Nandu Antram Rajput, Pune V. Deputy Commissioner of Income-tax,

ITA 1038/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1167 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 08-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 19-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: JAYANT G PENDSE
• Keywords: Unexplained investment; Business income; Income from undisclosed sources; Search and seizure; Opportunity of being heard; Principle of natural justice; Corroborative evidences; Valuation report; Capital expenditure
• Section: 40A(3); 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.1036 TO 1041/PN/2014 #& & / ASSESSMENT YEARS : 2006-07 TO 2011-12 NANDU ANTRAM RAJPUT, S.NO.125, ARJUN HEIGHTS, NEAR WARJE JAKAT NAKA, WARJE, PUNE 411 029 PAN NO.AAPPR5684Q . / APPELLANT V/S DCIT CENTRAL CIRCLE - 2(3), PUNE . / RESPONDENT / ASSESSEE BY : SHRI JAYANT G. PENDSE & SHRI SHANTANU PENDSE / REVENUE BY : SHRI K.K. MISHRA / ORDER PER R.K.PANDA, AM : THE ABOVE BATCH OF 6 APPEALS FILED BY THE ASSESSEE ARE D IRECTED AGAINST THE COMMON ORDER DATED 28-02-2014 OF THE CIT(A ) CENTRAL, PUNE RELATING TO ASSESSMENT YEAR 2006-07 TO 2011-12 R ESPECTIVELY. SINCE COMMON GROUNDS ARE INVOLVED IN THESE APPEALS, THERE FORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER . 2. FIRST WE TAKE UP ITA NO.1036/PN/2014 AS THE LEAD CA SE. THE FIRST ISSUE RAISED BY THE ASSESSEE IN THE GROUNDS OF APPE AL RELATE TO THE ORDER OF THE CIT(A) IN SUSTAINING THE ADDITION OF RS.1,30,31,20 1/- ON ACCOUNT OF INVESTMENT IN THE BUNGALOW. / DATE OF HEARING :08.06.2016 / DATE OF PRONOUNCEMENT:05.08.2016 2 ITA NOS.1036 TO 1041/PN/2014 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS UN DER THE NAME AND STYLE OF THE PROPRIETARY CONCERN M/S. SNEHA CO NSTRUCTION. HE HAD FILED HIS RETURN OF INCOME FOR DIFFERENT ASSESSMENT Y EARS, THE DETAILS OF WHICH ARE AS UNDER : ASST. YEAR DATE OF FILING OF RETURN INCOME DECLARED AGRICULTURAL INCOME 2006 - 07 31 - 10 - 2006 1,35,78,686/ - 79,020/ - 2007 - 08 31 - 10 - 2007 78,37,860/ - 2008 - 09 29 - 09 - 2008 46,84,427/ - 2009 - 10 28 - 09 - 2009 51,57,660/ - 2010 - 11 06 - 10 - 2010 1,22,67,446/ - 2011 - 12 30 - 09 - 2011 8,68,48,281/ - 4. A SEARCH U/S.132 OF THE ACT WAS CONDUCTED IN THE CA SE OF THE ASSESSEE ON 12-10-2010. IN RESPONSE TO THE NOTICE U/ S.153A OF THE ACT THE ASSESSEE FILED THE RETURN OF INCOME FOR DIFFERENT ASSES SMENT YEARS DISCLOSING TOTAL INCOME AS UNDER: ASST. YEAR DATE OF FILING OF RETURN INCOME DECLARED AGRICULTURAL INCOME 2006 - 07 30 - 09 - 2011 1,57,90,687/ - 79,020/ - 2007 - 08 30 - 09 - 2011 97,18,671/ - 59,700/ - 2008 - 09 30 - 09 - 2011 1,43,21,943/ - 2009 - 10 30 - 09 - 2011 1,27,98,327/ - 29,482/ - 2010 - 11 30 - 09 - 2011 2,52,20,651/ - 29,482/ - 5. THE AO ISSUED NOTICE U/S.143(2) AND NOTICE U/S.142(1) ALO NG WITH QUESTIONNAIRES ETC. TO WHICH THE ASSESSEE RESPONDED AND FILED VARIOUS SUBMISSIONS ON DIFFERENT DATES. FROM THE VARIOUS D ETAILS FURNISHED BY THE ASSESSEE THE AO NOTED THAT ASSESSEE HAS OFFERED FOR TAXATION ADDITIONAL INCOME OF DIFFERENT YEARS ON ACCOUNT OF ON-MONEY RECEIVED FROM SALE OF FLATS/SHOPS. THE AO NOTED THAT DUR ING THE COURSE OF SEARCH ACTION IT WAS NOTICED THAT THE ASSESSEE HAS M ADE SUBSTANTIAL INVESTMENT IN A BUNGALOW AT SURVEY NO.302, MANEWADI, KHANA PUR, SINHAGAD ROAD, TALUKA HAVELI, DISTRICT PUNE. 6. SINCE THE INVESTMENT WAS HUGE AND THE INVESTMENT S HOWN IN THE RECORDS WAS LESS, THE PROPERTY WAS VALUED BY HIRING THE SERVICES OF AN 3 ITA NOS.1036 TO 1041/PN/2014 APPROVED VALUER DURING THE SEARCH ITSELF. THE APPROVED V ALUER SHRI RAVINDRA BAPAT GAVE VALUATION REPORT ACCORDING TO WHICH THE PROPERTY WAS VALUED AT RS.24,82,49,207/- WHICH INCLUDED THE COST OF P LOT AT RS.9,52,87,500/- AND COST OF CONSTRUCTION AT RS.15,29,61,707/ -. HOWEVER, AS PER THE RECORDS MAINTAINED BY THE ASSESSEE , THE INVESTMENT IN BUNGALOW WAS SHOWN AT RS.3,20,08,627/- AS ON 31-03- 2010 INCLUDING THE COST OF THE LAND. THE ISSUE OF VALUATION DONE BY THE APPROVED VALUER SHRI RAVINDRA BAPAT WAS RAISED AT THE T IME OF SEARCH. THE ASSESSEE IN HIS STATEMENT RECORDED U/S.132(4) ON 14- 10-2010 HAD DISCLOSED ADDITIONAL INCOME OF RS.9 CRORES ON ACCOUNT OF UND ISCLOSED INVESTMENT IN THE BUNGALOW. AS THERE WAS AN ADMITTED UN DISCLOSED INVESTMENT, A REFERENCE WAS MADE TO THE DVO FOR OBTAINING THE VALUATION REPORT OF THE SAID FARM HOUSE/BUNGALOW. THE DVO -II, MUMBAI PREPARED AND SUBMITTED AN EXHAUSTIVE VALUATION RE PORT IN RESPECT OF THE ABOVE MENTIONED PROPERTY BY GIVING THE Y EAR WISE COST OF CONSTRUCTION, THE DETAILS OF WHICH ARE AS UNDER : F.Y. RS. 2005 - 06 1,70,26,504/ - 2006 - 07 54,91,686/ - 2007 - 08 6,43,49,709/ - 2008 - 09 1,45,91,834/ - 2009 - 10 1,92,19,267/ - TOTAL 12,06,79,000/ - 7. IN THE VALUATION REPORT, THE DVO HAS STATED THAT THE FOLLOWING ARE NOT INCLUDED IN THE ESTIMATE : (A) THE MOVABLE ITEMS LIKE FURNITURE & FITTINGS, CHA IRS, TABLES, COTS, LIGHT FITTINGS, WALL HANDING PAINTINGS ETC. (B) THE COST OF LAND. (C) THE SMALL STRUCTURE IN MEMORY OF THE ASSESSEES PARENT S, SAID TO BE BUILT PRIOR TO START OF WORK. HOWEVER, AS PER THE DVO, THIS REPORT INCLUDES THE FOLL OWINGS 4 ITA NOS.1036 TO 1041/PN/2014 THE COST OF ALL NORMAL SERVICES LIKE WATER SUPPLY, SANI TARY, DEVELOPMENT WORKS INCLUDING THE RETAINING WALLS, GUARD WALLS, WBM ROAD, GATE, LAWN, WATER TANK, SEPTIC TANK, MANDIR, SWIMMING POOL, PORCH , FOUNTAINS, FIXED WARDROBES, FALSE CEILING WORKS, INTERNAL FINISHING WOR KS, LIFT, CHANDELIER, GENERATOR SET ETC. & EXTRA ITEM/SUBSTITUTE ITEMS FOR R ICHER SPECIFICATIONS THAN NORMAL AS COVERED IN THE CBDT APPROVED RATES ETC AND PLANTS AND EQUIPMENTS AS DECLARED/PROVIDED DETAILS OF WHICH ARE A S GIVEN IN THE ANNEXURE. 8. IN VIEW OF THE ABOVE REPORT, THE AO ASKED THE ASSES SEE TO EXPLAIN AS TO WHY THE DIFFERENCE BETWEEN THE YEAR-WISE COST OF C ONSTRUCTION AS PER THE DVOS REPORT AND THE INVESTMENT/EXPENDITURE SH OWN BY THE ASSESSEE SHOULD NOT BE BROUGHT TO TAX AS UNDISCLOSED IN COME OF THE ASSESSEE. THE YEAR-WISE DIFFERENCE AS NOTED BY THE AO IS AS UNDER : F.Y. YEAR - WISE ESTIMATED COST OF CONSTRUCTION AS PER DVOS VALUATION REPORT INVESTMENT/ EXPENDITURE SHOWN IN THE ACCOUNTS BY THE ASSESSEE DIFFERENCE (BEING EXCESS UNACCOUNTED INVESTMENT MADE BY THE ASSESSEE) 2005 - 06 1,70,26,504 NIL (SINCE THE ASSESSEE HAS SHOWN ONLY THE COST OF LAND, AT RS.45,15,912/- IN THE BALANCE SHEET) 1,70,26,604 2006 - 07 54,91,686 14,56,159 40,35,527 2007 - 08 6,43,49,709 1,70,66,533 4,72,83,176 2008 - 09 1,45,91,834 38,73,523 1,07,18,311 2009 - 10 1,92,19,267 50,96,500 1,41,22,767 TOTAL 12,06,79,000 3,20,08,627 9,31,86,279 9. THE ASSESSEE IN RESPONSE TO THE ABOVE SUBMITTED THAT : 1. RATE CONSIDERED FOR COST OF CONSTRUCTION (RCC) IS O N VERY HIGHER SIDE. THE CONSTRUCTION WAS STARTED IN THE YEAR 2006, T HE WEIGHT AGE FOR THE SAME IS NOT GIVEN WHILE CALCULATION OF COST OF CONSTRUC TION. THE COST OF CONSTRUCTION CONSIDERED WHILE CALCULATION IS RS.2,382/- PER SQ.FT. YOU ARE KINDLY REQUESTED TO LOOK INTO THE MATTER. 2. RCC COMPOUND WALL STRUCTURE IS VALUED AT RS.132.33 (93.75+8.40_22.02+8.16) AGAINST 65.13, WHICH IS ALMOST TWICE OF THE GOVERNMENT REGISTERED VALUATOR SHRI S.R. NIMBAL. 3. ALL THE SPECIALIZED ITEMS, LIKE STONES, PAINTING ET C., VALUATION NEEDS RECONSIDERATION; IRRESPECTIVE OF FACT THAT BILLS FOR T HE MAJORITY ITEMS ARE AVAILABLE THE VALUATION IS DONE ON THE SUBJECTIVE AND /OR MARKET VALUE AS ON DATE. 4. SWIMMING TANK AND LAWN WORK VALUATION NEED A SPEC IAL ATTENTION, AS THESE ARE ALSO COMING UNDER SPECIALIZED ITEMS AND VAL UED BY DVO AT HIGHER SIDE. 5 ITA NOS.1036 TO 1041/PN/2014 5. NO DEDUCTION/ALLOWANCE ON ACCOUNT OF WHICH BROUG HT SAVINGS IN THE COST OF CONSTRUCTION TO THE ASSESSEE BY USING EXPERIENCE O F THE ASSESSEE HIMSELF AND HIS FAMILY MEMBERS AND FREE OF COST USE OF SH UTTERING AND CONSTRUCTION EQUIPMENTS AVAILABLE WITH THEM AS THEY AL L ARE ENGAGED IN CONSTRUCTION AND DEVELOPMENT BUSINESS ACTIVITIES. FURTH ER, THE ALLOWANCE GIVEN FOR SUPERVISION WORK IS VERY LESS, I.E. ONLY 3%, I N NORMAL CASE IT SHOULD BE AT LEAST 15% TO 20%. WE FURTHER DEMAND TO REDUCE THE COSTING ON ACCOUNT OF ARCHITECTURE FEES AS ASSESSEE IS ENGAGED IN THE CONSTRUCTION AND DEVELOPMENT BUSINESS. 6. THE VALUATION REPORT CONTAINS CERTAIN ADDITIONS AF TER THE DATE OF SEARCH, THE SAME NEED TO BE EXCLUDED FROM THE VALUATI ON. 10. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THAT THE ASSESSEE HAS NOT GIVEN ANY BASIS WITH SUPPORTING DOCUMENTS WHILE RAISING THE OBJECTION THAT THE RATE CONSIDERED FOR COST OF CONSTRUCTION (RCC) IS ON THE HIGHER SIDE. THE ASSESSEE HAS ALSO NOT GIVEN ANY ALTERNATE RATE OR ALTER NATE METHOD FOR DETERMINING THE RATE FOR COST OF CONSTRUCTION. THE ASSE SSEE WAS PRESENT AT THE TIME OF VALUATION BY THE DVO AND HE HAS NOT RAISED ANY SUCH ISSUE BEFORE THE DVO. AS REGARDS THE OBJECTION OF THE ASSESSEE TO THE VALUE OF RCC COMPOUND WALL STRUCTURE AS PER THE REP ORT OF THE VALUATION MADE BY GOVERNMENT REGISTERED VALUER SHRI S.R. NIMBAL IS CONCERNED, THE AO NOTED THAT THE BASIS OF THE VALUATION MADE BY SHRI S.R. NIMBAL IS NOT PROVIDED BY THEM. HE OBSERVED THAT THE ASSESSEE HAS FAILED TO SHOW HOW THE VALUATION DONE BY DVO IS WRONG IN HIS OBJECTION ALSO. THEREFORE, THERE IS NO MERIT IN HIS OBJECTION. AS REGA RDS THE OBJECTION OF THE ASSESSEE REGARDING THE VALUATION OF THE SPECIALIZED ITEMS, SWIMMING TANK AND LAWN WORK VALUATION IS CONCERNED H E OBSERVED THAT THE OBJECTIONS ARE VERY VAGUE, UNSPECIFIC AND GENERAL IN NATURE. FURTHER, SAME ARE NOT SUPPORTED BY ANY DOCUM ENTARY EVIDENCE. THE AO ALSO NOTED THAT THE ASSESSEE HAS NOT GIVEN ANY JUSTIFICATION WITH THEM TO PROVE IN RESPECT OF THE DEMAND THAT ALLOWANCE SHOULD BE GIVEN AT THE RATE OF 15% TO 20% FOR S ELF SUPERVISION WORK. NO SCIENTIFIC AND OR TECHNICAL BASIS FOR TH IS PAYMENT 6 ITA NOS.1036 TO 1041/PN/2014 MADE BY THEM WAS PROVIDED. THE ASSESSEE HAS ALSO NOT SPECIFIED AS TO WHAT ARE THE ADDITIONS MADE AFTER THE DATE OF SEARCH WH ICH NEED TO BE EXCLUDED FROM THE VALUATION. HE ACCORDINGLY REJECTED VAR IOUS OBJECTIONS RAISED BY THE ASSESSEE IN HIS LETTER. 11. THE AO FURTHER NOTED THAT A MAGNIFICENT BUNGALOW HAS BEEN CONSTRUCTED BY THE ASSESSEE WHICH WAS VALUED BY VALUER SHRI RAVINDRA BAPAT, AN APPROVED VALUER, ACCORDING TO WHICH THE VALUE O F THE BUNGALOW WAS RS.24,82,49,207/-. THE AO FURTHER NOTED THAT IN HIS STATEMENT RECORDED U/S.132(4) ON 14-10-2010 THE ASSESSEE IN R ESPONSE TO QUESTION NO.22 HAD ADMITTED THAT THE COST OF CONSTRU CTION OF THE BUNGALOW IS AT RS.12 CRORES AND RS.9 CRORES OUT OF TH E SAME IS UNEXPLAINED. THUS, THE ASSESSEE ON HIS OWN HAD AGREED TO DISCLOSE ADDITIONAL INCOME OF RS.9 CRORES UNDER THIS HEAD. EVEN AS PER THE VALUATION REPORT OF THE DVO, COST OF CONSTRUCTION OF THE B UNGALOW IS RS.12,06,79,000/-. THEREFORE, HE NOTED THAT THERE IS NO M ERIT IN ASSESSEES VERSION THAT THE VALUATION REPORT IS WRONG. IN VIEW OF THE ABOVE, THE AO HELD THAT THE YEAR-WISE INVESTMENT FIGURE W ORKED OUT BY THE DVO HAS TO BE ADOPTED WHILE DETERMINING THE UNDISCLOS ED INCOME OF THE ASSESSEE UNDER THIS HEAD. CONSIDERING THE ABOVE , THE AO MADE ADDITION OF RS.1,70,26,504/- TO THE TOTAL INCOME OF THE ASSE SSEE ON ACCOUNT OF THE DIFFERENCE BETWEEN THE ESTIMATED COST OF C ONSTRUCTION AS PER THE DVOS REPORT AND THE COST SHOWN BY THE ASSE SSEE FOR CONSTRUCTION. 12. SIMILAR ADDITIONS HAVE BEEN MADE BY THE AO FOR DIFFERE NT ASSESSMENT YEARS ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE BUNGALOW THE DETAILS OF WHICH ARE AS UNDER : 7 ITA NOS.1036 TO 1041/PN/2014 A.Y. INVESTMENT AS PER DVO INVESTMENT AS PER ASSESSEE DIFFERENCE 2006 - 07 1,70,26,504 -- 1,70,26,504 2007 - 08 54,91,686 14,56,159 40,35,527 2008 - 09 6,43,49,709 1,70,66,533 4,72,83,176 2009 - 10 1,45,91,834 38,73,523 1,07,18,311 2010 - 11 1,92,19,267 50,96,500 1,41,22,767 13. BEFORE CIT(A) IT WAS SUBMITTED THAT THE REPORT PREPA RED BY THE APPROVED VALUER SHRI RAVINDRA BAPAT, WHICH WAS PREPARED HURRIEDLY AND REFLECTED THE COST OF THE CONSTRUCTION OF THE FARM HO USE/BUNGALOW AT EXORBITANTLY HIGH VALUE OF RS.24,82,49,000/-, WAS OBTAINED AND USED BY THE DEPARTMENT TO PRESSURIZE THE ASSESSEE TO DISCLOSE THE AMOUNT OF RS.9 CRORES IN THE STATEMENT RECORDED ON 14- 10-2010 U/S.132(4) OF THE I.T. ACT. LEADING QUESTIONS WERE PUT TO TH E ASSESSEE WITH MALICIOUS INTENT TO OBTAIN THE REQUIRED ANSWERS ALTHOU GH THE SAME WERE NOT BACKED BY ANY CORROBORATIVE EVIDENCE. I T WAS SUBMITTED THAT THE AO AND THE DVO TOTALLY IGNORED THE REPORT OF M/S. S.R. NIMBAL AND ASSOCIATES, REGISTERED VALUER AND NOT EVEN A SINGLE W ORD HAS BEEN MENTIONED ABOUT THIS REPORT IN THE ASSESSMENT ORDERS. AS PER THE REPORT OF THE SAID REGISTERED VALUER WHICH WAS OBTAINED B Y THE ASSESSEE, THE VALUE OF THE BUNGALOW INCLUDING LAND WAS RS.7 .10 CRORES. IT WAS SUBMITTED THAT IT IS CLEAR FROM THE REPORT OF THE DVO ITSELF THAT THE AO DID NOT EVEN FORWARD THE SAID REPORT TO THE DVO . IT WAS SUBMITTED THAT SUCH REJECTION OF THE REPORT OF M/S. S.R. NIMBAL AND ASSOCIATES WAS GROSSLY UNJUSTIFIED AND THIS WAS DONE BEC AUSE THE SAID REPORT WAS NOT SATISFYING THE CONDITION OF THE I.T. DEPAR TMENT AS REGARDS TO DISCLOSURE TO BE OBTAINED ON ACCOUNT OF BUNG ALOW AT KHANAPUR, I.E. RS. 9 CRORES. IT WAS SUBMITTED THAT THE AO BEING A QUASI-JUDICIAL AUTHORITY SHOULD HAVE FOLLOWED THE PRINCIPLES OF NATURAL JUSTICE AND SHOULD HAVE ATLEAST CARRIED OUT A COMPARISON BETWEEN THE 2 VALUATION REPORTS WHEN 2 CONTRADICTING REPORTS WERE TO BE MADE . IT WAS ALSO BROUGHT TO THE NOTICE OF THE CIT(A) THAT NO INFORMATIO N WAS 8 ITA NOS.1036 TO 1041/PN/2014 PROVIDED AS TO WHETHER THE REPORT OF M/S. S.R. NIMBAL WAS ACCEPTED OR REJECTED. 14. THE ASSESSEE SUBMITTED THAT THE AO HAD REFERRED T HE MATTER TO THE DVO ON 25-04-2012 WITHOUT INTIMATION TO THE ASSESSE E. FURTHER, MANY ITEMS WHICH HAVE BEEN CONSIDERED BY THE DVO IN HIS REPORT WERE FIXED/CONSTRUCTED/DEVELOPED SUBSEQUENT TO 31-03-2010, I.E. DATE UPTO WHICH THE DVO HAS ESTIMATED VALUE OF CONSTRUCTION OF THE BUNGALOW. THE ASSESSEE FILED VARIOUS DETAILS OF BILLS AND VOUCHERS WHICH WERE INCURRED ON THE BUNGALOW/FARM HOUSE PERTAINING TO THE PE RIOD AFTER 31-03-2010 BUT TAKEN INTO ACCOUNT BY THE DVO AS HAVIN G BEEN INVESTED PRIOR TO 31-03-2010. THE TOTAL OF SUCH EXPENDIT URE WAS TO THE TUNE OF RS.1.89 CRORES. 15. THE ASSESSEE FURTHER SUBMITTED THAT THE DVO USED CPWD INDICES FOR 1992 INSTEAD OF CPWD INDICES OF 2007 OR 2009 WH ICH HAD BECOME AVAILABLE. IT WAS SUBMITTED THAT THE CONSTRUCTION WAS STARTED ONLY IN THE MIDDLE OF 2007. HAD THE DVO USED CPWD INDICES OF 2007 THEN THE MATHEMATICAL ERROR CAUSED BECAUSE OF USAGE OF 1992 INDICES COULD HAVE BEEN AVOIDED AND THE BUNGALOW WOULD HAVE BE EN VALUED AT MUCH LOWER FIGURE. IT WAS SUBMITTED THAT THE ASSESSEE B EING A BUILDER, PROMOTER AND DEVELOPER WAS ABLE TO TAKE ADVANTAGE OF HIS TECHNICAL KNOWLEDGE, KNOWLEDGE OF AVAILABILITY OF CHEAP LABOUR, QUALITY OF MATERIAL, DISCOUNT ON BULK PURCHASES ETC. TO ACHIEVE CONSID ERABLE ECONOMY IN CONSTRUCTION COST. HOWEVER, THE DVO DID NOT TAKE INTO ACCOUNT ALL THESE FACTORS AND HAD ALLOWED 3% AS SELF SUPER VISION CHARGES. IT WAS ARGUED THAT THE PRICES AND RATES UTILIZ ED BY THE DVO ARE VERY EXORBITANT AND HE HAS TAKEN THE HIGHEST MARK ET VALUE. IT WAS ARGUED THAT CONSIDERING THE BUSINESS OF THE ASSESSEE AS PROMOTER AND DEVELOPER, AND CONSIDERING HIS DOMAIN KNOWLEDGE, EXPERTISE, C ONTACTS 9 ITA NOS.1036 TO 1041/PN/2014 ETC. SELF SUPERVISION CHARGES SHOULD HAVE BEEN GRANTED BE TWEEN 15% TO 20%. 16. IT WAS FURTHER ARGUED THAT THE DVO HAD INAPPROPRIA TELY USED CLOSING BALANCES OF CONSTRUCTION WORK IN THE BOOKS OF TH E ASSESSEE AS THE BASIS FOR ACTUAL WORK IN PROGRESS. FURTHER, THE DVO DID NOT DISCUSS HIS FINDINGS WITH THE ASSESSEE BEFORE SUBMITTING THE SAME TO THE AO. IT WAS ARGUED THAT THE AO HAS MECHANICALLY AC CEPTED THE DVOS REPORT WITHOUT JUDICIOUS SCRUTINY. BEFORE ACCEPTING THE DVOS VALUATION, THE AO SHOULD HAVE CROSS VERIFIED BY REFERENCE TO THE SOURCE OF INCOME UNEARTHED DURING THE SEARCH AND SEIZURE OPERA TION AND WHETHER SUFFICIENT SOURCES WERE AVAILABLE TO THE ASSESSEE FOR MAKING INVESTMENTS IN THE IMPUGNED PROPERTY TO THE EXTENT ES TIMATED BY THE DVO. IT WAS ARGUED THAT THE AO HAS NOT REJECTED THE ASSESSEES BOOKS OF ACCOUNT WHICH IS A PRE-REQUISITE CONDITION OF MAKING A RE FERENCE TO THE DVO U/S.142A. THIS SHOWS THAT HE HAS PARTLY ACCEP TED AND RELIED UPON THE CLOSING BALANCES OF WORK IN PROGRESS ON WHICH BA SIS HE HAS ALLOCATED THE COST OF CONSTRUCTION WORKS MADE OUT BY TH E DVO AND MADE ADDITIONS TO INCOME FOR THE VARIOUS ASSESSMENT YEA RS WHICH IS NOT JUSTIFIED. IT WAS SUBMITTED THAT REFERENCE TO THE DV O COULD NOT BE MADE WITHOUT REJECTING THE BOOKS OF ACCOUNT. FOR THE A BOVE PROPOSITION HE RELIED ON THE DECISION OF HONBLE SUPREME CO URT IN THE CASE OF SARGAM CINEMA VS. CIT REPORTED IN 328 ITR 513 A ND CIT VS. LUCKNOW PUBLIC EDUCATIONAL SOCIETY REPORTED IN 339 ITR 58 8. VARIOUS OTHER DECISIONS WERE ALSO CITED BY THE ASSESSEE BEFORE THE CIT(A). 17. HOWEVER, THE CIT(A) WAS NOT FULLY SATISFIED WITH THE AR GUMENTS ADVANCED BY THE ASSESSEE. AFTER CONSIDERING THE SUBMISS IONS MADE BY THE ASSESSEE HE NOTED THAT THE DVO HAS INCLUDED ALL COSTS AS PE R PLINTH AREA RATES UPTO THE TIME OF VALUATION, I.E. EARLY 2013 AN D SPREAD THE 10 ITA NOS.1036 TO 1041/PN/2014 SAME OVER F.Y. 2005-06 TO 2009-10. AFTER CONSIDERING TH E VARIOUS DETAILS SUBMITTED BY THE ASSESSEE HE DIRECTED THE AO TO ALLOW DEDUCTION TO THE EXTENT OF 5% OF THE ESTIMATED VALUE WO RKED OUT BY THE DVO ON ACCOUNT OF EXPENDITURE INCURRED AFTER 31-03-2010 . THUS, HE ALLOWED RELIEF OF RS.60,33,950/- ON THIS COUNT. HE ALSO DIRECT ED THE AO TO GRANT SET OFF OF ADDITIONAL INCOME DISCLOSED IN THE RETUR N FILED IN RESPONSE TO NOTICE U/S.153A AS AVAILABLE TO THE ASSESSEE TO EXPLAIN THE SOURCE OF INVESTMENT. 18. SO FAR AS SELF SUPERVISIONS CHARGES IS CONCERNED, HE D IRECTED THE AO TO INCREASE THE SAME TO 6% AS AGAINST 3% ALLOWED BY HIM. THUS, HE REJECTED ALL OTHER ARGUMENTS BEFORE HIM AND SUSTAINED AN AMO UNT OF RS.6,52,99,320/- FOR VARIOUS YEARS, THE DETAILS OF WHICH ARE AS UNDER : A.Y. AMOUNT ADDED BY AO LESS: RELIEF ALLOWED @3% OF COST (SEE PARA 12.35) LESS: RELIEF ALLOWED ON ACCOUNT OF EXPENDITURE AFTER 31-03- 2010 (SEE PARA 12.31) LESS : SET OFF FOR INCOME DISCLOSED IN 153A RETURN (SEE PARA 12.46) ADDITION SUSTAINED 2005 - 06 NIL NIL NIL NIL NOT APPLICABLE 200 6 - 07 1,70,26,504/ - 6,81,900/ - 11,02,403/ - 22,12,000/ - 1,30,31,201/ - 2007 - 08 40,35,527/ - 1,61,611/ - 2,61,270/ - 8,79,000/ - 27,33,646/ - 2008 - 09 4,72,83,176/ - 18,94,166/ - 30,62,230/ - 42,70,000/ - 3,80,56,780/ - 2009 - 10 1,07,18,311/ - 4,29,220/ - 6,93,904/ - 27,04,667/ - 68,90,520/ - 2010 - 11 1,41,22,767/ - 5,65,451/ - 9,14,143/ - 80,55000/ - 45,88,173/ - 2011 - 12 NIL NIL NIL NIL NIL TOTAL 9,31,86,285/ - 37,32,348/ - 60,33,950/ - 1,81,20,667/ - 6,52,99,320/ - 19. AGGRIEVED WITH SUCH PART RELIEF GIVEN BY THE CIT(A) THE ASSESS EE IS IN APPEAL BEFORE US. HOWEVER, THE REVENUE HAS NOT FILED ANY APPEAL. 20. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY OBJECTED TO THE ORDER OF THE CIT(A) IN SUSTAINING THE ADDITION ON ACCOUNT OF UNDISCLO SED INVESTMENT IN THE BUNGALOW FOR DIFFERENT ASSESSMENT YEARS. REFERRING TO THE STATEMENT OF FACTS AND GROUNDS OF APPEAL FILED BEFOR E THE LD.CIT(A) FOR THE A.Y. 2006-07 HE SUBMITTED THAT THE A CQUISITION OF 11 ITA NOS.1036 TO 1041/PN/2014 LAND WAS GOING ON TILL 26-03-2006 AND THE ASSESSEE HAD P AID RS.22,08,656/- IN THE MONTH OF MARCH AS NAZARANA CHARGES . WITHOUT THE NAZRANA CHARGES CONSTRUCTION ACTIVITY IS NOT PERMITT ED. FURTHER THE PERMISSION WAS RECEIVED BY THE ASSESSEE VIDE LETTER DATED 15-05- 2006, IE. DURING THE F.Y. 2006-07. THE PLAN OF BUILDING AS PE R THE ARCHITECT WAS RECEIVED BY THE ASSESSEE ON 7-04-2006. WITHOUT THE SAID PLAN CONSTRUCTION ACTIVITY OF THE FARMHOUSE/BUNGALOW WAS NOT POSSIBLE. ALTHOUGH THE SAID PLANS WERE SUBMITTED TO THE DV O, HOWEVER HE HAS NOT CONSIDERED THE SAME. 21. REFERRING TO PARA 12.12 OF THE ORDER OF THE CIT(A), THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENC H TO THE SUBMISSION MADE BEFORE THE CIT(A) WHEREIN THE ABOVE FACTS WERE NARRATED. HOWEVER, HE HAS NOT CONSIDERED THE SAME. H E SUBMITTED THAT THE ASSESSEE HAS STARTED ONLY DEVELOPING THE HILLY PORTION OF THE LAND BY WAY OF CONSTRUCTING APPROACHABLE ROAD TO REACH THE TOP OF THE HILL AND LEVELLING THE TOP OF THE SAID HILL DURING F.Y.2005-06. HOWEVER, THERE WAS NO DEVELOPMENT WORK LIKE CONSTRUCTION OF RETA INING WALLS, WATER COOLERS, GUTTERS ALONG SIDE OF ROAD AND OTHER WORK OF LEVELLING OF LAND WHICH STARTED AND GOT FINISHED ONLY IN THE MIDDLE OF T HE YEAR 2007. REFERRING TO PARA 12.3 OF THE SAID LETTER HE SUBMITTE D THAT ALTHOUGH ALL THE DETAILS WERE GIVEN BEFORE THE CIT(A), HOWE VER, HE HAS NOT CONSIDERED THE SAME AND WENT BY THE REPORT OF THE DVO AND THEREBY SUSTAINED THE ADDITION OF RS.1,30,30,201/- FOR THE A .Y. 2006- 07. HE SUBMITTED THAT THE ADDITIONAL INCOME DECLARED FOR A .Y.2006-07 IS SUFFICIENT ENOUGH TO MEET THE CONSTRUCTION OF THE APPRO ACH ROAD TO REACH THE HILL TOP AND THE LEVELLING WORK ETC. WHICH HAS BE EN CARRIED OUT TOWARDS THE FAG END OF F.Y.2005-06 RELEVANT TO A.Y. 2 006-07. THEREFORE, NO ADDITION IS CALLED FOR DURING A.Y.2006-07. 12 ITA NOS.1036 TO 1041/PN/2014 22. SO FAR AS THE ADDITION SUSTAINED BY THE LD.CIT(A) ON THE BASIS OF VALUATION REPORT GIVEN BY THE DVO IS CONCERNED, HE SUBM ITTED THAT THERE ARE SERIOUS LAPSES IN THE SAID REPORT OF THE DVO. H E SUBMITTED THAT DESPITE THE AVAILABILITY OF GUIDELINES FOR VALUATION OF IMMOV ABLE PROPERTIES IN 2009 CPWD RATES, THE DVO HAS ADOPTED CP WD INDICES OF 1992. REFERRING TO THE COMPARATIVE TABLE OF RATES USED B Y THE DVO AND THE RATES AS PER 2009 GUIDELINES, HE SUBMITTED THAT IF TH E 2009 RATE IS ADOPTED, THEN THERE IS A DIFFERENCE OF RS.1,29,31,475.85. HE SUBMITTED THAT ALTHOUGH THE SAME WAS BROUGHT TO THE NOTICE OF TH E LD.CIT(A), HOWEVER HE REJECTED THE SAME ON THE GROUND THAT THE SAME IS YET TO BE APPROVED BY THE CBDT. HE SUBMITTED THAT NON APPROVAL OF THE CBDT 2007 SPECIFICATIONS OR 2009 SPECIFICATION CANNOT BE A GROUN D FOR SUSTAINING THE ADDITION WHEN THE CONSTRUCTION OF THE FARMHOUSE/BUNGALOW HAS TAKEN PLACE DURING THE PERIOD 200 6-07 TO 2012-13. 23. HE SUBMITTED THAT THE DVO INSPECTED THE FARM HOUSE/ BUNGALOW ON 23-01-2013 AND SUBMITTED HIS REPORT ON 28-02-2013. AT THE TIME OF THE INSPECTION OF THE DVO THE CONSTRUCTION ACTIVITY WAS S TILL GOING ON. HOWEVER, HE HAS GIVEN HIS REPORT REGARDING THE CONSTRUC TION OF THE BUNGALOW UPTO F.Y. 2009-10 AND HAS CONSIDERED THE CONS TRUCTION ACTIVITY THAT HAS TAKEN PLACE TILL THE DATE OF HIS INSPECTIO N AS CONSTRUCTED DURING THE F.Y. 2005-06 TO F.Y.2009-10. HE SUBMITTED THAT THE EXPENDITURE INCURRED AFTER THE DATE OF SEARCH TILL THE DATE OF INSPECTION OF THE BUNGALOW CANNOT BE ADDED AS UNDISCLOSED INVESTMENT EXPENDITURE DURING F.Y. 2005-06 TO 2009-10. HE SUBMITTE D THAT ALTHOUGH THE ABOVE POINTS WERE RAISED BEFORE THE LD.CIT(A ) HE HAS SIMPLY ALLOWED A RELIEF OF 5% OF THE ESTIMATED VALUE ON ADHO C BASIS AND GAVE A RELIEF OF RS.60,33,950/- ONLY. 13 ITA NOS.1036 TO 1041/PN/2014 24. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IN HIS RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S.153A HA S DISCLOSED THE ADDITIONAL INCOME FOR DIFFERENT ASSESSMENT YEARS STARTIN G FROM 2006-07 TO 2010-11. HE SUBMITTED THAT ALTHOUGH THE AS SESSEE HAS DECLARED ADDITIONAL INCOME OF RS.3,43,23,198/- FOR DIFFERENT ASSESSMENT YEARS THE LD.CIT(A) HAS GIVEN RELIEF OF ONLY RS.1,81,20,667/- AS SET OFF FOR INCOME DISCLOSED IN 153A RETUR N. HE SUBMITTED THAT THE ASSESSEE HAS DISCLOSED AN AMOUNT OF RS.3,43,23,198/- AS ADDITIONAL INCOME DURING THE PERIOD FROM 2 006-07 TO 2010-11 WHEREAS THE LD.CIT(A) HAS GRANTED SET OFF T HE AMOUNT OF RS.1,81,20,667/- ONLY. THUS, THE AMOUNT OF RS.1,62,03,531/- REMAINED TO BE GIVEN SET OFF WHICH THE LD.CIT(A) HAS FAILED TO DO. HE ACCORDINGLY SUBMITTED THAT THE ADDITIONAL INCOME DECLARED IN THE RETURN FILED IN RESPONSE TO NOTICE U/S. 153A SHOULD BE MA DE AVAILABLE TO THE ASSESSEE TO MEET THE CONSTRUCTION OF THE FARM HOUSE/BUNGA LOW 25. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS MAINTAINED PROPER BOOKS OF ACCOUNT AND HAS DISCLOSED THE INVESTMENT TOWARDS THE CONSTRUCTION OF THE FARMHOUSE/BU NGALOW AND YEAR-WISE INVESTMENT WAS SHOWN IN THE BALANCE SHEET. TH E BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT REJECTED. THEREFORE, T HE AO COULD NOT HAVE MADE A REFERENCE TO THE DVO WITHOUT REJECTING THE BOOK RESULTS. FOR THE ABOVE PROPOSITION, HE RELIED ON THE FOLLOWING DECISIONS : 1. SARGAM CINEMA VS. CIT REPORTED IN 328 ITR 513 (SC) 2. CIT VS. LUCKNOW PUBLIC EDUCATIONAL SOCIETY REPOR TED IN 339 ITR 588 (ALL) 3. SMT. TARAWATI DEBI AGARWAL VS. ITO REPORTED IN 1 62 ITR 606 (CAL) 4. CIT VS. SMT. SURAJ DEVI REPORTED IN 328 ITR 604 (DEL) 5. K.P. VARGHESE VS. ITO & ANOTHER REPORTED IN 131 I TR 597 6. SHANTI COMPLEX VS. ITO REPORTED IN 63 ITD 181 (PA T) 7. DR. G. PREMALATHA VS. DCIT ITA NO.200/HYD/2014 8. SMT. SEEMA GUPTA VS. DCIT ITA NO.1619/DEL/2008 9. CIT VS. BHARAT ALUMINIUM CO. LTD. REPORTED IN 303 ITR 256 14 ITA NOS.1036 TO 1041/PN/2014 26. REFERRING TO PAGE 158 OF THE PAPER BOOK, THE LD. CO UNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE RETUR N OF INCOME FOR A.Y. 2011-12 AND SUBMITTED THAT THE ASSESSEE HAS SUO- MOTO DISCLOSED AN AMOUNT OF RS.7,20,95,852/- AS VOLUNTARY DISCLOSURE. HE SUBMITTED THAT SINCE THE CONSTRUCTION ACTIVITY WAS GOING ON, THEREFO RE, IT IS QUITE POSSIBLE THAT CERTAIN EXPENSES REMAINED PAYABLE AND THE ASSESSEE CAN BE CONSIDERED TO HAVE PAID A PART OF SUCH EXPENDITURE IN THE SUBSEQUENT YEARS. THE AMOUNT DISCLOSED AS VOLUNTARY DIS CLOSURE IN A.Y.2011-12 ALSO PROVES THAT THE ASSESSEE HAS PAID CERT AIN AMOUNT IN THE SUBSEQUENT YEAR. 27. REFERRING TO FOLLOWING CHART THE LD. COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THERE ARE OBVIOUS MISTAKES IN VALUATION OF THE PROPERTY LEADING TO EXCESS VALUATION. SR.NO. PARTICULARS OBSERVATIONS PAPER BOOK PAGE REFERENCE 1 SR.NO.3 IN THE DESCRIPTION, THE DOME AREA IS GIVEN AS 131.77 SQM WHEREAS FOR COMPUTATION, AREA TAKEN IS 182.74 SQMT. HENCE THE ACTUAL COST SHOULD BE RS.5,57,277.73 INSTEAD OF RS.7,72,838/- (FURTHER REDUCTION 32.5% FOR EXTRA SERVICES+ DEDUCTION OF INDEXATION +5% FOR INTERIOR LOCATION). HENCE, EXCESS VALUATION COMES AS FOLLOWS: 212,213 PARTICULARS AS PER DVO ACTUAL AREA EXCESS VALUATION DOME AREA FOR VALUATION 182.74 131.77 50.97 BASIC VALUE 772,838.00 557,277.73 215,560.27 ADD FOR EXTRA SERVICES @32.5% 251,172.35 181,115.26 70,057.09 SUB TOTAL 1,024,010.35 738,392.99 285,617.36 ADD FOR INDEXATION @(336/100) 3,440,674.78 2,481,000.45 959,674.32 ADD FOR INTERIOR LOCATION @5% 172,033.74 124,050.02 47,983.72 TOTAL VALUATION 3,612,708.51 2,605,050.48 1,007,658.04 15 ITA NOS.1036 TO 1041/PN/2014 SR.NO. PARTICULARS OBSERVATIONS PAPER BOOK PAGE REFERENCE 2 SERVICES EXTRA DEVELOPMENT WORKS INCLUDING FILTER WATER SUPPLY, HOT WATER SEWER, LEVELLING, STORM WATER. THE AREA IS TAKEN AS 22500 SQMT WHEREAS THE DVO OBSERVES IN SUMMARY ON PAGE 200 IS 1690.10 SQM. TO THIS MAY BE ADDED MANDIR 52.58 SQM & GATE 49.82 SQM TOTALLING TO 1792.0 SQM. AT THE RATE ADOPTED BY DVO OF RS.141.65 THE EXCESSIVE VALUATION IS AS UNDER : (FURTHER DEDUCTION OF INDEXATION +5% FOR INTERIOR LOCATION) 213 & 200 PARTICULARS AS PER DVO REVISED VALUE NET EFFECT BASIC RATE ADOPTED 141.65 141.65 -- AREA 22,500.00 1,792.00 20,708.00 VALUE 3,187,125.00 253,836.80 2,933,288.20 ADD FOR INDEXATION @(336/100) 10,708,740.00 852,891.65 9,855,848.35 ADD FOR INTERIOR LOCATION @5% 535,437.00 42,644.58 492,792.42 TOTAL VALUATION 11,244,177.00 895,536.23 10,348,640.77 SR.NO. PARTICULARS OBSERVATIONS PAPER BOOK PAGE REFERENCE 3 ITEM NO.54 RCC WATER TANK WITH CAPACITY OF 17,000 LITRES @ RS.10 PER LT. 223 PARTICULARS AS PER DVO ACTUAL AREA NET EFFECT WATER TANK CAPACITY (LITRES) 17,000 17,000 -- RATE 10 10 -- VALUE 1,700.00 170,000 1,530,000 ADD FOR CONTINGENCIES ETC. @7.5% (ITEM NO.75) 127,500 12,750 114,750 TOTAL VALUATION 1,827,500 182,750 1,644,750 NET DIFFERENCE IN VALUATION (TOTAL OF DIFFERENCE IN ABOVE ITEMS : 1,30,01,048.81 16 ITA NOS.1036 TO 1041/PN/2014 28. HE SUBMITTED THAT THE ASSESSEE HIMSELF IS A BUILDER/CON TRACTOR. HE KNOWS WHERE THE QUALITY MATERIALS ARE AVAILABLE AT CHEA P RATE. SINCE HE IS AN EXPERT IN THIS LINE OF BUSINESS, HE IS EXPECTE D TO KNOW HOW TO CONSTRUCT HIS OWN FARM HOUSE/BUNGALOW AT CHEAP RATE. HE SUBMITTED THAT THE DVO HAD GRANTED ONLY 3% SELF SUPERV ISIONS CHARGES WHICH WAS ACCEPTED BY THE AO. THE LD.CIT(A) ENHANCED TH E RATE TO ONLY 6%. HE SUBMITTED THAT WHEN THE VALUATION OF CONSTR UCTION OF BUILDING IS ESTIMATED, THE APPELLATE AUTHORITIES GRANT SELF SUP ERVISION CHARGES RANGING FROM 15% TO 20%. HOWEVER, IN THE INSTAN T CASE, THE SAME HAS BEEN ALLOWED ONLY AT 6%. (I.E. AO 3% AND FURTHER RELIEF OF 3% BY THE CIT(A). HE ACCORDINGLY SUBMITTED THAT SELF SUPERVIS ION CHARGES @15% TO 20% MAY BE GRANTED TO THE ASSESSEE. 29. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT WHEN BILLS AND VOUCHERS FOR CERTAIN HIGH VALUE ITEMS WERE AVAILABLE THE DV O WAS NOT JUSTIFIED IN ESTIMATING THE COST OF CONSTRUCTION WITHOUT GIVIN G THE BENEFIT OF RATES OF THOSE ITEMS. HE ACCORDINGLY SUBMITTE D THAT IF ALL THESE THINGS ARE CONSIDERED, THEN NO ADDITION IS CALLED FOR ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE CONSTRUCTION OF THE FARM HOUSE/BUNGALOW AT KHANAPUR, SINHAGHAD PANSHET ROAD, PUNE. 30. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF CIT(A). HE SUBMITTED THAT THE LD.C IT(A) HAS ALREADY GRANTED SUBSTANTIAL RELIEF AND THE DEPARTMENT IS N OT IN APPEAL. THEREFORE, HIS ORDER BEING IN CONSONANCE WITH FACTS AND LAW , THE ADDITION SHOULD BE UPHELD AND THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE DISMISSED. 31. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIO US DECISIONS 17 ITA NOS.1036 TO 1041/PN/2014 RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE. WE FIND THE ASSESSEE IN THE INSTANT CASE IS A PROMOTER, BUILDER AND DEVELOPER. A SEARCH U/S.132 OF THE I.T ACT WAS CONDUCTED IN HIS CASE ON 12- 10-2010. DURING THE COURSE OF SEARCH, IT WAS NOTICED THAT THE AS SESSEE HAS MADE SUBSTANTIAL INVESTMENT IN FARM HOUSE/BUNGALOW AT MANEWADI, KHANAPUR, SINHAGAD PANSHET ROAD, TALUKA HAVELI, DISTRICT PUN E. AT THE TIME OF SEARCH, THE DEPARTMENT HIRED THE SERVICES O F AN APPROVED VALUER WHO VALUED THE BUNGALOW AT RS.24,82,49,207/- WHICH INCLUDED THE COST OF PLOT AT RS.9,52,87,500/- AND COST OF CONSTRUCT ION AT RS.15,29,61,707/-. SINCE THE ASSESSEE IN HIS BALANCE SHEET AS ON 31-03-2010 HAS RECORDED THE INVESTMENT AT RS.3,20,08,62 7/- THE ASSESSEE WAS CONFRONTED. THE ASSESSEE IN HIS STATEMENT RECORDED U/S.132(4) ON 14-10-2010 HAD DISCLOSED ADDITIONAL INCOME OF RS.9 CRORES ON ACCOUNT OF UNDISCLOSED INVESTMENT IN THE BUNG ALOW. SUBSEQUENTLY, SINCE THE ASSESSEE DID NOT HONOUR THE DIS CLOSURE IN THE RETURNS FILED FOR THE A.Y. 2006-07 TO 2010-11 THE AO MADE A REFERENCE TO THE DVO FOR OBTAINING THE VALUATION REPORT OF THE FARMHOUSE/BUNGALOW. THE DVO GAVE HIS REPORT DETERMINING THE INVESTMENT BY THE ASSESSEE IN THE FARM HOUSE AT RS.12,06 ,79,000/- FROM F.Y. 2005-06 TO 2009-10. SINCE THE ASSESSEE HAD SH OWN INVESTMENT OF RS.3,20,08,627 INCLUDING THE COST OF LAND AT RS.45,15,912/-, THE AO MADE ADDITION OF RS.9,31,86,279/- BEING THE DIFFERENCE BETWEEN THE VALUATION DETERMINED BY THE DVO A ND THE INVESTMENT DECLARED BY THE ASSESSEE FROM A.Y. 2006-07 TO 2010-11, THE DETAILS OF WHICH ARE ALREADY GIVEN AT PARA 8 OF THIS ORDER. 32. WE FIND BEFORE CIT(A) THE ASSESSEE RAISED THE OBJECTIO N REGARDING CONSIDERATION OF EXPENDITURE INCURRED AFTER THE DATE OF S EARCH AND BEFORE THE DATE OF INSPECTION BY THE DVO FOR WHICH THE L D.CIT(A) ALLOWED ONLY 5% OF THE COST OF PROPERTY ON ESTIMATE AS E XPENDITURE 18 ITA NOS.1036 TO 1041/PN/2014 INCURRED AFTER THE DATE OF SEARCH. SO FAR AS THE OBJECT ION OF THE ASSESSEE REGARDING GRANTING OF SELF SUPERVISION CHARGES AT 3% IS CONCERNED, THE LD.CIT(A) ALLOWED THE SAME AT 6 %. AS REGA RDS THE OBJECTION OF THE ASSESSEE FOR NON GRANTING OF SET OFF OF T HE ADDITIONAL INCOME DECLARED IN THE RETURN FILED IN RESPONSE TO NOTICE U /S.153A THE LD.CIT(A) GRANTED RELIEF OF RS.1,81,20,667/-. VARIOUS OTHER OBJ ECTIONS OF THE ASSESSEE WERE REJECTED BY THE CIT(A) FOR WHICH THE ASSESSEE IS AN APPEAL BEFORE US. IT MAY BE PERTINENT TO MENTION HERE T HAT THE REVENUE HAS NOT FILED ANY APPEAL. 33. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESS EE THAT THE AO COULD NOT HAVE REFERRED THE MATTER TO THE DVO WITHO UT REJECTING THE BOOKS OF ACCOUNT. IT IS ALSO HIS SUBMISSION THAT LD. CIT(A) IS NOT JUSTIFIED IN GIVING ONLY 5% OF THE ESTIMATED VALUE OF THE BUN GALOW AS EXPENDITURE INCURRED AFTER 31-03-2010 TILL THE DATE OF INSP ECTION WHEN ASSESSEE HAD SUBSTANTIAL EXPENDITURE DURING THAT PERIOD. FURTHER, IT IS ALSO THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE SELF SUPERVISION CHARGES AT 6% IS VERY LOW. FURTHER, IT IS HIS S UBMISSION THAT THE LD.CIT(A) ALSO IS NOT JUSTIFIED IN NOT GRANTING SET OFF OF THE ENTIRE ADDITIONAL INCOME DISCLOSED IN THE RETURN U/S.153A. APART FROM THE ABOVE, IT IS ALSO THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE DVOS METHOD OF VALUING THE PROPERTY IS ERRONE OUS IN VIEW OF CERTAIN GLARING COMPUTATIONAL ERROR AND APPLICATION OF THE 1 992 RATES AS AGAINST 2009 RATES AVAILABLE. 34. SO FAR AS THE ARGUMENT OF THE LD. COUNSEL FOR THE AS SESSEE THAT THE AO COULD NOT HAVE REFERRED THE MATTER TO THE DVO IS CONCERNED, WE FIND THE SAID ARGUMENT IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE VARIOUS DECISIONS RELIED ON BY THE LD. COUNSEL FO R THE ASSESSEE ARE ALSO DISTINGUISHABLE AND NOT APPLICABLE TO TH E FACTS OF THE 19 ITA NOS.1036 TO 1041/PN/2014 PRESENT CASE. THEREFORE, THE PLEA OF THE ASSESSEE THAT THE AO COULD NOT HAVE REFERRED THE MATTER TO THE DVO IS MISPLACED UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 35. HOWEVER, WE FIND SOME FORCE IN THE ARGUMENT OF THE LD . COUNSEL FOR THE ASSESSEE REGARDING THE MANNER AND METHOD OF VA LUATION AND THE MISTAKES COMMITTED BY THE DVO AND THE LD.CIT(A). TH ERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE IN ITS BALANCE SHE ET AS ON 31-03- 2006, A COPY OF WHICH IS PLACED AT PAPER BOOK PAGE 8 R EAD WITH PAGE 12, HAS SHOWN THE COST OF LAND AT KHANAPUR AT RS.45,15,91 2/- AND NO INVESTMENT ON ACCOUNT OF CONSTRUCTION OF THE SAME HAS BEEN DISCLOSED. WE FIND BEFORE THE LD.CIT(A) THE ASSESSEE HAS MADE THE FOLLOWING SUBMISSION WHICH HAS BEEN REPRODUCED BY THE LD.CIT(A) A T PARA 12.12 OF THE ORDER: 2.12 DURING APPELLATE PROCEEDINGS, THE APPELLANT, V IDE DETAILED WRITTEN SUBMISSIONS DATED 31/12/2013 (FILED ON 23/1/2014) CONTE NDED AS BELOW- A. ADDITION ON ACCOUNT OF VALUATION OF BUNGALOW AT KHANAPUR 1. THE APPELLANT AND HIS WIFE MRS. SAMINA NANDU RAJPU T HAS PURCHASED 4 HECTAR 96.1 R (12.25 ACRE) LAND AT S.NO. 302B/1 KHANAPUR MANERWADI TAL. HAVELI, DIST. PUNE FROM MR.ASHOKKUMAR V. SURTWALA IN THE ON 03RD AUGUST 2000 THE SAID LAND WAS RAMOSHI VATA N AGRICULTURAL LAND. THE SAID LAND WAS BEEN RELEASED O N 15/05/2006 BY HAVELI TAHASILDAR'S OFFICE AFTER CHARGING FEES OF RS.21 ,62,556/- (CHALLAN DATED 09/03/2006) AS PER REVENUE LAWS APPLIC ABLE IN MAHARASHTRA. ENCLOSED LETTER OF TAHASILDAR DATED 15/05 /2006 AND COPY OF INDEX II DATED 04/08/2000. THE SAID LAND HAS AROUND 6 ACRE ROAD LEVEL AND AROUND 4.5 ACRE ELEVATED LOCATION AN D THE BALANCE LAND IS UNUSABLE. IN THIS MANNER THE APPELLANT INCURRED A TOTAL COST OF RS.41,46,556/- (RS. 19,84,000/- + RS.21,62,556/-) ON T HE LAND. 2. THE APPELLANT HAS STARTED DEVELOPING THE HILLY P ORTION OF THE LAND BY WAY OF CONSTRUCTING APPROACHABLE ROAD TO REA CH THE TOP OF THE HILL AND LEVELING THE TOP OF THE SAID HILL IN THE FI NANCIAL YEAR 2005-06. FURTHER SINCE THIS DEVELOPMENT WAS CARRIED FOR CONSTRUC TION OF FARM HOUSE BUNGALOW ALONG WITH LAWN. THEREFORE DEVELOPMEN T WORK LIKE CONSTRUCTION OF RETAINING WALLS, WATER CLEARANCE GUTT ERS ALONG SIDE OF ROAD AND OTHER WORKS OF LEVELING OF LAND WAS STARTED AND IT GOT FINISHED BY THE MIDDLE OF THE YEAR 2007. 3. SUBSEQUENTLY FINAL ARCHITECTURAL PLAN WAS PREPARE D ON 17/06/2006 AND ACTUAL WORK ON FOUNDATION OF THE BUN GALOW WAS COMMENCED IN THE YEAR OF 2008 WHICH IS EVIDENT FROM THE ARCHITECT'S 20 ITA NOS.1036 TO 1041/PN/2014 PLAN DRAWN UP BY MONISH SHAH & ASSOCIATES DATED 26/07/2 008. THE SAID PLAN HAS BEEN APPROVED BY GRAMPANCHAYAT MANERWAD I TAL HAVELI, DIST. PUNE ON OR AFTER 26/07/2008, FROM WHIC H DATE FOUNDATION OF BUNGALOW COMMENCE. (COPY OF APPROVED PLAN IS ENCLOSED HEREWITH). 4. THE APPELLATE RESPECTFULLY STATE THAT TILL THE AC TUAL SANCTION OF GRAMPANCHAYAT, SITE DEVELOPMENT WOK WAS CARRIED O UT LIKE LAND DEVELOPMENT/ LEVELLING, ROAD DEVELOPMENT AND RETAIN ING WALL CONSTRUCTION WAS IN PROGRESS AND COST INCURRED UP TO 31/ 03/2007 IS OF RS.59,72,071/- AS PER THE BOOKS OF ACCOUNTS. 5. ON 12/10/2010 SEARCH AND SEIZURE OPERATIONS WERE CARRIED AT THE APPELLANTS RESIDENCE U/S.132 OF THE IN COME TAX ACT. AT THE TIME OF SEARCH SUBSTANTIAL CONSTRUCTION WORK OF THE BUNGALOW/FARM HOUSE WAS COMPLETED. THE PENDING WORK INCLUDED FALL CEILING WORK IN SOME ROOM, HAND PAINTING WORK, LIFT FITTING ETC. 6. THE INCOME TAX DEPARTMENT APPOINTED MR. RAVINDR A BAPAT A REGISTERED VALUER TO ESTIMATE THE VALUE OF THE BUNGA LOW; WHO VISITED THE SITE ALONG WITH SEARCH TEA OF THE INCOME TAX DEPT . ON 13/10/2010. SUBSEQUENTLY MR. RAVINDRA BAPAT SUBMITTED VALUATION R EPORT CERTIFYING THE COST OF THE PLOT AND CONSTRUCTION OF THE FARM HOU SE / BUNGALOW AT RS,24,82,49,000/- WHICH WAS ON THE BASIS OF MANY ASSUMPT IONS, LIMITATIONS ETC. THE COST WAS WORKED OUT TAKING INTO A CCOUNT ON THE BASIS OF RECENT TRANSACTIONS FOR BROADLY COMPARABLE PRO PERTIES IN THE VICINITY AND HE SUBMITTED HIS REPORT ON 18/10/2010 WI TH FOLLOWING NOTE. --- THE COST INCURRED IS MADE AT THE REQUEST OF THE INCOME TAX DEPARTMENT. PUNE AND IS PREPARED SOLELY FOR USE OF INC OME TAX DEPARTMENT. WE UNDERSTAND THAT THE REPORT WILL NOT B E COPIED OR RELEASED FOR EXTERNAL CIRCULATION WITHOUT PERMISSION O F THE AUTHOR. THIS REPORT HAS BEEN PREPARED AS PER INFORMATION PROVIDED BY THE DEPARTMENT. WE HAVE NOT VERIFIED THE SAME WITH THE O RIGINAL DOCUMENTS. NO RESPONSIBILITY WILL BE ACCEPTED TO ANY T HIRD PARTY, WHO MAY ACQUIRE AND CHOOSE TO MAKE USE OF OR RELY ON, T HE WHOLE OR ANY PART OF THE REPORT CONTENTS. IT SEEMS THAT MR. BAPAT HIMSELF DID NOT WANT TO BE USED HIS REPORT TO BE USED BY ANY EXTERNAL PERSON/AUTHORITY OTHER THAN I NCOME TAX DEPARTMENT AND THE SAID REPORT WAS PREPARED WITH ONE VISIT TO SITE AND SAME WAS SUBMITTED WITHIN 5 DAYS FROM THE DATE OF V ISIT. THE SAID REPORT OF MR. BAPAT HAS BEEN USED BY THE SEARCH TEAM T O OBTAIN AND PRESSURIZE THE APPELLANT TO RECORD THE STATEMENT ON 14 /10/2010 THIS FACT HAS BEEN NOTED BY LEARNED AO PAGE 5 UNDER PARA 4.1 OF ASSESSMENT ORDERS FOR PERIOD AY 2006-07 TO AY 2010-11 W HICH READS AS FOLLOWS. '- THE ISSUE OF VALUATION DONE BY THE APPROVED VALUER SHRI BAPAT WAS RAISED AT THE TIME OF SEARCH IN VIEW OF THIS THE A SSESSEE, IN HIS STATEMENT RECORDED ON 14/10/2010 DISCLOSED ADDITIONAL INCOME OF RS. 9 CRORE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN THE BUNGALOW.-' THIS PROVES THAT THE APPELLANT WAS ORALLY PRESSURIZED O N THE BASIS OF MR. BAPATS REPORT WHICH WAS EXORBITANTLY HIGHLY VALUED TO RECORD ADDITIONAL DISCLOSURE OF RS.9 CRORE FROM THE AP PELLANT. 21 ITA NOS.1036 TO 1041/PN/2014 OTHERWISE HAS THE IT DEPT. ACCEPTED THE SAID REPORT TH EN IT WOULD HAVE VERY DIFFICULT TO ESTABLISH THE DIFFERENCE BETWE EN DISCLOSURE OBTAINED AND VALUATION OF THE MR. BAPAT OF RS.3 CROR E WHY SAME WAS WAIVED OFF. HENCE, SAID REPORT WAS NOT ACCEPTED A ND IT WAS SOLELY UTILIZE TO GET ADDITIONAL DISCLOSURE FROM THE A PPELLANT. 7. FURTHER APPELLANT RESPECTFULLY BRING TO NOTICE OF YOUR HONOUR THAT EVEN QUESTIONS FRAMED TO RECORD THE STATEMENT OF THE A PPELLANT WAS WITH MALICE AND MALICIOUS INTENTION AND TO OBTAIN INTENDE D ANSWERS TO GET MAXIMUM DISCLOSURE FROM THE APPELLANT WITHOUT HAVING ANY CORROBORATIVE EVIDENCES. 8. YOUR HONOR WILL NOTICE USAGE OF SELECTIVE QUESTION AND ANSWERS RECORDED BY THE LEARNED AO TO COMPLETE THE ASSESSMENT I N RESPECT OF ADDITION TO BE CARRIED OUT ON ACCOUNT OF BUNGALOW. THERE IS ALSO CLEAR PROOF THAT THE DEPT. HAS RECORDED STATEMENT OF THE ASSESSEE TO EXPLOIT HIS IGNORANCE AND THE CIRCUMSTANCES AT THE SAME TIME OF SEA RCH TO GET PREDETERMINED DISCLOSURE OF RS.15 CRORE EITHER FROM HI MSELF OR HIS FAMILY MEMBERS. THIS FACT IS ON THE PAGE NO.11 AND 12 WHICH A RE THE PHOTO COPIES OF THE STATEMENT RECORDED BY THE SEARCH TEAM WHICH AR E INSERTED AND USED IN THE ASSESSMENT ORDER FOR THE PERIOD FROM A. Y. 2006- 07 TO A. Y. 2010-11 9. SUBSEQUENT TO MR. BAPATS REPORT AND AFTER THE CLO SURE OF SEARCH PROCEEDING THE APPELLATE WAS DISTURBED AND PUZZLED HO W COULD HE USE SUCH HUGE AMOUNT FOR CONSTRUCTION OF THE FARM HOUSE/BUNGAL OW; AS HE DOES NOT HAVE ANY OTHER SOURCE OF INCOME. HENCE, HE DECIDED TO OBTAIN TRUE PICTURE OF THE COST OF THE BUNGALOW AND HE APPOINTED M/S. S.R . NIMBAL & ASSOCIATES REGISTERED VALUER TO CARRY OUT THE VALUATION OF THE SAID BUNGALOW. 10. M/S. S.R. NIMBAL & ASSOCIATES PREPARED THE REPORT ON ITEM TO ITEM COST BASIS AND BY MEASURING WORK BY USAGE OF COUNTS, MEA SURING TAPES WEIGHTS ETC. HIS REPORT HAS PROVIDED DETAILED CALCUL ATIONS OF CEMENT BAGS, AREA MEASUREMENTS FOR PAINTING ETC. AND ALSO ADDING 7% CONTINGENCIES AND WORKED OUT 7.10 CRORE AS THE COST OF THE BUNGALOW INC LUDING LAND. THE SAID REPORT WAS SUBMITTED TO LEARNED AO BUT LEARNED AO AND DVO DID NOT ACCEPT THE SAME. FURTHER, THE LEARNED AO HAS TOTALLY IGNORE D THE REGISTERED VALUER REPORT AND NOT EVEN SINGLE WORD WAS MENTIONED ABOUT T HIS REPORT IN THE ASSESSMENT ORDERS. 11. AN ARBITRARY REJECTION OF REGISTER VALUER M/S S. R. NIMBAL & ASSOCIATES REPORT BY THE LEARNED AO IS BECAUSE OF THE FA CT IT WAS NOT SATISFYING THE OBJECTIVE OF THE IT DEPT. AS REGARDS TO DISCLOSURE TO BE OBTAIN ON ACCOUNT OF BUNGALOW AT KHANAPUR I.E RS.9 CRORE TH E APPELLANT RESPECTFULLY DRAWS YOUR HONOR'S ATTENTION TO THE FACT THAT THE LEARNED AO HAS NOT EVEN CHECKED WHETHER PROCEDURE ADOPTED BY TH E REGISTERED VALUER IS PROPER AND REASONABLE TO ARRIVE AT APPROPRIATE ESTI MATE COST OF CONSTRUCTION OF BUNGALOW. FURTHER LEARNED AO AT FEAST SHOULD HAVE CARRIED OUT COMPARISONS BETWEEN TWO VALUATION REPORT AS REGARD S TO METHOD ADOPTED BY REGISTERED VALUER M/S S.R. NIMBAL & ASSOCIAT ES AND LEARNED DVO TO APPRECIATE WHICH METHOD PROVIDES APPROPRIATE CALCULATION OF COST OF CONSTRUCTION. LEARNED AO BEING QUASI JUDICIAL AUTH ORITY, IT IS IMPERATIVE UPON HIM TO FOLLOW RULES OF NATURAL JUSTICE HENCE, HE SHOULD HAVE BEEN ADOPTED COMPARISONS OF TWO REPORTS BEFORE TAXING THAT AMOUNT WHICH IS ESCAPE FROM TAXATION AND DETERMINE MORE APPROPRIATE ESTIMATE OF COST OF CONSTRUCTION OF THE FARM HOUSE/BUNGALOW RATHER THAN N OTIONAL AMOUNT WORKED OUT ON THE BASIS OF MARKET VALUE OF THE CONSTRU CTION AS ESTIMATED BY LEARNED DVO. 22 ITA NOS.1036 TO 1041/PN/2014 12. THE LEARNED AO REFERRED THE MATTER TO DVO WITHO UT INTIMATION TO APPELLANT. THIS REFERENCE WAS MADE ON 25/04/2012 WHI CH CAN BE CONFIRMED FROM DVOS VALUATION REPORT. THE APPELLA NT WAS NOT BEEN PROVIDED ANY INFORMATION ABOUT REGISTER VALUER S.R. NIMBAL REPORT WHETHER SAME HAS BEEN ACCEPTED OR REJECTED AND WHY THE REFERE NCE TO THE DVO HAS BEEN PREFERRED. THE DVO HIMSELF BRING THIS FACT ON R ECORD ON PAGE NO.3 STATING AS FOLLOWS : . AS THE ASSESSEE HAS NOT RESPONDED TO THE NOTICE AND TE LEPHONIC CONTACTS, THE UNDERSIGNED PROPOSED FOR THE INSPECTION O F THE PROPERTY AS THERE WERE REMINDERS AND PRESSURE FROM THE AOS (AND HIS SUPERIORS) SIDE FROM NOVEMBER ONWARDS TO COMPLETE TH E VALUATION IMMEDIATELY (THE REASON FOR SENDING THE REF ERENCE ONLY IN APRIL 2012 TO THIS OFFICE BY THE AO, IN SPITE OF HAV ING TWO CONTRADICTING REPORTS RECEIVED BY HIM, I.E. ONE OF A UG 2010 OBTAINED BY THE DEPARTMENT AND ONE SUBMITTED BY THE ASSESSEE IN 2011 IS NOT KNOWN) FURTHER DVO MENTIONED ON PAGE NO.4 OF HIS REPORT AB OUT AOS ACTION OF NOT FORWARDING VALUATION REPORT SUBMITTED BY THE ASSESSEE IN THE FOLLOWING WORDS. THE ASSESSING OFFICER HAS FORWARDED A COPY OF THE VALU ATION REPORT OF THE REGISTERED VALUER, SHRI RAVINDRA B. BA PAT APPOINTED/ENGAGED BY THE DEPARTMENT. HOWEVER, THE DETAILS ETC. OBTAINED THROUGH THE ASSESSEE/VALUER PROVIDED AS STATED B Y THE VALUER WERE NOT FORWARDED TO THIS OFFICE IN SPITE OF REPEATED REQUESTS TO THE AO (ACIT/DCIT/JCIT). THE VALUATION R EPORT SUBMITTED BY THE ASSESSEE WAS ALSO NOT FORWARDED TO THIS O FFICE.. THIS INDICATES THAT LEARNED AO DESPERATELY AND WITH MA LAFIDE INTENTION SUPPRESSED REGISTERED VALUER M/S. S.R. NIMBAL & ASSOCIATES VALUATION REPORT. IT IS CLEAR THAT THE LEARNED AO WAS POLLUTIN G THE MIND OF DVOS TO GET VALUATION REPORT NOT TO THE TRUE FACT BY PROVID ING EXORBITANTLY VALUED VALUATION REPORT OF MR. BAPAT WHICH REPORT HE HIMSEL F IS NOT BELIEVING TO BE CORRECT BECAUSE OF THE METHODOLOGY ADOPTED BY MR. BA PAT AND REPORT USAGE CONDITION STATED IN THE VALUATION REPORT. AS STATED H EREIN ABOVE AND WITH THE COST OF REPETITION THE APPELLATE STATES THAT MR. R AVINDRA BAPAT PREPARED THE REPORT IN HURRY STILL THE LEARNED AO WAS FORWARDI NG THE SAME REPORT AND NOT OTHER REPORT SUBMITTED BY THE APPELLANT. 13. THE LEARNED DVO HAD STARTED WORK OF VALUATION B Y VISITING THE SITE ON 23/01/2013 AND SUBMITTED REPORT ON 28/02/2013. I N BETWEEN HE HAD CALLED THE APPELLANT TO PRODUCE DETAILS ABOUT TITLE DOCUMENTS OF THE LAND, ANY VALUATION REPORT AND BILLS OF EXPENDITURE ALL OF WHICH WAS SUBMITTED BY THE APPELLANT ON 14/01/2013 AND 23/01/2013. THE AP PELLANT DRAWS YOUR KIND ATTENTION THAT THE APPELLANT ONLY SUBMITTED THE REPORT OF M/S. S.R. NIMBALS REPORT TO DVO. 14. THE APPELLANT RESPECTFULLY BRING TO YOUR HONORS KIND ATTENTION THAT MANY ITEMS WHICH ARE CONSIDERED BY DVO IN HIS REPORT W ERE FIXED OR CONSTRUCTED DEVELOPED SUBSEQUENT TO 31/03/2010 THE DAY FOR WHICH DVO HAS ALLEGED ESTIMATE VALUE OF CONSTRUCTION OF THE BUNG ALOW. THE LIST OF THE ITEMS IS ANNEXED HEREWITH WHICH HAS BEEN CARRIED OUT SU BSEQUENT TO 31/03/2010. 23 ITA NOS.1036 TO 1041/PN/2014 15. THE DVO HAS USED CPWD INDICES OF 1992 INSTEAD OF CP WD AVAILABLE INDICES OF 2007. THE LEARNED DVO AFTER ESTIMATING TH E COST OF CONSTRUCTION ON THE BASIS OF CPWD INDICES OF 1992 MATHEMATICALLY WO RKED OUT/CALCULATED/ESTIMATED ON THE BASIS OF WEIGHTED AVER AGE COST INDEXED VALUE OF CONSTRUCTION AT RS.12,06,79,000/- UNDER THE ASSUMPTION THAT THE WORK STARTED FROM 1/00/2005 AND WAS COMPLETED ON 31/3 /2010. THIS FACT OF STARTING COMMENCEMENT OF WORK IS NOT CORRECT SINCE ACTUAL CONSTRUCTION WORK WAS STARTED IN THE MIDDLE OF 2007. AS STATED HERE ABOVE ON THE DATE OF VISIT TO THE SITE BY DVO THE FINISHING WORK OF BUNG ALOW WAS GOING ON. 16. HAD THE DVO USED CPWD INDICES OF 2007 THEN MATHEM ATICAL ERROR CAUSED BECAUSE OF USAGE OF INDICES OF 1992 COULD HAVE B EEN ELIMINATED AND COST OF BUNGALOW WOULD HAVE BEEN MUCH LESSER THAN ACTU ALLY CALCULATED BY DVO. THE CALCULATIONS ON THE BASIS OF 2007 INDICES AR E ANNEXED HEREWITH. FURTHER THE DVOS REPORT HAS GONE WRONG BECAUSE OF NON CONSIDERATION OF WORK CARRIED OUT AFTER 31/03/2010 AND INAPPROPRIATE LY ALLOWING DEDUCTION OF 3% INSTEAD OF MINIMUM 20% FOR THE SUPERV ISION CARRIED OUT BY THE APPELLANT (BEING HIMSELF BUILDER AND DEVELOPE R AND PROMOTED FOR PAST 25 YEARS). FURTHER THE APPELLANT HAD TAKEN THE ADVANTAGE OF HAVING KNOWLEDGE OF AVAILABILITY OF CHEAP LABOUR AND BEST Q UALITY MATERIAL WHICH WAS PURCHASED AT LOW COST SINCE HE COULD TAKE ADVANTAGE OF BULK PURCHASE OF CONSTRUCTION MATERIALS. FURTHER THE APPELLANT BEI NG FROM RAJASTHAN HE HAS FULL KNOWLEDGE OF AVAILABILITY OF SPECIALIZED WOR KERS FROM RAJASTHAN AT LOW COST. THESE FACTS HAVE NOT BEEN CORRECTLY APPREC IATED BY THE DVO WHILE ESTIMATING THE COST OF CONSTRUCTION. 17. THE PRICES AND RATES UTILIZED BY THE DVO ARE VERY EXORBITANT AND HE HAD TAKEN HIGHEST MARKET VALUE AS IF THE LEARNED DVO WAS CARRYING OUT VALUATION FOR CAPITAL GAINS AND HE HAS FORGOTTEN THAT THE REFERENCE IS U/S.142A WITH MANDATE TO ESTIMATE COST OF CONSTRUCTION FOR THE PURPOSE TO CALCULATE UNDISCLOSED INCOME WHICH IS ALWAYS REQUIRED T O BE CALCULATED WITH RELATION TO THE CASH FLOW OF THE PERSON AS WELL A S AVAILABLE BILLS AND SURROUNDING AREA MARKET RATES OF THE CONSTRUCTION MATE RIALS. FURTHER THE APPELLANT RESPECTFULLY STATES THAT THE APPELLANT BEIN G A BUILDER, DEVELOPERS AND CONTRACTOR AND HAVING DONE CONSTRUCTION WORK ON LARGE SCALE IN THE SURROUNDING AREA HE HAS TAKEN THE ADVANTAGES OF BULK P URCHASE OF CONSTRUCTION MATERIALS AND LOW COST OF LABOUR. THERE FORE THE BUNGALOW COST IS MUCH LESSER TO THE APPELLANT THAN HAD THIS BUNGA LOW BEEN CONSTRUCTED BY ANY OTHER PERSON THAN THE APPELLANT. 18. FURTHER LEARNED DVO HAS INAPPROPRIATELY USED CLOSI NG BALANCE OF CONSTRUCTION WORK IN THE BOOKS OF APPELLANT AS BASE FOR ACTUAL WORK IN PROGRESS. IN FACT WHEN LEARNED AO HAS REJECTED BOOKS O F ACCOUNTS IF AT ALL THAN SUCH TYPE OF USAGE CANT BE TAKE AND IT CANNOT BE CONSIDERED ACTUAL WORK IN PROGRESS TO SPREAD THE COST OF CONSTRUCTION AM ONG THE VARIOUS FINANCIAL YEARS. 19. THE APPELLANT RESPECTFULLY STATE THAT THE DVOS RE PORT DOES NOT SHOW CORRECT AND TRUE COST OF CONSTRUCTION AND SAME WAS NOT DISCUSSED WITH THE APPELLANT BEFORE SUBMITTING TO LEARNED AO. LEARNED DVO HAS NOT CALCULATED COST OF CONSTRUCTION ON THE BASIS OF AVAILAB ILITY OF MANY OTHER FACTORS TO THE APPELLANT AND THE VALUATION REPORT IS NOT CORRECT TO THE EXTENT IT IS BACK DATED CALCULATION AS ON 31/03/2010 AFTER T HE APPROX. 3 YEARS GAP. THIS FACT HAS BEEN RECORDED BY LEARNED DVO IN HIS REPO RT THAT THE CALCULATIONS NEED TO BE ADJUSTED FOR THE COST OF CONSTR UCTION WORKED OUT BY HIM; SINCE THE SAME WAS CALCULATED UPTO THE DATE OF RE PORT, I.E. FEB 2013. 24 ITA NOS.1036 TO 1041/PN/2014 20. THE LEARNED AO HAS MECHANICALLY ACCEPTED DVOS R EPORT WITHOUT JUDICIOUSLY SCRUTINIZING WHETHER REPORT REFLECTS CORRE CT APPROXIMATE ESTIMATE OF ACTUAL COST TO THE APPELLANT. FURTHER TH E LEARNED AO HAS INTENTIONALLY AVOIDED TO COMMUNICATE THE APPELLANT BEFORE THE REFERENCE TO DVO U/S.142A AND THIS WAY PURPOSEFULLY HE DID NOT GIVE OPPORTUNITY TO THE APPELLANT TO ARGUE WHY REFERENCE SHOULD NOT BE MADE TO THE DVO. FURTHER THE LEARNED AO HAS NOT GIVEN CHANCE OR NOT COMMENTED ON WHY VALUATION REPORT SUBMITTED BY APPELLANT SHOULD BE CONSIDERED FOR THE WORKING OF COST OF CONSTRUCTION. THE LEARNED AO HAS NOT COMMENTED ON WHAT GROUNDS M/S. S.R. NIMBAL & ASSOCIATES REPORT WAS NOT CONSIDERED AND I T IS VERY MUCH EVIDENT FROM AOS ORDER THAT HE WAS HAPPY TO GET DVO S REPORT OF RS.9 CRORE ADDITIONS THAN THE BOOK RECORDED VALUE AND TO HUSH UP THE MATTER. FURTHER HE HAS TOTALLY MISGUIDED AND RELIED ON THE AP PELLANTS STATEMENT RECORDED BY THE SEARCH TEAM WHICH WAS OBTAINED BY MISU SE OF MR. BAPATS REPORT, WHICH IN TURN HAS NOT BEEN RELIED UPON BY LE ARNED AO. THE LEARNED DVO AND EVEN MR. BAPAT HIMSELF WAS DOUBTFUL ABOUT HIS OWN CALCULATIONS BECAUSE OF LACK OF INFORMATION AND TIME WITHIN WHICH HE HAS ESTIMATED COST OF CONSTRUCTION. 21. THE LEARNED AO HAS NOT REJECTED BOOKS OF ACCOUNTS OF THE APPELLANT WHICH IS PREREQUISITE CONDITION TO MAKE REFERENCE U/S. 142A TO DVO. FURTHER PARTLY HE HAS ACCEPTED AND RELIED UPON CONST RUCTION CLOSING BALANCES TO WORK OUT WORK IN PROGRESS ON WHICH BASIS H E HAS ALLOCATED COST OF CONSTRUCTION WORKED BY DVO AND ADDED THE INCOME T O APPELLANTS RETURN INCOME FOR THE VARIOUS ASSESSMENT YEARS. THESE ADDITIONS A RE BASED UPON INAPPROPRIATE JUDICIOUS SCRUTINY AND NOT PROVIDING SUF FICIENT PROPER OPPORTUNITY TO THE APPELLANT TO CONFRONT DVOS REPOR T AND TO ESTABLISH CORRECTNESS OF THE VALUATION REPORT SUBMITTED BY THE A PPELLANT. 22. FURTHER THE APPELLANT RESPECTFULLY STATES THAT BEF ORE ACCEPTING DVOS VALUATION REPORT AS A BASE FOR ADDITION TO THE RETURN ED INCOME OF THE APPELLANT HE SHOULD HAVE BEEN FOUND OUT APPROXIMATE CASH INFLOW TO CROSS CHECK INVESTMENTS CALCULATED BY THE DVO AND THEN AND THEN ONLY ADDITION SHOULD HAVE BEEN EFFECTED. THE APPELLANT BRING TO T HE YOUR HONORS KIND NOTICE THAT ALL THE SOURCES OF THE INCOME HAVE BEEN SU RFACED THROUGH SEARCH BY THE SEARCH TEAM U/S.132. IN SUCH CIRCUMSTANCE THERE CANNOT BE PRESUMED THAT ADDITIONAL SOURCES ARE LEFT OUT FROM THE SEARCH. HENCE, IT IS NECESSARY TO WORK OUT CASH FLOW STATEMENT ON THE BASIS OF SEARCH DATA TO FIND OUT AVAILABLE MONEY TO INVEST IN A CONSTRUCTION OF THE BUNGALOW. 36. HOWEVER, WE FIND DESPITE THE ABOVE SUBMISSION BEFORE TH E LD.CIT(A) HE HAS NOT DELIBERATED UPON ON THIS ISSUE AND HAS GONE BY THE REPORT OF THE DVO WHICH HAS BEEN ACCEPTED BY THE AO. SINCE THE SUBMISSION OF THE ASSESSEE HAS NOT BEEN REBUTTED AT AN Y PLACE, THEREFORE, WE FIND MERIT IN THE SUBMISSION OF THE LD. COUNSE L FOR THE ASSESSEE THAT CONSTRUCTION ACTIVITY CANNOT START UNTIL A ND UNLESS THE LAND IS RELEASED BY THE HAVELI TAHSILDAR OFFICE. SINCE THE LAND HAS BEEN RELEASED ON 15-05-2006 AND THE FIRST ARCHITECTURAL PLAN W AS PREPARED 25 ITA NOS.1036 TO 1041/PN/2014 ON 17-06-2006 WE FIND FORCE IN THE SUBMISSION OF THE LD. C OUNSEL FOR THE ASSESSEE THAT CONSTRUCTION ACTIVITY HAS NOT STARTE D DURING F.Y. 2005-06 RELEVANT TO A.Y.2006-07. WHATEVER ACTIVITY HAS BE EN DONE IS CONSTRUCTION OF APPROACH ROAD TO REACH TO THE TOP OF T HE HILL AND LEVELLING THE TOP OF THE SAID HILL. THIS IN OUR OPINION CAN BE M ET OUT OF THE ADDITIONAL INCOME DISCLOSED IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S.153A FOR A.Y.2005-06 AND 2006-07. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT RS.1,30,30,201/- TOWA RDS CONSTRUCTION OF THE BUNGALOW WHICH THE LD.CIT(A) SUSTAINE D OUT OF THE ADDITION OF RS.1,70,26,504/- MADE BY THE AO IS UNCALLED FOR. WE ACCORDINGLY DIRECT THE AO TO DELETE THE ADDITION OF RS.1,3 0,30,201/- FROM A.Y. 2006-07. 37. NOW COMING TO THE ARGUMENT OF THE LD. COUNSEL FOR TH E ASSESSEE THAT THE DVO HAS CONSIDERED THE ENTIRE EXPENDITURE INCU RRED UP TO HIS DATE OF VISIT ON 23-01-2013 AS EXPENDITURE INCURRED DU RING THE F.Y. 2006-07 TO 2009-10 IS CONCERNED, WE FIND SOME FORCE IN TH E SAME. ADMITTEDLY, THE SEARCH TOOK PLACE ON 12-10-2010. THE A SSESSEE IN HIS BALANCE SHEET AS ON 31-03-2010, A COPY OF WHICH IS PLACE D AT PAPER BOOK PAGE 143 READ WITH PAGE 148 HAS SHOWN LAND COST AND DEVELOPMENT EXPENDITURE AT RS.3,20,08,627/-. THE AO BASED ON THE REPORT OF THE DVO VALUED THE PROPERTY AT RS.12,06,79,000/ - AND MADE THE ADDITION OF RS.9,31,86,279/- BEING THE DIFFERENCE BETWEEN THE VALUE DECLARED BY THE ASSESSEE IN HIS BALANCE SHEET AS ON 31- 03-2010 AND THE VALUE DETERMINED BY THE DVO. HE HAS COMPLETELY IGNO RED THE INVESTMENT MADE AFTER 31-03-2010 TILL THE DATE OF SEARCH AND THEREAFTER TILL THE DATE OF VISIT OF THE DVO. 38. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE IN THE PAPER BOOK, WE FIND THE ASSESSEE IN HIS BALANCE SHEET AS ON 31- 03-2011, A 26 ITA NOS.1036 TO 1041/PN/2014 COPY OF WHICH IS PLACED AT PAPER BOOK PAGE 161, HAS DISC LOSED SUCH INVESTMENT AT RS.7,10,68,339.50 THEREBY INVESTING FURTHER AMOUNT OF RS.3,90,59,712/- BETWEEN 01-04-2010 TO 31-03-2011. WE FIN D THE LD.CIT(A) HAS ONLY ALLOWED AN AMOUNT OF RS.60,33,950/- BEING 5% OF THE ESTIMATED VALUE OF THE PROPERTY. ALTHOUGH THE ASSES SEE HAS STATED BEFORE HIM THAT AN AMOUNT OF RS.1.89 CRORES WAS INCURRED ON THE FARM HOUSE/BUNGALOW AFTER 31-03-2010 TILL THE DATE OF SEARCH H E HAS REJECTED THE SAME ON THE GROUND THAT THE ASSESSEE W AS UNABLE TO ADDUCE ANY COGENT EVIDENCE IN SUPPORT OF HIS CLAIM THAT A N AMOUNT OF RS.1.89 CRORES WAS INCURRED ON THE FARM HOUSE/BUNGALOW. 39. AS MENTIONED EARLIER, FROM THE DETAILS FURNISHED BY THE A SSESSEE IN THE BALANCE SHEET, THE ASSESSEE HAS MADE INVESTMENT OF RS.3,90,59,712/- BETWEEN 01-04-2010 TO 31-03-2011 AS PE R THE BALANCE SHEET FILED. HOWEVER, THE SAME CANNOT BE FULLY ALLOW ED UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, BENEFIT OF RS.2,00,00,000/- ON ESTIMATE ON ACCOUNT OF EXPENDITURE AFTER 31-03-2010 AS AGAINST RS.60,33,950/- ALLOWED BY THE CIT(A) IN OUR OPINION WILL MEET THE ENDS OF JUSTICE. WE HOLD AND DIRECT ACCORDINGLY. 40. NOW COMING TO THE AMOUNT OF SELF SUPERVISION CHARGES, W E FIND THE DVO HAS GRANTED ONLY 3% OF THE VALUE OF THE PROPER TY AS SELF SUPERVISION CHARGES WHICH HAS BEEN ENHANCED TO 6% BY T HE CIT(A). THE ASSESSEE IN THE INSTANT CASE IS ADMITTEDLY ENGAGED IN THE BUSINESS OF PROMOTERS, BUILDERS AND DEVELOPERS. HE IS AWARE OF TH E PLACES WHERE MATERIAL AND LABOUR IS AVAILABLE AT CHEAP RATE. THER EFORE, HE IS MOST LIKELY TO SAVE SUBSTANTIAL AMOUNT ON ACCOUNT OF MAT ERIAL AND LABOUR COST AS COMPARED TO AN ORDINARY PERSON. THE VA RIOUS BENCHES OF THE TRIBUNAL ARE GRANTING SELF SUPERVISION CHARGES VARYIN G FROM 10% 27 ITA NOS.1036 TO 1041/PN/2014 TO 15%. CONSIDERING THE FACT THAT THE ASSESSEE HIMSELF IS A BUILDER- CUM-PROMOTER, THEREFORE, HE IS SUPPOSED TO HAVE SUBSTAN TIAL SAVINGS ON THIS ACCOUNT. IN VIEW OF THE ABOVE, WE ARE OF THE CON SIDERED OPINION THAT THE RELIEF GRANTED BY THE CIT(A) ON ACCOUNT OF SELF SU PERVISION CHARGES AT 6% AS AGAINST 3% ALLOWED BY THE AO APPEARS TO BE ON THE LOWER SIDE. WE ARE OF THE CONSIDERED OPINION THAT SELF SUPE RVISION CHARGES AT 12.5% OF THE VALUE OF THE PROPERTY DETERMINED BY THE DVO IN THE INSTANT CASE WILL MEET THE ENDS OF JUSTICE. WE ACCO RDINGLY DIRECT THE AO TO ALLOW SELF SUPERVISION CHARGES OF RS.1,50,84,875/- B EING 12.5% OF THE ESTIMATED VALUE OF THE PROPERTY BY THE DVO AT RS.12,06,79,000/-. THUS THE ASSESSEE GETS RELIEF OF RS.1,14,64 ,505/- BEING THE DIFFERENCE BETWEEN THE SELF SUPERVISION CHARGES G IVEN AS PER THIS ORDER AND THE SELF SUPERVISIONS CHARGES GRANTED BY THE DVO. 41. FURTHER, WE FIND THE ASSESSEE IN HIS RETURN IN RESPONS E TO NOTICE U/S.153A HAS DECLARED ADDITIONAL INCOME FOR DIFFERENT ASSESSM ENT YEARS TOTALING TO RS.3,43,24,198/-, THE DETAILS OF WHICH ARE AS UNDER : ASST. YEAR ADDITIONAL INCOME OTHER INCOME 2006 - 07 22,12,000/ - NIL 2007 - 08 8,79,000/ - 10,01,810/ - (SALE OF FLAT) 2008 - 09 42,70,000/ - 53,67,516/ - (SNEHA PARADISE PROFIT) 2009 - 10 49,36,000/ - 27,04,667/ - SNEHA PARADISE PROFIT) 2010 - 11 80,55,000/ - 41,50,245/ - SNEHA PARADISE PROFIT) 7,47,960/ - CANCELLATION CHARGES 2,03,52,000/ - 1,39,72,198/ - TOTAL 3,43,24,198/ - 42. WE FIND FROM THE ORDER OF THE CIT(A) AT PAGE 53 THAT H E HAS GIVEN SET OFF OF ONLY RS.1,81,21,667/-. WE DO NOT FIND ANY REASON AS TO WHY THE ENTIRE UNDISCLOSED INCOME SHOULD NOT BE ALLOWED AS BEI NG AVAILABLE TO THE ASSESSEE TO MEET THE COST OF INVESTMENT TOWARD S THE FARM HOUSE/BUNGALOW. THERE IS NO MATERIAL AT THE DISPOSAL OF THE REVENUE THAT THE ADDITIONAL INCOME DISCLOSED HAS BEEN UTILISED OTHER WISE. 28 ITA NOS.1036 TO 1041/PN/2014 UNDER THESE CIRCUMSTANCES AND CONSIDERING THE TOTALITY O F THE FACTS OF THE CASE AND CONSIDERING THE FACT THAT THE ASSESSEE H AS DECLARED ADDITIONAL INCOME OF RS.3,43,24,198/- DURING THE PERIOD FROM A.Y. 2006-07 TO 2010-11 IN HIS RETURNS FILED IN RESPONSE TO N OTICE U/S.153A THE SAME IN OUR OPINION SHOULD BE AVAILABLE TO THE ASSESSE E FOR INVESTING IN THE BUNGALOW. WE, THEREFORE, DIRECT THE AO TO GIVE SET OFF OF RS.3,43,24,198/- AS AGAINST RS.1,81,21,667/- ALLOWED BY THE LD.CIT(A). 43. SO FAR AS THE CONTENTION OF THE ASSESSEE THAT THE D VO HAS CONSIDERED THE 1992 RATES AS AGAINST 2007 AND 2009 RA TES WHICH WERE AVAILABLE IN PUBLIC DOMAIN IS CONCERNED, WE ALSO FIND SOME FORC E IN THE ABOVE. ADMITTEDLY, THE CONSTRUCTION OF THE BUILDING HAS ST ARTED DURING THE PERIOD FROM 2006-07 WHICH CONTINUED TILL 2010-11 AND T HEREAFTER. THEREFORE, ADOPTION OF 1992 SCHEDULE OF RATES AND MULTIPLYING THE SAME BY COST INFLATION INDEX AS AGAINST THE AVAILABLE RATE OF 2007 OR 2009 WILL GIVE A DISTORTED FIGURE. THE LD. COUNSEL FOR THE ASSESSEE FILED A CHART SHOWING THAT BECAUSE OF THESE FAULTY METHOD ADOPTED BY THE DVO, THE DIFFERENCE COMES TO RS.1,82,41,436/-. HOWEVER, SINCE THE ASSE SSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT ON DAY-TO-DAY BASIS TOWARDS THE INVESTMENT IN THE BUNGALOW, THEREFORE, THE PROPERTY HAS T O BE VALUED BY FOLLOWING THE METHOD OF VALUATION/GUIDELINES ISSUED BY VARIO US AGENCIES. IT IS ALSO A FACT THAT THE CPWD RATES ARE HIGH ER THAN THE LOCAL PWD RATES. FURTHER, WE FIND SOME FORCE IN THE SUBMISS ION OF THE LD. COUNSEL FOR THE ASSESSEE THAT INSTEAD OF ADOPTING 199 2 RATES AND MULTIPLYING THE SAME BY COST INFLATION INDEX THE DVO COULD H AVE ADOPTED THE CURRENT SCHEDULE OF RATES PRESCRIBED BY CP WD AND BROUGHT IT DOWN OR MADE SUITABLE ADJUSTMENTS. SINCE THE ASSESSEE DURING THE COURSE OF SEARCH IN HIS STATEMENT RECORDED U/S.132(4) HAS ALSO MADE A STATEMENT THAT THE INVESTMENT IN THE BUNGA LOW IS ABOUT 29 ITA NOS.1036 TO 1041/PN/2014 RS.12 CRORES, THEREFORE, THE VALUATION REPORT FILED BY HIM FR OM A REGISTERED VALUER UNDER THE FACTS AND CIRCUMSTANCES OF T HE CASE CANNOT BE ACCEPTED. IN VIEW OF THE VARIOUS LACUNAE POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE DUE TO NON ADOPTION OF THE CUR RENT SCHEDULE OF RATE AND DUE TO SOME CALCULATION ERROR THE REPORT FILED BY THE DVO ALSO CANNOT BE ACCEPTED. IN OUR OPINION THE INVESTMENT IN THE PROPERTY SHOULD BE COMPUTED BY REDUCING THE VARIOUS ARITHMETICAL INACCURACIES IN THE REPORT OF THE DVO AND FURTHER ADJUSTING THE SAM E TO THE 2007 INDICES OR 2009 SCHEDULE OF RATES AS AGAINST THE 1992 RA TE ADOPTED BY THE DVO. THE OBVIOUS ARITHMETICAL ERRORS AS POINTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE DETAILS OF WHICH ARE ALREADY REPRODUCED AT PARA 27 COMES TO RS.1,30,01,048.81. SIMILARLY, THE DIFFERENC E DUE TO ADOPTION OF 1992 RATES AS AGAINST 2009 GUIDELINES GIVES A DIFFERENCE OF RS.1,29,31,475/-. THUS, ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE THE DIFFERENCES COMES TO RS.2,59,32,523.81 (I.E. RS.1,30,01,048.81 +1,29,31,475. SINCE THE INVESTMENT IN THE PROPERTY HAS BE EN ESTIMATED IN ABSENCE OF MAINTENANCE OF PROPER BOOKS OF AC COUNT, THEREFORE, THERE IS BOUND TO BE SOME DIFFERENCE IN THE ES TIMATION. THE AMOUNT CALCULATED BY THE LD. COUNSEL FOR THE ASSESSEE A T RS.2.59 CRORES CANNOT BE ACCEPTED IN TOTO. HOWEVER, IT ALSO CAN NOT BE REJECTED BECAUSE OF CERTAIN OBVIOUS CALCULATION MISTAKES AND ADOPTI ON OF 1992 SCHEDULE OF RATES. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE A FURTHER REDUCTION OF 20% FROM THE VALUE ADOPTED BY THE DVO MAY BE ALLOWED TO MEET THE ENDS OF JUSTICE. THIS COMES TO RS.2,41 ,35,800/- AS AGAINST RS.2,59,32,523/- CALCULATED BY THE LD. COUNSEL FOR THE ASSESSEE. THIS IN OUR OPINION WILL MEET THE ENDS OF JUSTICE. WE HOLD AND DIRECT ACCORDINGLY. 44. IN THE LIGHT OF OUR ABOVE OBSERVATIONS, WE FIND THE INVE STMENT IN THE PROPERTY CAN BE DETERMINED AS UNDER : 30 ITA NOS.1036 TO 1041/PN/2014 AMOUNT DETERMINED B Y THE DVO 12,06,79,000 LESS : INVESTMENT SHOWN BY THE ASSESSEE UPTO 31-03-2010 (EXCLUDING THE COST OF LAND 2,74,92,715 9,31,86,2 85 LESS: SET OFF OF ADDITIONAL INCOME AS PER PARA 42 OF THIS ORDER 3,43,24,198 5,88,62,08 7 RELIEF ON A CCOUNT OF EXPENDITURE AFTER 31-03-2010 AS PER PARA 39 2,00,00,000 3,88,62,08 7 LESS : RELIEF ON ACCOUNT OF SELF SUPERVISION CHARGES AS PER PARA 40 1,14,64,5 05 2,73,97,5 82 LESS: MISTAKES/CALCULATION ERRORS AS PER PARA 43 OF THIS ORDER 2,41,35,800 UNDISCLOSED IN VESTMENT TO BE ADDED FOR DIFFERENT YEARS 32,61,7 82 45. THE ABOVE AMOUNT OF UNDISCLOSED INVESTMENT IN OUR OPIN ION HAS TO BE APPORTIONED TO DIFFERENT ASSESSMENT YEARS BETWEEN A.Y. 2007-08 TO 2010-11 IN THE RATIO OF INVESTMENT SHOWN BY THE ASSE SSEE WHICH IS AS UNDER : A.Y. AMT. DECLARED BY ASSESSEE UNEXPLAINED INVESTMENT TO BE SUSTAINED FINALLY 2007 - 08 14,56,159/ - 5.30 % 1,72, 875 / - 2008 - 09 1,70,66,533/ - 62 .08 % 20,2 4 , 91 4 / - 2009 - 10 38,73,523/ - 14.08% 4,59, 259 / - 2010 - 11 50,96,500/ - 18.5 4 % 6,04, 734/ - 2,74,92,715/ - 100 32,61, 78 2/ - 46. THE AO SHALL VERIFY THE ABOVE COMPUTATION AND MAKE SUITABLE ADJUSTMENT IF ANY CALCULATION MISTAKE IS FOUND. HE SHALL REST RICT THE ADDITION AS DIRECTED. THE GROUND RAISED BY THE ASSESSE E FOR A.Y. 2006- 07 IS THUS ALLOWED AND FOR OTHER YEARS PARTLY ALLOWED AS PER THE TABLE ABOVE. 47. THE NEXT ISSUE RAISED BY THE ASSESSEE IN THE GROUN DS OF APPEAL FOR A.YRS. 2006-07, 2008-09 AND 2010-11 RELATE TO THE O RDER OF THE CIT(A) IN CONFIRMING THE ADDITION MADE BY THE AO U/S.40A(3). 31 ITA NOS.1036 TO 1041/PN/2014 48. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAS IN CURRED CERTAIN EXPENSES IN CASH FOR WHICH A SET OFF HAS BEEN GIVEN WHILE C OMPUTING ASSESSEES UNDISCLOSED INVESTMENT/CASH/INCOME. FOR A.Y. 2 006-07, RS.5,55,000/- IS THE AMOUNT OF SUCH CASH EXPENDITURE WHICH HAS BEEN ALLOWED WHILE COMPUTING HIS UNACCOUNTED INCOME AS SHOWN IN THE CHART OF YEAR-WISE BREAK UP OF DISCLOSURE. FOR A.Y. 2008-0 9, RS.4 LAKHS IS THE AMOUNT OF SUCH CASH EXPENDITURE AND FOR A.Y.2 010-11 THE AMOUNT IS RS.7,40,483/-. THE AO INVOKING THE PROVISIONS OF S ECTION 40A(3) OF THE I.T. ACT DISALLOWED 20% OF SUCH EXPENDITURE B EING RS.1,11,000/- FOR A.Y. 2006-07, RS.4 LAKHS FOR A.Y. 2008-09 AND RS.7,40,483/- FOR A.Y. 2010-11. THE AO FURTHER NOTED THAT ON 19-03- 2013 THE ASSESSEE HAS FILED A LETTER DATED 18-03-2013 IN TAPPAL CONTENDING THAT UNDISCLOSED INCOME DISCLOSED BY HIM FOR TH E A.YRS. 2005-06 TO 2009-10 OF RS.2,06,99,420/- HAS BEEN INVESTED BY HIM IN THE KHANAPUR BUNGALOW. HE OBSERVED THAT THE STAND HA S BEEN TAKEN BY THE ASSESSEE FOR THE FIRST TIME AT THE FAG END OF ASSE SSMENT PROCEEDINGS. NO CREDIBLE EVIDENCE IN SUPPORT OF HIS CLAIM HA S BEEN GIVEN. HE FURTHER OBSERVED THAT DURING THE COURSE OF SEA RCH NO EVIDENCE WAS FOUND TO INDICATE THAT THE CASH GENERATED HAS BEEN INVESTED IN THE BUNGALOW. THE ASSESSEE HAS PURCHASED O VER 250 ACRES OF LAND IN SRIVARDHAN AND HAS ALSO ACQUIRED SEVERAL OTHER IMMOVABLE PROPERTIES. THEREFORE, THE POSSIBILITY OF THE ASSESSEE USING THE CASH COLLECTED FOR PURCHASE OF THESE IMMOVABLE PROPERTIES CANNO T BE RULED OUT. IN ABSENCE OF ANY CREDIBLE EVIDENCE THE AO REJECTE D THE VERSION OF THE ASSESSEE AND ACCORDINGLY MADE ADDITION U/S.40A(3) AS MENTIONED ABOVE. 49. BEFORE THE CIT(A) IT WAS SUBMITTED THAT UNDER THE PRO VISIONS OF SECTION 40A(3) DISALLOWANCE CAN ONLY BE MADE WHEN AN ASS ESSEE INCURS 32 ITA NOS.1036 TO 1041/PN/2014 EXPENDITURE WHICH IS OTHERWISE DEDUCTIBLE UNDER THE OTHE R PROVISION OF THE ACT FOR COMPUTING BUSINESS INCOME AND PAYMENT IN RE SPECT OF THE SAME HAS BEEN MADE OTHERWISE THAN BY ACCOUNT PAYEE C HEQUE OR DEMAND DRAFT IN EXCESS OF RS.20,000/- AT ONE TIME. 50. HOWEVER, THE CIT(A) WAS ALSO NOT CONVINCED WITH THE A RGUMENTS ADVANCED BY THE ASSESSEE AND UPHELD THE DISALLOWANCE MA DE BY THE AO. ACCORDING TO HIM, THE PROPOSITION THAT SECTION 40A(3) WILL HAVE NO APPLICATION WHERE THE CASH PAYMENTS WERE RELATED TO UNA CCOUNTED TRANSACTIONS IS NO LONGER ACCEPTABLE IN VIEW OF THE DECISIO N OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. HYNOUP FOOD AND OIL INDUSTRIES LTD. REPORTED IN 290 ITR 702, THE DECISION IN T HE CASE OF HONBLE A.P. HIGH COURT IN THE CASE OF S. VENKATA SUBBA RA O VS. CIT REPORTED IN 173 ITR 340, THE DECISION OF HONBLE PUNJAB A ND HARYANA COURT IN THE CASE OF CIT VS. SAI METAL WORKS REPORTED IN 241 CTR 377 AND THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. D.D.HAZARE REPORTED IN 48 ITD 595 (BOM.) ETC. 51. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 52. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALLENGED THE ORDER OF THE CIT(A). RELYING ON VARIOUS DECISIONS HE SUBMITTED THAT NATURE OF EXPENDITURE INCURRED IS CAPITAL EXPENDITURE AND THEREFORE PROVISIONS OF SECTION 40A(3) ARE NOT APPLICABLE. REFERRING TO THE DECISION OF HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. PURSHO TTAMLAL TAMRAKAR REPORTED IN 270 ITR 314 HE SUBMITTED THAT PR OVISIONS OF SECTION 40A(3) CANNOT BE APPLIED WHERE THE AO APPLIES NET PROFIT RATE IN COMPUTING THE INCOME OF THE ASSESSEE. 33 ITA NOS.1036 TO 1041/PN/2014 53. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 54. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIO US DECISIONS CITED BEFORE US. WE FIND THE ASSESSEE BEFORE COMPLETION O F THE ASSESSMENT ON 28-03-2013 VIDE HIS LETTER DATED 18-03- 2013 HAD SUBMITTED BEFORE THE AO THAT UNDISCLOSED INCOME DISCLOSED BY HIM FOR THE A.YRS. 2005-06 TO 2009-10 AMOUNTING TO RS.2,06,99,420/ - HAS BEEN INVESTED BY HIM IN THE KHANAPUR BUNGALOW. ACCORDING TO THE AO, SINCE THE STAND HAS BEEN TAKEN BY THE ASSESSEE FOR TH E FIRST TIME AT THE FAG END OF THE ASSESSMENT PROCEEDINGS AND SINCE NO CRED IBLE EVIDENCE IN SUPPORT OF THIS CLAIM HAS BEEN GIVEN, HE REJECTED THE C LAIM OF THE ASSESSEE THAT NO DISALLOWANCE U/S.40A(3) CAN BE MADE. 55. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESS EE THAT THE AMOUNT INVOLVED IN QUESTION HAS BEEN INVESTED IN THE CON STRUCTION OF THE FARM HOUSE WHICH IS A CAPITAL EXPENDITURE AND THEREFOR E PROVISIONS OF SECTION 40A(3) ARE NOT APPLICABLE. WE FIND MERIT IN THE ABO VE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE. IN THE PR ECEDING PARAGRAPHS, WE HAVE ALREADY HELD THAT THE ADDITIONAL INCOM E DISCLOSED BY THE ASSESSEE IS AVAILABLE TO HIM FOR INVESTMENT IN FARM HOUSE/BUNGALOW. THUS, THE EXPENDITURE IS CAPITAL IN NATURE . IT HAS BEEN HELD IN VARIOUS JUDICIAL DECISIONS THAT PROVISIONS OF SEC TION 40A(3) ARE NOT APPLICABLE TO CAPITAL EXPENDITURE. THEREFORE, WE HO LD THAT THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE MADE BY THE AO U/S.40A(3) OF THE I.T. ACT. WE ACCORDINGLY SET ASIDE THE O RDER OF THE CIT(A) AND THE GROUNDS RAISED BY THE ASSESSEE FOR A.YRS. 2006-07, 2008-09 AND 2010-11 ON THIS ISSUE ARE ALLOWED. 34 ITA NOS.1036 TO 1041/PN/2014 56. THE NEXT ISSUE IN A.Y. 2011-12 RELATES TO THE ORDER OF THE CIT(A) IN CONFIRMING THE REJECTION OF RELIEF ON ACCOUNT OF EXCESS DIS CLOSURE IN GOLD AMOUNTING TO RS.37,24,917/-. 57. FACTS OF THE CASE, IN BRIEF, ARE THAT DURING THE COURSE OF SEARCH AND SEIZURE IN THE CASE OF THE ASSESSEE JEWELLERY VALUED AT RS.1,65,60,991/- WAS FOUND OUT OF WHICH JEWELLERY VALUED AT RS.1,36,61,002/- WAS SEIZED. THE ASSESSEE IN THE RETURN FIL ED FOR A.Y. 2011-12 HAS OFFERED AN AMOUNT OF RS.67 LAKHS FOR TAXATION ON ACCOUNT OF DISCLOSURE IN EXCESS GOLD ORNAMENTS FOUND. VIDE LETTER DATED 15-03- 2013 IT WAS SUBMITTED THAT THERE IS EXCESS DECLARATION B Y APPROXIMATELY RS.37,24,917/-. ACCORDING TO THE AO THE SA ID CLAIM WAS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE AND IS ALSO VERY VAGUE AND CONFUSING. FURTHER, THE SAME WAS MADE AT A VERY LAT ER STAGE OF THE ASSESSMENT PROCEEDINGS FOR WHICH THE AO HELD THAT THE S AME CANNOT BE ACCEPTED. THE AO FURTHER NOTED THAT AT THE TIME OF RELEASE OF JEWELLERY THE ASSESSEE WAS ASKED TO RECONCILE THE SEIZED JEWELLERY ITEM- WISE. IT WAS SUBMITTED BY THE ASSESSEE THAT ITEM-WISE R ECONCILIATION IS NOT POSSIBLE DUE TO DEPARTMENTAL VALUER NOT DOING ITEM-WIS E VALUATION. HOWEVER, ITEM-WISE VALUATION WAS DONE JUST BEFORE THE RE LEASE OF JEWELLERY AGAINST BANK GUARANTEE. WITH THIS VALUATION REPO RT THE ASSESSEE COULD HAVE DONE ITEM-WISE RECONCILIATION WITH THE PURCHASE BILLS. HOWEVER, THE SAME HAS NOT BEEN DONE. HE FURTHER N OTED THAT ALTHOUGH THE ASSESSEE HAS DISCLOSED AN ADDITIONAL INCOME O F RS.67 LAKHS DURING THE CURRENT YEAR ON ACCOUNT OF JEWELLERY BU T STILL SOME PART OF THE JEWELLERY STANDS UNEXPLAINED. THE AO FURTHER NOTED THAT THE FACT THAT CANNOT BE DENIED IS THAT THERE MAY BE SO ME EXCESS DISCLOSURE DURING THE YEAR ON ACCOUNT OF BUNGALOW AT KAH ANPUR AS MAJOR PART OF THE INVESTMENT HAS BEEN TAXED DURING THE EARLIER YEA RS ON ACCOUNT OF DVOS REPORT. KEEPING IN VIEW THIS FACT THE AO HAD NOT 35 ITA NOS.1036 TO 1041/PN/2014 MADE ANY SEPARATE ADDITION ON THIS HEAD. 58. BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THAT THE AO HAS NOT APPRECIATED THE BASIC PRESUMPTION AS REGARDS THE STREE DHAN OF EACH MARRIED FEMALE IN THE FAMILY THAT 500 GMS GOLD ORNAMENTS S HOULD BE ALLOWED AS INVESTMENT NOT BELONGING TO THE ASSESSEE. IT WAS SUBMITTED THAT IN THE ASSESSEES CASE THERE ARE TWO MARRIED LADIE S, NAMELY WIFE AND DAUGHTER IN LAW OF THE ASSESSEE. THIS WAY AROUND 10 00 GMS GOLD ORNAMENTS AND JEWELLERY SHOULD BE TREATED AS RECEIVED D URING THE MARRIAGE TIME AS PER THE GUIDELINES ISSUED BY CBDT. SIMILARLY , 100 GMS OF GOLD JEWELLERY PER MEMBER OF THE FAMILY SHOULD BE TR EATED AS HAVING BEEN RECEIVED DURING THE TIME OF MARRIAGE AND CANN OT BE LABELED AS UNDISCLOSED INCOME OR UNEXPLAINED INVESTMENTS. THE FAMILY CHART OF THE ASSESSEE WAS GIVEN WHICH IS AS UNDER : SR.NO. NAME RELATION QTY OF GOLD IN GMS A SAMINA NANDU RAJPUT WIFE 500 B RIYA ARJUN RAJPUT DAUGHTER IN LAW 500 C NANDU ANTARAM RAJPUT APPELLANT 100 D ARJUN NANDU RAJPUT SON 100 E NAKUL NANDU RAJPUT SON 100 TOTAL 1300 IT WAS ARGUED THAT BEFORE THE AO IT WAS SUBMITTED THAT THE MINIMUM AMOUNT OF ABOVE QUANTITY HAS BEEN RECEIVED BY FEMALE MEM BERS DURING THE COURSE OF THE MARRIAGE. THEREFORE, THE VALUE OF SUCH JEWELLERY AMOUNTING TO RS.37 LAKHS WHICH WAS INADVERTENTLY DISCLOSE D IN THE RETURN FOR A.Y. 2011-12 SHOULD BE GIVEN CREDIT. IT WAS SU BMITTED THAT THE ASSESSEE DURING THE COURSE OF SEARCH PROCEEDINGS A S WELL AS AT THE TIME OF ASSESSMENT PROCEEDINGS HAS INFORMED TO THE DEPA RTMENT THAT THE GOLD AND ORNAMENTS BELONGING TO HIS MARRIED DAUGHTE R WERE IN THE CUSTODY OF THE ASSESSEE ON ACCOUNT OF DASARA FESTIVAL WH ICH WAS CONCLUDED 4 DAYS PRIOR TO THE DATE OF SEARCH PROCEEDING S. IT WAS 36 ITA NOS.1036 TO 1041/PN/2014 ACCORDINGLY ARGUED THAT SUCH GOLD AMOUNT BELONGING TO 2 MARRIED DAUGHTERS CANNOT BE INCLUDED IN HIS ACCOUNT. 59. HOWEVER, THE CIT(A) WAS NOT SATISFIED WITH THE ARGUME NTS ADVANCED BY THE ASSESSEE AND DISMISSED THE GROUND RAIS ED BEFORE HIM ON THIS ISSUE BY OBSERVING AS UNDER : 53.3 I HAVE GIVEN CAREFUL CONSIDERATION TO THE ABOV E CONTENTION OF THE APPELLANT. CBDT INSTRUCTION NO.1916 DATED 11-5-1994 STATES THAT IN THE CASE OF A PERSON NOT ASSESSED TO WEALTH-TAX GOLD JEWELLER Y AND ORNAMENTS TO THE EXTENT OF 500 GM. PER MARRIED LADY, 250 GM P ER UNMARRIED LADY AND 100 GM PER MALE MEMBER OF THE FAMILY NEED NOT BE SEI ZED. THE RELEVANT OF THIS INSTRUCTION WHILE COMPLETING ASSESSMENTS IN SEARCH CA SES HAS BEEN A MATTER OF DISPUTE. IN NEM CHAND DAGA V. ACIT [2005] 1 SOT 515 (DELHI), ITAT DELHI POINTED OUT THAT THE INSTRUCTION NOWHERE STATES THAT SUCH JEWELLERY FOUND SHOULD BE TREATED AS EXPLAINED AND NO ADDITION TOWARDS THE SAME SHOULD BE SAME. THE INSTRUCTION ONLY SPEAKS THAT ORNAMENTS TO THE EXTENT OF 250 GM. IN THE HANDS OF AN UNMARRIED LADY AND 100 GM. IN THE CASE OF MALE PERSON SHOULD NOT BE SEIZED. HOWEVER, IN CERTAIN OTHER CASES INCLUDING THE DECISION OF THE HON. GUJARAT HIGH COUR T IN CIT VS. RATANLAL VYAPARILAL JAIN [TAX APPEAL NOS. 661 & 662 OF 2009), IT HAS BEEN HELD THAT THE BENEFIT OF THE INSTRUCTION SHOULD BE GIVEN TO TH E APPELLANT. 53.4 IN THE PRESENT CASE, HOWEVER, THE CLAIM PUT FORW ARD BY THE APPELLANT IS INADMISSIBLE ON FACTS. IT IS NOTEWORTHY TH AT IN THE PRESENT CASE NO ADDITION AS SUCH HAS BEEN MADE BY THE AO ON ACCOUNT OF EXCESS JEWELLERY. WHAT THE APPELLANT IS SEEKING TO CLAIM IS RELIEF OUT OF THE INCOME HE HIMSELF HAD DECLARED IN HIS RETURN OF INCOME AS DI SCLOSURE IN EXCESS GOLD. IN THIS REGARD, IT IS NOTEWORTHY THAT THE SEAR CH ACTION IN THIS CASE TOOK PLACE ON 12/10/2010, THE RETURN OF INCOME WAS F ILED ON 30/09/2011, I.E. NEARLY A YEAR LATER MAKING THE SAID EXCESS DISCL OSURE OF JEWELLERY AND THE SAME WAS SOUGHT TO BE WITHDRAWN TO THE EXTENT OF R S.37,24,917/- VIDE LETTER DATED 15/03/2013, NEARLY ONE AND HALF YEARS A FTER FILING THE RETURN AND ABOUT 2 WEEKS BEFORE THE END OF THE LIMITATION P ERIOD. UNDER THE CIRCUMSTANCES, ON THE VERY FACE OF FACTS, I AM OF THE VIEW THAT THE APPELLANT IS NOT ENTITLED TO ANY RELIED ON THIS GROUND. BESIDES, THE DECISION OF THE HON. SUPREME COURT IN GOETZE INDIA LTD. VS. CIT (200 6) 284 ITR 323 (SC) IS ALSO AGAINST HIM. AS SUCH, THIS GROUND OF APPEAL IS HERE BY DISMISSED. 60. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 61. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO PAGE 75 9 OF THE PAPER BOOK DREW THE ATTENTION OF THE BENCH TO THE LIST/ INVENTORY OF JEWELLERY FOUND AND SUBMITTED THAT THE SAME INCLUDES JEWE LLERY/GOLD ORNAMENTS OF HIS DAUGHTER SHWETA V. BIRE VALUED AT RS.19,5 0,000/-. 37 ITA NOS.1036 TO 1041/PN/2014 FURTHER, ENTIRE JEWELLERY HAS BEEN ADDED IN THE HANDS O F THE ASSESSEE WITHOUT GIVING ANY CREDIT TO THE FEMALE MEMBERS OF THE FAMIL Y. HE SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN SUMMARILY R EJECTING THE CLAIM OF THE ASSESSEE MERELY BECAUSE HE HAD INADVERTENT LY MADE THE DECLARATION. RELYING ON VARIOUS DECISIONS HE SUBMITTED T HAT THE REVENUE AUTHORITIES CANNOT TAKE ADVANTAGE OF THE IGNORA NCE OF THE TAXPAYER. 62. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 63. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIO US DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE JEWELLERY VALUE D AT RS.1,65,60,991/- WAS FOUND AT THE TIME OF SEARCH OUT OF WHIC H JEWELLERY VALUED AT RS.1,36,61,002/- WAS SEIZED. THE ASSESS EE IN THE RETURN FILED FOR THE A.Y. 2011-12 HAS OFFERED AN AMOUNT OF R S.67 LAKHS FOR TAXATION ON ACCOUNT OF DISCLOSURE IN EXCESS GOLD ORNAM ENTS. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSEE VIDE LETTER DATED 15-03-2013 SUBMITTED THAT THERE IS EX CESS DECLARATION OF APPROXIMATELY RS.37,24,917/-. WE FIND THE AO REJECTED T HE SAME ON THE GROUND THAT THE SAME WAS NOT SUPPORTED BY ANY D OCUMENTARY EVIDENCES AND IS ALSO VERY VAGUE AND CONFUSING. FURTHER, HE HELD THAT THE LETTER WAS FILED TOWARDS FAG END OF THE COMPLETION OF AS SESSMENT PROCEEDINGS AND THE ASSESSEE HAS NOT RECONCILED THE SE IZED JEWELLERY ITEM WISE. WE FIND BEFORE CIT(A) THE ASSESSEE REQUESTED TO ALLOW APPROPRIATE RELIEF ON ACCOUNT OF JEWELLERY BELONGING TO DIFFERE NT FAMILY MEMBERS AS PER CBDT INSTRUCTION. HOWEVER, THE CIT(A) RE JECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT CBDT INSTRUCT ION NO.1916 38 ITA NOS.1036 TO 1041/PN/2014 DATED 11-05-1994 ONLY STATES FOR NON SEIZURE OF JEWELLER Y AND INSTRUCTION DOES NOT SAY THAT SUCH JEWELLERY FOUND SHOU LD BE TREATED AS EXPLAINED AND NO ADDITION TOWARDS THE SAME SHOULD BE MAD E. HE FURTHER OBSERVED THAT IN THE INSTANT CASE THE SEARCH ACTION TOOK PLACE ON 12-10-2010 AND THE RETURN WAS FILED ON 30-09-2011 BY MAKING EXCESS DISCLOSURE OF JEWELLERY. NOW THE ASSESSEE VIDE LETT ER DATED 15-03-2013 CANNOT MAKE A REQUEST FOR SUCH RELIEF. RELYI NG ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GOETZ I NDIA LTD. REPORTED IN 284 ITR 323 HE REJECTED THE CLAIM OF THE AS SESSEE. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT A CLEA R GLANCE AT THE PANCHANAMA SHOWS THAT JEWELLERY VALUED AT APPROXIMA TELY RS.19,50,000/- HAVE BEEN SHOWN IN THE NAME OF HIS DAUGHTE R SWETA V. BIRE. FURTHER, SOME RELIEF SHOULD HAVE BEEN GRANTED TO TH E DIFFERENT FAMILY MEMBERS IN THE LIGHT OF THE CBDT INSTRUCTION NO.1916 DATED 11- 05-1994. 64. WE FIND SOME FORCE IN THE ABOVE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE. A PERUSAL OF THE PANCHANAMA, COPY OF WHICH IS PLACED AT PAGE 759 OF THE PAPER BOOK, SHOWS THAT THE LIST/INVENTOR Y OF JEWELLERY SHOWS JEWELLERY/GOLD ORNAMENTS VALUED AT RS.19,50,000/- IN THE NAME OF SWETA V. BIRE, DAUGHTER OF THE ASSESSEE. FURTHER IN OU R OPINION SOME RELIEF SHOULD HAVE BEEN GRANTED TO THE ASSESSEE ON ACCOUNT OF JEWELLERY BELONGING TO DIFFERENT FAMILY MEMBERS IN THE LIGHT OF THE CBDT INSTRUCTION NO.1916 DATED 11-05-1994. MERELY BECAUSE THE ASSESSEE HAS MADE THE CLAIM TOWARDS THE FAG END OF THE ASSESSME NT PROCEEDINGS, THE SAME CANNOT BE A GROUND TO REJECT TH E PLEA OF THE ASSESSEE FOR GIVING APPROPRIATE RELIEF. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BALMUKUND ACHARYA VS. DCIT REPORTED IN 31 0 ITR 310 HAS HELD THAT THE APEX COURT AND THE VARIOUS HIGH COUR TS HAVE RULED THAT THE AUTHORITIES UNDER THE ACT ARE UNDER AN OBLIGAT ION TO ACT IN 39 ITA NOS.1036 TO 1041/PN/2014 ACCORDANCE WITH LAW. TAX CAN BE COLLECTED ONLY AS PROVID ED UNDER THE ACT. IF ANY ASSESSEE, UNDER A MISTAKE, MISCONCEPTION OR O N NOT BEING PROPERLY INSTRUCTED IS OVER-ASSESSED, THE AUTHORITIES U NDER THE ACT ARE REQUIRED TO ASSIST HIM AND ENSURE THAT ONLY LEGITIMATE TA XES DUE ARE COLLECTED. IN VIEW OF THE ABOVE DISCUSSION, WE RESTORE TH E ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THIS GROUND BY THE ASS ESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 65. THE VARIOUS OTHER GROUNDS WERE NOT PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE. THEREFORE, THESE ARE DISMISSED AS NOT PRESSED . 66. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR A.YR S. 2006-07 TO 2010-11 ARE PARTLY ALLOWED AND FOR A.Y. 2011-12 PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 05-08-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED : 05 TH AUGUST, 2016. ) *#,! -! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A ) CENTRAL, PUNE 4. 5. 6. THE CIT CENTRAL, PUNE $ ''(, (, / DR, ITAT, B PUNE; - / GUARD FILE. / BY ORDER , // TRUE COPY // // TRUE COPY // // $ ' //TRUE /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE