ACIT, Central Circle-4, Hyderabad V. Sri Krishna Kumar, Hyderabad

ITA 967/HYD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69960 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 20-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: B SAI PRASAD
• Keywords: Unexplained investment; Capital asset; Gift; Business income; Search and seizure; Opportunity of being heard; Cost of acquisition; Valuation report
• Section: 54F; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS. 966 TO 968/HYD/2012 ASSTT. YEARS: 2003-04, 2004-05 & 2009-10. ACIT, CC-4, -VS- SRI KRISHNA KUMAR, HYDERABAD. HYDER ABAD. PAN: ACFPK6100J (APPELLANT) (RESPONDENT) ITA NOS. 969 AND 970/HYD/2012 ASSTT. YEARS: 2007-08 & 2009-10. ACIT, CC-4, -VS- SRI SUNIL KUMAR, HYDERABAD. HYDER ABAD. PAN: AMXPS5187M ITA NO. 971/HYD/2012 ASSTT. YEAR: 2009-10. ACIT, CC-4, -VS- SRI RAM PRAKASH (ALIAS HYDERABAD. MAHAVI R PRASAD), HYDERABAD. PAN: ABPPP3842H DEPARTMENT BY SHRI D. SUDHAKAR RAO (DR) ASSESSEE BY SHRI B. SAI PRASA D 2 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. DATE OF HEARING 05-11-2013 DATE OF PRONOUNCEMENT 29-11-2013 ORDER PER SAKTIJIT DEY, J.M: THESE APPEALS FILED BY THE DEPARTMENT IN CASES OF D IFFERENT ASSESSEE-RESPONDENTS ARE DIRECTED AGAINST THE ORDER S OF CIT(A) PERTAINING TO THE ASSESSMENT YEARS 2003-04,2004-05 ,2007- 08,2009-10 AND 2009-10 RESPECTIVELY. SINCE IDENTIC AL ISSUES ARE INVOLVED IN ALL THESE APPEALS, FOR THE SAKE OF CONVENIENCE, ALL THESE APPEALS ARE CLUBBED TOGETHER AND DISPOSED OFF BY THE COMBINED ORDER . ITA NO.966/HYD/2012- ASST. YEAR 2003-04 :- 2. IN THIS APPEAL, THE DEPARTMENT HAS RAISED 5 GROU NDS. GROUND NOS. 1 AND 5 BEING GENERAL GROUNDS, NO ADJUD ICATION IS REQUIRED. 3. GROUND NOS. 2 AND 3 RELATE TO A COMMON ISSUE OF ADDITION MADE BY THE ASSESSING OFFICER BY ESTIMATING THE PRO FIT AT 10% OF THE GROSS RECEIPTS WHICH WAS DELETED BY THE CIT (A). 4. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIVI DUAL. SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE PREMISES OF THE ASSESSEE ON 29-1-2009. PURSUANT TO THE SEARCH AND SEIZURE OPERATION, A NOTICE U/S 153A WAS ISSUED TO THE ASSE SSEE ON 17- 9-2009 CALLING FOR A RETURN OF INCOME. IN RESPONSE TO THE SAID 3 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. NOTICE, THE ASSESSEE ON 28-10-2009 FILED A RETURN O F INCOME FOR THE IMPUGNED ASSESSMENT YEAR DECLARING A TOTAL INCO ME OF RS.4,43,020/- DERIVED FROM BUSINESS AND OTHER SOURC ES. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER WHILE VERIFYING THE RETURN OF INCOME NOTICED THAT THE ASS ESSEE HAD SHOWN REMUNERATION OF RS.60,000/- SHARE PROFIT OF R S.60,639 AND INCOME OF RS.24,463/- FROM M/S HYDERABAD STEEL SECTION MILLS AS INCOME UNDER THE HEAD BUSINESS AND PROFES SION. IN THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE HAS SHOWN GROSS PROFIT OF RS.2,29,351/- ON A TOTAL SALES MADE OF RS.97,27, 567/-. IN ADDITION TO THE AFORESAID INCOME FROM BUSINESS, THE ASSESSEE HAD SHOWN RENTAL INCOME OF RS.37,419/- AND INTEREST INCOME OF RS.14,276/-. AFTER CLAIMING VARIOUS EXPENDITURES, T HE NET PROFIT WAS SHOWN AT RS.24,462/-. THE ASSESSING OFFICER ON NOTING THE FACT THAT THE ASSESSEE HAD NOT FURNISHED ANY BREAK- UP OF EXPENDITURE CLAIMED NOR COULD PRODUCE THE BOOKS OF ACCOUNTS OR BILLS AND VOUCHERS IN SUPPORT OF THE EXPENDITURE CL AIMED, REJECTED THE CLAIM OF EXPENDITURE AND PROCEEDED TO ESTIMATE THE PROFIT AT 10% ON THE GROSS RECEIPTS OF RS.97,27 ,567/- THEREBY DETERMINING THE PROFIT FROM THE BUSINESS AT RS.9,72,757/-. THE ASSESSEE CHALLENGED THE ESTIMAT ION MADE BY THE ASSESSING OFFICER BEFORE THE CIT (A). 5. THE CIT (A) DELETED THE ADDITION MADE ON ACCOUNT OF ESTIMATION OF PROFIT BY OBSERVING THAT THE ASSESSIN G OFFICER HAS NOT BROUGHT ANY ADVERSE INFORMATION AGAINST THE ASS ESSEE SO AS TO ENABLE HIM TO ESTIMATE THE PROFIT. HE FURTHER OBSERVED THAT 4 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. THE ASSESSING OFFICER WITHOUT REFERRING TO ANY PART ICULAR EXPENDITURE WHICH IN HIS VIEW IS INAPPROPRIATE OR E XORBITANT, SHOULD NOT HAVE STRAIGHT AWAY RESORTED TO ESTIMATIO N OF PROFIT. THE CIT (A) FURTHER RELYING UPON THE DECISION OF CI T VS. UTKAL ALLOYS LIMITED REPORTED IN 319 ITR 339 HELD THAT IN ABSENCE OF ANY DEFECT FOUND IN THE BOOKS OF ACCOUNTS MAINTAI NED IN THE REGULAR COURSE OF BUSINESS, NO ADDITION CAN BE MADE TO THE INCOME DISCLOSED BY THE ASSESSEE IN ITS RETURN OF I NCOME ON THE BASIS OF DISCREPANCY WORKED OUT ON ESTIMATION. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE REFERRIN G TO THE OBSERVATION MADE BY THE ASSESSING OFFICER IN THE AS SESSMENT ORDER SUBMITTED THAT WHEN THE ASSESSEE HAD NOT PROD UCED ITS BOOKS OF ACCOUNTS OR ANY OTHER DOCUMENT IN SUPPORT OF CLAIM OF EXPENDITURE, THE ASSESSING OFFICER WAS LEFT WITH NO OTHER OPTION BUT TO ESTIMATE THE PROFIT BY APPLYING A REASONABLE RATE. HE FURTHER SUBMITTED THAT CONSIDERING THE ASSESSEES L INE OF BUSINESS, THE ESTIMATION OF PROFIT AT 10% IS REASON ABLE. HE THEREFORE SUBMITTED THAT THE ADDITION MADE BY THE A SSESSING OFFICER SHOULD BE RESTORED. 7. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE AS SESSEE, ON THE OTHER HAND, SUBMITTED THAT IN CASE OF AN ASSESS MENT U/S 153A OF THE ACT IN PURSUANCE TO A SEARCH AND SEIZUR E OPERATION ROUTINE AND GENERAL DISALLOWANCES WITHOUT ANY INCRI MINATING MATERIAL FOUND AT THE TIME OF SEARCH CANNOT BE MADE . IN THIS CONTEXT, THE LEARNED AR RELIED UPON A DECISION OF H ONBLE ORISSA 5 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. HIGH COURT IN CASE OF UTKAL ALLOYS LIMITED (SUPRA) AND IN CASE OF ALL CARGO GLOBAL LOGISTICS LTD., VS. DCIT (137 ITD 287). 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS OF THE PART IES AND PERUSED THE MATERIAL ON RECORD AS WELL AS THE ORDER OF THE REVENUE AUTHORITIES. AS CAN BE SEEN FROM PARA 2.1 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS STATED THAT SINCE THE ASSESSEE HAS NOT PRODUCED ITS BOOKS OF ACCOUNTS , BILL VOUCHERS ETC., TO SUBSTANTIATE ITS CLAIM OF EXPENDI TURE, THE ASSESSING OFFICER FINDING NO OTHER OPTION HAD TO RE SORT TO ESTIMATION OF PROFIT AND APPLY THE RATE OF 10% WHIC H ACCORDING TO HIM IS REASONABLE PERCENTAGE OF PROFIT IN THE PA RTICULAR LINE OF BUSINESS CARRIED ON BY THE ASSESSEE. AS CAN BE SEEN THE CIT (A) HAS DELETED THE ADDITION BY OBSERVING THAT WITH OUT POINTING OUT ANY DEFECT OR DISCREPANCY IN THE BOOKS OF ACCOU NTS OR ALLOWABILITY OF EXPENDITURE, THE ASSESSING OFFICER COULD NOT HAVE RESORTED TO ESTIMATION OF PROFIT. BUT, IN OUR VIEW, WHEN THE ASSESSEE HAS NOT PRODUCED ITS BOOKS OF ACCOUNTS OR BILLS AND VOUCHERS IN SUPPORT OF CLAIM OF EXPENDITURE, TH E ASSESSING OFFICER COULD NOT HAVE POINTED OUT ANY DEFECT OR DI SCREPANCY IN THE BOOKS OF ACCOUNTS OR INADMISSIBILITY OF ANY PAR TICULAR EXPENDITURE IN THE ABSENCE OF BOOKS OF ACCOUNTS, BI LLS, VOUCHERS OR EVEN BREAK-UP OF THE EXPENDITURE. IN SUCH AN EV ENT, THE ASSESSING OFFICER COULD NOT HAVE VERIFIED THE AUTHE NTICITY OF THE EXPENDITURE CLAIMED. 9. ON A SPECIFIC QUERY MADE BY THE BENCH, AS TO W HETHER THE ASSESSEE HAS PRODUCED ITS BOOKS OF ACCOUNTS AND OTHER 6 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. EVIDENCES BEFORE THE ASSESSING OFFICER, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT ALL THE BOOKS OF ACCOUNTS WERE SEIZED BY THE DEPARTMENT AND IS AVAIL ABLE WITH THE ASSESSING OFFICER. HOWEVER, THIS FACT DOES NOT EMANATE EITHER FROM THE ASSESSMENT ORDER OR THE ORDER OF CI T (A). WE ARE THEREFORE UNABLE TO ACCEPT THE CONTENTION OF TH E ASSESSEE THAT IT HAS PRODUCED ALL THE RELEVANT MATERIAL BEFO RE THE ASSESSING OFFICER. EVEN IN CASE OF ALL CARGO GLOBA L LOGISTICS LTD., VS. DCIT (SUPRA), THE INCOME-TAX APPELLATE T RIBUNAL, BOMBAY SPECIAL BENCH HAD HELD THAT IN ASSESSMENTS T HAT ARE ABATED, THE ASSESSING OFFICER RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM U/S 153A FOR WHICH THE ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSES SMENT YEARS SEPARATELY. UNDISPUTEDLY, IN THE PRESENT CA SE, REGULAR ASSESSMENT IN CASE OF THE ASSESSEE HAS NOT BEEN MAD E PRIOR TO THE SEARCH. THEREFORE, THE ASSESSING OFFICER RETAI NS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFE RRED ON HIM U/S 153A FOR ASSESSING THE INCOME. IN THESE CIRCUMSTAN CES, UNLESS THE ASSESSEE PRODUCES ITS BOOKS OF ACCOUNTS AND OTH ER EVIDENCES IN SUPPORT OF THE CLAIM MADE IN THE RETUR N OF INCOME, THE ASSESSING OFFICER WOULD BE HANDICAPPED IN COMPU TING THE INCOME, HENCE WOULD BE FORCED TO ESTIMATE THE PROFI T. THIS FACT HAS NOT BEEN PROPERLY APPRECIATED BY THE FIRST APPE LLATE AUTHORITY. THEREFORE, CONSIDERING THE FACT THAT TH E ASSESSING OFFICER HAS RESORTED TO ESTIMATION OF PROFIT IN THE ABSENCE OF BOOKS OF ACCOUNTS OR OTHER EVIDENCES AND ALSO CONSI DERING THE 7 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. CONTENTION OF THE ASSESSEE THAT IT HAS MAINTAINED B OOKS OF ACCOUNTS IN THE REGULAR COURSE OF BUSINESS AND THE BOOKS OF ACCOUNT ARE AUDITED, WE CONSIDER IT PROPER TO REMI T THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR CONSI DERING THE SAME AFRESH AFTER VERIFYING THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS WHICH MAY BE AVAILABLE ON RECORD OR WHICH MAY BE PRODUCED BY THE ASSESSEE. WE ALSO DIRECT THE ASSES SEE TO CO- OPERATE IN FINALISATION OF THE PROCEEDINGS BY PRODU CING BOOKS OF ACCOUNTS AND OTHER RELEVANT DOCUMENTS. 10. THE NEXT ISSUE AS RAISED IN GROUND NO.4 RELATES TO DELETION BY THE CIT (A) OF ADDITION OF AN AMOUNTS OF RS.37,4 19/- AND RS.14,276/- BEING THE RENTAL INCOME AND INTEREST IN COME AS INCOME FROM OTHER SOURCES. 11. . BRIEFLY THE FACTS ARE, DURING THE ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER WHILE VERIFYING THE P & L A/C NOTICED THAT THE ASSESSEE HAS SHOWN THE RENTAL RECEIPT FROM LETTING OU T OF LANDED PROPERTY AT HYDERABAD STEEL SECTION MILLS TO THE RELIA NCE INFRATEL LIMITED FOR RS.37,419/- AND INTEREST INCOME OF RS.1 4,276/- AND CLAIMED EXPENDITURE AGAINST THEM. THE ASSESSING OFF ICER FELT THAT THE RECEIPT OF RENT AND INTEREST SHOULD HAVE BEEN SHOWN U NDER THE HEAD INCOME FROM OTHER SOURCES AND ACCORDINGLY TREATED THE S AID AMOUNT AS INCOME FROM OTHER SOURCES AS AGAINST THE ASSESSE ES CLAIM OF BUSINESS INCOME. THE CIT (A) RELYING UPON A DECISI ON OF HONBLE SUPREME COURT IN CASE OF UNIVERSAL PLAST LIMITED VS. C IT (237 ITR 454) HELD THAT THE PLOT OF LAND WAS LEASED OUT BY T HE ASSESSEE FOR COMMERCIAL ACTIVITY FOR A TEMPORARY PERIOD FOR MAKING THE PROFIT FOR 8 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. THE BUSINESS, HENCE THE LEASE RENTAL RECEIVED BY THE ASSESSEE BY EXPLOITING SUCH COMMERCIAL ASSET IS TO BE TREATED AS BUSINESS INCOME. SO FAR AS THE INTEREST INCOME OF RS.14,276/- IS CONC ERNED, THE CIT (A) HELD THAT SINCE THE SAME REPRESENT THE INTEREST ACCRUE D ON DEPOSITS MADE WITH THE APSEB AND SINCE THE DEPOSIT RELATED T O THE BUSINESS, THE INTEREST EARNED WOULD ALSO BE THE BUSINESS INCOM E AND CANNOT BE TREATED AS INCOME FROM OTHER SOURCES. 12. WE HAVE CONSIDERED THE SUBMISSION OF THE PARTIES AN D PERUSED THE MATERIALS ON RECORD. IT IS THE CONTENT ION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE ASSESS EE ITSELF HAS SHOWN THE LEASE RENTAL INCOME AND INTEREST INCO ME AS INCOME FROM OTHER SOURCES FROM THE ASSESSMENT YEA R 2009- 10. THIS FACT WAS NOT CONTROVERTED BY THE ASSESSEE . WHEN THE ASSESSEE ITSELF IS TREATING THE LEASE RENTAL INCOME AND INTEREST INCOME AS INCOME FROM OTHER SOURCES IN THE SUBSEQ UENT ASSESSMENT YEAR I.E., ASSESSMENT YEAR 2009-10, THEN IT BECOMES VERY MUCH CLEAR THAT IT IS NOT TEMPORARY EX PLOITATION OF BUSINESS ASSET. RATHER IT DEMONSTRATES THAT TH E ASSESSEE HIMSELF NO LONGER TREATS THE ASSET LEASED OUT AS BUSINESS ASSET BUT IN THE NATURE OF EXPLOITATION OF PROPERTY BY AN OWNER. IN THE AFORESAID CIRCUMSTANCES, WE ARE INCLINED TO AGREE WITH THE CONTENTION OF THE LEARNED DEPARTMENTAL REPRESEN TATIVE THAT THE AMOUNT OF RS.37,419/- BEING LEASE RENTAL AND IN TEREST OF RS.14,276/- HAVE TO BE TREATED AS INCOME FROM OTH ER SOURCES AS HELD BY THE ASSESSING OFFICER. WE THEREFORE, SE T ASIDE THE ORDER OF THE CIT (A) ON THIS ISSUE AND RESTORE THE ADDITION MADE 9 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. BY THE ASSESSING OFFICER. HENCE, THE GROUND RAISED BY THE REVENUE IS ALLOWED. ITA 967/HYD/2012- ASST. YEAR 2004-05 13. IN THIS APPEAL, THE DEPARTMENT HAS RAISED 6 GRO UNDS. GROUND NOS. 1 AND 6 BEING GENERAL GROUNDS, NO ADJUD ICATION IS REQUIRED. 14. GROUND NOS. 2 AND 3 RELATE TO A COMMON ISSUE OF ADDITION MADE BY THE ASSESSING OFFICER BY ESTIMATING THE PRO FIT AT 10% OF THE GROSS RECEIPTS WHICH WAS DELETED BY THE CIT (A). THIS ISSUE BEING IDENTICAL TO THE ISSUE RAISED IN GROUND NOS. 2 AND 3 OF ITA NO.966/HYD/2012, FOLLOWING OUR DECISION IN P ARA-9 OF THE ORDER HEREINABOVE, WE RESTORE THE MATTER BACK TO TH E FILE OF THE ASSESSING OFFICER FOR DECIDING AFRESH. 15. THE NEXT ISSUE AS RAISED IN GROUND NO.4 RELATES TO CIT (A) TREATING THE LEASE RENTAL INCOME AS INCOME FROM BUSINESS. 16. THIS ISSUE IS IDENTICAL TO GROUND NO.4 OF ITA NO.966/HYD/2012. IN VIEW OF OUR DECISION IN PARA-1 2 OF THE ORDER HEREINBEFORE, WE DECIDE THIS ISSUE AGAINS T THE ASSESSEE BY UPHOLDING THE VIEW OF THE ASSESSING OFF ICER IN TREATING THE LEASE RENTAL INCOME AS INCOME FROM OTH ER SOURCES. THIS GROUND OF THE DEPARTMENT IS ALLOWED. 10 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. 17. THE ONLY OTHER SURVIVING ISSUE AS RAISED IN GRO UND NO.5 IS WITH REGARD TO THE ISSUE OF ALLOWABILITY OF EXEM PTION U/S 54F OF THE ACT TO THE ASSESSEE. 18. BRIEFLY, THE FACTS ARE DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWN INCOME FROM LONG TERM CAPITAL GAINS FROM SALE OF LANDED PROPERTY BUT AT THE SAME TIME THE CAPITAL GA INS COMPUTED ON SALE OF LAND AT RS.15,94,332/- WAS CLAI MED AS EXEMPT U/S 54F OF THE ACT ON ACCOUNT OF REINVESTMEN T IN CONSTRUCTION OF A HOUSE PROPERTY. THE ASSESSING OF FICER ON VERIFYING THE CLAIM OF THE ASSESSEE WITH REFERENCE TO HIS WEALTH TAX RETURN FILED FOR ASST. YEAR 2004-05 NOTE D THAT THE ASSESSEE HAS NOT ACQUIRED/CONSTRUCTED A NEW HOU SE BUT HAS INVESTED THE SALE PROCEEDS IN THE OLD ASSET ITS ELF FOR ITS IMPROVEMENT/DEVELOPMENT. THE ASSESSING OFFICER THEREFORE DENIED EXEMPTION U/S 54F OF THE ACT. THE ASSESSEE CHALLENGED THE DENIAL OF EXEMPTION U/S 54F BEFORE THE CIT (A). 19. IT WAS CONTENDED BEFORE THE CIT (A) BY THE ASSE SSEE THAT THE ASSESSEE HAS REINVESTED THE SALE PROCEEDS FOR CONSTRUCTING AN ADDITIONAL FLOOR ON THE EXISTING HO USE BEARING NO.13-6-433 AT PLOT NO.157 NETAJI NAGAR CO- 11 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. OPERATIVE SOCIETY, HYDERABAD. HE THEREFORE SUBMITT ED THAT SINCE THE SALE PROCEEDS WERE INVESTED WITHIN THREE YEARS BY ADDING ANOTHER FLOOR ON THE EXISTING RESIDENTIAL HO USE, THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54F OF THE A CT. THE CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE AS SESSEE VIS-A-VIS THE PROVISIONS CONTAINED U/S 54F OF THE A CT HELD THAT THE INVESTMENT MADE IN CONSTRUCTION OF AN ADDI TIONAL FLOOR CANNOT BE TERMED AS REPAIR OR RENOVATION OF T HE EXISTING ASSET AS HELD BY THE ASSESSING OFFICER. HE FURTHER HELD THAT THERE BEING NO DEFINITION TO THE EXPRESSI ON NEW ASSET THE ADDITIONAL FLOOR CONSTRUCTED WITH INDEP ENDENT FEATURES CAN BE CONSIDERED AS A NEW ASSET BY LIBERA LLY INTERPRETING THE PROVISION AS CONTAINED U/S 54F WHI CH IS A BENEFICIAL PROVISION. ACCORDINGLY, THE CIT (A) HEL D THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 54F OF THE A CT. 20. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITT ED BEFORE US THAT THE INVESTMENT OF SALE PROCEEDS HAVI NG BEEN MADE BY THE ASSESSEE FOR CONSTRUCTION OF AN ALREADY EXISTING HOUSE CANNOT MAKE HIM ELIGIBLE FOR DEDUCTI ON U/S 54F OF THE ACT. 21. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE, ON THE OTHER HAND REITERATING THE STAND T AKEN BEFORE THE CIT (A) SUBMITTED THAT IT IS NOT A REN OVATION OR MODIFICATION OF THE EXISTING HOUSE AS HELD BY THE A SSESSING 12 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. OFFICER BUT CONSTRUCTION OF AN COMPLETE ADDITIONAL FLOOR WITH INDEPENDENT FACILITIES WHICH CAN BE TERMED AS A NEW HOUSE. HE THEREFORE SUBMITTED THAT THE ASSESSEE IS ELIGIBL E FOR DEDUCTION U/S 54F HAVING INVESTED THE SALE PROCEEDS FOR CONSTRUCTION OF THE SAID ADDITIONAL FLOOR. IN SUPP ORT OF SUCH CONTENTION, THE LEARNED AR RELIED UPON THE FOLLOWIN G DECISIONS: I] CIT VS. SMT. K.G.RUKMINIAMMA (331 ITR211) 2] CIT VS. D. ANANDA BASAPPA (309 329) 3] MRS. MEERA JACOB VS. INCOME-TAX OFFICER (313 IT R 411) 4] ACIT VS. SUDHA GURTOO (15 TAXMANN.COM 231 (DELH I) 5] BALVANTRAM U.CHIMNA VS. ITO (72 TTJ (AHD) 451 6] DHARAM SHOBHA RANI VS. ITO (53 SOT 239 22. WE HAVE CONSIDERED RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD AS WELL AS THE O RDERS OF THE REVENUE AUTHORITIES. WE HAVE ALSO CAREFULLY AP PLIED OUR MIND TO THE DECISIONS RELIED UPON BY THE LEARNED AR . A PLAIN READING OF SECTION 54F OF THE ACT MAKES IT CL EAR THAT IN CASE OF CAPITAL GAINS ARISING FROM TRANSFER OF A NY LONG TERM CAPITAL ASSET NOT BEING A RESIDENTIAL HOUSE, I F THE ASSESSEE, WITHIN THE PERIOD OF ONE YEAR BEFORE OR T WO YEARS 13 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE HA D PURCHASED A RESIDENTIAL HOUSE OR WITHIN THE PERIOD OF THREE YEARS, HAS CONSTRUCTED A RESIDENTIAL HOUSE, THEN TH ERE WILL BE EXEMPTION OF CAPITAL GAINS. HOWEVER, THE PROVIS O TO THE SAID SECTION MAKES IT CLEAR THAT THE ASSESSEE W ILL NOT BE ENTITLED TO AVAIL EXEMPTION U/S 54F(1) IF HE OWNS M ORE THAN ONE RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET ON T HE DATE OF TRANSFER OF ORIGINAL ASSET OR PURCHASES ANY OTH ER RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET WITHIN P ERIOD OF ONE YEAR AFTER THE DATE OF THE TRANSFER OF ORIGINAL ASSET OR CONSTRUCTS ANY RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET WITHIN THE PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET. IN THE PRESENT CASE, UNDISPUT EDLY, THE ASSESSEE HAS INVESTED THE CAPITAL GAINS IN CONSTRUC TION OF AN ADDITIONAL FLOOR AS CLAIMED BY THE ASSESSEE OVER AN ALREADY EXISTING HOUSE PROPERTY. 23. THEREFORE, THE ISSUE BEFORE US IS WHETHER THE ADDITIONAL FLOOR STATED TO HAVE BEEN CONSTRUCTED CA N BE CONSIDERED TO BE A DISTINCT AND SEPARATE HOUSE INDE PENDENT OF EXISTING HOUSE PROPERTY. IN THIS CONTEXT, THE D ECISIONS RELIED UPON BY THE ASSESSEE, NO WAY HELP THE CASE O F THE ASSESSEE. ON THE CONTRARY, THEY ARE AGAINST THE A SSESSEE AS THE HONBLE KARNATAKA HIGH COURT IN THE DECIS IONS CITED HAVE HELD THAT MORE THAN ONE FLAT PURCHASED BY AN 14 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. ASSESSEE ON THE SAME BUILDING ON THE SAME FLOOR OR DIFFERENT FLOOR HAVE TO BE CONSIDERED AS ONE UNIT. THE SAME VIEW HAS ALSO BEEN EXPRESSED BY THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH IN CASE OF ACIT VS. SUDHA GURTOO (SUPRA) THEREFORE, APPLYING THE SAME LOGIC T HE ADDITIONAL FLOOR CONSTRUCTED BY THE ASSESSEE HAS TO BE TREATED AS A SINGLE UNIT OF THE ALREADY EXISTING HO USE. THEREFORE, IT CANNOT BE TREATED AS A NEW ASSET AS P ER THE PROVISIONS OF SECTION 54F OF THE ACT. THE HONBLE K ERALA HIGH COURT IN CASE OF MRS. MEERA JACOB VS. INCOME- TAX OFFICER THOUGH MADE SOME PASSING OBSERVATIONS, BUT THAT CANNOT BE CONSIDERED TO BE AN OBITER AS SUCH OBSER VATION WAS MADE IN A DIFFERENT CONTEXT. IN AFORESAID VIEW OF THE MATTER, THE ASSESSEE WILL NOT BE ELIGIBLE TO CLAIM EXEMPTION U/S 54F OF THE ACT. WE THEREFORE SET ASIDE THE OR DER OF THE CIT (A) AND UPHOLD THE VIEW OF THE ASSESSING OFFICE R ON THIS ISSUE. HENCE THE GROUND RAISED BY THE DEPARTMENT I S ALLOWED. 24 IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T STANDS ALLOWED. ITA 968/HYD/2012-ASST. YEAR 2009-10 25. THE DEPARTMENT IS AGGRIEVED OF THE ORDER PASSED BY THE CIT (A) DELETING THE ADDITION MADE BY THE ASSES SING 15 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. OFFICER RELYING UPON INFORMATION SUBMITTED BY THE A SSESSEE WITHOUT AFFORDING AN OPPORTUNITY TO THE ASSESSING O FFICER. 26. BRIEFLY THE FACTS ARE, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT IN C OURSE OF SEARCH AND SEIZURE OPERATIONS, THE GOLD JEWELLERY F OUND AT THE PREMISES OF THE ASSESSEE AND HIS OTHER FAMILY M EMBERS WAS VALUED AT RS.4,19,67,132 BY THE REGISTERED VALU ER, WHEREAS THE VALUE OF GOLD JEWELLERY DECLARED BY KR ISHNA KUMAR AND HIS FAMILY MEMBERS IN THEIR RESPECTIVE WE ALTH- TAX RETURNS FILED ON 31-3-2008 AGGREGATED TO RS.2,63,60,261/- WHICH RESULTED IN A DIFFERENCE OF RS.1,27,60,063/- BETWEEN THE VALUATION MADE BY THE REGISTERED VALUER AND WEALTH DECLARED BY THE ASSESS EE AND HIS FAMILY MEMBERS IN THE WEALTH RETURNS. HE FURTH ER NOTED THAT THE TOTAL VALUE OF GOLD JEWELLERY ADOPTED BY T HE DEPARTMENT FOR THE ENTIRE GROUP I.E., SRI KRISHNA K UMAR AND FAMILY MEMBERS AS WELL AS OTHER MEMBERS OF THE GROU P AT RS.11,32,77,199/-. WHEN THE ASSESSING OFFICER ASKE D THE ASSESSEE TO EXPLAIN ABOUT THE SHORTFALL, THE ASSESS EE SUBMITTED THAT THE TOTAL VALUE OF JEWELLERY DECLARE D BY THE ENTIRE GROUP AT RS.13,06,80,312/- WAS MORE THAN THE VALUE ADOPTED BY THE DEPARTMENT AT RS.11,32,77,199/-. IT WAS FURTHER SUBMITTED THAT THE VALUE ADOPTED BY THE VAL UER DEFERS FROM VALUER TO VALUER SINCE THE GOLD CONTENT IS 16 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. ESTIMATED APPROXIMATELY BY THE VALUER AND THE VALU E OF PRECIOUS STONES IS ALSO ESTIMATED BY THE VALUER. I T WAS SUBMITTED THAT THE TOTAL JEWELLERY DECLARED BY THE ASSESSEE WAS WITHOUT CONSIDERING THE VALUE OF JEWELLERY OFFE RED FOR ASSESSMENT YEAR 2008-09. HE FURTHER CONTENDED THAT THE JEWELLERY BELONGING TO MR. KRISHNA KUMAR AND HIS FA MILY MEMBERS AS FOUND, WAS INVENTORISED ONLY IN THE NAM ES OF THE ASSESSEE AND TWO OTHER FAMILY MEMBERS. THEREFO RE, IF ALL THE FACTS ARE CONSIDERED, THERE WOULD NOT BE MU CH DIFFERENCE IN THE VALUATION OF JEWELLERY. 27. IT WAS FURTHER SUBMITTED THAT THE ADDITIONS MAD E TO THE JEWELLERY ON ACCOUNT OF PRESENTS RECEIVED ON DI FFERENT OCCASIONS, GIFTS RECEIVED FROM FAMILY MEMBERS WHI CH WERE OFFERED BY THEM IN THEIR RESPECTIVE RETURNS HAVE NOT BEEN INVENTORIED AT THE HANDS OF THE RESPECTIVE OWNERS O F THE JEWELLERY. THE ASSESSING OFFICER HOWEVER WAS NOT CO NVINCED WITH THE EXPLANATION OF THE ASSESSEE. HE WAS OF TH E VIEW THAT ON THE DATE OF SEARCH THE JEWELLERY WAS PROPER LY INVENTORISED, QUANTIFIED AND VALUED BY A REGISTERED VALUER IN RESPECT OF THE ASSESSEE AT RS.4,19,67,132/- AND IN RESPECT OF THE ENTIRE GROUP AT RS. 11,32,77,199/-. HOWEVER, THE ASSESSEE COULD NOT GIVE THE QUANTITY A ND BASIS OF SUCH GOLD JEWELLERY, STONES, DIAMONDS ETC. IT WAS ALSO NOT SUBSTANTIATED WHETHER SUCH VALUATION MADE WAS ON 17 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. THE BASIS OF ANY OPINION OF THE REGISTERED VALUER A S ON 31- 3-2002. THE ASSESSING OFFICER ALSO DID NOT ACCEPT THE ASSESSEES CONTENTION THAT DIFFERENT FAMILY MEMBERS RECEIVED GIFTS ON VARIOUS OCCASIONS AND WHEN THOSE WERE OFFERED AS INCOME IN THEIR RESPECTIVE HANDS ON THE GROUND THAT SUCH GIFTS MIGHT HAVE BEEN ALREADY INCLUDED IN THE TOTAL VALUE OF JEWELLERY RETURNED IN THE WEALTH-TAX RETURN FOR THE ASSESSMENT YEAR 2008-09. THE ASSESSING OFFI CER FURTHER OBSERVED THAT THE VERIFICATION OF WEALTH-T AX RETURN FILED BY THE ASSESSEE AND HIS FAMILY FOR ASST. YEAR 2008-09 FURTHER REVEALES THAT THE VALUE OF TOTAL JEWELLERY RETURNED BY THE ASSESSEE AND HIS FAMILY MEMBERS FELL SHORT BY RS.1,27,60,063/- AS AGAINST THE VALUATION MADE BY T HE REGISTERED VALUER. HE THEREFORE TREATED THE SHORTF ALL OF RS.1,27,60,063/- AS UNACCOUNTED INVESTMENT MADE BY THE ASSESSEE AND ADDED IT TO THE INCOME OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR. 28. BEING AGGRIEVED OF SUCH ADDITION, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A). THE ASSES SEE CONTENDED BEFORE THE CIT (A) THAT DURING THE SEARCH AND SEIZURE OPERATION, THE JEWELLERY OF THE THREE FAMIL IES CONSISTING OF ENTIRE GROUP I.E. FAMILIES OF KRISHN A KUMAR, SUNIL KUMAR AND MAHAVIR PRASAD GOT MIXED UP AS THE SAME IS BEING USED IN EXCHANGE BY ONE ANOTHER, THEREFORE THE 18 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. DIFFERENCE IN VALUATION NEEDED TO BE EXPLAINED AS A GROUP DECLARED IN THE WEALTH-TAX RETURN BY THE GROUP WAS PUT AT RS.8,68,47,963/- AS AGAINST THE VALUE OF RS.11,32,7 7,199/- DETERMINED BY THE REGISTERED VALUER. IT WAS SUBMIT TED THAT ARITHMETICAL MISTAKES WERE COMMITTED BY THE VALUER AS IN CASE OF MAHAVIR PRASAD, THE MISTAKE WAS POINTED OUT INDICATING THE DIFFERENCE IN VALUATION TO THE EXTEN T OF RS.4,60,170/-. SIMILARLY, WHILE GIVING CREDIT FOR JEWELLERY DECLARED BY THE GROUP THE JEWELLERY STANDING IN THE NAMES KRISHNA KUMAR (HUF), SUNIL KUMAR HUF) AND MAHAVIR PRASAD (HUF) TO THE EXTENT OF RS.60,36,175/-, RS.54,31,027/- AND RS.90,01,432/- RESPECTIVELY WERE NOT CONSIDERED. IT WAS FURTHER CONTENDED BY THE ASSES SEE THAT QUANTITATIVE PARTICULARS ARE NOT MENTIONED IN THE W EALTH- TAX RETURN FILED BY THE GROUP WHOSE VALUE WAS ADOPT ED AS BASIS BY THE ASSESSING OFFICER. IT WAS SUBMITTED T HAT IF THE JEWELLERY AT THE PREVAILING RATE OF RS.5010 PER 10 GRAMS AS ON 31-3-2002 AND THEN VALUED AT THE RATE OF RS.13,9 00 PER 10 GRAMS AS ON 29-1-2009 THE DATE OF VALUATION, THE VALUE OF JEWELLERY WOULD EXCEED THE VALUE AS DETERMINED B Y THE REGISTERED VALUER. WITH REGARD TO THE DIFFERENCE I N VALUATION ON ACCOUNT OF RATE AS ON 31-3-2008 AND 29 -1- 2009, IT WAS SUBMITTED THAT THE DIFFERENCE WOULD BE RS.53,59,112. SO FAR AS THE QUANTIFICATION OF EXCE SS 19 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. JEWELLERY BY THE ASSESSING OFFICER WITH REFERENCE T O THE JEWELLERY IN THE WEALTH-TAX RETURN IS CONCERNED, IT WAS CONTENDED BY THE ASSESSEE THAT THE JEWELLERY TO THE TUNE OF RS.60,36,175/- STANDING IN THE NAME OF KRISHNA KUMA R HUF WAS NOT TAKEN INTO ACCOUNT WHILE CONSIDERING THE TO TAL JEWELLERY OF THE ASSESSEE AND HIS FAMILY MEMBERS. THE ASSESSEE FURTHER CONTENDED THAT THOUGH THE VALUE OF JEWELLERY OF ARTICLES FORM PART OF VALUATION REPORT , THE SAME WAS NOT CONSIDERED BY THE ASSESSING OFFICER AS PER WEALTH- TAX RETURN. 29. THE CIT (A) ON CONSIDERING THE SUBMISSIONS OF THE ASSESSED OPINED THAT AS PER THE REPORT DATED 29-1-2 009 OF THE REGISTERED VALUER , THE JEWELLERY OF THE ASSESS EE QUANTIFIED AT RS.4,19,67,132 ALSO INCLUDES THE VAL UE OF PRECIOUS STONES AND SILVERWARE. THE CIT (A) FURTHE R WAS OF THE VIEW THAT THE SHORTFALL OF RS.1,27,60,063/- ARR IVED AT BY THE ASSESSING OFFICER BY COMPARING THE VALUE OF THE JEWELLERY DECLARED IN THE WEALTH-TAX RETURN BY THE ASSESSEE AND HIS FAMILY MEMBERS AS AGAINST THE VALUE OF RS.4,19,67,132/- AS PER THE VALUATION REPORT DATED 29-1- 2009 IS NOT CORRECT AS THE AMOUNT OF RS.2,63,62,061 /- TAKEN TO BE THE VALUE OF JEWELLERY AS PER WEALTH-TA X RETURN ON 31-3-2008 DOES NOT INCLUDE THE VALUE OF SILVERWA RE AMOUNTING TO RS.27,22,890/-. HE FURTHER NOTED THAT THE 20 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. JEWELLERY VALUED AT RS.60,36,175/- STANDING IN THE NAME OF SRI KRISHNA KUMAR HUF HAS NOT BEEN TAKEN INTO ACCOU NT BY THE ASSESSING OFFICER. THE CIT (A) OBSERVED THAT I F THOSE ITEMS ARE TAKEN INTO ACCOUNT THEN THE TOTAL VALUE O F JEWELLERY WOULD BE OF RS.3,51,19,326/- AND THE EXCE SS OF JEWELLERY AS PER VALUATION REPORT DATED 29-1-2009 W OULD ONLY BE TO THE EXTENT OF RS.68,47,806/- AND AFTER D EDUCTING THERE FROM THE DIFFERENCE ON ACCOUNT OF RATE AS ON 31-3- 2008 AND 16-3-2009 OF AN AMOUNT OF RS.53,59,112/-, THE EXCESS CAN BE WORKED OUT TO RS.14,88,694/-. THE CI T (A) AFTER WORKING OUT THE EXCESS AS ABOVE WHICH IS ALS O MENTIONED IN PARA 4.7 OF ORDER FINALLY CAME TO THE CONCLUSION THAT OUT OF EXCESS OF RS.14,88,694/- DISALLOWANCE TO THE EXTENT OF 50% AMOUNTING TO RS.7,44,347 COULD BE MADE. 30. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMIT TED BEFORE US THAT THE CIT (A) WHILE ALLOWING THE BENEF IT TO THE ASSESSEE CONSIDERED CERTAIN NEW FACTS AND SUBMISSI ONS MADE BY THE ASSESSEE WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO VERIFY THE CONTENTIONS OF THE ASSESSEE. IT WAS SUBMITTED THAT THE ASSESSEE HAD NEVER SUBMIT TED ALL THESE FACTS BEFORE THE ASSESSING OFFICER WHICH WERE SUBMITTED AT THE TIME OF HEARING OF APPEAL BEFORE T HE CIT (A). HE THEREFORE SUBMITTED THAT THE CIT (A) AT LEA ST SHOULD 21 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. HAVE CALLED FOR REMAND REPORT FROM THE ASSESSING OF FICER ON THE RECONCILIATION MADE BY THE ASSESSEE. 31. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE, ON THE OTHER HAND STRONGLY SUPPORTING THE ORDER OF THE CIT (A) SUBMITTED THAT NO NEW FACTS OR MATER IAL WERE PLACED BEFORE THE CIT (A) AND THE CIT (A) HAD ONLY RELIED UPON THE INFORMATION AS SUBMITTED IN THE WEALTH-TAX RETURN OF THE MEMBERS AVAILABLE WITH THE ASSESSING OFFICER . THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE POWER OF THE FIRST APPELLATE AUT HORITY BEING CO TERMINUS WITH THAT OF THE ASSESSING OFFICE R, HE CAN EXAMINE AND RE-APPRECIATE THE EVIDENCE. IN THIS CON TEXT, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSES SEE RELIED UPON THE FOLLOWING DECISIONS:- I) CIT VS.RAGHURAJI AGRO INDUSTRIES PVT. LTD. ( 349 ITR 260) (ALL) II) JUTE CORPORATION OF INDIA LTD. VS. CIT (187 ITR 688 (SC) III) CIT VS. NIRBHERAM DALURAM (224 ITR 610) IV) ITO VS. INDUSTRIAL ROADWAYS (305 ITR (AT) 21 9] 32. WE HAVE CONSIDERED RIVAL SUBMISSIONS OF THE PAR TIES AND PERUSED THE MATERIAL ON RECORD AS WELL AS THE O RDERS OF 22 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. THE REVENUE AUTHORITIES. WE HAVE ALSO EXAMINED THE DECISIONS RELIED UPON BY THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE. THE ISSUE BEFORE US PRECISELY IS WHETHER THERE IS AN EXCESS OF JEWELLER Y TO THE EXTENT OF RS.1,27,60,063/- AS DETERMINED BY THE ASS ESSING OFFICER. AS CAN BE SEEN FROM THE ASSESSMENT ORDER, THE ASSESSING OFFICER ON THE BASIS OF THE JEWELLERY DEC LARED IN THE WEALTH-TAX RETURN FILED BY THE ASSESSEE AND HIS FAMILY MEMBERS FOUND THAT THE TOTAL JEWELLERY DECLARED TO THE TUNE OF RS.2,63,60,261/- WHEREAS AS PER THE REPORT DATED 29-1-2009 OF THE REGISTERED VALUER THE TOTAL JEWEL LERY OF THE ASSESSEE AND HIS FAMILY MEMBERS WAS VALUED AT RS.4,19,67,132/-. WHEREAS BEFORE THE CIT (A) IT W AS CONTENDED BY THE ASSESSEE THAT THE ASSESSING OFFICE R HAS NOT TAKEN INTO CONSIDERATION THE JEWELLERY DECLARED BY SRI KRISHNA KUMAR HUF IN THE WEALTH-TAX RETURN AMOUNTI NG TO RS.60,36,175/- AND THE VALUE OF SILVERWARE OF RS.27,22,890/- DECLARED IN THE WEALTH TAX RETURN W HICH WAS INCLUDED IN THE VALUATION MADE BY THE VALUER AMOUNTING TO RS.4,19,67,132/-. HOWEVER, IT IS SEEN FROM THE ASSESSMENT ORDER THAT SO FAR AS VALUE OF JEWEL LERY STATED TO HAVE BEEN DECLARED IN THE WEALTH-TAX RETU RN OF SRI KRISHNA KUMAR HUF AMOUNTING TO RS.60,36,175/- DOES NOT APPEAR IN PARA-2 OF THE ASSESSMENT ORDER WHEREIN TH E ASSESSING OFFICER HAS CONSIDERED THE JEWELLERY DECL ARED IN 23 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. THE CASE OF THE ASSESSEE AND OTHER FAMILY MEMBERS. IT IS NOT KNOWN WHETHER THIS FACT WAS BROUGHT TO THE NOTI CE OF THE ASSESSING OFFICER BY THE ASSESSEE. SIMILARLY, THE SILVERWARE VALUED AT RS.27,22,890/- ALSO DOES NOT F IND PLACE ANYWHERE IN THE ASSESSMENT ORDER. IT IS ALSO NOT KNOWN WHETHER THIS FACT WAS BROUGHT TO THE NOTICE O F THE ASSESSING OFFICER THAT THE SILVERWARE OF RS.27,22,8 90/- STATED TO HAVE BEEN DECLARED IN THE WEALTH-TAX RETU RN ALSO FORMS PART OF THE VALUATION MADE BY THE REGISTERED VALUER. THEREFORE, IN OUR VIEW, THE CIT (A) BEFORE ACCEPTIN G THE CONTENTION OF THE ASSESSEE SHOULD HAVE GIVEN AN OPPORTUNITY TO THE ASSESSING OFFICER TO PUT FORTH H IS OPINION ON THE ISSUE. THIS IS BECAUSE OF THE FACT, AS IT A PPEARS FROM THE ASSESSMENT ORDER, THE ASSESSEE HAS NOT SUB MITTED THE BASIS FOR VALUATION OF GOLD JEWELLERY, STONES, DIAMONDS ETC. IN AFORESAID VIEW OF THE MATTER, WE ARE INCL INED TO REMIT THE ISSUE BACK TO THE FILE OF THE ASSESSING O FFICER FOR VERIFYING THE CLAIM OF THE ASSESSEE. IF THE ASSESS EE IS ABLE TO PROVE THAT JEWELLERY AMOUNTING TO RS.60,36,175/- HAS BEEN DECLARED AT THE HANDS OF THE HUF IN THE WEALTH -TAX RETURN AND FURTHER IF IT IS FOUND THAT SILVERWARE A MOUNTING TO RS.27,22,890/- HAS BEEN DECLARED IN THE WEALTH-T AX RETURN AND ALSO FORMS PART OF THE VALUATION MADE BY THE REGISTERED VALUER, THEN THEY CANNOT BE TREATED AS UNEXPLAINED. WHILE DECIDING THE ISSUE, THE ASSESS ING 24 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. OFFICER SHOULD ALSO TAKE INTO ACCOUNT THE ASSESSEE S CONTENTION WITH REGARD TO THE DIFFERENCE ARISING ON ACCOUNT OF RATE OF GOLD AS ON 31-3-2008 AND AS ON 16-3-2009 . THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AFTER AFFO RDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. ITA NO. 969 /HYD/2012-ASST. YEAR 2007-08:- 33. THE ONLY EFFECTIVE GROUND IN THIS APPEAL OF TH E DEPARTMENT IS AS UNDER:- THE CIT (A) OUGHT TO HAVE GIVEN OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE FRESH INFORMATION FILED BEFORE THE CIT (A) AS PER RULE 46-A OF IT RULES. 34. BRIEFLY THE FACTS ARE, DURING THE ASSESSMENT PR OCEEDINGS, THE ASSESSING OFFICER ON THE BASIS OF INFORMATION A VAILABLE WITH HIM NOTICED THAT THE ASSESSEE HAS SOLD A PLOT BEARI NG NO.2 ADMEASURING 300 SQ. YARDS, SURVEY NOS.234,235,238 A ND 275(P) SITUATED AT NIZAMPET VILLAGE, QUTBULLAHPUR M ANDAL, FOR A CONSIDERATION OF RS.30,00,000/-. THE ASSESSEE H AD CLAIMED THE COST OF ACQUISITION OF THE SAID LAND AT RS.25, 65,000/-. THE ASSESSING OFFICER NOTED THAT AS PER THE SALE DEED D ATED 29-3- 2005 THE ASSESSEE HAD PURCHASED THE SAID PLOT OF LA ND FOR A TOTAL CONSIDERATION OF RS.1,65,000/-. HE THEREFORE CONCLUDED THAT THE ASSESSEE HAS NOT SUBSTANTIATED THE COST O F ACQUISITION TO THE EXTENT OF RS.24 LAKH. HE TREATED THE SAME A S SHORT-TERM CAPITAL GAINS FOR THE IMPUGNED ASSESSMENT YEAR. TH E ASSESSEE 25 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. BEING AGGRIEVED OF THE ADDITION MADE PREFERRED AN A PPEAL BEFORE THE CIT (A). 35. BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS CO NTENDED BY THE ASSESSEE THAT DURING THE FINANCIAL YEAR RELEVAN T TO THE ASSESSMENT YEAR 2007-08, THE ASSESSEE HAD SOLD A PL OT FOR A CONSIDERATION OF RS.30 LAKH AND HAD DECLARED CAPITA L GAINS OF RS.1,96,275/- AFTER REDUCING THE COST OF ACQUISITIO N AT RS.25,65,000/-. TO SUBSTANTIATE THE COST OF ACQUIS ITION, THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS MADE INVES TMENT IN CONSTRUCTION OVER THE SAID LAND AND IN THAT REGARD, FURNISHED A COPY OF DEVELOPMENT AGREEMENT ENTERED WITH M/S RAAS I DEVELOPERS ALONG WITH THE DETAILS OF LOAN SANCTIONE D FOR RS.24 LAKH AND DISBURSEMENT OF THE LOAN FROM HDFC. THE CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A S WELL AS THE INFORMATION SUBMITTED BEFORE HIM WAS OF THE VIEW TH AT THE COST OF ACQUISITION ADOPTED BY THE ASSESSEE WHILE COMPUT ING THE CAPITAL GAINS WAS CORRECT SINCE THE ASSESSEE HAD SU BMITTED CREDIBLE INFORMATION IN THE FORM OF EVIDENCES PRODU CED BY HIM TOWARDS THE LOAN TAKEN FROM HDFC AMOUNTING TO RS.24 LAKH AS WELL AS THE DEVELOPMENT AGREEMENT FOR CONSTRUCTION WITH M/S. RAASI DEVELOPERS. HE THEREFORE DELETED THE ADDITION OF RS.24 LAKH. 36. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITT ED BEFORE US THAT THE CIT (A) WAS NOT JUSTIFIED IN DELETING T HE ADDITION ON CONSIDERING THE FRESH INFORMATION AND EVIDENCE FILE D BY THE 26 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. ASSESSEE WITHOUT ALLOWING AN OPPORTUNITY TO THE ASS ESSING OFFICER FOR CONSIDERING THE SAME. 37. THE LEARNED AR, ON THE OTHER HAND, STRONGLY SU PPORTING THE ORDER OF THE CIT (A) SUBMITTED THAT ALL THE INF ORMATION HAVING BEEN FURNISHED BEFORE THE AO, THERE IS NO S COPE FOR INTERFERING WITH THE ORDER PASSED BY THE CIT (A). 38. WE HAVE CONSIDERED SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AS WOULD BE EVIDENT FROM THE ORDER OF THE CIT (A), HE HAS DELETED THE ADDITION O F RS.24 LAKH RELYING UPON THE INFORMATION SUBMITTED BY THE ASSES SEE IN THE NATURE OF DEVELOPMENT AGREEMENT WITH M/S RAASI DEVE LOPERS AND ALSO THE DETAILS OF LOAN DISBURSEMENT BY THE H DFC. HOWEVER, IN PARA-5 OF THE ASSESSMENT ORDER, THE ASS ESSING OFFICER HAS CLEARLY MENTIONED THAT IN ABSENCE OF TH E DETAILS REGARDING DISBURSEMENT OF LOAN AS WELL AS SANCTION LETTER FROM HDFC OR ANY STATEMENT FROM THE BANK TO SUBSTANTIATE THE DISBURSEMENT OF THE LOAN HE DID NOT ACCEPT THE CLAI M OF RS.24 LAKH. NOTHING HAS BEEN PRODUCED BEFORE US TO SHOW THAT THE DETAILS OF DISBURSEMENT OF LOAN FROM HDFC WERE SUBM ITTED BEFORE THE ASSESSING OFFICER TO SUBSTANTIATE ITS CL AIM OF AVAILING LOAN FOR CONSTRUCTION OF THE PROPERTY. AS IT APPEA RS, THE CIT (A) ALSO HAS NOT ALLOWED THE ASSESSING OFFICER TO HAVE HIS VIEW ON THE EVIDENCES/INFORMATION SUBMITTED BY THE ASSES SEE DURING APPELLATE PROCEEDINGS. IN THIS VIEW OF THE MATTER, WE ARE INCLINED TO SET ASIDE THE ORDER PASSED BY THE CIT ( A) AND REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE 27 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. SAME AFRESH, THE ASSESSING OFFICER SHALL CONSIDER T HE ENTIRE EVIDENCES WITH REGARD TO THE CLAIM MADE BY THE ASSE SSEE TOWARDS COST OF ACQUISITION AND THEREAFTER DECIDE T HE ISSUE AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. 39. IN THE RESULT, THIS APPEAL IS TREATED AS ALLOWE D FOR STATISTICAL PURPOSES. ITA NO.970/HYD/2012- ASST.YEAR 2009-10 40. THE DEPARTMENT HAS RAISED THE FOLLOWING EFFECT IVE GROUND:- THE CIT (A) OUGHT TO HAVE GIVEN OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE FRESH INFORMATION FILED BEFORE THE CIT (A) AS PER RULE 46A OF IT RULES. 41. DURING THE ASSESSMENT PROCEEDING, THE ASSESSING OFFICER WHILE EXAMINING ASSESSEES BALANCE SHEET AS ON 31-3 -2009 FOUND THAT THE ASSESSEE HAS PAID RS.83,54,000/- TOW ARDS HIS SHARE FOR PURCHASE OF LAND AT GACHIBOWLI. AS NOTED BY THE ASSESSING OFFICER, IN SPITE OF CALLING UPON THE ASS ESSEE FOR FURNISHING NECESSARY INFORMATION WITH REGARD TO SOU RCES, SINCE THE ASSESSEE DID NOT FURNISH ANY INFORMATION THE AS SESSING OFFICER TREATED THE AFORESAID SUM AS UNEXPLAINED IN VESTMENT. 42. THE CIT (A), HOWEVER ON THE BASIS OF SUBMISSION S MADE BY THE ASSESSEE AND INFORMATION SUBMITTED BEFORE HIM D URING APPEAL PROCEEDING DELETED THE ADDITION. 28 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. 43. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES AN D PERUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS OTHE R MATERIALS ON RECORD. THE SOLE CONTENTION OF THE LEARNED DEPA RTMENTAL REPRESENTATIVE IS, THE CIT (A) WITHOUT AFFORDING A REASONABLE OPPORTUNITY TO THE ASSESSING OFFICER HAS DELETED TH E ADDITION BY CONSIDERING NEW INFORMATION. WHEREAS IT IS THE CON TENTION OF THE LEARNED AR BEFORE US THAT, THE ASSESSEE ALONG W ITH TWO OTHER PERSONS HAD PURCHASED THE SAID PROPERTY AT GA CHIBOWLI FOR A TOTAL CONSIDERATION OF RS.2,08,85,000/- VIDE REGISTERED SALE DEED NO.9049/2007 DATED 13-6-2007. IT WAS THE REFORE SUBMITTED THAT THE INVESTMENT HAVING BEEN MADE IN T HE FINANCIAL YEAR 2007-08 AND THE ASSESSEE HAVING SHOW N THE SAME AS INVESTMENT IN THE BALANCE SHEET AS ON 31-3- 2008 IT CANNOT BE TREATED AS UNEXPLAINED INVESTMENT OF THE IMPUGNED ASSESSMENT YEAR. THUS, IN EFFECT, IT IS THE CLAIM OF THE ASSESSEE THAT IT IS ONLY A CARRY FORWARD OF THE EAR LIER YEARS INVESTMENT. HOWEVER, AS CAN BE SEEN FROM THE ASSES SMENT ORDER, THE ASSESSEE HAS NOT PRODUCED ANY INFORMATIO N OR DETAILS DURING THE ASSESSMENT PROCEEDING TO SUBSTANTIATE TH AT THE INVESTMENT WAS MADE IN THE EARLIER YEAR. WHATEVER INFORMATION WAS SUBMITTED BY THE ASSESSEE WAS BEFORE THE FIRST APPELLATE AUTHORITY. THEREFORE, IN ALL FAIRNESS THE CIT (A) SHOULD HAVE GIVEN THE ASSESSING OFFICER AN OPPORTUNITY TO VERIF Y ALL THESE FACTS BEFORE DECIDING THE ISSUE. IN THIS VIEW OF T HE MATTER, WE ARE INCLINED TO REMIT THE MATTER BACK TO THE FILE O F THE ASSESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESS EE. IF ON 29 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. VERIFICATION, ASSESSEES CLAIM OF HAVING MADE THE I NVESTMENT IN THE EARLIER ASSESSMENT YEAR IS FOUND TO BE CORRECT, THEN NO ADDITION CAN BE MADE BY THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL AFFORD A REASONABLE OPPORTUNITY OF BE ING HEARD TO THE ASSESSEE. 44. IN THE RESULT, THE DEPARTMENTS APPEAL IS ALLOW ED FOR STATISTICAL PURPOSES. ITA NO.971/HYD/2012- ASST..YEAR 2009-10 :- 45. THE DEPARTMENT HAS FILED THIS APPEAL BEING AGG RIEVED OF THE ORDER PASSED BY THE CIT (A) IN DELETING THE AD DITION OF RS.1,12,67,886/. 46. BRIEFLY, THE FACTS OF THE ISSUE ARE, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT DURIN G THE SEARCH OPERATION AT THE PREMISES OF THE ASSESSEE, GOLD JEW ELLERY FOUND WAS VALUED AT RS.2,71,00,414/- BY THE REGISTERED VA LUER. HOWEVER, THE VALUE OF GOLD JEWELLERY DECLARED BY T HE ASSESSEE AND HIS FAMILY MEMBERS IN THEIR WEALTH TAX RETURNS AT RS.1,59,02,528/- WHICH WAS CONSIDERED BY THE ASSESS ING OFFICER IN HIS ASSESSMENT ORDER. THOUGH THE ASSESSEE OFFERE D SOME EXPLANATION WITH REGARD TO THE DIFFERENCE OF RS.1,1 2,67,886/- BETWEEN THE VALUATION MADE BEFORE THE REGISTERED VA LUER AND THE VALUATION MADE IN THE WEALTH-TAX RETURN, THE AS SESSING OFFICER WAS NOT CONVINCED WITH THE SAID EXPLANATION OF THE ASSESSEE AND TREATED THE SAME AS UNACCOUNTED INVEST MENT AND ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED 30 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. THE ADDITION MADE4 BY THE BY PREFERRING AN APPEAL B EFORE THE CIT (A). BEFORE THE CIT (A) THE ASSESSEE WHILE REC ONCILING THE DIFFERENCE AS WORKED OUT BY THE ASSESSING OFFICER C ONTENDED THAT THE ASSESSING OFFICER HAS NOT TAKEN INTO ACCOU NT JEWELLERY WORTH RS.54,31,027/- DECLARED IN THE WEALTH-TAX RET URN OF SRI MAHAVIR PRASAD, HUF, JEWELLERY WORTH OF RS.63,88,64 0/- DECLARED BY SMT. KAVITA RANI IN THE WEALTH TAX RET URN AND THE VALUE OF SILVERWARE SHOWN IN THE WEALTH-TAX RETURN BY THE ASSESSEE AND FAMILY MEMBERS AMOUNTING TO RS.31,14,3 52/. THEREFORE, THERE IS NO SHORTFALL IN VALUATION OF JE WELLERY DECLARED IN WEALTH-TAX RETURN BY THE ASSESSEE AND H IS FAMILY MEMBERS AS POINTED OUT BY THE ASSESSING OFFICER. 47. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PART IES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WE LL AS MATERIALS ON RECORD. AS CAN BE SEEN FROM PARA-2 OF ASSESSMENT ORDER THAT THERE IS NO MENTION OF EITHER MAHAVIR PR ASAD OR SMT. KAVITA RANI IN THE LIST OF MEMBERS. IT IS NOT KNOW N WHETHER THE ASSESSEE HAS SUBMITTED MATERIALS BEFORE THE ASSESSI NG OFFICER TO INDICATE THAT AMOUNTS OF RS.54,31,027 AND RS.63 ,88,640/- TOWARDS VALUE OF JEWELLERY HAD BEEN DECLARED IN THE WEALTH-TAX RETURN OF SRI MAHAVIR PRASAD (HUF) AND SMT. KAVITA RANI WERE SUBMITTED BEFORE THE ASSESSING OFFICER. IT APPEARS WHILE RECONCILING THE DIFFERENCE, THE ASSESSEE HAS BROUGH T THIS FACT FOR THE FIRST TIME TO THE NOTICE OF THE FIRST APPEL LATE AUTHORITY. THEREFORE, IN OUR VIEW, IN ALL FAIRNESS, THE CIT (A ) SHOULD HAVE ALLOWED AN OPPORTUNITY TO THE ASSESSING OFFICER TO VERIFY THE 31 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. DETAILS. SINCE NO OPPORTUNITY WAS GIVEN TO THE ASS ESSING OFFICER BEFORE ACCEPTING THE CLAIM OF THE ASSESSEE ON THE BASIS OF FRESH MATERIALS SUBMITTED BEFORE THE FIRST APPEL LATE AUTHORITY, WE ARE INCLINED TO REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER BY SETTING ASIDE THE ORDER OF THE CIT (A). 48. IN THE RESULT, THE APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 49. IN THE RESULT, DEPARTMENTS APPEALS IN ITA NO. 966/HYD/12 AND 967/HYD/12 ARE PARTLY ALLOWED AND ITA NOS. 968 TO 971/HYD/2012 ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 29-11-2013. SD/- ( CHANDRA POOJARI) ACCOUNTANT MEMBER SD/- (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 29 TH NOVEMBER, 2013 JMR* COPY TO:- 1) ACIT, CENTRAL CIRCLE-4, HYDERABAD. 2) SRI KRISHNA KUMAR, 21-2-636, PATHHERGATTI, HYDERABAD. 3) SRI SUNEEL KUMAR,21-2-636, URUDUGALLI, PATHERGATTI , HYDERABAD. 4) SRI RAMPRAKASH (ALIAS MAHAVIR PRASAD), 21-2-636, URDUGALLY, PATHERGATTI, HYDE3RABAD. 5) CIT(A) VII, HYDERABAD. 6) CIT (CENTRAL), HYDERABAD. 7) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 32 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD. 33 ITA NO.966 AND OTHERS OF2012 KRISHNA KUMAR & OTHERS, HYD.