TO BE TAKEN IN THE HANDS OF TH E INDIVIDUAL BUT NOT IN THE HANDS OF THE COMPANY. HENCE FOLLOWING THE DE CISION OF THE HONBLE SUPREME COURT (SUPRA),THE ADDITION OF RS.15 ,90,000/- AS UNEXPLAINED SHARE CAPITAL AND RS.1,21,100/- AS UNEX PLAINED SHARE APPLICATION MONEY IS DELETED. 2.3.2. AS REGARDS UNSECURED LOAN OF RS.10,02,2 00/- FROM M/S. NAVRANG ELECTRONICS, IT IS SEEN THAT THE A.O. HIMSE LF HAS STATED THAT A CONFIRMATION WAS FILED WITH PAN. THE CONFIRMATION C ONTAINED FULL ADDRESS. THE A.O. HAS WRITTEN IN THE ASSESSMENT ORD ER THAT ON GOING THROUGH THE BANK STATEMENT, IT WAS NOTICED THAT M/S . NAVRANG ELECTRONICS IS HAVING CASH CREDIT FACILITY. THIS SH OWS THAT THE ASSESSEE HAD NOT ONLY FILED CONFIRMATION WITH PAN A ND FULL ADDRESS ITA NO 300 & CO.56/AHD/2009 A.YR.. 2005 -06. 5 BUT ALSO FILED COPY OF BANK STATEMENT AND ACKNOWLED GEMENT OF INCOME TAX RETURN FILED. THE APPELLANT HAD STATED T HAT IT HAD DISCHARGED THE ONUS BY GIVING CONFIRMATION WITH PAN AND BANK STATEMENT AND, THEREFORE, IF AT ALL ANY ADDITION HA S TO BE MADE THEN IT HAS TO BE MADE IN THE HANDS OF M/S. NAVRANG ELECTRO NICS. THE SOURCE OF CASH DEPOSIT MADE BY M/S. NAVRANG ELECTRONICS CA NNOT BE ASKED FROM THE ASSESSEE AS FOR THE DECISION OF THE HONBL E GUJARAT HIGH COURT IN THE CASE OF NEMICHAND KOTHARI (264 ITR 25 4), BECAUSE THAT WOULD AMOUNT ASKING SOURCE OF SOURCE. AS REGARDS CR EDITWORTHINESS OF M/S. NAVRAG ELECTRONICS, THE SAME IS PROVED BY T HE FACT THAT IT WAS ENJOYING THE HUGE CASH CREDIT LIMIT FROM THE BANK T O THE EXTENT OF RS.80 LACS. I AGREE WITH THE APPELLANT. THE SOURCE OF SOURCE CANNOT BE ASKED IN THIS CASE. IDENTITY OF M/S. NAVRANG ELE CTRONICS, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS HAS BEEN ESTABLISHED. AS PER THE DECISION OF THE HONBLE SUP REME COURT IN THE CASE OF ORISSA CORPORATION (52 CTR-138) AND THE DEC ISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF ROHINI BU ILDERS (182 CTR- 373), NO ADDITION CAN BE MADE IN THE HANDS OF THE A SSESSEE COMPANY AND THE SAME IS HEREBY DELETED. 6. THE REVENUE BEING AGGRIEVED BY THE ORDER OF CIT (A), IS NOW IN APPEAL BEFORE US. 7. BEFORE US, THE LD. D.R. SUBMITTED THAT THE RECEI PTS OF SHARE APPLICATION MONEY WERE IN CASH. THE ASSESSEE COULD NOT FURNISH THE DETAILS IN SUPPORT OF SOURCE OF FUND NOR DID THE ASSESSEE P RODUCE THE PARTIES PERSONALLY BEFORE THE A.O. HE SUBMITTED THAT IN THE ABSENCE OF THE PERSONAL PRESENCE OR ANY CONSTRUCTIVE DETAILS WHICH MAY PROV E THEIR CREDITWORTHINESS, THE CREDITWORTHINESS OF THE CREDI TORS CANNOT BE VERIFIED. HE THUS SUPPORTED THE ORDER OF THE A.O. AND URGED T HAT THE ORDER OF THE A.O. BE UPHELD. ITA NO 300 & CO.56/AHD/2009 A.YR.. 2005 -06. 6 8. ON THE OTHER HAND, THE LD. A.R. SUBMITTED THAT T HE ASSESSEE HAD FILED CONFIRMATIONS ALONG WITH THE NAMES, ADDRESSES AND P AN NUMBERS AND HAD THUS DISCHARGED THE ONUS CAST ON THE ASSESSEE. HE F URTHER RELIED ON THE DECISION OF THE APEX COURT IN THE CASE OF LOVELY EX PORTS 216 CTR 195. HE THUS SUPPORTED THE ORDER OF CIT (A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE UNDISPUTED FACT IS THAT THE ASSESSEE HA D RECEIVED SHARE APPLICATION MONEY FROM VARIOUS PERSONS DURING THE Y EAR APART FROM UNSECURED LOAN. BEFORE A.O. ASSESSEE HAD FURNISHED NAME, ADDRESS, PAN NUMBERS AND THE COPY OF CONFIRMATION. THE ASSESSEE HAD ALSO REQUESTED THE A.O. TO ISSUE NOTICE U/S. 133(6) TO THE INDIVID UALS TO PRESENT THEMSELVES BEFORE THE A.O. CIT (A) WHILE DELETING THE ADDITION HAS GIVEN A FACTUAL FINDING THAT THE ASSESSEE HAD FILED CONFIRMATIONS A LONG WITH THE NAMES, ADDRESSES AND PAN NUMBERS. THE ASSESSEE HAD ALSO FI LED THE COPIES OF ACKNOWLEDGEMENTS OF RETURN OF INCOME IN RESPECT OF ALL THE PARTIES EXCEPT IN THE CASE OF MR. RAHUL GUPTA. IN THE CASE OF RAHUL G UPTA, THE ASSESSEE HAD GIVEN HIS PAN, NAME AND ADDRESS. CONSIDERING THE MA TERIAL ON RECORD, CIT (A) HAS HELD THAT ASSESSEE HAS DISCHARGED THE INITI AL BURDEN CAST ON THE ASSESSEE. CIT (A) RELYING ON THE DECISIONS OF HONB LE APEX COURT IN THE CASE OF LOVELY EXPORTS (SUPRA), ORISSA CORPORATION (SUPRA) AND THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF ROHINI BUILDERS (SUPRA) DELETED THE ADDITION. THE REVENUE COULD NOT BRING ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF CIT (A). THE R EVENUE COULD ALSO NOT DISTINGUISH THE FACTS OF THE CASE RELIED BY CIT (A) . IN VIEW OF THE AFORESAID CIRCUMSTANCES WE FIND NO REASON TO INTERFERE TO THE ORDER OF CIT (A). THUS THIS GROUND OF THE REVENUE IS DISMISSED. ITA NO 300 & CO.56/AHD/2009 A.YR.. 2005 -06. 7 GROUND NO.2 IS WITH RESPECT TO THE ADDITION ON ACCO UNT OF SUPPRESSION OF INVESTMENT IN LAND. 10. ON PERUSING THE DETAILS, THE A.O. NOTICED THAT ASSESSEE HAS SHOWN LAND AMOUNTING TO RS.9,27,756/- IN THE BALANCE SHEE T. ASSESSEE WAS ASKED TO PRODUCE THE PURCHASE DEED; CONSIDERATION P AID ETC. FROM THE DETAILS SUBMITTED BY THE ASSESSEE, A.O. WAS OF THE VIEW THAT THE PRICE OF LAND SHOWN BY THE ASSESSEE WAS VERY LESS AS COMPARE D TO THE PREVAILING MARKET RATE. HE ACCORDINGLY MADE REFERENCE U/S. 142 A TO THE DISTRICT VALUATION OFFICER (DVO). DVO VIDE HIS REPORT DATED 28-12-2007 WORKED OUT THE INVESTMENT IN LAND AT RS.18,03,000/- AS AGAINST RS.7,30,800/- SHOWN BY THE ASSESSEE. A.O. THEREAFTER SENT THE COPY OF THE REPORT OF DVO AND ISSUED SHOW CAUSE NOTICE TO ASSESSEE ASKING HIM TO SHOW AS TO WHY THE DIFFERENCE OF RS.10,72,000/- (RS.18,03,000 7,30,8 00) NOT BE CONSIDERED AS UNEXPLAINED INVESTMENT U/S. 69 AND ADDED TO THE INCOME. ASSESSEE INTERALIA SUBMITTED THAT ASSESSEE HAD PURCHASED THE PLOT OF LAND FOR RS.7,30,800/- AND INCURRED TRANSFER FEES ETC TO THE TUNE OF RS.1,96,956/- AND THE TOTAL COST OF LAND AMOUNTING TO RS.9,27,956 /- WAS SHOWN IN THE ACCOUNTS. IT WAS FURTHER SUBMITTED THAT THE ASSESSE E HAS EXECUTED THE PURCHASE DEED AT THE AFORESAID COST AND REGISTERED IT WITH THE APPROPRIATE AUTHORITIES. FURTHER, SOME OTHER PLOTS IN THE SAME INDUSTRIAL SOCIETY WERE REGISTERED IN THE SAME YEAR AT SAME COST AND THE SA ME WERE ALSO ACCEPTED BY THE REGISTRAR OFFICE. THE ASSESSEE FURTHER SUBM ITTED THAT DVO HAS CONSIDERED THE VALUE OF LAND ALONG WITH THE COMPOUN D WALL. ACCORDING TO THE ASSESSEE THE CONSTRUCTION OF THE COMPOUND WALL WAS COMPLETED IN THE SUBSEQUENT YEAR AND WAS THEREFORE SHOWN AS CAPITAL IN PROGRESS AND ITA NO 300 & CO.56/AHD/2009 A.YR.. 2005 -06. 8 THEREFORE NOT INCLUDED IN THE COST. A.O. DID NOT AC CEPT THE CONTENTION OF THE ASSESSEE. HE RELYING ON THE REPORT OF DVO HELD LAND COST TO BE RS.13,88,520/- (@ RS.190/- SQ. MT.) AND COST OF COM POUND WALL AT RS.4,14,605/- AND THEREFORE THE AGGREGATE INVESTMEN T IN LAND TO BE RS.18,03,000/- AND THEREBY TREATED THE DIFFERENCE O F RS.10,72,200/- AS SUPPRESSED VALUE OF LAND AS UNEXPLAINED INVESTMENT U/S. 69 AND ADDED TO THE INCOME. AGGRIEVED WITH THE ORDER OF A.O. THE AS SESSEE CARRIED THE MATTER BEFORE CIT (A). CIT (A) AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE AND THE REMAND REPORT RECEIVED FROM THE A. O. GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER:- 3.3. I HAVE CONSIDERED THE SUBMISSION MADE BY TH E APPELLANT AND THE OBSERVATION OF THE A.O. IT IS SEEN THAT THE APP ELLANT HAS NOT BEEN ABLE TO MAKE OUT ITS CASE THAT THE RATE ADOPTED BY THE AVO WAS NOT BASED ON FACTS. AS IS CLEAR FROM THE CROSS EXAMINAT ION REPORT OF THE A.O., THE AVO HAS ADOPTED THE RATE BASED ON REAL TR ANSACTIONS IN THE AREA OF THE APPELLANT. THE INSTANCE CITED BY THE AP PELLANT WERE NOT RELIED UPON BY THE AVO FOR THE REASONS GIVEN BY HIM DURING THE COURSE OF CROSS-EXAMINATION AND THAT IS THE APPELLA NT COULD NOT GIVE ANY PROOF AS TO WHETHER THOSE INSTANCES WERE ACCEPT ED BY THE STAMP DUTY AUTHORITIES OR WHETHER STAMP DUTY AUTHORITIES HAD LEVIED EXCESS STAMP DUTY BY REVALUING THOSE THREE INSTANCES GIVEN BY THE APPELLANT. HENCE, IT IS CLEAR THAT THE APPELLANTS CASE IS BAS ED ON UNSUBSTANTIATED COPIES OF AGREEMENT WHICH DO NOT PR OVE THAT THE RATES WERE INDEED ACCEPTED BY THE STAMP DUTY AUTHOR ITIES. THEREFORE, THE RATE ADOPTED BY THE AVO AND CONSEQUE NTLY BY THE A.O. IS CONFIRMED. WITH RESPECT TO THE ISSUE OF CO NSTRUCTION OF WALL, THE AVO HAS CLARIFIED DURING THE CROSS-EXAMINATION THAT NO DETAILS WERE SUBMITTED BY THE ASSESSEE DURING THE COURSE OF THE PROCESS OF VALUATION AND NO DATE OF CONSTRUCTION WAS PROVIDED AND, THEREFORE, HE HAD CONSIDERED THE WALL IN A.Y. 2005-06. PERUSAL OF LETTER DATED 24- 11-2008 SHOWS THAT IN HIS COMMENTS ON THE REMAND RE PORT THE APPELLANT HAD MADE NO SUBMISSION ON THE ISSUE OF WA LL. EXCEPT SAYING THAT IT WAS CLARIFIED THAT NO CONSTRUCTION O F COMPOUND WALL HAD ITA NO 300 & CO.56/AHD/2009 A.YR.. 2005 -06. 9 TAKEN PLACE IN THE CONCERNED PERIOD AND THE AVO WAS PROVIDED A COPY OF CONTRACTORS BILL. SINCE THE AVO HAD ADMITT ED THAT HE HAD INCLUDED THE WALL BECAUSE DETAILS WERE NOT PROVIDED , THE VALUE OF THE WALL AS MENTIONED IN THE ASSESSMENT ORDER OF RS.4,1 4,605/- IS ALLOWED AS NOT PERTAINING TO THE CURRENT YEAR. HENC E, THE ASSESSEE GETS A RELIEF OF RS.4,14,605/- BEING EXPENDITURE ON WALL INCURRED IN THE NEXT YEAR AND NOT IN THE CURRENT YEAR, WHICH WA S WRONGLY INCLUDED BY THE AVO. THEREFORE, THE ADDITION OF RS.10,72,200 /- IS RESTRICTED TO RS.6,57,595/-.HENCE THIS GROUND OF APPEAL IS PARTLY ALLOWED. 11. AGAINST THE ABOVE ACTION OF CIT (A), THE REVENU E IS IN APPEAL BEFORE US AND THE ASSESSEE HAS ALSO FILED CROSS OBJECTION FOR THE PARTIAL RELIEF GRANTED TO IT. 12. BEFORE US, THE LD. D.R. SUBMITTED THAT THE ASSE SSEE WAS GRANTED SUFFICIENT OPPORTUNITY TO PRODUCE THE DETAILS OF PR OPERTY AND THE A.O. HAD PROVIDED CROSS EXAMINATION OF AVO TO THE ASSESSEE D URING THE COURSE OF REMAND PROCEEDINGS. IT WAS FURTHER SUBMITTED THAT T HE ASSESSEE DID NOT SUBMIT ANY DETAILS IN RESPECT TO THE CONSTRUCTION O F WALL AND THEREFORE THE CONSTRUCTION COST OF THE WALL WAS INCLUDED IN THE C OST OF LAND. THE LD. D.R. FURTHER SUBMITTED THAT THE ASSESSEE SUBMITTED THE C OPY OF THE BILL FOR CONSTRUCTION COST OF WALL DURING THE COURSE OF CROS S EXAMINATION AND NOT DURING EITHER THE VALUATION PROCEEDINGS BEFORE THE VALUATION OFFICER OR DURING THE ASSESSMENT PROCEEDINGS BEFORE THE A.O. T HE LD. D.R. FURTHER SUBMITTED THAT THE ASSESSEE DID NOT FURNISH ANY SAT ISFACTORY EXPLANATION OR EVIDENCE TO SUBSTANTIATE ITS CLAIM THAT THE CONSTRU CTION OF WALL WAS CARRIED OUT IN THE NEXT ACCOUNTING YEAR AND NOT IN THE YEAR UNDER CONSIDERATION. HE ALSO POINTED OUT TO THE VALUATION REPORT OF THE AVO WHEREIN THE AVO HAS CATEGORICALLY STATED THAT DETAILS OF EXPENDITURE AN D WORK DONE AFTER THE DATE ITA NO 300 & CO.56/AHD/2009 A.YR.. 2005 -06. 10 OF PURCHASE WAS NOT SUBMITTED BY THE ASSESSEE. HE F URTHER SUBMITTED THAT ON THE FACTS OF THE CASE THE A.O. WAS FULLY JUSTIFI ED IN REFERRING THE MATTER WITH RESPECT TO VALUATION TO THE DVO AND FOR WHICH HE ALSO RELIED ON THE DECISION IN THE CASE OF SMT. KIRAN LATA VS. ITAT (2 009) 177 TAXMAN 420 (UTTARKHAND) AND INDIRA HOSPITAL RESEARCH AND DIAGN OSTIC CENTRE VS. ACIT (2012) 19 TAXMANN.COM 130 (KAR). HE THEREFORE SUBMI TTED THAT THE ORDER OF THE A.O. BE UPHELD. 13. ON THE OTHER HAND THE LD. A.R. SUBMITTED THAT T HE ASSESSEE HAD PURCHASED THE PLOT OF LAND DURING THE YEAR UNDER CO NSIDERATION AND THE SAME WAS REFLECTED IN ITS BOOKS OF ACCOUNTS. THE PU RCHASE DEED WAS EXECUTED IN THE SAME PERIOD WHEREIN THE VALUATION W AS ADOPTED BY THE LOCAL AUTHORITY FOR THE PURPOSE OF LEVY OF STAMP DU TY WHICH PROVES THAT THE COST PAID BY THE ASSESSEE WAS APPROPRIATE. HE FURTH ER SUBMITTED THAT AVO HAS CONSIDERED PLOT AND BOUNDARY WALL WHEREAS SINCE NO WALL WAS CONSTRUCTED DURING THE PERIOD UNDER REVIEW, ASSESSE E HAD CORRECTLY SHOWN THE VALUE OF LAND IN ITS BOOKS OF ACCOUNTS. HE FURT HER SUBMITTED THAT THE A.O. SHOULD HAVE FIRST DETECTED THE UNDISCLOSED SOU RCE OF INCOME IN THE HANDS OF ASSESSEE BEFORE RELYING ON THE REPORT OF A VO. HE FURTHER SUBMITTED THAT BEFORE MAKING REFERENCE TO AVO THE A .O. SHOULD HAVE FIRST REJECTED THE BOOKS OF ACCOUNTS. REFERENCE U/S. 142A WITHOUT FIRST REJECTING THE BOOKS WAS NOT AS PER THE PROVISIONS OF THE ACT. FOR THIS PROPOSITION HE RELIED ON THE DECISION OF APEX COURT IN THE CASE OF SARGAM CINEMA VS. CIT (2010) 328 ITR 513 (SC). HE THEREFORE URGED THAT TH E ADDITION OF RS.6,57,595/- CONFIRMED BY CIT (A) BE DELETED. ITA NO 300 & CO.56/AHD/2009 A.YR.. 2005 -06. 11 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE THE A.O. NOTICED THAT A SSESSEE HAD PURCHASED LAND. ACCORDING TO THE A.O. THE PRICE SHOWN BY THE ASSESSEE WAS LESS IN COMPARISON TO THE PREVAILING MARKET PRICE AND THERE FORE HE MADE A REFERENCE U/S. 142A TO THE DVO. THE LD. A.R. HAS AR GUED THAT BEFORE MAKING REFERENCE U/S.142A, REJECTION OF BOOKS IS NE CESSARY. SINCE THE ASSESSEE HAD NOT REJECTED THE BOOKS OF ACCOUNTS, RE FERENCE WAS NOT IN ORDER AND FOR THIS PROPOSITION HE RELIED ON THE DEC ISION OF APEX COURT IN THE CASE OF SARGAM CINEMA (SUPRA). THE LD. D.R. ON THE OTHER HAD HAS PLACED RELIANCE ON THE DECISION OF KARNATAKA HIGH COURT IN THE CASE OF INDIRA HOSPITAL (SUPRA). WE FIND THAT THE HONBLE HIGH COU RT WHILE DECIDING THE CASE IN THE CASE OF INDIRA HOSPITAL (SUPRA) AFTER C ONSIDERING THE DECISION OF APEX COURT IN THE CASE OF SARGAM CINEMA AND HAS H ELD AS UNDER:- ASSESSING OFFICER REFERRED MATTER TO DISTRICT VAL UATION OFFICER FOR ESTIMATING COST OF CONSTRUCTION OF HOSPITAL BUILDIN G ON GROUND THAT ACCOUNT OF ASSESSEE HAD NOT BEEN PROPERLY MAINTAINE D - SUBSEQUENTLY, ON BASIS OF REPORT OF DVO, ASSESSMENT ORDER WAS PASSED MAKING CERTAIN ADDITIONS FIRST APPELLATE A UTHORITY AND TRIBUNAL SUSTAINED 25 PER CENT OF ADDITION ASSESS EE THUS FILED INSTANT APPEAL CONTENDING THAT SINCE ASSESSING OFFI CER HAD NOT SPECIFICALLY SET ASIDE ACCOUNTS MAINTAINED BY ASSES SEE, MATTER COULD NOT BE REMITTED TO DVO AND, THEREFORE, IMPUGNED ORD ER PASSED BY TRIBUNAL WAS PERVERSE AND ARBITRARY IT WAS APPARE NT FROM RECORDS THAT TRIBUNAL HAD TAKEN A SPECIFIC VIEW THAT MATTER WAS REFERRED TO DVO ONLY AFTER IT WAS FOUND THAT ACCOUNT HAD NOT BE EN PROPERLY MAINTAINED WHICH WOULD NECESSARILY MEAN THAT ACCOUN T OF ASSESSEE HAD BEEN REJECTED AND REFERENCE HAD BEEN MADE BY DV O MOREOVER, TRIBUNAL HAD ALREADY GIVEN SUBSTANTIAL RELIEF TO AS SESSEE BY ADDING ONLY 25 PER CENT OF COST OF CONSTRUCTION WHETHER IN VIEW OF AFORESAID, IMPUGNED ORDER PASSED BY TRIBUNAL DID NO T REQUIRE ANY INTERFERENCE- HELD, YES. ITA NO 300 & CO.56/AHD/2009 A.YR.. 2005 -06. 12 15. AS THE DECISION OF KARNATAKA HIGH COURT IN THE CASE OF INDIRA HOSPITAL (SUPRA) IS THE LATEST DECISION OF THE HIGH COURT AN D SINCE IT HAS ALSO CONSIDERED THE DECISION OF APEX COURT IN THE CASE O F SARGAM CINEMA (SUPRA) AND SINCE NO OTHER SUBSEQUENT DECISION OF H IGH COURT HAS BEEN BROUGHT TO OUR NOTICE BY THE A.R., WE ARE INCLINED TO FOLLOW THE DECISION OF KARNATAKA HIGH COURT AND ACCORDINGLY HOLD THAT IN T HE FACTS OF THE PRESENT CASE, THE A.O. WAS JUSTIFIED IN MAKING REFERENCE U/ S. 142A TO THE DVO. 16. WE FIND THAT CIT (A) HAS GIVEN A CATEGORICAL FI NDING WHILE DECIDING THE ISSUE THAT THE ASSESSEE HAS NOT BEEN ABLE TO MAKE O UT ITS CASE THAT THE RATE ADOPTED BY THE AVO WAS NOT BASED ON FACTS. HE HAS FURTHER OBSERVED THAT THE ASSESSEE HAS RELIED ON THE UNSUBSTANTIATED COPIES OF THE AGREEMENT WHICH DO NOT PROVE THAT THE RATES WERE IN DEED ACCEPTED BY THE STAMP DUTY AUTHORITIES. WITH RESPECT TO THE CONSTRU CTION OF WALL IN SUBSEQUENT YEAR, HE HAS HELD THAT THE ASSESSEE DID NOT FURNISH THE REQUIRED DETAILS DURING THE COURSE OF PROCESS OF VALUATION. BEFORE US, THE LD. A.R. & D.R. COULD NOT BRING ANY MATERIAL ON RECORD TO CONT ROVERT THE FINDINGS OF CIT (A). IN VIEW OF THESE FACTS, WE FIND NO REASON TO I NTERFERE TO THE ORDER OF CIT (A). WE THUS UPHOLD THE ORDER OF CIT (A) ON THIS I SSUE. THUS THE GROUND OF THE REVENUE AND C.O. OF ASSESSEE ARE DISMISSED. ITA NO 300 & CO.56/AHD/2009 A.YR.. 2005 -06. 13 17. IN THE RESULT, THE APPEAL OF THE REVENUE AND C. O. OF THE ASSESSEE IS REJECTED. ORDER PRONOUNCED IN OPEN COURT ON 28 - 12 - 2012. SD/- SD/- (MUKUL KUMAR SHRAWAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACC OUNTANT MEMBER AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-I, SURAT. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. 1.DATE OF DICTATION 5 - 11 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 13 ,14 / 12 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 26 - 12 -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 28 - 12 -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 28 - 12 -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK - -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..