Assistant Commissioner of Income-tax, V. Mrs. Sharon Ashok Ranpise, Pune

ITA 2187/PUN/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9399 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 16-01-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 18-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIRUPAMA KOTRU
• Assessee Lawyers: SUNIL V SHINDE
• Keywords: Unexplained cash credit; Unexplained investment; Loose papers; Cost of acquisition; Initiation of penalty proceedings; Fair market value; Corroborative evidences; Valuation report
• Section: 143(3); 153A; 68; 132

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.2187/PUN/2013 / ASSESSMENT YEAR : 2008-09 ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), PUNE. . / APPELLANT V/S MRS. SHARON ASHOK RANPISE, FLAT NO.701 TO 704, JASMINE BUILDING, FLOWER VALLEY, WANWORIE, PUNE 411 040. PAN : AFHPR1986B. . / RESPONDENT ASSESSEE BY : SHRI SUNIL V. SHINDE. REVENUE BY : SMT. NIRUPAMA KOTRU. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE REVENUE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) CENTRAL, PUNE DT.30.09.2013 FOR THE ASSESSMENT YEARS 2008-09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- 2.1 ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED IN FASH ION DESIGNING. A SEARCH ACTION U/S 132 OF THE ACT WAS CONDU CTED ON 18.11.2009 AT FLAT NOS.701 TO 704, JASMINE BUILDING, FLOWER V ALLEY, WANOWRIE, PUNE OCCUPIED BY SHRI ASHOK BABANRAO RANPISE, M RS. / DATE OF HEARING : 16.01.2018 / DATE OF PRONOUNCEMENT: 23.01.2018 2 SHARON A RANPISE AND OTHER FAMILY MEMBERS. AS THERE WA S WARRANT IN THE NAME OF THE ASSESSEE, NOTICE U/S 153A OF THE ACT WAS ISSUED TO THE ASSESSEE ON 26.08.2010 IN RESPONSE TO WHICH, ASSESSE E FILED HER RETURN OF INCOME DECLARING TOTAL INCOME OF RS.9,87,576/-. THE REAFTER, THE CASE WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT WA S FRAMED U/S 143(3) R.W.S. 153A OF THE ACT VIDE ORDER DT.30.12.2011 AND T HE TOTAL INCOME WAS DETERMINED AT RS.1,68,67,580/-. AGGRIEVED BY TH E ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE CONSOLIDATED ORDER DT.30.09.2013 FOR A.Y. 2004-05 TO A.Y. 201 0-11) (IN APPEAL NO.PN/CIT(A)-CENTRAL/ACIT CENT. CIR.2(2)/181,182,183,18 4, 185,186,187/2011-12) GRANTED SUBSTANTIAL RELIEF TO THE ASSE SSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPE AL BEFORE US FOR A.Y. 2008-09 AND HAS RAISED THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION O N ACCOUNT OF UNEXPLAINED CREDIT ENTRY OF RS.7,50,000/- IN THE BA NK ACCOUNT OF THE ASSESSEE, ON BASIS OF CONFIRMATION LETTER WHEREIN T HERE WAS NOTHING TO PROVE THE CREDITWORTHINESS OF THE LENDER ? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) WAS CORRECT IN HOLDING THAT THE RENOVATION COST OF FOUR FLATS IS RS.30,00,000/- AS AGAINST RS.1,50,00,000/- ESTIMATED BY THE ASSESSING OFFICER ? 3. THE ORDER OF THE LD.CIT(A) MAY BE VACATED AND TH AT OF THE ASSESSING OFFICER BE RESTORED. 3. FIRST GROUND IS WITH RESPECT TO DELETING THE ADDITION OF UNEXPLAINED CREDIT OF RS.7,50,000/-. 3.1. DURING THE COURSE OF SEARCH U/S 132 OF THE ACT AT THE RESIDENTIAL PREMISES OF THE ASSESSEE, CERTAIN LOOSE PAPERS WERE FOUND AND SEIZED. AS PER THE LOOSE PAPER BUNDLE NO.6 (CONTAINING 91 PAGES) T HERE WERE 3 CERTAIN ENTRIES FOR THE PERIOD FROM 01.02.2007 TO 06.02.2008 IN RESPECT OF ACCOUNT NO.110010100016807 WITH AXIS BANK, WA NOWRIE BRANCH AND THERE WAS A CREDIT ENTRY OF RS.7,50,000/- TRA NSFERRED FROM DHARIWAL SINGH ON 31.12.2007. AO NOTED THAT ASSESSEE CO ULD NOT EXPLAIN THE ENTRY BEING CREDITED IN THE BANK ACCOUNT AND HE THEREFORE CONSIDERED IT AS UNEXPLAINED INCOME OF THE ASSESSEE AND MADE ITS ADDITION. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO DELETED THE ADDITION BY OBSERVING AS UNDER : 36. GROUND-C : THIS GROUND PERTAINS TO AN ADDITION MADE ON ACCOU NT OF CREDIT ENTRY IN THE BANK AMOUNTING TO RS.7,50,000/- . THE AO HAS DISCUSSED THIS ISSUE IN PARA 07 OF THE ASSESSMENT O RDER. HE NOTED THAT DURING THE SEARCH ACTION U/S.132 AT THE RESIDENTIAL PREMISES OF THE APPELLANT, CERTAIN LOOSE PAPERS WERE FOUND AND SEIZ ED. PAGE NO.48 TO 51, 59 TO 62 & 78 TO 81 OF LOOSE PAPER BUNDLE NO.6 SHOWED CERTAIN TRANSACTIONS FOR THE PERIOD FROM 01/02/2007 TO 06/0 2/2008 IN RESPECT OF THE ACCOUNT NO.110010100016807 WITH AXIS BANK,WA NOWRIE BRANCH. IT WAS OBSERVED FROM THE ENTRIES THAT THERE WAS A CREDIT ENTRY OF RS.7,50,000/- TRANSFERRED FROM ONE DHARIWAL SING H ON 31/12/2007. THE AO HAS NOTED THAT THE APPELLANT COULD NOT EXPLA IN THE SAID ENTRY. AS SUCH, HE CONSIDERED THE SAID AMOUNT CREDITED IN THE BANK ACCOUNT AS UNEXPLAINED INCOME OF THE APPELLANT AND ADDED TH E SAME TO INCOME. 36.1 IN HER STATEMENT OF FACTS, THE APPELLANT HAS CONTENDED THAT SHE HAD TAKEN A LOAN FROM MR. JAQDISH DHARIWAL OF BANGA LORE. THE AMOUNT WAS SUBSEQUENTLY TRANSFERRED FROM BANGALORE TO PUNE IN THE AXIS BANK VIA RTGS. IT IS SUBMITTED THAT THE LOAN WAS DULY RE FLECTED IN THE APPELLANT'S RETURN OF INCOME FILED ON 31/03/2009. I T IS ALSO CONTENDED THAT THIS FACT WAS DULY BROUGHT TO THE NOTICE OF TH E AO THROUGH THE APPELLANT'S WRITTEN CORRESPONDENCE DATED 14TH FEB. 2011. FURTHER, ON 28/11/2011, A SUMMARY OF THE BANK DEPOSITS WAS ALSO SUBMITTED TO THE AO. IT IS ALSO STATED BY THE APPELLANT THAT PAG E-WISE EXPLANATIONS FOR THE SEIZED MATERIAL HAD ALSO BEEN SUBMITTED BEF ORE THE INVESTIGATION WING IN DECEMBER, 2009. UPON THESE FACTS, THE APPEL LANT HAS CHALLENGED THE ADDITION OF THE SAID AMOUNT OF RS.7, 50,000/-AND INITIATION OF PENALTY PROCEEDINGS ON THE BASIS THER EOF. 36.2 DURING THE COURSE OF APPELLATE PROCEEDINGS, TH E APPELLANT HAS MADE FURTHER WRITTEN SUBMISSIONS DATE 31/05/2012 WH EREIN THE APPELLANT SUBMITTED A CONFIRMATION LETTER DATED 21/ 05/2012 ON THE LETTERHEAD OF 'J.S. DHARIWAL' DULY SIGNED BY THE AU THOR OF THE LETTER, WHO HAS GIVEN HIS ADDRESS AS 204, SILVER OAKS, VITT AL MALLYA ROAD, BANGALORE, IN CONFIRMATION OF HAVING ADVANCED RS.7, 50,000/- TO HIS SISTER IN LAW MRS. SHARON A. RANPISE. THE APPELLANT HAS FURTHER FILED HER BALANCE SHEET AS ON 31/03/2008 WHICH IS STATED TO HAVE BEEN FILED WITH THE RETURN OF INCOME FOR A.Y 2008-09 FILED ON 31/03/2009, A COPY OF THE ACKNOWLEDGEMENT FOR HAVING FILED THE RETURN ON THE SAID DATE IS ALSO FILED. 4 36.3 THE ABOVE SUBMISSIONS OF THE APPELLANT ALONG W ITH THE SUPPORTING EVIDENCE FILED WERE FORWARDED TO THE AO FOR HIS COM MENTS ON THE ADMISSIBILITY AS WELL AS THE MERITS OF THE EVIDENCE VIDE MY PREDECESSORS LETTER DATED 11/07/2012 ALONG WITH TH E SUBMISSIONS AND EVIDENCE FILED IN RESPECT OF AY 2004-05 AS STAT ED IN PARA 6.7 ABOVE. HOWEVER, THERE HAS BEEN NO RESPONSE WHATSOEV ER FROM THE AO AS STATED IN THAT PARAGRAPH. ACCORDINGLY, THE ADDIT IONAL EVIDENCE FILED BY THE APPELLANT IS ADMITTED AND AFTER CAREFUL CONS IDERATION THEREOF, THE ADDITION OF RS.7,50,000/- MADE BY THE AO IS HEREBY DELETED. AS SUCH, GROUND C IS HEREBY ALLOWED. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPE AL BEFORE US. 4. BEFORE US, LD.D.R. SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO EXP LAIN THE CREDIT ENTRY OF RS.7.50 LACS WHICH HAS BEEN TRANSFERRED FROM DHARIWAL SINGH . SHE SUBMITTED THAT ASSESSEE COULD NOT EXPLAIN THE ENTRY . LD.D.R. FURTHER SUBMITTED THAT LD.CIT(A) GRANTED RELIEF ONLY ON THE BASIS OF THE CONFIRMATION LETTER. FROM THE ORDER OF LD.CIT(A), SHE POINT ED THAT THE CONFIRMATION WAS ON THE LETTER HEAD OF J.S. DHARIWAL AND THERE WAS NO EVIDENCE TO SHOW THAT J.S. DHARIWAL AND DHARIWAL SINGH ARE ONE AND THE SAME PERSONS. LD.D.R. FURTHER SUBMITTED THAT BEFORE LD.CIT(A) ASSESSEE HAS SUBMITTED THAT SHE HAS TAKEN LOAN FROM JAGADISH DHARIWAL. SHE THEREFORE SUBMITTED THAT THERE A RE INCONSISTENCIES IN THE SUBMISSIONS OF THE ASSESSEE AND ASS ESSEE HAS NOT PROVED THE GENUINENESS OF THE TRANSACTION AND THER EFORE THE ORDER OF AO BE UPHELD. SHE FURTHER SUBMITTED THAT MERELY BY S UBMITTING THE CONFIRMATION LETTER, IT CANNOT BE STATED THAT ASSESSE E HAS PROVED THE CREDITWORTHINESS AND THE OTHER REQUIREMENTS THAT ARE REQUIRED U/S 68 OF THE ACT. SHE THEREFORE SUBMITTED THAT THE ADDITIO N MADE BY THE AO BE UPHELD. LD.A.R. ON THE OTHER HAND, SUPPORTED THE O RDER OF AO. 5 HE FURTHER SUBMITTED THAT DURING THE COURSE OF ASSESSM ENT PROCEEDINGS AND APPELLATE PROCEEDINGS NO QUESTION WAS ASKED TO P ROVE THE CREDITWORTHINESS OF THE SAID TRANSACTION. IN SUCH A SITUATION, NO FAULT CAN BE FOUND WITH THE ORDER OF LD.CIT(A). HE THUS SUP PORTED THE ORDER OF LD.CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPEC T TO ADDITION U/S 68 OF THE ACT. THE READING OF THE PROVISION OF SEC.6 8 OF THE ACT MAKES IT CLEAR THAT THE ASSESSEE HAS TO PRIMA FACIE PROV E (1) THE IDENTITY OF THE CREDITOR (2) THE GENUINENESS OF THE TRANSA CTION AND (3) THE CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR. ONCE THESE THREE ESSENTIAL REQUIREMENTS ARE PRIMA FACIE PROVED BY TH E ASSESSEE, THE ONUS WOULD SHIFT TO THE DEPARTMENT. FURTHER MERELY BY ESTABLISHING THE IDENTITY OF THE CREDITOR OR ANY ONE OF TH E OTHER CONDITIONS, THE ASSESSEE CANNOT CLAIM TO HAVE DISCHARGED THE INITIAL BURDEN CAST UPON ASSESSEE. THE ASSESSEE HAS ALSO TO SATISFY THE REVENUE AS TO THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHINESS OF THE INDIVIDUAL WHO HAS ADVANCED AMOUNT S. INITIAL BURDEN IS CAST UPON THE ASSESSEE TO OFFER AN EXPLANATION ABOUT THE NATURE AND SOURCE OF THE MONEY FOUND CREDITED IN ITS BANK OF ACCOUN TS AND IF THAT EXPLANATION IS NOT SATISFACTORY IN THE OPINION OF AO, THE SUM SO CREDITED BE CHARGED AS INCOME FOR THE PREVIOUS YEAR. IT IS ALSO A SETTLED LAW THAT THE FACT THAT THE AMOUNTS HAVE BEEN TRANSFE RRED THROUGH CHEQUE PAYMENTS DOES NOT BE ITSELF MEANS THAT THE TRANSACTIONS ARE GENUINE. IN THE PRESENT CASE, IT IS AN UNDISPUTED FACT THAT THE CREDIT ENTRY OF RS.7,50,000/- WAS FOUND IN THE BA NK ACCOUNT 6 OF THE ASSESSEE AND THE ASSESSEE WAS ASKED TO EXPLAIN THE CREDIT E NTRY. ON FAILURE OF THE ASSESSEE TO GIVE ANY COGENT EXPLANATION AO MADE ITS ADDITION. LD.CIT(A) DELETED THE ADDITION AS THE ADDITIONAL EVID ENCES FORWARDED BY HIM TO THE AO HAD REMAINED UN-RESPONDED B Y THE AO. BEFORE US, NO EVIDENCE HAS BEEN FURNISHED BY THE ASSESSE E TO PROVE THAT SHE HAS BEEN ABLE TO PROVE THE REQUIREMENTS OF S EC.68 OF THE ACT THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF TRANSACT ION AND HAS THUS COMPLIED WITH. WE FURTHER FIND THAT THE LD.CIT(A) HAS NOTED THREE DIFFERENT NAMES OF THE CREDITOR NAMELY, DHARIWAL S INGH, JAGADISH DHARIWAL AND J.S. DHARIWAL. BEFORE US, NO M ATERIAL HAS BEEN PLACED BY THE ASSESSEE TO PROVE THAT ALL THESE PE RSONS ARE ONE AND THE SAME. IN SUCH A SITUATION, WE ARE OF THE VIEW T HAT THE ONUS CAST UPON THE ASSESSEE HAS NOT BEEN DISCHARGED AND T HEREFORE THE AO WAS FULLY JUSTIFIED IN MAKING THE ADDITION. WE THEREFORE SET ASIDE THE ORDER OF LD.CIT(A) AND THUS, THE GROUND OF THE REVENUE IS ALLOWED. 6. SECOND GROUND IS WITH RESPECT TO ADDITION OF RS.30 LACS ON ACCOUNT OF RENOVATION COST OF FOUR FLATS. 6.1. DURING THE COURSE OF SEARCH ACTION AT THE RESIDENT IAL PREMISES OF THE ASSESSEE, COPIES OF VALUATION REPORT OF FLAT NOS. 701 TO 704, THE PROPERTY BELONGING TO THE ASSESSEE, WAS FOUND. IT WAS FO UND THAT FOUR FLATS WERE PURCHASED THROUGH SEPARATE AGREEMENTS DT.1 2.03.2003 AND THE AGGREGATE PURCHASE COST AS PER THE AGREEMENTS W AS RS.52,74,600/-. THE VALUATION REPORT DT.20.03.2008 OF SHRI AR VIND S. JOSHI FROM A.S. JOSHI AND ASSOCIATES SHOWED THE VALUATION OF FLATS AT RS.6,77,65,260/-, THE FAIR MARKET VALUE AT RS.6.51 CRORES (ROUNDED OFF) 7 AND THE REALIZABLE VALUE AT RS.6.19 CRORES. DURING THE COU RSE OF SEARCH, STATEMENT OF ASHOK B. RANPISE WAS RECORDED WHE REIN HE STATED THAT THE VALUATION OF THE FLATS WAS OBTAINED FOR TH E PURPOSE OF MORTGAGE OF FLATS TO PNB, KALYANINAGAR BRANCH, PUNE. AO N OTICED THAT THERE WAS BIG DIFFERENCE BETWEEN PRICE PAID TO THE B UILDER AND THE PRICE MENTIONED IN VALUATION REPORT MADE BY THE REGISTERE D VALUER. HE WAS OF THE VIEW THAT THE DIFFERENCE IN THE VALUE WAS VE RY HIGH AND IN SUCH A SITUATION THE UNACCOUNTED INVESTMENT IN THE FLA TS CANNOT BE RULED OUT. THE DIFFERENCE OF RS.5.99 CRORES, ACCORDING TO H IM, COULD NOT BE ATTRIBUTED TO THE APPRECIATION IN THE INVESTMENT VALUE OF THE FLATS FROM 01.04.2003 TO 20.03.2008. AO ON COMPARISON OF THE SPECIFICATIONS GIVEN AS PER THE AGREEMENTS MADE WITH THE BUILDER AND THE SPECIFICATIONS OF THE PROPERTY AS PER THE VALUATION, CO NCLUDED THAT THE ASSESSEE HAD SPENT HUGE AMOUNTS TOWARDS BEAUTIFICA TION OF THE FLATS AND THE INTERIOR WORK AND OTHER IMPROVEMENTS WERE CARRIED OUT AFTER TAKING THE POSSESSION BECAUSE THE SPECIFICATIONS IN T HE AGREEMENTS AND THE VALUATION REPORT DID NOT MATCH. THE DIFFERENCE IN THE SPECIFICATIONS AS PER THE AGREEMENTS AND AS PER THE VALUATION REPORT IS TABULATED BY THE AO IN HIS ASSESSMENT ORDER. THE ASSESSEE WAS ASKED TO RECONCILE THE DIFFERENCE BETWEEN THE VALUES. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO T HE AO. AO CONSIDERED THE DIFFERENCE BETWEEN THE VALUE AS SHOWN BY THE VALUER (AT RS.6.19 CRORES) AND THE VALUE AS PER THE AGREEMENTS (RS.52,74,600/-) OF RS.5,05,62,000/- TO BE ON ACCOUNT OF INTER IOR DECORATION AND FURNITURE AND FIXTURE OF THE FLATS. HE THER EFORE CONCLUDED THAT ASSESSEE HAS SPENT CERTAIN MONEY WHICH HAS NOT BEEN REFLECTED IN THE BOOKS OF ACCOUNTS. IN THE ABSENCE OF AN Y DATA, HE 8 CONSIDERED RS.1.50 CRORE AS BEING SPENT ON RENOVATION, W HICH HAS NOT BEEN REFLECTED IN THE RETURN OF INCOME AND ACCORDINGLY MA DE ITS ADDITION. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO GRANTED PARTIAL RELIEF BY OBSERVING AS UNDER : 38.10 I HAVE GIVEN CAREFUL CONSIDERATION TO ALL THE FACTS BEFORE ME. IT IS THE AOS CASE THAT THE APPELLANT HAD MADE A SUBS TANTIAL INVESTMENT IN RENOVATION OF THE FLAT AFTER THE PURCHASE THEREO F. IN THE ABSENCE OF ANY CONCRETE DATA, HE HAS ESTIMATED THE SAME AT AN AMOUNT OF RS.1,50,00,000/-. AS AGAINST THIS, THE APPELLANT HA S CONTENDED THAT THE INFLATED VALUATION REPORT OBTAINED FROM THE REGISTE RED VALUER WAS ONLY FOR OBTAINING A LOAN FROM THE BANK AND APART FROM THE NATURAL APPRECIATION IN THE MARKET VALUE OF THE PROPERTY, T HERE WAS NO SUBSTANTIAL DIFFERENCE IN THE VALUE OF THE PROPERTY AT THE TIME OF ITS PURCHASE AND AT THE TIME OF OBTAINING THE VALUATION REPORT. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AM OF THE VIEW THAT THE CONTENTIONS OF THE APPELLANT ARE NOT WITHOUT MERIT. NO DOUBT THE VALUER HAS ASSIGNED A VALUE OF RS.6,19,70,000/- TO THE PR OPERTY AND HAS ALSO MADE CERTAIN SPECIFIC OBSERVATIONS THAT THE FLAT O WNER MIGHT HAVE SPENT HUGE AMOUNT TOWARDS THIS BEAUTIFICATION OF TH ESE FLATS; THAT ALTHOUGH THE OWNER HAS MADE FOR SEPARATE AGREEMENTS WITH THE BUILDERS, ACTUALLY THE FLAT IS ONLY ONE BECAUSE THE PASSAGE IN BETWEEN THESE FLATS ARE ALSO IN HER POSSESSION VIDE ALLOTME NT LETTER DATED 15/03/2003; THAT THE OPEN TERRACE ABOVE THESE FLATS IS OWNED AND ALSO 6 CAR PARKING SPACES ARE EXCLUSIVELY OWNED BY THE O WNER OF THE FLATS AND THAT ON THE TERRACE, A SERVANTS QUARTER IS HOU SED. HOWEVER, APART FROM THE GENERAL COMMENT THAT THE HOUSE OWNER MIGHT HAVE BEEN SPENT HUGE AMOUNT TOWARDS BEAUTIFICATION THERE IS NOTHING IN THESE OBSERVATIONS TO SUBSTANTIATE THAT SUCH HUGE INVESTM ENT WAS MADE BY THE APPELLANT IN RENOVATION OF THE SAID FLATS. THE APPELLANTS CONTENTION THAT HIS INFLATED VALUATION REPORT WAS OBTAINED BY HIM FOR THE PURPOSE OF OBTAINING A SUBSTANTIAL LOAN ALSO CANNOT BE REJE CTED OUT OF HAND. THE APPELLANT HAS ALSO SUBMITTED THAT THE BANK DID NOT ATTACH MUCH CREDENCE TO THIS REPORT AND ONLY SANCTIONED A LOAN OF RS.1,62,85,000/- WHICH, NO DOUBT ALSO FACTORS IN THE NATURAL APPRECI ATION IN THE MARKET VALUE OF THE PROPERTY SINCE ITS PURCHASE, APART FRO M THE IMPROVEMENTS MADE BY THE APPELLANT. AT THE SAME TIME, HOWEVER, CONSIDERING ALL THE MATERIAL ON RECORD INCLUDING CERTAIN SPECIFIC OBSER VATIONS OF THE VALUER, AND THE DIFFERENCE IN SPECIFICATIONS WHICH HAS BEEN BROUGHT OUT IN SOME DETAIL BY THE AO, I AM OF THE VIEW THAT AN APPRECIA BLE AMOUNT OF MONEY MUST, NO DOUBT, HAVE BEEN INVESTED BY THE APPELLANT IN RENOVATION OF/ IMPROVEMENTS TO THE FLATS. ACCORDINGLY, I AM OF THE VIEW THAT THE ENDS OF JUSTICE WILL BE MET IF THE INVESTMENT MADE BY THE A PPELLANT IN THE FLAT IS ESTIMATED CONSERVATIVELY AT RS.30 LAKH. ACCORDINGLY , THE ADDITION IS SUSTAINED TO THIS EXTENT. THIS GROUND OF APPEAL IS THUS PARTLY ALLOWED. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPE AL BEFORE US. 9 7. BEFORE US, LD.D.R. TOOK US THROUGH THE FINDINGS OF AO AND SUBMITTED THAT THE MODIFICATIONS MADE BY THE ASSESSEE IN THE FLATS WERE NOT REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSE SSEE AND IN SUCH A SITUATION, AO WAS REASONABLE ENOUGH AND ONLY MAD E AN ADDITION OF RS.1.50 CRORE. SHE SUBMITTED THAT THE BASIS OF THE RELIEF GRANTED BY LD.CIT(A) IS ALSO NOT SUPPORTED BY ANY EVIDEN CE AND THEREFORE SUBMITTED THAT THE ORDER OF AO BE UPHELD. LD.A. R. ON THE OTHER HAND, SUBMITTED THAT NO ADDITION IS CALLED FOR IN THE PRESENT CASE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESP ECT TO ESTIMATION OF ADDITION. IT IS THE CASE OF AO THAT THE DIFFERE NCE IN THE VALUE AS REPORTED BY THE VALUER AND HAS REFLECTED IN TH E PURCHASE AGREEMENT IS ON ACCOUNT OF THE RENOVATION MADE TO THE FLATS AND THE EXPENDITURE TOWARDS RENOVATION OF FLATS HAVE NOT BEEN REFLECTED IN THE BOOKS OF ACCOUNTS. ON THE OTHER HAND, IT IS ASSESSEES SUBMISSION THAT THE VALUATION REPORT WAS OBTAINED FOR THE PURPOSE OF OBTAINING LOAN FROM THE BANK AND IT DID NOT REFLECT THE TRUE VALUE O F THE FLAT AND THERE WERE CERTAIN ERRORS IN THE VALUATION REPORT. IN THE PRESENT CASE, IT IS AN UNDISPUTED FACT THAT ADDITION HAS BEEN MADE ON THE BASIS OF AN ESTIMATION MADE BY THE AO AND IS NOT SUPPORTED BY ANY EVIDENCE THAT WAS FOUND DURING THE COURSE OF SEARCH. LD.CIT(A) RE STRICTED THE ADDITION TO RS.30 LACS AS AGAINST RS.1.50 CRORE MADE BY THE AO. BEFORE US, ASSESSEE HAS ALSO NOT PLACED ANY MATERIAL ON R ECORD TO SUBSTANTIATE THE EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS THE RENOVATION COST OF FLATS. IT IS ALSO A FACT THAT AGAINST THE ADDITIONS 10 UPHELD BY LD.CIT(A), ASSESSEE IS NOT IN APPEAL. CONSIDERING THE TOTALITY OF THE FACTS, WE ARE OF THE VIEW THAT THE ENDS O F JUSTICE SHALL MEET IF THE ADDITION IS RESTRICTED TO RS.50 LACS AS AGAINST RS.30 LACS MADE BY LD.CIT(A). WE THUS DIRECT ACCORDINGLY. THUS, THE GROUND OF THE REVENUE IS PARTLY ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 23 RD DAY OF JANUARY, 2018. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 23 RD JANUARY, 2018. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. THE CIT(A), CENTRAL, PUNE. THE CIT, CENTRAL, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $+,-/ GUARD FILE. / BY ORDER // TRUE COPY // ./0%1&2 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.