Praveen Kumar Kesarwani, Allahabad V. Jt. CIT(OSD), Allahabad

ITA 68/ALLD/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2187 (ITAT-ALLAHABAD)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 13-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANDEEP CHAUHAN
• Assessee Lawyers: ANAND GODBOLE; S P AGRAWAL S
• Keywords: Value adopted by valuation officer; Search and seizure; Loose papers; Valuation report; Block assessment
• Section: 153A; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH, ALLAHABAD BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.68/A/2013 ASSESSMENT YEAR: 2009-10 SHRI PRAVEEN KUMAR KESARWANI, VS. JOINT COMMISSIONE R OF INCOME TAX SAHSON, ALLAHABAD. (OSD), CENTRAL CIRCLE, ALLAHA BAD. (PAN: AFQPK 0683 N). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANAND GODBOLE & SHRI S.P. AGRAWAL, ADVOCATES RESPONDENT BY : SHRI SANDEEP CHAUHAN, CIT (D.R.) DATE OF HEARING : 06.06.2013 DATE OF PRONOUNCEMENT : 25.06.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 20.11.2012 PASSED BY THE LD. CIT(A), ALLAHABAD FOR THE ASSESSM ENT YEAR 2009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT IN ANY VIEW OF THE MATTER THE INCOME AS DE CLARED IN THE RETURN SHOULD HAVE BEEN ACCEPTED IN THE FACTS AND C IRCUMSTANCES OF THE CASE OF AND THE INCOME AS DETERMINED BY THE ASS ESSING OFFICER AT 2 ITA NO.68/A/2013 A.Y. 2009-10 RS.66,57,070/- IS HIGHLY UNJUSTIFIED, INCORRECT AND UNWARRANTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT IN ANY VIEW OF THE MATTER THE ACTION TAKEN UNDER SECTION 132(1) OF THE INCOME TAX ACT IN CONSEQUENCE TO WHIC H THE NOTICE ISSUED UNDER SECTION 153A(B) OF THE INCOME TAX ACT IS WITHOUT ANY INCRIMINATING MATERIAL OR ANY UNDISCLOSED INCOME FO UND IN THE SEARCH THE BLOCK ASSESSMENTS MADE DETERMINING THE INCOME A T RS.66,57,070/- AS AGAINST THE DECLARED INCOME OF RS.13,94,576/- IS ILLEGAL, ARBITRARY AND AGAINST THE PROVISIONS OF THE ACT HENCE SUCH OR DER PASSED IS A NULLIFY. 3. THAT IN ANY VIEW OF THE MATTER THE COMMISSIONER OF INCOME TAX (APPEAL) WAS HIGHLY UNJUSTIFIED AND INCORRECT IN CO NFIRMING THE MAJOR ADDITIONS UNDER VARIOUS HEADS WITHOUT CONSIDERING T HE FACTS/SUBMISSIONS, EVIDENCES AND LAW ON THE POINT I N ISSUE AND ALLOWING ONLY A NEGLIGIBLE RELIEF UNDER THE HEAD HO USE HOLD EXPENSES. IN THIS WAY HIS ORDER IS NOT A JUDICIOUS AND VALID ORDER IN THE EYES OF LAW. 4. THAT IN ANY VIEW OF THE MATTER THE TWO LOWER AUT HORITIES WERE WRONG IN IGNORING THE LEGAL ISSUES RAISED BEFORE TH EM BY CHALLENGING THE VALIDITY OF THE ASSESSMENT, HENCE THEIR ORDERS ARE LIABLE TO BE QUASHED. 5. THAT IN ANY VIEW OF THE MATTER ADDITION OF RS.10 ,48,000/- MADE BY THE ASSESSING OFFICER ON THE BASIS OF CASH-FLOW STATEMENT FURNISHED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PR OCEEDING IS HIGHLY UNJUSTIFIED AND WRONG BECAUSE IT WAS MADE BY IGNORI NG OPENING CASH BALANCE AS ON 01.04.2008 WHEREAS THE CLOSING BALANC E AS ON 31.03.2008 WAS ACCEPTED BY HIM HENCE THE ADDITION C ONFIRMED BY THE COMMISSIONER OF INCOME TAD (APPEAL) IS HIGHLY UNJUS TIFIED AND INCORRECT. 6. THAT IN ANY VIEW OF THE MATTER THE TWO LOWER AUT HORITIES ARE WRONG IN SAYING/OBSERVING THAT OPENING CASH BALANCE IS NOT CORRECT IN ABSENCE OF ANY EVIDENCE BUT THEY FAILED TO STATE TH AT WHAT TYPE OF THE EVIDENCE WAS REQUIRED BY THEM WHEN THE CASH FLOW CH ART IS BASED ON 3 ITA NO.68/A/2013 A.Y. 2009-10 BANK STATEMENTS AND WITHDRAWAL FROM FIRMS ETC. THER EFORE THE OPENING CASH BALANCE TREATED AS APPELLANTS INCOME IS HIGHL Y UNJUSTIFIED. 7. THAT IN ANY VIEW OF THE MATTER THE MANNER OF THE ADDITION ON THE BASIS OF THE CASH FLOW STATEMENT AS MADE BY THE ASS ESSING OFFICER AND CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEAL S) IS TOTALLY WRONG AND THE ENTIRE APPROACH OF THE TWO LOWER AUTH ORITIES IN ADJUDICATING THE ISSUE IS ALSO NOT PROPER AND THEIR FINDINGS AND OBSERVATIONS IN HIS REGARD IN THE ORDER ARE FOR AWA Y FROM THE TRUTH AND ARE LIABLE TO BE IGNORED. 8. THAT IN ANY VIEW OF THE MATTER ADDITION OF RS.97 ,900/- UNDER THE HEAD HOUSE HOLD EXPENSES AS MAINTAINED BY THE COMMI SSIONER OF INCOME TAX (APPEAL) BY IGNORING THE FACTS, FAMILY S IZE AND SOURCES ETC., IS HIGHLY UNJUSTIFIED AND INCORRECT HENCE THE ADDITION AS MAINTAINED IS UNWARRANTED. 9. THAT IN ANY VIEW OF THE MATTER ADDITION OF RS.38 ,77,589/- MADE BY THE ASSESSING OFFICER BY ALLEGING UNDISCLOSED IN VESTMENT SIMPLY ON THE BASIS OF DVOS REPORT WHO INSPECTED THE PROPERT Y ON 13.09.2011 IN A VERY CASUAL MANNER WHEN THE INVESTMENTS FALL I N DIFFERENT ASSESSMENT YEARS IS UNJUSTIFIED AND INCORRECT BECAU SE THE DVOS REPORT IS NOTHING BUT AN OPINION BASED ON HIS OWN W HIMS AND THE SAME CAN NOT BE CONSIDERED AS A GOSPEL TRUTH. LIKE WISE THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO ERRED IN CONFIRMING THE ADDITION WITHOUT CONSIDERING THE TRUE FACTS OF THE CASE, THEREFORE THE ADDITION IS LIABLE TO BE DELETED. 10. THAT IN ANY VIEW OF THE MATTER IN THE COURSE OF SEARCH OPERATION ON 27.08.2009 NO INCRIMINATING MATERIAL WAS FOUND W ITH REGARD TO INVESTMENT IN CONSTRUCTION OF PROPERTY AND MORE SO YEAR WISE INVESTMENTS MADE IN THE CONSTRUCTION OF PROPERTY AR E RECORDED IN THE BOOKS OF RESPECTIVE YEARS OF EACH CO-OWNERS WHICH F ACTS WERE INTENTIONALLY DISCARDED BY THE TWO LOWER AUTHORISE AND BOTH THE LOWER AUTHORITIES GAVE WEIGHTAGE ONLY TO THE DVOS REPORT WHO APPLIED HIGHER RATE OF MATERIALS AND LABOUR CHARGES ETC. WH EN THE PROPERTY WAS CONSTRUCTED AT SAHSON WHICH IS FAR AWAY FOR THE ALLAHABAD CITY WHERE LABOURS AND BUILDING MATERIALS WERE AVAILABLE ON CHEAPER 4 ITA NO.68/A/2013 A.Y. 2009-10 RATES, HENCE REFERENCE TO THE DVO UNDER SECTION 142 A OF THE ACT WAS NOT PROPER AND BASED ON THE DVOS REPORT THE ADDITI ON OF RS.38,77,589/- AS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEAL) BY INVOKING THE PROVISIONS OF SECTION 69 OF THE ACT IS HIGHLY UNJUSTIFIED AND ILL EGAL IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 11. THAT IN ANY VIEW OF THE MATTER THE FINDINGS AND OBSERVATIONS OF THE TWO LOWER AUTHORITIES FOR MAKING AND MAINTAININ G THE ADDITION OF RS.38,77,589/- SIMPLY ON THE BASIS OF DVOS REPORT AND ALSO BY IGNORING THE CASE LAWS CITED BEFORE THEM ARE ALSO G ENERAL, VAGUE AND CASUAL, HENCE THE ENTIRE ACTIONS OF TWO LOWER AUTHO RITIES ARE NOTHING BUT A NON-JUDICIOUS ACTION THEREFORE THE ADDITION I S LIABLE TO BE DELETED. 12. THAT IN ANY VIEW OF THE MATTER THE ADDITION OF RS.155000/- BY ALLEGING INVESTMENT IN FURNITURE ETC. AS MADE BY TH E ASSESSING OFFICER BASED ON HER OWN PRESUMPTIONS, SURMISES AND CONJECT URES AND HER ACTION AS CONFIRMED BY THE COMMISSIONER OF INCOME T AX (APPEALS) IS UNJUSTIFIED AND ILLEGAL, HENCE THE ADDITION IS LIAB LE TO BE DELETED. 13. THAT IN ANY VIEW OF THE MATTER THE INTEREST CHA RGED UNDER PROVISIONS OF VARIOUS SECTIONS OF THE INCOME TAX AC T IS HIGHLY UNJUSTIFIED AND ILLEGAL IN THE FACTS AND CIRCUMSTAN CES OF THE CASE. 14. THAT IN ANY VIEW OF THE MATTER THE APPELLANT RE SERVES HIS RIGHT TO TAKE ANY FRESH GROUND BEFORE HEARING OF THE APPE AL. IT IS RESPECTFULLY PRAY THAT A SUITABLE ORDER MAY K INDLY BE PASSED AND RELIEF BE ALLOWED ACCORDINGLY. 3. THE ASSESSEE HAS RAISED AS MANY AS 14 GROUNDS OF APPEAL. THE GROUND NOS. 1 TO 4 ARE GENERAL IN NATURE AND CHALLENGING THE NOTICE UN DER SECTION 153A(B) OF 5 ITA NO.68/A/2013 A.Y. 2009-10 THE ACT. THESE GROUNDS HAVE NOT BEEN MUCH ARGUED BY THE LD. AUTHORIZED REPRESENTATIVE, THEREFORE, THE SAME ARE DISMISSED. 4. THE GROUNDS NO.5 TO 7 ARE IN RESPECT OF PERTAINING TO ADDITION OF RS.10,48,000/- MADE BY THE A.O. ON ACCOUNT OF CASH FLOW STATEMENT FURNISHED BY THE ASSESSEE. THIS GROUND HAS BEEN RAISED BY THE AS SESSEE IN GROUNDS NO.5 TO 7 IN THE GROUNDS OF APPEAL. DURING THE ASSESSMENT PROCEE DINGS, THE ASSESSEE FURNISHED A CASH FLOW CHART SHOWING OPENING BALANCE OF RS. 1,98 ,651/- AS ON 01.04.2003. THE A.O. ASKED THE ASSESSEE TO JUSTIFY THE OPENING BALA NCE OF CASH AS ON 01.04.2003. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FURNISHED A CASH FLOW CHART. THE A.O. ACCEPTED THE INFLOW AND OUTFLOW OF THE CAS H SHOWN IN THE CHART BUT HE DID NOT ACCEPT THE OPENING BALANCE OF CASH BALANCE SHOW N BY THE ASSESSEE. THE COMPARATIVE POSITION OF CASH FLOW CHART AS PER ASSE SSEE AND AS PER A.O. HAS BEEN PRODUCED BY THE ASSESSEE OF WHICH COPY HAS BEEN PLA CED AT PAGE NO.19 OF THE PAPER BOOK. THE SAME IS REPRODUCED AS BELOW :- (PAG E NO.19, PAPER BOOK) COMPARISON OF CASH FLOW STATEMENT SUBMITTED BY THE APPELLANT AND REDRAWN BY THE ASSESSING OFFICER IN THE CASE OF PRAVEEN KUMAR KESARWANI SAHSON, ALLAHABAD (1) AS PER ASSESSEE 6 ITA NO.68/A/2013 A.Y. 2009-10 A.Y. CASH FLOW CHART AS PER THE APPELLANT (AT PAGE 34) 2009-2010 OPENING BALANCE (BASED ON FIGURE OF BOOKS AND BANK WITHDRAWAL) 1085231.00 ADD: WITHDRAWAL FROM BANK ALLAHABAD BANK S/B A/C NO.115551 1197000.00 WITHDRAWAL FROM BANK ICICI BANK A/C NO.62801522097 2100.00 TOTAL CASH IN FLOW 1199100.00 LESS : HOUSE HOLD EXPENSES IN CASH 80000.00 HOUSE HOLD EXPENSES THROUGH ICICI BANK A/C NO.62801522097 2100.00 INVESTMENT IN BUILDING AT SAHSON, IN CASH 1550000.0 0 CASH DEPOSIT TO FIRM KESARWANI ZARDA BHANDAR 600000.00 CASH DEPOSIT IN BANK ICICI BANK A/C NO. 62801522097 15000.00 TOTAL CASH OUT FLOW 2247100.00 7 ITA NO.68/A/2013 A.Y. 2009-10 CLOSING BALANCE 37,231.00 (2) AS PER ASSESSING OFFICER CASH FLOW CHART REDRAWN BY THE A.O. AT PAGE 2 OF TH E ORDER (AND 17) PARTICULARS AVAILABILITY OF BALANCE CASH OPENING BALANCE (AS DISCUSSED ABOVE) UNDER DISPUTE NIL ADD : WITHDRAWAL FROM BANK ALLAHABAD BANK S/B A/C NO.115551 1197000.00 WITHDRAWAL FROM BANK ICICI BANK A/C NO.62801522097 2100.00 TOTAL CASH INFLOW 1199100.00 LESS : HOUSE HOLD EXPENSES IN CASH 80000.00 HOUSE HOLD EXPENSES THROUGH ICICI BANK A/C NO.62801522097 2100.00 INVESTMENT IN BUILDING AT SAHSON 1550000.00 CASH DEPOSIT TO FIRM KESARWANI ZARDA BHANDAR, SAHON, ALLAHABAD 600000.00 CASH DEPOSIT IN BANK ICICI BANK 15000.00 8 ITA NO.68/A/2013 A.Y. 2009-10 TOTAL CASH OUT FLOW 2247100.00 CLOSING BALANCE UNDER DISPUTE -1048000.00 5. THE A.O. FOUND THAT THE ASSESSEE HAD NO SUFFICIE NT CASH BALANCE TO MEET OUT THE EXPENSES TO THE EXTENT OF OPENING BALANCE OF RS .10,85,231/-, THEREFORE, HE MADE ADDITION OF RS.10,48,000/- . THE CIT(A) HAS CONFIRM ED THE ADDITION AS UNDER :- (PAGE NO.11 AND 12, CIT(A)) 4.2 DECISION : I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SU BMISSION OF THE APPELLANT. THE ASSESSING OFFICER HAS EXAMINED T HE CASH FLOW CHART SUBMITTED BY THE APPELLANT. THE ASSESSEE HAS SHOWN THE OPENING BALANCE AS ON 01.04.2009 AT RS.10,85,231/-. THE ASSESSING O FFICER HAS NOT ACCEPTED THE OPENING BALANCE IN VIEW OF THE DISCUSS ION MADE IN PARA 2 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS DIS BELIEVED THE OPENING BALANCE OF RS.1,98,651/- AS ON 01.04.2003 AND SUBSE QUENT OPENING BALANCES OF INTERMEDIARY FINANCIAL YEARS. IN THIS R EGARD THE APPELLANTS CONTENTION IS THAT HE HAS BEEN FILING RETURN OF INC OME SHOWING SUBSTANTIAL INCOME FROM YEAR TO YEAR. HE HAS WITHDRAWN MONEY FR OM BANK AND CAPITAL ACCOUNT WITH THE FAMILY CONCERNS. THEREFORE , THE OPENING BALANCE SHOULD BE ACCEPTED BY THE A.O. BUT THE ASSESSING OF FICER HAS REJECTED THE EXISTENCE OF OPENING BALANCE ON THE BASIS THAT THE SAME IS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. THE ASSESSEE HAS NEVER FILED CAPITAL ACCOUNT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. THE ASSESSEE HAS NEVER FILED CAPITAL ACCOUNT SHOWING THE AVAILABILITY OF B ALANCES AS CLAIMED. THE ASSESSEE HAD NOT FILED WEALTH TAX RETURN IN ANY OF THE ASSESSMENT YEARS EITHER. IN VIEW OF ABOVE OBSERVATIONS, THE ASSESSIN G OFFICER REJECTED THE CLAIM OF THE APPELLANT. AFTER CAREFUL CONSIDERATION OF THE FACTS OF THE CASE, I FIND THAT THE ASSESSING OFFICER IS FULLY JUSTIFIE D IN DISBELIEVING THE CASH FLOW CHART SUBMITTED BECAUSE THE INFLOW AND OUTFLOW IS NOT SUPPORTED BY DOCUMENTARY EVIDENCES. I THEREFORE HOLD THAT THE AD DITION MADE BY THE 9 ITA NO.68/A/2013 A.Y. 2009-10 A.O. AMOUNTING TO RS.10,48,000/- IS FULLY JUSTIFIED . HENCE, GROUND NOS. 4 AND 5 ARE DISMISSED. 6. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE CASH FLOW STATEMENT SUBMITTED BEFORE A.O. WAS BASED ON ASSESSEES WITHD RAWAL FROM THE FIRMS AND HIS RESPECTIVE BANK ACCOUNTS. THE LD. AUTHORIZED REPRES ENTATIVE SUBMITTED THAT THE A.O. HAS ACCEPTED THE INFLOW AND OUTFLOW OF THE CAS H, ONLY HE DOUBTED THE OPENING BALANCE SHOWN IN THE CASH FLOW STATEMENT. THE LD. A UTHORIZED REPRESENTATIVE SUBMITTED THAT REVENUE AUTHORITIES ACCEPTED THE CAS H FLOW STATEMENT FOR 363 DAYS BUT HE DOUBTED ONLY TWO DAYS I.E. 1 ST APRIL AND 31 ST MARCH OF EACH YEAR. HE FURTHER SUBMITTED THAT DURING THE COURSE OF SEARCH OPERATIO N, NO DOCUMENTS OR LOOSE PAPERS WERE FOUND INDICATING THAT HEAVY EXPENDITURES WHICH WERE NOT RECORDED. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESS EES FAMILY CONSISTS OF HIMSELF, HIS WIFE AND ONE MINOR CHILD. THE ASSESSEE HAS FURN ISHED THE POSITION OF INCOME AS WELL AS HIS MOTHERS INCOME AS SHE WAS ASSESSED TO TAX. THE DETAILS FURNISHED BY THE ASSESSEE AT PAGE NOS. 23&24 OF ASSESSEE PAPER B OOK IS REPRODUCED AS BELOW :- (PAGE NOS.23&24, PAPER BOOK) CHART SHOWING DECLARED INCOME BY THE APPELLANT DURING THE BLOCK PERIOD IN THE CASE OF PRAVEEN KUMAR KESARWANI C/O KESARWANI SHEETALAYA, SAHSON, ALLAHABAD 10 ITA NO.68/A/2013 A.Y. 2009-10 ASSESSMENT YEAR DECLARED INCOME IN THE RETURN 2004-2005 300707.0 2005-2006 334985.00 2006-2007 1260774.50 2007-2008 1516104.00 2008-2009 1466075.00 2009-2010 1394576.00 2010-2011 1286601.00 TOTAL 7559822.50 CHART SHOWING DECLARED INCOME BY THE APPELLANTS WIDOW MOTHER SMT. URMILA DEVI DURING TH E BLOCK PERIOD SAHSON, ALLAHABAD ASSESSMENT YEAR DECLARED INCOME IN THE RETURN 2004-2005 1754590.00 2005-2006 1882863.00 2006-2007 2197633.00 2007-2008 2476220.00 2008-2009 2584967.00 2009-2010 2453359.00 11 ITA NO.68/A/2013 A.Y. 2009-10 2010-2011 2374093.00 TOTAL 15723725.00 SUBMISSION TOTAL ASSESSED FIGURE OF THE APPELLANT IS RS. 75,59,822.50 TOTAL ASSESSED FIGURE OF THE APPELLANTS MOTHER IS RS. 1,57,23,725.00 A- THAT FROM THE ABOVE CHART IT WILL APPEAR THAT TH E INCOME DECLARED BY THE APPELLANT AND HIS MOTHER DURING THE BLOCK PERIOD IS RS.75,59,822.50 + 1,57,23,725 = 2,32,83,547.50 WHERE AS OPENING AND CLOSING CASH BALANCE IS DOUBTED BY THE TWO LOWER AUTHORITIES WITHOUT ANY MATERIAL BROUGHT ON T HE RECORDS. B- THE APPELLANT IS ASSESSED TO WEALTH TAX AND FOR THE ASSESSMENT YEAR 2010-2011 ORDER PASSED U/S 16(3) OF THE WEALTH TAX ACT AND TH E APPELLANTS WEALTH IS DETERMINED AT RS.2,50,00,000/- CIN EACH YEAR WITHDRAWAL FROM THE BOOKS/BANK AND E XPENDITURE AS DECLARED WAS ACCEPTED YEAR AFTER YEAR AS DECLARED IN CASH FLOW S TATEMENT EXCEPT THE OPENING AND CLOSING CASH BALANCE WERE IGNORED BY THE ASSESSING OFFICER AS PER HIS OWN WHIMS AND WISHES AND NOT ON ANY COJENT REASONS. DTHE ENTIRE MANNER ADOPTED BY THE TWO LOWER AUTHOR ITIES ABOUT IGNORING OPENING AND CLOSING CASH BALANCE NOT BASED ON ANY L OGICAL BASIS. 7. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE TOTAL INCOME DECLARED BY THE ASSESSEE AND HIS WIDOW MOTHER DURING WHOLE O F THE BLOCK PRIOD WAS RS.2,32,83,547/-. THE LD. AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE FILED WEALTH TAX RETURN FOR A.Y.2010-11 DE CLARING TOTAL WEALTH WHICH WAS DETERMINED AT RS.2.5 CRORE. THE LD. AUTHORIZED REPR ESENTATIVE SUBMITTED THAT COMPARATIVE POSITION OF CASH FLOW STATEMENT FOR A.Y .2008-09 HAS BEEN FURNISHED, A 12 ITA NO.68/A/2013 A.Y. 2009-10 COPY WHICH HAS BEEN PLACED AT PAGE NOS. 23 & 24 OF THE PAPER BOOK. SIMILARLY CASH FLOW CHART FOR A.Y. 2004-05 TO 2010-11 IS ALSO FILED OF WHICH COPY HAS BEEN PLACED AT PAGE NOS.29 TO 34 OF THE PAPER BOOK. 8. THE LD. D.R., ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(A). 9. WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED. WE NOTICED THAT DURING THE COURSE OF SEARCH NO INCRIMI NATING DOCUMENTS WERE FOUND RELATING TO THE FACT THAT ASSESSEE WAS NOT HAVING C ASH BALANCES. THE LD. CIT(A) CONFIRMED THE ADDITION MERELY ON THE BASIS THAT THE ASSESSEE NEVER FILED CAPITAL ACCOUNT SHOWING FOR EACH OF THE CASH BALANCES. WE N OTICED THAT ASSESSEE HAS FURNISHED SUFFICIENT MATERIAL INCLUDING INCOME OF T HE VARIOUS YEARS OF ASSESSEE AS WELL AS ASSESSEES MOTHER WHICH SUFFICIENTLY PROVES THAT THE ASSESSEE MUST HAVE OPENING BALANCES. THE ASSESSEE FURNISHED CASH FLOW STATEMENT FOR EARLIER YEAR ALSO I.E. A.YS.2004-05 TO 2010-11 OF WHICH COPY HAS BEEN PLACED IN ASSESSEE PAPER BOOK PAGE NO.29 ONWARDS. THE CASH FLOW OF THE EARLI ER YEARS CLEARLY SHOW THAT THE ASSESSEE WAS HAVING SUCH AN OPENING BALANCES. THE A SSESSEE DISCHARGED THE BURDEN REGARDING CASH BALANCES SHOWN IN THE CASH FLOW STAT EMENT BY FURNISHING TOTAL INCOME AND EARNING IN EARLIER YEARS AND FURNISHING CASH FLOW STATEMENTS FROM A.Y.2004-05 ONWARDS. THE FINDING OF THE CIT(A) IS C ONTRARY TO THE FINDING OF THE FACTS AS THE A.O. HIMSELF ACCEPTED INFLOW AND OUTFL OW OF THE CASH IN THE CHART 13 ITA NO.68/A/2013 A.Y. 2009-10 SUBMITTED AND HE DID NOT DOUBT ABOUT THAT. HE DOUBT ED ABOUT ONLY OPENING BALANCES. WHEN THE ASSESSEE HAS FURNISHED THE POSIT ION OF INCOME FROM EARLIER/DIFFERENT YEARS AND THE TOTAL INCOME OF THE ASSESSEE AND HIS MOTHER COMES TO RS.2,32,83,547/-, IT CAN NOT DISBELIEVE THAT THE AS SESSEE WAS NOT HAVING CASH BALANCE TO THE EXTENT OF RS.10,85,231/- AS OPENING BALANCE IN A.Y.2009-10. WE FIND THAT THE ASSESSEE HAS FURNISHED SUFFICIENT MAT ERIAL AND DISCHARGED THE BURDEN, SUPPORTING THE FACT THAT THE ASSESSEE WAS HAVING CA SH BALANCE OF RS.10,48,000/- IN THE BEGINNING OF THE YEAR, PARTICULARLY UNDER THE F ACTS AND CIRCUMSTANCES WHEN NO INCRIMINATING DOCUMENTS OR OTHER MATERIAL WAS FOUND DURING THE COURSE OF SEARCH. WE FIND THAT ADDITION IS NOT WARRANTED, WE, THEREFO RE, SET ASIDE THE ORDERS OF REVENUE AUTHORITIES AND DELETE THE ADDITION OF RS.1 0,48,000/-. 10. THE NEXT EFFECTIVE GROUND IS IN RESPECT OF ADDI TION OF RS.97,900/- WHICH HAS BEEN RAISED BY THE ASSESSEE AS GROUND NO.8 OF THE GROUNDS OF APPEAL. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED FROM THE C ASH FLOW CHART THAT THE ASSESSEE HAS SHOWN LOWER HOUSE HOLD WITHDRAWALS. CO NSIDERING THE SIZE OF FAMILY AND SOCIAL STATUS OF THE ASSESSEE, THE A.O. HAS EST IMATED HOUSEHOLD EXPENSES OF RS.22,000/- PER MONTH AS AGAINST THE TOTAL HOUSEHOL D WITHDRAWAL OF RS.1,80,424/- PER ANNUM SHOWN BY THE ASSESSEE. THE A.O. MADE ADDI TION OF RS.1,81,900/-, BEING THE DIFFERENCE OF AMOUNT. 14 ITA NO.68/A/2013 A.Y. 2009-10 11. THE LD. CIT(A) RESTRICTED THE ADDITION TO THE E XTENT OF RS.97,900/- AND ALLOWED RELIEF OF RS.84,000/- ACCEPTING THE ASSESSE ES CONTENTION THAT THE AGRICULTURAL PRODUCE WAS CONSUMED BY THE ASSESSEE F AMILY AND THEY DO NOT PAY RENT AS THEY LIVE IN THEIR HOUSE. THE ASSESSEE HAS COMMO N KITCHEN WITH MOTHER AND BROTHERS. THE CIT(A) FOUND THAT HOUSEHOLD EXPENSES TO THE EXTENT OF RS.15,000/- PER MONTH IS A REASONABLE ESTIMATION. 12. WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIE S AND RECORDS PERUSED. AS DISCUSSED ABOVE, IT IS A SEARCH CASE AND DURING THE YEAR NO INCRIMINATING MATERIAL OR DOCUMENTS WERE FOUND. THE A.O. HAS ESTIMATED THE HO USEHOLD EXPENSES WITHOUT CONDUCTING A DETAILED ENQUIRY. HE MADE ADDITION MER ELY ON THE BASIS OF GENERAL PRESUMPTION, WHEREAS, THE ASSESSEE HAS FURNISHED A REASONABLE EXPLANATION THAT THE ASSESSEE IS RESIDING IN REMOTE AREA AT 20 KM. AWAY FROM CITY HAVING SUBSTANTIAL AGRICULTURAL INCOME AND PRODUCE. THE ASSESSEE IS WI DOW MOTHER, WHO IS A SEPARATE INCOME TAX PAYER SINCE LONG, ALSO RESIDES WITH THE ASSESSEE AND SHE HAS ALSO BEEN WITHDRAWING FOR HOUSEHOLD EXPENSES. IF WE CONSIDER THE ASSESSEES SUBMISSION, THE HOUSEHOLD EXPENSES CANNOT BE MADE MERELY ON THE BAS IS OF PRESUMPTION THAT THE ASSESSEE HAS INCURRED EXPENSES AND HAS SHOWN LESSER AMOUNT. IN THE ABSENCE OF MATERIAL, PARTICULARLY UNDER THE CIRCUMSTANCES WHER E THE ASSESSEE HAS SATISFACTORILY EXPLAINED THE HOUSEHOLD EXPENSES SHOWN BY THE ASSES SEE, IN THE LIGHT OF THESE FACTS, 15 ITA NO.68/A/2013 A.Y. 2009-10 WE FIND THAT THE CIT(A) IS NOT CORRECT IN SUSTAININ G THE ADDITION OF RS.97,900/-. WE THEREFORE, DELETE THE SAID ADDITION OF RS.97,900/- SUSTAINED BY THE LD. CIT(A). IN OTHER WORDS, THE ENTIRE ADDITION OF RS.1,81,900/- M ADE BY THE A.O. ON ACCOUNT OF HOUSEHOLD EXPENSES IS DELETED. 13. THE GROUNDS RAISED IN GROUNDS NO. 9 TO 11 ARE PERTAINING TO ADDITION OF RS.38,77,589/- MADE BY THE A.O. BY ALLEGING UNDISCL OSED INVESTMENT ON THE BASIS OF DVOS REPORT. 14. THE BRIEF FACTS OF THE CASE ARE THAT THE SEARCH AND SEIZURE OPERATION UNDER SECTION 132(1) OF THE I.T. ACT WAS CARRIED OUT ON 2 7.08.2009 IN THE GROUP CASES OF KESARWANI ZARDA BHANDAR, SAHSON, ALLAHABAD. THE ASS ESSEE IS A PARTNER ONE OF THE FIRM OF THIS GROUP NAMELY KESARWANI ZARDA BHANDAR A ND KESARWANI SHEETALAY. THE NOTICE UNDER SECTION 153A WAS ISSUED ON 07.07.2 010. THE ASSESSEE FILED RETURN OF INCOME DECLARING AS INCOME OF RS.13,94,576/- ON 16.08.2010. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE A SSESSEE HAS STATED IN THE CASH FLOW STATEMENT THAT RS.15,50,000/- WAS UTILIZED IN THE CONSTRUCTION OF BUILDING AT SAHSON KNOWN AS FULWARIA. THE A.O. ASKED THE ASSE SSEE TO PRODUCE THE BILLS AND VOUCHERS TO ASCERTAIN THE ACTUAL COST OF THE CONSTR UCTION. THE A.O. REFERRED THE MATTER TO THE DVO ON 10.08.2011 WHO HAS SUBMITTED H IS REPORT ON 20.09.2011. THE REPORT WAS CONFRONTED TO THE ASSESSEE ON 22.11.2011 . THE DVO DETERMINED THE 16 ITA NO.68/A/2013 A.Y. 2009-10 VALUATION OF PROPERTY FROM FINANCIAL YEAR 1999-2000 TO 2004-05. SINCE THE CASES ARE PENDING FROM THE ASSESSMENT YEAR 2004-05 TO 201 0-11, HENCE THE A.O. REQUESTED DVO TO DETERMINE THE COST OF PROPERTY FRO M THE FINANCIAL YEAR 2003-04 TO THE DATE OF INSPECTION. THE VALUATION OFFICER VI DE HIS REPORT DATED 07.10.2011 HAS DETERMINED THE COST OF CONSTRUCTION OF PROPERTY AT RS.2,70,44,806/- AS ON DATE OF INSPECTION I.E. 13.09.2011, AS AGAINST RS.1,91,2 4,000/- SHOWN BY THE ASSESSEE. THE A.O. CONFRONTED THE DVOS REPORT TO THE ASSESSE E. IN REPLY TO THAT, IT WAS SUBMITTED BY THE ASSESSEE THAT COST OF CONSTRUCTION WAS ESTIMATED BY THE DVO BY APPLYING HIGHER RATES, IGNORING THE AREA IN WHICH T HE PROPERTY IS CONSTRUCTED WHERE THE LABOUR CHARGES WAS ON THE LOWER SIDE. IT WAS SU BMITTED THAT NO INVESTMENT WAS MADE IN THE CONSTRUCTION EXCEPT WHITE WASHING/MINOR REPAIR ETC. DURING THE PERIOD FROM 01.04.2011. IT WAS ALSO STATED THAT DVO HAS SI MPLY ESTIMATED THE COST OF CONSTRUCTION SINCE F.Y.1999-2000 TO 2002-03 WHICH A RE OUT OF BLOCK PERIOD. AFTER CONSIDERING THE ASSESSEES SUBMISSION, THE A.O. AFT ER EXCLUDING PERIOD 1999-2000 TO 2002-03 THE VALUATION DETERMINED BY DVO WAS CON SIDERED FROM F.Y.2003-04 RELEVANT TO THE A.Y. 2004-05. THE A.O. NOTICED THAT THE ASSESSEE HAS INVESTED ONLY IN THE F.YS. 2009-10 AND 2010-11, THEREFORE, THE DI FFERENCE OF INVESTMENT IS CONSIDERED FOR THE F.YS. 2009-10 AND 2010-11. THE D VO DETERMINED THE VALUATION FOR THE COMPLETE PROPERTY WHEREIN ASSESSEE AND OTHE RS ARE CO-OWNERS. THE A.O. NOTICED THAT THE TOTAL DIFFERENCE IN VALUATION COME S TO RS.79,20,806/-. OUT OF 17 ITA NO.68/A/2013 A.Y. 2009-10 WHICH, RS.9,87,296/- (RS.75,11,296 BY VALUATION OFF ICER RS. 65,24,000/- SHOWN BY ASSESSEE I.E. DIFFERENCE OF AMOUNT OF VALUATION BET WEEN VALUATION OFFICER AND ASSESSEE BEFORE F.Y. 2003-04 RELEVANT TO THE A.Y. 2 004-05) WAS EXCLUDED AS DIFFERENCE BEFORE BLOCK PERIOD. REMAINING AMOUNT OF RS.69,33,510/- INCLUDES RS.10,76,704/- DIFFERENCE OF AMOUNT ON VALUATION OF FICER AND ASSESSEE FOR THE F.Y.2003-04 AND 2004-05. BALANCE DIFFERENCE COMES T O RS.58,56,806/- DIFFERENCE OF AMOUNT BELONGS TO THE A.Y.2009-10 AND 2010-11. S HARE OF ASSESSEE AS PER HIS RATIO OF INVESTMENT COMES TO RS.38,77,589/- FOR THE YEAR UNDER CONSIDERATION. THE A.O. NOTICED THAT DURING THE YEAR UNDER CONSIDERATI ON, TOTAL INVESTMENT FOR CONSTRUCTION IN THE ABOVE PROPERTY HAVE BEEN SHOWN BY ALL THE CO-OWNERS AT RS.35,31,000/- BEFORE THE VALUATION OFFICER WHEREA S SHARE OF INVESTMENT OF THE ASSESSEE COMES TO RS.38,77,589/- AS PER DVOS REPOR T FOR THE YEAR UNDER CONSIDERATION. THE A.O. MADE ADDITION OF RS.38,77,5 89/- UNDER SECTION 69 OF THE I.T. ACT. THE CIT(A) CONFIRMED THE ADDITION AS UNDE R :- (CIT(A) PAGE NOS. 19 TO 23) I HAVE GONE THROUGH THE ORDER OF THE ASSESSING OFFI CER, WHO REPORTS OF THE DVO AND THE SUBMISSION OF THE APPELLANT. THE VA LUATION OFFICER HAS SUBMITTED TWO REPORTS DATED 20.09.2011 AND 07.10.20 11. IN THE REPORT DATED 20.09.2011, THE VALUATION OFFICER HAS ESTIMAT ED COST OF THE CONSTRUCTION AT RS.75,69,500/- AS AGAINST RS.65,70, 000/- DECLARED COST. THIS REPORT WAS NOT ACCEPTED BY THE ASSESSING OFFIC ER ON THE GROUND THAT THE CONSTRUCTION SHOWN IN F.Y. 1999-2000 AND 2004-0 5 WAS BASED ON THE INFORMATION PROVIDED BY THE ASSESSEE TO THE VALUATI ON OFFICER. SHE, THEREFORE, ASKED THE VALUATION OFFICER TO MAKE THE ASSESSMENT OF THE COST OF 18 ITA NO.68/A/2013 A.Y. 2009-10 CONSTRUCTION AS ON THE DATE OF INSPECTION. ACCORDIN GLY THE VALUATION OFFICER HAD SUBMITTED THE REPORT DATED 07.10.2011 D ETERMINING THE COST OF CONSTRUCTION AT RS.1,30,30,085/-. BUT IN THIS REPOR T, THE DVO HAS REMARKED THAT THIS DETERMINATION HAS BEEN MADE BY INTERPOLAT ION OF COST INDEX WHICH IS NOT IN ACCORDANCE WITH THE PROVISIONS CONTAINED U/S 14 OF THE I.T. ACT. THE DVO ALSO REMARKED THAT THE COST OF INVESTMENT I S ALWAYS BASED ON DECLARATION BY THE ASSESSEE OR A.O. WHEREVER THE CO ST OF CONSTRUCTION IS NOT INTIMATED BY THE ASSESSEE. IN THIS WAY, THE DVO HAS SUBMITTED THE REPORT UNDER PROTEST. IN THE SUBMISSION, THE APPELLANT REP LIED THE NOTICE OF THE ASSESSING OFFICER DATED 12.12.2011 STATING THAT NO INVESTMENT WAS MADE IN THE CONSTRUCTION BETWEEN 01.04.2010 TO 13.09.2011 E XCEPT WHITE WASH/MINOR REPAIR. THE DVO FILED HIS LATER REPORT DATED 07.10.2011 UN DER PROTEST ON THE GROUND THAT AS PER THE PROVISIONS OF SECTION 142 A HE HAD TO TAKE THE BASIS OF INVESTMENT AS DECLARED BY THE ASSESSEE. BUT I FI ND THAT THE DVO HAS NOT EXAMINED THE CORRECTNESS OF INVESTMENT SHOWN BY THE ASSESSEE FROM F.Y.1999-2000 TO 2004-04. QUESTION ARISES AS TO HOW THE DVO ACCEPTED THE YEARS OF INVESTMENT WHEN IN HIS REPORT HE HAS H IMSELF MENTIONED THAT THE ASSESSEE DID NOT SUBMIT THE DETAILS VIZ. TECHNI CAL DATA, REGISTERED VALUERS REPORT, LAYOUT PLAN/ SITE PLAN, ACCOUNTS A ND BILLS/VOUCHERS. IT MEANS HIS PROTEST IN THE LATER REPORT TO THE EFFECT THAT INTERPOLATION OF COST INDEX IS NOT PERMISSIBLE U/S 142A OF THE I.T. ACT I S NOT JUSTIFIED, CLEARLY BECAUSE EVEN HE DID NOT HAVE ANY BASIS TO DETERMINE THE FINANCIAL YEARS OF INVESTMENT. IN VIEW OF THESE FACTS, THE LATER REPOR T DATED 07.10.2011 HOLDS GOOD. I FIND THAT THE ASSESSING OFFICER HAS CORRECTLY WO RKED OUT THE INVESTMENT MADE BY THE ASSESSEE BECAUSE DURING THE FINANCIAL Y EAR UNDER CONSIDERATION ONLY TWO PERSONS HAD MADE THE INVESTM ENT NAMELY SRI PRAVEEN KUMAR KESARWANI AND URMILA DEVI. THE ASSESS ING OFFICER HAS TAKEN THE RATIO OF UNEXPLAINED COST OF CONSTRUCTION WHICH IS AVAILABLE IN THE SHEET REFLECTING THE INVESTMENTS MADE BY THE FAMILY MEMBERS IN DIFFERENT FINANCIAL YEARS. THE APPELLANT HAS MADE EXCLUSIVE S UBMISSION ON THE EARLIER REPORT OF THE DVO AS PER WHICH THERE REMAIN S THE DIFFERENCE OF RS.9,99,500/-. REFERRING TO THIS REPORT THE APPELLA NT ALSO STATED THAT IF DEDUCTION FOR SELF SUPERVISION @ 10% IS ALLOWED. AN D IF THE DIFFERENCE COMES DOWN BELOW 10% THERE WOULD NOT BE ANY ADDITIO N. BUT I HAVE ALREADY HELD THAT EARLIER REPORT OF THE DVO WAS NOT CORRECT AND JUSTIFIED. I 19 ITA NO.68/A/2013 A.Y. 2009-10 HAVE BEFORE ME THE ISSUE OF DETERMINATION OF COST O F CONSTRUCTION DURING F.Y.2008-09 RELEVANT FOR A.Y.2009-10. THE CONSTRUCT ION IN THIS PARTICULAR FINANCIAL YEAR IS NOT DENIED BY THE ASSESSEE AS IS EVIDENT FROM THE CHART SHOWING THE COST OF THE CONSTRUCTION BY HIM DURING THE FINANCIAL YEAR UNDER CONSIDERATION. THE APPELLANTS ANOTHER OBJECTION IS THAT THE A.O. HAS TAKEN THE REPORT OF THE DVO AS GOSPEL TRUTH. IN THIS CONNECTION, IT IS TO BE UNDERSTOOD THAT THE PROVISION OF REFERENCE TO THE VALUATION OFFICER IS FOR THE PURPOSES OF MAKING ESTIMATE OF THE VALUE OF THE INVESTMENT. NO DOUBT, THE A.O. MAY NOT BE AN ENGINEER/ARCHITECT/EXPERT TO ESTIMATE THE VAL UE OF THE CONSTRUCTION. THEREFORE, THE I.T. ACT HAS MET THE PROVISION TO RE FER SUCH MATTER TO THE VALUATION OFFICER, THE A.O. HAS TO BE SATISFIED THA T HE HAS NOT BEEN ABLE TO WORK OUT THE CORRECT VALUE OF THE INVESTMENT MADE BY AN ASSESSEE ON THE BASIS OF BOOKS OF ACCOUNT, PRODUCED, SUPPORT BILLS AND VOUCHERS. IF THE A.O., ON ACCOUNT OF THE NATURE OF BOOKS OF ACCOUNT, BE IT INCOMPLETE OR HAVING NO RELEVANT PARTICULARS OF INVESTMENT, REACH ES THE CONCLUSION THAT THE CORRECT VALUE OF THE INVESTMENT CANNOT BE ASCER TAINED, HE IS NOT ADVISED TO MAKE WHILE GUESS. AT THIS JUNCTURE THE INSTITUTI ON OF VALUATION OFFICER COMES INTO THE PICTURE TO ASSIST THE A.O. IT IS ALS O TRUE THAT A.O. HAS TO EXAMINE THE REPORT OF THE VALUATION OFFICER AND AFF ORD THE ASSESSEE AN OPPORTUNITY TO SUBMIT HIS COMMENTS ON THE REPORT. T HE A.O. IS SUPPOSED TO PASS THE ORDER AFTER TAKING INTO ACCOUNT THE REPORT OF THE VALUATION OFFICER AND THE OBJECTION, IF ANY, SUBMITTED BY THE ASSESSE E. IN THE INSTANT CASE, THE A.O. CALLED FOR THE BILLS AND VOUCHERS RELATING TO THE CONSTRUCTION OF THE BUILDING. THE ASSESSEE COULD NOT PRODUCE THE BILLS & VOUCHERS EVEN AFTER THE FIXED DATE OF HEARING. ONLY THEN THE A.O. REFER RED THE MATTER TO THE VALUATION OFFICER WHICH IS PERFECTLY IN ACCORDANCE WITH THE PROVISIONS OF LAW. ANOTHER ALLEGATION OF THE APPELLANT IS THAT THE RA TES OF MATERIALS AND LABOURER ETC. AS CONSIDERED BY THE DVO ARE TOO HIG H. THE DVO CONSIDERED CPWD RATES, WHEREAS ONLY LOCAL RATES ARE LIABLE TO BE CONSIDERED SINCE THE PLACE OF BUILDING IS FAR AWAY FROM THE NAGAR PALIKA AREA WHERE THE APPELLANT GOT MATERIALS AND LABOURER S AT LESSER RATES. I DO NOT AGREE WITH THE SUBMISSION OF THE APPELLANT ON T HIS COUNT. IF THE ASSESSEE WANTS TO REBUT THE ESTIMATION OF INVESTMENT BY THE DVO, IT IS NOT SUPPOSED TO TALK IN GENERAL AND CASUAL MANNER. IT HAS TO SPE CIFICALLY TELL THE DVO AND THE A.O. THAT AS AGAINST THE RATE OF MATERIALS AND LABOURERS ESTIMATED 20 ITA NO.68/A/2013 A.Y. 2009-10 BY THE DVO, IT PURCHASED THE MATERIAL AND GOT THE L ABOUR AT SUCH PARTICULAR RATES. BUT FOR MAKING SO AVERMENT, IT HA S TO PRODUCE THE DOCUMENTARY EVIDENCES. IT IS SEEN THAT THE APPELLAN T HAS FAILED TO DISCHARGE ITS ONUS AND HAS MERELY LEVELED ALLEGATIONS ON THE DVO AND THE A.O. THE CORRECT COURSE OF ACTION WITH THE APPELLANT, IF IT THOUGHT THAT THE INVESTMENT RECORDED IN THE BOOKS BY IT ARE CORRECT, IT SHOULD HAVE PRODUCED THE RELEVANT BILLS & VOUCHERS AGAINST EACH ALLEGED HIGH ER ESTIMATE BY THE DVO. THE DVO HAS ADOPTED THE PRESCRIBED NORMS FIXED BY THE CBDT AND HAS ALSO FOLLOWED SOUND ENGINEERING PRACTICE. THE A .O. HAS TAKEN INTO ACCOUNT ALL THESE MATERIAL FACTS. THE APPELLANT HAS REFERRED TO VARIOUS CASE LAWS CL AIMING THEM TO BE IN ITS FAVOUR. BUT I NOTE THAT THE FACTS OF THE ASSESS EE ARE DIFFERENT FROM ALL THE CASE LAWS CITED BY THE ASSESSEE. I AM ALSO OF THE C ONSIDERED VIEW THAT THE A.O. HAS FOLLOWED CORRECT METHOD AND PROCEDURE FOR MAKING THE ADDITION. HENCE, THE ABOVE GROUNDS OF THE APPELLANT ARE DISMI SSED. IN THE LIGHT OF ABOVE DISCUSSION, THE ADDITION MAD E BY THE A.O. IS CONFIRMED AND RELATED GROUNDS TAKEN BY THE APPELLAN T ARE DISMISSED. 15. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THA T THE DVO HAS SUBMITTED TWO VALUATION REPORTS. AS PER THE FIRST REPORT DATE D 20.09.2011 WHICH WAS BASED ON PHYSICAL INSPECTION OF THE PROPERTY ON 13.09.2011, THE DVO HAS ESTIMATED THE COST OF CONSTRUCTION OF PROPERTY FOR RS.75,69,500/-. AS PER THE SECOND REPORT DATED 07.10.2011, THE DVO HAS ESTIMATED THE TOTAL VALUE O F CONSTRUCTION OF RS.1,30,30,085/-. THE LD. AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT THE DVO IN HIS REPORT DATED 07.10.2011 CLEARLY STATED T HAT THE VALUATION OF THE PROPERTY AMOUNTING TO RS.1,30,30,085/- BY INTERPOLATION OF C OST INDEX IS NOT IN ACCORDANCE WITH PROVISIONS CONTAINED IN SECTION 142A OF THE I. T. ACT. IT WAS FURTHER STATED THAT 21 ITA NO.68/A/2013 A.Y. 2009-10 THE COST OF INVESTMENT IS ALWAYS BASED ON INVESTMEN T DECLARED BY THE ASSESSEE. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE A. O. HAS TAKEN VALUE OF PROPERTY AMOUNTING TO RS.1,30,30,085/- AS PER DVOS REPORT D ATED 07.10.2011 SIMPLY FOR THE PURPOSE OF MAKING HIGHER ADDITION. THE LD. AUTH ORIZED REPRESENTATIVE FURTHER SUBMITTED THAT CALCULATION DONE BY THE A.O. IN THE ASSESSMENT ORDER TO ARRIVE AT THE SHARE OF UNDISCLOSED INVESTMENT BY THE ASSESSEE IN THE PROPERTY IS NOT UNDERSTANDABLE AND A.O. HAS NOT CLARIFIED HOW THIS AMOUNT HAS BEEN DETERMINED. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT TH E BUILDING KNOWN AS FULWARIA WAS JOINTLY OWNED BY SEVERAL PERSONS AND A SSESSEE IS ONE OF THE CO- OWNER. THE CONSTRUCTION OF THE BUILDING WAS DONE DU RING THE PERIOD FROM F.Y.1999-2000 TO F.Y. 2004-05 AT A TOTAL COST OF RS .65,70,000/- INCURRED BY ALL THE CO-OWNERS. THE DVO HAS ESTIMATED THE COST OF CONSTR UCTION IN THE FIRST REPORT AT RS.75,69,500/- AS AGAINST RS.65,70,000/- DECLARED B Y ALL THE CO-OWNERS INCLUDING THE ASSESSEE. IN THIS WAY, THE DIFFERENCE COMES TO ONLY RS.9,99,500/- WHICH IS ALMOST 13%. 16. IN THIS REGARD, DETAILS FURNISHED BY THE LD. A. R. FROM THE DVOS REPORT IS REPRODUCED AS UNDER :-(PAGE NO.42, PAPER BOOK) 22 ITA NO.68/A/2013 A.Y. 2009-10 FINANCIAL YEAR DECLARED COST IN CONSTRUCTION/INVESTMENT (RS.) F.Y. WISE ESTIMATED COST OF CONSTRUCTION /INVESTMENT (RS.) 1999-2000 4,27,000/- 4,91,960/- 2000-2001 8,35,000/- 9,62,029/- 2001-2002 9,88,000/- 11,38,305/- 2002-2003 12,37,000/- 14,25,186/- 2003-2004 13,75,000/- 15,84,180/- 2004-2005 17,08,000/- 19,67,840/- TOTAL 65,70,000/- 75,69,500/- 17. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THA T THE DVO IN HIS REPORT HAS FAILED TO ALLOW THE BENEFIT FOR SELF-SUPERVISION WH ICH IS ALLOWABLE TO THE EXTENT OF 10%. LIKEWISE, THE DVO HAS ALSO INCLUDED 3% BUILDER S EFFORT WHEN NO ARCHITECT WAS INVOLVED. THE LD. AUTHORIZED REPRESENTATIVE SUB MITTED THAT THE DVO HAS APPLIED CPWD RATES WHICH IS ABOUT 6% HIGHER IN COMP ARISON TO UPPWD RATES. 18. THE LD. D.R., ON THE OTHER HAND, RELIED UPON TH E ORDER OF THE CIT(A). 19. WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIE S AND RECORDS PERUSED. THE ADMITTED FACTS OF THE CASE ARE THAT THE ASSESSEE IS ONE OF THE CO-OWNERS OF THE 23 ITA NO.68/A/2013 A.Y. 2009-10 BUILDING. THE CONSTRUCTION WAS CARRIED OUT JOINTLY BY ALL THE CO-OWNERS. THE CONSTRUCTION OF THE BUILDING WAS CARRIED OUT FROM F .Y. 1999-2000 TO F.Y. 2004-05. THE DVO HAS FURNISHED TWO REPORTS OF VALUATION. THE DVO WHILE SUBMITTING THE SECOND REPORT ESTIMATED COST OF RS.1,30,30,085/- AN D CLEARLY STATED THAT THE VALUE DETERMINED BY INTERPOLATION OF COST INDEX WHICH IS NOT IN ACCORDANCE WITH PROVISIONS OF SECTION 142A OF THE ACT. THIS FACT HA S BEEN POINTED OUT TO THE A.O. BY THE DVO VIDE HIS LETTER DATED 7.10.2011 FROM PAG E NO.50 OF THE ASSESSEES PAPER BOOK. A COPY OF SAID LETTER/VALUATION REPORT WHICH IS REPRODUCED AS UNDER :- (PAGE NO.50, PAPER BOOK) TO, THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, I.T. DEPTT. ALLAHABAD. SUB:- ESTIMATING COST OF INVESTMENT IN THE PROPERTY IN THE NAME OF PRAVEEN KUMAR KESARWANI-REGARDING. REF :- YOUR OFFICE LETTER NO. DCIT(CC)/ALLD/REF FOR VALUATION/2011-12 DT. 29.09.2011 PLEASE REFER TO YOUR LETTER ON THE SUBJECT MENTION ED ABOVE. IN THIS CONNECTION IT IS INTIMATED THAT TOTAL VALUE OF CONS TRUCTION OF PROPERTY AS ON DATE AT INSPECTION WORKS OUT TO RS.1,30,30,085/-. ( RUPEES ONE CRORE THIRTY LAC THIRTY THOUSAND EIGHTY FIVE ONLY) --BY INTERPOL ATION OF COST INDEX WHICH IS NOT ACCORDANCE WITH PROVISION CONTAINED U/S 142A OF THE IT ACT 1961. IT IS PERTINENT TO MENTIONED HERE THAT COST OF INVESTM ENT IS ALWAYS BASED ON INVESTMENT DECLARED BY ASSESSEE OR A.O. WHEREAS IN THE ABOVE COST OF CONSTRUCTION, NO INVESTMENT INTIMATED BY ASSESSEE O R A.O. SUBMITTED FOR FURTHER ACTION AT YOUR END PLEASE. 24 ITA NO.68/A/2013 A.Y. 2009-10 20. THE CIT(A) WHILE GIVING HIS FINDING NOTED THAT THE SECOND REPORT HAS BEEN SUBMITTED BY THE DVO UNDER PROTEST ON THE GROUND TH AT AS PER THE PROVISIONS OF SECTION 142A OF THE ACT, THE DVO HAS TAKEN THE BA SIS OF INVESTMENT AS DECLARED BY THE ASSESSEE. HOWEVER, THE CIT(A) HELD THAT SECO ND REPORT OF DVO HOLDS GOOD. WE NOTICED THAT CALLING A VALUATION REPORT FROM DVO IS A TECHNICAL OPINION. THE A.O. CANNOT PRESSURIZE THE DVO TO GIVE SECOND REPOR T AS PER HIS DESIRE. THE DIFFERENCE BETWEEN THE CONSTRUCTION COST DECLARED B Y THE CO-OWNERS OF THE PROPERTY AND ESTIMATED BY THE DVO IS 13%, WHEREAS, THERE ARE SEVERAL DEFECTS IN ESTIMATION OF CONSTRUCTION COST BY DVO AND ACCEPTED BY THE A.O . THE IMPORTANT ONE IS PERTAINING TO THE PERIOD OF CONSTRUCTION. THE A.O. HAS EXCLUDED BEYOND BLOCK PERIOD BY HIS OWN CALCULATION AND INCLUDED LATER PA RT OF THE CONSTRUCTION. UNDER THESE CIRCUMSTANCES, THE DIFFERENCE OF 13% IS BOUND TO BE THERE. THE CIT(A) ANALYZED THE ASSESSEES SUBMISSION AND FIRST REPORT OF DVO AND NOTICED THAT THE DIFFERENCE WAS ONLY RS.9,99,500/- AND DEDUCTION FOR SELF SUPERVISION @ 10% AND IN THAT CIRCUMSTANCES NO ADDITION IS WARRANTED BUT THE CIT(A) IGNORED THE EARLIER REPORT ON THE BASIS THAT THE EARLIER REPORT OF THE DVO WAS NOT CORRECT AND JUSTIFIED. IN THIS WAY, THE A.O. AND CIT(A) BOTH HAS IGNORED T HE DVOS FIRST REPORT AND CONSIDERED THE SECOND REPORT FOR THE PURPOSE OF MAK ING ADDITION IN FINANCIAL YEAR 2008-09 RELEVANT TO A.Y. 2009-10. CONTRARY TO THAT, THE ASSESSEE HAS REPEATEDLY SUBMITTED THAT THE DVO HAS CONSIDERED CPWD RATES WH EREAS LOCAL PWD RATES 25 ITA NO.68/A/2013 A.Y. 2009-10 WERE VERY LOWER. IT WAS ALSO SUBMITTED BY THE ASSES SEE BEFORE THE REVENUE AUTHORITIES THAT RATES OF MATERIAL AND LABOUR ETC. WERE CONSIDERED BUT THE SAME WAS REJECTED BY THE CIT(A) STATING REASON THAT THE ASSE SSEE DID NOT FURNISH ANY EVIDENCE IN THIS REGARD. BUT THE FACT IS THAT MATERIAL AND L ABOUR RATES PRESCRIBED IN CPWD, THE RATES ARE HIGHER THAN THE LOCAL PWD OR LOCAL AR EA RATES, THEREFORE, THERE IS SUBSTANCE IN MAKING OBJECTION OF DVOS REPORT BY TH E ASSESSEE. THE TOTAL INVESTMENT MADE BY ALL THE CO-OWNERS FURNISHED BY L D. AUTHORIZED REPRESENTATIVE IS REPRODUCED AS BELOW :- (PAGE NOS. 10 & 11, PAPER BOOK) YEAR WISE BREAKUP INVESTMENT IN HOUSE PROPERTY SITAUTED AT SAHSON, ALLAHABAD IN THE CASE OF PRAVEEN KUAR KESARWANI & OTHER A.Y. AMOUNT 2000-2001 4,27,000/- 2001-2002 8,35,000/- 2002-2003 9,88,000/- 2003-2004 12,37,000/- 2004-2005 13,75,000/- 2008-2009 17,08,000/- 2009-2010 20,50,000/- 2010-2011 10,50,000/- 26 ITA NO.68/A/2013 A.Y. 2009-10 TOTAL 96,70,000/- 21. THE REVENUE HAS FAILED TO POINT OUT THAT THE BU ILDING OWNED BY CO-OWNERS AND WHAT STEPS HAVE BEEN TAKEN IN CASE OF THE CO-OW NERS WHETHER ANY ADDITION IS MADE OR NOT. THE REVENUE HAS FAILED TO POINT OUT AN Y INFORMATION IN THIS REGARD. AFTER CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT WHEN A PROPERTY IS CONSTRUCTED BY VARIOUS CO-O WNERS, ASSESSEE IS ONE OF THE CO- OWNER CONSTRUCTION PERIOD WAS FROM 2000-2001 TO 201 0-2011 I.E. FOR ABOUT 10 YEARS, BIFURCATION OF YEARLY INVESTMENT HAS BEEN GI VEN BY THE ASSESSEE, CONSIDERING OBJECTION OF THE ASSESSEE IN RESPECT OF DVOS REPOR T PARTICULARLY NOT ALLOWING 10% SELF-SUPERVISING CHARGES, 3% OF ARCHITECT FEE ETC. THE DIFFERENCE IS ONLY 13% IN COMPARISON TO COST DECLARED BY THE ASSESSEE AND EST IMATED BY THE DVO AND THE EFFECT OF THE ENTIRE DIFFERENCE GIVEN IN A PARTICUL AR YEAR IS NOT JUSTIFIED. THEREFORE, WE ARE OF THE VIEW THAT THE INVESTMENT DECLARED BY THE ASSESSEE IS REASONABLE AND THE SAME IS ACCEPTABLE, BECAUSE IN TOTALITY THE INV ESTMENT SHOWN BY THE ASSESSEE IS CORRECT. THE FIRST DVOS REPORT SUPPORTS TO THIS FA CT. WE, THEREFORE, ARE OF THE VIEW THAT IN THE LIGHT OF DETAILED DISCUSSIONS MADE ABOV E, NO ADDITION IS WARRANTED. WE, THEREFORE, DELETE THE ADDITION OF RS.38,77,589/- MA DE BY THE A.O. ON ACCOUNT OF INVESTMENT IN PROPERTY UNDER SECTION 69 OF THE ACT AND SUSTAINED BY LD. CIT(A). 27 ITA NO.68/A/2013 A.Y. 2009-10 22. THE GROUND NO.12 WHICH PERTAINS TO ADDITION OF RS.1,55,000/- BY ALL EGING INVESTMENT IN FURNITURE ETC. THE A.O. MADE ADDITION OF RS.1,55,000/- ON THE GROUND THAT THE DVO HAS SHOWN THE CONSTRUCTION COST WHICH DOES NOT INCLUDE COST OF LAND, FURNITURE AND FURNISHING, A.C., ELECTRICAL EQUIPMEN T, OLD STRUCTURES AND OLD BOUNDARY WALL. THE A.O. TREATED 20% OF THE COST OF CONSTRUCTION S HOWN BY THE ASSESSEE AT RS.15,50,000/- AND CALCULATED AMOUNT OF ADDITION OF RS.1,55,000/- BY TREATING IT AS EXPENDITURE INCURRED FOR FURNITURE A ND FURNISHING OVER AND ABOVE COST OF CONSTRUCTION. THE LD. CIT(A) CONFIRMED THE ADDIT ION. 23. WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIE S AND RECORDS PERUSED. IN THE LIGHT OF DETAILED DISCUSSIONS MADE WHILE DECIDING T HE GROUNDS NO.9 TO 11, WE FIND THAT THE CASE UNDER CONSIDERATION IS SEARCH YEAR AN D DURING THE COURSE OF SEARCH NO INCRIMINATING DOCUMENT OR MATERIAL WAS FOUND REGARD ING SUCH INVESTMENT. THE ASSESSEE HAS ALREADY SHOWN CONSTRUCTION OF COST IN VARIOUS YEARS AND AFTER DETAILED DISCUSSION THE ADDITION MADE ON THE GROUND OF CONST RUCTION HAS BEEN DELETED. IN THE LIGHT OF THE FACT AND AS PER THE DISCUSSIONS MADE W HILE DELETING THOSE ADDITION ON ACCOUNT OF DIFFERENCE BETWEEN CONSTRUCTION COST SHO WN BY THE ASSESSEE AND DVO REPORT, THIS ADDITION IS ALSO ON THE BASIS OF ESTIM ATION WITHOUT BASIS, WE FIND THAT THE A.O. MADE ADDITION WITHOUT EXAMINING CORRESPONDING INVESTMENT. THE PROPERTY WAS OWNED BY CO-OWNERS. THE PROPERTY CONSTRUCTED IN 10 YEARS. NO MATERIAL WAS 28 ITA NO.68/A/2013 A.Y. 2009-10 FOUND DURING THE COURSE OF SEARCH. THE A.O. HAS FAI LED TO POINT OUT BY MAKING ENQUIRY THAT HOW MANY A.C AND OTHER ELECTRICAL EQUI PMENTS WERE THERE WITH THE ASSESSEE. AFTER CONSIDERING TOTALITY OF THE FACTS O F THE CASE, WE ARE OF THE VIEW THAT SUCH ADHOC ADDITION IS NOT WARRANTED. IN LACK OF EN QUIRY, BY THE A.O. AND MAKING ADDITION WITHOUT CONSIDERING COMPLETE FACTS, WE ARE OF THE CONSIDERED VIEW THAT MERELY ON THE BASIS OF CONJECTURE OR SURMISES ADDIT ION CANNOT BE MADE PARTICULARLY IN CASE OF SEARCH. IN THE LIGHT OF THE FACT, WE DO NOT FIND ANY JUSTIFICATION OF MAKING ADDITION OF RS.1,55,000/-, THEREFORE, WE DELETE THE ADDITION OF RS.1,55,000/-. 24. GROUNDS NO. 13 & 14 ARE GENERAL IN NATURE, REQU IRE NO INDEPENDENT FINDINGS. 25. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED AND PARTLY ALLOWED AS INDICATED ABOVE. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER AMIT/- COPY OF THE ORDER FORWARDED TO: 29 ITA NO.68/A/2013 A.Y. 2009-10 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, ALLAHABAD BENCH, ALLAHABAD 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE T RIBUNAL, ALLAHABAD TRUE COPY