M/s Rajan Enterprises, Ambala city` V. DCIT-CC-1, Ludhiana

CO 7/CHANDI/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4466 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 08-08-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 54; 37; 132; 10; 154; 11; 15; 64; 43; 48; 72; 13

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ,च डीगढ़ I N T H E I N C O M E T A X A P P E L L A T E T R I B U N A L D I V I S I O N B E N C H , “ B ” , C H A N D I G A R H B E F OR E SH R I N . K . SA I N I , V I C E P R E SI D E N T & S H R I S U D H A N S HU SR I V A S T A V A , J U D I C I A L M E M B E R आयकरअपीलसं./ ITA No.169/C H D / 2 0 2 1 नधा रणवष / Assessment Year :2 0 1 7 - 1 8 The DCIT, Central Circle-1, Ludhiana बनाम M/s Rajan Enterprises, AggarsainChowk, Ambala City, Haryana थायीलेखासं./PAN NO: AAIFR0997F अपीलाथ /Appellant यथ /Respondent C.O. No. 7/Chd/2021 (arising in आयकरअपीलसं./ITA No. 169/C H D / 2 0 2 1 ) नधा रणवष / Assessment Year :2 0 1 7 - 1 8 M/s Rajan Enterprises, AggarsainChowk, Ambala City, Haryana बनाम The DCIT, Central Circle-1, Ludhiana थायीलेखासं./PAN NO: AAIFR0997F अपीलाथ /Appellant यथ /Respondent Hearing though video Conferencing नधा $रतीक&ओरसे/Assessee by : Sh. SudhirSehgal, Advocate राज वक&ओरसे/ Revenue by : Sh. Sarabjit Singh, CIT DR स ु नवाईक&तार+ख/Date of Hearing : 08.02.2022 उदघोषणाक&तार+ख/Date of Pronouncement : 06. 05.2022 आदेश/Order P er S u d h a ns h u S r iv as ta v a, Ju d ic i a l M e mb er : T hi s a p pe al is pr e fe rr ed b y t h e Re ve n ue a n d t he c ro ss ob j e ct i o n by t he as s e s s ee an d b ot h a r e ag ai ns t t h e o rd e r d a t ed 30. 04. 20 21 p a s s e db y t he L d. Co mm i s s i o n er o f I nc o m e T a x( A p pe a l s )- 5, L u dh ia na [h e re i n a f te r re fe rr ed t o a s ‘CI T ( A )’ ] a n d pe r t a i n t o a s s es s men t ye a r 20 1 7- 18 . 2 ITA 169-Chd/2021and C.O No.7/Chd/2021 Rajan Enterprises, Ambala City 2. 0 T he b ri e f fa c t s o f t he ca s e a r e t ha t t he a s s s ess e e is a p a rt ne rs hi p fi r m e ng a ge d i n t h e bus i ne s s o f t r a d i ng i n c l ot h. Th e r e t ur n o f in c o m e fo r t h e ca pt i o ne d ye a r w as fi l e d i n t e r ms o f s e ct i on 1 3 9 ( 1 ) o f th e In c o m e T a x A c t , 1 96 1 ( h e r e i n a ft e r c a l l ed ‘ t h e A ct ’) de cl a ri ng a t o t a l i nc o me o f Rs . 3, 76 , 67, 72 0 /- . S u b s eq uen tl y, o n 0 1. 11. 2 0 1 7 s e a r c h a n d s e iz u r e o pe ra t i ons u/ s 13 2 ( 1) o f t h e A c t w er e c a r ri e d o u t i n M / s R o op S qua r e G r ou p o f C o mp a n ie s an d s i n c e t h i s fi r m w as a p ar t o f t he G r o up , t he s e a rc h c o v er ed t he as s e s s ee f ir m a l s o. I n r es pons e t o no t i c e is s u ed u/ s 1 53 A o f t he A c t, t he fi r m f i l e d t he r et ur n o f in c o m e de c la ri ng i nc o me o f R s . 3, 76, 6 7, 720 / - . T he re a f t e r, t he as s e ss me n t w as co mp l e t e d u/ s 1 5 3A o f t he A c t at a n i n c o m e o f Rs . 4, 69, 89 , 10 0/- a ft e r ma k i n g t he fo l l ow i ng a dd i t i o ns : - 1. Rs . 3 , 80, 03 5 /- on a cc ou n t o f un d ec l a r e d gr o ss pro fit on un a c c o u nt ed s al e s o f Rs . 50, 67 , 1 3 6/ - 2. Rs . 3, 58 , 7 5 3/ - on a c c ou nt o f un a c c o unt ed i nv es t me n t i n s to c k pe r t a in i n g to u n di s cl os e d s a le s o f Rs . 50 , 67, 1 36 /- . 3. Rs . 8, 58 , 2 5 3/ - o n ac c o u nt o f u ne x pl ai ne d i nv e s t m e n t i n c ons t ru c t io n o f s ho w r oo m. 2. 1 A ggr i e v e d, t he a s s es s e e a pp ro ac he d t h e L d. F i rst A ppe l la t e A ut h or i t y ch al l e ng in g t he a d di t i o ns . Th e a p p ea l o f t h e a s s es s e e w as pa r t l y al l ow e d w i t h t h e L d. CI T (A ) de l et i n g t he a d di t i o n o f R s. 3, 58 , 75 3/ - pe rt a i n i ng t o un di s c l os e d in v e s t m en t i n t h e s t oc k on t h e gr o un d t h at t he a s s es s e e h a d a t urn o v e r in c r o re s a nd t h e sa l es for t h e 3 ITA 169-Chd/2021and C.O No.7/Chd/2021 Rajan Enterprises, Ambala City re l ev an t a s s es s me n t ye a r w e r e Rs . 1 4 6. 37 c r o re s a n d t h e c or r es p o n di n g c lo s i n g s t o c k w a s 10 . 3 7 c r o r e s an d, t he r e for e, th e a s s e ss ee ha d s uf fi ci e nt in ves t m e nt i n s t o c k a nd n o s e pa r a t e a d diti on o n t h i s a cc ou n t w as c al l ed fo r . Th e Ld. CIT (A ) a l s o de le t e d t he a ddi t i o n o f R s . 85 , 8 2, 5 93 /- o n a cc ou nt o f u n ex pl ai ne d i n v es t me n t i n t he c o ns t r u ct i o n o f s ho w ro o m by fo l l o w in g t he fi rs t a pp e l la t e o rd er i n as s e s s ee ’s ow n ca s e fo r A Y 20 16 -1 7, w h er ei n a s i m i l a r ad di t i o n h a d be e n de l e t e d . T h e L d . CI T(A ) , h ow e ve r, up hel d t he ad d i t i o n o f R s . 3 , 8 0, 0 35 / - o n ac c o un t o f gr os s pro fi t pe r t a in in g t o s a l es ou ts i de th e b o oks o f ac co u nt . 2. 2 A ggr i e v e d, t h e R e v e nu e h a s a pp r o ac h e d t h i s T ri bu n a l c h a ll e ng i n g t he d e l et i o n o f ad d i ti on s by t he L d. CI T( A ) a nd foll ow i n g gro u n ds hav e be e n ra is e d by t he Re ven ue i n t hi s ap p ea l : - 1. Whether upon facts and circumstances of the case, the Ld. CIT (A) was justified in deleting the addition made on account of unaccounted investment in stock amounting to Rs. 3,58,753/- by applying stock turnover ratio @ 7.08% especially when the said turnover ratio rate @7.08% has been declared by the assessee in its audited balance sheet? 2. Whether upon the facts and circumstances of the case, the Ld. CIT (A) was justified in deleting the addition made on account of unaccounted investment in stock amounting to Rs. 3,58,753/- by applying stock turnover ratio @ 7.08% especially when the Ld. CIT(A) has upheld the addition made on account of GP on the same undisclosed sales? 3. Whether upon the facts and circumstances of the case, the Ld. CIT (A) was justified in deleting the addition made on account of unexplained investment made in construction of showroom amounting to Rs.85,82,593/-? 4 ITA 169-Chd/2021and C.O No.7/Chd/2021 Rajan Enterprises, Ambala City 4. The Appellant craves leave to add, amend, modify, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal. 2. 3 T he a s s e ss e e , i n i t s c ro s s o bj ec t i o n, ha s r ai s ed fol l ow i n g gro un ds : - 1. That the Ld. CIT(A) has rightly deleted the various additions as made by the Assessing Officer. 2. That the appeal of the department is not maintainable since on the basis of additions made by the Assessing Officer, which were subject matter of appeal before the CIT(A), the total tax and interest as per the order of CIT(A), dated 30.04.2021, was only to the tune of Rs. 43,23,154/- and, therefore, the appeal of the department is not maintainable and liable to be dismissed as per Board Circular, being taxed less than Rs. 50 lacs. 3. That the rectification order u/s 154 as passed by the Assessing Officer for the same assessment year vide order, dated 16.06.2021, after the order of CIT(A), dated 30.04.2021, charging to tax the addition on account of unexplained investment and the rate of 60% by invoking the provisions of section 115BBE cannot be considered for the purposes of filing the appeal since the same very addition stood deleted by the CIT(A), vide order, dated 30.04.2021. 4. Notwithstanding the above said ground of appeal, the assessment as framed by the Assessing Officer deserves to be quashed since "Mandatory Approval" as given by the Ld. Addl. CIT u/s 153D is without any application of mind and being a 'Mechanical Approval" only, the assessment as framed by the Assessing Officer at an income of Rs. 4,69,89,100/- deserves to be quashed in view of the binding judgment of Hon'ble Jurisdictional Bench of ITAT, in the case of Inder International in ITA No.1573/Chd/2018. 5 ITA 169-Chd/2021and C.O No.7/Chd/2021 Rajan Enterprises, Ambala City 5. That the respondent craves leave to add or amend any grounds of appeal before the appeal is finally heard or disposed off. 3. 0 A t t h e o u ts e t , t he Be nc h r a i s e d a q ue r y t h a t s in c e a s pe r th e o rde r o f t h e Ld. CI T (A ) v i d e C ol u mn N o. 5, t h e t ot al t ax l i a bi l it y i n c l u di ng i nt er es t , w as o nl y Rs . 43 , 2 3, 1 54 /- i. e . l es s t h a n Rs . 5 0, 0 0, 00 0 /- , w hi ch w as th e mi ni mu m s t at u t o r y l i mi t for a D e p a r t m e n t a l ap p e a l t o b e m ai nt ai na bl e b e for e t h is T r i b u na l , w hy s h o u l d t h e D e pa r t me n t a l a pp e a l no t be di s mi s s ed a t t he v e r y t hr e s ho l d it s e l f. I n r es p o ns e to t h e qu e r y , t he L d. A R s u b mi t t ed t h a t s u b s eq u e n t t o t h e pa s s in g o f t h e i m p ug n e d or d e r b y th e L d . CI T (A ) , a n ot i c e u/ s 15 4 o f th e A c t w a s i s s ue d by t h e A s s es s i ng O ff i c e r p ro p os i n g c h a r gi ng o f t a x @ 60 % i n t e r ms o f s e c t i o n 11 5B BE o f t h e A c t on t h e ad di ti on o f Rs . 85, 82 , 693 /-. I t w a s fur t he r s ub m i tt e d t ha t , t he r e a f te r, th e A O pa s sed t he o r de r u/ s 1 5 4 o f t h eA c t by c al c u l at i n g t he ta x o n a d di ti on o f Rs . 85 , 8 2, 59 3 / - @ 60 % w hi c h a mou nt e d t o Rs . 64 , 36, 94 5/ - . I t w a s s ub mi t te d b y th e L d. A R, t ha t a pp a r e n t l y , th e D e pa r t me n t a l a p p e a l ha d be e n fi l ed a ft e r th e pas s i n g o f t he a fo r es a i d or d e r u/ s 154 o f t h e A ct a n d, th e re fo re , pr i m a fa c ie , th e t ax e ffe c t i nv o l v e d w a s a bo v e t h e s ta t u t o ry l i mi t o f Rs. 50, 00 , 00 0/ -. 3. 1 H ow e ver , it w as t h e c o n t e n t i o n o f t h e L d. A R t ha t t h e a p pe a l o f t he D ep ar t m e n t w a s no t ma i n ta i n a b le b ec au s e as o n the da t e o f p as s i n g o f t he or de r u/ s 1 54 o f t h e A c t i. e . 16 . 0 6. 2 02 1 , t he a dd i t i on o f R s. 85 , 8 2, 5 93 /- a l r e a d y s to o d d el e te d by t h e or de r o f th e Ld . CI T (A ) w h ic h 6 ITA 169-Chd/2021and C.O No.7/Chd/2021 Rajan Enterprises, Ambala City w as pa s s ed o n 30. 04. 2 0 21 a n d s in c e th e as s e s s me n t or d e r g o t me r g e d w i th t he or de r o f t he L d. F i r s t A pp el l at e A u t ho ri t y o n 3 0 . 04. 20 2 1, t he s a me co u l d n o t h a v e be e n r e c t i fi e d b y th e A O . I t wa s s u b mi t t e d t ha t a cc or d i n g l y t h e a p pe a l o f t he D ep a rt m e nt w a s l ia bl e t o be di s mi s s e d a t t he v er y t hr e s ho l d i ts e l f. 4. 0 T he L d. A R, t he r e a ft e r, re fe rr e d t o t he g ro un ds ra i s ed i n t h e M e mo ra nd u m o f Cr o s s O bj e c t i on, sp ec i fi ca l ly G ro un d N o. 4 a n d s ub m i tt e d th at th e Ld . A dd l. CI T h ad n ot a ppl i e d h is mi n d a t t he ti me o f gr a n t i n g ap p ro v a l u/ s 1 5 3D o f t h e A c t a nd it w a s a pp ar en t t ha t t h e m a nd a t o r y a pp r o va l ha d be e n g iv e n by t h e L d. A d dl . CI T i n a m e r e m ec ha ni ca l ma n ne r and , t he r e f or e , t h e s a me de s e r v ed t o be q u as h e d . Re l ia nc e w as pl a c e d o n n u me r ou s j ud i c i al pre ce de nt s b y c o o rd i na t e Be nc h e s o f t h is T r i bu na l, w h e re i n i t h a d b ee n h e l d th a t w he re a p pr ova l u/ s 15 3 D o f th e A ct ha s b e e n g i v e n i n a m ec ha ni ca l w a y, w i t hou t a pp l i ca ti on o f mi n d, th e as s e s s me nt or d er p a s s ed c ons e que nt t o s uc h m ec ha ni ca l a pp r o va l d es e r ve s t o be q u as h ed . T h e L d. A R su b mi t t e d t ha t i n vi e w o f t h e s e t t l e d j u di c ia l pr e c e d e nt , t he a s ses s me nt o rd e r i t s el f b e qu as h e d. 5. 0 In re s p ons e t o t he ar g u m en t s o f th e L d. A R, t he Ld. CI T D R s ub m i tt e d th at t h e A O w a s w el l w i t hi n h i s ri ght s to r ec t i f y t h e a s s es s men t o rd e r by e n h a n ci ng t he ra t e o f ta x b e ca us e a s pe r t h e a s s es s men t or de r i t s e l f, i n p a r a 5. 4, i t h as b ee n cl e a r l y me nt i on e d t ha t 7 ITA 169-Chd/2021and C.O No.7/Chd/2021 Rajan Enterprises, Ambala City t ax s ho u l d b e c ha r ge d u / s 1 1 5B B E a n d, th u s , i t w a s a m is t a k e a p p ar en t fr o m t h e re c o r d w hi ch w a s ri gh t l y r e c t i fi e d b y t he A O . 5. 1 Wi t h r e s pe c t t o t h e ar g u m en t s o f th e L d. A R reg a rd i n g gra nt o f m ec ha ni ca l a pp r o v a l by t he L d. A d dl . CIT , th e L d. CIT D R su b mi t t ed t ha t t h e c o n t e n t i on o f t h e L d. A R w a s f ig m e nt o f im ag i n at i o n a nd j u s t be c aus e t he t e xt o f ap p ro va l h a d n ot b ee n w r i t t e n ela bo r at e ly , i t ca nn o t be pr e s u m ed t ha t t h e a pp ro va l w as mec ha n i c a l . 6. 0 A rgu i n g o n th e gr o u n ds ta ke n by t he D ep ar t m en t i n i t s a ppe a l, th e L d. C I T D R s u b mi t te d th at a n a d d i ti on o f Rs . 3, 58, 75 3/ - had b e e n m a d e by t he A O by ap pl y in g th e s t o ck t ur n o ve r r a t i o @ 7.0 8 % o n u nd i s c lo s e d s a le s o f Rs . 50 , 67, 1 36 / - . I t w a s s ub m i t t e d t h at t here w e re u nd i s c l o se d s a le s ( as per t he s e iz e d m at e ri al ) an d t he L d. CI T(A ) h a d a l s o i n a w a y a cc e p te d th e s a me by up h o l d i n g t h e a d d it i o n o f Rs . 3, 80 , 03 5/ - on a cc ou n t o f gr os s pro fi t on s u c h u nd i s c lo se d s a l e s . It w a s s ub mi t t e d t ha t t he Ld . C IT (A ) h ad w ro ng ly de le t e d th e a dd i t i o n o f Rs . 3, 58 , 753 / - be c aus e , u nd ou bt ed l y, s o m e i n ve s t m e n t o f s t oc k w a s r eq u ir e d i n ma k i n g t he un d is c l os e d s a l e s a nd s to ck t u r no ver r a t io w as th e b es t y ar ds t i c k t o c o mp ut e t h e s a me. It w a s s ub mi t t e d by t h e L d. CIT D R th a t t h is a dd i t io n o f Rs . 3, 58, 7 53 / - s ho u l d be r es t or e d. 6. 1 Wi t h re sp ec t t o t he ad d i t i on o f Rs . 85 , 82, 5 9 3 /- p e r t a i n in g t o un e xp la i n e d i n ve s t m e n t i n t h e c ons t r uc t io n o f sh ow ro o m, t h e L d. C I T D R r e f er re d t o t he re l ev an t p ar ag r ap hs i n t h e a s s e ss m e n t ord er w her ei n 8 ITA 169-Chd/2021and C.O No.7/Chd/2021 Rajan Enterprises, Ambala City t he A O h ad re fe rr e d t o th e re po r t o f t he D ep a r t m e n ta l V a lu at i o n O f fi c e r (D V O ) an d s ub m it t ed t h a t a s pe r th e D V O ’ s r ep ort , a re ba te o f 7. 5 % ha d a lr ea dy b e e n a ll ow e d fo r s el f- s upe rv i s i on bu t t h e as s es s e e ’s c l a i m o f a ll ow i n g b en e f i t u p t o 1 5 % fo r s e l f-s u p er v i s io n w as uns up por te d b y a n y bi l ls or s e tt l e d l e g a l p re ce de nt . T he L d. C IT D R su b mi t t ed t h at t h e L d . CI T(A ) ha d in co rre ct l y de l et e d t he a d d it i o n by r e l yi n g o n t he o r d er o f t he L d . F i rs t A p pe l la t e A u th o r i t y fo r t he i mm e d i a t el y pr e c e d i n g a s s es s men t y ea r i n as s e s s ee ’s o w n c as e (i . e . fo r A Y 2 016 -1 7) by ob s er v i n g t ha t s i n c e t he d i ff er e n c e i n c os t o f c o ns t ru ct i o n as pe r b o oks o f a c c ou nt a nd a s p er D V O ’s re p or t w as l es s th an 1 0%, t h e s a m e de s e r ve d t o be d e l e te d. T he L d. C I T D R su b mi t t e d th at th is w as n o ba s i s fo r de l et i n g th e a d d it i o n as t h e a s s e ss e e c oul d n ot s ub s t a n t ia t e w i th c o g e nt e vi d en ce w h y s uc h a d di ti o n w a s mi s pl ac ed. 7. 0 P e r c o n tr a, th e Ld . A R s u b mi t t e d t ha t as fa r as t h e a d di t i on o f R s . 3, 58 , 75 3/ - p er t a i ni ng t o a l l e ge d u nd i s cl os e d i n v es tme nt i n s t o c k w as c on c e r n e d, i t w as un d is p u t e d t ha t t h e as s e s s ee h a d a t urn o v e r o f R s . 14 6. 37 c r o re s for th e y ea r u nde r c o ns i de ra ti on an d e v e n t h e c l os i ng s t oc k w as Rs . 1 0. 37 c ro r es a n d, t he re fo r e, l oo ki n g i nt o t hes e vo lu m e s , t he L d. C I T( A ) h ad r i g h tl y d e l et e d t h e a d d i t i on. He a ls o r e fe rr ed t o t h e ob s er v a t i ons o f t h e L d. C I T (A ) a t p ag e 10 o f t h e i mp u g ne d o rd er , w he re in t he Ld . CI T( A ) h a d g iv e n a c a te go r i c a l f in di n g t h at t h e a s s es s e e ha d pr ov id ed a c o mp l e t e r ec onc i l i a ti on / ex pl an a t i on t ow a rds a l l eg e d un di sc l os e d s al e s o f Rs . 50, 6 7, 1 36 / - . I t w a s s u b mi tt e d t ha t t he s e s a l es 9 ITA 169-Chd/2021and C.O No.7/Chd/2021 Rajan Enterprises, Ambala City w er e i n f ac t n ot u n di sc l os e d s a l es b ut ha d b e e n d uly r e co r d e d i n t h e bo oks o f a cc ou n t b u t du e to m i s m a t c h o f n a me s o f t he bi l l ed p a r t i es , t he Re ve n ue h a d t ak en t he s a me a s u n di s cl os e d s a l e s bu t t h e s a m e s t o od du l y e x p l a i ne d as ha d b e e n re co r de d by t h e Ld . C I T(A ). T he L d . A R s up p ort e d th e r e as on i n g g i ve n b y t h e Ld. C IT (A ) t hat t he a s s ae s s ee ’s c lo s i n g s t o ck o f R s . 10. 37 c r o re s , as p er t h e r e g u la r b oo k s o f a c c o u n t , w as s uf fi ci e n t t o i ron ou t a n y d e fi ci e nc y o r di s c r ep a n c y. Th e L d. A R s ub m i tt e d t ha t t he de l e t io n o f t h e s a i d a d di t i o n b e u ph e l d . Th e L d. A R a ls o a r g u e d th at t h i s w a s a s e a r ch c a se a n d no i nc ri mi na t i n g ma te ri a l h a d be e n fo u n d w h i c h w ou l d i n d i c a t e t h at t he r e w a s a n y u nd i s c l os e d i nv e s t m e n t i n s t oc k a n d, t h e re fo re , on t hi s g ro un d a l s o , t he ad di t i o n m a de by t he A O w as n ot s u s ta i na bl e . 7. 1 Wi t h re sp ec t t o t he ad d i t i on o f Rs . 85 , 82, 5 9 3 /- p e r t a i n in g t o di ff e r e nc e i n va l ua ti o n o f i n v es t me nt m a de i n c on s tr uc t i on o f t he s h o w ro o m, t he L d . A R s u b mi t te d t ha t th e e nt ir e i nv es t men t ma d e i n t h e c ons t ru c t io n h ad b e en du l y ro u t e d t h r o ug h t he r e gu la r bo ok s o f a cc ou n t a nd f urt he r n o i nc r i mi na t i n g m a t e r i a l ha d b ee n f ou nd du r i ng t he c o ur s e o f s e a r ch w h i c h w o ul d in di c a t e t h at t h e a ss e s s e e h ad ma d e a n y i nv e s t m e n t i n th e c on st ru ct i o n o f s h ow r oo m w hi ch wa s ou ts i de t he bo oks o f a c c ou nt . T he Ld. A R s u b mi t t e d t ha t it i s s et t l e d l a w th a t n o a dd i t io n c a n b e ma de in a s e a r c h ca s e de h or s in cr i m i n at i n g ma t e ri a l fo u nd du r i n g t he c ou rs e o f s e a rc h . T h e L d. A R al s o ma d e a re f e r e n ce t o t he or de r o f t h e L d . CI T( A ) f o r as s e s sme nt y ea r 2 016- 1 7 o n t he ba s is o f 10 ITA 169-Chd/2021and C.O No.7/Chd/2021 Rajan Enterprises, Ambala City w hi ch t he Ld . F ir s t A pp el l at e A ut hor it y h a d de le t ed t he a dd i t i on i n t h e c ap ti on e d y e a r a n d i t w as s ub mi tt e d t ha t i f t h e a s ses s e e i s a l l ow e d a c o mp l e t e b e n e fi t o f s el f- su pe r vi s i on @ 7. 5% a n d, t he re a ft e r, a c o mp a r is o n is m ad e w i t h t h e i n v es t me nt as d is c l os e d in th e r eg u l a r bo oks o f a cc ou n t, t he d i ff er en c e c o m es t o 9. 24 %, w hi c h i s b el ow t h e a cc e p te d a l l o w a b l e n or m o f de vi a t i on o f 1 0 %. T he Ld . A R p l a c e d re l ia nc e o n n u me r o us j u d ic i a l p re c e de nt s w h er ei n i t h a d be e n h e l d t h a t a de v i a t i on u pt o 10 % be t w e e n t he c os t as pe r t he D V O’s r ep or t an d t h e c os t a s pe r t h e b o o ks of a c c ou nt w as a cc e pt a b l e . 8. 0 We h a v e h e ar d t he ri v a l s u b mi s s i o ns a nd h a ve a ls o g on e t hr o u gh t he p ap er b oo k s fi l e d by t he as s e s s ee a s w e l l a s t he c o pi e s o f v a ri ous j ud i c ia l p r ec e d e n ts w hi ch h a v e be e n r e l i e d u p o n b y t h e a s s es s e e. As fa r a s t h e de l e t io n o f a dd i t i o n o f Rs . 3, 5 8, 753 / - p er t ai n i n g to un di s c lo s e d i nv e s t m e n t i n s t o c k is c on c e r ne d, th e e nt i r e c on t r ov e rs y ha s ar is e n on a cc ou n t o f c e rt a i n l oos e do c u me nt s fou n d du r in g t h e c o urs e o f s e a r c h w hi ch i n di c at e d t h a t t he r e w er e un d i s c l os ed s a l e s of R s . 50, 6 7, 360 / - . H ow e ver , w e n o t e t ha t a s p e r t h e o rd e r o f t h e L d. CIT (A ), i n pa g e 9, t h e L d. C I T( A ) h as gi v e n a ca t eg or i c a l f in di n g t h a t th e as s e s s ee w a s ab l e t o l oc at e an d r e c o nc i l e a l l t h e s e en tr ie s w i th t he r e gul ar b o oks o f a cc ou n t a nd t h e re w e re o nl y s o m e m i no r di ff e re nc e s t o be fou nd i n t h e qu a nt i t a t i ve d e t a i l s o f s t oc k as pe r t he b o oks o f ac c o u nt a n d th e p h ys i c a l ve r i fi c a t i on o f st oc k as on t he d at e o f s e ar ch. I t ha s b e e n m e n ti on ed b y t he L d. CI T( A ) t h a t t he di ff e re nc e w a s onl y t o t he t une o f 0. 35 % o f t h e 11 ITA 169-Chd/2021and C.O No.7/Chd/2021 Rajan Enterprises, Ambala City t ur n ov e r. Th e o b s e rva t i on s o f t h e L d. CI T ( A ) a t p age 10 o f t h e i mpu gne d or de r ar e be i n g re pr o du c e d h er e i n u n d e r for a re a dy r e fe re nc e. “ T he AR was a sk e d t o s ubs t a n t i a t e t h es e co nt en t i on a n d s ho ws t h a t th e s al e s as r e cor d ed in t h e s e iz e d d oc um e n t ha v e b e e n r ec or de d i n t he r eg u l a r b oo k s of ac c o u nt s b i l l - wi s e / da te -w i s e . T he s e we r e go t v e r if i ed t hr o u g h t he In s pe c t or of I n c om e T ax p os t e d in th i s of f i ce a nd in t he r e por t , t h e In s p ec t or ha s m en t i o n e d th a t t he e nt ri es of l oos e p ap er s do n o t m at ch wi th th e n a m e s m en t i o n e d o n t he l o os e d oc um e n t s but h av e be e n en te r ed i n t he l ed g er ac c ou nt of o t h e r p a r ti e s . I n t h e a s s es sm e nt or d er , th e AO ha s a l s o m e n ti on e d t h a t s a le s t o t h e t u n e of Rs . 50 , 6 7, 1 36 /- we re n ot r e f l e c t ed in t h e r e gu l ar bo ok s o f ac c ou nt s . It i s a g en er al l y acc e p t e d pr i nc i p a l t h a t t he e nt r i e s s hou l d be r ec or de d i n t h e l e d ger ac c ou nt of th e c on c er n ed p er s on a nd ca nn ot be ex p l a i ne d o n t he ba sis o f e nt r i e s 5n t he ac c ou n t o f s om e o t h er p er s on . T he r e fo r e, un der t h e f a c ts & c i r cu m s t an ce s o f th e ca s e, th e addi t i o n of Rs . 3, 80 , 03 5/ - m ad e by t h e A O o n th e ba s is of un acc ou nt e d s al es i s up he l d. Re g ar d i n g t h e a d di ti on o f R s . 3, 58 , 7 5 3/ -, o n a c c o un t of i nv es t m en t in s t o c k, i t i s r e le v an t t o m e nt i o n her e t h at t h e as s e sse e h as tu r nov er i n Cr or e s a nd t he s a l e s f or t he y ea r e n d i ng 31. 0 3. 2 01 7 w as R s . 14 6. 37 c r or e a n d th e c or r es p o ndi n g c l os i ng s t o ck was R s . 10. 37 c r or e. K ee p i n g i n v i e w th es e f i gur e s , i t is s ee n t ha t th e as s e s s ee h as s uf f i ci e n t i n v es t m en t i n s t ock an d n o s e par at e a dd it i o n o n ac c ou nt o f i n v e s tm e nt i n s t oc k i s j us t i f i ed i n r e l at io n to t he s e s a le s . T he r e f or e , t he ad di t i on of Rs 3, 5 8, 75 3 / - i s de l e t ed . ” 8. 1 T he a b ov e fi n di ng by t h e L d. CI T (A ) ha s b ee n r ec or de d a ft e r a de t ai l e d v e r i fi c a t i o n a n d e v e n du r i ng t he c o u rs e o f a r gu m e nt s be fo r e u s, t he L d. CI T D R co ul d n ot p o i n t o u t a ny pe rve rs i t y in t h e fi n d in gs o f t h e L d. C IT ( A ). T hus , t he L d. CI T (A ) h a s r et ur ne d a c at e g or i c al fi nd i n g 12 ITA 169-Chd/2021and C.O No.7/Chd/2021 Rajan Enterprises, Ambala City t ha t t he re w e re no u n di s cl os e d s a l es . I n s u c h a s it ua t i o n, a n y a d d it i on on ac c ou nt o f u n d i s cl os e d i nv es t me n t i n s t o c k, w hi ch i s re l at a b l e t o un di sc l os e d s a l es , c a n no t b e s us ta i ne d. F i n d i n g n o p e r v er si t y i n t h e or d e r o f t h e Ld. CI T( A ) on t hi s i s s ue , w e up hol d his fi n di ngs a n d di s mi s s t he g ro un d ra i se d by th e D ep a r t me n t. 8. 2 A s re ga rds t he d el e t i o n o f ad di t i on o f Rs . 8 5, 82, 5 9 3/ - pe r t ai ni ng t o a dd i t io n on ac co u nt o f d i f fe re nc e i n co s t o f c o ns tr uc t i on a s pe r t he bo oks o f a c c o u n t a n d a s pe r t he r ep o r t o f t h e D V O , i t i s an un d is p ut e d fa c t o n r e c o rd t h a t n o i nc ri mi na ti ng ma te ri a l or e vi d e nc e w a s fo un d du r i n g t h e co urs e o f s e a r c h w hi c h co u ld i n d i c a t e t ha t t h e a s s es s e e h a d m a de i n v es t me n t t o w a rds c os t o f c on s t r uc ti on ou t s i de t he re g ul a r b o oks o f a cc o u nt . W e al s o no t e t h a t t he L d. CIT ( A ) h a d de l e t e d t he a d d i t i o n i n th is ye a r by f ol lo w i ng t h e o rd e r o f t he L d . CI T(A ) f or t h e i mm e d ia t e l y p r e c e d in g as s e s s me nt y e a r. T he r el e va n t o b s er v a t i o ns a nd fi n d i n gs i n t he o rd e r o f t h e L d. F i rs t A p pel l a t e A ut ho r i t y for A Y 20 1 6- 17 a r e be i n g r e p ro d uc e d h e r ei n un de r for a re a d y r efe re nc e. : - “ T he AR w a s as ke d t o pr od u ce t he b i ll s i n r e s p e c t of t h e c ons t r u c t i o n an d i n r e s po ns e t he A R p ro d uc e d t h e l edg e r of b u i l di ng co n s tr u ct i o n ac c o un t al on g wi t h t he b ill s wh i c h we r e go t v e r i f ie d t hr o u g h t he I ns pe ct or o f I nc om e T ax po s te d in t hi s of f i c e. It h a s be e n r e por t e d t h at t h e ap pel l a nt p r od uc e d c om p l e te d or i g i nal b i l l an d l e dge r c op y f o r ve r i fi c a ti on wh i c h w er e r a nd om ly v er i f ie d/t es t c he ck a n d f ou nd t o be c o rr e c t. T he A R ha s a r g ue d t hat t h e c ons t r u c t i o n a cc o un t i s f ul ly vo uc hed a nd b a ck e d by i nd e p e n de nt v ou c h e rs & bi l l s , L a s tl y it w a s s ta te d t h a t i t i s o n l y a ca s e o f es t i m a t e d c o s t o f c on s tr u c t i on a nd t h e 13 ITA 169-Chd/2021and C.O No.7/Chd/2021 Rajan Enterprises, Ambala City e s ti m at es v ar i es f r om m an t o m a n an d de p en d up o n nu m b er o f f a c t or s l im e pr oc ur e m en t o f m at e r ia l s e l f- s up er v is i on a nd nu m e r ou s o t h er f ac to r s w hi c h h a v e be e n i gn o re d by t h e AO . As pe r t he A R , t he p er s qua r e f ee t c os t of c o ns t r u ct i on c o m e s t o R s . 18. 48 wh ic h i s r ea so na bl e t ak in g in to c o ns i de r at i o n t hat it i s n o t a co n s tr u ct i o n o f ho us e an d t h e r e ar e no t m u c h p ar t it i o n wa l l a n d t h e c ons t r u c t i o n st ar t e d i n t he F i na nc i al ye ar 20 15 - ` 6 an d ar g ue d t h a t t he a d di t i o n m ade b y t h e A O i s not pr ope r . T he ar g u m e n t s of t he A R h a ve be e n c ons i d e r ed an d ther e i s m er i t i n t h e co n t en t i on t h a t th e C P WD r a t e a p pl ied b y t he D VO i s 20 - 2 5 % h ig he r th an t h e P WD ra t e ap pl ic abl e f or pr o pe r t y o f t h e a s s es s e e s i tu at e d a t A m b al a. T he ot he r ar g um e nt s of t h e A R t ha t t he AO h as n ot a l l o we d t h e be n e f i t o f s el f -s up e r v is i o n whi c h i s n or m al l y a ll o we d at m i ni m u m r at e o f 1 0 % h as a ls o m e ri t s i n it a nd t he be ne fi t ha s to b e gi v e n t o t h e as s es s e e be c a us e t h e AO i n th e as s e s sm ent or d er ha s m e nt i o ne d t h a t t h e a s s es s e e s el f - s up er v is e d t he p r o je c t. F ur t h er , v al u at i o n is a m a tt er of op i n i on /e s t im at i o n wi t h t h e ac t u al , a nd if t he s e bene fi t s ar e al l o w ed t o t he a ss e s s e e, th en n o a ddi t i o n is c al l e d f o r . E ve n ot her w is e t he d i f f er e nc e i s l es s t ha n 1 0 % a nd a s pe r v ar i o us ca s e l a ws q uo t e d b y th e A R, s u c h di ff e r en c e h as to be i gn or e d i n t he c as e o f es t i m a t i on . U n der t h e f act an d c ir c um s t a nc es of t he c as e a n d i n v i e w o f t h e c a s e la w s r e li e d u p o n b y t h e A R, t h e di f f e r e n ce of l e s s th an 1 0 % i s l ia bl e t o be i gn o re d a n d n o a dd it i on i s c al le d f or . T he r ef or e , t h e ad d i t i o n m a de b y t h e AO on ac co u nt of e s ti m at ed c os t of c o ns t ru c t i on i s de l e t e d. ” 8. 3 We fi nd o urs e l ve s i n c o m pl et e a gr e e me nt w i th t he a b o ve st a t e d ob s er v a t i ons o f t he Ld . CI T (A ) an d w e h a v e n o h es it at i o n i n u p h ol di ng t he m. We w o u l d a l s o l i ke t o s ta t e t h a t w e h av e d uly p e r us e d t h e or de rs o f t he c oo rd in at e B e nc h o f I T A T , Ch a n di g a r h i n t h e c a s es o f S mt . J a ti n d e rK a u r an d S m t. H a rb h a j a nK au r i n I TA N os . 70 a n d 71 / C hd /2 02 1 vi d e o rd e r d a t e d 2 5 . 10. 20 2 1, w he re i n i t h a d b e e n h el d t h a t i n a s s es s me n t 14 ITA 169-Chd/2021and C.O No.7/Chd/2021 Rajan Enterprises, Ambala City fr a m e d u /s 15 3 A o f th e A ct , ad d i t i on c o ul d on l y be m a d e on t he b as i s o f s o me i nc ri mi na t i n g ma t er ia l a n d s i n c e n o i n cr i m i n ati n g ma t e r i a l h a d be e n fo un d i n re s p e c t o f t he c on st ru c t i on a c t i vi t y, n o a d di t io n c o ul d b e m a de on t h e b as i s o f t h e r ep ort o f t h e D V O . I n t h es e tw o c a se s , th e c oo r d in at e B en ch o f IT A T, Cha nd i g a rh h a d f ol lo w e d th e j u d ge me nt o f t he H on ’ b l e D el hi H i gh C ou r t i n t he c as e o f A b hi na v M it t a l r e p ort e d i n 35 1 I TR 2 0 (D e l h i ) , w he re i n t h e H o n ’ b le D e l hi H i gh C o u rt ha d h el d t ha t s i nc e n o ma t e ri al w a s fo u nd i n t h e s ea r c h a nd s e i z ur e o pe r a t i o ns w h ic h c ou l d j us t i f y th e A s s es s i ng O ff i ce r’s a c t i o n i n re fe rr i n g t he ma t t e r t o t he D V O fo r hi s op in io n o n v al ua t i o n o f th e s ai d p r o pe rt i e s , t he n t he va l ua t i on a r r i v e d a t by th e D V O w o ul d be o f n o c o nse q ue nc e . A cc or di ng l y, i n vi ew o f t h e a bo v e c i t e d j u di ci a l p re c e d e nt s as w el l as t he f ac t u al fi nd i n g r ec or d e d by t he L d. CIT (A ) i n as s e s s me nt y ea r 20 16 - 17 , w hi ch, i n ou r o p in io n , i s b ot h s o u nd a s w el l a s l og i c al , w e h a v e no he s i t a t io n i n u p h ol di n g t he s a me . A c co r di ng l y, t he gr ou nd r ai s e d b y t he D ep ar t m en t o n t h is i s s ue a l s o s t and s d i s m i s se d. 9. 0 In th e re s ul t , t he ap pea l o f t h e D e pa rt m e nt s tand s d is m is s e d. 10 . 0 A s fa r as t he a rg u me nt s r ai s e d by t he a s s es s e e i n s up p ort o f M e mo ra nd u m o f C r os s O bj ec t i on s a re c on c e r n e d, s i n c e w e h a v e a lr ea dy di s mi s s e d t h e ap pe a l o f th e D ep ar t m e nt an d t h e re lie f al r e a d y gra nt e d t o t he a s s es s e e by t he L d. C IT (A ) st a n ds uph el d by us , w e a re no t i n c l in ed a t t h is j u nc tu re t o a dj ud i c at e on t h e i s su es ra is e d b y t h e as s e s s ee i n t h e 15 ITA 169-Chd/2021and C.O No.7/Chd/2021 Rajan Enterprises, Ambala City C. O . We di s mi s s t he as s e s s ee ’s C. O . a s ha v i n g b ec o me i n f ru c t uo us for t he r e a s on o f t h e D e pa r t me n t a l a pp e a l h a v i n g b e e n di sm i s s ed a nd t h e i s s ue s h av i ng be e n de c id ed i n a s s es s e e’ s fa vo ur . 11 . 0 In th e re s ul t , t he C. O . o f t h e a s s es s e e a l s o s ta nd s d is m i ss e d. 12 . 0 In t he f i n al re s u lt , bot h t h e a p pe al o f t h e Re v e n ue a s w e l l as t he C. O . of th e a s se s s e e s t an d di s mi s s ed . O rde r p ro no un c e d o n 06. 0 5. 2 02 2 . Sd- Sd/- ( N.K. SAINI) (SUDHANSHU SRIVASTAVA) Vice President Judicial Member Dated :06.05.2022 “आर.के .” आदेशक& त2ल3पअ4े3षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent 3. आयकरआय ु 5त/ CIT 4. आयकरआय ु 5त (अपील)/ The CIT(A) 5. 3वभागीय त न8ध, आयकरअपील+यआ8धकरण, च:डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायकपंजीकार/ Assistant Registrar