Shri Gopichand B.Lalwani, Kolhapur V. DCIT, Kolhapur

ITA 1153/PUN/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1106 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-08-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 01-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K RASTOGI
• Keywords: Unexplained investment; Value adopted by valuation officer; Unexplained expenditure; Search and seizure; Loose papers; Document seized; Valuation report; Documents seized
• Section: 143(3); 153A; 132; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO S . 1150 TO 1153 /PN/201 2 / ASSESSMENT YEAR S : 20 0 3 - 0 4 TO 2006 - 07 SHRI GOPICHAND B. LALWANI, 250 - B, TRIMURTI, E - WARD, NAGALA PARK, KOLHAPUR . / APPELLANT PAN: AAEPL3162A VS. THE DY. COMMISSIONER OF INCOME TAX, CEN TRAL CIRCLE, KOLHAPUR . / RESPONDENT / APPELLANT BY : SHRI M.K. KULKARNI / RESPONDENT BY : SHRI S.K. RASTOGI, CIT / ORDER PER SUSHMA CHOWLA, JM: THIS BUNCH OF FOUR APPEALS FILED BY THE ASSESSEE ARE AGAINST CONSOLIDATED ORDER OF CIT(A), KOLHAPUR , DATED 15 .0 3 .201 2 RELATING TO ASSESSMENT YEAR S 20 0 3 - 0 4 TO 200 6 - 0 7 AGAINST RESPECTIV E ORDER S PASSED UNDER SECTION 143(3) R.W.S. 153A(B) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT). / DATE OF HEARING : 02 .0 8 .201 6 / DATE OF P RONOUNCEMENT: 12 . 0 8 .201 6 2 ITA NO S . 1150 TO 1153 /PN/201 2 SHRI GOPICHAND B. LALWANI 2. THIS BUNCH OF FOUR APPEALS INVOLVING DIFFERENT ASSESSMENT YEARS ON SIMILAR ISSUES WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ASSESSEE IN ITA NO.1150/PN/2012 , RELATING TO ASSESSMENT YEAR 2003 - 04 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTA INING ADDITION ON ACCOUNT OF HOUSE - HOLD EXPENSES OF RS.86,005/ - WHEN THE ASSESSMENTS WERE MADE UNDER S. 153A AND NO INCRIMINATING MATERIAL WAS FOUND AND SEIZED DURING THE COURSE OF SEARCH AND SEIZURE ACTION. THE ADDITION BE DELETED. 2. ON THE FACTS AND C IRCUMSTANCES OF THE CASE AND IN LAW THE LEVY OF INTEREST U/S 234B/234C WAS NOT JUSTIFIED IN VIEW OF HUGE AMOUNT SEIZED OF RS.16,00,000/ - AT THE TIME OF SEARCH ACTION AND IT ADJUSTED AS PER PROVISIONS OF S.132B NO INTEREST AS LEVIED WOULD HAVE BEEN PAYABLE BY THE APPELLANT. THE INTEREST LEVIED BE QUASHED. 4. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS NOT PRESSED AND HENCE, THE SAME IS DISMISSED AS NOT PRESSED. 5. THE ISSUE RAISED VIDE GROUND OF APPEAL NO.1 IS AGAINST THE ADDITION MADE ON ACCOUNT OF HOUSEHOLD EXPENSES OF RS.86,005/ - . THE CLAIM OF THE ASSESSEE BEFORE US WAS THAT WHEN THE ASSESSMENT WAS BEING MADE UNDER SECTION 153A OF THE ACT AND IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH, THERE WAS NO MERIT IN THE SAID ADDITION BEING MADE IN THE HANDS OF ASSESSEE. 6. BRIEFLY, IN THE FACTS OF THE CASE, SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT ON THE PREMISES OF ASSESSEE FROM 18.04.2007 TO 20.04.2007. UNDER THE SEARCH O PERATION, 29 PERSONS WERE COVERED WHICH INCLUDED THE ASSESSEE ALSO. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, IN RESPONSE TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.20,93,180/ - . THE ASSESSMENT PROCEEDINGS WERE TAKEN UP AND THE ASSESSING OFFICER NOTES THAT THE ASSESSEE 3 ITA NO S . 1150 TO 1153 /PN/201 2 SHRI GOPICHAND B. LALWANI FURNISHED NECESSARY EXPLANATION REGARDING SEIZED MATERIAL AND THE RETURN OF INCOME. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE DETAILS OF HOUSEHOLD EXPENSES WERE CA LLED FOR AND THE ASSESSEE FURNISHED YEAR - WISE WITHDRAWALS OF HIMSELF AND HIS FAMILY MEMBERS, WHICH ARE TABULATED UNDER PARA 6 AT PAGE 3 OF THE ASSESSMENT ORDER. THE TOTAL WITHDRAWALS FOR ASSESSMENT YEAR 2003 - 04 BY THE ASSESSEE AND HIS FAMILY MEMBERS WAS R S. 93,595/ - . THE ASSESSING OFFICER VIDE PARA 7 OBSERVED THAT THE WITHDRAWALS WERE TOO LESS TO MAINTAIN EVEN A SINGLE FAMILY, WHEREAS THE ASSESSEE WAS MAINTAINING TWO FAMILIES AT TWO DIFFERENT PLACES. FURTHER, THE ASSESSEE HAD ALSO CLAIMED CERTAIN EXPENDIT URE LIKE ADVANCE TO HIS EMPLOYEE SHRI VIJAY AND PURCHASE OF JEWELLERY IN ASSESSMENT YEAR 2007 - 08 FROM PERSONAL FUNDS. THE ASSESSING OFFICER LOOKING AT THE STATUS OF THE ASSESSEE, HIS BUSINESS STANDARD AND CONSIDERING THE FACT THAT HE WAS MAINTAINING TWO F AMILIES, ESTIMATED THE EXPENDITURE IN THE HANDS OF ASSESSEE @ 25,000/ - PER MONTH AND SHORT WITHDRAWALS OF RS. 2,06,405/ - WAS ADDED AS INCOME OF THE ASSESSEE. 7. THE CIT(A) OBSERVED THAT NO REASONING HAD BEEN GIVEN BY THE ASSESSING OFFICER TO ADOPT THE FIGU RE AT RS.3 LAKHS FOR ASSESSMENT YEARS 2002 - 03 AND 2003 - 04, RS.3,60,000/ - FOR ASSESSMENT YEAR 2004 - 05, RS.4,20,000/ - FOR ASSESSMENT YEARS 2005 - 06 AND 2006 - 07 AND RS.4,80,000/ - FOR ASSESSMENT YEARS 2007 - 08 AND 2008 - 09. HE ALSO NOTED THAT THERE WAS NO JUSTIF ICATION FOR THE ASSESSEE TO SHOW WITHDRAWAL OF RS. 1,63,300/ - AGAINST HOUSEHOLD EXPENSES FOR ASSESSMENT YEAR 2004 - 05 AND SHOW THE SAME AT RS. 24,000/ - FOR ASSESSMENT YEAR 2006 - 07 AND RS.21,000/ - FOR ASSESSMENT YEAR 2008 - 09. THE CIT(A) WAS OF THE VIEW THAT T HE WITHDRAWALS SHOWN BY THE ASSESSEE EXCEPT FOR ASSESSMENT YEAR 2002 - 03 WERE NOT SUFFICIENT TO MEET HIS HOUSEHOLD EXPENSES AND TAKING THE BASIS FOR ASSESSMENT YEAR 2002 - 03, ESTIMATED HOUSEHOLD EXPENSES WERE WORKED OUT BY INCREASING THE SAID AMOUNT AT 10% O N ACCOUNT OF INFLATION. 4 ITA NO S . 1150 TO 1153 /PN/201 2 SHRI GOPICHAND B. LALWANI CONSEQUENTLY, THE CIT(A) ESTIMATED THE HOUSEHOLD EXPENSES AT RS. 1,79,600/ - FOR ASSESSMENT YEAR 2003 - 04 AS AGAINST RS.3 LAKHS AND REDUCED THE ADDITION TO RS. 86,005/ - . SIMILARLY, ESTIMATION WAS MADE BY THE CIT(A) IN ALL OTHER YEARS, WHICH ARE ALSO IN APPEAL BEFORE US. 8. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 9. THE CLAIM OF THE ASSESSEE BEFORE US WAS THAT IN THE ABSENCE OF ANY INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH, THERE WAS NO MERIT IN ESTIMA TING THE HOUSEHOLD EXPENSES IN THE HANDS OF ASSESSEE. 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, POINTED OUT THAT IN THE FACTS OF THE CASE, WHERE THE EXPENSES WERE SHOWN BY THE ASSESSEE WERE ON LOWER SIDE TAKING INTO CO NSIDERATION THE ERRATIC WITHDRAWALS MADE BY THE ASSESSEE FROM YEAR TO YEAR, THE ORDER OF CIT(A) MERITS TO BE UPHELD. HE FURTHER POINTED OUT THAT REVENUE IS NOT IN APPEAL AGAINST THE ORDER OF CIT(A) IN GRANTING PARTIAL RELIEF TO THE ASSESSEE. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING BY WAY OF GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS AGAINST THE ESTIMATION OF HOUSEHOLD EXPENSES. SEARCH AND SEIZURE OPERATION WAS CARRIED OUT ON THE PREMISES OF ASSESSEE AND THE ASSESSING OFFICER NOTED THAT THE ASSESSEE WAS MAINTAINING TWO FAMILIES AT DIFFERENT PLACES. OTHER PERSONS WERE ALSO COVERED UNDER THE SAID SEARCH OPERATION. THE ASSESSEE WAS ASKED TO EXPLAIN YEAR - WISE WITHDRAWALS MADE BY HIM AND HIS FAMILY MEMBERS TO ME ET THE HOUSEHOLD EXPENSES. THE ASSESSEE CLAIMED VARIABLE WITHDRAWALS FROM YEAR TO YEAR WITH WITHDRAWAL OF RS.1,63,300/ - IN ASSESSMENT YEAR 2002 - 03 AND RS.93,595/ - IN ASSESSMENT YEAR 2003 - 04 AND FURTHER RS.24,000/ - IN ASSESSMENT YEAR 2006 - 07 AND RS.21,000/ - IN ASSESSMENT YEAR 2008 - 09. THE ASSESSING 5 ITA NO S . 1150 TO 1153 /PN/201 2 SHRI GOPICHAND B. LALWANI OFFICER NOTED THAT THE WITHDRAWALS SHOWN BY THE ASSESSEE WERE INSUFFICIENT TO MEET THE HOUSEHOLD EXPENSES AND HENCE, ESTIMATION WAS MADE BY THE ASSESSING OFFICER FROM YEAR TO YEAR. THE SAID ESTIMATION HAS BEEN SCALED DOWN BY THE CIT(A) BY TAKING WITHDRAWALS SHOWN IN ASSESSMENT YEAR 2002 - 03 AT RS. 1,63,300/ - AS AGAINST FIGURES AND THEREAFTER, INCREASING THE HOUSEHOLD EXPENSES BY 10% OVER THE PRECEDING YEAR. THE REVENUE IS NOT IN APPEAL AGAINST THE RELIEF GIVEN BY THE CIT(A). HOWEVER, THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ADDITION SUSTAINED BY THE CIT(A). THE TABULATED DETAILS OF WITHDRAWALS SHOWN BY THE ASSESSEE AND AS ESTIMATED BY THE ASSESSING OFFICER AND CIT(A) AND THE CONSEQUENT ADDITION IN THE CAS E OF ASSESSEE ARE AS UNDER: - A.Y. WITHDRAWALS SHOWN BY APPELLANT (RS.) WITHDRAWALS ESTIMATED BY A.O. (RS.) ADDITION MADE BY THE A.O. FOR SHORT WITHDRAWALS (RS.) WITHDRAWALS AS INCREASED BY 10% OVER PRECEDING YEAR TO COMPENSATE INFLATION (RS.) RELIEF GIVE N BY CIT(A) (RS.) (RS.) 1 2 3 4 5 6 2002 - 03 1,63,300 3,00,000 1,36,700 1,63,300 1,36,700 2003 - 04 93,595 3,00,000 2,06,405 1,79,600 1,20,400 2004 - 05 1,25,979 3,60,000 2,34,021 1,97,600 1,62,400 2005 - 06 85,045 4,20,000 3,34,955 2,17,400 2,02,600 2006 - 07 24, 000 4,20,000 3,96,000 2,39,100 1,80,900 2007 - 08 86,019 4,80,000 3,93,981 2,63,000 2,17,000 2008 - 09 21,000 4,80,000 3,93,981 2,89,300 1,90,700 12. THE PERUSAL OF THE ABOVE SAID DETAILS REFLECTS THAT FROM YEAR TO YEAR, THE ADDITION HAS BEEN MADE ON ACCOU NT OF INSUFFICIENT WITHDRAWALS FOR MEETING THE HOUSEHOLD EXPENSES BY THE CIT(A). THE ASSESSEE HAS STRESSED THAT THERE WAS NO MERIT IN THE AFORESAID ADDITION BEING MADE IN HIS HANDS AS THE YEAR UNDER APPEAL WAS A SEARCH YEAR AND NO EVIDENCE WAS FOUND TO ES TABLISH THE CASE OF REVENUE. THE PERUSAL OF THE ORDER OF CIT(A) REFLECTS THAT IT IS A CONSOLIDATED ORDER FOR ASSESSMENT YEARS 2002 - 03 TO 2008 - 09, WHEREIN THE ISSUE OF HOUSEHOLD EXPENSES AROSE IN ALL THE YEARS EXCEPT FOR ASSESSMENT YEAR 2002 - 03. THE CIT(A ) HAS UPHELD THE DISALLOWANCE ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS IN 6 ITA NO S . 1150 TO 1153 /PN/201 2 SHRI GOPICHAND B. LALWANI ALL THE YEARS STARTING FROM ASSESSMENT YEAR 2003 - 04 TO 2008 - 09. THE ASSESSEE TIME AND AGAIN STRESSED THAT NO ADDITION COULD BE MADE IN THE ASSESSMENT YEARS FIXED FOR HEARING BEFORE U S I.E. ASSESSMENT YEARS 2003 - 04 TO 2006 - 07. HOWEVER, IT IS NOTICED THAT THE APPEALS FOR ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 WERE HEARD BY PUNE BENCH OF TRIBUNAL IN ITA NOS.1154 & 1155/PN/2012 VIDE ORDER DATED 25.06.2014, WHEREIN THE ASSESSEE ON HIS OWN M OTION HAD NOT PRESSED THE GROUND OF APPEAL RAISED AGAINST ESTIMATION OF HOUSEHOLD EXPENSES AND THE ADDITION THEREOF. THE ISSUE ARISING IN THE PRESENT APPEAL BEFORE US IS IDENTICAL AND IN VIEW THEREOF, THE SAME STAND NEEDS TO BE TAKEN IN RESPECT OF THE SAM E ADDITION BEING MADE BY THE ASSESSING OFFICER AND THE CIT(A) VIDE CONSOLIDATED ORDER. THE GROUND OF APPEAL ON ACCOUNT OF LOW HOUSEHOLD EXPENSES WERE NOT PRESSED BY THE COUNSEL AS PER INSTRUCTION OF THE ASSESSEE IN ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 AND FOLLOWING THE SAME PARITY OF REASONING, WE FIND NO MERIT IN THE CLAIM MADE BY THE ASSESSEE AND THE SAME IS THUS, REJECTED. IN ANY CASE, THE WITHDRAWALS MADE BY ASSESSEE ARE INSUFFICIENT TO MEET THE HOUSEHOLD EXPENSES AND HENCE, ADDITION NEEDS TO BE UPHEL D. THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS THUS, DISMISSED. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, DISMISSED. 13. THE ASSESSEE IN ITA NO.1151/PN/ 2012 RELATING TO ASSESSMENT YEAR 2004 - 05 HAS RAISED SIMILAR GROUNDS OF APPEAL AS IN ASSESSMENT YEAR 2003 - 04 EXCEPT GROUND OF APPEAL NO.2, WHICH READS AS UNDER: - 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.4,60,983/ - MADE BY A.O. ON ACCOUNT OF EXCESS/SUPPRE SSED CONSTRUCTION EXPENSES AS REFLECTED IN THE BALANCE - SHEET OF M/S SAI AGRO WHEREIN APPELLANT IS A 50% PARTNER. THE LD. CIT(A) FAILED TO APPRECIATE THE THIRD PARTY EVIDENCE IN THE FORM OF CONFIRMATION PRODUCED FROM BUILDERS ABOUT THE ACTUAL RECEIPT OF CO NSTRUCTION COST AS PAID BY THE APPELLANT. THE EXTENT OF ACTUAL OUTGO FROM THE APPELLANT WAS ALSO NOT EXAMINED. IN VIEW OF THIS AND ADDITION BEING NOT BASED ON ANY EVIDENCE FOUND DURING SEARCH ACTION THE ADDITION WAS UNSUSTAINABLE AND IT BE QUASHED. 7 ITA NO S . 1150 TO 1153 /PN/201 2 SHRI GOPICHAND B. LALWANI 1 4. THE FIRST ISSUE RAISED BY THE ASSESSEE BY WAY OF GROUND OF APPEAL NO.1 IS AGAINST THE ADDITION MADE ON ACCOUNT OF HOUSEHOLD EXPENSES OF RS.71,621/ - IS DISMISSED IN LINE WITH OUR REASONING IN THE PARAS HEREINABOVE. 15. THE ISSUE IN GROUND OF APPEAL NO.3 IS NOT PRESSED BY THE ASSESSEE AND HENCE, THE SAME IS DISMISSED AS NOT PRESSED. 16. NOW, COMING TO THE ISSUE IN GROUND OF APPEAL NO.2 WHICH IS AGAINST THE ADDITION OF RS. 4,60,983/ - . 17. BRIEFLY, THE FACTS RELATING TO THE ISSUE ARE THAT DURING THE COURSE OF SURVEY, LOOSE PAPERS VIDE BUNDLE - 1 WITH PAGES 1 TO 79 AND BUNDLE - 2 WITH PAGES 1 TO 84 (PART NO.BS 5) WERE IMPOUNDED. PAGE NO.56 OF BUNDLE - 1 SHOWED THE BUILDING CONSTRUCTION ACCOUNT FOR 01.04.2003 TO 31.03.2005 . THIS ACCOUNT SHOWED THE DATE - WISE ADDIT ION TO THE PROPERTIES BEING PAYMENTS MADE TO VARIOUS PARTIES ON DATE - WISE ADDIT ION TO THE PROPERTIES BEING PAYMENTS MADE TO VARIOUS PARTIES ON ACCOUNT OF CONSTRUCTION OF COMPOUND WALL TO WANDARE TRADERS AT RS.34,251/ - , CONSTRUCTION OF BUILDING TO SHRI RAM BUILDERS AT RS.11 LAKHS, PURCHASE OF ELECTRICAL MATERIALS, PVT PIPES, ETC. THE CLOSING BALANCE AS ON 31.03.2004 REFLECTED IN THIS ACCOUNT WAS RS.12,10,614/ - . FURTHER, PAGES 1 TO 84 OF BUNDLE - 2 GAVE THE DETAILS OF EXPENDITURE ON CONSTRUCTION OF FACTORY BUILDING. PAGES 1 TO 80 GAVE THE TECHNICAL DETAILS OF CONSTRUCTION AND PAGE N O .8 2 GAVE THE SUMMARY OF RUNNING BILLS RAISED BY THE CONTRACTOR AS ON 17.12.2003, ACCORDING TO WHICH, RA BILL NO.1, THE TOTAL EXPENDITURE TOWARDS CONSTRUCTION OF BUILDING WAS AT RS.7,36,205/ - AND RA BILL NO.2 WAS AT RS. 8,03,529/ - , TOTALING RS.15,39,734/ - . FU RTHER, ON THE SAME PAGE, AN AMOUNT OF RS.20,000/ - WAS ADDED ON ACCOUNT OF COMPOUND WALL, THEREBY TOTAL EXPENDITURE ON THIS ACCOUNT WAS RS.15,59,734/ - . FURTHER, EVIDENCE IN RESPECT OF TOTAL INVESTMENTS AT RS. 15,59,734/ - IN THE 8 ITA NO S . 1150 TO 1153 /PN/201 2 SHRI GOPICHAND B. LALWANI BUILDING WAS THE BACKSIDE OF PAGE NO.81, WHICH SHOWS THAT THE TOTAL EXPENDITURE UP TO 17.12.2003 WAS AT RS.15,60,000/ - . 18. PAGE 79 OF BUNDLE - 1 WAS THE RA BILL NO.3 RAISED BY THE CONTRACTOR SHRI RAM BUILDER WHICH SHOWS FURTHER EXPENDITURE OF RS.5,57, 379/ - . THUS, FROM THE ABOVE REFER RED SEIZED DOCUMENTS, IT WAS EVIDEN T THAT COST OF CONSTRUCTION OF FACTORY BUILDING WAS RS.20,97,113/ - (RS.7,36,205/ - + RS.8,03,529/ - + RS.5,57,379/ - ). THE ASSESSING OFFICER ON PERUSAL OF BALANCE SHEET AS ON 31.03.2004 NOTED THAT THE ASSESSEE FIRM M/S. SAI AGRO, WHO HAD MADE THE AFORESAID INVESTMENTS IN CONSTRUCTIO N OF FACTORY BUILDING HAD SHOWN THE INVESTMENT IN FACTORY BUILDING AT RS.11,75,147/ - , HENCE, THERE WAS UNACCOUNTED INVESTMENT AT RS. 9,21,966/ - UP TO 31.03.2004. THE EXPLANATION WAS SOUGHT FROM TH E ASSESSEE. HOWEVER, THE ASSESSEE FAILED TO PRODUCE ANY CORROBORATIVE EVIDENCE AND IN VIEW THEREOF, THE ASSESSING OFFICER CAME TO A FINDING THAT THERE WAS UNACCOUNTED INVESTMENT OF RS. 9,21,966/ - . HOWEVER, CONSIDERING THE FACT WAS UNACCOUNTED INVESTMENT OF RS. 9,21,966/ - . HOWEVER, CONSIDERING THE FACT THAT THE SAID FIRM HAD NOT S TARTED ITS BUSINESS AND HAD NOT STARTED ITS COMMERCIAL PRODUCTION OR TRADED IN THE MARKET, THE UNACCOUNTED INVESTMENT SO DETECTED WAS ADDED IN THE HANDS OF ASSESSEE FIRM ON PROTECTIVE BASIS. HOWEVER, THE ADDITION ON THIS ACCOUNT WAS MADE IN THE HANDS OF A SSESSEE BEING PARTNER OF M/S. SAI AGRO AT RS. 4,60,983/ - BEING 50% OF TOTAL RS. 9,21,966/ - . 19. THE CIT(A) UPHELD THE SAID ADDITION, AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 20. THE CONTENTION OF THE ASSESSEE BEFORE THE CIT(A) THAT THE CONSTRUCTI ON OF FACTORY BUILDING WAS FINALLY SETTLED WITH THE CONTRACTOR AT RS.11 LAKHS. THE CONFIRMATION LETTER OF WHICH WAS FILED BEFORE THE ASSESSING OFFICER, WAS REJECTED BY THE CIT(A) AND THE ADDITION MADE ON THE BASIS OF SEIZED / IMPOUNDED DOCUMENTS WAS UPHEL D. THE ASSESSEE ALSO CONTENDED THAT T HE ASSESSING 9 ITA NO S . 1150 TO 1153 /PN/201 2 SHRI GOPICHAND B. LALWANI OFFICER HAD REFERRED THE MATTER TO THE DVO FOR COST VALUATION, WHO HAD VALUED IT AT RS. 14,27,000/ - AND THE SAME CANNOT BE RELIED UPON. THE CIT(A) REJECTED THE SAID CLAIM MADE BY THE ASSESSEE. 21. THE A SSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 22. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSING OFFICER HAD NOT REJECTED THE BOOKS OF ACCOUNT AND HENCE, REFERENCE MADE TO THE DVO FOR VALUATION OF THE PROPERTY WA S NOT VALIED. 23. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, POINTED OUT THAT THE ADDITION WAS MADE IN THE HANDS OF ASSESSEE NOT ON ACCOUNT OF VALUATION REPORT OF THE DVO, BUT ON ACCOUNT OF DOCUMENTS SEIZED DURING THE COURS E OF SURVEY, WHEREIN UNRECORDED INVESTMENT IN THE CONSTRUCTION OF FACTORY BUILDING BY M/S. SAI AGRO WAS DETECTED AND SINCE THE SAID FIRM HAD NOT STARTED THE BUSINESS, THE ASSESSEE BEING 50% PARTNER IN THE SAID FIRM, UNDISCLOSED INVESTMENT TO THE EXTENT OF 50% WAS ADDED IN THE HANDS OF ASSESSEE ON SUBSTANTIVE BASIS. 24. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ADDITION MADE IN THE HANDS OF ASSESSEE ON ACCOUNT OF INVESTMENT FOR CONSTRUCTION OF FACTORY BUILDING WHICH WAS IN THE NAME OF M/S. SAI AGRO IS BASED ON THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION. THE RUNNING BILL OF CONTRACTOR WAS FOUND FROM THE POSSESSION OF ASSESSEE, WHEREIN THE TOTAL INVESTMENT IN THE CONSTRUCTION OF BUILDING WAS TO THE TUNE OF RS . 20,97,113/ - . HOWEVER, THE FIRM IN ITS BALANCE SHEET AS ON 31.03.2004 HAD DECLARED THE INVESTMENT IN FACTORY BUILDING AT RS.11,75,147/ - . THE CLAIM OF THE ASSESSEE BEFORE THE CIT(A) WAS THAT THE SAID RUNNING BILL WAS AN ESTIMATED EXPENDITURE AND FINALLY, THE AMOUNT WAS SETTLED AT A LESSER FIGURE, WAS REJECTED 10 ITA NO S . 1150 TO 1153 /PN/201 2 SHRI GOPICHAND B. LALWANI BY THE CIT(A) IN THE ABSENCE OF ANY EVIDENCE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE US HAS NOT RAISED ANY SUCH ISSUE. THE ONLY PLEA RAISED BY THE LEARNED AUTHORIZED REPRESENT ATIVE FOR THE ASSESSEE BEFORE US WAS IN RESPECT OF VALUATION OF THE DVO AT RS. 14,27,000/ - . HE CONTENDED THAT WHERE THE BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED, THE ASSESSING OFFICER COULD NOT HAVE MADE THE AFORESAID REFERENCE TO THE DVO. WE FIND NO MERIT IN THE CLAIM OF ASSESSEE SINCE THE VALUATION REPORT, IF ANY, SUBMITTED BY THE DVO HAS NOT BEEN MADE THE BASIS FOR MAKING ADDITION IN THE HANDS OF ASSESSEE. THE ADDITION IS MADE ON THE BASIS OF DOCUMENTS FOUND DURING THE COURSE OF SEARCH, UNDER WHICH THE ASSESSING OFFICER HAS ELABORATELY REFERRED TO VARIOUS INVESTMENTS TO THE EXTENT OF RS.20,97,113/ - HAS BEEN RECORDED IN DIFFERENT DOCUMENTS FOUND IN DIFFERENT BUNDLES. THE ASSESSEE HAS NOT BEEN ABLE TO CONTROVERT THE SAME AND MERELY SAYING THAT THE AMOUNT WAS PAID ON ESTIMATE BASIS, WITHOUT ANY CORROBORATIVE EVIDENCE HAS NO MERIT. 25. THE SECOND PLEA OF THE ASSESSEE THAT NO ADDITION CAN BE MADE IN THE HANDS OF ASSESSEE AS NO BOOKS OF ACCOUNT WERE REJECTED AND HENCE, NO MERIT IN MAKING REFERENCE TO THE DV O DOES NOT STAND SINCE THE REPORT OF DVO HAS NOT BEEN RELIED UPON BY THE ASSESSING OFFICER TO MAKE THE SAID ADDITION. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES OF THE CASE, WE UPHOLD THE ORDER OF CIT(A) IN CONFIRMING THE ADDITION OF RS. 4,6 0,983/ - BEING THE INVESTMENT IN CONSTRUCTION EXPENSES WHICH ARE NOT REFLECTED IN THE BALANCE SHEET OF ASSESSEE FIRM M/S. SAI AGRO AND THE ASSESSEE IS A PARTNER TO THE EXTENT OF 50%. THE ADDITION IS BEING MADE IN THE HANDS OF ASSESSEE SINCE THE SAID FIRM H AD NOT CARRIED OUT ANY BUSINESS DURING THE YEAR UNDER CONSIDERATION AND HAD NOT EARNED ANY REVENUE FROM ANY SOURCE IN THE YEAR UNDER APPEAL. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS THUS, DISMISSED. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, DISMISSED. 11 ITA NO S . 1150 TO 1153 /PN/201 2 SHRI GOPICHAND B. LALWANI 26. NOW, COMING TO THE APPEAL IN ITA NO.1152/PN/2012 RELATING TO ASSESSMENT YEAR 2005 - 06. 27. THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS AGAINST THE ADDITION MADE ON ACCOUNT OF ESTIMATION OF HOUSEHOLD EXPENSES, WHICH IS IDEN TICAL TO THE GROUND OF APPEAL NO.1 RAISED IN ASSESSMENT YEAR 2003 - 04 AND FOLLOWING THE SAME PARITY OF REASONING, THE SAME IS DISMISSED. 28. THE GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE IS NOT PRESSED AND HENCE, THE SAME IS DISMISSED AS NOT PRESSED. 2 9. THE ISSUE IN GROUND OF APPEAL NO.2 READS AS UNDER: - 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT ACCEPTING THE VALUATION OF CONSTRUCTION AS PER BOOKS OF ACCOUNT AND INSTEAD SENDING IT BACK TO A.O. FOR FURTHER VERIFICATION WHEN IT WAS POINTED OUT THAT THERE WAS MARGINAL DIFFERENCE AMOUNTING TO LESS THAN 15% BETWEEN THE VALUATION MADE BY DVO U/S 142(A) AND AS PER BOOKS OF THE BETWEEN THE VALUATION MADE BY DVO U/S 142(A) AND AS PER BOOKS OF THE ASSESSEE. THE LD. CIT(A) OUGHT TO HAVE DELETED THE ADDITION MADE U/S 69B OF RS .1,13,369/ - SINCE THE ACCOUNTS WERE NOT REJECTED U/S 145(3) AND THEREFORE, HONBLE SUPREME COURT JUDGMENT APPLIED. THE ADDITION BE DELETED. 30. THE CLAIM OF THE ASSESSEE BEFORE US IS THAT WHERE THE DIFFERENCE BETWEEN INVESTMENT SHOWN BY THE ASSESSEE IN IMMOVABLE PROPERTY WAS LESS THAN 15% AS AGAINST VALUATION REPORT OF DVO FOR THE SAID PROPERTY, THEN NO ADDITION IS WARRANTED UNDER SECTION 69B OF THE ACT. THE ASSESSEE IS AGGRIEVED BY THE ORDER OF CIT(A) IN SETTING ASIDE THE ISSUE FOR FURTHER VERIFICATION TO THE ASSESSING OFFICER. 31. THE PERUSAL OF THE FACTS AS MENTIONED BY THE ASSESSING OFFICER UNDER PARA S 9 AND 10 AT PAGE 4 OF ASSESSMENT ORDER REFLECTS THAT THE ASSESSEE CLAIMED TO HAVE ACQUIRED THE SAID PROPERTY FOR RS. 2,71,000/ - ON 25.08.2003 AND COST OF CONSTRUCTION ON THE SAID PROPERTY WAS AT RS.12,39,140/ - . THE ASSESSING 12 ITA NO S . 1150 TO 1153 /PN/201 2 SHRI GOPICHAND B. LALWANI OFFICER HAD MADE A REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER (DVO) UNDER SECTION 142A OF THE ACT TO DETERMINE THE COST OF PROPERTY IN THE HANDS OF ASSESSEE. THE DVO VIDE VAL UATION REPORT DATED 08.10.2009 HAD ESTIMATED THE COST OF CONSTRUCTION AT RS.14,27,000/ - AND HE HAD NOT TAKEN INTO CONSIDERATION THE COST OF LAND AS IT WAS PERTAINING TO THE PERIOD PRIOR TO THE YEAR UNDER CONSIDERATION. THE ASSESSEE CONTENDED BEFORE THE AS SESSING OFFICER THAT WHEREVER THE DIFFERENCE BETWEEN THE INVESTMENT SHOWN BY THE ASSESSEE AND THE VALUE DETERMINED BY THE DVO WAS LESS THAN 15% THEN, NO ADDITION WAS WARRANTED. THE ASSESSING OFFICER ACKNOWLEDGES THAT DIFFERENCE WAS 6.68%. HOWEVER, THE AD DITION TO THE EXTENT OF RS.1,13,369/ - WAS MADE UNDER SECTION 69B OF THE ACT. 32. THE CIT(A) HAD REMANDED THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER FOR RE - VERIFICATION. 33. THE ASSESSEE IS AGGRIEVED BY THE SAID ORDER OF CIT(A). 34. IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WHERE THE ASSESSEE HAD DECLARED COST OF CONSTRUCTION AT RS. 12,39,140/ - , AGAINST WHICH THE DVO HAD ESTIMATED THE COST OF CONSTRUCTION AT RS. 14,27,000/ - , ADMITTEDLY, THE DIFFERENCE IN TWO VALUATIONS WAS ONLY 6.68%. UNDER SECTION 69B OF THE ACT, THE ASSESSING OFFICER IS EMPOWERED TO TAX THE AMOUNT INVESTED BY THE ASSESSEE, WHICH IS FOUND TO BE OVER AND ABOVE THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNT MAINTAINED. HOWEVER, SECTION FURTHER PROVIDES THAT BEFORE MAKING AN ADDITION UNDER THE SECTION, THE ASSESSING OFFICER WAS REQUIRED TO REACH A POSITIVE FINDING THAT THE ASSESSEE HAD INCURRED EXPENDITURE ON COST OF CONSTRUCTION, WHICH WAS MORE THAN THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNT. FOR THIS PURPOSE, THE ASSES SING OFFICER BEFORE MAKING IMPUGNED 13 ITA NO S . 1150 TO 1153 /PN/201 2 SHRI GOPICHAND B. LALWANI ADDITION UNDER SECTION 69B OF THE ACT , WAS TO OBTAIN REPORT OF THE DVO ESTIMATING THE VALUE OF CONSTRUCTION AT ANY HIGHER FIGURE. HOWEVER, THE REPORT OF DVO AT BEST IS ESTIMATION BUT NOT AN EVIDENCE TO PROVE ANY UNDISCL OSED INVESTMENT IN CONSTRUCTION BY THE ASSESSEE. THE COURTS HAVE HELD THAT WHERE THE DIFFERENCE BETWEEN THE VALUE DECLARED BY THE ASSESSEE AND VALUE AS ESTIMATED BY THE DVO WAS LESS THAN 15%, THERE IS NO MERIT IN MAKING ANY ADDITION ON ACCOUNT OF UNDISCLO SED INVESTMENT. ADMITTEDLY, IN THE FACTS OF THE PRESENT CASE, THE DIFFERENCE BETWEEN THE VALUE DECLARED BY THE ASSESSEE AND AS ESTIMATED BY THE DVO ON ACCOUNT OF COST OF CONSTRUCTION WAS 6.68%. IN VIEW THEREOF, THERE IS NO MERIT IN MAKING ANY ADDITION IN THE HANDS OF ASSESSEE ON THIS COUNT AND WE ALLOW THE CLAIM OF ASSESSEE IN THIS REGARD. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS THUS, ALLOWED. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED. 35. NOW, COMING TO THE APPE AL IN ITA NO.1153/PN/2012 RELATING TO ASSESSMENT YEAR 2006 - 07. 36. THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS AGAINST THE ADDITION ON ACCOUNT OF HOUSEHOLD EXPENSES, WHICH IS DI SMISSED AS IN THE EARLIER YEARS. 37. THE GROUND OF APPEAL NO.3 IS NOT PRESSED BY THE ASSESSEE AND HENCE, THE SAME IS DISMISSED AS NOT PRESSED. 38. THE ISSUE IN GROUND OF APPEAL NO.2 READ S AS UNDER: - 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN RESTRICTING THE ADDITION TO RS. 1,90,000/ - AS AGAINST ADDITION MADE BY A.O. OF RS.2,90,000/ - RESULTING INTO ADDITION SUSTAINED OF RS.1,00,000/ - ON ACCOUNT OF MARRIAGE EXPENSES ESPECIALLY WHEN NO INCRIMINATING RECORDS WERE FOUND/SEIZED DURING SEARCH ACTION INDICATING ANY EXCESS/UNACCOUNTE D MARRIAGE EXPENSES. THE ADDITION BE DELETED. 14 ITA NO S . 1150 TO 1153 /PN/201 2 SHRI GOPICHAND B. LALWANI 39. THE ISSUE RAISED BY WAY OF GROUND OF APPEAL NO.2 IS AGAINST THE ESTIMATED ADDITION MADE ON ACCOUNT OF MARRIAGE EXPENSES AT RS.1 LAKH. THE ASSESSING OFFICER MADE THE SAID ADDITION AS IN THE POST SEARCH EN QUIRIES, THE STATEMENT OF ASSESSEE WAS RECORDED ON 29.06.2007, WHO ADMITTED HAVING GOT HIS DAUGHTER MARRIAGE MS. RACHANA G. LALWANI MARRIED IN THE MONTH OF MAY, 2005. THE MARRIAGE WAS PERFORMED AT GOA IN ONE HOTEL. THE HOTEL HAD OFFERED A PACKAGE OF 24 H OURS FOR RS.1,50,000/ - . THE SAID AMOUNT WAS DEBITED IN THE BOOKS OF ACCOUNT. IN ADDITION, THE ASSESSEE WHILE ANSWERING TO QUESTION NO.17 HAD VOLUNTARILY OFFERED UNACCOUNTED EXPENDITURE OF RS.60,000/ - ON THIS ACCOUNT. HOWEVER, IN VIEW OF THE STATUS OF AS SESSEE AND HIS BUSINESS RELATIONS, THE ASSESSEE WAS ASKED TO GIVE DETAILS OF HEAD - WISE EXPENDITURE ON ACCOUNT OF CATERING, VIDEO / PHOTOGRAPHY, PURCHASE OF CLOTHING, JEWELLERY, ETC. HOWEVER, NO SUCH DETAILS WERE FURNISHED BY THE ASSESSEE AND THE ASSESSING OFFICER ESTIMATED THE MARRIAGE EXPENSES AT RS.5 LAKHS AND THE DIFFERENCE BETWEEN THE EXPENSES DEBITED IN THE BOOKS OF ACCOUNT AND DECLARED DURING THE COURSE OF SEARCH WAS RS.2,90,000/ - , WHICH WAS ADDED AS INCOME OF THE ASSESSEE. 40. THE CIT(A) HAS SCALED DOWN THE SAID ADDITION TO RS.1 LAKH BY ESTIMATING TOTAL EXPENDITURE AT RS.4 LAKHS. 41. THE ASSESSEE IS AGGRIEVED BY THE ORDER OF CIT(A) IN MAKING THE SAID ADDITION, WHEREIN NO INCRIMINATING DOCUMENTS WERE FOUND DURING THE COURSE OF S EARCH . 42. WE FIND N O MERIT IN THE CLAIM OF ASSESSEE IN THIS REGARD, WHEREIN THE ASSESSEE HAS DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD ADMITTED THAT TO THE MARRIAGE OF HIS DAUGHTER, OFFERED UNACCOUNTED EXPENSES OF RS.60,000/ - ON THIS ACCOUNT. THE ASSESSEE HAD ONLY DEB ITED EXPENSES OF THE HOTEL AT GOA, 15 ITA NO S . 1150 TO 1153 /PN/201 2 SHRI GOPICHAND B. LALWANI BUT NO EXPLANATION WAS GIVEN WITH REGARD TO THE EXPENDITURE OF CATERING, VIDEO / PHOTOGRAPHY, PURCHASE OF CLOTHING, JEWELLERY, ETC. IN THE ABSENCE OF THE SAME, WE UPHOLD THE ORDER OF CIT(A) IN ESTIMATING THE EXPENDITURE AT RS.4 LAKHS AND HOLDING THE ADDITION TO THE EXTENT OF RS.1 LAKH. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS THUS, DISMISSED. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, DISMISSED. 43 . IN THE RESULT, APPEALS OF ASSESSEE RELATING TO ASSESSMENT YEARS 2003 - 04, 2004 - 05 AND 2006 - 07 ARE DISMISSED AND THE APPEAL RELATING TO ASSESSMENT YEAR 2005 - 06 IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 12 TH D AY OF AUGUST , 2016 SD/ - SD/ - ( R.K. PANDA ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 12 TH AUGUST , 2016 GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - , KOLHAPUR ; 4. / THE CIT I / II, KOLHAPUR / CIT (CENTRAL) , PUNE; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , //TRUE COPY/ / / SR. PRIVATE SECRETARY , / ITAT, PUNE