The DCIT, Circle-2, Surat V. M/s. Shanti Enterprise, Surat

ITA 1669/AHD/2013

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1676 (ITAT-SURAT)
• Duration Of Justice: 9 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-08-2022
• Assessment Year: 2009-2010
• Appeal Filed On: 06-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Value adopted by valuation officer; Income from undisclosed sources; Valuation report; Set aside
• Section: 131; 133A; 69B; 55A; 13; 145(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRIPAWAN SINGH, JM &DR. A.L.SAINI, AM आयकर अपील सं./ITA No.1208 & 1669/AHD/2013 (Ǔनधा[रणवष[ / Assessment Years: (2009-10) (Virtual Court Hearing) 1. M/s. Shanti Enterprises, Millenium Textile Market, Shop No.1013-14, Umarwada, Kamela Darwaja, Ring Road, Surat-395002. The DCIT, Circle-2, Surat. Vs. The DCIT, Circle-2, Surat. M/s. Shanti Enterprises, Millenium Textile Market, Shop No.1013-14, Umarwada, Kamela Darwaja, Ring Road, Surat-395002. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AALFS5217L (Applicant)/(Revenue) (Respondent)/(Assessee) Assessee by : Shri Hiren Vepari, CA Respondent by : Shri H.P. Meena, CIT(DR) स ु नवाई कȧ तारȣख/ Date of Hearing : 05/08/2022 घोषणा कȧ तारȣख/Date of Pronouncement : 19/09/2022 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned Cross-appeals filed by the assessee and Revenue, pertaining to the Assessment Year (AY) 2009-10, are directed against the common order passed by the Learned Commissioner of Income Tax (Appeals)-II, Surat [in short “the ld.CIT(A)”] in Appeal No. CAS-II/245/11-12,dated 26.03.2013, which in turn arises out of a common assessment order passed by Assessing Officer (in short “the assessing officer) under section 143(3)of the Income Tax Act, 1961 [hereinafter referred to as the “Act”], dated 27.12.2011. 2. Since, these cross appeals relate to assessment year 2009-10, common issues are involved, therefore these appeals have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. Page | 2 ITA.1208 & 1669/AHD/2013 A.Y.09-10 M/s. Shanti Enterprises 3. First, we shall take assessee’s appeal in ITA No.1208/AHD/2013 for AY.2009-10, wherein the grievances raised by the assessee as follows: “(I) Addition of “on money” Rs.3,17,72,000/- (1) On the facts and circumstances of the case and as per law, the learned Commissioner of Income-tax (Appeals) erred in confirming the addition of Rs.3,17,72,000/- being 50% of gross receipts on sales as on money. (2) The assessee submits that there is no instance or evidence of any ‘on money’ having been collected during the year and that as noted by the learned Commissioner of Income-tax (Appeals) himself, the shopkeepers who were randomly called by the Assessing Officer had confirmed that no ‘on money’ was given by them. (3) The assessee further submits that the addition has been confirmed on the basis of disclosure in survey which had taken place almost after end of one year i.e. 18- 02-2010 and this did not relate to transactions of A.Y.2009-10. (4) The assessee further submits that even in the course of survey proceedings, nothing was found to show that the assessee had collected any on money during A.Y.2009-10 and that the learned Commissioner of Income-tax (Appeals) has confirmed the addition only on the basis of presumption. (5) The assessee further submits that the Assessing Officer has not brought any corroborative evidence to justify the above addition particularly when the sales rates charged have been above the circle rates prescribed by the State Government for stamp duty purpose and sale rates were better than any other rate in the marker area. Miscellaneous:- (1) The Assessing Officer erred in charging interest u/s.234B of the Act. (2) The Assessing Officer erred in charging interest u/s.234D of the Act. (3) The assessee craves leave to add, alter or vary any of the grounds of appeal.” 4. Although, in this appeal, the assessee has raised multiple grounds of appeal, however, during the course of hearing, the solitary grievance of the assessee has been confined to the issue that “assessee did not collect On Money from shopkeepers”, therefore addition confirmed by the ld CIT(A) may be deleted. 5. So far as this solitary grievance of the assessee is concerned, the relevant material facts are like this. In the case of assessee, a survey proceedings under section 133A of the Act took place in F.Y.2009-10, during which assessee disclosed the additional income of Rs.7,20,00,000/- as 'on money' received over and above the sale proceeds of shops during the year 2009-10. This ‘on money’ was admitted by Page | 3 ITA.1208 & 1669/AHD/2013 A.Y.09-10 M/s. Shanti Enterprises the partner of assessee firm namely, Shri Vasantbhai Gajera, as unaccounted income received during whole of the F.Y. 2009-10. The details of this unaccounted income was found mentioned in the diaries impounded during the survey proceedings. On the basis of this disclosure, it was concluded by assessing officer that the assessee was showing lesser value in the documents in comparison to the existing market price. This conclusion was supported by the details regarding market price of shops given by registered valuer in his report also. Since, the fact that on money was received by assessee firm related to Phase III of the project, it was concluded by Assessing Officer that the assessee has received ‘on money’ on the sale of shops belonging to Phase I and Phase II of the project also. The assessment being made for the year under consideration related to Phase II and partly Phase I, therefore on the sales of shops shown, assessing officer has estimated the ‘on money’ as have been received. As per assessing officer, the on money of Rs.7,20,00,000/- received by assessee works out to 50% of the total sale of the financial year 2009-10, therefore for the year under consideration also, he estimated ‘on money, @ 50% of the total sales. The sales shown by assessee are at Rs.6,35,44,000/-, therefore 50% of it worked out by Assessing Officer at Rs.3,17,72,000/- was added by assessing officer to the income of the assessee as ‘on money’. 6. On appeal, the Ld. CIT(A) confirmed the addition made by the Assessing Officer observing as follows: “4.3 I have carefully considered the facts of the issue, basis of addition made by assessing officer and submissions of assessee. In the case of assessee, the survey proceedings conducted by department has established the fact that assessee firm has been receiving on money over and above the sale proceeds as registered and shown in the regular books of account. The on money received by assessee is also not in small proportion rather upto the 50% of the sale proceeds (Rs.7,20,00,000/- on sale proceeds of Rs.13,82,66,000/-) of shops. It has been admitted by assessee during the survey that they have taken on money on the sale of shops during whole of the financial year starting from 01.04.2009 to 18.02.2010, upto the date of survey (however, the income disclosed is for the period upto 31.03.2010), Thus, on the basis of the fact that assessee has been taking on money in respect of the shops sold during F.Y. 2009-10, assessing officer has concluded that during the year under consideration also assessee has taken on money on the same pattern as was taken in the sale of shops in subsequent year. As per assessing officer, the shops of all three Phases are located on the same plot of land and are contiguous. As per him, the shops which have been taken into consideration for estimating the on money during the year under consideration are located near to main road therefore they Page | 4 ITA.1208 & 1669/AHD/2013 A.Y.09-10 M/s. Shanti Enterprises should fetch more money than the shops of other Phases. Thus, justifying the estimation of on money during the year, assessing officer has made the addition. In my opinion, the basis given by assessing officer for estimation of on money is justifiable and logical. It is a fact and admitted by assessee also that he has been receiving on money on the sales of shops of Phase III. It is also admitted that he has taken on money throughout the year starting from 01.04.2009 to at least upto the date of survey though he has disclosed the unaccounted income for whole of the year. Thus, it is proved that assessee is in the habit of taking on money on the sale of shops. It is difficult to believe that for one third part of the project he has taken on money but for the remaining part he has not taken a single rupee in the form of on money though the same system has been practiced in respect of all three projects. The nature of business as well as nature of establishment and the method of booking remains the same for every Phase of the project. Under section 114(d) of the Indian Evidence Act,. there is a presumption that a thing or state of things which has been shown to be in existence within a period shorter than that within which such things or state of things usually ceases to exist, is still in existence. Thus, a particular habit or bad habit of manipulating sale figures was found to be existing or was found to be practiced by the assessee in respect of third Phase of the project, the same state of things can be found to be existing even in the earlier accounting years in respect of first and second Phase. That means the habit of manipulation of sale proceeds can be presumed to be existing even in A.Y. 2009-10. And such presumption can be stated to be a legitimate presumption drawn under the law. Thus, it can be very well concluded that the assessee has been taking on money on the sale of shops which have been made during the year under consideration. Further, the reliance of assessee on the orders of Hon'ble ITAT in its own case for earlier years is also misplaced for the reason that facts of the year under consideration are different to the facts-of those years, In the-years as mentioned by assessee and orders given by Hon'ble ITAT, there was no evidence of on money in possession of assessing officer and nor there was admittance by assessee for receiving the on money. But, now the assessing officer has got the evidence in the form of notings in the diary impounded during the survey proceedings and statements of assessee also admitting the fact that he has been taking on money during the F.Y. 2009-10. Thus, the decisions of Hon'ble ITAT in the case of assessee for earlier years are not applicable in the year under consideration. In view of this discussion, it is held that the assessing officer has rightly estimated the on money @ 50% on the sale proceeds of Rs.6,35,44,000/- which works out to Rs.3,17,72,000/- which is a justifiable estimation of on money on the basis of evidence found during the survey proceedings. I, therefore, confirm the addition made by assessing officer and dismiss the ground of appeal.” 7. Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. 8. At the outset, the Learned Counsel submits that grounds raised by assessee, in this appeal, are squarely covered by the decision of the Coordinate Bench, in favour of assessee, in assessee’s own case in ITA No.2104/AHD/2011 for AY.2008- 09 order dated 05.07.2016 wherein the Tribunal held as follows: Page | 5 ITA.1208 & 1669/AHD/2013 A.Y.09-10 M/s. Shanti Enterprises “2.3. During the course of assessment proceedings, and perusing the details furnished by the assessee, assessing officer noticed that assessee had shown a loss of Rs.2.15 crores. He also noticed that survey proceedings were conducted in the case of assessee on 18/02/2010, wherein assessee had declared “on-money” of Rs.7,20,00,000/- and the sales as on 18/02/2010 based upon the impounded trial balance the sales was Rs.13,82,62,000/-. assessing officer also noted that during the assessment proceedings for AY 2007-08, it was found that assessee was collecting “on-money” while selling shops and therefore addition on account of “on-money” was made on the basis of uniform sale rate of Rs.4,000/- per sq.ft. assessing officer asked the assessee to show-cause as to why the estimation of “on- money” not been made. The submissions of the assessee were not found acceptable to the assessing officer. Thereafter, on the basis of disclosure made by the assessee during the course of survey proceedings, sale instance in AY 2007-08 and taking into account the normal trend on real estate business, assessing officer estimated the “on-money” at Rs.7,94,25,700/-. Aggrieved by the order of assessing officer, assessee carried the matter before the ld.CIT(A), who deleted the addition by holding as under:- “4. Decision: 4.1. I have duly considered the submission of the assessee and find that the addition on account of estimated ‘on-money' of ₹ 7,94,25,700/- has been made by the Assessing Officer on the basis of similar addition made in the A.Y.2007-08, which was upheld at the appellate stage. The assessee had, against the above appellate order filed appeal before the ITAT vide ITA No. 390/AHD/2011, which has been decided vide order dtd.25.5.2011, wherein the hon'ble 'A' Bench of the ITAT, Ahmedabad by relying upon the order of 'D' Bench of the ITAT, Ahmedabad in ITA No.469/AHD/2009 in the A.Y.2005-06 in the case of the assessee, wherein similar addition was deleted, has allowed the appeal of the assessee on the lines of decision given in A.Y.2005-06. The hon'ble Bench, in AY 2005-06 deleted the addition of ₹ 3,01,58,459/- made on account of suppression of sales by estimating the selling rate of shops, and also upheld book results of the assessee. Following the order dtd.22.02.2011 of the 'D' Bench of the ITAT, Ahmedabad in A.Y.2005-06, the 'A' Bench of the ITAT has deleted the similar addition made in A.Yrs 2004-05 & 2007- 08, and upheld the book results of the assessee vide the above order dtd.27.5.2011. I, therefore, find that the issues involved in the assessment under appeal have been decided in favour of the assessee vide order of the ITAT in A.Yrs 2004- 05, 2005-06 & 2007-08. I, following the above decision, delete the addition of ₹7,94,25,700/- made on account of estimated ‘on-money’ to the income of the assessee, and also uphold the book result of the assessee. The first ground of appeal, therefore, stands allowed.” 2.4. Aggrieved by the order of ld.CIT(A), Revenue is now in appeal before us. 2.5. Before us, ld.CIT-DR took us through the observations of the assessing officer and strongly supported the order of assessing officer. 3. We have heard the ld.CIT-DR, perused the material available on record and gone through the orders of the authorities below. We find that the ld.CIT(A) while deleting the addition has noted that the addition made on account of “on-money” in AY 2007-08 was deleted and the issue was decided in favour of assessee by the Tribunal (ITAT Ahmedabad) in ITA No.390/Ahd/2011 vide order dated 25/05/2011. Page | 6 ITA.1208 & 1669/AHD/2013 A.Y.09-10 M/s. Shanti Enterprises He has further noted that similar additions were made in AYs 2004-05, 2005-06 & 2007-08 which were also deleted by the Tribunal. He therefore, relying on the decision of the Tribunal, deleted the addition in the year under consideration. Before us, Revenue has not brought any material on record to demonstrate that the aforesaid order of the Tribunal (ITAT Ahmedabad) has been set aside by higher authorities nor could point out any distinctive feature in the present case and that of earlier years. We therefore find no reason to interfere with the order of the ld.CIT(A). Thus, this ground of Revenue is dismissed.” 9. On the other hand, Learned Departmental Representative (in short “the ld. DR”) for the Revenue relied on the order of the Assessing Officer. 10. We note that issue is squarely covered in the assessee’s case in ITA No.2104/AHD/2011 for AY.2008-09 and ld. DR has failed to contradict the findings of the Tribunal, therefore respectfully following the binding precedent in assessee’s own case(supra), we delete the addition of Rs.3,17,72,000/-. 11. Now, we shall take Revenue’s appeal in ITA No.1669/AHD/2013 for AY.2009-10 wherein the grounds of appeal raised by the Revenue are as follows: “[1] On the facts and circumstance of the case and in law, the Ld. CIT(A)-II, Surat has erred in deleting the addition of Rs.1,27,08,800/- made on account of net profit estimation without appreciating the fact that the assessee was suppressing real construction cost incurred by him and not showing any profit on sale of shops. [2] On the facts and circumstance of the case and in law, the Ld. CIT(A)-II, Surat has erred in deleting the addition of Rs.12,35,73,942/- made on account of unaccounted investment without appreciating the fact that the assessee has suppressed the cost of construction, which is evidenced from the report of the CPWD Engineer's report and the fact that cost of construction is way below the cost shown in FY 2003-04. [3] On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. [4] It is therefore, prayed that the order of the CIT(A) may be set-aside and that of Assessing Officer may be restored to the above extent.” 12. Now, we shall take ground no.1 raised by the Revenue, which relates to deletion of the addition of Rs.1,27,08,800/- made on account of net profit estimation. Brief facts qua the issue are that during the assessment proceedings, the assessing officer observed that in view of revised accounting standard (AS)-7, which is effective from 01.04.2003, which does away with the completed contract Page | 7 ITA.1208 & 1669/AHD/2013 A.Y.09-10 M/s. Shanti Enterprises method or project completion method and only method now recognised is the percentage completion method. According to para 21 of revised AS-7, in all the cases where the outcome of a construction contract can be estimated reliably, the contract revenue and the contract costs have to be recognized as revenue and expenses respectively by reference to the stage of completion of the contract activity. The assessing officer observed that assessee has not followed accounting standard-7 and this clearly proves that assessee was postponing the sales as per his convenience and showing no profit. On verification of the details of construction submitted by assessee, the construction in Phase-I and II were completed way back in the Financial Year 2004-05 and assessee first started receiving bookings way back from F.Y 2001-02 onwards. This clearly indicates that assessee was having high demand for the shops, he has constructed which can be seen from the booking deposits shown in his balance sheet in the successive years which is reproduced below for reference: F.Y A.Y Booking deposit Amount 03-04 04-05 24,93,31,675 04-05 05-06 23,74,76,050 05-06 06-07 16,60,65,050 06-07 07-08 18,37,42,256 07-08 08-09 12,01,13,156 08-09 09-10 14,63,75,100 13. Some, of persons whose names were appearing in the Booking deposits list of the current year were summoned u/s 131 of the Act and statements were recorded and details of the persons are indicated as below: Name & Shops Date of Date of Date of Rate of address of Booked booking possession registration shop party (area 170 Sq.ft each) Shri. Santlal 4035 2005 2008 2010 Rs. 3, 16,000 Narang 4036 2005 2008 2010 Rs. 3, 16,000 Page | 8 ITA.1208 & 1669/AHD/2013 A.Y.09-10 M/s. Shanti Enterprises 4037 2005 2008 2010 Rs. 3, 16,000 4038 2005 2008 2010 Rs.3, 16,000 4051 2005 2007 2007 Rs.3, 16,000 4052 2005 2007 2007 Rs.3, 16,000 4053 2005 2007 2007 Rs.3, 16,000 4054 2005 2007 2007 Rs.3,16,000 Bhawarlal Jhawar F-4279 F-4280 2009 2009 2009 2009 2011 2011 5,00,000 5,00,000 D. P. Textiles 1-3488 2008 2010 2010 5,25,000 (Subhash 1-3489 2008 2010 2010 5,25,000 Gashilal Dosi) 1-3490 2008 2010 2010 5,25,000 Ramesh 1-3482 2008 2010 2010 10,50,000 textiles(Ramesh 1-3482 2008 2010 2010 10,50,000 ghasilal Doshi) 1-3483 2008 2010 2010 10,50,000 Mukesh kumar E-3257 2006 Not given 2010 5,25,000 jogani E-3258 2006 Not given 2010 5,25,000 Ajay choksi B-2041 2008 2008 2010 Rs.7,00, 000 B-2042 2008 2008 2010 Rs.7,00,000 In their statements most of them agreed that they have booked shops at different dates and received possession at different dates and made documents at different dates as per the convenience of the assessee. As per the transfer of property Act possession or execution of documents of property whichever is earlier is considered as transfer date of property for all legal purposes. But however auditor of the assessee mentioned in the notes forming part of the accounts that revenue is recongnised on transfer of shops and on execution of documents.But the statements of the above mentioned persons proves beyond doubt that transfer of property is taking place much before execution of the sale deed, however assessee was recognizing the sales as per his convenience and offering income on sales as per his convenience. The construction of phase-1 and Phase-2 was completed in the year 2004 and assessee was receiving lot of amount year by year as booking deposits of the shops which shows the demand for shops. However assessee was recognizing the sales as per his convenience not offering the profits in the year in which Page | 9 ITA.1208 & 1669/AHD/2013 A.Y.09-10 M/s. Shanti Enterprises possession was given instead he is offering sales after 2 to 3 years and that too showing sales rate at par with booking date rate which is not acceptable. The assessee was showing any interest income from the purchasers for delaying the payment at the same time he was showing interest payment to partners and bank in the successive years from 2004. 14. The assessing officer observed that assessee was not showing correct cost of construction and sales rate and he is manipulating both these rates to justify the rates shown by the assessee. Considering the above facts, the assessing officer was not satisfied with the correctness and completeness of the books of accounts and profits shown by the assessee and therefore rejected the book results u/s 145(3) of the Act. During the year on verification of the Profit and Loss account of the assessee, it was found that assessee has shown sale of shops at Rs.6,35,44,000/- and other income of Rs.1,04,58,777/- and net profit shown by assessee at Rs.81,63,757/-. That means assessee has not shown any profit on the sale of shops and the profit shown in the books of accounts is mainly due to rental income obtained by assessee on shops lying in stock in trade. The normal profit in construction business is 20 to 25% and therefore the profit of the assessee on sale of shops was estimated by assessing officer at 20% of the sales of Rs.6,35,44,000/- which comes to Rs.1,27,08,800/-, the assessing officer added the same to the total income of the assessee. 15. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by the Assessing Officer. Aggrieved, the Revenue is in appeal before us. 16. Learned Departmental Representative (ld. DR) for the Revenue submits that A.O. has rightly applied the Accounting Standard AS-7 in the case of assessee, as being developer/builder. The assessing officer noted malpractices in the books of accounts maintained by the assessee, therefore A.O. has rejected the books of account of assessee by applying the AS-7 and made addition of Rs.1,27,08,800/- .Some of the persons whose names were appearing in the booking deposits list of the current year were summoned u/s 131 of the Act and statements were recorded. Page | 10 ITA.1208 & 1669/AHD/2013 A.Y.09-10 M/s. Shanti Enterprises In the statements, most of them agreed that they have booked shops at different dates and received possession at different dates and made documents at different dates as per the convenience of the assessee. The assessee was recognizing the sales as per his convenience by not offering the profits in the year in which possession was given instead it is offering sales after 2 to 3 years and too showing sales rate at par with booking date rate which is not acceptable. The assessee was suppressing real construction cost incurred by him and there by justifying the sales rate shown by him. Further, assessee was showing document price based on carpet area, thereby justifying the document price vis-a-vis circle/jantri rates of Government. This clearly indicates that assessee was not showing correct cost of construction and sales rate and he is manipulating both these rates to justify the rates shown by the assessee. Therefore, ld DR prays that addition made by the assessing officer may be upheld. 17. On the other hand, the Learned Counsel for the assessee, defended the order passed by ld. CIT(A). The ld Counsel submitted factual paper book and legal case law compilation. After narrating the facts of the assessee`s case, the ld Counsel contended that order passed by the ld CIT(A) is a reasoned and speaking order and the same may be upheld. 18. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. The ld CIT(A) noted that assessing officer has wrongly applied the Accounting Standard AS-7 in the case of assessee as being developer/builder, the same is not applicable in its case. The AS-7 is applicable in the case of contractor and in that case where assessee has disclosed profit on the basis of percentage completion method of accounting. The ld CIT(A) noted that assessing officer cannot force the assessee to adopt the Accounting Standard as per his wishes to show the profit on percentage completion method in place of project completion method being followed by it. The different method of accounting can be applied by assessing officer to compute the actual income of Page | 11 ITA.1208 & 1669/AHD/2013 A.Y.09-10 M/s. Shanti Enterprises assessee only in the cases where books of account of assessee and his method of accounting are not reliable on the basis of specific discrepancies found by assessing officer. In the case of assessee, assessing officer has rejected the books of account only on the basis of general observation that it is postponing the profit in the subsequent years. However, this observation is not supported with any evidence. 19. The ld CIT(A) noted that statements recorded on oath of six persons during assessment proceedings have also confirmed the version of assessee. They have denied to pay any amount other than registered amount made through account payee cheques. The perusal of statements of those persons reveals that there is nothing adverse against the assessee in those statements. The assessing officer has also not mentioned any specific discrepancy in those statements. Further, the estimation of profit made by assessing officer @ 20% of the sales has also no basis. He has not been able to give any comparable case to show the profit in construction business ranging from 20 to 25%, Moreover, the surplus amount over and above the sale proceeds has already been taxed by assessing officer while making the addition on estimation of 'on money' at Rs.3,17,72,000/-therefore if any surplus profit is earned by assessee on the sale of shops, the same is covered by the said addition. In view of these facts, the ld CIT(A) held that assessing officer has wrongly rejected the books of accounts of assessee by applying the AS-7, therefore, he deleted the addition made by assessing officer. We do not find any infirmity in the order of ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. 20. In the result, ground No.1 raised by the Revenue is dismissed. 21. Coming to ground No. 2 raised by the Revenue which relates to addition of Rs.12,35,73,942/-. Learned DR for the Revenue argued before us that Ld. CIT(A) has erred in deleting the addition of Rs.12,35,73,942/- made on account of unaccounted investment without appreciating the fact that assessee has suppressed the cost of construction, which is evidenced from the report of the CPWD Page | 12 ITA.1208 & 1669/AHD/2013 A.Y.09-10 M/s. Shanti Enterprises Engineer's report and the fact that cost of construction is way below the cost shown in FY 2003-04. Therefore, ld DR argued that Ld. CIT(A) ought to have upheld the order of the Assessing Officer. 22. On the other hand, ld Counsel for the assessee defended the order passed by the ld CIT(A). He pointed out that even during the remand proceeding, the Assessing Officer failed to comment on the figures of valuation made by DVO. The Assessing Officer made comment on procedural part of valuation. The letter given by Assistant Engineer of CPWD, estimating the cost of construction at Rs.1,802/- per sq. ft. without any calculation cannot be basis for estimating the cost of construction in the case of the assessee, hence Assessing Officer made addition based on guess work only. Thus, Ld. Counsel pointed out that ld. CIT(A) has considered all these facts and deleted the addition, hence order of ld. CIT(A) may be upheld. 23. We have heard both the parties. The assessing officer noted that assessee has completed all the works in wings L,M,N of Phase-Ill during the F.Y. 2008-09 and construction cost need to be taken at full and at the rates applicable during this year. Assessee himself in his submission submitted that average cost per sq.ft built up area as Rs.522.34 and proposed rate in the show cause notice of AO was at Rs.600 to Rs.650/sq.ft. The difference is Rs.78 to 128 /sq.ft between cost of construction estimation of the assessee and that of the department. However CPWD engineer's opinion indicates the cost of construction per sq.ft built up area for F.Y 2008-09 in case of shopping complex is at Rs.1802 /sq.ft. In view of that even if most conservatively taken i.e. 50% of the rate recommended by Central public works department it comes to Rs.901/sq.ft of built up area. The construction cost as per the current prices for the F.Y. 2008-09 which was adopted @ Rs.901/sq.ft on total built up area of 1,92,156 sq.ft constructed during F.Y 2008-09 comes to Rs.17,31,32,556/-. But however, assessee has shown construction cost of Rs.4,95,58,611/- for the F.Y 2008-09 in his books of accounts. In view of that difference amount of Rs.12,35,73,945/- (Rs.17,31,32,556 - Rs.4,95,58,611) was Page | 13 ITA.1208 & 1669/AHD/2013 A.Y.09-10 M/s. Shanti Enterprises added back to the income of the assessee, u/s 69B of the IT Act, by the assessing officer. 24. On appeal, Ld CIT(A) deleted the addition. The ld CIT(A) noted that valuation report was received by assessing officer on the date on which assessment order was served on the assessee. But, the report was not considered by him though the reference was made by him only. During the appellate proceedings, ld CIT(A) observed that even during the remand proceedings, assessing officer failed to comment on the figures of valuation made by DVO. He has just commented on procedural part of valuation and did not accept the valuation made by DVO. However, as per law, the valuation report submitted by DVO on the reference by Assessing Officer himself has to be accepted by him and to be given effect. As per section 55A of IT Act r.w.s. sub section (6) of section 16A of the W.T. Act, assessing officer has to complete the assessment proceedings in conformity with the estimate of the Valuation Officer. The sub section (6) of section 16A of W.T. Act is reproduced asunder: "(6) On receipt of the order under sub section (3) or sub section (5) from the Valuation Officer, the [Assessing Officer] shall, so far as the valuation of the asset in question is concerned, proceed to complete the assessment in conformity with the estimate of the Valuation Officer.]" After going through the above provisions, the ld CIT(A) noted that assessing officer has not given the effect to the valuation report of DVO which is mandatory on his part. Moreover, the basis of valuation made by assessing officer without finding any specific discrepancy in the books of account cannot be held valid in view of plethora of the decisions as given by Hon’ble Courts/ITATs. The simple letter given by Assistant Engineer, CPWD, estimating the cost of construction at Rs.1,802/- per sq. ft. without any calculation cannot be basis for estimating the cost of construction in the case of assessee. During the remand report also, assessing officer failed to challenge the estimation made by DVO. However, the DVO has estimated the cost of construction at Rs.24,41,05,883/- against the cost declared by assessee at Rs.21,99,91,747/- which works out the difference less than 12% and where difference is less than 15% in the valuation as estimated by Valuation Officer and as Page | 14 ITA.1208 & 1669/AHD/2013 A.Y.09-10 M/s. Shanti Enterprises shown by assessee, value estimated by Valuation Officer has to be ignored and value shown by assessee has to be accepted to assessing officer. Thus, in the case of assessee, since the difference in value is less than 15%, the value of cost of construction shown by assessee has to be accepted. In view of this, ld CIT(A) held that addition made by assessing officer in the case of assessee amounting to Rs.12,55,73,945/- should be deleted and accordingly addition was deleted by ld CIT(A). We note that based on the assessee`s facts, the above conclusion reached by ld CIT(A) is correct. The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us. We, approve and confirm the order of the CIT(A) and dismiss ground No.2 raised by the Revenue. 25. In the result, ground No.2 raised by the Revenue is dismissed. 26. In the result, the appeal of the Assessee in (ITA No.1208/AHD/2013 for AY.2009-10) is allowed and the appeal of the Revenue in (ITA No. 1669/AHD/2013 for AY.2009-10) is dismissed. Order is pronounced on 19/09/2022 by placing result on Notice Board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 19/09/2022 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat