Khemchand Kangumal Tharwani, Navsari V. The Asstt. Commissioner of Income Tax, Navsari Circle, Navsari

ITA 3135/AHD/2016

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2321 (ITAT-SURAT)
• Duration Of Justice: 5 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-01-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 28-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Unexplained investment; Depreciation; Loose papers; Valuation report; Reason to believe; Reassessment proceedings
• Section: 145; 148; 133A; 143(1); 150(1); 143(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM &DR. A.L.SAINI, AM आयकरअपीलसं./ITA Nos.2867-2869/AHD/2016 (िनधाŊरणवषŊ / Assessment Years: (2008-09 to 2010-11) (Virtual Court Hearing) Assistant Commissioner of Income Tax, Navsari Circle, Room No./302, Aaykar Bhavan, Nr. Charpool Police Chowki, Lunsikui, Navsari-396445 Vs. Shri Rajesh Khemchand Tharwani, L/h Lt. Shri Khemchandbhai Kungmal Tharwani, Prop. of K.K. Biscuit Bakery, 154-155, GIDC, Kabilpore, Navsari-396445 ̾थायीलेखासं./जीआइआरसं./PAN/GIR No.: AALPT 1806 G (Assessee ) (Respondent) आयकरअपीलसं./ITA Nos.3135/AHD/2016 (िनधाŊरणवषŊ / Assessment Year: (2012-13) Shri Khemchand Kangumal Tharwani, by L/r Rajesh Khemchand Tharwani, Prop. of M/s K.K. Biscuit Bakery, 154-155, GIDC, Kabilpore, Navsari-396445 Vs. Assistant Commissioner of Income Tax, Navsari Circle, Room No./302, Aaykar Bhavan, Nr. Charpool Police Chowki, Lunsikui, Navsari-396445 ̾थायीलेखासं./जीआइआरसं./PAN/GIR No.: AALPT 1806 G (Assessee ) (Respondent) Assessee by : Shri Rasesh Shah, C.A Respondent by : Shri Abhishek Gautam – S. DR सुनवाईकीतारीख/ Date of Hearing : 20/01/2022 घोषणाकीतारीख/Date of Pronouncement : 06/04/2022 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned three appeals filed by the Revenue and an appeal by the assessee, pertaining to the assessment years 2008-09 to 2010-11 and 2012-13, are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals)-Valsad [‘CIT(A)’ for short], which in turn arise out of separate assessment orders passed by the Assessing Officer (‘AO’ for short) under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). Page | 2 ITA No.2867-2869/AHD/2016 & ITA 3135/AHD/2016 A.Ys.08-09 to 10-11 & 11-12 Sh. R.K.Tharwani L/h Lt K.K.Tharwani 2. Since, the issues involved in all the appeals are common and identical; therefore, these appeals have been heard together and are being disposed of by this consolidated order. 3. First, we shall take Revenue’s appeals in ITA Nos.2867 to 2869/AHD/2016. To adjudicate these appeals of Revenue, we take lead case in ITA No. 2867/AHD/2016 for assessment year 2008-09. 4. Grounds of appeal raised by Revenue (in lead case in ITA No.2867/AHD/2016), are as follows: “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the appeal of the assessee and in quashing the reopening proceedings u/s 148 of the Act even though the AO has formed his belief for escapement of income on the basis of the incriminating documents/files impounded during the survey proceedings. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has ignored the loose papers files, which constituted admissible evidences were relied upon by the assessee and AO while forming belief of escapement of income and not completely relying upon the basis of DVO’s report. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in accepting the argument of assessee that books of account were not rejected before referring the matter to DVO; even though there were evidences of unaccounted expenses during the course of survey and this defects in the books of account were already exiting prior to the matter being referred to DVO. 4. It is therefore, prayed that the order of the CIT(A), be set-aside and that the order of the Assessing Officer be restored.” 5. The relevant material facts, as culled out from the material on record, are as follows. The assessee is an individual and is mainly engaged in the business of manufacturing of bread, biscuit, cakes etc., as well as retail of such items manufactured by reputed brands. Besides, the assessee is also engaged in building and development activities. The assessee filed his return of income on 29.09.2008 declaring total income of Rs.15,29,470/-. Subsequently, a survey proceedings u/s 133A of the Act was carried out in assessee’s case on 10.11.2009 and certain documents were impounded. On examination of the documents, so impounded, it was found that some of the material relates to construction expenses pertaining to Page | 3 ITA No.2867-2869/AHD/2016 & ITA 3135/AHD/2016 A.Ys.08-09 to 10-11 & 11-12 Sh. R.K.Tharwani L/h Lt K.K.Tharwani K.K. Plaza, a project being developed by the so named proprietary concern of the assessee. It was also observed by assessing officer that entries of such expenses are neither accounted for nor reconcilable inasmuch as even no proper books of accounts were maintained in respect of K.K.Plaza. It was also observed from the records, that there was complete absence of willingness or cooperation from assessee’s side towards reconciliation of such findings with accounts of the assessee, if any maintained in respect of K.K.Plaza. There being a clear evidence that such entries relatable to construction expenses of K.K.Plaza, were not properly accounted for by the assessee there being no cooperation in the matter from the assessee’s side. Therefore, the matter was referred to the District Valuation Officer (‘DVO’ for short) in order to quantify the actual expenditure incurred by the assessee towards construction of K. K. Plaza. 6. The contents of the DVO’s report were analysed and evaluated. The assessee is a proprietor of M/s K.K. Biscuit Bakery and M/s K.K. Plaza, a project developed by the assessee. As noted above, a survey u/s 133A of the Act was carried out at these proprietary concerns of the assessee on 10.11.2009. During the survey, certain documents were also found in the case of M/s K.K. Plaza which were impounded by the Department and named as Bl-8 and Bl-18 under the impounded documents. Apart from this, there was also impounding of documents etc. in the case of M/s K.K. Biscuit Bakery. The statements of the following persons were recorded during and after the survey: (i) Shri Khemchand Tharwani Proprietor M/s K.K. Biscuit Bakery on 10.11.2009. (ii)Shri Khemchand Tharwani Proprietor M/s K.K. Biscuit Bakery on 13.11.2009. (iii) Shri Rajeshbhai Khemchand Tharwani on 13.11.2009. (iv) Shri Mahendra B. Patel, a labour contractor on 23.11.2009. During the survey there was no disclosure of additional income by the assessee in either of the two proprietary concerns i.e. M/s K.K Biscuit Bakery and M/s K.K. Plaza. During the course of recording of the statement, assessee admitted that the project of M/s K.K. Plaza was started in 2007 and it contains 8 floors in which Page | 4 ITA No.2867-2869/AHD/2016 & ITA 3135/AHD/2016 A.Ys.08-09 to 10-11 & 11-12 Sh. R.K.Tharwani L/h Lt K.K.Tharwani there are 54 shops and 35 flats. The total built up area was approximately 73,000 sq. ft. Regarding the assessment year under reference, the assessee filed the return of income on 24.09.2009 declaring total income at Rs.12,21,950/-. 7. The assessing officer referred the matter to DVO u/s 131(l)(d) of the Act, for estimating the cost of investment in the building on 11.12.2012. The DVO submitted its report, vide letter dated 20.05.2013 which was received by the assessing officer on 28.05.2013. The DVO estimated the cost of investment in M/s K.K.Plaza as under: Sr. No. Financial Year Cost Of Investment Difference Assessee's Valuation DVO's Valuation 1 2007-08 8606053 34009203 25403150 2 2008-09 10254444 35822577 25568133 3 2009-10 8225831 27007405 18781574 4 2010-11 4796114 14853373 10057259 5 2011-12 706864 1905354 1198490 6 2012-13 868625 1935223 1066598 TOTAL 3,34,57,931 11,55,33,135 8,20,75,204 8. Thereafter, the assessing officer re-opened the assessments for the A.Yrs. 2008-09, 2009-10, 2010-11 and 2011-12. All these re-assessments were completed on 29.01.2016 by making the additions of the difference of cost of investments as determined by DVO in his valuation report. The reasons recorded for re-opening these assessments are same for each year except the amount of investment referring to the difference the cost shown by the assessee and the cost determined by the DVO. The re-opening of the assessment was objected to by the assessee and raised certain objections which the assessing officer disposed off in a combined order for the Assessment Years 2008-09 to 2011-12. As per assessing officer, the assessment was re-opened, as during the course of survey u/s 133A of the Act carried out on 10.11.2009, certain documents were impounded and on verification of impounded material it was observed that certain materials were related to construction expenses of M/s K.K. Plaza. No proper books of accounts were maintained by the assessee in respect of M/s K.K. Plaza and certain material was not reconciled. Page | 5 ITA No.2867-2869/AHD/2016 & ITA 3135/AHD/2016 A.Ys.08-09 to 10-11 & 11-12 Sh. R.K.Tharwani L/h Lt K.K.Tharwani Considering all these aspects, the case was referred to DVO to ascertain the correct cost of construction who furnished report on 20.05.2013. As per this report, the cost of construction for the year under reference was at Rs.3,40,09,203/- as against the assessee's shown cost of construction at Rs.86,06,053/- thereby causing a difference being unexplained difference to the extent of Rs.2,54,03,150/- (Rs.3,40,09,203- Rs.86,06,053). Further, it was mentioned that during survey loose files were found and impounded and marked as Bl-8 and Bl-18 which shows that certain bills and vouchers are not correlated with the accounts or not accounted for. Due to this reason, the assessing officer mentioned that it requires rejection of books of accounts u/s 145 of the Act and the difference of Rs.2,54,03,150/- has to be considered as unexplained investments made by the assessee. Then the assessing officer concludes that all this has led him to believe that income to the extent of Rs.2,54,03,150/- has escaped assessment within the meaning of section 147 of the Act. 9. The purpose to make, reference to the DVO, in fact, was for calculation and adoption of rates that references were made to the DVO where the assessee was supposed to assist the DVO in arriving at the most reasonable rate applicable to assessee’s case. However, the assessee failed to do so. The assessee has also not furnished any report on cost of construction by his architect/engineer as assured by him. Thus, in view of the preceding discussion, the assessing officer was of the considered opinion that the books of account as maintained by the assessee do not portray the picture of assessee’s actual state of affairs completely and truly and are, therefore, rejected by invoking provision of Section 145 of the Act. Accordingly, the amount of Rs.2,54,03,150/-, (Rs.3,40,09,203- Rs.86,06,053), being the value of suppressed expenditure/investment of the assessee in the building K.K. Plaza was accordingly added back to the total income of the assessee. 10. Aggrieved, by the order of the Assessing Officer, the assessee carried the matter in appeal before Ld. CIT(A) who has deleted the addition made by Assessing Officer. Aggrieved, the Revenue is in appeal before us. Page | 6 ITA No.2867-2869/AHD/2016 & ITA 3135/AHD/2016 A.Ys.08-09 to 10-11 & 11-12 Sh. R.K.Tharwani L/h Lt K.K.Tharwani 11. Shri Abhishek Gautam, Sr. DR for the Revenue pleads that there is no doubt about the fact that evidences of unaccounted and unrecorded expenses towards construction of K.K. Plaza were found during the course of survey proceedings which have been impounded, as Annexure BI-8 & BI-18. This fact has not been denied by the assessee. The assessee has claimed that his books of account were not rejected during the assessment proceedings for A.Y. 2008-09. This argument has got no relevance as case of the assessee for the A.Y. 2008-09 has not been subjected to scrutiny. Thus, there was no occasion before the AO to reject the books of account as stated by the assessee. This very important aspect has escaped the attention of Id. CIT(A). It was also submitted by ld DR that in most of the case laws relied upon by the assessee, the Hon'ble courts have held that the books of account should have been rejected before referring the matter to the DVO. This has been done by Hon'ble courts with a point of view that there should be no fishing enquiry and there should be some defects in the books of account of the assessee. In the instant case when some evidences of unaccounted expenses were found during the course of survey, which were not found recorded in the books of account, this certainly amounts to defects in the books of account and accordingly the action of the AO in referring the matter to the DVO was totally justified. 12. Shri Rasesh Shah, Learned Counsel for the assessee argues that assessing officer has not mentioned the details of amounts which are at variance when compared with the books of accounts. No defect in the books of accounts was pointed out. There is no mention of any particular bill and voucher found and impounded during the survey which was not correlated/reconciled with the books of accounts. No show cause notice was issued showing intention to reject the books of accounts before referring the matter to DVO. The learned counsel further pointed out that report of DVO is not an information for re-opening assessment u/s 147 of the Act. The AO has to apply his mind to the information if any collected and must form a belief on them. Therefore, ld Counsel prays the Bench that order passed by ld CIT(A) may be upheld. Page | 7 ITA No.2867-2869/AHD/2016 & ITA 3135/AHD/2016 A.Ys.08-09 to 10-11 & 11-12 Sh. R.K.Tharwani L/h Lt K.K.Tharwani 13. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that issue involved in this lis is no longer res-integra. The Assessment, on the basis of DVO's report, cannot be reopened as held by the Hon'ble Supreme Court in the case of M/s Dhairya Construction Co. reported in 328 ITR 555 and in the case of Sargam Cinema reported in 328 ITR 513. Therefore, Let us, first analyze the reasons recorded by the assessing officer. For the sake of clarity, the reasons recorded by the assessing officer are re-produced below: "Form for recording the reasons for initiating proceedings u/s 147 of the Income tax Act, 1961. Name and address of the assessee M/s. Shri Khemchand Kungmal Tharwani Prop, of K. K. Biscuit Bakery 154-155, GIDC, Kabilpore, Navsari. 2 PAN AALPT1806G 3 Status Individual 4 District & Circle ACTT, Navsari Circle, Navsari 5 A. Y. in respect of which is proposed to issue notice u/s 148 2008-2009 6 Quantum of Income which has escaped to assessment Rs. 2,54,03,150/- 7 Whether the provisions of Section 147(a) or 147(b) are applicable or both U/s. 147 of the Act. 8 Whether the assessment is proposed to be made for the first time. If the reply is in the affirmative please state: (a) Whether any Vol. Return has already been filed. (b) If so, the date of filing of the said return yes 9 If the answer to item 8 is in the negative please state: (a) the income originally assessed, whether if this case is for under assessment at too low a rate assessment which has been made the subject of the excessive loss / depreciation. N.A 10 Whether the provision of section 150(1) applicable, if the reply is in the affirmative, the relevant facts may be stated against No. 11 and it may be brought out that the proviso of section 150(2) would not stand in the way of initiating provisions of section 148. N.A. 11. Reasons for the belief that income has escaped assessment: Page | 8 ITA No.2867-2869/AHD/2016 & ITA 3135/AHD/2016 A.Ys.08-09 to 10-11 & 11-12 Sh. R.K.Tharwani L/h Lt K.K.Tharwani [3] The assessee is engaged in the business of manufacturing and resale of Bread, Biscuit, Cakes, Farsan, Sweets, Resale of well known company's-food products. The assessee is also a builders and developer. The assessee has filed his return of income on 29/09/2008 declaring total income at Rs.15,29,470/-. The case was processed u/s 143(1) by accepting return income. [4] In this case survey action u/s 133A of the Act was carried out on 10/11/2009 and certain books are impounded. On verification of impounded material, it is observed that certain materials are related to construction expenses of M/s. K. K. Plaza, which is proprietary concern of the assessee. During the course of survey proceedings, it is observed that no proper books of accounts were maintained in respect of M/s. K. K. Plaza and certain material was not reconciled. Considering all the aspects, the case of the assessee was referred to the DVO to ascertain correct cost of construction. The DVO has furnished his report on 20/05/2013. On verification of report furnished by the DVO, it is observed that the DVO has assessed cost of construction for the F.Y. 2007-08 related to A.Y. 2008-09 at Rs. 3,40,09,203/- (excluding land) as against the assessee has shown cost of construction of Rs. 86,06,053/- (As per DVO report). Thus, it is observed that the assessee had made unexplained investment of Rs. 2,54,03,150/- during the F. Y. 2007-08. [5] It is pertinent to note that the DVO in his report mentioned that the assessee has not submitted any ledger account in support of investment and submit only a few bills / vouchers which do not carry any significance. It is further submitted that during the course of survey proceedings, loose files were found and impounded at BI-8 and BI-18 which shows that certain bills and vouchers are not co-related with the accounts or not accounted. Looking to the facts and circumstances of the case, it is required to reject the books of account maintained by the assessee u/s 145 of the Act and the difference of Rs.2,54,03,150/- being cost of construction determined by the DVO at Rs.3,40,09,203/- and shown by the assessee at Rs.86,06,053/- should be considered as unexplained investment by the assessee. [6] Considering the facts stated above, I have reason to believe that the income of the assessee to the tune of Rs. 2,54,03,150/- for the accounting period relevant to A. Y. 2008- 09, has escaped assessment within the meaning of section 147 of the l.T. Act, 1961." 14. From the above reasons recorded, it is vivid that amount of escaped assessment at Rs.2,54,03,150/- is not emanating from any evidence on record found during survey but it is the difference pointed out by the DVO in his valuation report. The report of DVO is not an information for re-opening assessment u/s 147 of the Act. The AO has to apply his mind to the information if any collected and must form a belief on them. As we have noted earlier that assessment, on the basis of DVO's report, cannot be reopened as held by the Hon'ble Supreme Court in the case of M/s Dhairya Construction Co. reported in 328 ITR 555, therefore, it is abundantly clear that reassessment proceedings initiated by the assessing officer is bad in law and therefore should be quashed. Page | 9 ITA No.2867-2869/AHD/2016 & ITA 3135/AHD/2016 A.Ys.08-09 to 10-11 & 11-12 Sh. R.K.Tharwani L/h Lt K.K.Tharwani 15. Besides, ld CIT(A) during the appellate proceedings, observed that there were no such discrepancies in the construction expenses. The following were the important observations: i) During the course of survey proceedings, documents found and impounded were never confronted to the assessee, despite the fact that his statement was recorded twice during the survey proceedings. ii) At the time of survey proceedings, the scrutiny assessment for the Assessment Year 2009-10 was pending which was finalized on 29.11.2011. In that assessment order there is no reference of any discrepancy found in the construction expenses during survey and if there would have been any difference, the assessing officer was required to mention the same in assessment order. iii) Even after the conclusion of survey, the assessing officer has not confronted the amounts of these differences relating to construction expenses found during survey to the assessee because the record in this regard is silent. 16. From the above details, it seems that the assessing officer is referring to certain material without describing them and quantifying the amounts contained therein. The Hon'ble Supreme Court in the case of ITO V/s Lakhmani Mewaldas (1976) 103 ITR 437 summarized as to what constitutes "reason to believe" for the purpose of section 147 of the Act, as follows: “(a) The powers of the Assessing Officer to reopen an assessment, though wide, are not plenary. (b) The words of the statute are "reason to believe" and not "reason to suspect". (c) The reopening of an assessment after the lapse of many years is a serious matter. Since the finality of a judicial or quasi-judicial proceedings are sought to be disturbed, it is essential that before taking action to reopen the assessment, the requirements of the law should be satisfied. (d) The reasons to believe must have a material bearing on the question on escapement of income. It does not mean a purely subjective satisfaction of the assessing authority; the reason be held in good faith and cannot merely be a pretence. Page | 10 ITA No.2867-2869/AHD/2016 & ITA 3135/AHD/2016 A.Ys.08-09 to 10-11 & 11-12 Sh. R.K.Tharwani L/h Lt K.K.Tharwani (e) The reasons to believe must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the ITA Nos. 292 of 2015 & 299 of 2015 Page 9 of 14 material coming to the notice of the Assessing Officer and the formation is belief regarding escapement of income. (f) The fact that the words "definite information" which were there in section 34 of the Act of 1922 before 1948, are not there in section 147 of the 1961 Act would not lead to the conclusion that action can now be taken for reopening an assessment even if the information is wholly vague, indefinite, far-fetched or remote.” 17. From the above judgment of the Hon`ble Supreme Court, it is abundantly clear that that there should be a live link between the material coming to the notice of the Assessing Officer and the formation of belief regarding the escapement of income. In the present case, there is no material except the valuation report of DVO which has a live link and base for the assessing officer to form a belief regarding the escapement of income. Rather, the natural conclusion which can be drawn is that the assessing officer has re-opened the assessment on the basis of DVO's valuation report. Therefore, in the facts and circumstances of the case and also keeping in view the decision of Hon'ble Supreme Court in the case of Dhariya Construction Co.(supra), we are of the considered opinion that the assessing officer has re-opened the assessment on the basis of DVO's valuation report. Hence keeping in view the facts and circumstances of the case, we do not find any infirmity in the order of ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. 18. In the result, appeals filed by the Revenue ( in ITA Nos.2867 to 2869) are dismissed. 19. Now we shall take assessee’s appeal in ITA No.3135/AHD/2016 for A.Y. 2012-13. Grounds of appeal raised by assessee as follows:- 1. In the facts and circumstances of the case as well as in law, the learned Commissioner of Income Tax (Appeals), Valsad grossly erred in not deleting the addition of Rs.10,90,215/- made by the AO being the difference in the value of cost of construction of building as per the books of account and that estimated by the District Valuation Officer. Page | 11 ITA No.2867-2869/AHD/2016 & ITA 3135/AHD/2016 A.Ys.08-09 to 10-11 & 11-12 Sh. R.K.Tharwani L/h Lt K.K.Tharwani 2. In the facts and circumstances of the case as well as in law, the learned Commissioner of Income Tax (Appeals) Valsad grossly erred in not deleting the impugned addition without appreciating the fact that the reference made by the AO to the Valuation Officer for determination of cost of construction was not justified in law as the AO has not rejected the books of account of the assessee before making such reference and the conditions required u/s 142A and 131(1)(d) of the I.T. Act were not fulfilled. 3. In the facts and circumstances of the case as well as in law, the learned Commissioner of Income Tax (Appeals) Valsad grossly erred in not deleting the impugned addition, in utter disregard to the fact that the AO has made reference to the DVO on 11/12/2012 u/s 131(1)(d) of the I.T. Act for determination of cost of construction whereas on the date of such reference, assessment proceedings for A.Y 2012-13 were not initiated and the first statutory notice u/s 143(2) was issued only on 12/8/2013. Therefore, the reference made by the AO to the DVO is illegal. 4. In the facts and circumstances of the case as well as in law, the learned Commissioner of Income Tax (Appeals) Valsad grossly erred in not deleting the impugned addition by capriciously holding that ‘the assessee was not having any objection to the estimation of the cost of construction by the DVO as the assessee has not presented his case before the DVO’, which is contrary to the facts and evidence on record. The assessee had furnished before the DVO copies of bills and vouchers, copy of the detailed building plan and copy of development permission etc., 5. In the facts and circumstances of the case as well as in law, the learned Commissioner of Income Tax (Appeals) Valsad grossly erred in not deleting the impugned addition disregarding the various judgments of Supreme Court, High Court and ITAT which had been specifically brought his notice. 6. In the facts and circumstances of the case as well as in law, the learned Commissioner of Income Tax (Appeals) Valsad grossly erred in not deleting the impugned addition without appreciating the fact that valuation made by the DVO is mere estimate on the basis of CPWD plinth area rate 2007 and indexed cost method. 7. In the facts and circumstances of the case as well as in law, the learned Commissioner of Income Tax (Appeals) Valsad grossly erred in not deleting the impugned addition in utter disregard to the fact that DVO has estimated the cost of construction by adopting the CPWD rate rate @ 1500/- per sq.ft. The rate of CPWD is higher by 25% than the rate of PWD of the State. 8. In the facts and circumstances of the case as well as in law, the learned Commissioner of Income Tax (Appeals) Valsad grossly erred in not deleting the impugned addition without appreciating the fact that the DVO has estimated the cost of construction @ Rs.1,500/- per sq.ft. whereas the Jantri value for Stamp Duty purposes published by Government of Gujarat for the year 2011 is Rs.845/- per sq.ft. 9. It is therefore prayed that the impugned addition may please be deleted.” Page | 12 ITA No.2867-2869/AHD/2016 & ITA 3135/AHD/2016 A.Ys.08-09 to 10-11 & 11-12 Sh. R.K.Tharwani L/h Lt K.K.Tharwani 20. The facts have already been stated by us while adjudicating Revenue`s appeals (supra), therefore, we do not repeat the assessee`s facts for the sake of brevity. The core issue involved in assessee`s appeal is the addition of Rs.10,l9,219/- being the difference in the value of cost of construction determined by DVO at Rs.19,05,354/- and as shown by the assessee in the books of account at Rs.8,15,139/-. Before us, ld Counsel reiterated the submissions made before the ld CIT(A), which is reproduced below: i) The cost of construction is Rs.8,15,139/- ii) Reference to DVO was made without fulfilling all the condition of Section 131(1)(d) of the Act. iii) The DVO worked out the cost of construction only by adopting the method of CPWD plinth area rate 2007 and cost index method in spite of the fact that the full details were supplied by the assessee. iv) No reduction in the cost of construction was made by considering 15% as supervision charges. v) The DVO worked out the year wise cost of construction without disclosing the basis for the same. vi) The DVO arrived at average weighted CI for the period on the base year at Rs.126/- without disclosing the base for the same. vii) DVO’s valuation shows cost of construction at Rs.1500/- per sq.ft. which is much higher than the actual cost. 21. After considering the submission of assessee, the ld CIT(A) partly allowed the appeal of the assessee observing as follows: “.....Before the DVO, the assessee has not presented his case despite opportunity of being heard was given. By not availing the opportunity, it can be inferred that the assessee was not having any objection to the estimation of cost of construction made by DVO. Before the Assessing Officer, the assessee raised a number of objections without any supportive evidence. In the circumstances, I do not feel any need to interfere in the addition made by the Assessing Officer based on the report of DVO but in my considered view the assessee is entitled to deduction of 15% being supervision chargers. The observation of the Assessing Officer that the assessee is an old man and less educated is no bar to the claim of the assessee because the assessee even at this age and with this education can supervise the Page | 13 ITA No.2867-2869/AHD/2016 & ITA 3135/AHD/2016 A.Ys.08-09 to 10-11 & 11-12 Sh. R.K.Tharwani L/h Lt K.K.Tharwani work unless until something is brought on record that he was not physically well to perform that job. So the Assessing Officer is directed to give deduction of 15% as supervision charged while calculating the difference between the cost of construction as estimated by the DVO and as shown by the assessee in the books of account. Hence, in the facts & circumstances of the case, the grounds of appeal are partly allowed.” 22. We have heard ld DR for the Revenue and note that the issue involved in the year under consideration is exactly similar and identical that has been adjudicated by us in above para in Revenue`s appeals in AYs 2008-09 to 2010-11, therefore the adjudication done by us in these assessment years are squarely application for the year under consideration i.e. AY 2012-13, consequently, we allow the appeal of the assessee. 23. In the result, appeal of the assessee is allowed. Order pronounced on 06/04/2022 by placing the result on the notice board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat/िदनांक/ Date: 06/04/2022 Dkp Outsourcing Sr.P.S./*SS Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat