Appeal details
Counselvise Citation
238020114 RSA 2011
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 month(s) 26 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
05-08-2011
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
14-07-2011
Assessment Year
2007-2008
Appeal Filed On
10-05-2011
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH A BENCH A BENCH A BENCH A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI R.P.TOLANI, JM AND SHRI B.K.HALDAR, AM BEFORE SHRI R.P.TOLANI, JM AND SHRI B.K.HALDAR, AM BEFORE SHRI R.P.TOLANI, JM AND SHRI B.K.HALDAR, AM BEFORE SHRI R.P.TOLANI, JM AND SHRI B.K.HALDAR, AM ITA NO ITA NO ITA NO ITA NOS SS S. .. .2376/DEL/2011 TO 2381/DEL/2011 2376/DEL/2011 TO 2381/DEL/2011 2376/DEL/2011 TO 2381/DEL/2011 2376/DEL/2011 TO 2381/DEL/2011 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEARS SS S : : : : 2003 2003 2003 2003- -- -04 TO 2008 04 TO 2008 04 TO 2008 04 TO 2008- -- -09 0909 09 ASSTT.COMMISSIONER OF ASSTT.COMMISSIONER OF ASSTT.COMMISSIONER OF ASSTT.COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -16, 16, 16, 16, NE NENE NEW DELHI. W DELHI. W DELHI. W DELHI. VS. VS. VS. VS. M/S AMBIENCE DEVELOPERS & M/S AMBIENCE DEVELOPERS & M/S AMBIENCE DEVELOPERS & M/S AMBIENCE DEVELOPERS & INFRASTRUCTURE PVT.LTD., INFRASTRUCTURE PVT.LTD., INFRASTRUCTURE PVT.LTD., INFRASTRUCTURE PVT.LTD., L LL L- -- -4, GREEN PARK EXTENSION, 4, GREEN PARK EXTENSION, 4, GREEN PARK EXTENSION, 4, GREEN PARK EXTENSION, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 016. 110 016. 110 016. 110 016. PAN NO. PAN NO. PAN NO. PAN NO.AAECA6894P. AAECA6894P. AAECA6894P. AAECA6894P. (APPELLANT) (RESPONDENT) APPELLANT BY : MRS.GEETMALA MOHNANI, CIT-DR. RESPONDENT BY : SHRI T.R.TALWAR, ADVOCATE. ORDER ORDER ORDER ORDER PER R.P.TOLANI, JM PER R.P.TOLANI, JM PER R.P.TOLANI, JM PER R.P.TOLANI, JM : : : : THESE ARE SIX REVENUES APPEALS. THE ASSESSEE BEI NG SAME AND THE ISSUE BEING COMMON, THE SAME ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE SOLE ISSUE RAISED BY THE REVENUE IN ALL THES E APPEALS IS AS UNDER, THOUGH THE AMOUNTS ARE DIFFERENT:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) HAS ERRED IN DELETING ADDITION OF FOL LOWING AMOUNTS MADE BY A.O. ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION OF MALL. ASSESSMENT YEAR AMOUNT OF ADDITION 2003-04 RS.7,33,655/- 2004-05 RS.1,09,11,640/- 2005-06 RS.2,46,12,807/- 2006-07 RS.4,14,77,078/- 2007-08 RS.4,68,24,043/- ITA-2376 TO 2381/DEL/2011 2 2008-09 RS.3,82,40,303/- 2. (A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NO T TENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DU RING THE COURSE OF THE HEARING OF THE APPEAL. 3. BRIEF FACTS ARE THAT A SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE IT ACT WAS CONDUCTED ON THE AMBIENCE GRO UP OF COMPANIES ON 10.10.2007 AND THE ASSESSEE IS ONE OF THE COMPAN IES OF THIS GROUP WHICH WAS COVERED IN THE SEARCH. THE ASSESSEE IN T HIS YEAR WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF PROPERTY I.E. MALL IN THE NATIONAL CAPITAL REGION OF DELHI. THE AO NOTED THA T THIS COMPANY OF THE GROUP WAS CONSTRUCTING ONE AMBIENCE MALL PROJEC TS AT NH-8, GURGAON. MAJOR CONSTRUCTION WORK AT THIS MALL WAS BEING UNDERTAKEN BY THE CONSTRUCTION COMPANY OF THE GROUP VIZ. M/S A MBIENCE PROJECTS AND INFRASTRUCTURE LTD. AND THE EXPENSES ARE BEING ACCOUNTED FOR ON THE BASIS OF BILLS DRAWN BY THE CONSTRUCTION COMPAN Y. HOWEVER, CERTAIN COSTS AND EXPENSES WERE INCURRED DIRECTLY B Y THE ASSESSEE COMPANY IN ITS PROJECT. DURING THE ASSESSMENT PROC EEDINGS, THE AO, BASED ON CERTAIN SEIZED DOCUMENTS MENTIONED IN THE ASSESSMENT ORDER CAME TO A CONCLUSION THAT THE EXPENSES INCURRED ON THE CONSTRUCTION OF AMBIENCE MALL PROJECT, NH-8, GURGAON ARE NOT COMPLE TELY RECORDED IN THE BOOKS OF ACCOUNT AND HENCE, MADE A REFERENCE TO THE VALUATION OFFICER U/S 142A OF THE IT ACT WHO SUBMITTED THE VA LUATION REPORT. AS PER THE VALUATION REPORT, THE TOTAL INVESTMENT INCU RRED IN THE SAID PROPERTY SHOULD HAVE BEEN RS.437,88,53,104/- OVER V ARIOUS YEARS WHEREAS THE ASSESSEE HAD SHOWN THE INVESTMENT AT RS .421,60,56,594/- OVER THESE YEARS IN ITS BOOKS OF ACCOUNT. THE COMP ARATIVE YEAR WISE DETAILS OF THE EXPENSES SHOWN BY THE ASSESSEE COMPA NY AND AS ESTIMATED BY THE VALUATION OFFICER ARE AS UNDER:- ITA-2376 TO 2381/DEL/2011 3 S.NO. PERIOD OF CONSTRUCTION COST OF CONSTRUCTION AS PER THE RETURN (RS.) COST OF CONSTRUCTION AS ESTIMATED BY DISTT. VALUATION OFFICER (RS.) DIFFERENCE (RS.) 1. 2002-03 19000000/- 19733655/- 7,33,655/- 2. 2003-04 282586069/- 293497693/- 1,09,11,624/- 3. 2004-05 637415316/- 662028123/- 2,46,12,807/- 4. 2005-06 1074083566/- 1115557644/- 4,14,77,078/- 5. 2006-07 1212635421/- 1259459464/- 4,68,24,043/- 6. 2007-08 990336222/- 1028576525/- 3,82,40,303/- TOTAL : 421,60,56,594/- 437,88,53,104/- 16,27,96,510/- 4. THE ASSESSING OFFICER, THEREFORE, MADE ADDITION TO THE RETURNED INCOME ON ACCOUNT OF DIFFERENCE BETWEEN THE COST OF CONSTRUCTION AS PER THE RETURN AND COST OF CONSTRUCTION AS ESTIMATE D BY THE DISTRICT VALUATION OFFICER FOR EACH YEAR UNDER CONSIDERATION AS INDICATED IN THE CHART ABOVE. 5. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL WHERE DETAILED EXPLANATION AND DOCUMENTS WERE FILED BY IT. 6. THE CIT(A) CALLED FOR AOS REMAND REPORT AND AFT ER CONSIDERATION OF THE MATERIAL AVAILABLE DELETED THE ADDITION BY F OLLOWING OBSERVATIONS:- 9. I HAVE CONSIDERED THE ASSESSING OFFICERS ORDER , HIS REMAND REPORT AND THE SUBMISSIONS MADE BY THE APPEL LANT AND THE POSITION OF FACTS AND LAW. IN THIS RESPECT IT IS OBSERVED THAT ALTHOUGH THE APPELLANT HAS CHALLENGED THE REFERENCE MADE TO DVO UNDER SECTION 142A OF THE IT ACT FOR ESTIMATING THE COST OF CONSTRUCTION OF THE PROP ERTY AS ITA-2376 TO 2381/DEL/2011 4 THERE IS NO MENTION OF SECTION 69C IN SECTION 142A AS HELD BY THE HONBLE JURISDICTIONAL HIGH COURT SUPRA, IT BECOMES DEBATABLE WHEN WE VIEW IT FROM THE POINT OF VIEW OF INVESTMENT BY THE APPELLANT COMPANY IN THE SAID PRO PERTY. HOWEVER, THIS REFERENCE WAS NOT VALID KEEPING IN VI EW THAT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECI FIC DEFECTS IN THE BOOKS OF ACCOUNTS REGULARLY MAINTAIN ED AND AUDITED AND HIS PRESUMPTION THAT SOME EXPENSES AS MENTIONED IN CERTAIN SEIZED DOCUMENTS ON ACCOUNT OF CONSTRUCTION ARE NOT COMPLETELY RECORDED IN THE BOO KS OF ACCOUNTS WAS NOT FOUND CORRECT WHEN THE SAME WERE EXPLAINED BY THE APPELLANT AND VERIFIED BY THE ASSE SSING OFFICER WITH THE SUPPORTING EVIDENCE VIS-A-VIS THE BOOKS OF ACCOUNTS. AS ASSESSING OFFICER HAD ALSO NOT REJECT ED THE BOOKS OF ACCOUNTS U/S 145(3), BY POINTING OUT ANY D EFECT, REFERENCE TO THE DVO WAS NOT VALID AND THEREFORE, T HE DVOS REPORT COULD NOT BE UTILIZED FOR FRAMING ASSE SSMENT U/S 143(3) R.W. SECTION 153A OF THE I.T.ACT, EVEN I F SUCH A REPORT WAS CONSIDERED VALID TO BE OBTAINED U/S 142A AS HELD BY THE VARIOUS TRIBUNALS AND HIGH COURTS REFER RED TO SUPRA. IT IS ALSO OBSERVED THAT THE DIFFERENCE BET WEEN THE COST OF CONSTRUCTION AS PER THE BOOKS OF ACCOUNTS A ND THE COST OF CONSTRUCTION AS ESTIMATED BY THE DVO IS ONL Y IN THE RANGE OF 3.86% WHICH IS FAIRLY MARGINAL AND IS IN T HE ACCEPTABLE ERROR MARGIN RANGE AS THE DVOS REPORT I S ONLY AN ESTIMATION AND THE VARIATION IS BOUND TO BE THER E FOR VARIOUS REASONS/FACTORS AS HELD BY THE VARIOUS TRIB UNALS AND HIGH COURTS REFERRED TO SUPRA. 10. IN VIEW OF THE ABOVE POSITION IT IS MY CONSIDER ED VIEW THAT IN THE FIRST PLACE THE BASIS TAKEN BY THE AO F OR MAKING THE ADDITION, I.E. THE DIFFERENCE BETWEEN THE DECLA RED VALUE AND THE VALUE AS PER THE DVOS REPORT IS NOT JUSTIF IED IN LAW FOR MAKING ADDITIONS U/S 143(3) R.W. S. 153A OF THE IT ACT, AS UNEXPLAINED INVESTMENT IN THE CONSTRUCTION OF TH E PROPERTY, IN THE ABSENCE OF ANY DEFECTS POINTED OUT BY THE AO IN THE REGULARLY MAINTAINED AND AUDITED BOOKS OF ACCOUNTS ON THE BASIS OF ANY EVIDENCE FOUND DURING THE SEARCH ACTION AS ALSO IN THE ABSENCE OF REJECTION O F THE BOOKS OF ACCOUNTS U/S 145(3) OF I.T.ACT. IN ANY EV ENT, EVEN THE DIFFERENCES NOTED ARE OF MARGINAL NATURE REPEAT EDLY HELD TO BE WITHIN TOLERABLE ERROR MARGIN RANGE BY V ARIOUS JUDICIAL FORA AS SUBMITTED. SINCE THE APPELLANT HA S BEEN SUBJECTED TO ACTION U/S 132 OF THE I.T.ACT, THE SCO PE OF ANY SUCH ADDITION U/S 143(3) R.W. SECTION 153A OF THE I .T.ACT ON ESTIMATION BECOMES SEVERELY RESTRICTED BY THE FINDI NGS AND EVIDENCES OF THE SEARCH ACTION AND ANY ATTEMPT TO B ASE ITA-2376 TO 2381/DEL/2011 5 ADDITIONS ON THE BASIS OF SUCH ESTIMATIONS IS DIFFI CULT TO BE APPROVED. THE APPELLANT THEREFORE GETS RELIEF IN R ESPECT OF THE ADDITION MADE IN EACH YEAR REPRESENTING THE DIF FERENCE BETWEEN THE COST OF CONSTRUCTION AS PER THE BOOKS O F ACCOUNTS AND THE COST OF CONSTRUCTION AS ESTIMATED BY THE DVO, WHICH IS DIRECTED TO BE DELETED IN EACH OF THE APPEALS LISTED IN THIS ORDER. 7. AGGRIEVED, THE REVENUE IS IN APPEALS. 8. THE LEARNED DR RELIES ON THE ORDER OF THE ASSESS ING OFFICER AND CONTENDS THAT :- (I) THE REFERENCE MADE TO DVO U/S 142A WAS A PROPER REFERENCE INASMUCH AS THE ASSESSEE DID NOT EXPLAIN THE INCRIMINATING SEIZED MATERIAL FOUND DURING THE COUR SE OF SEARCH. (II) THOUGH THERE IS NO MENTION OF SECTION 69C IN THE 14 2A PROPOSAL, THE SAME DOES NOT LEAD TO ANY ADVERSITY A S THE ADDITIONS IN EFFECT ARE UNDER SECTION 69B. SINCE T HE ASSESSEE COULD NOT EXPLAIN THE DOCUMENTS FOUND DURI NG THE COURSE OF SEARCH, THEREFORE, ASSESSEE FAILED TO JUSTIFY THE COST OF CONSTRUCTION OF THE MALL PROPERTY. THE ONLY SECTION IN THE INCOME-TAX ACT WHICH DEALS WITH UNEX PLAINED INVESTMENT IS SECTION 69B. THEREFORE, SECTION 69B IS INBUILT IN THE WHOLE PROCESS. THE ADVERSE INFERENC E DRAWN BY THE CIT(A) ON THIS ISSUE IS NOT PROPER. (III) THERE IS NO PROVISION IN THE ACT THAT BOOKS OF ACCO UNT SHOULD BE REJECTED FOR ESTIMATING COST OF CONSTRUCT ION. SINCE THE ASSESSEE WAS NOT ABLE TO DEMONSTRATE ITS COST OF CONSTRUCTION AS NOTED IN THE INCRIMINATING DOCUMENT S, THE AO CAN MAKE THE ADDITIONS WITHOUT POINTING OUT SPEC IFIC DEFECTS IN THE BOOKS OF ACCOUNT. ITA-2376 TO 2381/DEL/2011 6 (IV) THOUGH THE DIFFERENCE BETWEEN THE DVOS REPORT AND ASSESSEES INVESTMENT IN PERCENTAGE TERMS APPEARED TO BE 3.86%, THE QUANTUM WHICH IS VERY LARGE AND CIT(A) E RRED IN DELETING THE ADDITIONS ON PERCENTAGE TERMS. (V) RELIANCE IS PLACED ON THE DECISION OF HONBLE UTTAR AKHAND HIGH COURT IN THE CASE OF SMT.KIRAN LATA VS. ITAT A ND OTHERS 318 ITR 44. THE HEAD NOTE OF THE SAID JUD GMENT READS AS UNDER:- THE ASSESSEES MAIN SOURCE OF INCOME WAS FROM HER MEDICAL PROFESSION BY RUNNING A NURSING HOME, A NEW LY CONSTRUCTED BUILDING. SHE HAD SHOWN AN INVESTMENT IN THE BUILDING AT RS.26.99 LAKHS AND THE RETURN FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY. A NOTICE WAS I SSUED UNDER SECTION 143(2) OF THE INCOME-TAX ACT, 1961, A FTER APPROVAL FROM THE COMMISSIONER. AS THE ASSESSING O FFICER FOUND THAT THE CLAIM OF INVESTMENT WAS NOT SUPPORTE D WITH SUFFICIENT PROOF, THE BUILDING WAS GOT ASSESSED BY THE DEPARTMENTAL VALUATION OFFICER WHO ESTIMATED THE INVESTMENT AT RS.46,57,430. THE ASSESSING OFFICER ADDED RS.19,57,092 TO THE INCOME OF THE ASSESSEE TREATING IT AS ADDITIONAL INVESTMENT MADE IN THE CONSTRUCTION OF T HE BUILDING FROM UNDISCLOSED SOURCES UNDER SECTION 69 OF THE ACT. THE COMMISSIONER (APPEALS) DISMISSED THE APPE AL. THE TRIBUNAL RESTRICTED THE ADDITION TO RS.10 LAKHS AND PARTLY ALLOWED THE APPEAL. ON FURTHER APPEAL : HELD, DISMISSING THE APPEAL, (I) THAT THE AUTHORITI ES BELOW HAD ALREADY APPLIED THEIR MIND TO THE FACTS OF THE CASE AND THE FACTUAL SATISFACTION RECORDED BY THE TRIBUNAL C ALLED FOR NO INTERFERENCE. (II) THAT THE TRIBUNAL WAS JUSTIFIED IN ACCEPTING T HE VALUATION DONE BY THE REVENUE WITHOUT REJECTING THE BOOKS OF ACCOUNT SUBMITTED BY THE ASSESSEE AS THE ASSESSE E HAD ADMITTED AT THE SPOT THAT THE ACCOUNTS WERE NOT COM PLETE. 9. THE LEARNED DR, THEREFORE, CONTENDS THAT CIT(A) S ORDER SHOULD BE REVERSED AND THAT OF AO RESTORED. ITA-2376 TO 2381/DEL/2011 7 10. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OT HER HAND, VEHEMENTLY ARGUES THAT :- (I) THE AMBIENCE GROUP HAS MANY ASSOCIATED CONCERNS WHI CH WERE SIMULTANEOUSLY SEARCHED. DURING THE COURSE OF SEARCH, SOME INCRIMINATING MATERIAL WAS FOUND AND S EIZED WHICH PERTAINED TO ALL THE GROUP ENTITIES. THE INC RIMINATING MATERIAL WAS SUBSEQUENTLY EXPLAINED. HOWEVER, AT T HE TIME OF SEARCH, IMMEDIATE EXPLANATION WAS DEMANDED FROM THE ASSESSEE. TO AVOID THIS SITUATION, THE AS SESSEE GROUP AGREED TO DECLARE AN AMOUNT OF `40 CRORES AS ADDITIONAL INCOME IN VARIOUS GROUP ENTITIES. (II) THE ASSESSEE HONOURED ITS AGREEMENT WITH DEPARTMENT AND PAID THE TAXES ON THE AMOUNT OF `40 CRORES AND FILED THE RETURN OF INCOME OF GROUP ENTITIES OFFERING THE DUE TAXES. (III) THE AO IN THE NAME OF INCRIMINATING MATERIAL ATTEMP TED TO GO BEYOND THE AGREED DECLARATION IGNORING THE FACT THAT THE AMOUNT OF `40 CRORES WAS DECLARED IN LIEU OF INABIL ITY TO IMMEDIATELY EXPLAIN THE INCRIMINATING MATERIAL. TH E INCRIMINATING DOCUMENTS WERE EXPLAINED IN WRITING B EFORE AO DURING ASSESSMENT. THEREFORE, THERE IS NO JUSTI FICATION IN RECOURSING TO REFERENCE TO DVO AS NO UNEXPLAINED MATERIAL EXISTS AND THE ASSESSEE GROUP HAD ALREADY OFFERED THE TAX RELATING TO INCRIMINATING MATERIAL. (IV) DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE COMPANY IN WRITING RECONCILED THE ALLEGED INCRIMINATING EVIDENCE AND EXPLAINED THAT THEY WERE RECORDED IN THE BOOKS OF ACCOUNT OF THE VARIOUS GRO UP ENTITIES. THE AO HAS MAINTAINED TOTAL SILENCE ON T HIS ASPECT. THOUGH THE EXPLANATION OF THE ASSESSEE ON EACH ITA-2376 TO 2381/DEL/2011 8 INCRIMINATING MATERIAL IS ON RECORD, NO COMMENT HAS BEEN OFFERED EITHER ACCEPTING OR REJECTING THE ASSESSEE S EXPLANATION. THUS, THE ASSESSEE DULY DISCHARGED IT S BURDEN IN RESPECT OF INCRIMINATING MATERIAL ON TWO PROPOSITIONS:- (A) THE TAX ON THE AMOUNT OF `40 CRORES OFFERED HAS BEE N PAID BY THE GROUP AS AGREED TO THE DEPARTMENT. (B) IN THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE FURNISHED ADEQUATE EXPLANATION ABOUT THE INCRIMINAT ING MATERIAL WHICH HAS NOT BEEN CONTROVERTED BY THE AO. IN VIEW OF THESE FACTS, NO ADDITION CAN BE MADE. (V) THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED AN D THE COST OF CONSTRUCTION IN THE BOOKS OF ACCOUNT ARE AC CEPTED BY THE AO. ONCE THE BOOKS ARE ACCEPTED AND ASSESSE E HAS OFFERED WRITTEN EXPLANATION IN RESPECT OF INCRIMINA TING MATERIAL, IT DOES NOT LIE WITH THE AO TO HOLD THAT THE COST OF CONSTRUCTION COULD NOT BE DETERMINED. THERE BEING NO DEFECT IN THE BOOKS OF ACCOUNT AND THERE BEING NO O THER MATERIAL IN THE POSSESSION OF THE AO TO SUGGEST ANY UNEXPLAINED INVESTMENT IN THE CONSTRUCTION, THE PRO POSAL TO DVO U/S 142A CANNOT BE MADE AS NO ADVERSE INFERE NCE CAN BE DRAWN. RELIANCE IS PLACED ON HON'BLE DELHI HIGH COURT JUDGMENT IN THE CASE OF CIT VS. AAR PEE APART MENTS P.LTD. 319 ITR 276 (DEL), THE HEAD NOTE OF THE SA ID JUDGMENT READS AS UNDER:- INTERPRETATION OF TAXING STATUTES EXCLUSION BY LEGISLATURE COURT CANNOT INCORPORATE. SUB-SECTION (1) OF SECTION 142A OF THE INCOME-TAX A CT, 1961, ENABLES THE ASSESSING OFFICER TO GET THE VALU ATION DONE FROM THE VALUATION OFFICER IN CERTAIN SPECIFIC TYPES OF ITA-2376 TO 2381/DEL/2011 9 CASES. THERE WOULD BE CASES WHEREIN AN ESTIMATE OF THE VALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69 O R SECTION 69B OR THE VALUE OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES REFERRED TO IN SECTION 69A OR SECTION 69B IS REQUIRED. THERE IS NO MENTION ABOUT SECTION 69C. SECTION 69A DEALS WITH UNEXPLAINED MONEY. SECTION 69D LIKE WISE RELATES TO THE AMOUNT OF INVESTMENT, ETC., NOT FULL Y DISCLOSED IN THE BOOKS OF ACCOUNT. ON THE OTHER HA ND, THE PROVISION RELATING TO UNEXPLAINED EXPENDITURE IS IN SECTION 69C. THE SCOPE AND AMBIT OF SECTION 69B AND SECTIO N 69C ARE ALTOGETHER DIFFERENT. THE CONNOTATION TO THE INVESTMENT APPEARING IN SECTION 69B HAS TO BE IN TH E CONTEXT OF INVESTMENT MADE IN SOME PROPERTY OR ANY OTHER TYPE OF INVESTMENT AND IT COULD NOT BE BUSINESS EXPENDITURE. THE WORD INVESTMENT CONTAINED IN SE CTION 69B DEALS WITH INVESTMENT IN BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES, ETC. THE CENTRAL BOARD OF DIREC T TAXES CIRCULAR EXPLAINING THE PROVISIONS OF THE FINANCE ( NO.2) BILL, 2004, SPECIFICALLY OMITTED THE WORD EXPENDITURE A S WELL AS SECTION 69C. WHAT IS NOT INCLUDED BY THE LEGISLATURE AND RATHER SPECIFICALLY EXCLUDED CANNOT BE INCORPORATED BY THE COURT THROUGH THE PROCESS OF INTERPRETATION. THE ONLY RE MEDY IS TO AMEND THE PROVISIONS. IT IS NOT THE FUNCTIONING OF THE COURT TO LEGISLATE OR PLUG THE LOOPHOLES IN THE LAW . THE ASSESSEE, A CONSTRUCTION COMPANY, TOOK UP THREE PROJECTS IN THE YEARS EARLIER TO THE ASSESSMENT YEA R 1998- 99. IT ADOPTED THE COMPLETION OF PROJECT METHOD OF ACCOUNTING AND COMPLETED THE FIRST PROJECT AND DECL ARED SOME PROFITS. IT SHOWED THE COST OF THE CONSTRUCTI ON OF THE FIRST PROJECT AT RS.39,69,440. THE ASSESSING OFFIC ER REFERRED THE MATTER TO THE DEPARTMENTAL VALUATION O FFICER TO DETERMINE THE COST OF CONSTRUCTION WHOSE REPORT SHOWED THE COST AT RS.19,99,559. ON THE BASIS OF THE REPO RT THE COST OF CONSTRUCTION WAS ADOPTED. THE ASSESSING OF FICER ACCEPTING THE LOWER COST OF CONSTRUCTION THAN WHAT WAS SHOWN BY THE ASSESSEE MADE AN ADDITION OF RS.19,69, 881. THE COMMISSIONER (APPEALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. THE TRIBUNAL REVERSED THE DECIS ION THE GROUND THAT IT WAS NOT PERMISSIBLE FOR THE ASSESSIN G OFFICER TO REFER THE MATTER TO THE DEPARTMENTAL VALUATION O FFICER FOR OBTAINING THE COST OF CONSTRUCTION. THE TRIBUN AL HELD THAT EVEN WITH THE INSERTION OF SECTION 142A WITH RETROSPECTIVE EFFECT FROM NOVEMBER 15, 1972, THIS C OURSE OF ACTION WAS NOT OPEN TO THE ASSESSING OFFICER AS THE ITA-2376 TO 2381/DEL/2011 10 PROVISION DID NOT DEAL WITH UNEXPLAINED EXPENDITURE UNDER SECTION 69C. ON APPEAL : HELD, DISMISSING THE APPEAL, THAT THE ASSESSING OFF ICER FOR THE PURPOSE OF GETTING HIMSELF SATISFIED ABOUT THE PURPORTED UNEXPLAINED EXPENDITURE UNDER SECTION 69C COULD NOT INVOKE THE POWERS UNDER SECTION 142A. IF INVESTMENT COULD INCLUDE WITHIN ITS FOLD THE EXPENDITURE AS WELL WHICH IS INCURRED BY A BUSINE SSMAN DURING THE COURSE OF HIS BUSINESS, THERE WAS NO NEC ESSITY OF HAVING A SEPARATE PROVISION UNDER SECTION 69C WH ICH DEALS WITH UNEXPLAINED EXPENDITURE. THUS, THE EXPENDITURE INCURRED SHOULD NOT BE CONSIDERED AS COMING WITH THE EXPRESSION INVESTMENT. EXCEPT TH E REPORT OF THE DEPARTMENT VALUATION OFFICER THERE WA S NO EVIDENCE TO DISBELIEVE THE EXPENDITURE SHOWN BY THE ASSESSEE. THE EXPENDITURE SHOWN BY THE ASSESSEE FR OM THE TIME WHEN IT WAS AN ONGOING PROJECT WAS EXAMINE D AND ACCEPTED BY THE ASSESSING OFFICER. THE TRIBUNAL RI GHTLY DELETED THE ADDITION OF RS.19,69,881 MADE BY THE ASSESSING OFFICER. (VI) EVEN IN THE CASE OF A BLOCK ASSESSMENT UNDER SECTIO N 153A, NO ADDITION CAN BE MADE. (VII) FURTHER RELIANCE IS PLACED ON HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF SARGAM CINEMA VS. CIT 328 ITR 513, HOLDING AS UNDER:- 4. IN THE PRESENT CASE, WE FIND THAT THE TRIBUNAL DECIDED THE MATTER RIGHTLY IN FAVOUR OF THE ASSESSEE INASMU CH AS THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESS ING AUTHORITY COULD NOT HAVE REFERRED THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER (DVO) WITHOUT THE BO OKS OF ACCOUNT BEING REJECTED. IN THE PRESENT CASE, A CAT EGORICAL FINDING IS RECORDED BY THE TRIBUNAL THAT THE BOOKS WERE NEVER REJECTED. THIS ASPECT HAS NOT BEEN CONSIDERE D BY THE HIGH COURT. IN THE CIRCUMSTANCES, RELIANCE PLA CED ON THE REPORT OF THE DVO WAS MISCONCEIVED. ITA-2376 TO 2381/DEL/2011 11 5. FOR THE ABOVE REASONS, THE IMPUGNED JUDGMENT OF THE HIGH COURT IS SET ASIDE AND THE ORDER PASSED BY THE TRIBUNAL STANDS RESTORED TO THE FILE. ACCORDINGLY, THE ASSESSEE SUCCEEDS. (VIII) FOR REJECTION OF BOOKS OF ACCOUNT, THE AO HAS TO GI VE A SPECIFIC FINDING POINTING OUT DEFECTS AND A CONCLUS ION THAT DUE TO THESE DEFECTS, THE BOOKS AND INCOME OF THE ASSESSEE COULD NOT BE VERIFIED. SIMILARLY, IF THER E WAS ANY QUESTION ABOUT COST OF CONSTRUCTION, THE AO HAS TO ASK THE ASSESSEE TO FILE EXPLANATION AND IF ASSESSEE FAILS TO GIVE REASONABLE EXPLANATION, THEN ONLY THE BOOKS CAN BE REJECTED. THE ONLY REASON FOR REFERENCE TO SECTION 142A HAS BEEN ATTRIBUTED TO NON-EXPLANATION OF INCRIMINA TING MATERIAL WHICH IS NOT CORRECT. DETAILED EXPLANATIO N WAS GIVEN TO THE AO THAT THE DOCUMENTS WERE RECORDED IN GROUP ENTITIES WHICH IS AVAILABLE ON THE PAPER BOOK . THE AO HAS NOWHERE GIVEN ANY FINDING THAT ASSESSEES EXPLANATION IS NOT CORRECT. IN THESE CIRCUMSTANCES , HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF SARGAM CINEMA (SUPRA) AND AAR PEE APARTMENTS P.LTD. (SUPRA) ARE V ERY MUCH APPLICABLE. SUCH A REFERENCE CANNOT BE MADE U NDER SECTION 142A. (IX) THE ASSESSEES DOCUMENTS AND EXPLANATION BEFORE THE CIT(A) WERE DULY FORWARDED TO THE AO FOR COMMENTS; IN THE REMAND REPORT, AO HAS ONLY INSISTED ON HIS EARLIER STAND WITHOUT ELABORATING ANYTHING FURTHER. THEREFORE, I N REMAND ALSO, AO HAS FAILED TO JUSTIFY REFERENCE U/S 142A W HICH IS BAD IN LAW. ITA-2376 TO 2381/DEL/2011 12 (X) ASSUMING EVEN THAT REFERENCE UNDER SECTION 142A IS PROPER, THE DVOS REPORT IS TOTALLY UNRELIABLE. TH E ASSESSEE WAS CONSTRUCTING A MALL UNDER THE SUPERVISION OF IT S GROUP ENTITIES. THE PURCHASE OF CEMENT AND STEEL WERE IN BULK AT COMPETITIVE RATES. BESIDES THE VALUATION IS BEREFT OF QUANTITY AND MEASUREMENT OF CONSTRUCTION. DVO INST EAD OF GIVING AN OBJECTIVE VALUATION HAS MERELY ADOPTED CP WD RATES ON FLAT RATE BASIS. EVEN IF A REBATE OF 5% F OR SALES SUPERVISION AND A PERCENTAGE OF 5% FOR BULK PURCHAS ES OF MATERIAL IS GIVEN, IT AMOUNTS TO REDUCTION OF COST OF CONSTRUCTION INCURRED BY THE ASSESSEE BY 10% WHICH WILL MAKE THE COST IN ACCOUNT BOOKS MORE THAN THE DVOS REPORT. (XI) DVOS REPORT BEING ONLY AN OPINION BASED ON ESTIMAT ION, COURTS HAVE HELD THAT MARGIN OF ERROR OF + - 5% MAY EXIST BETWEEN TWO ESTIMATES. THE ASSESSEES COST OF CONSTRUCTION BEING ON DAY TO DAY BASIS REFLECTED IN THE BOOKS OF ACCOUNT WHICH ARE DULY AUDITED IS PERFECTL Y RELIABLE. THERE IS NO WHISPER OF REJECTION OF BOOK S DUE TO ANY MISTAKES OR INFLATED COST OF CONSTRUCTION, THE ASSESSEES RECORD IS ANY DAY BETTER THAN THE DVOS REPORT BASED ON SUMMARY BASED ON MATERIAL EXCEPT A VAGUE REFERENCE TO SEIZED DOCUMENTS WHICH ARE EXPLAINED B Y THE ASSESSEE. 11. THE LEARNED COUNSEL FURTHER CONTENDED THAT THE ASSESSEE HAS ONE OF THE BIGGEST MALLS IN DELHI AND THE EFFORT INVOLV ED IN A PROPER AND OBJECTIVE VALUATION IS HUGE AND MASSIVE. IT WILL T AKE A VERY LONG TIME TO MAKE SUCH OBJECTIVE VALUATION BASED ON THE QUANT ITIES OF ITA-2376 TO 2381/DEL/2011 13 CONSTRUCTION IN PHASES AND CONSIDERING THE ARCHITEC TURAL DESIGNS. THE SUMMARY PROCEDURE ADOPTED BY THE DVO IS EVIDENT FRO M THE FACT THAT THEIR TEAM VISITED THE MALL IN NOVEMBER, 2009 AND I N DECEMBER, 2009, A MAMMOTH VALUATION REPORT HAS BEEN FILED BY MERELY ADOPTING CPWD RATES. THE LEARNED COUNSEL, THEREFORE, RELIED ON T HE ORDER OF THE CIT(A). 12. THE LEARNED DR, IN THE REJOINDER, CONTENDS THAT :- (I) THE VALUATION REFERENCE UNDER SECTION 142A AND VALU ATION REPORT ARE PROPER AND RELIABLE. (II) ASSESSEES BOOKS ARE IMPLIEDLY REJECTED BY THE AO A ND CIT(A) IS NOT CORRECT IN HOLDING THAT THE BOOKS ARE NOT REJECTED. (III) ASSESSEE DID NOT EXPLAIN THE DIFFERENCE BETWEEN THE VALUATION REPORT AND THE COST OF CONSTRUCTION IN TH E BOOKS. (IV) THE ASSESSEE FAILED TO EXPLAIN THE INCRIMINATING MA TERIAL. THE ORDER OF THE AO, THEREFORE, WAS RELIED UPON. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE MAIN ISSUES RAISED IN SERI ATIM ARE AS UNDER:- (A) WHETHER ASSESSEES BOOKS OF ACCOUNT ARE REJECTE D ? 14. IT HAS NOT BEEN DISPUTED THAT ASSESSEE MAINTAIN S PROPER BOOKS OF ACCOUNT WHICH ARE AUDITED AND SUPPORTED BY VOUCHERS EXCEPT VAGUE REFERENCE TO SOME SEIZED DOCUMENTS WHICH WE SHALL D EAL LATER. THERE IS NO REFERENCE TO ANY SPECIFIC ORDER BY THE AO REJ ECTING THE BOOKS, SECTION 145(3) READS AS UNDER:- WHERE THE ASSESSING OFFICER IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, OR WHERE THE METHOD OF ACCOUNTING PROVIDE D IN ITA-2376 TO 2381/DEL/2011 14 SUB-SECTION (1) OR ACCOUNTING STANDARDS AS NOTIFIED UNDER SUB-SECTION (2), HAVE NOT BEEN REGULARLY FOLLOWED B Y THE ASSESSEE, THE ASSESSING OFFICER MAY MAKE AN ASSESSM ENT IN THE MANNER PROVIDED IN SECTION 144. 15. IN THIS CASE, NEITHER THE AO HAS ASKED THE ASSE SSEE ANY QUESTION ABOUT THE ASSESSEES BOOKS OF ACCOUNT OR METHOD OF ACCOUNTING BEING DEFECTIVE NOR ASKED TO ASSESS UNDER SECTION 144. F OR REJECTING THE BOOKS, ASSESSEE WHO HAS APPEARED AND COOPERATED IN ASSESSMENT PROCEEDINGS IS TO BE CALLED ON TO EXPLAIN THE DISCR EPANCIES, INCORRECTNESS OR INCOMPLETENESS. THE QUESTION OF R EJECTION WILL BE TENABLE WHEN ASSESSEES EXPLANATION IS PROPERTY CON SIDERED FOLLOWING BY A FINDING THAT THE BOOKS ARE INCOMPLETE, INCORRE CT OR METHOD OF ACCOUNTING IS NOT REGULARLY FOLLOWED. IN THIS CASE , ASSESSEE HAS GIVEN A PROPER EXPLANATION ABOUT SEIZED DOCUMENTS BEFORE AO , THEN BEFORE THE CIT(A) WHICH IS FORWARDED TO AO IN REMAND PROCEEDIN GS. IN THE ABSENCE OF ANY SPECIFIC ORDER OF AO U/S 145(3), WE ARE UNABLE TO ACCEPT LEARNED DRS ARGUMENTS THAT THE BOOKS HAVE BEEN IMP LIEDLY REJECTED. THEREFORE, THE CIT(A)S FINDING ON THIS ASPECT IS U PHELD. (B) WHETHER ASSESSEE DID NOT EXPLAIN ALLEGED INCRIM INATING SEIZED DOCUMENTS ? 16. FROM THE FACTS, IT EMERGES THAT DURING THE COUR SE OF SEARCH, SOME ALLEGED INCRIMINATING DOCUMENTS FROM GROUP ENT ITIES WAS FOUND DURING THE COURSE OF SEARCH. ASSESSEE AGREED TO DE CLARATION OF `40 CRORES IN GROUP ENTITIES WHICH HAS BEEN IMPLEMENTED BY PAYING TAXES AND OF GROUP ENTITIES. THERE IS NO DISPUTE ON THIS ISSUE. FROM THE ASSESSEES PAPER BOOK PAGE 4 ONWARDS, VIDE LETTER D ATED 23.9.2009, ASSESSEE HAS OFFERED AN EXPLANATION ANNEXURE-WISE O N THE SEIZED DOCUMENTS ALONGWITH COPIES OF THE SUPPORTING ACCOUN TS AND DOCUMENTS. IN OUR VIEW, THE ASSESSEE HAS DISCHARGE D ITS ONUS BY FURNISHING THE EXPLANATION. IN THE ASSESSMENT ORDE R, AO HAS NOWHERE ITA-2376 TO 2381/DEL/2011 15 CONTROVERTED ANY OF THE CONTENTS OF EXPLANATION AS THERE IS NO FINDING THAT ASSESSEES EXPLANATION IS NOT CORRECT. ASSESS EE HAVING DISCHARGED ITS ONUS AND AO HAVING NOT REJECTED OR CONTROVERTED IT, IT CANNOT BE ASSUMED THAT THE ALLEGED INCRIMINATING MATERIAL REM AINED UNEXPLAINED. IN OUR VIEW, ASSESSEE GROUP HAVING MA DE THE DECLARATION AND EXPLAINED THE SEIZED DOCUMENTS, WE ARE UNABLE T O HOLD THAT THE ASSESSEE DID NOT EXPLAIN INCRIMINATING DOCUMENTS AN D ON THAT BASIS, BOOKS SHOULD BE INDIRECTLY REJECTED U/S 145. THERE FORE, THE OBSERVATION OF THE AO THAT THE VALUATION PROPOSAL HAS BEEN MADE U/S 142A CANNOT BE UPHELD ON THE BASIS THAT COST OF CONSTRUCTION CO ULD NOT BE ASCERTAINED, THIS INFERENCE HAS NO TENABLE BASIS. THUS, THERE IS NEITHER REJECTION OF BOOKS ON THE BASIS THAT THE COST COULD NOT BE SAID TO BE UNEXPLAINED. IN OUR VIEW, ASSESSEE FURNISHED PROPE R EXPLANATION FOR SEIZED MATERIAL AND NO ADVERSE INFERENCE CAN BE DRA WN ON THIS ISSUE. (C) WHETHER THE REFERENCE TO DVO UNDER SECTION 142A IS PROPER ? 17. SECTION 142A EMPOWERS THE AO TO REFER TO DVO VA LUATION WHERE AN ESTIMATE OF VALUE REFERRED TO IN SECTION 69 OR S ECTION 69B WHEN THE ASSESSEE IS FOUND TO HAVE INVESTED MORE COSDT THAN REFLECTED IN THE BOOKS. BOTH THE SECTIONS READ AS UNDER:- 69 6969 69. WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDI NG THE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMEN TS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERE D BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER , SATISFACTORY, THE VALUE OF THE INVESTMENTS MAY BE D EEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR. 69B 69B 69B 69B. WHERE IN ANY FINANCIAL YEAR THE ASSESSEE HAS M ADE INVESTMENTS OR IS FOUND TO BE THE OWNER OF ANY BULL ION, JEWELLERY OR OTHER VALUABLE ARTICLE, AND THE ASSESS ING OFFICER FINDS THAT THE AMOUNT EXPENDED ON MAKING SU CH ITA-2376 TO 2381/DEL/2011 16 INVESTMENTS OR IN ACQUIRING SUCH BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE EXCEEDS THE AMOUNT RECORDED IN THI S BEHALF IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLAN ATION ABOUT SUCH EXCESS AMOUNT OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER , SATISFACTORY, THE EXCESS AMOUNT MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. 18. SECTION 69 IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS IT PERTAINS TO INVESTMENTS WHICH ARE NOT RECORDED IN T HE BOOKS OF ACCOUNTS. SECTION 69B DEALS WITH A SITUATION WHERE AO FINDS THAT AMOUNT OF INVESTMENT EXCEEDS THE AMOUNT RECORDED IN THIS BEHALF IN THE BOOKS OF ACCOUNT AND ASSESSEE DOES NOT OFFER SA TISFACTORY EXPLANATION. IN SUCH CASE, THE EXCESS INVESTMENT M AY BE DEEMED TO BE INCOME OF THE ASSESSEE. THIS SECTION CAN BE ATT RACTED WHEN THE AO ASKS THE ASSESSEE AN EXPLANATION ABOUT INADEQUATE I NVESTMENT. AS ALREADY EXPLAINED, IN THIS CASE, NEITHER AO PUT UP A QUESTION ABOUT INADEQUATE COST OF CONSTRUCTION IN THE BOOKS OF ACC OUNT NOR ASSESSEES EXPLANATION OFFERED IN RESPECT OF SEIZED DOCUMENTS IS ADVERTED TO BY THE AO WHICH IS PLACED ON PAPER BOOK PAGE 4 ONWARDS . THUS, SECTION 69B WAS NOT PROPERLY APPLIED BY THE AO IN THESE FAC TS. THERE BEING NO DEFECT IN THE BOOKS OF ACCOUNT NOR ANY FINDING ABOU T INADEQUATE COST OF CONSTRUCTION BASED ON ANY COGENT MATERIAL AND OVERL OOKING OF ASSESSEES EXPLANATION ABOUT SEIZED DOCUMENTS, THER E WAS NO JUSTIFICATION FOR THE AO TO MAKE A PROPOSAL UNDER S ECTION 142A IN VIEW OF HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF SA RGAM CINEMA (SUPRA) AND HON'BLE DELHI HIGH COURT JUDGMENT IN TH E CASE OF AAR PEE APARTMENTS P.LTD. (SUPRA). IN VIEW THEREOF, WE UPH OLD THE FINDING OF THE CIT(A) THAT THE REFERENCE TO DVO UNDER SECTION 142A WAS NOT JUSTIFIED IN GIVEN FACTS AND CIRCUMSTANCES. (D) DVOS REPORT . ITA-2376 TO 2381/DEL/2011 17 19. IN THE VALUATION REPORT, DVO WHILE GIVING THE R ATES HAS NOT PREPARED THE VALUATION ON THE BASIS OF QUANTITIES, MEASUREMENT AND ARCHITECTURAL DESIGNS. THE REFERENCE TO DVO WAS MA DE ON 30.9.2009. IT HAS NOT BEEN DISPUTED THAT THE ASSESSEES MALL I S A HUGE PROPERTY, INVOLVING VARIOUS MEASUREMENTS BASED ON ARCHITECTUR AL DESIGNS. THE DVOS TEAM VISITED THE PROPERTY ON 3 RD TO 5 TH NOVEMBER, 2009 AND THE FINAL REPORT HAS BEEN SENT ON 23 RD DECEMBER, 2009. THE REPORT IS BASED ON CPWD FLAT RATES. 20. THE DVOS REPORT IN THE EYES OF LAW IS AN ESTIM ATE PREPARED BY AN EXPERT. NEVERTHELESS, LEGALLY, IT REMAINS AN OP INION BASED ON ESTIMATES AND, IN THIS CASE, THIS OPINION IS TOTALL Y BASED ON CPWD FLAT RATES. THE ASSESSEES BOOKS OF ACCOUNT ARE WRITTEN ON DAY TO DAY BASIS OVER THE NUMBER OF YEARS WHICH HAS NOT BEEN DISPUTE D. ACCORDING TO THE ASSESSEE, THE BOOKS CONTAINED ACTUAL EXPENSES I NCURRED IN CONSTRUCTION OF MALL. THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE NOT AS SUCH REJECTED. THE DIFFERENCE BETWEEN THE DVOS OP INION AND ASSESSEES BOOKS IS 3.86%. LEARNED DR CONTENDS THA T THE PERCENTAGE MAY NOT BE LOOKED INTO AS THE CONSEQUENTIAL AMOUNT IS VERY LARGE. IN OUR CONSIDERED VIEW, THE PREPARATION OF AN OPINION BASED ON AN ESTIMATE INVARIABLY INVOLVES A DIFFERENCE AS COMPAR ED TO OTHER FIGURES. IN THIS CASE, THE ASSESSEES BOOKS ARE REGULARLY MA INTAINED, AUDITED AND THE CONSTRUCTION SPREADS IN YEARS. THE SEIZED D OCUMENTS HAVE BEEN OFFERED TO BE EXPLAINED. IN OUR VIEW, A FLAT R ATE ESTIMATION INVOLVING A DIFFERENCE OF 3.86% WITHOUT GIVING THE REBATES ABOUT GROUPS OWN SUPERVISION AND BULK PURCHASE OF MATERI ALS CANNOT PROPERLY SUBSTITUTE THE COST OF CONSTRUCTION REGULA RLY REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE UNLESS COGENT AND PLAUSIBLE REASONS ARE ESTABLISHED. IN THIS CASE, THE ALLEGED INCRIMI NATING MATERIAL HAS BEEN EXPLAINED BY THE ASSESSEE. UNDER THE FACTS AN D CIRCUMSTANCES OF THIS CASE, WE ARE UNABLE TO AGREE WITH THE LEARNED DR THAT THOUGH THE ITA-2376 TO 2381/DEL/2011 18 DIFFERENCE OF 3.86% IS SMALL PERCENTAGE CONCEPT MAY BE IGNORED. AN ESTIMATE ULTIMATELY REMAINS AN ESTIMATE AND THE ELE MENT OF DIFFERENCE IS TO BE LOOKED FROM PERCENTAGE POINT OF VIEW. IN OUR VIEW, A SHAKY DIFFERENCE OF 3.86% ON A DVO SUMMARY VALUATION AS M ENTIONED ABOVE IS TO BE IGNORED. 21. IN VIEW OF THE FOREGOING REASONS AND CIRCUMSTAN CES, WE SEE NO INFIRMITY IN THE ORDERS OF CIT(A) DELETING THE ADDI TIONS IN ALL THESE YEARS. THE ORDERS OF CIT(A) ARE, THEREFORE, UPHELD AND THE APPEALS FILED BY THE REVENUE ARE DISMISSED. 22. IN THE RESULT, APPEALS FILED BY THE REVENUE ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 5 TH AUGUST, 2011. SD/- SD/- (B.K.HALDAR (B.K.HALDAR (B.K.HALDAR (B.K.HALDAR) )) ) (R.P.TOLANI (R.P.TOLANI (R.P.TOLANI (R.P.TOLANI) )) ) ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED : 05.08.2011. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR
