The DCIT, Circle-9, Surat V. Shri Anilbhia Arvindbhai Lakhankiya, Surat

ITA 2197/AHD/2011

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9265 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-01-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 02-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Unexplained investment; Sale consideration of property below Jantri Value; Tangible material; Valuation report
• Section: 44AD; 50C; 133A; 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.2197/AHD/2011 ( / ASSESSMENT YEAR : 2006-07) THE DY.CIT CIRCLE-9 SURAT 395 001 / VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA B-78, HANS SOCIETY VARACHHA ROAD SURAT # ./ ./ PAN/GIR NO. : ABXPL 0860H ( #% / ASSESSEE ) .. ( &#% / RESPONDENT ) #%' / ASSESSEE BY : MR. PRASOON KABRA, SR.DR &#%(' / RESPONDENT BY : NONE )*(+ / DATE OF HEARING 10/01/2017 ,-./(+ / DATE OF PRONOUNCEMENT 06/02/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-V, SURAT [CIT1( A) IN SHORT] DATED 24/05/2011 FOR ASSESSMENT YEAR (AY) 2006-07. 2. THE REVENUE HAS RAISED THE FOLLOWING SUBSTANTIV E GROUND OF APPEAL:- ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 2 - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MADE B Y THE A.O. AT RS.70,17,000/- ON ACCOUNT OF UNACCOUNTED SALES CON SIDERATION OF 11 ROW HOUSES IN SPITE OF THE FACT THAT THE ASSESSEE H AS CHARGED DIFFERENT PRICES FOR THE SAME ARE FROM DIFFERENT PERSONS MENT IONING ANY EXTRA WORK WITHOUT AGREEMENT. 3. NONE APPEARED FOR THE RESPONDENT-ASSESSEE. IT IS SEEN FROM THE RECORD THAT THE DATE OF HEARING WAS DULY INFORMED T O THE ASSESSEES REPRESENTATIVE ON THE PREVIOUS OCCASION. IT IS ALS O SEEN THAT IN THE PAST, SEVERAL OPPORTUNITIES HAVE BEEN GRANTED TO BOTH SID ES FOR DISPOSAL OF THE APPEAL. THE ASSESSEE HAS FILED WRITTEN SUBMISSION ON ONE OCCASION, A COPY OF WHICH WAS PROVIDED TO THE OTHER SIDE. IN THESE CIRCUMSTANCES, IT IS PRESUMED THAT THE ASSESSEE DOES NOT SEEK ORAL HE ARING IN THE MATTER. THE MATTER IS ACCORDINGLY PROCEEDED EX-PARTE FOR DISPOSAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND ON THE BASIS OF AR GUMENTS ADVANCED ON BEHALF OF THE REVENUE. 4. ON PERUSAL OF RECORDS, IT IS OBSERVED THAT TH E ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF CONSTRUCTION OF RAW HOUS ES ON FIXED CONTRACT BASIS. DURING THE YEAR, THE ASSESSEE HAD CARRIED OUT CONSTRUCTION OF 11 RAW HOUSES. THE ASSESSEE HAD SHOWN THE GROSS CONTRA CT RECEIPT OF RS.1,02,64,000/-. THE ASSESSEE HAD UNDERTAKEN THE BASIC CONSTRUCTION @ RS.8,25,000/- PER RAW HOUSES FOR 11 RAW HOUSES, THE TOTAL ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 3 - CONSIDERATION OF WHICH WORKS OUT TO RS.90,75,000/-. THE ASSESSEE HAD ALSO UNDERTAKEN THE EXTRA WORK IN 2 RAW HOUSES AS P ER THE SPECIFICATIONS GIVEN BY THE OWNERS OF RAW HOUSES. THE CONSIDERATIO N FOR EXTRA WORK FOR SUCH ROW HOUSES WERE RECEIVED RS.11,89,000/. ON T OTAL CONTRACT PRICE OF RS.1,02,64,000/-, THE ASSESSEE HAD SHOWN THE GROSS PROFIT OF RS.10,34,798/- WHICH IS ABOVE 10.08%. THE ASSESSEE HAD SHOWN THE NET PROFIT OF RS.8,23,839/- WHICH IS 8% OF CONTRACT REC EIPTS. 4.1. THE SURVEY PROCEEDINGS U/S. 133A OF THE ACT WERE CARRIED OUT ON 25.01.2006 IN WHICH THE ASSESSEE HAD ADMITTED ELEM ENT OF ON-MONEY RECEIPTS FROM RAW HOUSE OWNERS @ RS.1,30,000/- PER RAW HOUSE. THE TOTAL ON-MONEY RECEIPTS OF RS. 14,30,000/- WAS SHOW N IN THE BOOKS OF ACCOUNT AS WELL AS RETURN OF INCOME AND TAX THEREO N WAS PAID. 4.2. THE ASSESSING OFFICER FOUND THAT THE AREA OF PLOT OF RAW HOUSE IS SAME BUT THE ASSESSEE HAS CHARGED DIFFERENT RATES F OR THE SAME CONSTRUCTION AREA. THE COPIES OF AGREEMENT OF ASSES SEE WITH RAW HOUSE OWNERS DO NOT MENTION ANY EXTRA WORK AS CONTENDED B Y ASSESSEE IN HIS SUBMISSION DATED 14.07.2008. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO SUBMIT THE REASONS FOR CHARGING HIGHER AMOUNT IN ONE CASE AND LESS AMOUNT IN OTHER CASE FOR THE SAME AREA OF CONSTRUCTION AND SIMILAR PLAN. THE ASSESSEE ONLY CONTENDED THAT THE EXCESS AMOUNT RECEIVED REPRESENT THE CONSIDERATION FOR EXTRA WORK DONE. ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 4 - 4.3. THE ASSESSING OFFICER ALSO PRESUMED THAT THE ASSESSEE IS NOT A CONTRACTOR BUT IS A BUILDER AS THE ASSESSEE HAD MAD E THE DISCLOSURE OF RS. 14,30,000/- IN SURVEY PROCEEDINGS AS ON MONEY RECEI PTS. THE ASSESSING OFFICER THEREFORE, PRESUMED THAT THE ENTIRE PLANNIN G OF THE PROJECT HAS BEEN MADE BY THE ASSESSEE AND HIS FATHER IN AGREEME NT WITH THE LAND OWNER ACCORDING TO WHICH THE LAND OWNERS EXE CUTED AGREEMENTS FOR PURCHASE OF LAND AND THE ASSESSEE EXECUTED AGREEMEN T FOR CONSTRUCTION. THE ASSESSING OFFICER ALSO CONTENDED THAT IN A PREL IMINARY STATEMENT THE ASSESSEE'S FATHER HAD AGREED THAT HIS IS HAVING ALL THE RIGHTS OVER THE LAND AND LATER ON ALTERED HIS STATEMENT SAYI NG THAT HE HAS ONLY MADE AGREEMENT WITH MAHENDRABHAI SAVANI TO TAKE CON STRUCTION INCOME. THE LAND WAS PURCHASED BY SHRI KARASANBHAI MOHANBHA I VASANI BY AGREEMENT DTD. 25.02.2003. SHRI KARSANBHAI MOHANBHA I VASANI HAD CONVERTED THE AGRICULTURE LAND INTO NON AGRICULTURE LAND BY NECESSARY PERMISSION DTD. 10.04.2005. AFTER OBTAINING THE P ERMISSION OF SUB- DIVISION OF LAND ON 08.12.2003 FROM REVENUE AUTHO RITIES, SHRI KARSANBHAI MOHANBHAI VASANI PREPARED AND GOT TH E SANCTION OF PLAN OF 26 PLOTS. SHRI KARSANBHAI MOHANBHAI VASAN I HAD SOLD THE LAND TO MAHENDRABHAI SHIVABHAI SAVANI AND AS PER INSTRUCTIO N OF MAHENDRABHAI SHIVABHAI SAVANI, SHRI KARSANBHAI MOHANBHAI VASANI EXECUTED REGISTERED SALE DEED OF PLOTS IN FAVOUR OF RAW HOUS E OWNERS. THE ENTIRE PLAN OF LAND WAS SANCTIONED BY THE PERMISSION OF S URAT MUNICIPAL ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 5 - CORPORATION GRANTED ON 12.08.2004. ACCORDIN G TO ASSESSING OFFICER, ALL THIS PLANNING WAS MADE BY ASSESSEE. 4.4. AFTER CONSIDERING THE ASSESSEE AS A BUILDER , THE ASSESSING OFFICER ESTIMATED SALE VALUE OF EACH RAW HOUSE AT RS. 18,00 ,000/-. HE REDUCED THE COST OF LAND RS.99,000/- AND WORKED OUT THE C OST OF CONSTRUCTION AT RS.17,01,000/- PER RAW HOUSE. THE ASSESSING OFFICER ASSUMED SALE OF 11 RAW HOUSE AT RS.1,87,11,000/- AND REDUCED THE CO NTRACT RECEIPT OF RS.1,02,64,000/- THEREFROM SHOWN IN THE BOOKS OF AC COUNTS. FROM THE DIFFERENCE OF RS.84,47,000/- THE ASSESSING OFFICER REDUCED RS. 14,30,000/- DISCLOSED BY ASSESSEE AND MADE THE ADDI TION OF RS. 70,17,000/- BY COMMITTING A MISTAKE IN NOT DEDUCTIN G THE CONSIDERATION OF EXTRA WORK OF RS. 11,89,000/- WHICH WAS DONE IN THE CASE OF ASSESSEES FATHER . 4.5. THE A.O. HAS FURTHER GIVEN DETAILS OF INVESTMENT MADE BY THE ASSESSEE IN PLOTS OF LAND WHICH ARE AS UNDER: LAND ADDRESS AREA OF THE LAND (IN SQ. MTR.) TOTAL AMOUNT OF PURCHASE PRICE (IN RS.) COST PER SQ. MTR.(IN RS.) NEW JANTRY PRICE /SQ. MTR.W.E.F. SURVEY NO. 184, PLOT NO. 108, HARIDARSHAN, ADAJAN, SURAT 181.38 SQ. MTR. RS.2,21,000/ - 1218SQ. MTR. RS.14000/ - SQ.MTR. VILLANGE : SARTHAN, SURVEY NO. 188/1, ANMOL PARK HOUSING SOCIETY 83.81 SQ.MTR. RS. 10870 129,SQ. FRITS. RS. 7000 SQ.RNTR. ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 6 - SURVEY NO. 18888, 199/2, EILOCK NO. 182, ANAND PARK SOCIETY, SARTHANA 48.49 SQ.MT. RS.6305 RS . 130/SIQ|. MTR. RS.6000/ - SQ.MTR. SURVEY NO. 190/1, BLOCK 183, SARTHAN, KAMRJE 83.89 SQ. MTR RS. 10905 RS. 129 SQ. MTR RS.7000/ - SQ.MTR. SURVEY NO. 107/1, ADAJAN, SURAT 170.26 SQ.MTR. RS. 1,70, 000 SQ.MTR. 998 SQ.MTR. RS.14000 SQ. MTR. SURVEY NO. 107/1, T.P. SCHEME-32, PLOT NO. 85 ADAJAN, SURAT 96.35 SQ.MTR. RS.99,000 1027/SQ. MTR.: RS.14000 SQ.MTR. 4.6. THE ASSESSING OFFICER APPLIED THE JANTRY PRI CES OF ABOVE LAND FIXED BY STATE STAMP DUTY VALUATION AUTHORITIES AND APPLI CABLE FROM 1.4.2008 TO THE COST OF LAND PURCHASED IN A.Y. 2006/07. 4.7. AT THE SAME TIME THE ASSESSING OFFICER HIMSE LF ESTIMATED THE INVESTMENT ON PURCHASE OF LANDS AT RS. 50,00,000/- OVER AND ABOVE THE COST OF LAND SHOWN BY THE ASSESSEE IN HIS BOOKS OF ACCOUNTS. THE ASSESSING OFFICER HAD ISSUED THE SHOW CAUSE NOTICE TO EXPLAIN THE INVESTMENT. THE ASSESSEE HAD SUBMITTED THAT IT HAD PURCHASED 6 SMALL PLOT OF LAND AND PROVISION OF SECTION 50C, A DEEMIN G PROVISION, IS APPLICABLE TO SELLER OF LAND. THE ASSESSEE ALSO EXP LAINED THAT PROVISION OF SECTION 69B OF THE ACT ARE NOT APPLICABLE TO BUYERS OF LAND. THE ASSESSEE ALSO EXPLAINED THAT THE JANTRI RATE OF ALL THE LAND ARE RS.1000/- PER SQ.MTS. ON THE BASIS OF THE CERTIFICATE FROM THE SUB-REGIST RAR, SURAT WHO IS HAVING LIST OF ALL DOCUMENTS AND JANTRI PRICES OF LAND. TH E ASSESSEE HAD ALSO SUBMITTED THAT THE JANTRI RATE OF RS. 7,000/- FOR A GRICULTURE LAND AND ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 7 - RS.14,000/- PER METER FOR NON AGRICULTURE LAND IN T HE SHOW CAUSE NOTICE W.E.F. 1.4.2008 ARE ALSO INCORRECT SINCE, THE RATE W.E.F. 1.4.2008 IS RS. L,000/- PER METER. THE ASSESSING OFFICER HAD AS SUMED THE RATE AT RS. 7,000/- PER METER ESTIMATED THE UNACCOUNTED INVESTM ENT AT RS. 50,00,000/- BUT DID NOT MAKE ANY ADDITION SINCE HE HAD ESTIMATED THE UNDISCLOSED INCOME FROM SALE OF RAW HOUSES. THE ASS ESSING OFFICER ESTIMATED THAT THE CONSIDERATION STATED IN THE STAT EMENTS OF ACCOUNT IS MUCH LESS THAN THE MARKET VALUE OF LAND. THE CIT(A ) HAD DIRECTED THE ASSESSING OFFICER TO GET THE VALUATION OF LAND DONE BY DVO. THE ASSESSING OFFICER HAS NOT SUBMITTED HIS REPORT TO T HE CIT(A) DESPITE REMINDERS. THUS, THE ISSUE WAS DECIDED BY THE CI T(A) AS PER MATERIAL AVAILABLE ON RECORD. 4.8. IT WILL BE RELEVANT TO REFER TO SUBMISSIONS OF ASSESSEE BEFORE THE CIT(A) ADDITION OF RS. 70,17,OOO/- ON ACCOUNT OF ESTIMATION OF CONSTRUCTION / SALES INCOME: THE ASSESSING. OFFICER MADE THE ADDITION BY TAKING THE HYPOTHETICAL SALE PRICE OF 11 ROW HOUSE AT RS.17,01,000/- PER ROW HOUSE INSTEAD O F RS. 8,25,000/- SHOWN BY ASSESSEE AND EVIDENCED BY VARIOUS CONSTRUCTION AGRE EMENTS WITH ROW HOUSE OWNERS. SUBMISSION FOR ASSESSMENT AS CONTRACTOR : THE ASSESSEE IS A CONTRACTOR ENGAGED IN RAW HOUSE CONSTRUCTION ON FIXED CONTRACT BASIS. THE ASSESSEE SHOULD BE TREA TED AS CONTRACTOR SINCE- (I) THE ASSESSEE NEITHER PURCHASED LAND ,NOR OBTAINED A NY RIGHTS OF DEVELOPMENT AS A DEVELOPER OF LAND. ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 8 - (II) THE RAW HOUSE OWNERS ARE OWNERS AND HAVE ABSOLUTE AND UNCONDITIONAL' RIGHTS OF ENJOYING OWNERSHIP AND POSSESSION ON THESE LAND. ; (III) THE RAW HOUSE LAND OWNERS NEVER GAVE ANY RIGHTS OF OWNERSHIP OR POSSESSION IN THEIR LAND TO ASSESSEE. THE BRIEF FACTS OF OWNERSHIP OF LAND A. THE LAND WAS OWNED BY SHRI KARSANBHAI MOHANBHAI VASANI WHO HAD PURCHASED THESE LAND ON 25.02.2003AS PER REGISTERED SALE DEED OF EVEN DATE. B. SHRI KARSANBHAI MOHANBHAI VASAHI OBTAINED THE NON A GRICULTURE LAND PERMISSION AS PER THE ORDER OF THE COLLECTOR SURATO N 10.04.2003. C . SHRI KARSANBHAI MOHANBHAI VASANI SUB-DIVIDED THE LAND BY THE PERMISSION OF SUB-DIVISION GRATED BY THETDO ON 08.1 2,2003. D. SHRI KARSANBHAI MOHANBHAI VASANI PREPA RED AND APPROVED THE PLAN ON SUB-DIVISION PLOT NO. 1 AND SURAT MU NICIPAL, CORPORATION APPROVED 26 PLOTS. E. SHRI KARSANBHAI MOHANBHAI VASANI AGREED TO SEL L THE LAND TO SHRI MAHENDRABHAI SIVABHAI SAVANI RESIDING AT A/2, HANS SOCIETY, VARACHHA R.OAD, SURAT. F. SHRI MAHENDRABHAI SIVABHAI SAVANI HAD INS TRUCTED SHRI KARSANBHAI MOHANBHAI VASANI TO EXECUTE A REGISTERED SA LE DEED IN FAVOUR, OF 26 PLOT OWNERS. THEREFORE, SHRI, KARSANBHAI MOHANBHAI VASANI HAD TO ACT ACCORDING TO INSTRUCTION- OF SHRI MAHENDRABHAI SIVABHAI SAVANI. G. SURAT MUNICIPAL CORPORATION HADJ SANCTIONED TH E PLAN ON 12.08.2004 IN THE NAME OF SHRI KARSANBHAI MOHANBHAI V ASANI. THE COPY OF PERMISSION LETTER IS ENCLOSED ON PAGE 11 IN THE CA.SE OF ARVINDBHAI L. LAKHANKIYA. (V) THE COPY OF FOLLOWING DOCUMENTS FOR PURCHASES O F LAND MADE BY RAW HOUSE OWNERS FROM SHRI KARSANBHAI MOHANBHAI VASANI AND MAHENDRABHAI ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 9 - SAWANI ARE ENCLOSED ON PAGE 14 TO 43 IN THE CASE OF ARVINDBHAI L. LAKHANKIYA DATE OF DOCUMENT NAME OF RAW HOUSE OWNERS RAW HOUSE LAND PLOT NO. AMOUNT (RS.) 26.10.05 SUBHASHBHAI CHUNIBHAI GOHIL 3 99000 10.10.05 NEETABEN NARESHBHAI MODI 24 99000 THE SURVEY PROCEEDINGS WERE CARRIED OUT ON 20.01.20 06. THE DOCUMENTS FOR SALES WERE EXECUTED IN FAVOUR OF PLOT OWNERS BEFORE THE DATE OF SURVEY. THEREFORE, THE FACTS RECORDED IN THE REGISTERED SAL E DEED ARE CONCLUSIVE EVIDENCES ON THE DATE OF SURVEY THAT THE, PLOT OWNE RS HAD PURCHASED THE PLOTS FROM SHRI KARSANBHAI MOHANBHAI VASANI WHO HAD EXECU TED AGREEMENTS AS PER THE INSTRUCTIONS OF SHRI MAHENDRABHAI SFAABHAI SAVANI. IN THE REGISTERED SALE DEEDS THE CONFIRMING PARTY SHRI MAHENDRABHAI SIVABHAI SAVANI HAD RECEIVED THE CONFI RMING PARTY PROFIT OF RS. 22,285 PER PLOT. ON PAGE 10 OF THE REGISTERE D SALE DEED IT HAS BEEN MENTIONED THAT THE LAND OWNER HAS RECEIVED THE CONSIDERATION OF RS. 77,71 5/- PER PLOT FROM SHRI MAHENDRABHAI SIVABHAI SAVANI. THEREFORE, SHRI MAHENDRABHAI SIVABHAI SAVANI HAD IN THE FIRST INSTANCE PURCHASED EACH PLOT AT RS. 77,715/- FROM SH RI KARSANBHAI MOHANBHAI VASANI AND SOLD TO PLOT OWNERS AT R. 99,000/-, IN THE ENTIRE, TRANSACTIONS THE ASSESSEE HAS NO RIGHT OR TITLE AT ANY STAGE OF TRANSACTIONS RIGHT FROM AGRICULTURE LAN D PURCHASED BY SHRI KARSANBHAI MOHANBHAI VASANI TO THE FINAL STAGE OF E XECUTION OF DOCUMENT OF PLOT IN FAVOUR OF PLOT OWNERS. THEREFORE, THE ASSES SEE IS NOT A BUILDER AS HE HAS A) NOT PURCHASED, THE LAND OR OBTAINED ANY RIGH T OF DEVELOPMENT IN LAND AS A DEVELOPER. B) HAS NOT BOOKED ANY PLOTS. C) HAS NOT IMPLEMENTED ANY PLANNING OF PLOTTING. D) HAS NOT GOT THE PLAN APPROVED FROM SURAT MUNICIP AL CORPORATION. THE PLAN WAS PREPARED AND GOT APPROVED BY SHRI KARSANBHAI MOHANBHAI ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 10 - VASANI. THE COPY OF PLAN IS ENCLOSED ON PAGE 44 IN THE CASE OF ARVINDBHAI LAKHANKIYA . E) HAS NOT INSTRUCTED FOR EXECUTION OF DOCU MENT IN FAVOUR OF PLOT OWNERS. F) HAS NOT BEEN A CONFIRMING PARTY IN THE DOCUMENT G) HAS NEITHER RECEIVED NOR PAID ANY CONSIDERATION FOR PURCHASE OR SALE OF ANY PLOT SOLD BY SHRI KARSANBHAI MOHANBHAI VASANI SUBMISSION ON FACTS' 1 RECORDED IN. STATEMETN U/S. 131 OF THE ACT ON 20.01.2006. AT THE OUTSET IT IS SUBMITTED THAT ASSESSEE HAS NOT GIVEN ANY STATEMENT. THE STATEMENT OF SHRI ARVINDBHAI L. LAKHANKIA, FATHER OF ASSESSEE WAS RECORDED. THE AUTHORIZED OFFICER HAS EVEN HOT TAKEN THE SIGNATURE OF ASSESSE E ON THE STATEMENT. THEREFORE, THE STATEMENT IS NOT BINDING OH ASSESSEE. HOWEVER, SINC E THE ASSESSEE HAS PAID THE TAX ON THE AMOUNT ADMITTED BY HIS FATHER HIS RESULTS SHOUL D BE ACCEPTED. Q.NO 6 : KINDLY EXPLAIN IN DETAILS YOUR BUSINESS RE LATION WITH SHRI MAHENDRABHAI SIVABHAI SAVANI ? ANS. 6 : FOR LAND OF UMA RAW HOUSE; I HAVE AN AGRE EMENT WITH THEM THEY SHALL EXECUTE DOCUMENT TO WHOM I SUGGEST I HAVE A R IGHT ON THESE LAND. THE STATEMENT WAS AGAIN RECORDED ON 23.01.06. TH E CORRECT FACTS WERE RECORDED IN A STATEMENT ON 23.01.06 WHICH ARE REPRODUCED AS UN DER: Q.NO. 8 : KINDLY, SHOW HOW MUCH INVESTMENT YOU HA VE MADE IN UMA RAW HOUSE PROJECT ? WHAT IS THE INVESTMENT OF YOUR SON ANIL PATEL IN THIS PROJECT? ANS. 8 : I HAVE INVESTED, RS. 10,00,000/- IN THESE PROJECT AND MY SON HAS INVESTED RS. 2,00,000/-. Q.NO.9: PLEASE, STATE HOW MUCH INVES TMENT YOU HAVE MADE IN PURCHASE OF LAND AND CONSTRUCTION OUT OF RS. 10,00,000/-? ANS. 9 : WE HAVE NOT INVESTED ANY AMOUNT IN LAND. T HE TOTAL INVESTMENT OF RS. 12,00,000/- IS IN CONSTRUCTION ONLY. ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 11 - Q. 10 : YOU HAVE STATED IN REPLY TO Q. NO. 6 THA T YOU AND YOUR SON ANIL HAVE RIGHTS IN THIS LAND. KINDLY CLARIFY IN THIS MATTER. ANS. 10 : I WANTED TO STATE IN REPLY TO Q. NO. 6 THAT OUR AGREEMENT IS SUCH THAT THE CONSIDERATION FOR LAND OF RAW HOUSE IS TAKEN BY SHRI MAHENDRABHAI SIVABHAF SAVANI AND I HAVE TO TAKE THE AMOUNT OF CONSTRUCTION PRICE. THUS, THE Q. NO. 8 TO 10 RECORDED ON 23.01.2006 AFT ER THE ASSESSEE RECOVERED FROM AILMENT CLEARLY REVEAL THE FACT THE ASSESSEE IS ONL Y A CONTRACTOR AND HAS NO RIGHT IN LAND. IF, THE ENTIRE SITUATION IS REVIEWED ON FACTS IT IS EVIDENT THAT THE PLOT OWNERS HAD ALREADY PURCHASED THE LAND ON 10.10.2005 AND THE ST ATEMENT WAS RECORDED ON 20.01.2006 I.E. AFTER THE REGISTRATION DEED IN FAVO UR OF PLOT OWNERS. THEREFORE, ON THE DATE OF SURVEY THE EXISTING FACTS ARE THAT PLOT OWN ERS HAD PURCHASED THE LAND FROM SHRI. MAHENDRABHAI SIVABHAI SAVANI AND KARSANBHAI V ASANI AND NOT FROM ASSESSEE. THEREFORE, ANSWER TO Q. NO. 8 TO 10 ARE CORRECT AND Q. 6 IS FACTUALLY INCORRECT AS WHATEVER WAS STATED IN THAT REPLY NEVER EXISTED IN REAL SITUATION OR SUPPORTED BY FACTS. IN SUCH CIRCUMSTANCES THE HON'BLE KERALA HIGH COURT IN THE CASE OF PAUL MATHEWS AND SONS VS. CIT REPORTED AT-263 ITR 101 CLARIFIED THAT FACTS ARE TO BE BELIEVED. THE RELEVANT PART OF THE JUDGMENT IS AS UNDER : 'SECTION 133A(3)(III) -ENABLES THE AUTHORITY TO REC ORD THE STATEMENT OF ANY PERSONS WHICH MAY BE; USEFUL FOR OR RELEVANT TO, AN Y PROCEEDING UNDER THE ACT. SEPT/ON 133A, HOWEVER, ENABLES THE INCOME-TAX AUTHORITY ONL Y TO/RECORD ANY STATEMENT OF ANY PERSON WHICH MAY BE USEFUL, BU T DOES NOT AUTHORIZE TAKING ANY SWORN STATEMENT. ON THE OTHER HAND, WE F IND THAT SUCH A POWER TO EXAMINE A PERSON ON OATH IS SPECIFICALLY CONFERRED ON THE AUTHORIZED OFFICER ONLY UNDER SECTION 132(4) OF THE INCOME-TAX ACT IN THE COURSE !OF ANY SEARCH OR SEIZURE. THUS, THE INCOME-TAX ACT, WHE NEVER IT THROUGH FIT AND NECESSARY TO CONFER SUCH POWER TO EXAM INE PERSONS ON OATH, THE SAME HAS BEEN EXPRESSLY PROVIDED ! WHEREAS SECTION 133A DOES NOT EMPOWER ANY INCOME-TAX, OFFICE, TO EXAMINE ANY PERSON ON OA TH. THUS, IN CONTRADISTINCTION TO THE POWER UNDER SECTION 133A, SECTION 132(4) OF THE INCOME-TAX ACT ENABLES THE AUTHORIZED OFFICE TO EXA MINE A PERSON ON OATH AND ANY STATEMENT MADE BY SUCH PERSON DURING, SUCH EXAM INATION CAN ALSO BE USED IN EVIDENCE UNDER THE INCOME-TAX ACT. ON THE OTHER HAND, WHATEVER STATEMENT IS RECORDED UNDER SECTION 133A OF THE IN COME-TAX ACT IT IS NOT GIVEN ANY EVIDENTIARY VALUE OBVIOUSLY FOR THE REA SON THAT THE OFFICER IS NOT AUTHORIZED TO ADMINISTER OATH AND TO TAKE ANY SWORN STATEMENT WHICH ALONE HAS EVIDENTIARY VALUE AS CONTEMPLATED U NDER LAW. THEREFORE ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 12 - THERE IS MUCH FORCE IN THE ARGUMENT OF LEARNED COUN SEL FOR THE APPELLANT THAT THE STATEMENT ELICITED DURING THE SURVEY OPERATION HAS NOT EVIDENTIARY VALUE AND THE INCOME-TAX OFFICER WAS WELL AWARE OF THIS.' THUS, ANY AFFIRMATION MADE DURING THE SURVEY IS NOT LITERALLY BINDING FIRST ON ACCOUNT OF NON APPLICABILITY OF THE OATH AND EVIDE NCES ACT TO THE INCOME-TAX STATUTE AND SECONDLY ACCORDING TO SECTION 94LOF THE EVIDENCE ACT THE AFFIRMATION ADMISSION OR CONFESS IONALS IRRELEVANT IN VIEW OF THE FACT ON RECORDS. THE HON'BLE SUPREME COURT HA S FURTHER HELD IN CASES OF SHRI KISAHAN VS. KURUSHETRA UNIVERSITY AIR 199 6 SC 376 THAT THE ADMISSION MADE-IN IGNORANCE OF IEGAL RIGHTS OR WITH OUT THE KNOWLEDGE OF THE CORRECT FACTS DOES NOT BIND THE MAKER OF ADMISSION. SIMILAR VIEW WERE HELD BY THE ITAT JAIPUR BENCH IN ITO VS. RATAN DEVI DUNGE R 20 ITD 483. IT WAS HELD BY THE HIMACHAL PRADESH HIGH COURT IN THE DECI SION REPORTED AT 106 ITR 64 THAT EVEN THOUGH AN ADMISSION CONSTITUTES A RELE VANT PIECE OF EVIDENCE, IT CANNOT BE RELIED UPON AS SUCH, WITHOUT UNDERSTANDI NG THE REAL FACTS AND RECORDS. THEREFORE, THE ANSWER TO Q.NO. 6 WHICH IS INCONSISTENT WITH THE FACTS AND EVIDENCES OF REGISTERED DOCUM ENTS ON RECORDS HAS NO RELEVANCE IN VIEW OF ABOVE DECISION OF THE SUPRE ME COURT AND FURTHER, DECISION OF ITAT AHMEDABAD BENCH IN ITA NO. 4105/A/2003 AND 4104/A/2003. SUBMISSION ON CONSTRUCTION INCOME: THE ASSESSING OFFICER ESTIMATED SELLING RATE AT RS. 1200/- PER SQ. FTS. FOR 1500 SQ. FT.OF AREA CONSTRUCTED BY ASSESSEE AND RED UCED THE COST OF LAND RS. 99,000/- AND WORKED OUT THE VALUE OF ROW HOUSE AT R S. 17,01,000/- THE ASSESSEE SUBMITS THAT THE CONSIDERATION FOR CONTR ACT FOR 11 HOUSES SHOULD NOT BE TAKEN AT RS. 17,01,000/-PER RAW HOUSE SINCE- I. THE ASSESSEE HAD UNDERTAKEN CONTRACT AT DIFFERENT P RICES. THE ASSESSEE HAS CHARGED RS. 90,7&000/- AS CONTRACT RECEIPTS F OR 11 RAW HOUSE EACH OF 1500 SQ. FTS. THE ASSESSEE HAS CARRIED OUT EXTRA WORK OF RS. 11,89,000/- IN 2 RAW HOUSE AS PER THE DETAILS S UBMITTED ON 14,07.2008. II. THE ASSESSEE HAS SHOWN NET PROFIT OF RS. 6,7 4,839/- WHICH IS 6.6%. III. THE CONSIDERATION SHOULD BE TAKEN AT THE REAL AMOUN T OF RECEIPTS OF RS. 1,02,64,000/-. IV. THE ASSESSEE HAD SUBMITTED ALL DOCUMENTS IN THE FOR M OF CONTRACTS WITH 11 RAW HOUSE OWNERS. ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 13 - V. THE PER METER COST OF CONSTRUCTION AT RS. 2, 000/- TO RS. 2,500/- MENTIONED ON PAGE 2 OF SHOW CAUSE NOTICE IS VALUE B ELIEVED BY ASSESSING OFFICER WITHOUT ANY ACTUAL EVIDENCES. THE STATE STAMP DUTY. VALUATION AUTHORITIES HAVE DETERMINED THE VALUE OF CONSTRUCTION IN THESE AREA AT RS. 511/- PER SQ. FTS. THE CERTIFICAT E FROM STATE STAMP DUTY VALUATION AUTHORITIES IS ENCLOSED. THE ASSESSE E HAS TAKEN THE BASIC VALUE OF CONSTRUCTION CONTRACT AT RS. 550 PER SQ. FT. IF 8% PROFIT IS EXCLUDED THE COST OF CONSTRUCTION COMES TO RS, 5 06 PER SQ.FT FOR BASIC CONSTRUCTION EXCLUDING EXTRA WORK. THEREFORE, THE COST OF RS. 506/- IS MORE OR LESS NEARER TO RS. 511/- PER SQ, F TS. FIXED BY, THE STATE STAMP DUTY VALUATION AUTHORITIES. VI. THEREFORE, THE VALUE OF ENTIRE CONTRACT OF 11 RAW HOUSE SHOULD BE TAKEN AT RS. 1,02,64,006/- AND THE PROFIT OF RS. 6, 74,839/- DECLARED BY ASSESSEE SHOULD BE ACCEPTED WITHOUT ANY MODIFICATIO N. , ; VII. A LARGE NUMBER OF CASES OF BUILDERS /CONTRAC TORS ARE ASSESSED IN VARIOUS CIRCLES / RANGES IN SURAT. NO OFFICER HAS T AKEN THE RATE OF COST OF CONSTRUCTION AT RS. 2,000/- TO RS. 2,500/- PER SQ. FTS. A\IN ANY AREA OF SURAT. THEREFORE, THE HYPOTHETICAL RATE WHICH IS FAR BEYON D IMAGINATION SHOULD NOT BE APPLIED IN OUR CASE. OUT OF 26 RAW HOUSES OWNERS, AS PER THE INFORMATION GIVEN TO ASSESSEE, YOUR HONOUR HAD SUMMONED 5 RAW HOUSES OWNERS WHO ATTENDE D BEFORE ASSESSING OFFICER WITH THE REQUIRED DETAILS AND ADMITTED THAT THEY HAD PAID THE CONTRACT PRICE AS PER THE PRICE STATED IN THE WORKS CONTRACT EXECUTED, BY THEM WITH THE ASSESSEE. THEY ALSO ADMITTED THAT THEY HAVE NOT PAID ANY UNACCOUNTED CONSIDERATION TO ASSESSEE FOR COST OF CONSTRUCTION. THEY ALSO ADMITTED THAT THEY HAD PURCHASED THE LAND FROM MAHEN URABHAI SA VANI AND KARSANBHAI MOHANBHAI VASANI AND GIVEN TO ASSESSEE FOR CONS TRUCTION ONLY. THEY ALSO ADMITTED THAT THEY HAD INSTRUCTED THE ASSESSEE TO C ARRY, OUT CERTAIN EXTRA WORK AT THE PRICE MUTUALLY AGREED UPON WHICH IS AS PER THE DETAILS SUBMITTED BY ASSESSEE TO ASSESSING. OFFICER WHO HAS NOT DISCLOSE D THE RESULT OF THESE INVESTIGATION TO ASSESSEE AS IT PROVES THAT- I. THE ASSESSEE HAS NEITHER PURCHASED LAND F ROM SHRI MAHENDRABHAI SIVABHAI SAVANI NOR SOLD THE PLOT OF LAND TO RAW HOUSES PWNERS WHO HAD ACTUALLY PURCHASED THE PLOTS FROM KARSANBHAI MOHANBHSH;, VASANI AND SHRI MAHENDRABHAI SIVAP HAI SAVANI. II. NO TRANSACTION OF ON MONEY PAYMENT IS INVOLVE D. ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 14 - III. THE ASSESSEE IS A CONTRACTOR AND NOT A BUILDER. IV. THE ASSESSEE HAS NOT MADE ANY UNACCOUNTED INVES TMENT IN CONSTRUCTION. THE ASSESSING OFFICER HAS ADMITTED ON PAGE 3 PARA 3 OF YOUR NOTICE ITSELF THAT COST OF CONSTRUCTION PER SQ. FTS. IN THE LOCALITY OF ASSESS EE IS RS.400/-:TO RS. 500/-. THE COST OF RS. 400/- TO RS. 500/- PER SQ. FT. IS CORRECT AN D SUPPORTED BY THE STATE STAMP DUTY VALUATION AUTHORITIES AND VALUATION REPORTS OF VARI OUS REGISTERED VALUERS AND DEPARTMENTAL VALUERS. THE COPY OF SUMMON ISSUED SHR I SUBHASHBHAI C. GOHIL FOR RAW HOUSE NO. 3 ON 12.11.2008 WHO APPEARED ON 18,11 .2008 IS ENCLOSED ON PAGE45 IN THE CASE-OF ARVINDBHAI L. LAKHANKIYA. THE RAW HO USE OWNERS ARE MOSTLY GOVERNMENT EMPLOYEES AND HAD TAKEN THE LOAN FOR THE PURPOSE OF PAYMENT OF CONTRACT PRICE OF CONSTRUCTION TO ASSESSEE AFTER TH EY PURCHASED PLOT OF LAND AND GOT IT REGISTERED IN THEIR NAME. THESE ARE EVIDENCES THAT ASSESSEE IS A CONTRACTOR LAND WAS PURCHASED BY KARSANBHAI MOHANBHAI VASANI WHO SOLD P LOTS TO RAW HOUSE OWNERS AND NO EXTRA AMOUNT WAS PAID BY THEM TO ASSESSEE FO R THE PURPOSE OF CARRYING OUT THE CONSTRUCTION. THE ADDITION, OF RS, 70,17,000/ SHOULD BE DELETED. II. SUBMISSION ON INVESTMENT IN PURCHASE OF NEW LAND : THE ASSESSEE HAS PURCHASED LAND OF 170.26 AND 96.35 MTS. IN UMA RAW HOUSE PLOTS. YOUR HONOUR STATED THAT THE JANTRI PRICES OF RS. 10 000/- PER SQ, MTS. FROM 1.4.2008,SHOULD BE APPLIED AS PURCHASE PRICE. THE ASSESSEE HAD PURCHASED THE LAND IN A.Y. 2006/07 AND JANTRI PRICES OF A.Y. 2006/07 B ECOMES APPLICABLE AT THE MOST IF PROVISIONS, OF SEC. 50C ARE INVOKED. THE JANTRI P RICES AS ON THE DATE OF PURCHASES ARE RS. 1000/- PER SQ. MTS. THE ASSESSEE HAD PURC HASE THESE PLOTS AT THE JANTRY PRICES AND HAS SHOWN THE INVESTMENT OF RS. 2,99,050 /- IN THE BOOKS OF ACCOUNTS INCLUDING THE STAMP DUTY AND REGISTRATION EXPENSE S. THE COPY OF JANTRY PRICE WORKING IS ENCLOSED. (PAGE 12) THE ASSESSEE HAS PU RCHASED THE LAND ACCORDING TO THE MARKET RATE / JANTRI: RATE DETERMINED BY THE ST ATE STAMP DUTY VALUATION AUTHORITIES AS ON THE DATE OF PURCHASE. THE ASSESS ING OFFICER DID NOT ACCEPT THE REQUEST OF ASSESSEE TO CALF THE SELLERS OF LAND U/S . 131 OF THE ACT AND EXAMINE AS TO. WHETHER THEY HAVE RECEIVED OR ASSESSEE HAS PAID ANY EXTRA AMOUNT TO THEM FOR THE PURCHASE OF LAND AND TO REFER THE ISSUE OF DETER MINING CONSIDERATION U/S. 142A OF THE ACT TO THE DEPARTMENTAL VALUATION O FFICER TO WORK OUT THE AMOUNT OF INVESTMENT IN LAND. THE ASSESSING OFFICER CANNOT DE CIDE ANY CONSIDERATION OF LAND INVESTMENT SIMPLY ON THE BASIS OF PRESUMPTION AND S URMISES AS THE ASSESSEE HAS NOT ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 15 - MADE ANY UNACCOUNTED INVESTMENT IN PURCHASE OF LAN D. THE ISSUE IS DIRECTLY COVERED BY THE FOLLOWING DECISIONS. I. OMEGA ESTATE VS. ITO REPORTED AT 112 TTJ 261. II. THE DECISION OF THE PUNJAB & HARYARIA HIGH COURT IN CIT VS. SIDDHU RICE AND GENERAL MILLS REPORTED AT 281 ITR 428. THE ACTUAL CONSIDERATION IS THE CORRECT CONSIDERATI ON AS STATED IN THE REGISTERED PURCHASE DEED. SIMILARLY, THE OTHER 2 PLOTS OF ANMO L PARK, ANAND PARK AND RIVER VIEW PARK WERE PURCHASED AT JANTRY PRICES AND THE DOCUMENTS WERE CLEARED BY THE STAMP DUTY VALUATION AUTHORITIES AS PER THE CLEARAN CE STAMP AFFIXED ON THE LAST PAGE OF THE DOCUMENT SUBMITTED ON 14.07.2008. THE ADDITI ON WAS TELESCOPED AGAINST THE ESTIMATED INCOME OF FROM ROW HOUSES AND THE DISCLOS URE MADE U/S. 133A OF THE ACT. HOWEVER, THE ADDITION SHOULD THEREFORE BE DELETED. III. ALTERNATIVE GROUND THE LEARNED ASSESSING OFFICER HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN MAKING THE ADDITION OF RS. 70,17,000/- BY ESTIMATING THE CONTRACT RECEIPTS AT RS. 1,87,11,000/- AT THE RATE OF RS. 17,01,000/- F OR 11 ROW HOUSES WITHOUT APPRECIATING THE FACTS THAT THE ADDITIONAL RECEIPTS ESTIMATED AT RS. 84,47,000/- IS NOT ENTIRELY TAXABLE AND ONLY 8% OF RS. 84,47,000/- WORKS OUT TO RS. 6,75,760/- ONLY IS TAXABLE WHICH IS AGAI NST ELIGIBLE FOR TELESCOPING AGAINST THE DISCLOSURE OF RS. 14,30,000/- MADE U/S. 133A OF THE ACT. ON ALTERNATIVE GROUND OF APPEAL, THE ADDITION IF SUSTAINED, ONLY 8% NET PROF IT BE HELD AS TAXABLE AND ON TELESCOPING OF NET PROFIT AGAINST INCOME DISCLOSED U/S. 133A OF THE ACT, THE ENTIRE ADDITION OF RS. 70,17,000/- SHOULD BE DE LETED. 5. THE CIT(A) ON THE BASIS OF MATERIAL PLACED BEFO RE DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. THE OPERATIVE PARA OF THE ORDE R OF THE CIT(A) READS AS UNDER:- 6. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT OR DER AND SUBMISSION OF THE ASSESSEE. THE ASSESSING OFFICER IS NOT CORRECT IN A SSUMING THE ASSESSEE AS A BUILDER AND NOT A CONTRACTOR. FROM THEDETAILED SUBMISSION W ITH EVIDENCES SUBMITTED BY ASSESSEE IT IS CLEAR THAT SHRI KARSANBHAI MOHANBHAI VASANI, THE OWNER OF LAND HAS ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 16 - EXECUTED REGISTERED SALE DEEDS IN FAVOUR OF OWNERS OF ALL 11 RAW MOUSES CONSTRUCTED BY ASSESSEE AND MAHENDRABHAI SHIVABHAI SAVANI HAD J OINED AS A CONFIRMING PARTY. THE COPY OF SALE DEED OF LAND NO WHERE REFERS TO AN Y INVOLVEMENT OF APPELLANT IN THE TRANSACTION OF LAND. THE ASSESSING OFFICER HAS EXAM INED 5 RAW HOUSE OWNERS U/S. 131 OF THE ACT WHO HAD CONFIRMED TO HAVE PURCHASED THE LAND FROM SHRI KARSANBHAI MOHANBHAL VASANI FOR THEIR RAW HOUSE. ALL THE 5 RA W HOUSE OWNERS ALSO CONFIRMED THAT THEY HAD NOT PAID ANY ON MONEY TO APPELLANT FOR CONSTRUCTION OF RAW HOUSE?. THE RAW HOUSE OWNERS ARE MOSTLY GOVERNMENT EMPLOYEES WHO HAD TAKEN LOAN FOR PURCHASE OF LAND AND CONSTRUCTION T HEREON. SOME OF THE RAW HOUSE OWNERS HAD SEPARATELY EXECUTED AGREEMENT WI TH THE ASSESSEE FOR ADDITIONAL WORK TO BE CARRIED OUT IN THEIR RAW HOUSE ACCORDING TO THEIR REQUIREMENT. FOR THIS ADDITIONAL CONSTRUCTION APPELLANT HAD CHARGED A FURTHER PRICE WHICH WAS SHOWN AS CONSTRUCTION RECEIPT IN THE BOOKS OF ACCOUNTS O F ASSESSEE. IN THE SHOW CAUSE NOTICE DTD. 14.11.2008 ON PAGE 3, PARA 3 OF THE N OTICE, THE ASSESSING OFFICER HIMSELF HAD ADMITTED THAT THE COST OF CONSTRUCTION OF SIMIL AR PROJECT IN THE SAME LOCALITY SHOWN BY OTHER ASSESSEES IS RS. 400/- PER SQ. FT. TO RS. 500/- PER SQ. FT. THE ASSESSEE HAD PRODUCED THE CERTIFICATE FROM STATE ST AMP DUTY VALUATION AUTHORITIES SHOWING THE COST OF CONSTRUCTION IN THE AREA OF ASS ESSEE'S WORK AT RS. 511/- PER SQ. FT. BEFORE THE ASSESSING OFFICER. AS AGAINST THE RATE OF RS. 511/4 PER STATE STAMP DUTY VALUATION AUTHORITIES, THE ASSESSEE HAD SHOWN THE CONSTRUCTION CONTRACT RATE AT* &S. 550/- PER SQ. FT. THESE FACTS HAVE ALSO BEE N ACCEPTED BY THE ASSESSING OFFICER ON PAGE 2 AND 3 OF THE ASSESSMENT ORDER THAT APPELL ANT HAD CHARGED RS. 8,25,000/- FOR 1500 SQ. FTS. WHICH GIVES PER SQ. FT. RATE OF R S. 550/-. THEREFORE, THE CONTRACT PRICE FOR CONSTRUCTION IS IN ACCORDANCE WITH THE RA TE FIXED BY STATE STAMP DUTY VALUATION AUTHORITIES. THOUGH THE ASSESSING OFFICER HAD REJECTED THE BOOKS OF ACCOUNTS U/S, 145(3) OF THE ACT AND APPELLANT HAD NOT TAKEN ANY GROUND RELATIN G TO REJECTION OF BOOKS 'OF. ACCOUNTS, YET, THE NET PROFIT RATE HAS TO BE SEEN E VENIF, IT IS ASSUMED THAT THERE ARE CERTAIN DEFECTS IN THE BOOKS OF ACCOUNTS. THE NET P ROFIT SHOWN BY THE ASSESSEE MS 8% WHICH IS IN ACCORDANCE WITH THE RATE PRESCRIBED U/S . 44AD OF THE ACT. THEREFORE, THE NET PROFIT IS ALSO REASONABLE. THE ASSESSEE HAS NOT CARRIED OUT ANY SUCH CONSTRUCTION WORK EITHER IN A.Y. 2005/06 OR IN SUBSEQUENT A.Y. 2 007/08 AND THEREFORE, COMPARISON IS NOT POSSIBLE. ALL THE 5 RAW HOUSE OWNERS EXAMINE D BY THE ASSESSING OFFICER CONFIRMED THE BASIC RATE OF RS.8,25,000/- PER RAW H OUSE AS WELL AS THE PRICE PAID BY THEM FOR EXTRA WORK DONE. THE ASSESSING OFFICER: HA D NOT SUPPLIED COPY OF STATEMENT RECORDED OF RAW HOUSE OWNERS TO ASSESSEE TO SEEK ANY COMMENTS THEREON AS NO ADVERSE STATEMENT WAS MADE BY THE RAW HOUSE OWNE RS. THE ASSESSING OFFICER HAD SIMPLY RELIED ON Q. NO. 6 AND ANS. THEREON OF T HE STATEMENT OF ASSESSEE'S FATHER IN WHICH HE STATED THAT HE HAS A RIGHT TO EXECUTE DO CUMENT OF LAND. FROM THE STATEMENT ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 17 - PRODUCED BEFORE ME, FIND THAT IMMEDIATELY AFTER ANS WERING Q. NO. 6 ON 20.01.2006 FATHER OF ASSESSEE FELL ILL AND HIS STATEMENT WAS A GAIN RECORDED ON 23.01.2006. IN THE STATEMENT DTD. 23.01.2006, IN RESPONSE TO Q. NO.10 HE CLARIFIED THAT WHILE ANSWERING Q. NO. 6 HE MEANT THAT THE PRICE OF LAND IS TO BE T AKEN BY SHRI MAHENDRABHAI SHIVABHAI SAVANI AND PRICE OF CONSTRUCTION COST IS TO BE TAKEN BY HIM OUT OF TOTAL PRICE OF RAW HOUSE RECEIVED FROM CUSTOMERS. THUS, HE HAD CLARIFIED THE SITUATION TO THE SATISFA CTION OF THE AUTHORISED OFFICER. THE APPELLANT IS NOT THE OWNER LAND AND THEREFORE, HE CANNOT HAVE ANY RIGHT OF SELLING THE LAND UNDER THE TRANSFER OF PROPERTY ACT . UNDER SUCH CIRCUMSTANCES IN VIEW OF THE DECISION OF THE KERALA HIGH COURT IN P AUL MATHEWS AND SONS V/S. CIT, REPORTED AT 263 ITR 101, NO COGNIZANCE CAN BE G IVEN TO THE FACTUALLY INCORRECT STATEMENT OF ASSESSEE. THE /ASSESSING OFFICER, T HOUGH MENTIONED IN THE ASSESSMENT ORDER THAT THE RATE OF COST OF CONSTRUCTION IN THE LOCALITY OF ASSESSEE IS RS. 2000/- TO 2500/- SQ. FT., HAS NOT CITED ANY EVIDENCE IN SUPPO RT OF HIS ASSUMPTION WHICH IS PURELY HYPOTHETICAL. THE ASSESSEE HAD ALSO PROVED O N THE BASIS OF BOOKS OF ACCOUNTS, BILLS AND VOUCHERS OF MATERIAL AND LABOUR THAT THE COST OF CONSTRUCTION SHOWN BY HIM IS RS. 506/- PER SQ. FT. AS AGAINST THE INCORRECT W ORKING OF COST AT RS. 739/- MADE BY ASSESSING OFFICER. EVEN THE AUDITED STATEMENTS OF A CCOUNTS O NOT REVEAL THE CLAIM OF ASSESSEE AT RS. 739/- PER SQ, FT. FOR COST OF CONST RUCTION. THE WORKING OF ASSESSING OFFICER IS NOT CORRECT. REGARDING THE ALLEGED ESTIMATED UNACCOUNTED INVESTM ENT I FIND THAT THERE IS NO EVIDENCE WITH ASSESSING OFFICER FOR SUCH ESTIMATE. THIS OFFICE ALSO DIRECTED THE ASSESSING OFFICER TO OBTAIN REPORT FROM DVO U/S.142 A OF THE ACT. TILL DATE THE ASSESSING OFFICER HAS NOT SUBMITTED THE REMAND REPO RT AS WAS ASKED FOR. AFTER AWAITING FOR MORE THAN TWO YEARS, 1'HAVE NO ALTERNA TIVE, BUT TO DECIDE THE APPEAL ON MERITS. I FIND THAT THE ASSESSEE HAD ESTABLISHED ON THE BASIS OF CERTIFICATE FROM SUB- REGISTRAR THAT THE PURCHASE PRICE IS CORRECT. THEREFORE, THE VERY TWO BASIS OF DETERMINING THE UN ACCOUNTED INCOME OF RS. 70,17,000/- BASED ON 1) TREATING THE APPELLANT AS BUILDER AND 2) ESTIMATING THE UNACCOUNTED INVESTMENT IN LAND AT RS. 50,00,000/- A RE INCORRECT AS THEY ARE NOT /BASED UPON ANY COGENT EVIDENCE. ACCORDINGLY, THE A DDITION OF RS. 70,17,000/- IS HEREBY DELETED. SIMILARLY, THE PROVISION OF SECTION 69B OF THE ACT BEING NOT APPLICABLE TO PURCHASER OF LAND, THE ESTIMATED INVE STMENT OF RS. 50,00,000/- IN PURCHASE OF LAND IS ALSO NOT CORRECT AND IS ACCORDI NGLY, DELETED. HENCE, ALL THE THREE GROUNDS OF APPEAL ARE ALLOWED. ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 18 - 6. AGGRIEVED BY THE ORDER OF THE CIT(A), THE AO FI LED AN APPEAL BEFORE THE TRIBUNAL. BEFORE THE TRIBUNAL, THE LD. DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER (AO). 7. NONE APPEARED ON BEHALF OF THE RESPONDENT-ASSESS EE. FROM THE RECORD, IT IS SEEN THAT THE ASSESSEE HAS FILED WRIT TEN SUBMISSIONS DATED 07/12/2015 THROUGH ITS REPRESENTATIVE ASHWIN PAREKH & CO. CAS. THE RELEVANT PORTION OF THE WRITTEN SUBMISSION OF THE A SSESSEE READS AS UNDER:- IN THIS CASE THE REVENUE HAS NOT TAKEN ANY GROUNDS OF APPEAL. ONLY FORM NO.36 HAS BEEN FILED ON 02.09.2011. IN T HE GROUNDS OF APPEAL IT HAS BEEN STATED AS PER ANNEXURE ENCLOSED . THE ANNEXURE ENCLOSED IS A GROUNDS OF APPEAL OF SOME MA HESHBHAI DHANJIBHAI MANGUKIYA FOR A.Y. 2008/09. THE COPY OF GROUNDS OF APPEAL ATTACHED WITH FORM NO.36 IS ENCLOSED. SINCE , GROUNDS OF APPEAL IS NOT ATTACHED TO THE APPEAL, THE RE4VENUE HAS NOT TAKEN ANY GROUND AND THEREFORE, THE APPEAL SHOULD BE DISM ISSED. THE CALCUTTA HIGH COURT IN THE CASE OF NEW INDIA CONSTR UCTION CO. VS. CIT REPORTED AT 120 ITR 763 AND RAJASTHAN HIGH COUR T IN CIT V/S. SWASTIC MOTORS REPORTED AT 195 ITR 368 HELD TH AT APPEAL FILED IN FORM NO.36 WITHOUT ACCOMPANIMENT OF THE REQUISIT E DOCUMENTS IS NOT MAINTAINABLE AND SHOULD BE DISMISSED. AS PE R RULE-12 OF THE INCOME-TAX APPELLATE TRIBUNAL RULES 1963 IT IS COMPULSORY TO FILE GROUNDS OF APPEAL WITH FORM NO.36 AND IF IT IS NOT ATTACHED, THE APPEAL IS TO BE REJECTED. IN VIEW OF THE ABOVE FACTS THE APPEAL OF THE REVENUE SHOULD BE DISMISSED. ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 19 - 8. WE HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMISS IONS FILED ON BEHALF OF THE ASSESSEE, THE ASSESSMENT ORDER PASSE D BY THE AO AS WELL AS THE APPELLATE ORDER PASSED BY THE CIT(A). WE SHA LL FIRST DISPOSE OF THE TECHNICAL GROUND OF NON-MAINTAINABILITY OF THE APPE AL FILED BY THE REVENUE AS RAISED IN THE WRITTEN SUBMISSION OF THE ASSESSEE. WE NOTE THAT THE REVENUE FILED FORM NO.36 TOGETHER WITH GRO UNDS OF APPEAL. HOWEVER, THE GROUNDS OF APPEAL IS IN RESPECT OF SOM E MAHESHBHAI DHANJIBHAI MANGUKIYA FOR AY 2008-09 AND DOES NOT PE RTAIN TO ASSESSEE. THUS, THERE WAS AN APPARENT ERROR IN THE GROUNDS OF APPEAL. THE GROUNDS OF APPEAL DO NOT RELATE AT ALL TO THE ASSESSEE. TH E GROUNDS OF APPEAL WAS LATER REPLACED BY THE GROUNDS RELEVANT TO THE ASSES SEE. IN THESE CIRCUMSTANCES, WE DO NOT FIND ANY MERIT IN THE ARGU MENTS OF THE ASSESSEE THAT THE APPEAL IS LIABLE TO BE DISMISSED ON SUCH T ECHNICAL DEFECT. ADMITTEDLY, THE APPEAL HAS BEEN FILED IN TIME. HOWE VER, GROUNDS OF APPEAL PERTAINING TO SOME OTHER ASSESSEE APPEARS T O HAVE BEEN WRONGLY ANNEXED. THIS IS A HUMAN ERROR WHICH STANDS RECTIF IED. THE ASSESSEE IS NOT PREJUDICED SINCE THE GROUNDS OF APPEAL WERE REP LACED AND FAIR OPPORTUNITY WAS GRANTED TO THE ASSESSEE TO DEFEND I TS CASE. 9. HENCE, IN SUCH CIRCUMSTANCES, THE STATUTORY REME DY AVAILABLE TO THE PARTIES BEFORE THE TRIBUNAL IN OUR VIEW CANNOT BE S HUNNED ON MERE TECHNICAL DEFECTS. THE DEFECT HAS BEEN ADMITTEDLY CURED AND DOES NOT ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 20 - SURVIVE OR CONTINUE AT THE TIME OF DISPOSAL OF THE APPEAL. THUS, WE DO NOT CONCUR WITH THE TECHNICAL GROUND RAISED IN THIS RE GARD BY ASSESSEE. THE OBJECTION OF THE ASSESSEE IS THUS DISPOSED OF IN NE GATIVE. 9. WE SHALL NOW PROCEED TO DECIDE THE ISSUE ON MERI TS. WE FIND OURSELVES IN COMPLETE AGREEMENT WITH THE DECISION R ENDERED BY THE CIT(A) IN THE GIVEN SET OF FACTS AS NOTED IN THE EA RLIER PARAGRAPHS. WE NOTE THAT CIT(A) HAS EXAMINED THE ISSUE THREADBARE. WE DO NOT WISH TO AMPLIFY THE SAME ANY FURTHER. THE CIT(A) HAS CORRE CTLY APPRECIATED THE FACTS AND HELD THAT ESTIMATION MADE BY THE AO IS WI THOUT ANY EVIDENCE. WE ALSO NOTE THAT THE CIT(A) DIRECTED THE AO TO OBT AIN REPORT FROM THE DVO UNDER SECTION 142A OF THE ACT. THE AO DID NOT SUBMIT THE REMAND REPORT BEFORE THE CIT(A) AS CALLED FOR. IN THE CIR CUMSTANCES, THE LIABILITY ON ESTIMATIONS TOWARDS UNACCOUNTED INVESTMENT IN LA ND ETC. CANNOT BE FASTENED ON THE ASSESSEE. THE AO HAS APPARENTLY NO T DISCHARGED THE ONUS WHICH LAY UPON IT WHILE ESTIMATING THE CONSTRUCTION /SALES INCOME. THE ENTIRE ACTION OF THE AO SMACKS OF CONJECTURES AND S URMISES WITHOUT ANY TANGIBLE MATERIAL IN CORROBORATION. THE REVENUE CO ULD NOT SUCCESSFULLY POINT OUT ANY ERROR WHICH HAS IMPACT ON THE CONCLUS ION DRAWN BY CIT(A). IN THE CIRCUMSTANCES, THE DECISION ARRIVED AT BY TH E CIT(A) MERITS ACCEPTANCE. THEREFORE, NO INTERFERENCE THEREWITH IS CALLED FOR. ITA NO. 2197/AHD/2011 DCIT VS. SHRI ANILBHAI ARVINDBHAI LAKHANKIYA ASST.YEAR 2006-07 - 21 - 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. THIS ORDER PRONOUNCED IN OPEN COURT ON 06 / 02 /201 7 SD/- SD/- () ( ) (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 06/ 02 /2017 3..),.)../ T.C. NAIR, SR. PS !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. #% / THE ASSESSEE 2. &#% / THE RESPONDENT. 3. 456+ 7+ / CONCERNED CIT 4. 7+ ( ) / THE CIT(A)-V, SURAT 5. 89:+)56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<* / GUARD FILE. / BY ORDER, &8++ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 31.1.2017 (DICTATION-PAD 18- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 01.02.2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.7.2.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7.2.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER