ITO, Jaipur V. SMT. ANCHAL AGARWAL, Jaipur

ITA 73/JPR/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2143 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 29-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEENA JEPH DH LS
• Assessee Lawyers: MANISH AGARWAL DHK
• Keywords: Income from undisclosed sources; Additional evidence; Corroborative evidences; Valuation report

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO.73/JP/14 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 THE ITO,WARD - 1(3), JAIPUR. CUKE VS. SMT. ANCHAL AGARWAL, C-137, DAYANAND MARG, TILAK NAGAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAXPA6313R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SMT. NEENA JEPH FU/KZKFJRHDH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19/06/2017 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT: 03/08/2017. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-I, JAIPUR DATED 20.11.2013 FOR A.Y. 2009-10. THE GROUN DS OF APPEAL TAKEN BY THE REVENUE ARE AS UNDER:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS. 21,46,179/- MADE ON ACCOUNT OF DIFFERENCE IN OPENING CAPITAL BA LANCE SHOWN IN THE BALANCE SHEET. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.11,56,671/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN CONSTR UCTION OF PROPERTY. ITA NO. 73/JP/14 ITO VS. SMT. ANCHAL AGARWAL,JAIPUR 2 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS. 4,00,000/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN CONSTRUCTIO N OF HOUSE PROPERTY. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS. 20,00,000 MADE ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES. 2. IN GROUND NO. 1 OF REVENUES APPEAL, THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF RS.21,46,179/- MADE BY AO O N ACCOUNT OF DIFFERENCE IN OPENING CAPITAL BALANCE AS PER THE BALANCE SHEET FO UND DURING THE COURSE OF SURVEY AT THIRD PARTY PREMISES AND BALANCE SHEET SU BMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 3. BRIEF FACTS OF THE CASE ARE THAT A SURVEY U/S 1 33A WAS CARRIED OUT ON 10.12.2009 AT M/S GRAVITA INDIA LTD. (A COMPANY IN WHICH HUSBAND OF ASSESSEE SH. RAJAT AGRAWAL IS DIRECTOR), WHEREIN AS SESSEE IS ONE OF THE SHAREHOLDER. DURING THE COURSE OF SURVEY, CERTAIN D OCUMENTS PERTAINING TO ASSESSEE WERE FOUND AND IMPOUNDED, WHICH WERE CONSI DERED BY LD. AO WHILE COMPLETING ASSESSMENT. DOCUMENTS FOUND DURING SURVE Y INTER ALIA INCLUDED PRINT OUT OF BALANCE SHEET REPORT OF TALLY SOFTWA RE, IN WHICH THE OPENING BALANCE OF CAPITAL ACCOUNT WAS APPEARING AT RS.18,5 4,035/-. HOWEVER, AS PER FINAL BALANCE SHEET FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS , OPENING BALANCE OF CAPITAL WAS RS.39,92,214/-. THER EFORE, THE AO MADE ADDITION OF DIFFERENTIAL AMOUNT OF RS 21,46,179 WHI CH HAS BEEN DELETED BY THE LD CIT(A) AND NOW THE REVENUE IS IN APPEAL AGAINST THE SAID DELETION. 4. THE LD AR SUBMITTED THAT IT WAS SUBMITTED BEFOR E THE AO THAT THE PRINTOUT OF BALANCE SHEET FOUND DURING SURVEY WAS I NCOMPLETE AS CERTAIN ENTRIES WERE YET TO BE INCORPORATED. IN FACT THE FI NAL BALANCE SHEET SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WAS PRE PARED AFTER MAKING ALL THE NECESSARY RECONCILIATION AND TAKEN INTO CONSIDE RATION THE ADJUSTMENTS ITA NO. 73/JP/14 ITO VS. SMT. ANCHAL AGARWAL,JAIPUR 3 REQUIRED FOR FINALIZATION OF BOOKS OF ACCOUNT AND T HUS TALLYING WITH FINAL REPORT AS PER TALLY SOFTWARE. IT WAS FURTHER SUBMITTED THA T ALL THE ITEMS OF BALANCE SHEET WERE DULY SUPPORTED BY INFORMATION AVAILABLE ON RECORD, BANK ACCOUNTS AND VOUCHERS ETC., HOWEVER THE SAME WAS NOT CONSIDE RED BY AO AND ADDITION OF RS.21,46,179/-WAS MADE PRIMARILY ALLEGING THAT: - SINCE ASSESSEE COULD NOT FURNISH ANY RECORDS RELATI NG TO HER INCOME FROM FASHION/ APPAREL DESIGNING, BOOKS OF ACCOUNTS FURNISHED BY ASSESSEE WERE NOT ACCEPTED. - OPENING BALANCE COULD NOT BE ACCEPTED MERELY BECAUS E OF HOLDING OF ASSETS IN LACK OF EVIDENCES. - NO BALANCE SHEET WAS ANNEXED WITH RETURN OF INCOME. - NO WEALTH TAX RETURN WAS FILED BY ASSESSEE. - BALANCE SHEET SUBMITTED DURING ASSESSMENT PROCEEDIN GS WAS NOT SUPPORTED BY ACCEPTABLE EVIDENCES. IT WAS FURTHER SUBMITTED THAT ALL THE ABOVE ALLEGAT IONS AS POINTED OUT BY THE LD. AO WERE DULY EXPLAINED BEFORE THE LD. CIT(A) WI TH A DETAILED SUBMISSION AS REPRODUCED BY LD. CIT (A) AT PAGES 4 TO 8 OF THE OR DER, WHO AFTER CONSIDERING THE SAME ON MERITS HAS CONCLUDED THAT THE BALANCE S HEET FOUND DURING THE COURSE OF SURVEY WAS BASED ON THE INCOMPLETE RECORD S AND ASSESSEE HAS DULY DEMONSTRATED IT WITH THE HELP OF THE EVIDENCES AND OTHER MATERIAL THEREFORE NO ADDITION COULD BE MADE. IT WAS FURTHER SUBMITTED THAT IT IS AN ESTABLISHED LAW THAT THE ASSESSEE IS ENTITLED TO COMPLETE THE BOOKS OF ACCOUNTS FOUND IN COMPLETE DURING THE COURSE OF SURVEY AND THE ERRORS AND OMISSIONS POINT ED OUT BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS WERE RE MAINED UN-REBUTTED BY LD. AO THOUGH ALL DETAILED WERE SUBMITTED BEFORE HI M DURING THE COURSE OF ASSESSMENT PROCEEDINGS. FURTHER THE LD. AO HAS FAIL ED TO APPRECIATE THE FACT ITA NO. 73/JP/14 ITO VS. SMT. ANCHAL AGARWAL,JAIPUR 4 THE IN THE SAME BALANCE SHEET THE AMOUNT OF OPENING PROFIT & LOSS AT RS. 26,04,746.94 IS APPEARING AND IF THE SAME IS ADDED TO THE OPENING BALANCE OF CAPITAL AT RS. 19,38,341.94, THE RESULTANT BALANCE IS MORE THAN THE CAPITAL BALANCE APPEARING IN THE FINAL BALANCE SHEET PREPAR ED ON THE BASIS OF THE COMPLETED BOOKS OF ACCOUNTS. 5. WE NOW REFER TO THE RELEVANT FINDING OF THE LD. CIT(A) WHICH ARE UNDER CHALLENGE. THE SAME ARE REPRODUCED AS UNDER:- 4. I HAVE CONSIDERED SUBMISSIONS MADE BY THE APPELLANT AND HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER. IT IS NOTICED TH AT THE ADDITION HAS BEEN MADE BY THE AO PRIMARILY ON THE GROUND THAT IN THE COURSE OF SURVEY CARRIED OUT AT THE PREMISES OF M/S GRAVITA I NDIA LTD. ON 10/12/2009, A COPY OF BALANCE SHEET WAS FOUND IN WH ICH THE CAPITAL AS ON 31/03/2009 WAS SHOWN AT RS. 18,54,035/- WHILE IN THE BALANCE SHEET FILED WITH THE RETURN IT WAS SHOWN AT RS. 39,92,214 /-. THE DIFFERENCE IN THE AMOUNT OF THESE TWO BALANCE SHEETS WAS ACCORDIN GLY BROUGHT TO TAX BY THE AO. THE AO DID NOT ACCEPT THE BALANCE SHEET FILED WITH THE RETURN ON THE GROUND THAT THE APPELLANT HAD FAILED TO FURNISH ANY SUPPORTING EVIDENCE FOR THE OPENING CAPITAL AND THE BOOKS OF ACCOUNT ARE NOT RELIABLE. 4.1 IT IS, HOWEVER, NOTED THAT WHILE THE DOCUMENTS FOUND IN THE COURSE OF SURVEY ARE PRESUMED TO BE TRUE, THE PRESUMPTION IS A REBUTTABLE ONE. IT WAS SO HELD BY THE HONBLE KOLKATA TRIBUNAL IN T HE CASE OF NIRMAL FASHIONS ( 25 SOT 387) AND ALSO BY THE JURISDICTION AL HIGH COURT (124 ITR 111) WITH REFERENCE TO SEC. 132(4A). IN THE PRESENT CASE A BALANCE SHEET PERTAINING TO T HE APPELLANT WAS FOUND IN THE COURSE OF SURVEY CARRIED OUT ON M/S GR AVITA INDIA LTD. IT IS FURTHER NOTED THAT THE BALANCE SHEET FURNISHED BY T HE APPELLANT ALONG WITH THE RETURN SHOWS THAT THE OPENING ACCOUNT IS M ATCHED BY THE AVAILABLE ASSETS. MOREOVER, AS MENTIONED BY THE APP ELLANT THERE ARE PATENT SHORT COMINGS IN THE BALANCE SHEET FOUND DUR ING THE COURSE OF SURVEY WHICH SHOWS THAT THIS BALANCE SHEET WAS ONLY A TENTATIVE ONE. THE DEFECTS POINTED OUT BY THE APPELLANT, AS MENTIO NED IN PARA 3 OF HER SUBMISSION (SUPRA), SHOW THAT THERE WERE GLARING AN D SUBSTANTIVE SHORT COMINGS IN THE BALANCE SHEET FOUND IN THE COURSE OF SURVEY AT THE ITA NO. 73/JP/14 ITO VS. SMT. ANCHAL AGARWAL,JAIPUR 5 COMPANYS PREMISES. THESE SHORT COMINGS INCLUDE OMI SSION ON BOTH LIABILITIES AND ASSETS SIDES. FOR EXAMPLE, THERE IS A NEGATIVE BALANCE UNDER THE HEAD LOAN (LIABILITY) AGAINST HDFC BANK W HILE AS PER BANK STATEMENT, THE OUTSTANDING BALANCE AS ON 31.03.2009 IS RS. 19.09 LAKHS. THE CORRECT LOAN LIABILITY OF IDBI BANK IS A LSO NOT REFLECTED. ALL THESE DEFECTS NEED NOT BE REPEATED HERE BUT ARE TOO GLARING TO BE IGNORED. THESE DISCREPANCIES WERE ALSO BROUGHT TO T HE NOTICE OF THE AO VIDE LETTER DATED 28.02.2011, BUT THESE DISCREPANCI ES POINTED OUT BY THE APPELLANT REMAIN UN-REBUTTED. IN VIEW OF THE SERIOU S SHORT COMINGS POINTED OUT BY THE APPELLANT IN THE BALANCE SHEET, IT CANNOT BE SAID THAT THE BALANCE SHEET FOUND IN THE COURSE OF SURVEY REF LECTED THE CORRECT STATE OF AFFAIRS OF THE APPELLANT AND, THEREFORE, I T CANNOT BE RELIED UPON FOR MAKING ADDITION. IT IS FURTHER NOTED THAT NO OT HER FACTUAL DEFECT HAS BEEN FOUND IN THE BALANCE SHEET FURNISHED BY THE AP PELLANT ALONG WITH THE RETURN. THEREFORE, THE ADDITION OF RS. 21,46179 /- WHICH IS BASED ONLY ON THE DIFFERENCE BETWEEN THE TWO BALANCE SHEE TS APPEARS TO BE WITHOUT ANY BASIS AND IS, ACCORDINGLY, DELETED. 6. THE LD DR IS HEARD WHO HAS VEHEMENTLY ARGUED TH E MATTER AND RELIED ON THE ORDER OF THE AO. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ADDITION UNDER CONSIDERATION RELATES TO DIFFERENCE IN THE OPENING BALANCE IN THE CAPITAL ACCOUNT AS ON 1.4.20 08 AMOUNTING TO RS 21,46,179. THE DIFFERENCE HAS ARISEN ON ACCOUNT OF BALANCE SHEET RECOVERED DURING THE COURSE OF SURVEY CARRIED OUT AT THE PREM ISES OF M/S GRAVITA INDIA LTD AND THE BALANCE SHEET WHICH HAS BEEN FILED DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS. IN THIS REGARD, AS WE HAVE NOTED ABOVE, THE LD ARS CONTENTION IS THAT IT WAS SUBMITTED BEFORE THE AO THAT THE PRINTOUT OF BALANC E SHEET FOUND DURING SURVEY WAS INCOMPLETE AS CERTAIN ENTRIES WERE YET T O BE INCORPORATED. IN FACT THE FINAL BALANCE SHEET SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WAS PREPARED AFTER MAKING ALL THE NECES SARY RECONCILIATION AND ITA NO. 73/JP/14 ITO VS. SMT. ANCHAL AGARWAL,JAIPUR 6 TAKEN INTO CONSIDERATION THE ADJUSTMENTS REQUIRED F OR FINALIZATION OF BOOKS OF ACCOUNT AND THUS TALLYING WITH FINAL REPORT AS PER TALLY SOFTWARE. IT WAS FURTHER SUBMITTED THAT ALL THE ITEMS OF BALANCE SHEET WERE DULY SUPPORTED BY INFORMATION AVAILABLE ON RECORD, BANK ACCOUNTS AND VOUCHERS ETC., HOWEVER THE SAME WAS NOT CONSIDERED BY AO. THE AO DIDNT A CCEPT THE ASSESSEES CONTENTION ON ACCOUNT OF VARIOUS REASONS. THE REAS ONS WHICH MERIT ATTENTION ARE AS FOLLOWS: OPENING BALANCE COULD NOT BE ACCEPT ED MERELY BECAUSE OF HOLDING OF ASSETS IN LACK OF EVIDENCES, NO BALANCE SHEET WAS ANNEXED WITH RETURN OF INCOME, NO WEALTH TAX RETURN WAS FILED BY ASSESSEE, BALANCE SHEET SUBMITTED DURING ASSESSMENT PROCEEDINGS WAS NOT SUP PORTED BY ACCEPTABLE EVIDENCES. IN OUR VIEW, THESE ARE VALID REASONS FOR NOT ACCEPTING THE BALANCE SHEET FILED DURING THE COURSE OF ASSESSMENT PROCEED INGS AS THE SAME WAS NOT SUPPORTED BY ANY ACCEPTABLE EVIDENCE EITHER IN RESP ECT OF OPENING CAPITAL BALANCES OR TRANSACTIONS UNDERTAKEN DURING THE YEAR . NOW, LETS EXAMINE THE FINDINGS OF THE LD CIT(A). FIRSTLY, THE LD CIT(A) STATES THAT IT IS FURTHER NOTED THAT THE BALANCE SHEET FURNISHED BY THE APPELLANT A LONG WITH THE RETURN SHOWS THAT THE OPENING ACCOUNT IS MATCHED BY THE AVAILABL E ASSETS. IN THIS REGARD, THE AO HAS STATED THAT NO BALANCE SHEET HAS BEEN FI LED WITH THE RETURN OF INCOME AND INFACT, THE ASSESSEE IN HER SUBMISSIONS BEFORE THE LD CIT(A) IN PARA 4(D) STATES THAT THE BALANCE SHEET AS AT 31.3. 2008 HAS NOW BEEN PRODUCED WHEREIN ASSETS HAVE BEEN SHOWN AND THERE A RE SUFFICIENT EVIDENCE THAT THESE ASSETS WERE AVAILABLE WITH THE ASSESSEE AS ON 31.3.2008. THERE ARE THUS INHERENT CONTRADICTION IN THE FACTS AND FI NDINGS OF THE LD CIT(A). FURTHER, THERE IS NO FINDING THAT THE LD CIT(A) HAS VERIFIED OR CALLED FOR A REMAND REPORT TO VERIFY THE OPENING CAPITAL BALANCE S WITH THE ASSETS AS ON 1.4.2008. THEREAFTER, THE LD CIT(A) HAS DISCUSSED OTHER SO CA LLED GLARING AND SUBSTANTIVE SHORT COMINGS IN THE BALANCE SHEET FOUND IN THE COU RSE OF SURVEY AT THE ITA NO. 73/JP/14 ITO VS. SMT. ANCHAL AGARWAL,JAIPUR 7 COMPANYS PREMISES AND HELD THAT THE BALANCE SHEET FOUND IN THE COURSE OF SURVEY REFLECTED THE CORRECT STATE OF AFFAIRS OF TH E APPELLANT AND, THEREFORE, IT CANNOT BE RELIED UPON FOR MAKING ADDITION. IN THIS REGARD, OUR OBSERVATIONS ARE AS FOLLOWS. FIRSTLY, IT IS RELEVANT TO NOTE TH AT ASSESSEE HAS FILED HER RETURN OF INCOME ON 31.7.2009, THEREAFTER THE SURVEY WAS C ARRIED OUT ON 10.12.2009 AND EVEN BY THAT TIME, AS PER ASSESSEES VERSION, H ER BALANCE SHEET WAS INCOMPLETE AND CERTAIN ENTRIES WERE YET TO BE INCOR PORATED. TYPICALLY, ACCOUNTS ARE FINALISED AND BALANCE SHEET AND PROFIT /LOSS ACCOUNT ARE PREPARED AND THEREAFTER, THE RETURN OF INCOME IS LODGED WITH THE DEPARTMENT. IN THE INSTANT CASE, THE ASSESSEE, BEING AN INDIVIDUAL AND THE FACT THAT SHE IS NOT REQUIRED UNDER LAW TO MAINTAIN BOOKS OF ACCOUNTS, S OME RELAXATION CAN BE GIVEN PROVIDED THAT WHEN SHE IS CALLED UPON BY THE DEPARTMENT, SHE PRODUCES HER CORRECT STATE OF AFFAIRS SUPPORTED BY BOOKS OF ACCOUNTS AND FINANCIAL STATEMENTS. THEREFORE, IN THE INSTANT CASE, WHAT I S RELEVANT TO EXAMINE IS WHETHER THE BALANCE SHEET FOUND DURING THE COURSE O F SURVEY WAS SHOWING CORRECT STATE OF AFFAIRS OF THE ASSESSEE OR NOT. A S PER THE ASSESSEE, THE SAID BALANCE SHEET WAS INCOMPLETE AND DOESNT SHOW THE C ORRECT STATE OF AFFAIRS AND AFTER CARRYING OUT THE NECESSARY ENTRIES, A FIN AL BALANCE SHEET WAS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HERE, IT IS RELEVANT TO NOTE THAT THE AO THEN WENT ABOUT COMPARING THE TWO BALANCE SH EETS AND FOUND DIFFERENCES IN THE OPENING BALANCES IN THE CAPITAL ACCOUNT AND EXPENSES UNDER THE HEAD RENOVATION WHICH IS AGAIN A GROUND OF DISP UTE DEALT IN SUBSEQUENT PARAGRAPHS. THE LD CIT(A) HAS GIVEN HIS FINDINGS I N TERMS OF OTHER GLARING DIFFERENCES IN THE TWO BALANCE SHEETS AND FOUND THE BALANCE SHEET FOUND DURING THE COURSE OF SURVEY AS NOT A RELIABLE PIECE OF EVIDENCE. IN OUR VIEW, WHAT WAS EQUALLY RELEVANT FOR THE LD CIT(A) TO EXAM INE AND TO GIVE A FINDING RELATING TO DIFFERENCE IN THE OPENING BALANCE IN TH E CAPITAL ACCOUNT AS THE SAME IS THE SUBJECT MATTER OF DISALLOWANCE. MERELY BECAUSE THERE WERE SOME DISCREPENCIES IN THE BALANCE SHEET, IT CANNOT BE SA ID THAT ALL THE ENTRIES IN THE ITA NO. 73/JP/14 ITO VS. SMT. ANCHAL AGARWAL,JAIPUR 8 SAID BALANCE SHEET WERE WRONG. MORESO, WHEN THE DI FFERENCE RELATES TO OPENING CAPITAL BALANCE WHICH IS BROUGHT FOREWARD F ROM THE PREVIOUS YEAR. IN OUR VIEW, WHAT WAS RELEVANT TO EXAMINE IS THE PREVI OUS YEAR BALANCE SHEET AND THE CLOSING BALANCE IN THE CAPITAL ACCOUNT AND HOW THE SAME IS SUPPORTED BY CORRESPONDING NET ASSETS POSITION. FURTHER, WE NOTE THAT THE OPENING CAPITAL IS RS 39,92,214 AS REPORTED IN THE BALANCE SHEET SUBMITTED DURING THE ASSESSMENT PROCEEDINGS WHICH IS HIGHER THAN THE CAP ITAL OF RS 18,54,035 AS PER BALANCE SHEET FOUND DURING THE COURSE OF SURVEY . THEREFORE, IT IS TO BE EXAMINED WHETHER ANY FRESH CAPITAL HAS BEEN BROUGHT -IN BY THE ASSESSEE IN HER BOOKS OF ACCOUNTS AND WHICH HAS NOT BEEN REPORT ED. WE ARE ACCORDINGLY SETTING ASIDE THE MATTER TO THE FILE OF THE LD CIT( A) TO EXAMINE THE SAME AFRESH IN LIGHT OF ABOVE DISCUSSIONS AND AS PER LAW . IN THE RESULT, THE GROUND OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN GROUND NO. 2, THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF RS.11,56,671/- MADE BY AO, BEING DIFFERENTIAL AMOUN T BETWEEN AMOUNT SHOWN UNDER THE HEAD RENOVATION EXPENSES AS PER BAL ANCE SHEET FOUND DURING SURVEY AND BALANCE SHEET SUBMITTED DURING TH E ASSESSMENT PROCEEDINGS. 9. BRIEF FACTS PERTAINING TO THIS GROUND OF APPEAL ARE THAT ASSESSEE AND SMT. SHASHI AGRAWAL, HER MOTHER-IN- LAW ARE CO-OWNE RS OF HOUSE NO.C-137, DAYANAND MARG, TILAK NAGAR, JAIPUR. THE SAID HOUSE PROPERTY, PURCHASED IN MAY 2008, WAS NOT HAVING ENOUGH SPACE THUS RENOVATI ON AND FURTHER CONSTRUCTION WAS STARTED IN JUNE 2008, FOR WHICH A TOTAL SUM OF RS.54,40,605/- WAS SPENT DURING THE PREVIOUS YEAR, OUT OF WHICH 50% SHARE I.E. 27,30,303/- BEING RELATED TO AND WERE BORNE BY ASSESSEE AND DULY DISCLOSED AS INVESTMENT IN CONSTRUCTION OF HOUSE PR OPERTY IN FINAL BALANCE SHEET. SINCE, THE BALANCE SHEET FOUND DURING SURVEY REFLECTED INVESTMENT ON ACCOUNT OF CONSTRUCTION AT RS.38,76,974/-, ADDITION WAS MADE FOR DIFFERENTIAL ITA NO. 73/JP/14 ITO VS. SMT. ANCHAL AGARWAL,JAIPUR 9 AMOUNT BY ALLEGING THAT ACCOUNTS FOUND DURING SURVE Y CAN BE INCOMPLETE BUT NOT INCORRECT. THE LD. CIT(A) HAD DELETED THE ADDIT ION, HENCE THE PRESENT APPEAL BEFORE US. 10. THE LD AR SUBMITTED THAT THE ASSESSEE WAS MAINT AINING COMPLETE DETAILS ALONGWITH SUPPORTING DOCUMENTARY EVIDENCES IN RESPE CT OF THE CONSTRUCTION EXPENSES INCURRED BY HER. THE FIGURES APPEARING IN THE BALANCE SHEET ARE TAKEN FROM VARIOUS LEDGER ACCOUNTS. AS PER THESE DE TAILS, THE ASSESSEE INCURRED SUM OF RS.54,40,605/- TOWARDS THE CONSTRUC TION / RENOVATION OF THE HOUSE DURING THE FINANCIAL YEAR 2008-09 AND THEREAF TER RS.27,20,302.50 BEING 50% OF THE TOTAL SUM SO INCURRED HAS BEEN DEBITED T O MRS. SHASHI AGRAWAL, MOTHER-IN-LAW AND CO-OWNER OF THE PROPERTY TO THE E XTENT OF 50%. THE LEDGER ACCOUNT OF MRS. SHASHI AGRAWAL IS AT APB 150. 11. IT WAS FURTHER SUBMITTED THAT FOR ESTIMATION OF CONSTRUCTION EXPENSES, LD. AO REFERRED THE MATTER TO THE VALUATION CELL. THE VALUATION OFFICER ALSO GAVE REPORT WITHOUT ANY DEVIATION FROM THE AMOUNT O F EXPENDITURE SHOWN AS PER THE FINAL BALANCE SHEET. ACCORDINGLY, THE FIGUR ES OF CONSTRUCTION EXPENSES SHOWN IN THE FINAL BALANCE SHEET ARE DULY BACKED BY BILLS, VOUCHERS, PAYMENT DETAILS ETC. AND FURTHER SUPPORTED BY REPORT OF VAL UATION OFFICER, WHICH IS COMPLETELY INDEPENDENT HAVING NO SCOPE OF MANIPULAT ION SHOULD BE ACCEPTED. FURTHER, NOTHING WAS BROUGHT ON RECORD TO SHOW THAT THE AMOUNT OF INVESTMENT SHOWN IN THE FINAL BALANCE SHEET IS NOT CORRECT. IN SUCH CIRCUMSTANCES, THE ADDITION MADE ON THE BASIS OF IN COMPLETE AND INCORRECT REPORT GENERATED BY THE ACCOUNTING SOFTWARE BEFORE FINALIZATION OF THE ACCOUNTS IS NOT JUSTIFIED. IN THIS REGARD, DETAILED SUBMISSIONS WERE MADE BEFO RE AO DATED 28.11.2011 & 16.12.2011 RESPECTIVELY, STATING THAT THE BALANCE SHEET FOUND WAS INCORRECT AND INCOMPLETE, ACCORDINGLY NO ADDITION SHOULD BE M ADE ON THIS BASIS. FOR THE REASON OF CORRECTIONS OF VARIOUS ENTRIES AS WELL AS PUNCHING OF NEW ENTRIES ITA NO. 73/JP/14 ITO VS. SMT. ANCHAL AGARWAL,JAIPUR 10 AFTER THE STAGE OF TAKING OUT THE SAID PRINT OUT, T HERE IS NO TRAIL OR RECONCILIATION BETWEEN THE BALANCE OF INVESTMENT IN RENOVATION ACCOUNT AS PER THE SAID BALANCE SHEET AND AS PER THE FINAL BALANCE SHEET. HOWEVER, PERUSAL OF DETAILED LEDGER ACCOUNTS, OVERALL BALANCES OF WH ICH ARE APPEARING IN THE FINAL BALANCE SHEET SHOWS THAT AFTER MAKING ALL ENT RIES OF CONSTRUCTION EXPENSES TO THE EXTENT OF RS.54,40,605/-, ITS 50% B EING RS.27,20,302.50 HAS BEEN CHARGED TO MRS. SHASHI AGRAWAL, CO-OWNER OF TH E HOUSE. THUS, THE OVERALL INVESTMENT OF RS.54,40,905/- MADE AS PER BO OKS OF ACCOUNT IS MORE THAN AMOUNT OF RS.38,76,974/- FOUND RECORDED IN THE BALANCE SHEET REPORT FOUND DURING THE COURSE OF SURVEY. THE OBSERVATION OF THE ASSESSING OFFICER THAT THE S UM OF RS. 38,76,973.50 IS AFTER DEDUCTING THE SHARE OF THE CO-OWNER IS WITHOU T ANY BASIS. IN ABSENCE OF COMPLETE TRAIL OF ENTRIES CORRECTED/FURTHER ENTRIES PASSED, IT IS IMPOSSIBLE TO STATE WHETHER ANY AMOUNT STOOD ALREADY CHARGED AND IF CHARGED, HOW MUCH AMOUNT STOOD CHARGED IN THE ACCOUNTS ON THE DATE TH E SAID PRINTOUT WAS TAKEN. 12. WITHOUT PREJUDICE TO OUR SUBMISSIONS THAT NO CO GNIZANCE CAN BE GIVEN TO THE SAID BALANCE SHEET, AN ESTIMATE OF THE AMOUN T THAT WOULD HAVE ALREADY CHARGED TO MRS. SHASHI AGRAWAL (TILL TAKING THE SAI D PRINT OUT OF THE BALANCE SHEET REPORT) CAN BE MADE AS UNDER: AMOUNT OUTSTANDING AS LOANS & ADVANCE (ASSETS) RS. 2,27,53,680.50 LESS: AMOUNT CHARGED TO SHASHI AGRAWAL IN RESPECT OF PURCHASE OF PROPERTY RS.2,10,63,8 10.00 BALANCE AMOUNT CHARGED IN RESPECT OF RENOVATION EXP . RS. 16,89,870.50 AS EXPLAINED BY THE ASSESSEE DURING THE COURSE OF A SSESSMENT PROCEEDINGS, THE SAID LOANS & ADVANCES (ASSETS) SHOWN IN THE BAL ANCE SHEET OF THE ITA NO. 73/JP/14 ITO VS. SMT. ANCHAL AGARWAL,JAIPUR 11 ASSESSEE REPRESENT THE AMOUNT DEBITED TO SHASHI AGR AWAL IN RESPECT OF THE 50% PORTION OF THE PROPERTY. AS PER THE ABOVE WORKING, ONLY RS.16.89 LACS WAS CH ARGED TO SHASHI AGRAWAL AS AGAINST THE TOTAL AMOUNT OF RS.27.20 LACS CHARGE ABLE WHICH IS A REASON OF DIFFERENCE IN THE AMOUNT OF INVESTMENT AS PER THE T WO BALANCE SHEETS. FURTHER, THE BALANCE SHEET FOUND DURING SURVEY WAS PRINT OUT FROM THE INCOMPLETE RECORDS WHICH WERE SUBJECT TO MANY CORRE CTION/NEW ENTRIES TO BE PASSED. THE ASSESSEE NEVER DISOWNED THE SAME BUT AL WAYS CONTENDED THAT NO CONCLUSION SHOULD BE DRAWN ON THE BASIS OF IT AS IT DOES NOT GIVE TRUE AND FAIR PICTURE OF THE STATES OF AFFAIRS OF THE ASSESSEE. THE FINAL BALANCE SHEET ONLY GIVES THE TRUE AND CORRECT PICTURE AS THE SAME IS S UPPORTED WITH THE NECESSARY DOCUMENTARY EVIDENCES. THEREFORE, THE AOS OBSERVA TION REGARDING OWNERSHIP OF THE DOCUMENT HAS GOT NO RELEVANCE. IN VIEW OF THE ABOVE IT WAS SUBMITTED THAT THE ADDI TION MADE BY THE ASSESSING OFFICER OF RS.11,56,671/- ON ACCOUNT OF I NVESTMENT IN RENOVATION FROM UNDISCLOSED SOURCES BEING THE DIFFERENTIAL AMO UNT OF ONE SHOWN UNDER THE HEAD RENOVATION OF C-137 AS PER BALANCE SHEET REPORT OF ACCOUNTING SOFTWARE FOUND DURING THE COURSE OF SURVEY PROCEEDI NGS AT M/S GRAVITA INDIA LTD. AND AMOUNT SHOWN AS RENOVATION OF C-137 IN THE FINAL BALANCE SHEET SUBMITTED BY THE ASSESSEE HAS RIGHTY BEEN DELETED B Y LD. CIT(A). 13. THE RELEVANT FINDINGS OF THE LD. CIT(A) WHICH I S REPRODUCED IS AS UNDER:- 6. I HAVE CONSIDERED FACTS OF THE CASE. IT IS NOTI CED THAT THE AO HAS MADE THIS ADDITION ALSO ON THE BASIS OF COPY OF THE BALANCE SHEET FOUND IN THE COURSE OF SURVEY PROCEEDINGS. AS MENTIONED I N THE PRECEDING PARAS, THE DOCUMENTS FOUND IN THE COURSE OF SURVEY ARE PRESUMED TO BE TRUE. IT IS, HOWEVER, A REBUTTABLE PRESUMPTION. AS MENTIONED ABOVE, FROM THE DETAILS FURNISHED BY THE APPELLANT VARIOUS DISCREPANCIES HAVE BEEN NOTICED EG., ENTRIES WITH REFERENCE TO LOAN ET C. WERE NOT REFLECTED IN THIS BALANCE SHEET FOUND DURING THE COURSE OF SU RVEY. THESE ITA NO. 73/JP/14 ITO VS. SMT. ANCHAL AGARWAL,JAIPUR 12 DISCREPANCIES WERE ALSO REPORTED BY THE APPELLANT T O THE AO VIDE LETTER DATED 28.02.2011. THE AO HAS, HOWEVER, FAILED TO RE BUT THESE EXPLANATIONS GIVEN BY THE APPELLANT. IN VIEW OF VAR IOUS DISCREPANCIES, THE BALANCE SHEET FOUND IN THE COURSE OF SURVEY PRO CEEDINGS CANNOT BE CONSIDERED AS REFLECTING TRUE AND CORRECT PICTURE O F THE APPELLANTS AFFAIRS. IT IS ALSO NOTICED THAT THE VALUATION OF T HIS PROPERTY WAS REFERRED TO THE VALUATION CELL WHICH DID NOT FIND ANY DIFFER ENCE WITH THE AMOUNT OF EXPENSES DECLARED BY THE APPELLANT. THERE IS NOT HING ON RECORD TO SHOW THAT THE EXPENDITURE DECLARED BY THE APPELLANT WAS INCORRECT OR SUPPRESSED BY HER. HENCE, THE ADDITION MADE BY THE AO APPEARS TO BE UNJUSTIFIED AND IS, ACCORDINGLY, DELETED. 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE SUBJECT PROPERTY IS JOINTLY OWNED B Y THE ASSESSEE ALONG WITH HER MOTHER-IN LAW AND TOTAL EXPENSES OF RS 54,40,60 5 HAVE BEEN INCURRED AND 50% THEREOF HAVE BEEN DEBITED TO HER MOTHER-IN LAW ACCOUNT. THE EXPENSES ARE SUPPORTED BY BILLS AND VOUCHERS AND RELATED PAY MENT DETAILS. THE MATTER RELATING TO ESTIMATION OF CONSTRUCTION EXPENSES WAS ALSO REFERRED TO THE VALUATION OFFICER AND THERE IS NO DEVIATION THAT HA S BEEN BROUGHT ON RECORD IN TERMS OF EXPENSES INCURRED AND ESTIMATED BY THE VAL UATION OFFICER. IN THE RESULT, THERE IS NO BASIS FOR MAKING ADDITION OF RS 11,56,671 AND THE GROUND OF REVENUE IS DISMISSED. 15. IN GROUND NO. 3, THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF RS.4,00,000/-MADE BY AO ON ACCOUNT OF UNDISCLOSED I NVESTMENT IN CONSTRUCTION OF HOUSE PROPERTY. 16. BRIEF FACTS OF THIS CASE ARE THAT DURING THE CO URSE OF SURVEY, CERTAIN DOCUMENTS WERE FOUND SHOWING VARIOUS PAYMENTS AGGRE GATING TO RS.4,00,000/- DURING THE YEAR UNDER CONSIDERATION O N ACCOUNT OF LABOUR, MATERIAL, GRID, SAND ETC. LD. AO CONCLUDED THAT SIN CE THE PAYMENTS WERE NOT REFLECTING IN CASH BOOK, ADDITION WAS MADE. ITA NO. 73/JP/14 ITO VS. SMT. ANCHAL AGARWAL,JAIPUR 13 17. THE LD AR INVITED OUR ATTENTION TO PAGES 1-6 OF ANNEXURE A-6 FOUND DURING THE COURSE OF SURVEY AT M/S GRAVITA INDIA LT D. ON PERUSAL OF WHICH, IT IS EVIDENT THAT THESE PAPERS DEPICT CERTAIN EXPENDITUR ES INCURRED BY THE CONTRACTOR ON VARIOUS DATES. THE ASSESSEE HAS MADE A TOTAL PAYMENT OF RS.3,76,500/- DURING THE YEAR TO THE CONTRACTOR AS PER THE SUMMARY EXPENSES SHEET. THE PAPERS SO FOUND ARE THE DETAILS MAINTAIN ED BY THE CONTRACTOR AND THE SAME DO NOT REPRESENT THE PAYMENTS MADE BY THE ASSESSEE TO THE CONTRACTOR. FURTHER THE PAPERS ARE NOT WRITTEN IN T HE SYSTEMATIC MANNER SO AS TO ARRIVE AT ANY CONCLUSION. IT WAS FURTHER SUBMITTED THAT THE ENTIRE CONSTRUCTI ON EXPENSES ARE SUBJECT TO VALUATION BY THE VALUATION OFFICER. THE VALUATION O FFICER HAS AGREED WITH THE OVERALL EXPENDITURE INCURRED BY THE ASSESSEE AND TH EREFORE, THE QUESTION OF UNDERSTATEMENT OF EXPENDITURE DOES NOT ARISE. IT IS THUS PRAYED THE ORDER OF LD. CIT(A) MAY PLEASE BE UPHELD ON THIS SCORE. 18. THE RELEVANT FINDING OF THE LD. CIT(A) IS REPRO DUCED AS UNDER:- 8. I HAVE CONSIDERED FACTS OF THE CASE. IT IS NOTE D THAT AN ESTIMATED ADDITION OF RS. 4,00,000/- HAS BEEN MADE BY THE AO ON THE GROUND THAT THE PAYMENTS MADE TO BELDAR, LABOUR ETC. HAVE NOT B EEN SHOWN BY THE APPELLANT. IT IS, HOWEVER, NOTED THAT THE MATTER WA S REFERRED TO THE VALUATION CELL OF THE DEPARTMENT. THE VALUATION CEL L HAS NOT FOUND ANY MAJOR DISCREPANCY IN THE EXPENSES DECLARED BY THE A PPELLANT FOR CONSTRUCTION OF THE HOUSE. HENCE, THE ADDITION MADE ONLY ON THE BASIS OF SOME NOTHINGS ON THE PAPER CANNOT BE JUSTIFIED. 19. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND DONT FIND ANY INFIRMITY IN THE ORDER OF THE LD CIT(A). THE GROUND OF THE REVENUE IS THUS DISMISSED. 20. IN GROUND NO. 4, THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF RS.20,00,000/- MADE BY AO BY TREATING THE RENTAL IN COME AS INCOME FROM UNDISCLOSED SOURCES. ITA NO. 73/JP/14 ITO VS. SMT. ANCHAL AGARWAL,JAIPUR 14 21. BRIEF FACTS PERTAINING TO THIS GROUND ARE THAT THE ASSESSEE HAD LET OUT THE HOUSE NO. C-137, DAYANAND MARG, (IN WHICH ASSES SEE HOLD 50% OWNERSHIP) ALONGWITH OPEN LAND TO M/S GRAVITA INDIA LTD. FROM JUNE, 2008 FOR A MONTHLY RENT OF RS.4,00,000/-. ACCORDINGLY, A SUM OF RS.20,00,000/- WAS ALLOCABLE TO ASSESSEE FOR THE YEAR UNDER CONSIDERAT ION. OUT OF THIS RENTAL INCOME, AFTER CLAIMING DEDUCTION U/S 24(A) @ 30%, I .E. RS.6,00,000/- AND U/S 24(B) AMOUNTING TO RS.18,05,296/-, LOSS OF RS.4,05, 296/-WAS DECLARED. HOWEVER, LD. AO DID NOT ALLOW THE LOSS OF RS.4,05,2 96/- RATHER MADE ADDITION OF RS.20,00,000/- BY ALLEGING THAT THE SAID HOUSE P ROPERTY WAS 30 YEARS OLD AND SINCE ASSESSEE HAS GOT CONSTRUCTED BASEMENT ALS O, THE HOUSE COULD NOT BE RENTED. FURTHER, THE AO ALLEGED THAT THE HOUSE W AS LET OUT TO GRAVITA INDIA LTD., A CONCERN IN WHICH HUSBAND OF ASSESSEE IS DIR ECTOR. 22. THE LD AR SUBMITTED THAT THE ASSESSEE RECEIVED RENT FROM GRAVITA INDIA LTD., AND THEREFORE PURSUANT TO ASSESSMENT OF RENTA L INCOME AS INCOME FROM OTHER SOURCES, CASE OF GRAVITA INDIA LTD. WAS REOPE NED TO DISALLOW THE RENT EXPENSE. IN ASSESSMENT PROCEEDINGS OF GRAVITA INDIA , IT WAS SUBMITTED THAT THE PREMISES WAS USED FOR TRAINING TO EMPLOYEES OF OVERSEAS COMPANIES BEING SUBSIDIARIES OF GRAVITA INDIA AND THUS PAYMENTS MAD E TO ASSESSEE WERE RECOVERED BACK FROM THOSE OVERSEAS COMPANIES. IT WA S FURTHER STATED THAT THE RENT OF RS.20,00,000/- WAS CLAIMED AS EXPENSE IN PR OFIT & LOSS A/C RATHER WAS SHOWN UNDER HEAD LOANS & ADVANCES AS AMOUNT RECOV ERABLE FROM SUBSIDIARIES AND JOINT VENTURES IN THE AUDITED BAL ANCE SHEET AS ON 31.03.2009. FURTHER, ON THE BASIS OF OBSERVATIONS O F LD. CIT(A) IN APPELLATE ORDER THAT SINCE VALUATION REPORT WAS OBTAINED AFT ER THE CONSTRUCTION WORK WAS COMPLETED, IT CANNOT POSSIBLY DETERMINE THE STA GES OF CONSTRUCTION. HENCE, THE OBSERVATION OF THE AO THAT THE BUILDING WAS NOT IN A CONDITION TO BE USED IN ANY MANNER DOES NOT APPEAR TO BE FACTUAL LY CORRECT, NO ADDITION WAS MADE BY AO IN CASE OF GRAVITA INDIA LTD. ITA NO. 73/JP/14 ITO VS. SMT. ANCHAL AGARWAL,JAIPUR 15 IN THIS SCENARIO, SINCE NO EXPENSE WHATSOEVER WAS C LAIMED BY GRAVITA INDIA LTD. IN RESPECT TO PAYMENT MADE TO ASSESSEE OF RS.2 0,00,000/-, HENCE THE FACT THAT HUSBAND OF ASSESSEE IS DIRECTOR IN GRAVIT A INDIA LTD. MAKES NO DIFFERENCE AS NO BENEFIT HAS BEEN PASSED ON TO THAT COMPANY. 23. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE AND MRS. SHASHI AGRAWAL HAD JOINTLY PURCHASED THE HOUSE C-137, DAYANAND MARG, TILAK NAGAR, JAIPUR IN MAY 2008 VIDE REGISTERED SALE DEED DATED. IT IS TO BE NOTED HERE THAT WHEN THE ASSESSEE PURCHASED THE SITE, SOME PART OF IT WA S ALREADY CONSTRUCTED OVER IT INCLUDING BASEMENT, WHICH IS EVIDENT FROM SALE D EED, WHICH DESCRIBES THAT THERE WAS A HOUSE ON SITE AND COVERED AREA WAS 2135 .75 SQ. FT. FROM JUNE 2008 ONWARDS THE SAID HOUSE WAS GIVEN ON RENT TO M/S GRAVITA INDIA LTD. FOR A MONTHLY RENTAL OF RS.4,00,000/-, W HICH IS EVIDENCED BY COPY OF LEASE AGREEMENT AND CONFIRMATION FROM THE LESSEE AB OUT THE USE OF SUCH BUILDING AND OPEN LAND FOR THEIR BUSINESS PURPOSE. THUS M/S GRAVITA INDIA LTD. USED THE SUPERSTRUCTURE AS WELL AS THE OPEN LAND AV AILABLE ON THE PLOT FOR THE PURPOSE OF THEIR STORAGE, ASSEMBLING AND PACKING OF PLANT AS WELL AS TRAINING OF SUCH PROCESSES TO THE EMPLOYEES RECRUITED FOR OV ERSEAS CENTRES WHERE THE COMPANY IS GOING TO SET UP THE SAID PLANTS. THE PL ACES BEING VERY CLOSE (ABOUT 400 TO 500 METERS) TO THE CORPORATE OFFICE O F THE COMPANY, IT WAS VERY CONVENIENT FOR IT TO TAKE UP THESE ACTIVITIES. THOU GH THE RENOVATION WORK WAS BEING CARRIED ON, SIMULTANEOUSLY A PORTION OF BUILD ING WAS LET OUT. IN OTHER WORDS, THOUGH ALTERATIONS HAVE BEEN MADE BUT THE AS SESSEE HAS USED THE OLD CONSTRUCTION. BY MUTUAL UNDERSTANDING, THE RENOVATI ON WORK WAS MANAGED IN A MANNER SO THAT THERE IS NO INTERRUPTION IN THE CO MPANYS WORK AND VICE VERSA. THE ASSESSING OFFICER HAS CONCLUDED THAT THE ENTIRE OLD HOUSE MUST HAVE BEEN DEMOLISHED FOR CARRYING OUT THE CONSTRUCTION AT SIT E ON THE BASIS OF VALUATION REPORT FURNISHED BY VALUATION OFFICER DATED 31.10.2 011, RELEVANT EXTRACTS OF ITA NO. 73/JP/14 ITO VS. SMT. ANCHAL AGARWAL,JAIPUR 16 WHICH ARE REPRODUCED AT PAGE 3 OF ASSESSMENT ORDER. AS PER THE REPORT, THE ASSESSEE HAS GOT CONSTRUCTED BASEMENT AND THREE FLO ORS AND BARSATI , GUARD ROOM AS WELL. HOWEVER, IT IS NOWHERE MENTIONED THAT CONSTRUCTION WAS CARRIED OUT AFTER DEMOLISHING OLD CONSTRUCTION. ALSO, THE L D. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS DEPUTED THE WARD INSPECTOR W HO IN HIS REPORT DATED 09.12.2011 HAS STATED THAT THERE WAS OLD CONSTRUCTION OF APPROXIMATELY 2000 SQ. FT. IN THE PLOT AND ASSESSEE HAS FURTHER GOT IT RENOVATED AND CONSTRUCTION WAS CARRIED OUT ON OPEN LAND. FURTHER, IT WAS MENTI ONED THAT NO INFORMATION COULD BE GATHERED AS TO WHETHER THE PROPERTY WAS LE T OUT. A DETAILED SUBMISSION ALONG WITH THE ADDITIONAL EVI DENCES IN THE SHAPE OF CERTIFICATE OF THE ARCHITECTS WERE ALSO SUBMITTED B EFORE THE LD. CIT(A) WHICH IS REPRODUCED AT PAGES 18 TO 22 OF THE APPELLATE ORDER . LD. CIT(A) AFTER OBTAINING THE REMAND REPORT FROM THE AO HAS ADMITTE D THE ADDITIONAL EVIDENCES AND AFTER PROPERLY APPRECIATING THE FACT S THAT VALUATION OFFICER HAS ALSO NOT MADE ANY ADVERSE OBSERVATIONS ABOUT NON US ER OF THE PROPERTY DURING THE PERIOD OF CONSTRUCTION DELETED THE ADDIT IONS SO MADE. IN THIS SCENARIO, IT IS AMPLY CLEAR THAT THE ALLEGA TIONS OF LD. AO ARE PURELY ON THE BASIS OF HIS ASSUMPTION THAT THERE WAS NO BASEM ENT AT THE TIME THE HOUSE WAS PURCHASED. THIS PRESUMPTION OF THE ASSESSING OF FICER IS WITHOUT ANY BASIS OR MATERIAL ON RECORD AND NEITHER ANY SPECIFIC QUES TION WAS ASKED FROM THE ASSESSEE IN THIS RESPECT. WITH REGARD TO THE INSPEC TOR REPORT IT IS SUBMITTED THAT HE HAD MADE VISIT IN DECEMBER 2011 WHEN THE WO RK HAS BEEN COMPLETED AND PRIMA FACIE WITHOUT HAVING ANY TECHNICAL KNOWLE DGE NOBODY COULD JUDGE WHAT WAS AND HOW OLD THE EARLIER CONSTRUCTION WAS E XISTED. IT WAS FURTHER SUBMITTED THAT M/S GRAVITA INDIA LIM ITED IS A PUBLIC LIMITED COMPANY AND THE RENT WAS DECIDED ON THE BASIS OF US E OF THE PROPERTY BY THE COMPANY WHEREIN THERE ARE OTHER SHAREHOLDERS ALSO W HO ARE NOT RELATED TO ASSESSEE IN ANY MANNER. IT IS ALSO PERTINENT TO MEN TION HERE THAT THE ASSESSEE ITA NO. 73/JP/14 ITO VS. SMT. ANCHAL AGARWAL,JAIPUR 17 HAS RECEIVED RENT FROM M/S GRAVITA INDIA LIMITED WH ICH HAS BEEN PAID INCOME IN ACCORDANCE WITH LEASE AGREEMENT. IN SUCH CIRCUM STANCES, THE ASSESSING OFFICER HAS NO JURISDICTION TO CONSIDER THE RENT SO RECEIVED AS INCOME FROM OTHER SOURCES UNDER ANY OF THE PROVISIONS OF LAW. IN VIEW OF ABOVE, THE ASSESSING OFFICER WAS NOT JUS TIFIED IN TREATING THE AMOUNT OF RS.20,00,000/- RECEIVED FROM GRAVITA INDI A LTD. AS INCOME FROM OTHER SOURCES AND ACCORDINGLY DENYING THE INTEREST CLAIMED OF RS.18,05,296/-. IT IS THUS PRAYED THAT THE ORDER OF CIT(A) MAY PLEA SE BE UPHELD. 24. THE RELEVANT FINDING OF THE LD. CIT(A) IS REPR ODUCED AS UNDER:- 12. I HAVE CONSIDERED SUBMISSIONS OF THE APPELLANT , REPORTS OF THE ARCHITECT AS WELL AS VALUATION OFFICER AND HAVE ALS O GONE THROUGH THE ASSESSMENT ORDER. SINCE, THE APPELLANT WAS NOT GIVE N AN OPPORTUNITY BY THE AO TO REBUT THE VALUATION OFFICERS REPORT, IT IS CLEAR THAT THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PR ODUCING THE ARCHITECTS REPORT. THE ADDITIONAL EVIDENCE IN THE FORM OF THE ARCHITECT REPORT IS, THEREFORE, ADMITTED. IT IS SEEN THAT THE CLAIM OF THE APPELLANT WAS THAT THE BUILDING WAS CONSTRUCTED IN STAGES AND WHILE ONE PORTION WAS BEING CONSTRUCTED THE OTHER WAS BEING USED FOR PURPOSES OF BUSINESS SUCH AS GODOWN AND TRAINING PURPOSES. THE AO DID NOT ACCEPT THIS CONTENTION OF THE APPELLANT ON THE GROUND THAT THE BUILDING COULD NOT HAVE BEEN READY TO BE GIVEN ON RENT AND, THEREF ORE, CONCLUDED THAT THE RENTAL RECEIPT SHOWN BY THE APPELLANT WAS MEREL Y A TAX AVOIDANCE MECHANISM. HE, ACCORDINGLY, TREATED THE RENTAL INCO ME AS INCOME FROM OTHER SOURCES. 12.1 A PERUSAL OF THE REPORT OF THE VALUATION OFFIC ER SHOWS THAT IT WAS MEANT FOR DETERMINATION OF COST OF CONSTRUCTION AND IT DID NOT DWELL UPON THE ISSUE OF STAGES OF CONSTRUCTION. MOREOVER, SINCE THE REPORT HAS BEEN OBTAINED AFTER THE CONSTRUCTION WORK WAS COMPL ETED, IT CANNOT POSSIBLY DETERMINE THE STAGES OF CONSTRUCTION. HENC E, THE OBSERVATION OF THE AO THAT THE BUILDING WAS NOT IN A CONDITION TO BE USED IN ANY MANNER DOES NOT APPEAR TO BE FACTUALLY CORRECT. THE APPELLANTS CLAIM IS THAT THE PREMISES WERE USED ONLY FOR STORE KEEPING ETC. AND TRAINING PURPOSES. HENCE, THE TIME TAKEN AND EXPENDITURE INC URRED FOR ITA NO. 73/JP/14 ITO VS. SMT. ANCHAL AGARWAL,JAIPUR 18 FURNISHING ETC. IS NOT RELEVANT IN THIS CASE. MOREO VER, THE FACT THAT THE BUILDING WAS GIVEN TO A COMPANY WHOSE DIRECTOR WAS THE APPELLANTS HUSBAND DOES NOT MILITATE AGAINST THE FACT THAT THE BUILDING WAS GIVEN ON RENT. THE WHOLE ADDITION, THEREFORE, APPEARS HAV E BEEN MADE ONLY ON THE BASIS OF CONJECTURES AND SURMISES AND, HENCE , CANNOT BE SUSTAINED. THE ADDITION IS, ACCORDINGLY, DELETED. 25. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE LIMITED ISSUE UNDER DISPUTE RELATES TO WHETHER THE PROPERTY AT C-137, DAYANAND MARG, TILAK NAGAR, JAIPUR WAS ACTUA LLY LET OUT DURING THE YEAR OR NOT TO M/S GRAVITA INDIA LTD. CONSEQUENTLY , THE AMOUNT OF RS 20 LACS SO RECEIVED BY THE ASSESSEE IS INCOME UNDER THE HOU SE PROPERTY OR INCOME FROM UNDISCLOSED SOURCES. THE CASE OF THE REVENUE IS THAT THE CONSTRUCTION OF THE BUILDING ON THE SAID PLOT OF LAND WAS 30 YEARS OLD AND THERE WAS NO BASIS TO CARRY OUT FRESH CONSTRUCTION ON THE SAID PIECE O F LAND WITHOUT DEMOLISHING THE EXISTING STRUCTURE. THE CASE OF THE ASSESSEE I S THAT THE CONSTRUCTION WAS CARRIED OUT IN PHASES AND THE EXISTING STRUCTURE WA S KEPT INTACT IN THE FIRST PHASE OF CONSTRUCTION TO BE USED BY THE TENANT M/S GRAVITA INDIA LTD AND AFTER MARCH 2009, THE EXISTING STRUCTURE WAS DEMOLISHED T O CONSTRUCT THE REMAINING PART OF THE PROPOSED STRUCTURE. IN SUPPORT, THE AS SESSEE HAS SUBMITTED THE ARCHITECT REPORT ALONG WITH SITE PLAN AND THE METHO DOLOGY FOR CARRYING OUT THE CONSTRUCTION WORK DURING THE APPELLATE PROCEEDINGS WHICH WAS CONFRONTED TO THE AO BY THE LD CIT(A). THE DETAIL CONTENTS OF TH E ARCHITECT REPORT WAS REPRODUCED IN THE CIT(A) ORDER AND NOT BEEN REPRODU CED FOR SAKE OF BREVITY. THE ARCHITECT REPORT SUPPORTS THE POSITION OF THE A SSESSEE AND REMAINS UN- REBUTTED BEFORE US. THE VALUATION REPORT DIDNT DWE LL UPON THE STAGES OF CONSTRUCTION AS POINTED OUT BY THE LD CIT(A). NO O THER INDEPENDENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO SUPPORT THE POSITION OF THE REVENUE. THE AO APPREHENSION MIGHT BE CORRECT BUT THE SAME HAS TO B E SUPPORTED BY CREDIABLE EVIDENCE WHICH IS CLEARLY ABSENT IN THE PRESENT CAS E. MORESO, THE LEASE AGREEMENT AND CONFIRMATION FROM M/S GRAVITA INDIA L TD IS ON RECORD TO SUPPORT ITA NO. 73/JP/14 ITO VS. SMT. ANCHAL AGARWAL,JAIPUR 19 THE LEASE TRANSACTION AND THERE IS NO ADVERSE FINDI NG GIVEN BY THE AO IN CASE OF M/S GRAVITA INDIA LTD. IN LIGHT OF THE SAME, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD CIT(A) AND THE SAME IS HEREBY C ONFIRMED. HENCE, THE GROUND OF THE REVENUE IS DISMISSED. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 03/08/2017. SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 03/08/2017 VKNS'K DH IZFRFYFI VXZSF'KR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- ITO,WARD-1(3), JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- SMT. ANCHAL AGARWAL, C-137, DAYANAN D MARG, TILAK NAGAR, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, 6. XKMZ QKBZY@ GUARD FILE (ITA NO.73/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.