M/s. Gian Resorts, Bhikhi V. The Income-tax Officer, MANSA

ITA 22/ASR/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6988 (ITAT-AMRITSAR)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-08-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 09-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAAD KIDWAI
• Assessee Lawyers: P N ARORA
• Keywords: Unexplained investment; Value adopted by valuation officer; Additional evidence; Valuation report
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.22(ASR)/2014 ASSESSMENT YEAR:2010-11 PAN :ABWFS4242D M/S. SHRI GIAN RESORTS, VS. INCOME TAX OFFICER, MARRIAGE PALACE, SUNAM ROAD, WARD 1(4), BHIKHI. MANSA. (APPELLANT) (RESPONDENT) I.T.A. NO.25(ASR)/2014 ASSESSMENT YEAR:2010-11 INCOME TAX OFFICER, VS. M/S. SHRI GIAN RESORTS, WARD 1(4), MARRIAGE PALACE, SUNAM ROAD, MANSA. BHIKHI. (APPELLANT) (RESPONDENT) ASSESSEE BY: SH. P.N.ARORA, ADVOCATE RESPONDENT BY:SH. SAAD KIDWAI, DR DATE OF HEARING: 27/08/2014 DATE OF PRONOUNCEMENT:02/09/2014 ORDER PER B.P.JAIN, AM ; THESE CROSS APPEALS OF THE ASSESSEE AND THE REVEN UE ARISE FROM THE ORDER OF THE CIT(A), BHATINDA DATED 24.10.2013 FOR THE ASSESSMENT YEAR 2010-11.THE ASSESSEE HAS RAISED FOLLOWING GROUNDS O F APPEAL: ITA NO.22 & 25(ASR)/2014 2 1. THAT THE LD. CIT(A) ERRED ON FACTS AND LAW IN C ONFIRMING THE ACTION OF THE AO OF REJECTING THE BOOKS OF ACCOUNT AND INVOKING THE PROVISIONS OF SECTION 145(3). NO SPECIFIC DEFEC T HAS BEEN POINTED OUT IN THE BOOKS OF ACCOUNT BY THE LD. AO O R THE LD. CIT(A) AND THE PROVISIONS OF SECTION 145(3) HAS BEE N INVOKED DESPITE THE FACT THAT ALL THE BOOKS OF ACCOUNT ALON GWITH BILLS/VOUCHERS WERE PRODUCED. 2. THAT THE LD. CIT(A) ERRED ON FACTS AND LAW IN CO NFIRMING THE ADDITION OF RS.24,68,661/- ON ACCOUNT OF DIFFERENCE IN COST OF CONSTRUCTION OF THE BUILDING OF THE MARRIAGE PALACE AS ESTIMATED BY THE DISTT. VALUATION OFFICER AND AS RECORDED IN THE BOOKS OF ACCOUNT. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DISPOS ED OFF. 2. THE REVENUE IN ITS APPEAL HAS RAISED FOLLOWING G ROUNDS : 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.12, 74,724/- ON ACCOUNT OF COST OF EARTH FILING ON THE BASIS OF ADM ITTING THE AFFIDAVIT/STATEMENT OF SHRI BIKKAR SINGH, THE SELLE R OF THE LAND AND ADMITTING THE VALUATION REPORT OF THE REGISTERE D VALUER WHICH WAS NEVER PROVIDED DURING THE ASSESSMENT PROC EEDINGS. MOREOVER, SH. BIKKER SINGH COULD NOT PRODUCE ANY EV IDENCE IN SUPPORT OF HIS AFFIDAVIT/STATEMENT I.E. FROM WHERE THE EARTH WAS TAKEN, BILL OF DIESEL, HIRING OF TRACTOR AND LABOUR ETC. THE VO DETERMINED TOTAL COST OF EARTH FILLING AT RS.21,24 ,540/- AND THE AO HAD ALREADY ALLOWED 40% OF THE REBATE AMOUNTING TO RS.8,49,816/- AND MADE ADDITION OF RS.12,74,724/- U /S 69 OF THE I.T.ACT, 1961. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.30, 79,789/- ON ACCOUNT OF CONSTRUCTION OF THE BUILDING BY NOT ADMI TTING THE VALUATION OF REPORT PROVIDED BY THE VALUATION OFFI CER WHEREAS HE ADMITTED THE VALUATION REPORT OF THE REGISTERED VALUER WHOSE ITA NO.22 & 25(ASR)/2014 3 REPORT WAS GOT PREPARED BY THE ASSESSEE AFTER RECEI VING THE VALUATION REPORT FROM THE VO OF CPWD. 3. THE ABOVE MENTIONED ADDITION WAS DELETED BY THE LD. CIT(A) BY REJECTING THE VALUATION REPORT OF THE VALUATION OFFICER AND ADMITTING THE ADDITIONAL EVIDENCE PROVIDED BY THE A SSESSEE IN THE SHAPE OF VALUATION REPORT OF REGISTERED VALUER AFTER RECEIVING THE VALUATION REPORT FROM THE CPWD. 4. THAT IT IS PRAYED THAT THE ORDER OF THE LD. CIT( A) BE SET ASIDE AND THAT OF THE AO BE RESTORED. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS RUNNING A MARRIAGE PALACE UNDER THE NAME AND STYLE AS SHRI GIAN RESROT S AT SUNAM ROAD, BHIKHI. IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAD CONSTRUCTED A MARRIAGE PALACE DURING THE IMPUGNED YEAR WHICH WAS STARTED IN THE IMMEDIATE PRECEDING YEAR. THE COPIES OF PURCHASE V OUCHERS IN RESPECT OF BUILDING MATERIAL PURCHASED WERE FURNISHED AND PLA CED ON RECORD. THE AO OBSERVED THAT NO AMOUNT FOR EARTH FILLING, EXPENSES ON ACCOUNT FUEL/DIESEL ETC. WERE DEBITED AND IT WAS FURTHER OBSERVED THAT THE EXPENSES DEBITED UNDER LABOUR HEAD ACCOUNT APPEARED TO BE ON THE LO WER SIDE AS PROPORTIONATE TO THE MATERIAL PURCHASED. THE ASSESSEE WAS ASKED T O SUBMIT THE EXPLANATION AS OBSERVED BY THE AO AND CONCLUDED THAT THE BOOK V ERSION OF THE ASSESSEE ARE NOT CORRECT AND ACCORDINGLY REFERRED THE MATTER TO THE VALUATION OFFICER ITA NO.22 & 25(ASR)/2014 4 UNDER SECTION 142A(1) OF THE I.T.ACT, 1961 AFTER RE CORDING THE REASONS IN THE ORDER SHEET. THE AO RECORDED, REFERRING THE MATTER TO THE VALUATION OFFICER OBSERVED THAT THE ASSESSEE DID NOT MAINTAIN PROPER RECORD AND THE COST OF CONSTRUCTION APPEARED TO BE ON THE LOWER SIDE. THE VALUATION OFFICER, DETERMINED THE VALUATION OF THE BUILDING AT RS.1,5 8,07,300/- AS AGAINST RS.46,07,587/- (RS.52,61,406/- - RS.6,53,819/-) ON ACCOUNT OF INTEREST ETC. VIDE LETTER DATED 20.12.2012, THE ASSESSEE FIRM WA S REQUIRED TO FURNISH INFORMATION WITH REGARD TO THE COST OF CONSTRUCTION DECLARED AND AS ESTIMATED BY THE DVO AND WHY THE SAME SHOULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE BY REJECTING THE BOOK VERSION U/S 145(3) O F THE ACT. A COPY OF THE VALUATION REPORT WAS SUBMITTED TO THE ASSESSEE. THE ASSESSEE FIRM WAS ASKED TO PRODUCE BOOKS OF ACCOUNT ALONGWITH BILLS AND VO UCHERS. VIDE PARA 2.2 OF THE AO, THE ASSESSEE FIRM VIDE LETTER DATED 28.01.2 013 FURNISHED OBJECTIONS ON THE DVOS REPORT DATED 31.10.2012, AVAILABLE AT PAGES 2 & 3 OF AOS ORDER. SUCH OBJECTIONS FILED BY THE ASSESSEE WERE F ORWARDED TO THE DVO FOR HIS COMMENTS VIDE LETTER DATED 20.01.2013, WHO VID E LETTER DATED 13.02.2013 OFFERED HIS PARAWISE COMMENTS ON THE OBJ ECTIONS, WHICH WERE CONFRONTED TO THE ASSESSEE VIDE LETTER DATED 20.02. 2013 BY PROVIDING A COPY OF THE SAME AND AGAIN THE ASSESSEE WAS SHOW CAUSE D AS TO WHY DIFFERENCE OF RS.88,23,290/- MAY NOT BE ADDED BACK TO THE INCO ME OF THE ASSESSEE U/S ITA NO.22 & 25(ASR)/2014 5 69 OF THE ACT BY REJECTING THE BOOK VERSION U/S 145 (3) OF THE ACT. THE ASSESSEE MADE THE SUBMISSIONS, WHICH IS REPRODUCE D IN PARA 2.3 AT PAGE 3 OF AOS ORDER AND THE OBSERVATIONS MADE BY THE APPR OVED VALUER OF THE ASSESSEE HAVE ALSO BEEN REPRODUCED BY THE A.O. IN P ARA 2.4 OF HIS ORDER. THE RELEVANT PARA 2.3 TO 3.1 INCLUDING THE OBSERVATION S MADE BY THE AO ARE REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER: 2.3. THE OBJECTIONS FILED BY THE ASSESSEE FIRM WER E FORWARDED TO THE VALUATION OFFICER FOR HIS COMMENTS VIDE THIS OFFICE LETTER NO.1365 DATED 20.01.2013. THE VALUATION OFFICER, VIDE HIS L ETTER NO. 112 DATED 13.02.2013 OFFERED HIS PARAWISE COMMENTS ON THE OBJ ECTIONS AND FURNISHED NECESSARY DETAILS FROM PAGES 1 TO 34 ALON GWITH THE COMMENTS. THE SAME WAS CONFRONTED TO THE ASSESSEE F IRM VIDE THIS OFFICE LETTER DATED 20.02.2012 BY PROVIDING A COPY OF THE SAME AND THE ASSESSEE WAS REQUIRED AS TO WHY DIFFERENCE OF R S.88,23,290/- MAY NOT BE ADDED BACK TO ITS INCOME AS UNEXPLAINED INVE STMENT WITHIN THE MEANING OF SECTION 69 OF THE ACT BY REJECTING THE B OOK VERSION U/S 145(3) OF THE ACT. THE ASSESSEE FIRM SUBMITTED HIS WRITTEN SUBMISSIONS AS UNDER: .. 1. THE COST OF THE BUILDING HAS BEEN ESTIMATED BY T HE VALUATION OFFICER, LUDHIANA AT RS.1,58,07,300/- AGAINST WHICH A SUM OF RS.52,61,406/- HAS BEEN DEBITED IN THE BOOKS OF AC COUNT. THE COST HAS BEEN ESTIMATED BY THE VO BY APPLYING PAR RATES INSP ITE OF THE FACT THAT THE ASSESSEE HAS MAINTAINED REGULAR BOOKS OF A CCOUNT IN WHICH THE AMOUNT INCURRED FOR CONSTRUCTION HAS BEEN DEBI TED IN THE REGULAR COURSE OF CONSTRUCTION AND THE SAME IS SUPPORTED BY PURCHASE BILLS. THE BOOKS OF ACCOUNT HAS ALREADY BEEN PRODUCED FOR VERIFICATION. THE COPY OF THE BUILDING ACCOUNT AND THE PURCHASE BILLS WERE PRODUCED BEFORE THE VALUATION OFFICER DURING THE COURSE OF ESTIMATION OF COST OF CONSTRUCTION BY VO. ITA NO.22 & 25(ASR)/2014 6 2. THE VO WAS ASKED TO PROVIDE INFORMATION REGARDIN G THE ESTIMATION OF COST OF CONSTRUCTION WHICH HAS BEEN P ROVIDED TO US LETTER VIDE DATED 20.02.2013. WE GAVE ENGAGED SH. MANIKANT GARG, APPROVED VALUER, TO MAKE ANALYSIS OF THE COST OF C ONSTRUCTION ESTIMATED BY THE VALUATION OFFICER. THE OBSERVATION S MADE BY HIM IS ENCLOSED HEREWITH. 3.THAT SOME OF THE ISSUES WHICH ARE RELEVANT ARE A S UNDER: I) THE VO HAS ESTIMATED THE COST FOR EARTH FILLING AT RS.21,24,540/- BUT THE EARTH FILLING WAS PROVIDED BY THE SELLER OF THE LAND WHO HAD UNDERTAKEN TO DO THE EARTH FILLING FREE OF COST FROM HIS ON HAND. THE AFFIDAVIT OF THE SELLER OF THE LAND IS EN CLOSED. THE NECESSARY REBATE MAY KINDLY BE ALLOWED. II) THE VO HAS PREPARED THE VALUATION REPORT ON CPWD RA TES INSTEAD OF APPLYING PWD RATES. IT HAS BEEN HELD BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN CIT VS. HARCHAND PAL ACE 269 ITR 251 THAT COST OF CONSTRUCTION ESTIMATED AT THE SCHEDULED RATES OF THE PWD IS MORE SCIENTIFIC AND R ELIABLE THAN CPWD RATES. III) THE VO HAS ALLOWED REBATE FOR SELF SUPERVISION @ 7 .5% BUT THE SAME IS ALLOWED AS PER VARIOUS APPELLATE DECISION @ 10%. IV) THE ASSESSEE HAD PRODUCED THE COMPLETE PURCHASE BIL LS FOR THE ITEMS USED IN CONSTRUCTION OF THE BUILDING BEFORE T HE VO BUT THE VO HAS TAKEN THE VALUE OF THE ITEMS OF HIS OWN WITH OUT ANY JUSTIFICATION. V) THE VO HAS ESTIMATED THE NUMBER OF BRICKS, CEMENT B AGS AND OTHER ITEMS USED IN THE CONSTRUCTION OF THE BUILDIN G WITHOUT GIVING ANY WORKING. IN VIEW OF THE ABOVE STATED FACTS, THE ESTIMATION O F COST OF CONSTRUCTION PREPARED BY THE VO IS BASED ON PRESUMP TIONS AND IT IS REQUESTED THAT THE COST OF CONSTRUCTION AS DE CLARED BY THE ASSESSEE MAY KINDLY BE ACCEPTED WITHOUT DRAWING AN Y ADVERSE INFERENCE. 2.4. THE OBSERVATIONS MADE BY THE APPROVED VALUE OF THE ASSESSEE AS REPRODUCED FOR THE SAKE OF CONVENIENCE: ITA NO.22 & 25(ASR)/2014 7 . I AM APPROVED VALUER OF YOUR DEPARTMENT. M/S. SHREE GIAN RESORT HAS APPOINTED ME AS A VALUER TO ASSESS THE COST OF CONSTRUCTION OF THEIR PROPERTY. THE DEPARTMENT VAL UER HAS DONE THE VALUATION OF THIS PROPERTY ON THE BASIS OF PLIN TH AREA AMETHO WITH COST INDEX. THE PLINTH AREA METHOD IS JUST TO ASSESS TO MAKE TH E ROUGH COST ESTIMATE FOR APPROVALS OF HIGHER AUTHORITIES. THE S PECIFICATIONS FOLLOWED AT SITE ARE QUITE DIFFERENT FROM THE SPEC IFICATION ON WHICH THESE RATES ARE MADE. THE NATURE OF THE BUILD ING DOES NOT MATCH WITH THE NATURE OF THE BUILDING CONSTRUCTED A T SITE ON WHICH THESE RATES ARE BASED. THE EXACT & CORRECT METHOD TO ASCERTAIN THE CORRECT VALUE OF COST OF CONSTRUCTION IS THE ITEM RATE METHOD. IN TH E ITEM RATE METHOD THE MEASUREMENT OF EVERY ITEM IS TAKE AND RA TE OF EACH AND EVERY IS PROVIDED AS PER PURCHASE BILLS. IT IS QUITE A LENGTHY PROCESS. IN DUE COURSE OF TIME, I WILL PREPARE A DE TAIL REPORT OF THESE BUILDING AND WILL SUBMIT TO YOU. HOWEVER, BY SEEING THE VALUATION REPORT OF YOUR VAL UER, THERE ARE FEW DIFFERENCES IN THE RATES WHICH HA NOT BEEN CONSIDERED BY YOUR VALUER: FLOOR TILES: THE RATE FOR VITRIFIED TILES OF SIZES 605 X 605 HAS BEEN TAKEN AT 930.93 SQ. M OR RS.89.30 SQ. FT, WHER EAS THE ACTUAL PURCHASE PRICE OF TILES AS PER BILL NO.2406 DATED 02.10.2009 OF BATH GALLERY SANGRUR IS RS.614/- PER BOX OR 614/15.76 OR 38.95 SQ. FT BY ADDING THE COST OF FIX ING FOR LABOUR & MORTAR, THE COST PER SQ. FT. COMES OUT TO BE RS. 38.95 + 12 = RS.50.95 SQ. FT. OR 51 SQ. FT. SO THE NET DIFFERENC E OF RS.89.30 RS.59.95 = 38.30. SQ. FT. OR 412 SQ. MT. THE FOLLO RING TILES HAS BEEN USED IN THE MAIN HALL, ROOMS OF F.F. DRESSING & PREPARATION ROOM, DOUBLE HEIGHT LOBBY. THERE IS ABO UT 40% DIFFERENCE IN THE RATES OF THE TILES THAT HAS BEEN TAKEN BY YOUR VALUER. SIMILARLY, RATE OF KULU TILES, DHOLPUR STON ES & FRONT TILES HAS BEEN TAKEN ON HIGHER SIDE. ITA NO.22 & 25(ASR)/2014 8 IN THE PLINTH AREA RATES THE MAIN BANQUET HALL HAS BEEN COMPARED WITH GODOWN STRUCTURE WITH STEEL TRUSS. TH ERE IS LOT OF DIFFERENCE BETWEEN SPECIFICATIONS OF MAIN BANQUE T HALL & GODOWN STRUCTURE WITH STEEL TRUSS. THERE IS LOT OF DIFFERENCE BETWEEN SPECIFICATIONS OF MAIN BANQUET HALL & GODOW N STRUCTURE WITH STEEL TRUSS. IN THE STORAGE GODOWN, THE FLOORING IS 7 PCC IS LA ID OVER 9 AND FILLING WITH TOP COOL OF 2 CC FLOORING IS USED . SIMILARLY IN THE ROOFING TUBULAR FRUSSES OF STRUCTURAL STEEL WIT H AC SHEET & RAIN WATER GUTTERS HAS TO BE PROVIDED, BUT IN OUR C ASE ORDINARY MS PIPE HAS BEEN USED WITH CG SHEETS. THE STRUCTUR E STEEL & COST OF AC SHEET IS QUITE HIGH AS COMPARED TO ORDIN ARY PIPE & GI SHEET. IN THE MANY OTHER BUILDING SIMILARLY SUCH TYPE OF CHANGE IN SPECIFICATION IS THERE. THERE WILL BE APPROX. 30% DIFFERENCE IN ACTUAL COST & YOUR VALUER REPORT FOR THESE BUILDIN G. YOUR VALUER HAS TAKEN THE COST OF EARTH FILLING AS RS.21,24,450/-. IN ACTUAL THE OWNERS HAS PURCHASED THIS LAND FROM T HE SELLERS WITH THE CONDITION THAT EARTH FILLING WILL BE PROVI DED FREE . SO NO COST OF EARTH FILLING SHOULD BE INCLUDED IN THE VAL UATION REPORT. HOWEVER, IF WE FORGET THIS ASPECT OF FREE EARTH FIL LING THE ACTUAL COST OF EARTH FILLING WILL COME OUT TO BE RS.5,90,0 00/- AS EARTH FILLING IS AVAILABLE. 2.5. THE WRITTEN SUBMISSIONS FURNISHED BY THE ASSES SEE ALONGWITH OBSERVATIONS OF THE APPROVED VALUER HAVE BEEN CONSIDERED. THE MOST OF THE OBSERVATIONS MADE BY TH E APPROVED VALUER ARE OF TECHNICAL IN NATURE. MOREOVER, THE OB JECTIONS OF THE ASSESSEE ON THE VALUATION REPORT AND PARAWISE C OMMENTS ALONGWITH NECESSARY DETAILS OF THE VALUATION OFFICE R ON THE SAID OBJECTIONS OF THE ASSESSEE FIRM WERE PROVIDED TO TH E ASSESSEE BUT NO VALUATION REPORT OF APPROVED VALUER HAS BEEN SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, WHICH COULD BE COMPARED. HOWEVER, THE OBSERVATIONS ARE BEING SENT TO THE VO FOR HIS COUNTER COMMENTS SEPAR ATELY. BUT ASSESSMENT BEING TIME BARRING, THE SAME CANNOT BE K EPT PENDING AND IS DECIDED ACCORDINGLY. SOME OF THE OBS ERVATIONS ITA NO.22 & 25(ASR)/2014 9 MADE BY THE APPROVED VALUER ARE BEING CONSIDERED WH ILE FRAMING THE ASSESSMENT. 2.6. `IN REGARD TO ESTIMATED COST OF EARTH FILLING AT RS.21,24,450/- BY THE VO WHEREAS THE APPROVED VALUE R ESTIMATED THE COST OF EARTH FILLING AT RS.5,90,000/ -. THE ASSESSEE FURTHER SUBMITTED THAT THE EARTH FILLING WAS PROVID ED BY THE SELLER OF THE LAND WHO HAD UNDERTOOK TO DO THE EART H FILLING FROM FREE OF COST AND IT ALSO FURNISHED AN AFFIDAVIT TO THIS EFFECT OF THE SELLER SH. BIKAR SINGH OF THE SAID LAND. SPOT ENQUI RIES WERE ALSO MADE BY DEPUTING THE INSPECTOR, WHO RECORDED THE S TATEMENT OF SH. BIKAR SINGH, SELLER OF THE SAID LAND. HE MADE T HE INQUIRIES AND SUBMITTED HIS REPORT DATED 14.03.2013 WHICH IS PLACED ON RECORD. THE SELLER SH. BIKAR SINGH STATED THAT THE WORK OF EARTH FILLING WAS DONE BY HIM WITH THE HELP OF 10-12 TRA CTORS, OUT OF WHICH TWO ARE HIS OWN AND THE DIESEL FOR THE TRACTO RS WAS FILLED IN FROM M/. SHREE BALAJI FILLING STATION BUDHLADA. LOKING TO THE ENQUIRY REPORT AS MENTIONED IN THE REPORT I.E. SURROUNDED BY AGRICULTURAL LAND, THE SUBMISSIONS PUT FORWARD BY T HE ASSESSEE ON THIS ISSUE HAVE BEEN CONSIDERED. KEEPING IN VIEW ALL THESE FACTS IN VIEW, IT WOULD BE FAIR AND REASONABLE IF R EBATE UNDER THIS HEAD IS ALLOWED @ 40% AND THEREFORE, THE COST OF EARTH FILLING IS TAKEN AT RS.12,74,724/- (RS.21,24,540/- - RS.8,49,816/- ) WHILE WORKING OUT OF ADDITION ON ACCOUNT OF DIFFE RENCE IN COST OF INVESTMENT. 2.7. IN REGARD TO APPLICATION OF CPWD RATES BY THE VO INSTEAD OF PWD RATES, THE ASSESSEE HAS RELIED UPON THE CASE LAW OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. HARCHAND PALACE 269 ITR 251 WHEREIN IT HAS BE EN HELD THAT THE COST OF CONSTRUCTION ESTIMATED AT THE SCHE DULED RATES OF THE PWD IS MORE SCIENTIFIC AND RELIABLE THAN CPWD R ATES. KEEPING IN VIEW THE OBSERVATIONS OF THE APPROVED VA LUER OF ASSESSEE AS MENTIONED REGARDING RATES OF VITRIFIED TILES TAKEN BY THE VO AND COPY OF BILL REGARDING PURCHASE OF TIL ES, FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEE DINGS AND OTHER SIMILAR ISSUES MENTIONED IN THE OBSERVATION A S WELL AS RATIO OF HONBLE PUNJAB & HARYANA HIGH COURTS DECI SION IN THE CASE OF CIT VS. HARCHAND PALACE, IT WOULD BE FA IR AND ITA NO.22 & 25(ASR)/2014 10 REASONABLE JUST TO ALLOW A RELIEF OF 10% AND ALSO R EBATE ON ACCOUNT OF SELF SUPERVISION IS ALLOWED @ 10% AS AGA INST 7.5% ALLOWED BY THE VALUATION OFFICER, LUDHIANA AND THER EFORE, THE TOTAL COST/VALUE IS WORKED OUT AS UNDER: TOTAL VALUE AS ESTIMATED BY THE VO 1,70,89, 026/- LESS:EARTH FILLING AS REBATE IS ALLOWED SEPARATELY 21,24,540/- BALANCE 1,49,64,486/- LESS: 10% AS MENTIONED IN PARA 2.7 ABOVE 14 ,96,448/- 1,34,68,038/- ADD:EARTH FILLING AS ESTIMATED IN PARA 2.8 12,74,724/- TOTAL 1,47,42,762/- LESS: 10% FOR SELF SUPERVISION 14,74,276/- TOTAL: 1,32,68,486/- AFTER ALLOWING REBATE AS MENTIONED ABOVE, YEAR-WISE COST OF INVESTMENT IS DETERMINED AS UNDER: S.NO. FINANCIAL YEAR INVESTMENT SHOWN BY THE ASSESSEE INVESTMENT DETERMINED BY THE VO INVESTMENT DETERMINED AFTER ALLOWING REBATE AS MENTIONED IN PARA DIFF 1 2 3 4 5 (5-3) 1 2008-09 977639 33,54,082 2815364 18,37,725/- 2 2009-10 3629948 12453238 10453122 68,23,174/- TOTAL 46,07,587/- 1,58,07,320/- 1,32,68,286/- 86,80,899/- 3.1. KEEPING IN VIEW THE FOREGOING FACTS IN VIEW AS DISCUSSED IN PARAS 2.1 TO 2.7 ABOVE, BY INVOKING THE PROVISIONS OF SEC. 145(3) OF THE ACT, THE DIFFERENCE OF RS.68,23,174/- ON ACCOUNT OF COST OF UNEXPLAINED INVESTMENT AS WORKED OUT ABOVE FOR THE FINANCIAL YE AR 2009-10 RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION IS ADDED BACK TO THE INCOME OF THE ASSESSEE FIRM U/S 69 OF THE I.T.A CT,1961. ITA NO.22 & 25(ASR)/2014 11 4. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED TH AT THE ASSESSEE HAD MAINTAINED PROPER BOOKS OF ACCOUNT BASED ON PURCHAS E VOUCHERS WHICH WERE PRODUCED DURING THE COURSE OF ASSESSMENT PROCE EDINGS AND THE AO FAILED TO BRING ON RECORD ANY SPECIFIC DISCREPANCY IN THE BOOKS OF ACCOUNT AND THE ONLY REASON GIVEN BY THE AO FOR REJECTION O F BOOKS OF ACCOUNT IS THAT THE EXPENSES ON ACCOUNT OF MATERIAL AND LABOUR APPE ARED TO BE ON LOWER SIDE AND NO EARTH FILLING EXPENSES DEBITED IN THE BOOKS OF ACCOUNT. 5. THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO BY REJECTING THE BOOKS OF ACCOUNT AND REFERRING THE MATTER TO THE VA LUATION OFFICER FOR ESTIMATION OF COST OF CONSTRUCTION BECAUSE AS OBSE RVED BY THE LD. CIT(A) THERE WAS DIFFERENCE IN THE COST OF CONSTRUCTION AS ESTIMATED BY THE VALUATION OFFICER AND AS DEBITED IN THE BOOKS OF ACCOUNT OF T HE ASSESSEE WHICH PROVES THAT WHAT IS APPARENT IS NOT REAL. ACCORDINGLY, THE LD. CIT(A) DISMISSED THE GROUND OF THE ASSESSEE. 6. THE LD. CIT(A), ON MERIT OBSERVED THAT THE ASSES SEE HAS ENGAGED SH. MANIKANT GARG, THE APPROVED VALUER TO PREPARE THE E STIMATE OF COST OF CONSTRUCTION OF IMMOVEABLE PROPERTY. THE SAID SH. M ANIKANT GARG RAISED OBJECTIONS VIDE LETTER DATED 20.03.2013 ON THE REPO RT FROM THE DVO, WHICH WAS FILED BEFORE THE A.O. AND WHICH HAS BEEN REPROD UCED IN THE ASSESSMENT ITA NO.22 & 25(ASR)/2014 12 ORDER AT PAGES 3, 4 & 5. THE LD. CIT(A) REPRODUCED THE GIST OF THE SAME AT PAGES 4 & 5 OF THE ORDER. 7. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E THE LD. CIT(A), THE AR OF THE ASSESSEE FILED ANALYSIS OF THE VALUATION REPORT OF THE DVO BY THE REGISTERED VALUER, WHICH ARE AVAILABLE AT PAGES 7 & 8 OF CIT(A)S ORDER AND ARE REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER : MAIN BANQUET HALL: THIS PART OF THE BUILDING IS MA JOR PORTION AS IT MEASURES 1160 SQ.M. THE COST AS PER ITEM RATE ANAL YSIS WORKS OUT TO BE RS.3676,710/- WHEREAS AS PER ITO VALUATION REPOR T WHICH IS BASED ON PLINTH AREA METHOD AS PER ITEM NO. A4 OF THE RE PORT IS RS.62,30,360/-. THE FULL DETAILED ESTIMATE OF COST OF CONSTRUCTION OF THIS BUILDING PART HAS BEEN ATTACHED HERE WITH FOR YOUR REFERENCE IN APPENDIX 1. THE FOLLOWING IMPORTANT FACTS ARE BEING BROUGHT TO THE KIND NOTICE OF YOUR GOODSELF TO HIGHLIGHT THE FACTUAL ERRORS COMMI TTED BY THE DVO IN THE VALUATION REPORT WHILE ESTIMATING THE COST OF C ONSTRUCTION OF THE RELEVANT AREA OF THE BUILDING. I) THE DVO HAS COMPARED MAIN BANQUET HALL WITH GODOWN STRUCTURE WITH STEEL TRUSSES. THERE IS A LOT OF DIF FERENCE BETWEEN THE SPECIFICATIONS OF MAIN BANQUET HALL AND GODOWN STRUCTURE WITH STEEL TRUSS. II) IN STORAGE GODOWN THE FLOORING CONSIST OF 7PCC OVE R 9 SAND FILLING WITH TOP COVER OF 2 CC FLOORING. IN ROOFIN G TABULAR TRUSSES OF STRUCTURAL STEEL WITH AC SHEET AND RAIN WATER GUTTERS ARE TO BE PROVIDED. BUT IN THE CONSTRUCTION OF THIS BANQUET HALL ORDINARY MS PIPE HAS BEEN USED WITH CG SHEETS. THE COST OF STRUCTURAL STEEL AND AC SHEET IS QUITE HIGH AS COMP ARED TO ORDINARY MS STEEL PIPE AND GI SHEETS. III) AS STATED ABOVE, THIS A MAJOR PART OF THE BUILDING AND THERE IS APPROX. 40% DIFFERENCE IN THE COST ESTIMATE. SINCE THE MAJOR PART OF BUILDING WHICH GOVERNS THE MAJOR PORTION OF CONSTRUCTION HAS SUCH A LARGE DIFFERENCE SO METHOD OF CPWD ITA NO.22 & 25(ASR)/2014 13 RATES ADOPTED IS INAPPROPRIATE FOR THE ESTIMATE OF COST OF CONSTRUCTION FOR THE WHOLE BUILDING AS WELL. 2.9. THE REGISTERED VALUER HAS FURTHER POINTED OUT THAT THERE IS VARIATION OF AS MUCH AS 55% IN THE COST ESTIMATED B Y VO FOR DRY BRICK FLOORING BY APPLYING PAR CPWD APPROVED AND TH E COST ESTIMATED BY HIM ON DETAILED MEASUREMENT BASIS. 2.10. THE REGISTERED VALUER HAS FURTHER POINTED OUT THE F OLLOWING DISCREPANCIES IN THE VALUATION REPORT OF THE VO. WALL TILE I) THE RATE AND QUANTITY OF THIS ITEM HAS ALSO BEEN TA KEN ERRONEOUSLY. AS PER THE SITE THE QUANTITY FOR THE S AME IS 56.69 SQM WHEREAS AS PER VALUATION REPORT OF ITO AS PER I TEM NO. B 2.7 IS 82.71 SQM. THIS FACT SHOWS THAT SOME OF THE MEASUREMENTS HAS BEEN WRONGLY TAKEN. II) FURTHER, AS PER PURCHASE BILLS THE COST INCLUDING L ABOUR EXTRA COMES OUT TO BE RS.33,549/- WHEREAS AS PER ITO VALU ATION REPORT THE SAME IS RS.61789/-. THERE IS A DIFFERENC E OF APPROX. 45%. III) THERE IS ALSO A HUGE DIFFERENCE IN THIS ITEM. THIS AGAIN REFLECTS THAT CPWD PAR METHOD FOR ESTIMATION OF COST OF CONS TRUCTION IS INAPPROPRIATE. MARBLE SLAB ON KITCHEN COUNTERS : AS PER ITEM NO.B 2.8 OF ITO REPORT THE COST OF THIS ITEM IS RS.34634/-. BUT AS PER ACT UAL SITE THERE IS NO MARBLE SLAB IN KITCHEN WHAT IS ACTUALLY AT SITE IS TILE DADO WHOSE COST IS CONSIDERABLY LESS THAN THAT OF MARBLE. THIS SHOW S THAT ITEMS IN THE REPORT HAVE BEEN ERRONEOUSLY TAKEN. ELECTRICAL/WATER/SANITARY EXPENSES: I. AS PER REPORT OF THE DVO THE EXPENSES ON MATERIAL O F THE ABOVE SAID ITEMS HAS BEEN CALCULATED ON PERCENTAGE BASIS WHICH COMES TO RS.11,93,463/- II. BUT AS PER BILLS, THE EXPENSES WHICH HAVE BEEN ACTU ALLY SPENT COMES TO RS.3,97,574/-. 8. THE SAID ANALYSIS WERE FORWARDED TO THE AO FOR COMMENTS AND HE FILED THE REMAND REPORT VIDE LETTER DATED 11.10.201 3 IN WHICH HE STATED THAT ITA NO.22 & 25(ASR)/2014 14 NO VALUATION REPORT OF THE REGISTERED VALUER HAS BE EN SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN THE COUNTER CO MMENTS, THE AR OF THE ASSESSEE SUBMITTED, WHICH IS AVAILABLE IN PARA 2.1 2 & 2.13 OF THE ORDER OF THE LD. CIT(A) AND WHICH IS REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER: 2.12. IN HIS COUNTER COMMENTS, THE A/R OF THE APPE LLANT HAS STATED THAT THE AO HAS REJECTED THE ANALYSIS OF THE REGIST ERED VALUER OF THE REPORT OF THE DVO BY MAKING A COMPARISON ON DETAILE D MEASUREMENT BASIS IN TOTALITY WITHOUT GIVING ANY REASONS FOR T HE SAME. SIMILARLY, HE HAS NOT GIVEN ANY COMMENTS ON THE ANALYSIS OF THE R EGISTERED VALUER THAT ELECTRICAL/WATER/SANITARY EXPENSES HAS BEEN TA KEN ON PERCENTAGE BASIS OF THE COST ESTIMATED BY APPLYING PAR DESPITE THE FACT THAT THE ACTUAL PURCHASE BILLS WERE AVAILABLE ON RECORD AND THERE WAS NO NEED TO ESTIMATE THE COST OF THESE EXPENSES. IT HAS ALSO BEEN STATED THAT THE AMOUNT OF RS.169198/- TAKEN AS BUILDER EFFORTS BY T HE REGISTERED VALUER BE ALSO DELETED BECAUSE THE PURCHASES WERE M ADE FROM LOCAL MARKET WITHOUT ANY EFFORTS. HE HAS RELIED N THE ORD ER OF THE ITAT,AMRITSAR BENCH, IN THE CASE OF DR. RAMESH KUMA R ANAND VS. ITO, SUPRA IN WHICH THE AO HIMSELF ALLOWED RELIEF F OR BUILIDERS EFFORTS ( PARA 12.2 OF THE ORDER). ACCORDING TO THE A/R OF THE APPELLANT THE AO HAS ALSO FAILED TO REBUT THE ARGUMENTS OF TH E REGISTERED VALUER REGARDING THE ADDITION ON ACCOUNT OF EARTH FILLING EXPENSES AND HE HAS ONLY STATED THAT NO AUTHENTICATION OF THE STAT EMENT/FACT HAS BEEN PROVIDED/BROUGHT ON FILE GROUND AND THE AO HAS ALRE ADY ALLOWED RELIEF OF 40% (PARA 9 OF THE ASSESSMENT ORDER). 2.13. IT HAS BEEN FURTHER STATED BY THE A/R OF THE APPELLANT THAT THE DETAILED ANALYSIS OF THE REGISTERED VALUER COULD NO T BE SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS BECAUSE THE SAME WAS A LENGTHY PROCESS AND THE AO DID NOT ALLOW PROPER FUR THER OPPORTUNITY TO THE APPELLANT ON THIS THAT THE ASSESSMENT BEING TIME BARRING, THE SAME CANNOT BE KEPT PENDING. THE A/R OF THE APPELLA NT HAS MADE A REQUEST THAT THE DETAILED OBJECTIONS BASED ON THE I TEM RATE ANALYSIS MADE BY THE REGISTERED VALUER BE ADMITTED AS ADDIT IONAL EVIDENCE BECAUSE THE CASE OF THE ASSESSEE IS COVERED BY RULE S 46A(1)(C) ITA NO.22 & 25(ASR)/2014 15 BECAUSE THE APPELLANT WAS PREVENTED BY SUFFICIENT C AUSE FROM PRODUCING BEFORE THE AO ANY EVIDENCE WHICH IS RELEV ANT TO THE GROUNDS OF APPEAL. 9. THE LD. A/R BEFORE THE LD. CIT(A) RELIED UPON TH E DECISIONS OF VARIOUS COURTS OF LAW: I) ITO VS. HARCHAND PALACE ITA NO.185 & 186(ASR)/19 97 ORDER DATED 31.01.2003 - APPEAL OF THE DEPARTMENT WAS DI SMISSED BY THE HONBLE PUNJAB & HARYANA HIGH COURT (2004) 269 ITR 251 II) CIT VS. APSARA TALKIOES (1985) 155 ITR 303 (MAD) III) ITO VS. PRAKASHCHAND SONI (2005) 94 TTJ (IND) 631 IV) DR. RAMESH KUMAR ANAND VS. ITO (2007) 109 TTJ 568 10. AS REGARDS EARTH FILLING EXPENSES, THE AO OBSER VED THAT THE ASSESSEE FILED AN AFFIDAVIT OF SH. BIKKER SINGH, SELLER OF T HE LAND DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AO CONDUCTED AN INQUIRY THROUGH THE INSPECTOR WHO RECORDED THE STATEMENT OF SH. BIKKER SINGH IN W HICH HE CONFIRMED THE FACT THAT THE WORK OF EARTH FILLING WAS DONE BY HIM . BUT THE AO ALLOWED ONLY 40% OF THE REBATE AMOUNTING TO RS.8,49,816/- AND MA DE ADDITION OF RS.12,74,724/- AND ACCORDINGLY, THE LD. CIT(A) DEL ETED THE ADDITION OF RS.12,74,274/- WHICH THE AO HAS FAILED TO JUSTIFY T HE REBATE OF 40% INSTEAD OF ALLOWING THE WHOLE OF THE AMOUNT OF RS.21,25,540 /- DESPITE THE FACT THAT AO HAS NOT BEEN ABLE TO FIND ANY FAULT IN THE EXPLA NATION OF THE ASSESSEE ON THE ISSUE. ITA NO.22 & 25(ASR)/2014 16 11. THE DETAILED ANALYSIS OF THE DVO REPORT WAS AD MITTED AS ADDITIONAL EVIDENCE BY THE LD. CIT(A) UNDER RULE 46A(1)(C) OF THE INCOME TAX RULES, 1962 WHICH THE AO REFUSED TO ALLOW THE OPPORTUNITY TO THE ASSESSEE TO FILE SUCH EVIDENCE DURING THE COURSE OF ASSESSMENT PROCE EDINGS, AS HAS BEEN OBSERVED BY THE LD. CIT(A) VIDE PARA 4 AT PAGE 12 OF HIS ORDER. 12. AS REGARDS THE COST OF CONSTRUCTION, THE RELIEF @ 10% ON ACCOUNT OF DIFFERENCE IN THE COST OF CONSTRUCTION AS ESTIMATED AND AS DECLARED HAS BEEN ALLOWED, WAS OBSERVED BY THE LD. CIT(A) VIDE PARA 4 .1 OF HIS ORDER. RELIANCE HAS BEEN PLACED ON THE DECISION IN THE CASE OF ITO VS. HARCHAND PALACE OF ITAT, AMRITSAR BENCH, WHERE THE DEPARTMENTS APPEAL WAS DISMISSED BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN 269 ITR 251 WHERE IT WAS OBSERVED THAT THE REPORT OF DVO IS AN ESTIMATE OF T HE VALUATION OF THE PROPERTY AND IT CANNOT BE SAID THAT WHATEVER THE VA LUATION OFFICER HAS STATED IS FINAL AND THE DETAILED REPORT SHOULD BE PREFERRE D AS COMPARED TO THE ESTIMATE PREPARED ON THE BASIS OF PAR APPROVED BY C PWD. THE LD. CIT(A) ACCORDINGLY RELYING UPON THE DECISION IN THE CASE O F ITO VS. HARCHAND PALACE (SUPRA), A RELIEF OF 40% ON ESTIMATE OF COST OF CONSTRUCTION MADE BY THE VO WAS ALLOWED AS AGAINST 10% ALLOWED BY THE A .O. 13. AS REGARDS BUILDERS EFFORTS, THE AO HAS ESTIM ATED THE AMOUNT OF RS.169198/- BEING 1% OF THE ESTIMATED COST. THE LD. CIT(A) RESTRICTED THE ITA NO.22 & 25(ASR)/2014 17 SAME AT 0.50 OF THE ESTIMATED COST AND THE ASSESSEE HAD MADE PURCHASES ON FOR BASIS. 14. AS REGARDS EXPENSES NOT RELATED TO PAR, THE VO HAS TAKEN THE SAME ON PERCENTAGE BASIS AND THE DVO HAS TAKEN THE SAME AT RS.11,93,468/-, AS SUCH 7.5% OF THE PAR AND WATER SUPPLY/SANITARY HAS BEEN TAKEN@ 4% OF THE PAR. BUT AS PER EFFORTS OF THE REGISTERED VALUER IT COMES TO RS.3,97,574/- AS WORKED OUT BY THE REGISTERED VALUER ON THE BASIS OF BILLS AVAILABLE ON RECORD. THE SEPARATE CALCULATION OF THE ESTIMATION OF THE COST OF CONSTRUCTION HAD BEEN ANNEXED BY THE LD. CIT(A) AS ANNEXURE-1 AT RS. 77,41,316/- WHICH HAS BEEN DIVIDED FOR THE ASSESSMENT YEAR 2009-10 AT RS .16,42,707/- AND FOR THE IMPUGNED YEAR AT RS.60,98,609/- AND THE DIFFERENCE OF ADDITION SUSTAINED TO THE IMPUGNED YEAR WAS RS.24,68,661/-. 15. THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N.ARORA , ADVOCATE, AT THE OUTSET ARGUED THAT NO SPECIFIC DEFECT HAS BEEN POIN TED OUT BY THE A.O. WHILE REJECTING THE BOOKS OF ACCOUNT. AS REGARDS THE AMOU NT OF EARTH FILLING, NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT FOR WHICH NEC ESSARY EXPLANATION WERE GIVEN AND THE AFFIDAVIT OF SH. BIKKER SINGH WAS ON RECORD AND THE INSPECTOR OF THE DEPARTMENT HAS RECORDED THE STATEMENT OF SH. BIKKER SINGH, WHO HAD CONFIRMED THAT EARTH FILLING HAD BEEN DONE FREE OF COST TO THE ASSESSEE. THE SECOND OBJECTION WAS THAT THE LABOUR EXPENSES WERE ON THE LOWER SIDE. THIS ITA NO.22 & 25(ASR)/2014 18 IS A GENERAL REMARK, AS ARGUED BY THE LD. COUNSEL A ND NO SPECIFIC DEFECT HAS BEEN POINTED OUT. VARIOUS VOUCHERS FOR OTHER EXPEN SES LIKE FUEL/DIESEL ETC WERE PRODUCED BEFORE THE AO. THEREFORE, THERE REMAI NS NO DEFECT, AS SUBMITTED BY THE AO AND THE AO WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT AND THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE A.O. THE AO HAS OBSER VED AT PAGE 2 THAT THE COST OF CONSTRUCTION APPEARS TO BE ON THE LOWER SID E, AS ARGUED BY THE LD. COUNSEL. HE FURTHER ARGUED SIMPLY THE OBSERVATION W ITHOUT ANY MATERIAL ON RECORD, AS COST OF CONSTRUCTION APPEARS TO BE ON TH E LOWER SIDE, CANNOT BE A REASON TO INVOKE THE PROVISIONS OF SECTION 145(3) O F THE ACT. THE AO ALSO OBSERVED THAT DVO VALUED THE COST OF CONSTRUCTION A T CERTAIN AMOUNT AND THERE WAS DIFFERENCE OF RS.88,23,290/- AND IT WAS SHOW CAUSED THAT WHY THE SAME SHOULD NOT BE ADDED TO THE INCOME OF THE ASSE SSEE BY REJECTING THE BOOK VERSION. IT WAS ARGUED THAT SIMPLY ON THE BASI S OF DVO REPORT HIGHER AMOUNT WAS ESTIMATED, BOOKS OF ACCOUNT CANNOT BE RE JECTED, IN VIEW OF THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. PRATAPSINGH AMROSINGH RAJENDRA SINGH AND DEEPAK KUM AR (1993) 200 ITR 788 (RAJ), WHERE IT HAS BEEN HELD THAT SIMPLY BECA USE THE VALUATION REPORT WAS ON A HIGHER AMOUNT, THE BOOKS COULD NOT BE SAID TO BE UNRELIABLE, UNLESS, BY A DEEPER PROBE, ANY DEFECT IS FOUND IN THE MAINT ENANCE OF THE BOOKS OF ITA NO.22 & 25(ASR)/2014 19 ACCOUNT. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISIONS OF VARIOUS COURTS OF LAW AS UNDER: 1. DECISION OF SUPREME COURT IN THE CASE OF SARGAM CINEMA VS. CIT 328 ITR 513. 2. CIT VS. SMT. SALOCHANA BHATIA 20 TAXMAN.COM 298 (P&H) 3. CIT VS. OM OVERSEAS (2009) 315 ITR 185 (P&H) 4. DCIT VS. HARPREET SINGH PROP. M/S. AKASH ENTERPR ISES, FEROZEPUR.ITA NO.317(ASR)/2013 DATED 28.02.2014 (AS R). 5. KASHMIR STEEL ROLLING MILLS. VS. ACIT 155 TAXMAN 121 (ASR) 6. CIT VS. RAJNI KANT DAVI (2006) 150 TAXMAN 387 (A LL.) 7. CIT V. POONAM RANI (2010) 5 TAXMAN .COM 76 (DEL) 15.1. THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED UPON THE DECISIONS OF VARIOUS COURTS OF LAW WHEN THE ASSESSEE HAD MAINTAI NED BOOKS OF ACCOUNT REGULARLY, NO ADDITION CAN BE MADE ON THE BASIS OF THE REPORT OF THE DVO WITHOUT POINTING OUT ANY DEFECTS IN THE BOOKS, AS U NDER: I) SHEIKHAR CHAND & SONS 186 ITR 269 II) WESTERN ESTATES CASE 209 ITR 343 III) VINDABAN CHITRA MANDIRS CASE 209 ITR 520 IV) SHEKHAR CHAND JAIN & SONS 32 TTJ 570 (DEL) V) TEK CHANDS CASE 52 ITD 197 (JP) VI) NISHANT HOUSING DEVELOPMENT (P) LTD. 52 ITDE 103 (P AT) VII) SMT. UMA DEVI JHAWARS 126 TAXATION 452 (CAL) 15.2 THE LD. COUNSEL FOR THE ASSESSEE FURTHER ARGUE D THAT THE REGISTERED VALUER MR. MANIKANT GARG HAD SUBMITTED THE OBJECTIO NS TO THE DVO REPORT WHICH IS IN ITSELF IS THE VALUATION MADE BY THE REG ISTERED VALUER OF THE ASSESSEE. THOUGH NO OPPORTUNITY WAS GIVEN TO FILE THE DETAILED REPORT BEFORE THE AO SINCE THE ASSESSMENT WAS TIME BARRING, AS O BSERVED BY THE A.O. IN ITA NO.22 & 25(ASR)/2014 20 PARA 2.5 OF HIS ORDER. THE REGISTERED VALUER SUBMIT TED THE REPORT IN DETAIL, WHICH IN TURN WAS SUBMITTED TO THE LD. CIT(A) AS AD DITIONAL EVIDENCE AND IT WAS SENT TO THE AO IN THE REMAND REPORT BUT THE AO COMMENTED THAT SUCH REPORT WAS NOT SUBMITTED DURING THE COURSE OF ASSES SMENT PROCEEDINGS. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THE EXPLANA TION THROUGH THE REGISTERED VALUER BEFORE THE A.O. AS WELL AS IN THE FORM OF DETAILED REPORT BEFORE THE LD. CIT(A) FOR WHICH THE AO DID NOT PREF ER TO COMMENT ON THE SAME AND NO DEFECT HAS BEEN POINTED OUT IN THE REPO RT OF THE REGISTERED VALUER AND THEREFORE, NO ADDITION IS REQUIRED TO BE MADE BY THE AO AND THE LD. CIT(A) IS NOT JUSTIFIED IN SUSTAINING ANY ADDIT ION. 16. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS THE REJECTION OF BOOKS OF ACCOUNT, THE A O RAISED FOUR OBJECTIONS WHILE REJECTING THE BOOKS OF ACCOUNT (I) EARTH FILL ING EXPENSES ARE NOT DEBITED (II) FUEL/DIESEL EXPENSES ARE NOT DEBITED (III) LAB OUR EXPENSES APPEARS TO BE ON THE LOWER SIDE AS PROPORTIONATE TO THE MATERIAL PURCHASED AND (IV) VIDE LETTER DATED 20.12.2012, THE AO SHOW CAUSED ASSESSE E THAT AS PER VALUATION REPORT, THE CONSTRUCTION COST IF ESTIMATED AT RS.1, 24,53,238/- AS AGAINST DECLARED BY THE ASSESSEE AT RS.36,29,948/- DURING T HE IMPUGNED YEAR, THERE ITA NO.22 & 25(ASR)/2014 21 WAS A DIFFERENCE OF RS.88,23,290/- AND WHY THE SAME SHOULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED INVESTMEN T WHILE REJECTING THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT. IN THIS REG ARD, THE ASSESSEE SUBMITTED THE EXPLANATION WITH REGARD TO THE OBJECT IONS OF EARTH FILLING , AS SH. BIKKER SINGH, SELLER OF THE LAND UNDERTOOK THE EARTH FILLING FREE OF COST AND IN THIS REGARD, SH. BIKKER SINGH FURNISHED AN A FFIDAVIT THAT HE HAS FILLED THE EARTH FREE OF COST. SPOT INQUIRY WAS MADE BY DE PUTING INSPECTOR OF THE DEPARTMENT, WHO RECORDED THE STATEMENT OF SH.BIKKER SINGH AND WHO CONFIRMED THE CONTENTS OF HIS AFFIDAVIT. THEREFORE, HAVING NOT POINTED OUT ANY DEFECT IN THE SAME, THE AO WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.12,74,574/- ON ACCOUNT OF EARTH FILLING, WHICH I N FACT, HAS BEEN DELETED BY THE LD. CIT(A). THEREFORE, ON THIS ACCOUNT, THE BOO KS OF ACCOUNT COULD NOT HAVE BEEN REJECTED. SECONDLY, THE OBJECTION OF THE AO WITH REGARD TO NOT DEBITING THE EXPENSES ON ACCOUNT OF FUEL/DIESEL ETC . IT WAS SUBMITTED THAT ALL THE EXPENSES AND DETAILS WERE SUBMITTED BEFORE THE AO AND NO SPECIFIC DEFECT HAS BEEN POINTED OUT ON THIS ACCOUNT AS WELL . IN THE ABSENCE OF ANY SPECIFIC DEFECT ON THIS ACCOUNT, BOOKS OF ACCOUNT C ANNOT BE REJECTED. THIRD OBJECTION IS THAT THE ASSESSEE HAS DEBITED LABOUR EXPENSES WHICH APPEARS TO BE ON THE LOWER SIDE AS PROPORTIONATE TO THE MATERI AL PURCHASED, IN THE OPINION OF THE A.O. SUCH OPINION OF AO, WITHOUT BRI NGING ANY SPECIFIC ITA NO.22 & 25(ASR)/2014 22 DEFECT ON RECORD, CANNOT BE A REASON SUFFICE TO REJ ECT THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT. 18. LASTLY, AS PER LETTER DATED 20.12.2012, THE AO AFTER HAVING OBTAINED DVOS REPORT GAVE A SHOW CAUSE NOTICE AS TO WHY D IFFERENCE BETWEEN VALUATION REPORT AND THE AMOUNT DECLARED BY THE AS SESSEE SHOULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE AND WHY THE BOO KS OF ACCOUNT SHOULD NOT BE REJECTED. THE DVOS REPORT BEING JUST OPINIO N AND ESTIMATE IN VIEW OF THE DECISION OF VARIOUS COURTS OF LAW, AS REFERR ED TO ABOVE, THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON HEREINBABOVE, CANNOT BE A REASON TO REJECT THE BOOKS OF ACCOUNT. 19. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND FOR THE REASONS MENTIONED ABOVE, THE AO WAS NOT JUSTIFIED IN REJEC TING THE BOOKS OF ACCOUNT AND THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE A.O. WITH REGARD TO INVOCATION OF PROVISIONS OF SECTION 145(3) OF THE ACT. THE DECISIONS RELIED UPON BY THE LD. COUNSEL FOR THE AS SESSEE, AS MENTIONED ABOVE SUPPORTS THE CASE OF THE ASSESSEE. 20. SINCE WE HAVE REVERSED THE ORDER OF THE LD.CIT( A) WITH REGARD TO INVOKING THE PROVISIONS OF SECTION 145(3) OF THE AC T, THEREFORE, THE AO WAS NOT JUSTIFIED IN REFERRING THE MATTER TO THE DVO AN D THIS VIEW IS SUPPORTED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF SARGAM CINEMA VS. ITA NO.22 & 25(ASR)/2014 23 CIT REPORTED IN 328 ITR 513. ACCORDINGLY, NO ADDITI ON COULD HAVE BEEN MADE BY THE AO AND NO ADDITION COULD HAVE BEEN SUST AINED BY THE LD.CIT(A). THUS, IN VIEW OF OUR DECISION ON LEGAL I SSUE HEREINABOVE, THE APPEAL OF THE REVENUE IS LIABLE TO BE DISMISSED AN D THAT OF THE ASSESSEE IS LIABLE TO BE ALLOWED. 21. THE LD. CIT(A) HAS DECIDED THE ISSUE ON MERIT A S WELL. THE AO HAS GOT THE VALUATION REPORT OF THE BUILDING DONE FROM THE DVO AND THE REPORT WAS SUBMITTED TO THE ASSESSEE AND THE ASSESSEE GOT THE VALUATION DONE FROM THE REGISTERED VALUER MR. MANIKANT GARG IN VIEW OF THE DVOS VALUATION, WHO POINTED OUT THE DEFECT IN THE DVOS REPORT AND THE ASSESSEE SUBMITTED THAT THE DETAILED REPORT WILL BE SUBMITTED IN DUE C OURSE. BUT THE AO DID NOT PROVIDE ANY TIME SINCE THE ASSESSMENT WAS TIME BAR RING. THE SAME WAS PREPARED DURING THE APPELLATE PROCEEDINGS, WHICH IN FACT HAS RIGHTLY BEEN ADMITTED BY THE LD. CIT(A) AND WE FIND NO DEFECT IN THE SAME. ON GOING THROUGH THE OBJECTIONS ON DVOS REPORT BY THE REGIS TRED VALUER OF THE ASSESSEE AND THE DETAILED REPORT SUBMITTED BEFORE T HE LD. CIT(A), WE FIND THAT NO DEFECT HAS BEEN POINTED OUT, FIRST OF ALL, IN TH E REPORT OF THE REGISTERED VALUER AND ON THIS ACCOUNT, NO ADDITION CAN BE SUS TAINED BY THE LD. CIT(A). SECONDLY, THE ADDITIONS SUSTAINED BY THE LD. CIT(A) ARE ON ESTIMATE BASIS WITHOUT POINTING OUT ANY DEFECT IN REGISTERED VALUE RS REPORT AS OBSERVED BY ITA NO.22 & 25(ASR)/2014 24 US, HEREINABOVE AND WITHOUT BRINGING ANY MATERIAL O N RECORD OR WITHOUT POINTING OUT ANY SPECIFIC DEFECT. THEREFORE, THE IN FACTS AND CIRCUMSTANCES, THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE A DDITION OF RS.24,68,661/-. THUS, IN THE FACTS AND CIRCUMSTANCES, ALL THE GROUN DS OF THE ASSESSEE ARE ALLOWED AND THAT OF THE REVENUE ARE DISMISSED. 22. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.22(ASR)/2014 IS ALLOWED AND THAT OF THE REVENUE IN ITA NO.25(ASR )/2014 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2ND AUGUST, 2014. SD/- SD/- (A.D.JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2ND AUGUST, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. SHREE GIAN RESORT, BHIKHI. 2. THE ITO WARD 1(4), MANSA. 3. THE CIT(A), BATHINDA. 4. THE CIT, BATHINDA. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR