Om Prakash Bishu, Kuchaman City V. DCIT, Jodhpur

ITA 107/JODH/2022

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 8125 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-07-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 07-08-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Value adopted by valuation officer; Business income; Opportunity of being heard; Principle of natural justice; Deemed to accrue or arise in india; Question of law; Valuation report; Set aside
• Section: 131; 69; 148; 69C; 143(3); 50C; 54F; 142(1); 133A; 153A; 234B; 143(1); 69B; 250; 274; 143(2); 191; 192; 113; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR VIRTUAL HEARING BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM ITA No.107/Jodh/2022 (ASSESSMENT YEAR- 2019-20) Sh. Om Prakash Bishnu Marwar Zanana Hospital, Ward No. 4, Hospital Road, Tehsil Kuchaman City, Nagaur Vs DCIT, Jodhpur (Appellant) (Respondent) PAN NO. AKKPB 3832 H Assessee By Sh. C. M. Agarwal, CA Revenue By Sh. S. M. Joshi, JCIT-DR Date of hearing 13/07/2023 Date of Pronouncement 18/08/2023 O R D E R PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by assessee and is arising out of the order of the Commissioner of Income Tax (Appeals)-2, Udaipur dated 07.06.2022 [here in after (CIT(A))] for assessment year 2019-20 which in turn arise from the order dated 19.09.2021 passed under section 2 ITA No. 107/Jodh/2022 Om Prakash Bishnu 143(3) of the Income Tax Act, by the DCIT, Central Circle-02, Jodhpur. 2. The assessee has marched this appeal on the following grounds:- “1. The ld. DCIT, Central Circle-2, Jodhpur has erred on facts and in law in completing the assessment u/s 143(3) without issuing any notice u/s 143(2) himself, simply on the basis of notice issued u/s 143(2) by ITO, Ward-1, Nagaur on 25.02.2020 who had no jurisdiction over the case of the appellant assessee as on the date of issuance of the said notice u/s 143(2) dated 25.02.2020. Therefore, the assessment made by the AO without issuing any valid notice u/s 143(2) is bad in law and deserves to be quashed. 2. On the facts and in the circumstances of the case the ld. AO has erred on facts and in law in making addition of Rs.3,32,34,038/- on account of unexplained investment u/s 69B of the Act in construction of the Hospital Building, on the basis of Valuation Report of the DVO obtained u/s 142A of the Act. He has also erred on facts and in law in invoking provisions of sec.115BBEof the Act and levying the tax etc. accordingly. 3. The ld. AO has erred on facts and in law in making addition of Rs.3,32,34,038/- as unexplained investment u/s 69B on the basis of report of the DVO dated 15.06.2021 which is itself bad in law as the DVO has not provided an opportunity of being heard to the appellant assessee and has also not sent a copy of the valuation report, dated 15.06.2021 to the assessee, which are mandatory requirements u/s 142A(4) and 142A(6) of the I.T. Act, 1961. Therefore, the addition made by the ld. AO deserves to be deleted on this count. 4. The ld. AO has grossly erred on facts and in law in not considering the reply of the appellant assessee dated 31.08.2021 filed before him pointing out certain factual errors in the report of the DVO and the Valuation Report of the Registered Valuer, dated 24.08.2021 filed before the ld. AO by the appellant alongwith his aforesaid letter dated 31.08.2021. The ld. AO has made the addition of Rs.3,32,34,038/- without obtaining the comments of the DVO on the issues raised by the appellant in his letter dated 31.08.2021 and the Registered Valuer's report. The Id. AO has made the addition without following the principal of natural justice. 3 ITA No. 107/Jodh/2022 Om Prakash Bishnu 5. The Id. AO has made the addition of Rs.3,32,34,038/- simply on the basis of DVO's Report who has valued the Hospital Building on the basis of CPWD Rates and without allowing any deduction for self- supervision and deduction for purchase and procurement of the building material by the assessee himself from the local markets. Looking to the facts and circumstances of the case the deduction of rate differential on application of CPWD Rates vis-à-vis PWD Rates and deduction for self-supervision and further deduction for purchase/procurement of the building material by the assessee himself may also kindly be allowed. 6. On the facts and in the circumstances of the case while making the addition of Rs.3,32,34,038/-, the ld. AO has erred on facts and in law in not allowing the credit of income of Rs.1 Crore included in the returned income of the assessee, which was admitted as undisclosed investment in construction of hospital building, earned from undisclosed professional income/receipts, during the course of survey u/s 133A carried out at the premises of the assessee, in his statement recorded on 19/20.02.2019. 7. (i). The ld. AO has erred on facts and in law in making addition of Rs.1,00,000/- u/s 69B as unexplained investment simply on the basis of statement recorded during the course of survey u/s 133A (During survey the appellant assesseehad admitted undisclosed income invested in construction of hospital building at Rs.1,01,00,000/- but included income of Rs.1,00,00,000/- in his return of income). (ii). On the facts and in the circumstances of the case the ld. AO has erred on facts and in law in invoking provision of section 115BBE of the Act on the professional income of Rs. 1,00,00,000/- surrendered by the appellant assessee during the course of survey u/s 133A and which was included by him in his return income. The ld. AO has also erred in invoking provisions of sec. 115BBE on addition of Rs.1,00,000/- made by him u/s 69B as mentioned in (i) above. 8. The Id. AO has erred on facts and in law in charging interest of Rs.3,01,156/- u/s 234A; Rs.90,34,680/- u/s 234B and Rs.1,50,052/- u/s 234C aggregating to Rs.94,85,888/- on assessed income which should have been charged on returned income, in view of the decision of Hon'ble Jharkhand High Court in the case of Ajay PrakashVerma v. CIT,T.A. No.38 of 2010 reported in 2013 (1) TMI 140, consistently being followed by the Hon'ble ITAT Ranchi. 9. On the facts and in the circumstances of teh case the ld. has erred in initiating the penalty proceedings u/s 274 r.w.s 271AAC(1) of the Act. The appellant craves leave to add, amend or withdraw any of the grounds of the appeal during the course appellate proceedings. 4 ITA No. 107/Jodh/2022 Om Prakash Bishnu All the grounds of appeal are independent and without prejudice to each other.” 3. The fact as culled out from the records is that the assessee e- filed his return of income for A.Y 2019-20 in Form ITR-3 on 31/08/2018 declaring total income at Rs. 1,38,23,350/-. A survey u/s 133A of the Income Tax Act, 1961 was carried out at the assessee’s concern. M/s Marwar Zanana Hospital on 19.02.2019 and hence, as per CBDT guidelines the case was selected for compulsory scrutiny and notice u/s 143(2) dated 25.09.2020, issued vide DIN : ITBA/AST/S/143(2)/2020-21/1028058483(1), was served upon the assessee manually and digitally by the ITO, W-01, Nagour. During survey proceedings u/s 133A of IT. Act, 1961 on 19.02.2021 statement of assessee Dr. Om Prakash Bissu was recorded. In reply of question no. 25 and 26 the assessee has stated that during year under consideration hospital building construction is going on. The assessee was directed to produce the bills/vouchers of hospital construction in the assessment proceeding but the assessee failed to submit the same though various notices were given to the assessee. Based on that set of fact the assessing officer referred the matter to the departmental valuer. The assessing officer has noted that the 5 ITA No. 107/Jodh/2022 Om Prakash Bishnu difference between the value estimated by the DVO and amount of value of construction declared by the assessee in the books of account. The same was tabulated and is also reiterated here in below: Period of Valuation Cost of investment in construction of Property Declared by Assessee (Rs.) Fair value Estimated by Valuation Cell (Rs.) 2016-17 Rs. 3,50,000/- Rs. 12,48,485/- 2017-18 Rs. 1,06,44,205/- Rs. 3,79,68,920/- 2018-19 Rs. 1,29,46,152/- Rs. 4,61,80,190/- 2019-20 Rs. 12,04,359/- Rs. 42,96,065/- Total Investment (In Rs.) Rs. 2,51,44,716/- Rs. 8,96,93,660/- 3.1 For the year under consideration the ld. DVO estimated the value at Rs. 4,61,80,190/- and in the books the assessee has declared the investment at Rs. 1,29,46,152/- the difference of Rs. 3,32,34,038/- was considered as suppressed value of investment by the assessee. The copy of valuation report was provided to the assessee and the assessee was asked to show cause vide notice dated 05.08.2021 as to why the difference of Rs. 3,32,34,038/- cannot be added to the income of the year under consideration. The assessee filed the reply on 31.08.2021 raising various contentions and case laws relied upon. The assessee also submitted a valuation report of register valuer who has valued the property in question at Rs. 2,72,52,000/-. But the assessing officer relying the report of the ld. 6 ITA No. 107/Jodh/2022 Om Prakash Bishnu DVO made the addition of Rs.3,32,34,038/- as income of the assessee being the difference in the DVO’s report and amount reflected in the books of the assessee. 3.2 During the course of survey proceeding on 20.02.2019 in reply to question no 28 the assessee surrendered a sum of Rs. 1,01,00,000/- vide question no 31. From the perusal of the ITR filed by the assessee ld. AO noted that the assessee has declared Rs. 1,00,00,000/- only. The assessee was asked to show cause as to why the difference of Rs. 1,00,000/- should not be added. The assessee vide reply dated 31.08.2021 contended that the assessee has only offered income as earned by the assessee and duly disclosed in the return of income. No further other than what has been earned has been offered. However, in order to buy the peace of mind and to avoid litigation costs and time involvement the assessee requested to considered the same as income and ultimately added in the income of the assessee. 4. Aggrieved from the order of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A)/NFAC. A propose to the 7 ITA No. 107/Jodh/2022 Om Prakash Bishnu grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below: Finding of ld. CIT(A) on addition of Rs.3,32,34,038/-. “5.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- (i) The fact remains that during the course of survey proceedings u/s 133A of the Act carried out on 19.02.2021 in the case of the appellant, statement of the appellant Dr. Om Prakash Bissu was recorded wherein, in response to question no. 25 & 26, he admitted that construction of hospital building was being carried out during the year under consideration. Since the appellant failed to submit the bills & vouchers regarding building construction during the AY 2019-20, the AO referred the matter u/s 142A to DVO, Jodhpur on 10.03.2021 to elucidate the correct cost of construction of the aforesaid hospital building. The DVO furnished the valuation report on 15.06.2021 wherein the cost of construction in the aforesaid hospital building was estimated at Rs. 8,96,93,640/- for the AY 2016-17 to 2019-20 as against Rs. 2,51,44,716/- declared by the appellant as total investment in the aforesaid property. During the year under consideration, the value of fixed assets, in the balance sheet as on 31.03.2019, has been shown at Rs. 1,29,46,152/- by the appellant whereas the amount of investment estimated by the DVO for the year under consideration amounts to Rs. 4,61,80,190/-. Accordingly, the AO held that the value of investment during the year under consideration was suppressed by the appellant at an amount of Rs. 3,32,34,038/- and therefore after providing the copy of the valuation report alongwith notice u/s 142(1) dt. 05.08.2021, explanation of the appellant was called for as to why the addition of Rs. 3,32,34,038/- 1-on account of unexplained investment in the construction should not be made in the year under consideration. After considering the reply of the appellant, the AO treated the additional amount of Rs. 3,32,34,038/- as unexplained investment of the appellant u/s 69B of the Act and added back to the total income of the appellant. (ii) Before me, the appellant has contended that the valuation report suffers from several discrepancies and that the Ld. DVO has not given any 8 ITA No. 107/Jodh/2022 Om Prakash Bishnu opportunity of hearing to the appellant which is against the principles of natural justice and is not in accordance with law. Further it was contended that the appellant has objected the valuation report on many counts and had submitted the valuation report of a valuer duly authorized by the Income Tax Department which has not been considered by the AO. It was submitted that the addition was made without obtaining the comments of the DVO on the issues raised by the appellant and that the DVO has taken CPWD rates for valuing hospital building and also not allowed the self-supervision deduction. (iii) I have considered the facts of the case and it is observed that in the instant case there was no evidence available in any manner regarding the cost of construction since the same was neither produced before the AO nor before me during the appellate proceedings. It is observed that the appellant had not maintained proper details of expenses related to construction and therefore the case was referred to DVO for ascertaining the real value of the cost of construction. As regards the contention of the appellant that the DVO has not provided any opportunity of being heard to the appellant, on perusal of the valuation report of the DVO, it is observed that notices were sent by the DVO to the appellant on 15.03.2021 and during the course of inspection, the appellant has submitted the requisite documents. The property was inspected and the details were taken/verified and recorded in the presence of the representative of the appellant. As per the valuation report, it is observed that the appellant himself was present during the course of inspection alongwith with his AR. The fact also remains that the appellant has not submitted any registered valuer's report before the DVO, On the contrary, it is observed that a copy of the valuation report alongwith notice u/s 142(1) dt. 05.08.2021 was provided by the AO to the appellant and after considering the explanation of the appellant, the addition of Rs. 3,32,34,038/- was made by the AO in the year under consideration on account of unexplained investment in the construction of the aforesaid property. Therefore it is not a case that no opportunity was given by the AO to the appellant with reference to the valuation report and therefore contention of the appellant on this issue is not found acceptable. (iv) Further the appellant has contended that the addition of Rs. 3,32,34,038/- has been made by the AO on the basis of CPWD rates adopted by the DVO and without allowing any deduction for sales supervision and deduction for purchase and procurement of the building material by the appellant himself from the local markets. I find that the DVO has made the valuation by applying CPWD rates, however the hospital is situated at Nagaur. Therefore, against the CPWD rates, the valuation should have been made at the local 9 ITA No. 107/Jodh/2022 Om Prakash Bishnu PWD rates. The difference in valuation made on CPWD rates and local PWD rates have effect of around 20%. In various judgements, it has been held that the valuation should be made on the basis of local PWD rates. In the case of Mustaq Ahmed vs. Asstt. CIT 22 Taxworld 25 (JP), it was held by the Hon'ble Tribunal, Jaipur Bench that "it is appropriate to allow the assessee's claim in respect of local PWD rates by following the consistent view of the Bench. This Bench has allowed reduction 15% to 25% on account of difference of valuation in CPWD rates and PWD rates. They had allowed deduction @ 20% from the amount of valuation of DVO subject to the amount of investment shown by the assessee himself." In the case of Suwa Lal Giriraj Ajmera vs. ITO (2004) 86 TTJ NULL 414 on 30.07.2002, the Hon'ble Rajasthan High Court considered the decision of Mustaq Ahmed vs. Asstt. CIT (Supra) and held the deduction at the rate of 15% to be reasonable on this account. Further, this issue is also covered in favour of the appellant by the decision of Hon'ble Rajasthan High Court in the case of CIT vs. Dinesh Talwar (2003) 181 CTR (Raj) 472. In the aforesaid judgement, it has been held by the Division Bench as under: "The Tribunal has valued the property adopting the rate of PWD. What should be the value of construction, is basically a question of fact and that depends upon the material used, the location and the quality of construction. Therefore, straightaway, applying the PWD rate or CPWD rate is not justified in case of each house. What should be cost of construction, the Tribunal has applied the rate of PWD ie. on the facts and circumstances of the case, which is part of finding of fact. No interference is called for." (v) The Hon'ble Rajasthan High Court, Jodhpur in the case of CIT Central, Jaipur vs. Ashok Kumar Govadia in ITA No. 82/2010 has expressed a view that PWD rates have to be allowed for the properties constructed in the State of Rajasthan. A reference to the decision in the case of CIT vs. Raj Kumar (1990) 182 ITR 436 (All.) was made in this regard. It was held that placing of rates of PWD is a question of fact which depends on various factors such as location of property, quality of construction and the material used etc. In this case, the ld. CIT (A), allowed a general rebate of 20% which was found to be excessive and irrelevant to the material on record. Accordingly, the Hon'ble Court allowed a rebate of 15% for the difference between CPWD rates and PWD rates and held that the adjusted cost worked out after allowing the aforesaid adjustment shall be taken as cost of construction of the property. Reliance is also placed on the judicial decisions of Hon'ble Rajasthan High Court in the case of CIT vs. Hotel Joshi 242 ITR 478 and CIT vs. Elegant 10 ITA No. 107/Jodh/2022 Om Prakash Bishnu Homes Pvt. Ltd. 259 ITR 232 wherein it has been held that PWD rates have to be allowed instead of CPWD rates. (vi) The Hon'ble Income Tax Appellate Tribunal Jaipur in the case of Gopal - Kumar Deewan, Jaipur vs Ito, Alwar on 26 July, 2018 in ITA No. 498/JP/2017 has held that "I have gone through the decisions of the jurisdictional Hon'ble High Court and of Hon'ble ITAT, Jaipur Bench cited by the appellant and find that it has been categorically held that for the purposes of valuation of property, the rates of valuation as provided by the State PWD have to be applied apart from the factual matrix of each case. Therefore, following the same, as these decisions are found to be applicable to the facts of the present case, I hold that for the purposes of valuation of property, State PWD rates have to be applied to the plinth area of construction for each floor as given by the DVO in the report. Having held that, it would also take care of the objections of the appellant on the issue of supervision expenses, no discounting in the valuation given by the DVO for the cost of windows, almirahs, sanitary fittings, electric fittings, painting, false ceiling, finishing etc. as the expenses on these items were not incurred by the appellant and also the fact that construction material has been sourced locally. (vii) After considering the various court judgments of the jurisdictional Hon ble Rajasthan High Court and the Hon'ble ITAT, Jaipur Bench, wherein it has been held that state PWD rates have to be applied for estimating the value of construction, therefore respectfully following the binding nature of these decisions, the AO is directed to apply a rebate of 15% for the difference between CPWD rates and PWD rates and the adjusted cost worked out after allowing the aforesaid adjustment shall be taken as cost of construction of the property as held by the Hon'ble Rajasthan High Court, Jodhpur in the case of CIT Central, Jaipur vs. Ashok Kumar Govadia (Supra) and also by Hon'ble ITAT, Jaipur Bench in the case of Mustaq Ahmed vs. Asstt. CIT (Supra). (viii) As regards the registered valuer's report produced by the appellant as against the valuation report of the DVO, it is observed that the Hon'ble Allahabad High Court in the case of Commissioner of Income-tax Vs Dr. Indra Swaroop Bhatnagar (Allahabad High Court) in IT Appeal No. 97 of 2008 Date of Judgement/Order: 29/09/2011 has held that "11. In view of the above discussions and by considering the totality of the facts and circumstances of the case, it is crystal clear that generally. when the Assessing Officer has obtained the D. V. O. report then the same is binding. Therefore, we find no reason to interfere with the impugned order passed by 11 ITA No. 107/Jodh/2022 Om Prakash Bishnu the Tribunal, it is hereby upheld with the reasons mentioned therein". Though the report of the DVO is binding, however, in the interest of natural justice, due cognizance is being given to the Registered valuers report in considering the objections raised by him while deciding the cost of construction in the aforesaid property. (ix) It is observed that the DVO has not allowed any discount towards self supervision charges, though the Registered Valuer of the appellant has considered 10% discount on account of the same. Allowing of 10% discount, appears to be proper and in conformity with the practice prevalent at various benches of Hon'ble ITAT, Jaipur for which reliance is placed on the decision of Hon'ble ITAT in Hindustan Engineering Works Jodhpur vs. ITO and Shri Vishnu Prasad Heda vs. ITO and also in case of Shri Prakash Chand Surana vs. ITO in ITA No. 164/JP/77-78/Ajmer/1973-74 wherein the Hon'ble Benches have also accepted the deduction of 10% on account of owner's self-supervision. Accordingly, the AO is directed to allow the rebate of 10% on account of owner's self-supervision. (x) Apart from the above, the Registered Valuer has objected to the cost of Rs. 1,11,188/- mentioned by the DVO under the head cost of development and additional items covered under PAR on account of levelling, amount of Rs. 8,47,458/-on account of borewell, an amount of Rs. 93,632/- on account of horticulture work, amount of Rs. 6,36,559/- on account of compound wall and contingency @ 3% and architect fees @ 3% total amounting to Rs. 50,76,988/-. In this regard, it is held that 15% rebate on account of PWD rates and 10% rebate on account of self-supervision charges has already been allowed to the appellant by me and further the fact being that the report of the DVO is binding on the AO, therefore no further discounting in the valuation given by the DVO for levelling, borewell, horticulture, compound wall etc. as requested by the appellant is being given as these have already been considered by the DVO and also the fact that no evidence in this regard has been filed by the appellant. In view of the above discussion, it is held that all the objections raised by the appellant vide the report of the Registered Valuer produced by the appellant has been considered by me. Accordingly, for the purposes of valuation of property, the State PWD rates have to be applied to the plinth area of construction for each floor as given by the DVO in his report and therefore the AO is directed to allow 15% rebate on account of PWD rates and also allow 10% rebate on account of self-supervision charges. The Ground of Appeal No. 2 to 6 is partly allowed." 12 ITA No. 107/Jodh/2022 Om Prakash Bishnu Finding of ld. CIT(A) on addition of Rs.1,00,000/- and charging of tax u/s. 115BBE “6.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contention/submissions of the appellant are being discussed and decided as under:- (i) The fact remains that during the course of survey, the appellant had admitted undisclosed income invested in construction of hospital building at Rs.1,01,00,000/- but included only an income of Rs.1,00,00,000/- in his return of income. The AO observed that the appellant has himself surrendered the income of Rs. 1,01,00,000/- on account of building construction in view of Kaccha-Pakka Bill found as per page 1 to 21 of Exhibit-2, Annexure- A, Page 1 to 75 of Exhibit- 1 Annexure A, Page 1 to 39 of Diary as per Exhibit-2 of Annexure-A, Page 1 to 87 of Exhibit-2, Annexure- A and page 1 to 52 of Exhibit-4, Annexure-A. The AO observed that self- statement is an independent evidence of offering additional income of Rs. 1,00,000/- and accordingly added back the same by applying the provisions of sec. 69B and invoked the provisions of sec. 115BBE on the aforesaid amount as well as on the amount of Rs. 1,00,00,000/- declared by the appellant in his return of income as income from other source as admitted by him during the course of survey. (ii) Before me, the appellant has contended that the investment in the hospital building was out of the receipts of his profession as Doctor which includes OPD, Indoor, Sonography, and the hospital also receives cases under Bhamashah Yojana. The receipts from the aforesaid sources were invested in the construction of the hospital building and therefore provision of sec. 115BBE of the Act is not applicable. (iii) I have considered the facts of the case and it is observed that the appellant has himself surrendered the income of Rs. 1,01,00,000/- on account of building construction in view of Kaccha-Pakka Bills found as per the exhibits found during the course of survey. The admissions are relevant and strong piece of evidence that may be used against the person making such admission. It is observed that the appellant has admitted the income on account of corroborative evidence which cannot be simply brushed aside by the appellant. Accordingly the addition of Rs. 1,00,000/- being treated by the AO as undisclosed income invested in construction of hospital building and 13 ITA No. 107/Jodh/2022 Om Prakash Bishnu added back u/s 69B of the Act is principally treated as justified. However since the AO had referred the property for valuation to the DVO and since in view of report of DVO, the addition is partly sustained as per the Grounds of Appeal No. 2 to 6, therefore no separate addition is required to be sustained on this account as raised in Ground of Appeal No. 7. Accordingly, the addition of Rs. 1,00,000/- is deleted. (iv) As regards the contention of the appellant that the investment in the hospital building was out of the receipts of his profession as Doctor, therefore provisions of sec. 115BBE of the Act is not applicable, it is observed that the appellant has himself surrendered the income of Rs. 1,01,00,000/- on account of building construction in view of Kaccha-Pakka Bills found as per the exhibits found during the course of survey. Further the fact also remains that the appellant in response to question no. 26 recorded u/s 131 of the Act dt. 19.02.2019 has himself admitted he has incurred the expenditure in cash which has been offered for taxation. However, it is also observed that the appellant vide his statement recorded during the course of survey has himself admitted that this undisclosed investment is from his receipts of his profession as Doctor which, I find, has not been controverted by the AO. In view of the above facts, the addition of Rs. 1,00,000/- is out of his income and therefore the AO is not found justified in invoking the provisions of sec. 115BBE of the Act on the aforesaid sum. Accordingly, the issue of invoking the provisions of sec. 115BBE of the Act raised vide this ground of appeal is treated as allowed in favour of the appellant. The Ground of Appeal No. 7 is treated as allowed. 5. As the assessee did not receive the favour in full from the finding of the ld. CIT(A) the assessee has preferred this appeal on the grounds as reiterated here in above in para 2. The ld. AR appearing on behalf of the assessee has placed their written submission which is extracted in below; “Assessment Year – 2019-20 Order Appealed against – Order u/s 250 of CIT (A)-2 Udaipur, ITA No 107/JODH/2022 14 ITA No. 107/Jodh/2022 Om Prakash Bishnu Assessee has filed his return of income on dated 31.08.2018 declaring total income of Rs. 1,38,23,350/-. A survey u/s 133A of The Income Tax Act on dated 19.02.2019. The case was selected for scrutiny notice u/s 143(2) was issued on dated 25.09.2020 by the ITO Ward 2 makrana copy of the notice is enclosed. In the assessment order the LD AO has mentioned that valuation report was received from the DVO on dated 15.06.2021. But in fact it was received on 21.06.2021, The LD DVO estimated the cost of construction of building in different years at Rs. 8, 96, 93,860/- as against Rs. 2,51,44,716/- declared by the assesse. The LD DVO himself mentioned that assesse has submitted various case laws regarding valuation made by the DVO and but the same one not consider by the AO During the course of survey assess has surrender some of Rs. 1,01,00,000/- assesee has shown Rs. 1 Crore by mistake under the head income from other sources and no telescopy of this amount has been allowed against the investment in the building . The assesse has surrender this amount vide Q No 26 of the statement recorded on dated 19.02.2019 during the course of survey (copy of the statement enclosed), he stated that the investment towards hospital building out of the receipts of doctor profession which include OPD, Indoor, Sonography. Hospital also receipt case from the Bhamashah yojna and which were invested in the construction of the building. As income from the hospital which is verifiable from the statement recorded at the time of survey. Ld CIT (A) -2 Udaipur has decided the appeal and the addition was partially deleted and now the appellant is in appeal before your honors’ 1. LD CIT(A) has rejected the first ground regarding assessment was made by the AO without issuing any valid notice u/s 143(2) is bad in law and deserves to be quashed. 2. Other grounds were taken together and partial relief was allowed 3. That Ld CIT Appeal has not allowed telscopy of income surrender during survey and by mistake disclosed in ITR as income from other sources. Grounds of appeal are as under:- Ground No 1: The LD DCIT, Central Circle-2, Jodhpur has erred on facts and in law in completing the assessment u/s 143(3) without issuing any notice u/s 143(2) himself, simply on the basis of notice issued u/s 143(2) by ITO, Ward-1, Nagaur on 25.02.2020 who had no jurisdiction over the case of the appellant assessee as on the date of issuance of the said notice u/s 143(2) dated 25.02.2020. Therefore, the assessment made by the AO without issuing any valid notice u/s 143(2) is bad in law and deserves to be quashed. --------------- That it is important to note that notice u/s 143(2) of the Income Tax Act is to be issue by the jurisdictional AO only and in this case the notice was not 15 ITA No. 107/Jodh/2022 Om Prakash Bishnu issued by the jurisdictional AO and as such all the proceeding are bad in law. In support of which assessee relied on the following judgment. 1. ITO v/s Arti Securites & services Ltd ITA no 553 Lkw/19 dated 06/11/20. It is also important to note that Honorable Supreme Court in the case of CIT V/s Laxman Das Khandelwal Civil no. 6261-6262 of 2019 decided on 13.08.2019 that notice u/s 143(2) is a mandatory requirement for the completion of the assessment . failing which the assessment made is void a b- initio In this regard the head note of the decision of Hon’ble ITAT, Jodhpur in the case of Jodhpur Sahakari Bhoomi Vikas Bank vs.ITO, reported in (2015) 53 taxmann.com 113 (Jodphur-Trib.)) is reproduced as under:- “ Section 143 of the Income tax Act, 1961- Assessment- Issue of notice (Limitation)- Assessment Year 2007-08- Notice under section 143(2) was issued to assessee on 18-08-2008 by Dy. CIT, Circle-3 who had no jurisdiction over assessee’s case- Realizing that mistake, Dy. CIT, Circle-3 transferred file to ITO, Ward -3 who had jurisdiction over assessee’s case and thereafter, on 26-08-2009, fresh notice under section 143(2) was issued to assessee- Whether since Dy. CIT, Circle 3 had no jurisdiction over assessee’s case, notice issued by him/her was invalid and without jurisdiction and had to be treated as non est in eye of law- Held, yes- Whether valid notice issued by ITO, Ward-3 was dated 26-08-2009 which was clearly barred by limitation and assessment order framed consequent to this notice would also become invalid and barred by limitation- Held, yes {Para 4.2} {In favour of assessee}” In this regard reliance is also placed on the following judicial pronouncements:- 1. Sukumar Chandra Sahoo vs.ACIT, ITA/Kol./2016, dated 27.09.2017 (ITAT- Kolkata). 2. Krishnendu Chowdhury vs.ITO, {2017}78 taxmann.com 89 (ITAT- Kolkata). 3. Sun World Infrastructure (P) Ltd. WP (C) 1741/2015 & CM NO. 3112/2015 Delhi High Court, DOJ-05-03-2015. 4. ITO vs. M/s NVS Builders (P) Ltd., ITA No. 3729/Del./2012, ITAT Delhi reported in (2018) 169 ITD 679 (Delhi- Trib.). 5. Sh. Parvinder Vir Hans V. ACIT, CO No. 04/ASR/2011, A.Y. 2007-08 (Arising out of ITA No. 88 (ASR)/2011 ITAT, Amritsar, DOJ. 01-02-2016. 6. M/s Lexmark International (India) Pvt. Ltd. v. DCIT/ACIT, ITA No. 72/Kol./2017, ITA No.235/Kol./2017 & ITA No.2058/Kol./2017 (ITAT- Kolkata) DOJ. 28-09-2018 7. ITO vs.Ashok Kumar Periwal ITA No. 339/Viz./2016 (ITAT- Vishakhapatnam). In view of the facts of the case and the judicial pronouncements, the order passed by the DCIT, Circle-1, Jodhpur without issuing mandatory statutory notice u/s. 143(2) may kindly be quashed being invalid in the eyes of law. Ground No 2 to 6 : 16 ITA No. 107/Jodh/2022 Om Prakash Bishnu The LD AO has erred in making addition on the basis of the valuation report of the DVO and invoking sec. 115BBE of the Income Tax Act. The valuation report suffers from following discrepancies (1) Basement was constructed and Sizable amount of earth was excavated and no scope of levelling was left (2) There is no borewell (3) No horticulture work was done (4) There is vast difference in measurement of boundary wall (5) Contingencies 3% and Architect fee 3% was taken without any basis During the course of survey assessee has declared that there he has no other source of income except from the Doctor Profession and the LD AO has not brought any material or evidences to substantiated the applicability of sec. 115BBE of the Income Tax Act. Section u/s 142A (4) is as under:- The valuation office shall, estimate the value of the asset, property or investment after taking into account such evidence as the assessee may produce and any other evidence in his possession gathered, after giving an opportunity of being heard to the assesse. Thus it is apparent that LD DVO has not given any opportunity of hearing to assesse and which is against the principle of natural justice and as such the valuation report is not in accordance with the law and deserves to be ignored and addition made on the basis is to be deleted. Section u/s 142A (6) is as under the valuation office shall send a copy of the report of the estimate made under sub section (4) or sub section (5), as the case may be, to the assessing officer and the assesse, within a period of six months from the end of the month in which a reference is made under sub section That assesse has objected the valuation report of the LD DVO on many counts and also submitted the valuation report of a valuer duly authorized by the income tax department and this was not considered . The ld. AO has grossly erred on facts and in law in not considering the reply of the appellant assessee dated 31.08.2021 filed before him pointing out certain factual errors in the report of the DVO and the Valuation Report of the Registered Valuer, dated 24.08.2021 filed before the ld. AO by the appellant along with his aforesaid letter dated 31.08.2021. The ld. AO has made the addition of Rs.3, 32, 34,038/- without obtaining the comments of the DVO on the issues raised by the appellant in his letter dated 31.08.2021 and the Registered Valuer’s report. The ld. AO has made the addition without following the principal of natural justice. The ld. AO has erred on facts and in law in making addition of Rs.3,32,34,038/- as unexplained investment u/s 69B on the basis of report of 17 ITA No. 107/Jodh/2022 Om Prakash Bishnu the DVO dated 15.06.2021 which is itself bad in law as the DVO has not provided an opportunity of being heard to the appellant assessee and has also not sent a copy of the valuation report, dated 15.06.2021 to the assessee, which are mandatory requirements u/s 142A(4) and 142A(6) of the I.T. Act, 1961. Therefore, the addition made by the ld. AO deserves to be deleted on this count. On the facts and in the circumstances of the case the ld. AO has erred on facts and in law in making addition of Rs.3,32,34,038/- on account of unexplained investment u/s 69B of the Act in construction of the Hospital Building, on the basis of Valuation Report of the DVO obtained u/s 142A of the Act. He has also erred on facts and in law in invoking provisions of sec.115BBEof the Act and levying the tax etc. accordingly. The ld. AO has erred on facts and in law in making addition of Rs.3,32,34,038/- as unexplained investment u/s 69B on the basis of report of the DVO dated 15.06.2021 which is itself bad in law as the DVO has not provided an opportunity of being heard to the appellant assessee and has also not sent a copy of the valuation report, dated 15.06.2021 to the assessee, which are mandatory requirements u/s 142A(4) and 142A(6) of the I.T. Act, 1961. Therefore, the addition made by the ld. AO deserves to be deleted on this count. The ld. AO has grossly erred on facts and in law in not considering the reply of the appellant assessee dated 31.08.2021 filed before him pointing out certain factual errors in the report of the DVO and the Valuation Report of the Registered Valuer, dated 24.08.2021 filed before the ld. AO by the appellant alongwith his aforesaid letter dated 31.08.2021. The ld. AO has made the addition of Rs.3, 32, 34,038/- without obtaining the comments of the DVO on the issues raised by the appellant in his letter dated 31.08.2021 and the Registered Valuer’s report. The ld. AO has made the addition without following the principal of natural justice. As state above LD AO has not follow the principle of natural justice and without obtaining any comments from the DVO on the objection raised by the assesse and thus the addition made by LD AO on the basis of this report is bad in law and on facts. Remaining minor differences of 10% to 15% to be ignored. As laid down in the case of Smt. Pramila Agarwal reported on (2004) 88TTJ91(Lucknow and CIT v/s Abession Hotels (P) Ltd (2004) 191 CTR 263 (MP HC) That it was pointed out before both the authorities that Local PWD rate should be applied for valuation purpose and in support of which valuation from the registred valuer was also submitted but both authorities has not considered at and LD AO has made the addition on the DVO report and LD 18 ITA No. 107/Jodh/2022 Om Prakash Bishnu CIT appeal has allowed deduction from CPWD rate and also allowed self supervision charges. Further it was pointed out before the authorities that DVO report suffers from many defects such as the measurement, rate and also some the item taken by the LD AO are in fact these item were not either acquired of constructed by the appellant and further levelling was done because there is a basement also. We are enclosing herewith a comparative chart showing the measurement, item , rate taken by the LD DVO and the same taken by registred valuer and looking to which it is apparent that valuation made by LD DVO suffers from many defects as such the value taken by the valuer on the basis of PWD rate should be applied. It has been held in various Judicial pronouncement that local PWD rates is to be applied. It has been held by ITAT Jaipur in Gopal Kumar Deewan, Jaipur vs ITO, Alwar in ITA No. 498/JP/2017 on 26 July, 2018 As under:- “6.3.4 Thus in view of the above mentioned facts and the jurisdictional Hon'ble Rajasthan High Court Judgment as mentioned above, I hold that for the purposes of valuation of property, State PWD rates have to be applied to the plinth area of construction for each floor. However, I have also taken into account that bills/vouchers related to the construction have not been produced in total before the A.O and also during the appellate proceedings. But it is also a fact that the assessee has shown cost of construction in the books of accounts which almost adheres to the valuation done as per State PWD rate. In absence of complete set of bills/vouchers for the material purchased for the construction of the hotel and also to cover the items not included in the valuation report, I consider it reasonable to restrict the additions for the unexplained investment to the extent of Rs. 8 lakhs. Accordingly, the ground of appeal on this issue is partly allowed." Further the rates at village Kuchaman city is also lesser than the PWD rates and in support of which copy is enclosed. Ground no 7 : The ld. AO has erred on facts and in law in making addition of Rs.1,00,000/- u/s 69B as unexplained investment simply on the basis of statement recorded during the course of survey u/s 133A (During survey the appellant assessee had admitted undisclosed income invested in construction of hospital building at Rs.1,01,00,000/- but included income of Rs.1,00,00,000/- in his return of income). On the facts and in the circumstances of the case the ld. AO has erred 19 ITA No. 107/Jodh/2022 Om Prakash Bishnu on facts and in law in invoking provision of section 115BBE of the Act on the professional income of Rs.1,00,00,000/- surrendered by the appellant assessee during the course of survey u/s 133A and which was included by him in his return income. The ld. AO has also erred in invoking provisions of sec.115BBE on addition of Rs.1,00,000/- made by him u/s 69B as mentioned in (i) above. On the facts and in the circumstances of the case while making the addition of Rs.3,32,34,038/-, the ld. AO has erred on facts and in law in not allowing the credit of income of Rs.1 Crore included in the returned income of the assessee, which was admitted as undisclosed investment in construction of hospital building, earned from undisclosed professional income/receipts, during the course of survey u/s 133A carried out at the premises of the assessee, in his statement recorded on 19/20.02.2019. ------------------------- As state above the assesse disclosed a sum of Rs. 1 Cr during the course of survey and disclosed in the return of income and as such telescope of the amount is to be allowed. The ld. AO has erred on facts and in law in making addition of Rs.1,00,000/- u/s 69B as unexplained investment simply on the basis of statement recorded during the course of survey u/s 133A (During survey the appellant assessee had admitted undisclosed income invested in construction of hospital building at Rs.1,01,00,000/- but included income of Rs.1,00,00,000/- in his return of income). On the facts and in the circumstances of the case the ld. AO has erred on facts and in law in invoking provision of section 115BBE of the Act on the professional income of Rs.1,00,00,000/- surrendered by the appellant assessee during the course of survey u/s 133A and which was included by him in his return income. The ld. AO has also erred in invoking provisions of sec.115BBE on addition of Rs.1,00,000/- made by him u/s 69B as mentioned in (i) above. The assesse has surrender this amount vide Q No 26 of the statement recorded on dated 19.02.2019 during the course of survey (copy of the statement enclosed), he stated that the investment towards hospital building out of the receipts of doctor profession which include OPD, Indoor, Sonography. the hospital also receipt case from the bhamasham yojna and which were invested in the construction of the building. as the separation of income from the hospital income which is verifiable from the statement recorded at the time of survey and as such provisions of sec.115BBE is not applicable The matter is squarely covered by the decision of the Hon’ble Rajasthan High Court in case of Pr. CIT, Alwar vs. Bajargan Traders (D.B Appeal No. 20 ITA No. 107/Jodh/2022 Om Prakash Bishnu 258/2017 dated 12.09.2017) wherein the Hon’ble High Court has confirmed the view of the Tribunal which is reproduced as under:- “2.11 Having said that, the next issue that arises for consideration is whether the amount surrendered by way of investment in the unrecorded stock of rice has to be brought to tax under the head “business income” or “income from other sources”. In the present case, the assessee is dealing in sale of food grains rice and oil seeds, and the excess stock which has been found during the course of survey is stock of rice. Therefore, the investment in procurement of such stock of rice is clearly identifiable and related to the regular business stock of the assessee. The decision of the Co-ordinate Bench in case of Shri Ramnarayan Birla (supra) supports the case of the assessee in this regard. Therefore, the investment in the excess stock has to be brought to tax under the head “business income” and not under the head income from other sources”. In the result, ground No. 1 of the assessee is allowed.” (ii). Following the aforesaid decision of Hon’ble Rajasthan High Court, the Hon’ble ITAT, Jodhpur (SMC), in its decision dated- 25.05.2018 in the case of LovishSinghal v. ITO, ITA No. 143/Jodh/2018 has held as under: “ 13. I have heard the rival contentions and record perused. I have also carefully gone through the orders of the authorities below. I have also deliberated on the judicial pronouncements referred by the lower authorities in their respective orders as well as cited by the ld AR during the course of hearing before the ITAT in the context of factual matrix of the case. From the record, I find that during the course of survey, income was surrendered by the assessee on account of stock, excess cash found out of sale of stock and also in respect of incriminating documents. As per judicial pronouncements cited by the ld. AR and also the decision of Hon’ble Rajasthan high court in the case of Bajrang Traders in Income Tax Appeal No. 258/2017 dated 12/09/2017 I observe that the Hon'ble High Court in respect of excess stock found during the course of survey and surrender made thereof was found to be taxable under the head ‘business and profession’. Similarly in respect of excess cash found out of sale of goods in which the assessee was dealing was also found to be taxable as business income. Applying the proposition of law laid down in the judicial pronouncements as discussed above, I hold that the lower authorities were not justified in taxing the surrender made on account of excess stock and excess cash found U/s 69 of the Act. Thus, there is no justification for taxing such income U/s 115BBE of the Act. (iii).Non following of a decision of jurisdictional High Court is mistake apparent from record rectifiable u/s 154/254(2) of the Act. ACIT v. Saurashtra Kutch Stock Exchange Ltd., (2008) 305 ITR 227 (SC), CIT v. ArunaLuthra, (2001) 252 ITR 76 (P. & H.)(FB). 21 ITA No. 107/Jodh/2022 Om Prakash Bishnu (iv).It is also important to mention here that the Hon’ble Supreme Court in the case of DCIT v. Raghuvir Synthetics Ltd., (2017) 394 ITR 001(SC) has held that even in a case of a debatable issue, if there is a decision of the jurisdictional High Court on an issue , that issue is not debatable so far as that state is concerned and prima facie adjustments u/s 143(1) can be made on the basis of such decision of the jurisdictional High Court. (v).Article 265 of the Constitution of India provides that “Taxes not to be imposed save by authority of law. No tax shall be levied or collected except by authority of law”. (vi).In the case of S.R. Koshti v. Commissioner of Income Tax., (2005) 276 ITR 165 (Gujarat) , the Hon’ble Gujarat High Court has held as under: "A word of caution. The authorities under the Act are under an obligation to act in accordance with law. Tax can be collected only as provided under the Act. If an assessee, under a mistake, misconception or on not being properly instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. This Court, in an unreported decision in case of VinayChandulalSatia v. Shri N.O.Parekh., the Commissioner of Income Tax, Special Civil Application No. 622/1981, rendered on 20-8-1981, has laid down the approach that the authorities must adopt in such matters in the following terms : "The Supreme Court has observed in numerous decisions, including Ramlal and Ors. v. Rewa Coalfields Ltd., AIR 1962 SC 361; The State of West Bengal v. The Administrator, Howrah Municipality and Ors., AIR 1972 SC 749, and Babutmal Raichand Oswal v. Laxmibai R. Tarte, AIR 1975 SC 1297, that the State authorities should not raise technical pleas if the citizens have a lawful right and the lawful right is being denied to them merely on technical grounds. The State authorities cannot adopt the attitude which private litigants might adopt". (Emphasis supplied). (vii).The Hon'ble Bombay High Court in the case of Nirmala L. Mehta vs. A. Balasubramaniam, C.I.T. (2004) 269 ITR 1 (Bom.) has held that "There cannot be any estoppels against the statute. Article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law." (viii). In another instance the Bombay High Court in the case of Balmukund Acharyavs DCIT, CIT and UOI 310 ITR 310 (Bom.) has held that "Tax can be collected only as provided under the Act. If any assessee, under a mistake, misconception or on not being properly instructed is over assessed, 22 ITA No. 107/Jodh/2022 Om Prakash Bishnu the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected." (ix). In Sanchit Software & Solutions (P.) Ltd. vs. CIT [2012] 349 ITR 404 (Bombay) it has been held that "In any civilized system, the assessee is bound to pay the tax which he liable under the law to the Government. The Government on the other hand is obliged to collect only that amount of tax which is legally payable by an assessee. The entire object of administration of tax is to secure the revenue for the development of the Country and not to charge assessee more tax than that which is due and payable by the assessee. It is in aforesaid circumstances that as far back as in 11/04/1955 the Central Board of Direct Tax had issued a circular directing Assessing Officer not to take advantage of assessee's ignorance and/or mistake." (x).Circular No. 14(XL-35) of 1955, dated 11.4.1955, issued by the Central Board of Direct Taxes reads as under: "Officers of the department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a tax payer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding a tax payer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department, for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with the assesses on whom it is imposed by law, officers should – a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) Freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs". (xi).The Hon’ble ITAT, Ahmedabad in the case of Fashin World v. ACIT, ITA No. 1634/Ahd/2006, and dated 12.02.2010 has held as under- “13. Thus in a case where source of investment/expenditure is clearly identifiable and alleged undisclosed asset has no independent existence of its own or there is no separate physical identity of such investment/expenditure then first what is to be taxed is the undisclosed business receipt invested in unidentifiable unaccounted asset and only on failure it should be considered to be taxed under section 69 on the premises that such excess investment is not recorded in the books of account and its nature and source is not identifiable. Once such excess investment is taxed as undeclared business receipt then taxing it further as deemed income under section 69 would not be necessary. Therefore, the first attempt of the assessing authority should be to find out link of undeclared investment/expenditure with the known head, give opportunity to the assessee to establish nexus and if it is satisfactorily 23 ITA No. 107/Jodh/2022 Om Prakash Bishnu established then first such investment should be considered as undeclared receipt under that particular head. It is only where no nexus is established with any head then it should be considered as deemed income under section 69, 69A, 69B & 69C as the case may be. It is because when assessee fails to explain satisfactorily the source of such investment then it should be taxed under section 69, 69A, 69B & 69C as the case may be. It should not be done at the first instance without giving opportunity to the assessee to establish nexus.” (xii). The Hon’ble ITAT, Chennai in its recent decision dated – 07.02.2020 in the case of Samuel ThangarajPonniah v. ITO , ITA No. 1773/CHNY/2018 has held as under : “3.On the contrary, Shri S. Bharath, the Ld. Departmental Representative submitted that the assessee has not claimed deduction u/s.54F of the Act in the original return. No deduction was also claimed in the return filed consequent to the notice issued u/s. 148 of the Act. Moreover, in the course of the assessment proceedings, the assessee filed a letter claiming deduction u/s.54F of the Act. Therefore, the Pr. CIT found that the assessee is not entitled for deduction u/s. 54F of the Act. The Ld. Departmental Representative placed reliance on the judgment of Apex Court in the case of Goetze (India) Ltd vs. CIT, 284 ITR 323 (SC). 4. Having heard the Ld. Representative for the assessee and the Ld. Departmental Representative and perused the relevant material available on record. We also carefully went through the judgment of Apex Court in the case of Goetze (India) Ltd. In the very same judgment, the Apex Court categorically found that the power of this Tribunal will not impinge to admit additional or any other ground. Therefore, there is no impediment for this Tribunal to consider the claim u/s.54F of the Act. Moreover, the Apex Court in the case of CIT vs. Shelly Products and Another, (2003) 261 ITR 367 had categorically found that it is open to the assessee to bring to the notice of the Assessing Officer any claim in the course of the assessment proceedings even though it was not claimed in the return of income. This judgment of the Apex Court was not considered by the latest judgment in Goetze (India) Ltd (supra). Therefore the judgment of Apex Court in the case of Goetze (India) Ltd is per incuriam and not applicable to the present case. Since, the assessee admittedly invested in a residential flat and Assessing Officer admitted the claim of the assessee, this Tribunal is of the considered opinion that there is no justification for exercising the jurisdiction u/s.263 of the Act. In view of the above, we are unable to uphold the order of the Pr.CIT and accordingly the order of the Pr. CIT is set aside.” (Emphasis supplied) Ground No 8: The ld. AO has erred on facts and in law in charging interest of Rs.3,01,156/- u/s 234A; Rs.90,34,680/- u/s 234B and Rs.1,50,052/- u/s 234C aggregating to Rs.94,85,888/- on assessed income which should have been charged on returned income, in view of the decision of Hon’ble Jharkhand High Court in the case of Ajay PrakashVerma v. CIT,T.A. 24 ITA No. 107/Jodh/2022 Om Prakash Bishnu No.38 of 2010 reported in 2013 (1) TMI 140, consistently being followed by the Hon’ble ITAT Ranchi. In this case, original return of income was filed on 29.09.2018 showing income of Rs.15,62,540/- and again return u/s 153A was filed on 30.09.2021 showing income of Rs. 2,34,650/- However, the ld. AO has completed the assessment u/s 153A/143(3) on 30.09.2021 at income of Rs. 92,78,258/- creating huge demand While making the tax calculation the ld. AO has charged interest u/s 234A at Rs.1,59,090/- and u/s 234B at Rs.11,13,630/- on assessed income of Rs.11,13,630/-. The ld. AO has charged interest u/s 234A and 234B on assessed income which should have been charged on returned income. The Hon’be Ranchi ITAT has consistently been holding this view. The finding of the Hon’ble Bench in one such case is reproduced as under : Anup Kumar Chatterjee v. ACIT, Central Circle Jamshedpur, IT(SS)A No. 70 to 74/Ranchi, 19.12.2019. ITAT, Ranchi. “5. The assessee has also raised additional ground which is reproduced hereunder: “That interest u/s 234 and 234B can only be levied only on the total income declared in the return and not on the income assessed and determined by the AO. The issue is covered in view of full bench judgment of Ranchi bench of Patna High Court in the case of Smt. Tej Kumari.” 6. The additional ground being purely legal in nature requires to be entertained as there cannot be no estoppels against law. The additional ground of appeal is accordingly admitted for adjudication. Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxx 14. We shall now turn to legal objections raised by way of additional ground. The additional ground pertains to levy of interest under s.234A and 234B of the Act with reference to assessed income instead of returned income. 14.1 We find that identical issue has come up before the co-ordinate bench of ITAT in ITO vs. M/s. AnandVihar Construction Pvt. Ltd. ITA No. 335/Ran/2017 order dated 28.11.2018 wherein the issue was dealt with as under: “16. We have heard rival submissions and perused the material on record. Prima facie the disputed issue, being charging of interest u/s.234A & 234B as envisaged by ld. AR, is covered by the decision of Hon’ble jurisdictional High Court in the case of Ajay PrakashVerma in ITA No.38 of 2010 reported in 2013(1) TMI 140. The Hon’ble Court in Para23&24 held as under :- “23. Learned counsel for the appellant submitted that it has been ordered by the AO that interest be charged as per rule. Interest can be levied under Section 234A and 234B of the Act. It is submitted that in view of the judgment of Full Bench of Ranchi Bench of Patna High Court delivered in the case of Smt. Tej Kumari Vrs. Commissioner of Income-tax reported in [2001] 25 ITA No. 107/Jodh/2022 Om Prakash Bishnu the interest cannot be levied over the assessed income and it can be levied only on the income declared in the return. The revenue preferred SLP before Hon’ble Supreme Court against the said judgment of the Full Bench of Patna High Court, which was dismissed by the Hon’ble Supreme Court on merits vide order dated 01.08.2000 by saying that there is no merit in the appeal. 24. Learned counsel for the revenue could not dispute this legal position. Therefore, so far as question of law involved in this appeal that whether the interest could have been levied against the assessed income of the assessee under Sections 234A and 234B is concerned, in view of the Full Bench judgment of Ranchi Bench of Patna High Court delivered in the case of Smt. Tej. Kumari, the revenue can levy the interest only on the total income declared in the returns and not on the income assessed and determined by the AO to that extent. The orders passed by the authorities below are accordingly modified and interest shall be chargeable in the light of the Full Bench judgment, referred above.” 17.Ld. AR also placed reliance on the decision of coordinate bench of the Tribunal in the case of ShriGirdhariLal Sharma vs. ITO, Ward1(4), Jamshedpur in ITA No. 31/Ran/2013 by an order dated 07.05.2012 in para No. 6 relying upon the above decision of the Hon’ble Jharkhand High Court held :- “We accordingly following the above decision, direct the Assessing Officer to re-compute the interest under section 234B on the basis of the total income declared by the assessee in the return filed.” 18. We respectfully following the decision of the jurisdictional High Court and the decision of coordinate bench of the Tribunal direct the AO to recomputed the interest u/s.234B on the basis of total income declared by the assessee in the return filed. This ground of Cross Objection of the assessee is allowed.” 14.2 In consonance with the view expressed by the co-ordinate bench holding that interest under s.234A & 234B of the Act is chargeable with reference to returned income only, we are inclined to adjudicate the legal objection raised by way of additional ground in favour of the assessee. 14.3 In the result, additional ground raised by the assessee is allowed.”(Emphasis supplied). Following the aforesaid judgment of the Hon’ble Jharkhand High Court in the case of Sh. Ajay Prakash Verma, the Hon’ble ITAT, Ranchi, has consistently followed this view in the following cases and several other cases- (1). Sh. Girdhari Lal Sharma v. ITO, ITA No. 31/Ranchi/2013, DOJ 07-05.2013. (2). Sh. Sunil Kumar sawa v. ITO ITA No. 112- 115/Ranchi/2017, DOJ 30-05- 2018. (3).Durga Devi Gupta v. ITO ITA No. 156/Ranchi/2015, DOJ 28-02-2018. 26 ITA No. 107/Jodh/2022 Om Prakash Bishnu (4). ITO v. Anand Vihar Promoters & Developers ITA No. 159/Ranchi/2015 AY 2010-11, DOJ 28-02-2018 (5). M/s Cement supply agencies v. DCIT/ITA No. 304/Ranchi/2016, DOJ 28-02- 2018 (6). ITO v. Shree Tirupati Minerals (P) Ltd. ITA No. 09/Ranchi /2016, DOJ 05-12- 2016 (7). ACIT v. Uranium Corporation Of India Ltd., ITA No. 62/Ran/2017, 19.11.2018. ITAT- Ranchi. (8). M/s Alok Coal Agencies Ltd. V. DCIT, IT(SS)A No. 06/Ranchi/2016 , dated 25-05-2018.. So far as the decision of Hon,ble Supreme Court in the case of CIT v. Anjum M. H. Ghaswala (2001) 252 ITR 1 (S.C.) is concerned in that case the question before the Hon’ble Supreme Court was whether the Settlement Commission constituted under section 245B of the Act had jurisdiction to reduce or waive the interest chargeable under sections 234A, 234B and 234C of the Act while passing orders of settlement under section 245D(4) of the Act. Supreme Court held that Settlement Commission acting under section 245D(4) and (6) does not have the power to reduce or waive interest statutorily payable under sections 234A , 234B and 234C of the Act. The Hon’ble Apex Court did not decide the issue whether the interest u/s 234A, 234B and 234C will be charged on returned income or assessed income, as this was not the question before the Hon’ble court. The Hon’ble Jharkhand High Court has decided this issue in the case of Sh. Ajay Prakash Verma v. ITO (supra). The Hon’ble Supreme Court in the cases of CIT v/s. Vegetable Products Ltd. (1973) 88 ITR 192 (SC) and CIT v. Vatika Township (P) Ltd. (2014) 367 ITR 466 (SC) has held that when two views are possible on any issue, the view which is favorable to the assesse should be adopted. In view of the aforesaid judicial pronouncements the interest charged u/s 234A and 234B on assessed income may kindly be directed to be reduced to be charged on the returned income and not on assessed income. Ground No 9 On the facts and in the circumstances of the case the ld. Has erred in initiating the penalty proceedings u/s 274 r.w.s. 271AAC (1) of the Act. -------- The LD AO has not appreciated facts properly and initiated penalty proceeding u/s 271AAC (1) of the Act. Which is contrary the provision of law and natural justice and deserve to be dropped. The addition is from business income and as addition is also bad in law. The appellant craves leave to add, amend or withdraw any of the grounds of the appeal during the course appellate proceedings. All the grounds of appeal are independent and without prejudice to each other.” 27 ITA No. 107/Jodh/2022 Om Prakash Bishnu 5.1 The ld. AR of the assessee in addition the written submission vehemently argued that the ld. CIT(A) has given only part relief and has not considered the plea of the assessee based on the decision of the jurisdictional high court where in it has been held that for the purposes of valuation of property, State PWD rates have to be applied to the plinth area of construction for each floor. In that case it has been held that though the bills/vouchers related to the construction have not been produced before the A.O and also during the appellate proceedings, but it is also a fact that the assessee has shown cost of construction in the books of accounts which almost adheres to the valuation done as per State PWD rate and the relevant report of the valuer appointed by the assessee were placed on record and there is no discussion in the order of the lower authority as to why the same cannot be accepted. The assessee has filed a detailed chart showing the difference between the rate, area and thereby final value which differs in all most all aspect and the comparison chart so submitted and relied upon. The said chart is also attached as Annexure A to this order. Thus, in absence of complete set of bills/vouchers for the material purchased for the construction of the hospital building and cover the items for the alleged difference the assessee has already 28 ITA No. 107/Jodh/2022 Om Prakash Bishnu disclosed a sum of Rs. 1 crore for which the telescoping benefit is also not given and if that benefit is given then there is no further addition is required to be made in the income of the assessee. 6. On the other hand, the ld. DR is heard who has relied on the findings of the lower authorities and submitted that the ld. CIT(A) has already considered the grievance of the assessee and granted the relief of self supervision and ld. CIT(A) has directed the AO to take the rate of PWD. The ld. DR based on these arguments submitted that the grievance of the assessee has already been met with by the ld. CIT(A). Thus, he supported the findings of the ld. CIT(A) and prayed to sustained the order of the ld. CIT(A). 7. We have heard the rival contentions, perused the material placed on record and gone through the various judgments relied upon by both the parties to drive home to their contentions so raised before us. The bench noted that the ld. CIT(A) has admitted the plea of the assessee that the DVO has adopted the rate applicable to CPWD whereas considering the facts of the case the rate should have been taken of that of PWD. The ld. CIT(A) also noted the fact that the DVO 29 ITA No. 107/Jodh/2022 Om Prakash Bishnu has not given the benefit of self-supervision benefit to the assessee in rate and the same has been granted. So far as the other contention of the assessee objecting to the DVO’s report the ld. CIT(A) has rejected the plea of the assessee by observing as under: “ (x) Apart from the above, the Registered Valuer has objected to the cost of Rs. 1,11,188/- mentioned by the DVO under the head cost of development and additional items covered under PAR on account of levelling, amount of Rs. 8,47,458/-on account of borewell, an amount of Rs. 93,632/- on account of horticulture work, amount of Rs. 6,36,559/- on account of compound wall and contingency @ 3% and architect fees @ 3% total amounting to Rs. 50,76,988/-. In this regard, it is held that 15% rebate on account of PWD rates and 10% rebate on account of self-supervision charges has already been allowed to the appellant by me and further the fact being that the report of the DVO is binding on the AO, therefore no further discounting in the valuation given by the DVO for levelling, borewell, horticulture, compound wall etc. as requested by the appellant is being given as these have already been considered by the DVO and also the fact that no evidence in this regard has been filed by the appellant. In view of the above discussion, it is held that all the objections raised by the appellant vide the report of the Registered Valuer produced by the appellant has been considered by me. Accordingly, for the purposes of valuation of property, the State PWD rates have to be applied to the plinth area of construction for each floor as given by the DVO in his report and therefore the AO is directed to allow 15% rebate on account of PWD rates and also allow 10% rebate on account of self-supervision charges. The Ground of Appeal No. 2 to 6 is partly allowed." The bench also note that the ld. CIT(A) agreed that the assessee has objected the DVO’s report on account of levelling, borewell, horticulture, compound wall, difference in area, contingency and architect fees etc. The plea of the assessee was rejected in spite of the fact the registered valuer report consist all this aspect of the 30 ITA No. 107/Jodh/2022 Om Prakash Bishnu matter but the ld. CIT(A) has rejected the claim of the assessee by simply mentioning that no evidence in this regard has been filed by the assessee. To that aspect of the fact the ld. AR of the assessee submitted that once the assessee with the help of another experts dispute the valuation of the DVO then in that case the ld. CIT(A) and that of the ld. AO is duty bound to deal with the objections that has been taken by the assessee. In this case we find from the record that the assessee has vide letter dated 31.08.2021 has specifically taken the following objections to the DVO’s report: “The valuation report of DVO cannot be relied upon as it has several factual and computational defects some of which are listed as under: a) The rate, area and basis taken is factually incorrect. The Ld. DVO has taken CPWD rates for rural area as against state PWD Rated; b) The DVO has taken into account value of internal roads for the entire land area whereas there is only one small roads and a small parking area made up of paver blocks c) Borewell has been taken into account by DVO, whereas there is no borewell in the premises d) Horticulture has been taken for the entire land area whereas there is minuscule horticulture activity in the premises e) Ground levelling charges are added, whereas the building has basement and therefore such levelling charges do not apply f) Contingency Charges of 3% added without any basis g) The building for hospital was constructed on self supervision by Assessee thereby minimising wastage and costs. Further, the Assessee is well known and respected in the area and has helped several people over a long period of time and therefore, has the benefit of discount on almost all 31 ITA No. 107/Jodh/2022 Om Prakash Bishnu construction material as well as labour. No discount was considered by DVO in this respect. In support of aforesaid facts and costs incurred, we hereby furnish a valuation report by an Independent Registered Valuer who has provided a detailed valuation wherein the total cost of the hospital is a Rs.2,72,52,000/-. A copy of the same is furnished as Annexure B. The actual cost is within the tolerance limit of 10 per cent from the aforesaid valuation provided by the Independent Valuer. The said 10 per cent tolerance limit is prescribed in section 50C as amended by Finance Act, 2020. In view of the foregoing submissions and valuation report, we request your goodself to accept the cost as actually incurred and recorded by the Assessee.” The bench noted that the ld. AO has not deemed it fit to deal with the objection of the assessee and has simply adopted the DVO’s amount and difference between the DVO’s report and the amount recorded in the books of account was added as income of the assessee to the extent of the assessee for an amount of Rs. 3,32,34,408/-. In an appeal before the ld. CIT(A), he has accepted the contention of the assessee that the rate of CPWD be replaced with the PWD rate and the self-supervision benefit to the extent of the 10 % was considered but so far as other issues are concerned the ld. CIT(A) has rejected the contention of the assessee stating that “as these have already considered by the DVO and also the fact that no evidence in this regard has been filed by the appellant. In view of the above discussion, it is held that all the objections raised by the appellant vide the report of the registered Valuer produced by the appellant has been considered by me” 32 ITA No. 107/Jodh/2022 Om Prakash Bishnu Thus, we note that both lower authorities have ignored the contentions taken by the assessee right from the assessment proceeding by submitting the detailed report of the registered valuer who have valued the property at Rs. 2,72,52,000/- whereas the as per the books of account the actual investment reflected in the books amounts to Rs. 2,51,44,716/-. Thus, the difference between the amount reflected in the books and as appearing in the registered valuer’s report being less then 10 % which is the tolerance limit, u/s. 50C of the Act. We have also gone through the itemized cost considered by the DVO and register valuer as per annexure A to this order which is nothing but an analysis of both the report. Based on that analysis of the figure taken by the DVO and registered valuer we note that the value taken by the DVO is higher by Rs. 6,24,41,217/- which is on account of various factors such as 1) CPWD rates taken by DVO instead of state PWD rates. 2) Heights considered by DVO is incorrect and more than the actual height as considered by the registered valuer. 3) Area considered by the DVO incorrect. 4) For electric installation and wiring the DVO has considered an unreasonably higher rate of 11 % instead of 5 % considered by registered valuer. 5) Only 1/3 rd floor portion of the second floor is built and used for residential purpose and the remaining 2/3 rd portion is kept as blank hall 33 ITA No. 107/Jodh/2022 Om Prakash Bishnu without any construction, interior etc. Therefore, adding 12 % for internal wate any sanitary installations is not justified. 6) The building has basement floor, so levelling is not applicable and is incorrectly taken by the DVO. 7) The DVO has taken the entire land area for roads and path. 8) The DVO has already considered 10-12 % towards the internal water supply and sanitary installation and 5 % towards the external service connection in the plinth area, rates. 9) There is no horticulture work at the premises. The cumulative effect of all these contention as computed in the annexure A attached herewith, we note that the DVO has considered the value of the property by Rs. 6,24,41,217/-. The ld. AR of the assessee submitted that the assessee since beginning of the assessment proceeding contending all these issue and after considering the merits of the case he relied upon the registered valuer’s report who has valued the property at Rs. 2,72,52,000/- whereas as per books the same is 2,51,44,716/-. There is not discussion in the order of the lower authorities that as what extent the report of the registered valuer is not accepted. Not only that the ld. CIT(A) accepted the contention of the assessee that the rate adopted is that of CPWD and the assessee should be given the benefit of PWD rate and self supervision benefit. But even in the order of the ld. CIT(A) there is no discussion as to why on the other aspect of the matter the 34 ITA No. 107/Jodh/2022 Om Prakash Bishnu report of the registered valuer is different. Thus, we are of the considered view that considering the itemized difference with that of the DVO’s report we are of the view that the report of the register valuer is the fair estimation of the cost of the property in the case of the assessee. Thus, even if the said figure is considered as amount liable to be added in the income of the assessee the proportionate figure for the year under consideration comes to Rs. 10,84,968/- as computed here in below: Assessment Year Assessee’s Cost DVO RVO Diff of RVO and cost 2016-17 350000 1248485 379332 2017-18 10644205 37968920 11536256 2018-19 12946152 46180190 14031120 1084968 2019-20 1204359 4296065 1305292 25144716 89693660 27252000 35 ITA No. 107/Jodh/2022 Om Prakash Bishnu Annexure A 36 ITA No. 107/Jodh/2022 Om Prakash Bishnu Based on the discussion we are of the considered view that for the year consideration this difference between the book value and valuation report submitted by the assessee comes to Rs. 10,84,968/-, as against this the assessee has already surrendered a sum of Rs. 1cr and the same is used in the building under dispute for valuation. After 37 ITA No. 107/Jodh/2022 Om Prakash Bishnu considering the prayer of the assessee allowing the telescoping benefit of the income so declared with that the amount invested in the building by the assessee we see that there is no scope of adding any further amount in the income of the assessee in the year under consideration so far as the alleged difference in the cost of construction for the year under consideration. Based on these observations the grounds of appeal no. 2 to 7 are allowed. 8. The ground no.1 is challenging the assessment on technical ground since the appeal of the assessee is considered on merits this ground taken by the assessee becomes educative in nature. 9. Ground no 8 is consequential in nature and ground no. 9 is related to the levy of the penalty which is premature at the stage and the same are not require any specific adjudication. In the result, appeal of the assessee is allowed. 38 ITA No. 107/Jodh/2022 Om Prakash Bishnu Order pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963, by placing the details on the notice board. Sd/- Sd/- (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) Judicial Member Accountant Member D at e d : 1 8 / 08 /2 02 3 *G an es h K u m a r , P S Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR 6. Guard File Assistant Registrar Jodhpur Bench