Shri Vivek D. Choudhari, Jalgaon V. ITO, Wd 1(1), Jalgaon, Jalgaon

ITA 139/PUN/2012

• Counselvise Citation: 13924514 RSA 2012
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 24-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Unexplained cash credit; Rejection of books of accounts; Unexplained investment; Depreciation; Fair market value; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. ITA.NO.139/PN/2012 (ASSESSMENT YEAR 2007-08) SHRI VIVEK D. CHAUDHARI, GAJANAN HEART HOSPITAL, 370, ONKAR NAGAR, JALGAON-425101 PAN NO.ACVPC2417Q .. APPELLANT VS. ITO, WARD-1(1), JALGAON .. RESPONDENT ASSESSEE BY : SHRI SUNIL PATHAK REVENUE BY : SHRI S.P. WALIMBE DATE OF HEARING : 03-03-2014 DATE OF PRONOUNCEMENT : 24-03-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 25-11-2011 OF THE CIT(A)-II, NASHIK RELATING TO ASSESSMENT YEAR 2007-08. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND DOCTOR BY PROFESSION AND RUNNING A HOSPITAL UND ER AND NAME AND STYLE OF GAJANAN HEART HOSPITAL. HE FILED HIS RETURN OF INCOME ON 31-10-2007 DECLARING TAXABLE INCOME OF RS.4,58,2 70/-. IN THIS CASE, A SURVEY ACTION U/S.133A WAS CARRIED OUT ON 0 4-10-2006 AT THE BUSINESS PREMISES OF GAJANAN HEART HOSPITAL. D URING THE COURSE OF SUCH SURVEY PROCEEDINGS, SOME INCRIMINATING DOCU MENTS WERE FOUND ACCORDING TO WHICH THE ASSESSEE HAD SUPPRESSE D RECEIPTS. 2 ACCORDINGLY, THE ASSESSEE OFFERED ADDITIONAL INCOME . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFI CER OBSERVED THAT THE ASSESSEE HAS SHIFTED TO HIS NEW HOSPITAL B UILDING ON 01-07- 2006. THE CONSTRUCTION OF THE BUILDING WAS STARTED FROM F.Y. 2005- 06 AND COMPLETED IN F.Y. 2006-07. BEFORE THE CONST RUCTION STARTED BY THE ASSESSEE, THE PLOT WAS PURCHASED JOINTLY WIT H HIS WIFE SMT. ANJALI CHAUDHARY FOR AN AGREED CONSIDERATION OF RS. 65 LAKHS ON 31- 12-2004. FROM THE BALANCE SHEET AS ON 31-03-2006, THE HOSPITAL BUILDING WAS SHOWN IN THE BALANCE SHEET AT RS.44,21 ,483/-. THE ASSESSEE HAS TAKEN LOAN OF RS.80 LAKHS TO MEET RS.4 5.5 LAKHS FOR PURCHASE OF PLOT AND RS.34.5 LAKHS FOR CONSTRUCTION OF BUILDING. 2.1 THE ASSESSING OFFICER OBSERVED THAT THE ASSESSE E DURING THE COURSE OF SURVEY PROCEEDINGS HAS STATED IN HIS REPL Y TO Q.NO.34 THAT IN ADDITION TO CONSTRUCTION COST SHOWN AS ON 31-03- 2006, ADDITION IN BUILDING WAS MADE AT ABOUT RS.25 TO 30 LAKHS TILL 0 4-10-2006. THEREFORE, THE TOTAL CONSTRUCTION WORK WOULD BE ARO UND RS.74 LAKHS. AFTER THE SURVEY THE ASSESSEE HAS ALSO INCURRED MIS CELLANEOUS EXPENSES ON BUILDING. THE ASSESSING OFFICER OBSERV ED THAT IN THE BALANCE SHEET AS ON 31-03-2007 THE ASSESSEE HAS SHO WN ADDITION IN BUILDING OF RS.24,13,079/- AND ACCORDINGLY THE TOTA L COST OF BUILDING SHOWN AS ON 31-03-2007 WAS AT RS.68,34,562/-. HOWE VER, HE OBSERVED FROM THE BUILDING CONSTRUCTION LEDGER ACCO UNT THAT BUILDING COST HAS BEEN SHOWN AT RS.63,60,582/- WHICH INCLUDE S INTEREST ON BUILDING LOAN DEBITED TO BUILDING CONSTRUCTION ACCO UNT AT RS.6,48,090/-. THEREFORE, THE ASSESSING OFFICER NO TED THAT THE ACTUAL 3 TOTAL COST OF BUILDING CONSTRUCTION EXCLUDING THE I NTEREST OF RS.6,48,090/- IS AT RS.57,12,492/-. THE ASSESSING OFFICER REFERRED THE MATTER TO THE DVO, THANE FOR VALUATION OF THE S AID PROPERTY. HOWEVER, TILL THE COMPLETION OF THE ASSESSMENT THE VALUATION REPORT WAS NOT RECEIVED. SINCE THE ASSESSMENT WAS GETTING TIME BARRED BY 31-03-2009 THE ASSESSING OFFICER ESTIMATED THE VALU ATION OF THE BUILDING BY CONSIDERING THE COST OF CONSTRUCTION PE R SQ.FT. @RS.890/- WHICH WORKS OUT TO RS.74,76,000/- FOR THE BUILT UP AREA OF 8400 SQ.FT. SINCE THE ASSESSEE HAD SHOWN THE COST OF CONSTRUCTI ON OF THE HOSPITAL BUILDING AT RS.57,12,492/- THE ASSESSING OFFICER AD DED THE DIFFERENCE OF RS.17,63,508/- TO THE TOTAL INCOME OF THE ASSESS EE AS UNEXPLAINED INVESTMENT IN BUILDING. 2.2 FROM THE CASH BOOK PRODUCED BY THE ASSESSEE BEF ORE HIM THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS IN TRODUCED CASH IN THE BOOKS AMOUNTING TO RS.44,96,897/- ON VARIOUS DA TES THE DETAILS OF WHICH ARE AS UNDER : HE, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN THE SO URCE OF SUCH CASH INTRODUCED IN THE BOOKS DURING THE YEAR. THE ASSES SEE SUBMITTED THAT SINCE THE BOOKS OF ACCOUNTS WERE NOT PREPARED AT TH E TIME OF SURVEY ALL THE FIGURES WERE ESTIMATED AND CALCULATED. THE FIGURES REGARDING THE BUILDING WERE ALSO ESTIMATED. THE AMOUNT DEBIT ED TO BUILDING DATE AMOUNT 1/4/2006 RS.16,26,020/- 2/4/2006 RS.4,00,000/- 9/9/2006 RS.24,00,000/- 31/03/2007 RS.70,877/- TOTAL RS.44,96,897/- 4 CASH BOOK IS NOT NECESSARILY FOR EXPENSES INCURRED. THE EXCESS CASH FROM THE CONSTRUCTION CASH BOOK IS TRANSFERRED TO T HE REGULAR CASH BOOK AND HENCE THE CONSTRUCTION ACCOUNT REFLECTS TH E DEDUCTION FROM THE CONSTRUCTION ACCOUNT. IT WAS FURTHER ARGUED TH AT DURING THE SURVEY PROCEEDINGS THE ASSESSEE HAS OFFERED ADDITIO NAL INCOME OF RS.85 LAKHS FOR THREE DIFFERENT ASSESSMENT YEARS. IT WAS ARGUED THAT FOR THE A.Y. 2006-07 THE ASSESSING OFFICER HAD MADE ADDITION OF RS.7,80,000/- AS HIS ADDITIONAL INCOME. IT WAS ACC ORDINGLY REQUESTED THAT BENEFIT OF TELESCOPING FOR ADDITIONAL INCOME D ECLARED AND ASSESSED FOR A.Y. 2005-06 AND A.Y. 2006-07 TOTALLIN G TO RS.57,80,000/- SHOULD BE GIVEN. 3. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND ADDED THE AMO UNT OF RS.44,96,899/- TO THE TOTAL INCOME OF THE ASSESSEE BEING UNEXPLAINED CASH CREDIT U/S.68 OF THE I.T. ACT. 4. BEFORE CIT(A) IT WAS SUBMITTED THAT THE ASSESSIN G OFFICER HAS INCORRECTLY WORKED OUT THE CONSTRUCTION COST EXCLUD ING THE INTEREST ELEMENT AT RS.57,12,492/- AS AGAINST THE ACTUAL COS T OF RS.65,75,792/- INCLUDING THE INTEREST ELEMENT. IN THE MEANTIME, T HE DVO VIDE VALUATION REPORT DATED 20-02-2010 HAS VALUED THE BU ILDING AT RS.79,15,000/-. IT WAS ARGUED THAT THE REPORT OF T HE DVO CANNOT BE ACCEPTED AS CORRECT FOR THE FOLLOWING REASONS WHICH HAVE BEEN NARRATED BY LD.CIT(A) AT PARA 5.3 OF HIS ORDER AND WHICH READ AS UNDER : 5 1. THE DVO HAS APPLIED DELHI PLINTH AREA RATES AND D ELHI SCHEDULE OF RATES WHILE ARRIVING AT COST OF CONSTRUCTIO N. IT HAS BEEN HELD BY VARIOUS COURTS INCLUDING JURISDICTIONAL ITAT, PUNE BENCH THAT THE ABOVE RATES APPLIED FOR ARRIVING AT THE COST OF C ONSTRUCTION IN THE BIG CITIES IS MORE BY 15% COMPARED TO COST OF CONSTRUCT ION IN SMALL CITIES LIKE JALGAON. 2. AS PER THE VALUATION REPORT OF REGISTERED APPROVED VALUER SUBMITTED BY THE APPELLANT, THE TOTAL COST OF CONSTRUC TION HAS BEEN WORKED OUT AT RS.72,64,000/-. 3. THE COST OF CONSTRUCTION WORKED OUT BY THE DVO AT RS.79 LAKHS REPRESENTS COST OF CONSTRUCTION RS.55 LAKHS AND COST OF SANITARY INSTALLATIONS, ELECTRICAL INSTALLATIONS, TELEPHONE CO NDUCTS, WATER TANK AND COMPOUND WALL ESTIMATED BY THE DVO BY APPLYING SU BSTANTIALLY HIGHER RATES APPLICABLE TO DELHI CITY IS RS.24 LAKHS. THIS APPEARS TO BE APPARENTLY ON VERY HIGHER SIDE. 4. THE DIFFERENCE OF 10% BETWEEN THE VALUE ARRIVED AT DVO AND AS PER BOOKS IS TO BE IGNORED AS THE VALUATION MADE BY THE DVO IS ON ESTIMATE BASIS. IN SUPPORT OF THIS CONTENTION THE APP ELLANT HAS RELIED ON FOLLOWING DECISIONS: I. RAHUL CONSTRUCTION VS DCIT (2010) 38 DTR (PUNE) 19 II. C.B. GAUTAM VS. UNION OF INDIA 199 ITR 530, 108 CTR 304 R.W.S. 110 CTR 179 (SC) III. HONEST GROUP OF HOTELS (P) LTD. VS. CIT (2002) 17 7 CTR 232 (J&K) IV. ACIT VS. HARPREET HOTELS (P) LTD. ITA NO.1156- 1160/PN/2000 V. ITO VS. KAADDU JAYGHOSH APPASAHEB ITA NO.441/PN/2004. IT WAS ARGUED THAT THE COST OF CONSTRUCTION SHOWN I N THE BOOKS OF ACCOUNTS SHOULD BE ACCEPTED AND THE ADDITION OF RS. 17,63,508/- MADE BY THE ASSESSING OFFICER SHOULD BE DELETED. WITHOU T PREJUDICE TO THE ABOVE CONTENTION IT WAS SUBMITTED THAT THE ASSESSEE HAS OFFERED TO TAX RS.15,00,000/- AND RS.35,00,000/- IN AYS 2005-06 AN D 2006-07 RESPECTIVELY ON ACCOUNT OF UNDISCLOSED PROFESSIONAL RECEIPTS AND THE ASSESSING OFFICER ASSESSED UNDISCLOSED PROFESSIONAL RECEIPTS OF A.Y. 2005-06 AT RS.7,80,000/- WHICH HAS NOT BEEN DISPUTE D BY THE ASSESSEE. THE ASSESSEE THEREFORE CLAIMED THAT THE A BOVE AMOUNTS OF RS.57,80,000/- ARE AVAILABLE FOR TELESCOPING OF ADD ITION IF ANY 6 TOWARDS UNEXPLAINED INVESTMENT IN BUILDING AND TOWA RDS SOURCE OF CASH INTRODUCED IN THE BOOKS OF ACCOUNTS. 4.1 THE ASSESSEE ALSO RELIED ON THE FOLLOWING DECIS IONS : 1. ANANTHRAM VEERSINGHAIAH & CO. VS. CIT 123 ITR 457 (SC) 2. S. KUPPUSWAMI MUDALIAR VS. CIT 51 ITR 757 3. CIT VS. S. MILIAPPAN 66 ITR 722 4. CIT VS. VYANKATESHWARA TIMBER DEPOT 222 ITR 768 ( AP) 5. CIT VS. K.S.M. GURUSWAMY NADAR & SONS 149 ITR 127 (MAD.) 6. ITO VS. REPUBLIC POULTRY FOODS 45 ITD 359 (CHD.) 5. HOWEVER, THE CIT(A) WAS NOT FULLY SATISFIED WITH THE ARGUMENTS ADVANCED BY THE ASSESSEE. WHILE HE SUSTA INED AN AMOUNT OF RS.9,96,897/- OUT OF THE ADDITION OF RS.44,96,89 7/- BEING UNEXPLAINED CASH CREDIT BY THE ASSESSING OFFICER, H E DETERMINED THE UNEXPLAINED INVESTMENT IN THE HOUSE PROPERTY AT RS. 22,02,508/- AS AGAINST RS.17,63,508/- DETERMINED BY THE ASSESSING OFFICER. THE RELEVANT FINDING OF THE LD.CIT(A) ARE AS UNDER : 6. I HAVE CAREFULLY CONSIDERED FACTS OF THE CASE, THE ASSESSMENT ORDER AND REMAND REPORT OF THE A.O. AND THE SUBMISS ION OF THE APPELLANT. ON PERUSAL OF THE SAME IT IS NOTICED THA T THE APPELLANT HAS NOT CAPITALIZED IN HIS BOOKS OF ACCOUNTS THE AMOUNT OF RS.15,00,000/- OFFERED TO TAX IN A.Y. 2005-06 AND RS. 35,00,000/- IN A.Y. 2006-07. FURTHER IN A.Y. 2005-06 THE A.O. H AS MADE ADDITION OF RS.7,80,000/- ON ACCOUNT OF UNDISCLOSE D PROFESSIONAL RECEIPTS, WHICH HAS NOT BEEN CHALLENGED BY THE APPE LLANT IN APPEAL AND HENCE HAS ACCEPTED THE SAME. THEREFORE THE APPE LLANT HAS CLAIMED THAT THE ABOVE MENTIONED UNDISCLOSED INCOME FOR A.Y.2005- 06 AND 2006-07 AMOUNTING TO RS.57,80,000/- SHOULD BE TELESCOPED AGAINST UNEXPLAINED INVESTMENT IN BUILDING IF ANY AND CASH INTRODUCED IN F.Y. 2006-07 RELEVANT TO A.Y. 2007-08 AMOUNTING TO RS.44,96,897/-. THIS CONTENTION OF THE APPELLANT CA NNOT BE ACCEPTED IN RESPECT OF UNDISCLOSED INCOME OF A.Y. 2005-06 AS IT IS NOT LIKELY THAT THE APPELLANT HAS NOT USED HIS UNDISCLOSED INCOME A MOUNTING TO RS.22,80,000/- FOR ABOUT 1 YEARS AND THE CASH WAS AVAILABLE EVEN AFTER THE TIME GAP OF SUBSTANTIAL PERIOD. THE APPEL LANT HAS NOT BROUGHT ON RECORD ANY EVIDENCE IN SUPPORT OF HIS CL AIM THAT THE SAID INCOME OF A.Y. 2005-06 WAS IN FACT AVAILABLE FOR UTI LIZATION IN A.Y.2007-08. FURTHER THE CONSTRUCTION OF THE BUILDI NG WAS COMMENCED IN F.Y. 2005-06 RELEVANT TO A.Y.2006 : 07 AND NOT IN F.Y. 2004-05 RELEVANT TO A.Y. 2005-06. THEREFORE IT CANNOT BE SA ID THAT THE SAID UNDISCLOSED INCOME OF A.Y. 2005-06 HAS BEEN UTILIZE D FOR CONSTRUCTION OF BUILDING TO THE EXTENT UNEXPLAINED. THE CONTENTION 7 OF THE APPELLANT ABOUT TELESCOPING OF UNDISCLOSED INCO ME OF A.Y. 2005-06 AMOUNTING TO RS.22,80,000/- IS THEREFORE RE JECTED. 7. AS REGARDS THE UNDISCLOSED INCOME OF RS. 35 LACS FOR A.Y. 2006-07 OFFERED TO TAX BY THE APPELLANT IN THE SAID YEAR TH E CLAIM OF THE APPELLANT THAT HE HAS INTRODUCED THE SAID UNDISCLOSED I NCOME ON 1/4/2006, 2/4/2006 AND 9/9/2006 I.E. PRIOR TO THE D ATE OF SURVEY IS FOUND TO BE REASONABLE. THIS CONTENTION OF THE APPELL ANT ABOUT TELESCOPING OF UNDISCLOSED INCOME OF A.Y. 2006-07 IS SUPPORTED BY THE VARIOUS DECISIONS OF THE HON'BLE COURTS INCLUDING T HE APEX COURT RELIED ON BY THE APPELLANT. IN VIEW OF THE ABOVE FACTS AND DISCUSSION AND RESPECTFULLY FOLLOWING THE DECISIONS RELIED ON BY T HE APPELLANT, THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH INTRODUCED O F RS.44,96,897/- IS RESTRICTED TO RS.9,96,897/- AFTER TELESCOPING UNDI SCLOSED INCOME OF RS.35,00,000/- OF A.Y. 2006-07. THE A.O. IS DIRECTE D ACCORDINGLY. FURTHER AS THE APPELLANT HAS EXPLAINED SOURCE OF CASH INTRODUCED IN A.Y. 2007-08 OUT OF UNDISCLOSED INCOME OF RS.35,00,0 00/- OF THE PRECEDING YEAR, THE A.O. IS DIRECTED TO INITIATE PEN ALTY PROCEEDINGS U/S.271(1)(C) FOR A.Y.2006-07 AS PER THE PROVISIONS O F EXPLANATION-2 TO SECTION 271(1(C) OF THE ACT. 8. AS REGARDS ADDITION OF RS. 17,63,508/- ON ACCOUNT O F UNEXPLAINED INVESTMENT IN BUILDING CONSTRUCTION THE A .O. HAS CONSIDERED THE COST OF CONSTRUCTION AT RS.74,76,000/- AND COST OF CONSTRUCTION OF BUILDING INCURRED BY THE APPELLANT A T RS.57,12,492/-. THE DVO HAS VALUED THE COST OF THE CONSTRUCTION OF BUI LDING AT RS.79,15,000/- AS AGAINST ESTIMATED BY THE A.O. AT RS.74 ,76,000/-. THE DVO BEING THE EXPERT HAVING TECHNICAL KNOWLEDGE ABOUT COST OF CONSTRUCTION OF BUILDING THE VALUATION MADE BY THE D VO SHALL PREVAIL OVER THE ESTIMATE MADE BY THE A.O. AND THE CONSTRUCTI ON COST CLAIMED BY THE APPELLANT. THE OBJECTIONS RAISED BY THE APPELL ANT AGAINST THE VALUATION MADE BY THE DVO ARE REJECTED. THE DIFFERE NCE BETWEEN THE VALUATION MADE BY THE DVO AT RS. 79,15,000/- AND COS T OF CONSTRUCTION OF THE BUILDING INCURRED BY THE APPELLA NT AS WORKED OUT BY THE A.O. AT RS.57,12,492/- I.E. RS.22,02,508/- IS U NEXPLAINED INVESTMENT IN BUILDING. THE ADDITION OF RS.17,63,508 /- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN BUILDING IS THEREFORE ENHAN CED TO RS.22,02,508/-. THE AO IS DIRECTED ACCORDINGLY. GROUN D NO. 1 IS THEREFORE DISMISSED & GROUND NO. 2 IS PARTLY ALLOWED AS ABOVE. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1) ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN C ONFIRMING THE ADDITION ON ACCOUNT OF UNEXPLAINED CREDITS TO THE EX TENT OF RS.9,96,897/- WITHOUT ALLOWING TELESCOPING OF INCOME OFFERED TO TAX AND INCOME ASSESSED BY THE A.O. IN THE EARLIER YEAR. 2) ON THE FACTS AND,, IN LAW THE CIT(A) HAS ERRED IN CONFIRMING/MAKING THE ADDITION OF RS.22,02,508/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN BUILDING ON THE BASIS OF VA LUATION REPORT OF DVO TO WHOM THE VALUATION OF BUILDING WAS REFERRE D TO BY THE A.O. WITHOUT REJECTING AUDITED BOOKS OF ACCOUNT/BOOK RESUL TS. 8 3) ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN NO T FOLLOWING THE RATIO LAID DOWN BY HON'BLE SUPREME COURT IN THE CASE OF SARGAM CINEMA VS. CIT (2010) 328 ITR 513(SC). 4) ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN NO T APPRECIATING THE SUBMISSION ON MERITS FILED BY IN RESPECT OF THE INCO RRECT VALUE OF THE BUILDING ESTIMATED BY DVO. 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE HAS OFFERED TO TAX AN AMOUNT OF RS.15 LAKHS FOR A.Y. 20 05-06 AND RS. 35 LAKHS FOR A.Y. 2006-07. FURTHER, THE ASSESSING OFF ICER HAS ALSO ASSESSED UNDISCLOSED PROFESSIONAL RECEIPTS OF RS.7, 80,000/- DURING THE A.Y. 2005-06. THEREFORE, AN AMOUNT OF RS.57,80 ,000/- IS AVAILABLE TO THE ASSESSEE TO EXPLAIN THE SOURCE OF INTRODUCTION OF CASH IN THE BOOKS TOTALLING TO RS.44,96,897/-. HE SUBMI TTED THAT THE LD.CIT(A) IS NOT JUSTIFIED IN NOT GIVING TELESCOPIN G BENEFIT OF RS.22,80,000/- FOR A.Y. 2005-06 (RS.15 LAKHS + RS.7 ,80,000/-) ON THE GROUND THAT THE ASSESSEE MIGHT HAVE USED THIS A MOUNT AND IT CANNOT BE SAID THAT THE CASH WAS AVAILABLE TO THE A SSESSEE AFTER A GAP OF 1 YEARS. REFERRING TO THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. K. SRIDHARAN REPORTED IN 201 ITR 1010 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAI D DECISION HAS ALLOWED SET OFF OF PRIOR YEAR INCOME EVEN AFTER A P ERIOD OF FOUR YEARS. REFERRING TO THE DECISION OF PUNE BENCH OF THE TRIB UNAL IN THE CASE OF KASAT PAPER & PULP LTD. VS. ACIT REPORTED IN 74 ITD 455 (PUNE) HE SUBMITTED THAT THE TRIBUNAL IN THE INSTANT CASE HAS ALSO ALLOWED SET OFF OF PRIOR INCOME AFTER A SUBSTANTIAL TIME GAP. REFERRING TO EXPLANATION (2) TO PROVISIONS OF SECTION 271(1)(C) HE SUBMITTED THAT EVEN THE ACT ALSO GIVES THE BENEFIT TO THE ASSESSEE FROM ESCAPING 9 PENALTY PROVISIONS TO EXPLAIN THE SOURCE OF ANY REC EIPT, DEPOSIT, OUTGOING OR INVESTMENT OUT OF THE AMOUNT ADDED IN C OMPUTING THE INCOME OR DEDUCTED IN COMPUTING THE LOSS IN THE ASS ESSMENT IN AN EARLIER ASSESSMENT YEAR. HE ACCORDINGLY SUBMITTED THAT SINCE IN THE INSTANT CASE THE INCOME FOR A.Y. 2005-06 WAS AVAILA BLE TO THE ASSESSEE FOR A.Y. 2007-08 AND NOTHING HAS BEEN BROU GHT ON RECORD BY THE ASSESSEE THAT THE REVENUE HAS SPENT THE SAME IN SOME FORM OR OTHER AND SINCE THE ASSESSEE HAS NOT CLAIMED TO HAV E UTILISED THIS MONEY IN ANY OTHER FORM, THEREFORE, TELESCOPING BEN EFIT SHOULD BE ALLOWED TO THE ASSESSEE TO THE EXTENT OF RS.57,80,0 00/- AS AGAINST RS.35 LAKHS ALLOWED BY THE LD.CIT(A). 7.1 SO FAR AS THE ADDITION OF UNEXPLAINED INVESTMEN T IN THE BUILDING IS CONCERNED HE SUBMITTED THAT THE VALUATI ON DETERMINED BY THE DVO APPLYING DELHI PLINTH AREA RATE IS HIGHER A S COMPARED TO THE LOCAL RATES. REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. HARPREET HOTELS PV T. LTD. AURANGABAD VIDE ITA NOS.1156 TO 1160/PN/2000 ORDER DATED 16-08- 2005 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DEC ISION HAS HELD THAT THERE IS USUAL DIFFERENCE OF 15% RATE BETWEEN THE D ELHI PLINTH AREA RATE AND THE LOCAL AREA RATES. REFERRING TO THE DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA REPORTED IN 328 ITR 513 HE SUBMITTED THAT THE ASSESSING OFFICER CANNOT REFER THE MATTER TO THE DVO UNLESS HE REJECTS THE BOOKS OF ACCOUNTS. IN HIS ALTERNATE CONTENTION HE SUBMITTED THAT ONCE THE SURPLUS CASH AVAILABLE OUT OF THE TOTAL OF RS.57,80,000/- DECLARED BY THE ASSESSE E IN THE PRECEDING 10 YEARS INCLUDING THE ADDITIONAL INCOME DETERMINED B Y THE AO AND FULL BENEFIT OF 15% DUE TO RATE DIFFERENCE BETWEEN THE D ELHI RATE AND JALGAON RATE IS CONSIDERED THEN IN THAT CASE THERE WILL BE NO ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE BUILDIN G CONSTRUCTION. HE ACCORDINGLY SUBMITTED THAT BOTH THE ADDITIONS SH OULD BE DELETED. 8. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBM ITTED THAT THE ARGUMENT OF THE ASSESSEE THAT THE BOOKS OF ACCOUNTS HAVE NOT BEEN REJECTED AND THEREFORE THE MATTER CANNOT BE REFERRE D TO THE DVO IS INCORRECT SINCE THERE WERE NO BOOKS AT ALL DURING T HE COURSE OF SURVEY AND THE ASSESSEE HIMSELF HAS STATED BEFORE THE AO T HAT THE INVESTMENT IN BUILDING CONSTRUCTION WAS ESTIMATED WHILE GIVING THE FIGURES DURING THE COURSE OF SURVEY. SO FAR AS THE ISSUE R ELATING TO SET OFF OF INCOME DECLARED IN THE PAST FOR GIVING TELESCOPING BENEFIT HE SUBMITTED THAT THE BENCH MAY TAKE APPROPRIATE DECIS ION. 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. SO FAR AS THE FIRST GROUND RELATING TO ADDITION TO THE EXTENT OF RS.9,9 6,897/- IS CONCERNED WE FIND THE ASSESSING OFFICER MADE ADDITI ON OF RS.44,96,897/- BEING THE CASH INTRODUCED BY THE ASS ESSEE IN THE BOOKS DURING THE F.Y. 01-04-2006 TO 31-03-2007. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS DECLARED ADDITIONAL INCO ME OF RS.15 LAKHS 11 DURING A.Y. 2005-06 AND RS.35 LAKHS DURING A.Y. 200 6-07. THERE IS ALSO NO DISPUTE TO THE FACT THAT THE ASSESSING OFFI CER HAS ASSESSED UNDISCLOSED PROFESSIONAL RECEIPT OF RS.7,80,000/- D URING A.Y. 2005- 06 AND THE ASSESSEE HAS ACCEPTED THE SAME. WE FIND THE LD.CIT(A) RESTRICTED THE ADDITION ON ACCOUNT OF INTRODUCTION OF CASH TO THE TUNE OF RS.9,96,897/- AFTER GIVING TELESCOPING BENEFIT O F RS.35 LAKHS OFFERED BY THE ASSESSEE TO TAX DURING A.Y. 2006-07. THE REVENUE IS NOT IN APPEAL BEFORE US AGAINST THE RELIEF GIVEN BY THE CIT(A). WE FIND THE LD.CIT(A) DID NOT GIVE THE TELESCOPING BEN EFIT OF RS.15 LAKHS DECLARED BY THE ASSESSEE FOR A.Y. 2005-06 AND EXCESS UNDISCLOSED PROFESSIONAL RECEIPTS DETERMINED BY THE ASSESSING OFFICER AT RS.7,80,000/- FOR A.Y. 2005-06 ON THE GR OUND THAT THE ASSESSEE MIGHT HAVE SPENT THE MONEY AND THE CASH CA NNOT BE AVAILABLE TO THE ASSESSEE AFTER A GAP OF 1 YEARS. THERE IS NOTHING IN POSSESSION OF THE REVENUE THAT THE ASSESSEE HAS SPE NT THIS HUGE AMOUNT OF RS.22,80,000/- BY PURCHASING ANY OTHER AS SET OR INCURRING ANY LAVISH EXPENDITURE OR IN ANY OTHER MODE. IN AB SENCE OF THE SAME, WE FIND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THIS AMOUNT WAS AVAILABLE TO THE ASSESSEE FOR INTRODUCTION OF CASH IN THE BOOKS ESPECIALLY WHEN THE GAP IS ONLY 1 YEARS. 9.1 WE FIND THE HONBLE KERALA HIGH COURT IN THE CA SE OF K. SRIDHARAN (SUPRA) HAS OBSERVED AS UNDER (SHORT NOTE S) : IT IS NOW ESTABLISHED THAT THE ONUS IS ON THE ASSESSEE TO EXPLAIN THE CASH CREDIT ENTRIES IN HIS BOOKS OF ACCOUNT. HE MAY RE LATE IT TO THE INTANGIBLE ADDITIONS MADE FOR A PREVIOUS YEAR. AN IN TANGIBLE ADDITION MADE TO THE BOOK PROFITS OF AN ASSESSEE IS AS REAL AN INCO ME AS THAT DISCLOSED BY THE ASSESSEE. THE FACT THAT IT REPRESENTED SE CRET PROFITS, 12 NOT DISCLOSED, BUT ADDED IN THE COURSE OF THE ASSESSMENT P ROCEEDINGS OR DISCLOSED IN SOME OTHER ANCILLARY PROCEEDINGS DOES NO T MAKE IT ANY THE LESS THE INCOME OF THE ASSESSEE AVAILABLE FOR INV ESTMENT. ONCE AN INTANGIBLE ADDITION IS MADE, THAT IS AS GOOD A S THE DISCLOSED INCOME OF THE ASSESSEE AND IT COULD BE TREATED AS AVAILA BLE FOR INVESTMENT FROM THE YEAR IN WHICH SUCH AN ADDITION WA S MADE. IT IS FOR THE ASSESSING AUTHORITY TO CONSIDER THE ACCEPTABILIT Y OF THE EXPLANATION OF A CASH CREDIT ENTRY WITH REFERENCE TO ALL THE FACTS AND CIRCUMSTANCES OF THE CASE. THE PRESUMPTION THAT CASH CRE DITS REPRESENT INTANGIBLE ADDITIONS OF PRIOR YEARS CANNOT BE DRAWN IF A SUFFICIENTLY LONG .PERIOD OF TIME HAS ELAPSED AFTER TH E EARNING OF THE UNDISCLOSED PROFITS. THE ASSESSEE WAS A PARTNER IN TWO FIRMS, S AND K. HE WAS ALSO ASSOCIATED WITH A COMPANY, SR, IN WHICH THERE APPEARE D FIVE CASH CREDITS OF RS. 50,000 EACH ON JANUARY 1 AND 5, 1980, MARCH 15 AND 28, 1980, AND RS. 1,00,000 ON MARCH 3, 1980, AGGREGATING TO RS. 3 LAKHS. IN COMPLETING THE ASSESSMENT UNDER THE INCOME-TAX ACT FOR THE ASSESSMENT YEAR 1980-81, THE ASSESSING AUTHORITY HELD T HAT THESE CREDITS HAD NOT BEEN SATISFACTORILY EXPLAINED BY THE ASSESSEE AND ACCORDINGLY TREATED THEM AS HIS INCOME LIABLE TO TAX. THE ASSESSMENT WAS AFFIRMED IN FIRST APPEAL, BUT ON SECOND APPEAL, TH E ASSESSEE'S EXPLANATION IN RELATION TO THESE CREDITS WAS ACCEPTED BY THE TRIBUNAL AND IT DELETED THE AMOUNT FROM THE ASSESSMENT. THE ASSES SEE'S EXPLANATION FOR THESE CASH CREDITS WAS THAT HE HAD SUBST ANTIAL RECEIPTS FROM THE FIRMS, S AND K, DURING THE ASSESSMENT YEAR 1976- 77 AND THAT THE CASH CREDITS CAME OUT OF THOSE RECEIP TS. IN FACT, AN APPLICATION HAD BEEN MADE TO THE SETTLEMENT COMMISSIO N WHICH WAS ADMITTED ON JULY 30, 1979, OFFERING FURTHER AMOUNTS FOR ASSESSMENT FOR THAT YEAR. THE FIRM, S, HAD OFFERED AN AMOUNT O F RS. 7,00,000 FOR ASSESSMENT, OVER AND ABOVE THE AMOUNT OF RS. 11,70,460 D ISCLOSED AND RETURNED, OF WHICH THE ASSESSEE'S 50 PER CENT, SHARE AMOUNTED TO RS. 3,50,000. THE SETTLEMENT COMMISSION MADE A FURT HER ADDITION OF RS. 5,57,000 AS ADDITIONAL INCOME OF WHICH THE ASSESSE E'S SHARE CAME TO RS. 2,78,500. THE FIRM, K, HAD OFFERED FOR A SSESSMENT AN AMOUNT OF RS.11,00,000 AS AGAINST RS. 10,00,850 DISCLOSE D AND ASSESSED. THE ASSESSEE'S 25 PER CENT, SHARE OF THE ADDITIONAL AMOUNT OFFERED WAS RS.24,785. THE SETTLEMENT COMMISSION MADE A FURTHER ADDITION OF RS.1,04,000 BEING ADDITIONAL INCOME AND DISALLOWANCE OF EXCESS DEPRECIATION OF WHICH THE ASSESSEE'S SHARE CAME TO R S. 26,000. AFTER MAKING A COMPUTATION OF THE AMOUNT TH AT WOULD BE AVAILABLE WITH THE ASSESSEE, THE TRIBUNAL CAME TO THE CONCLUSION THAT HE HAD WITH HIM AN AMOUNT OF RS. 3,87,533 WHICH WOUL D FORM THE SOURCE OF THE CREDITS AGGREGATING TO RS. 3 LAKHS BETWEE N JANUARY 1, 1980, AND MARCH 28, 1980. IT WAS ACCORDINGLY THAT TH E APPEAL WAS ALLOWED AND THE ADDITION DELETED. ON A REFERENCE : HELD, THAT THE EXPLANATION OFFERED BY THE ASSESSEE RELATED T O THE AVAILABILITY OF ADDITIONAL FUNDS FROM THE FIRMS, S AN D K. THIS WAS UNDISCLOSED INCOME THE QUANTUM OF WHICH STOOD QUANTIF IED AND DISCLOSED ONLY BY THE FINAL ORDER OF THE SETTLEMENT C OMMISSION. THE FACT THAT A LESSER AMOUNT WAS OFFERED EARLIER, BUT IT WAS ENHANCED BY THE SETTLEMENT COMMISSION WOULD NOT DETRACT FROM THE VALIDITY OF THE EXPLANATION. HAVING REGARD TO THE INTANGIBLE AD DITIONS MADE BY 13 THE SETTLEMENT COMMISSION, THE ASSESSEE MUST BE DEEMED T O BE IN POSSESSION OF THOSE AMOUNTS FROM 1976-77 ITSELF. THE FACT THAT THE AMOUNT HAD NOT BEEN DISCLOSED IN WEALTH-TAX RETURNS UP TO THE ASSESSMENT YEAR 1980-81 WAS NOT RELEVANT BECAUSE THE ASSESS EE HAD NOT DISCLOSED IT OTHERWISE. THE FACT THAT THE AMOUNT H AD BEEN INTRODUCED IN INSTALMENTS WAS ALSO IMMATERIAL. THE AMOU NT NEED BE INVESTED ONLY AS AND WHEN IT WAS NECESSARY. IT NEED NOT BE IN ONE LUMP SUM MERELY BECAUSE IT WAS BEING DRAWN FROM A C ONSOLIDATED FUND. THE INCOME-TAX DEPARTMENT HAD NOT POINTED OUT ANY CIRCUMSTANCES FROM WHICH AN INFERENCE COULD BE DRAWN THAT THE ASS ESSEE HAD AS A MATTER OF FACT SPENT THE AMOUNTS. IT WAS STATED THAT THE A SSESSEE HAD INVESTED RS. 40 LAKHS FOR THE CONSTRUCTION OF A THEATRE BETWEEN 1977 AND 1980 FOR WHICH HE HAD TAKEN ONLY A LOAN OF RS. 20 LAKHS FROM THE BANK. BUT THAT DID NOT IMPLY THAT THE AMOUNT IN QUESTION HAD ALSO BEEN UTILISED FOR THE CONSTRUCTION WHEN THE ASSESSEE HAD SUBSTANTIAL SOUR CES OF INCOME EVEN OTHERWISE FROM THE PROFITS OF THE TWO FIRMS. ON THE OTHER HAND, THE FACT THAT THE ASSESSEE OFFERED A LARGE AMOUNT FOR SETTLE MENT WITH READINESS TO MAKE PAYMENT OF A LARGE AMOUNT BY WAY OF TAX ANY TIME THE SETTLEMENT COMMISSION PASSED ITS ORDER WAS ITSELF INDICATIVE T HAT THE ASSESSEE DID HAVE SUFFICIENT AMOUNTS WITH HIM. THE TRIBUNAL HAD FOUND AS A FACT THAT THE ASSESSEE COULD IN ANY EVENT HAVE HAD AN AMOUNT OF R S. 3,87,533 WITH HIM AVAILABLE FOR INVESTMENT IN JANUARY/MARCH, 1980. TH E PERIOD OF FOUR YEARS BETWEEN 1976-77 AND 1980-81 WAS NOT SO LONG A PERIO D AS TO REBUT THE PRESUMPTION REGARDING THE CONTINUED AVAILABILITY OF THE AMOUNT. THE ASSESSEE HAD DISCHARGED THE BURDEN THAT LAY ON HIM TO PROVE THE SOURCE OF THE AMOUNTS OF THE CASH CREDIT ENTRIES MADE IN JANU ARY/MARCH, 1980. HENCE, THE TRIBUNAL WAS JUSTIFIED IN DELETING THE A DDITION OF RS. 3 LAKHS MADE UNDER THE HEAD ' OTHER SOURCES ' 9.2 SIMILARLY, THE PUNE BENCH OF THE TRIBUNAL IN TH E CASE OF KASAT PAPER & PULP LTD. (SUPRA) HAS OBSERVED AS UNDER AT (PAGE 468) : 15.1 THE LAST ADDITION OF RS. 3.5 LAKHS RELATE TO THE PAYM ENT MADE TO SHRI SHAIKH AMIN AND SHRI A.G. GHARE. ON MERITS, THE ADDITION HAS NOT BEEN PRESSED BEFORE US BY THE LD. COUNSEL FOR THE A SSESSEE. HOWEVER, AN ALTERNATE SUBMISSION HAS BEEN MADE TO THE E FFECT THAT SET OFF BE ALLOWED TO THIS EXTENT AGAINST THE ADDITION ON ACCOUNT OF THE SALE OF COAL ASH AMOUNTING TO RS. 5,45,000 AND NOT DISPUTED BY THE ASSESSEE. WE FIND FORCE IN THE ALTERNATE SUBMISSION OF THE ASSESSEE. THE SALE PROCEEDS OF THE COAL ASH MUST HAVE BEEN AVAILABLE WITH THE ASSESSEE THOUGH POSSIBILITY OF SPENDING THE SAME T O SOME EXTENT BY THE DIRECTORS CANNOT BE RULED OUT. SINCE NO MATERIAL HAS BEEN PLACED ON THE RECORD IN THIS REGARD BY EITHER P ARTY, THE BENEFIT OF DOUBT GOES TO THE ASSESSEE. ACCORDINGLY, THE SET OFF AS ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE IS ALLOWED AND THE ADDIT ION OF RS. 3.50 LAKHS ON THIS ACCOUNT IS HEREBY DELETED. 14 9.3 SINCE IN THE INSTANT CASE THE TIME GAP IS HARDL Y 1 YEARS AND NOTHING HAS BEEN BROUGHT ON RECORD BY THE REVENUE T HAT THE ASSESSEE HAS SPENT THE MONEY BY WAY OF ANY INVESTMENT OR ON ACCOUNT OF SOME MARRIAGE OR OTHER LAVISH FUNCTION IN THE FAMIL Y, THEREFORE, THE BENEFIT OF DOUBT HAS TO BE IN FAVOUR OF THE ASSESSE E THAT SUCH MONEY IS AVAILABLE WITH HIM FOR INTRODUCTION IN THE BOOK S OF ACCOUNT. IN THIS VIEW OF THE MATTER, WE SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.9,96,897/-. GROUND NO.I IS ACCORDINGLY ALLOWED. 9.4 SO FAR AS THE ADDITION ON ACCOUNT OF UNEXPLAINE D INVESTMENT IN THE BUILDING ON THE BASIS OF VALUATION REPORT OF TH E DVO IS CONCERNED WE FIND THE DVO HAS APPLIED THE DELHI PLINTH AREA R ATE WHEREAS THE ASSESSEES HOSPITAL BUILDING IS PLACED AT A SMALL T OWN LIKE JALGAON. WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF HARPREET HOTELS PVT. LTD. (SUPRA) HAS HELD THAT 15% DEDUCTIO N MAY BE ALLOWED FOR LOCAL CONDITIONS FROM DELHI PLINTH AREA RATE. THE RELEVANT OBSERVATION OF THE TRIBUNAL AT PARA 13 OF THE ORDER READS AS UNDER : 3. ON A CAREFUL CONSIDERATION OF THE RIVAL CONTENT IONS, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE LD. D.R. THA T THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITIONS MADE FOR THE DIFFERENCE IN THE COST OF CONSTRUCTION. WE HAVE NO DIFFICULTY IN ACCEPT ING THE SUBMISSIONS MADE BY THE ID. COUNSEL FOR THE ASSESSEE. HIS CON TENTION THAT IN THE ABSENCE OF ANY DEFECTS POINTED OUT IN THE MAINTENANCE OF THE BOOKS OF ACCOUNT FOR THE COST OF CONSTRUCTION, NO RESORT COULD BE MADE FOR ESTIMATING THE SAME, IS SUPPORTED BY SEVERAL A UTHORITIES CITED SUPRA AND IS THEREFORE, ACCEPTED. SIMILARLY, TH ERE IS A GOOD DEAL OF FORCE IN HIS CONTENTION THAT THE APPLICATION OF T HE DELHI PLINTH AREA RATES TO THE PROPERTY CONSTRUCTED IN AURANGABAD WITHO UT ANY ADJUSTMENT FOR LOCAL CONDITIONS OR FACTORS WOULD BE AR BITRARY. IT IS ALSO TO BE NOTED THAT THE INSTRUCTION NO. 1671 WAS ISSUE D BY THE C.B.D.T. IN A WEALTH TAX FILE WHERE WHAT IS TO BE FO UND OUT IS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE VALUATION DATE. WE ARE HOWEVER, CONCERNED WITH THE DETERMINATION OF THE CO ST OF CONSTRUCTION WHICH REFERS TO THE ACTUAL INVESTMENT MAD E IN THE 15 CONSTRUCTION OF THE PROPERTY AND NOT THE FAIR MARKET VALUE. BOTH ARE DIFFERENT. IT IS ALSO CORRECT THAT THE D.V.O. HAS SIMPL Y APPLIED THE DELHI PLINTH AREA RATES TO THE PROPERTY IN QUESTION W HEREAS THE APPROVED VALUE, OF THE ASSESSEE HAS ADOPTED THE DSR RATE S OF AURANGABAD. THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF ASSTT. CIT VS. VINODKUMAR AGARWAL (2002) 257 ITR (AT) 65 HAS HELD THAT ANY ESTIMATE OF THE COST OF CONSTRUCTION ON THE B ASIS OF THE DELHI PLINTH AREA RATE MENTIONED IN THE BOARD'S INSTRUCTION WITHOUT ANY LOCAL ADJUSTMENT MADE AT THE RATE OF 15% CANNOT BE U PHELD. THE D.V.O HAS ALSO GIVEN DEDUCTION FOR SELF SUPERVISION ONLY AT 7.5% WHEREAS NORMALLY IT IS GIVEN AS THE RATE OF 10%. ALL T HESE ARE SERIOUS FLAWS IN THE REPORT OF THE D.V.O, WHICH WEAKENS ITS CR EDIBILITY. IF THE ADJUSTMENTS ARE MADE FOR DEDUCTION FOR SELF SUPERVISION AT 10% AND FURTHER ADJUSTMENT OF 15% IS MADE FOR LOCAL CONDITION S FROM DELHI PLINTH AREA RATES, THE COST OF CONSTRUCTION COMES TO R S.67,96,616 AS DEMONSTRATED TO US ON BEHALF OF THE ASSESSEE. THIS IS NOT M UCH HIGHER THAN WHAT THE ASSESSEE HAS SHOWN AND THE DIFFERENCE HARDL Y COMES TO 10%. WE ARE THEREFORE, OF THE VIEW THAT THE ADDI TIONS WERE RIGHTLY DELETED BY THE CIT(A). 9.5 WE THEREFORE FIND SOME MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT APPROPRIATE RELIEF SH OULD BE GIVEN TO THE ASSESSEE ON ACCOUNT OF ADOPTION OF DELHI PLINTH ARE A RATE BEING ON THE HIGHER SIDE AND ALSO TO THE EXTENT OF BALANCE CASH AVAILABLE OUT OF THE INCOME DECLARED IN THE A.Y. 2005-06. WE ACCORDINGL Y RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A D IRECTION TO GIVE AREA RATE OF 15% BEING THE DIFFERENCE BETWEEN THE DELHI PLINTH AREA RATE AND THE LOCAL AREA RATES. AFTER DETERMINING THE V ALUE, THE ASSESSING OFFICER SHALL ALSO GIVE RELIEF TO THE EXTENT OF CAS H AVAILABLE TO THE ASSESSEE AMOUNTING TO RS.12,83,103 (RS.57,80,000 44,96,897). THE ASSESSING OFFICER SHALL MAKE THE NECESSARY CALC ULATION AND SUBSTITUTE THE FIGURE AS AGAINST RS.22,02,508/- SUS TAINED BY THE CIT(A). THUS, GROUND OF APPEAL NO.2 IS ACCORDINGLY PARTLY ALLOWED. 9.6 SO FAR AS GROUND RAISED BY THE ASSESSEE THAT TH E ASSESSING OFFICER WAS NOT CORRECT IN REFERRING THE MATTER TO THE DVO SINCE HE HAS NOT REJECTED THE BOOKS OF ACCOUNTS WE FIND THE SAME IS WITHOUT 16 ANY MERIT. WE FIND THE ASSESSEE HIMSELF IN HIS LET TER DATED 29-11- 2009 ADDRESSED TO THE AO DURING THE COURSE OF SURVE Y PROCEEDINGS HAS STATED THAT BOOKS OF ACCOUNTS WERE NOT PREPARED AND ALL THE FIGURES WERE JUST ESTIMATED. THEREFORE, THE ASSESS EE NOW CANNOT SAY THAT HE HAD PREPARED BOOKS OF ACCOUNTS AND THE ASSE SSING OFFICER HAS NOT REJECTED THE SAME. ACCORDINGLY, GROUND OF APPEA L NO.3 BEING WITHOUT ANY MERIT IS DISMISSED. 9.7 GROUND OF APPEAL NO.4 BEING GENERAL IN NATURE I S DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 24-03-2014. SD/- SD/- (R.S.PADVEKAR ) ( R.K. PAN DA ) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, DATED 24 TH MARCH, 2014 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-II, NASHIK 4. THE CIT-II, NASHIK 5. THE DR B BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE