Krishna Developers, Vadodara V. The Income Tax Officer, Ward-5(2), Baroda

ITSSA 175/AHD/2016

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5274 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-01-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Assessment Year: 2003-2004
• Appeal Filed On: 19-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Document seized; Additional evidence; Tangible material; Valuation report; Documents seized; Set aside
• Section: 263; 143(3); 153C

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’D’’BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER Sr. No. ITA/IT(SS)A Asstt. Year Name of Appellant Name of Respondent 1. IT(SS)A No.175/Ahd/2016 2003-04 Krishna Developers 404 & 406, Earth Complex, Opp. Vaccine Institute, Near Malhar Point, Vadodara-390007 PAN:AAFFK3301H Income Tax Officer, Ward-5(2), Aaykar Bhavan, Baroda 2. IT(SS)A No. 160/Ahd/2016 2003-04 The Income Tax Officer, Ward- 3(1)(2), Vadodara, Aaykar Bhavan, Race Course Circle, Vadodara M/s. Krishna Developers Amit Nagar Char Rasta, Karelibaug, VIP Road, Vadodara- 390018 PAN:AAFFK3301H (Applicant) (Responent) Assessee by : Shri K. P. Singh, AR Revenue by : Shri Mohd. Usman, CIT DR सुनवाई कᳱ तारीख/Date of Hearing : 01/12/2 021 घोषणा कᳱ तारीख /Da te of Pronouncement: 28/01/2 022 आदेश/O R D E R PER BENCH: The cross appeals have been filed by the assessee and Revenue for A.Y. 2003-04 which are arising from the order of the Ld. CIT(A)-1, Vadodara dated 17.03.2016, in the assessment proceedings under Section 153C r.w.s. 143 (3) and 263 of the Income Tax Act, 1961 (in short “the Act”). 2. The assessee has raised the following grounds of appeal: “1. The Ld. Commissioner of Income Tax (Appeals)-I, Baroda has erred in law and in facts in holding that the documents as existing prior to the incorporation of the appellant firm and pertaining to the land purchased by it belonged to the appellant upon purchase of such land. IT(SS)A No.175/Ahd/2016 & IT(SS)A No. 160/Ahd/2016 A.Y. 2003-04 2 2. The Ld. Commissioner of Income Tax (Appeals)-I, Baroda has erred in law and in facts in holding that the proceedings initiated u/s. 153C based on such documents (pertaining to the land purchased) would be a valid initiation of the proceedings u/s. 153C. The proceedings so initiated being without jurisdiction may please be held to be bad in law and void and as such the impugned order be held as liable to be cancelled. 3. The Ld. Commissioner of Income Tax (Appeals)-I, Baroda has further erred in law and in facts in upholding an addition of Rs.25,37,656/- being the difference between the amount of the value of construction as estimated by the D.V.O. and the cost of construction as recorded in the books of accounts. Such addition being made without any tangible material and without rejection of books ought to have been deleted. The appellant prays for the deletion of the addition. 4. Your appellant craves the liberty to add, alter, amend or delete any or all of the above grounds of appeal.” 3. The first issue raised by the assessee in ground Nos. 1 and 2 of its appeal is that the Ld. CIT-A erred in holding the assessment farmed under Section 143(3) r.w.s. 153C as valid. 4. At the outset, we note that the Ld. AR for the assessee at the time of hearing submitted that he was directed by the appellant not to press this ground of appeal. Thus, the ground of appeal raised by the assessee is hereby dismissed as not pressed. 5. The next issue raised by the assessee is that the Ld. CIT-A erred in confirming the addition made by the AO for Rs. 25,37,656/- being the difference in the value of the cost of construction shown by the assessee in the books of accounts viz a viz the value determined by the DVO. 6. The facts in brief are that the assessee is a partnership firm and engaged in the business of real estate development. The facts of the case are like this that the assessee in its books of accounts has shown cost of construction at Rs. 1,19,33,600/- from 1 st April 2002 till 4 th of March 2005 as alleged by the AO. According to the AO, the DVO has estimated the cost of construction at Rs. 1,95,46,659/- for the above mentioned period as on 4 th March 2005 leading to IT(SS)A No.175/Ahd/2016 & IT(SS)A No. 160/Ahd/2016 A.Y. 2003-04 3 difference of Rs. 76,12,969/- which the AO has assumed unexplained expenses in the Financial Years 2002-03, 2003-04, 2004-05 in the assessment framed under Section 143(3) r.w.s. 153C vide order dated 29 th December 2006. However, the Ld. CIT-A vide order dated 01 st February 2008 deleted the addition made by the AO for all the years i.e. Financial Years 2002-03 to 2004-05. 7. On appeal by the Revenue, the ITAT in ITA Nos. 2558 to 2560/Ahd/2008 vide order dated 3 rd April 2009 set-aside the issue to the file of the AO by observing that the assessee has filed additional evidences before the Ld. CIT-A on which no remand report was called for from the AO. 8. The AO in the set-aside proceedings dropped the addition as discussed above for all the years as discussed above vide order dated 27 th December 2010. 9. Subsequently, the proceedings under Section 263 of the Act were initiated for the Assessment Year 2003-04 only by holding that the order of the AO dropping the addition is erroneous insofar prejudicial to the interest of revenue which were confirmed vide order dated 25 th March 2013 by the order of the Ld. CIT under Section 263 of the Act. The order of the Ld. CIT was not challenged by the assessee and therefore, it has reached to the finality. 10. In consequence to the direction of the Ld. CIT under Section 263 of the Act, the AO confirmed the addition for Rs. 25,37,656/- being the difference between the cost of construction recorded in the books of accounts viz a viz the value determined by the DVO pertaining to the year under consideration vide order dated 28 th March 2014 under Section 143(3) r.w.s. 263 of the Act. 11. On appeal, the Ld. CIT-A in his order dated 17 th March 2016 was pleased to confirm the addition of Rs. 25,37,656/- as discussed above to the total income of the assessee. IT(SS)A No.175/Ahd/2016 & IT(SS)A No. 160/Ahd/2016 A.Y. 2003-04 4 12. Being aggrieved by the order of the Ld. CIT-A, the assessee is in appeal before us. 13. The Ld. AR before us contended that the partnership firm was constituted dated 20 th January 2003 about two months before the close of the Financial Year under consideration. Furthermore, the order for the approval of non-agricultural land was passed by the collector of Baroda dated 30 th June 2003 and the revised permission for the construction was received on 1 st November 2004. The Ld. AR in support of his contention drew our attention on pages 118 to 132 and pages 151 of the Paper Book where copy of order of conversion into non-agricultural land and revised permission of construction were placed. 14. Accordingly, it was contended by the Ld. AR that there was no possibility for carrying out any construction activity in the year under consideration and accordingly no addition can be attributed on account of unaccounted cost of construction being difference in the cost of construction and the value determined by the DVO. 15. On the other hand, the Ld. DR vehemently supported the order of the authorities below. 16. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly the partnership firm came into existence dated 20 th of January 2003 being the first year under consideration. The previous year of the assessee was for limited duration approximately 70 days only. It is also evident on record that the permission for the conversion of impugned agricultural land in to non-agricultural was passed dated 30 th June 2003. Likewise the permission for the construction was received on 1 st November 2004. Thus, it is very unlikely that the assessee would not have started the construction activity in the year under consideration. If that be so, the question of addition on account of construction cost does not arise. IT(SS)A No.175/Ahd/2016 & IT(SS)A No. 160/Ahd/2016 A.Y. 2003-04 5 17. Be that as it may be, admittedly the addition on account of difference in the construction cost shown by the assessee in the books of accounts viz a viz the value determined by the DVO was added to the total income of the assessee in the Assessment Years beginning from 2003-04, 2004-05 and 2005-06. This fact can verified from the order of the AO date 29 th December 2006. The relevant contents are extracted below: “The cost of construction for the relevant period is held to be Rs. 1,95,46,569/- as the assessee has shown the cost of construction at Rs. 1,19,33,600/-. Therefore the balance amount of Rs. 76,12,969/- is added to the income of the assessee equally in the Asst. Year 2003-04, Asst. Year 2004-05 and AY 2005-06 on account of undisclosed investment in construction.” 18. However, the impugned addition for all the assessment years as discussed above was dropped by the AO in the order dated 27 th December 2012 under Section 143(3) r.w.s 153C in the set-aside proceedings in pursuance to the direction of the ITAT. 19. However, subsequently the proceedings under Section 263 of the Act was initiated only for the year under consideration i.e. Assessment Year 2003-04. In other words, the order of the AO pertaining to the Assessment Year 2004-05 and 2005-06 in the own case of the assessee involving identical facts was not revised under Section 263 of the Act which transpires that assessment orders in consequence to the direction of the ITAT for the Assessment Years 2004-05 and 2005-06 have reached to the finality. Thus, the question arises whether the Revenue can take different stand for different assessment years involving same set of facts and circumstances. The answer stands in negative. It is for the reason that the principles of consistency has to be maintained as held by the Hon’ble Supreme Court in the case of Pr. CIT vs. Maruti Suzuki India Ltd. reported in 107 taxmann.com 375, the relevant extract in reproduce here under: “There is a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable.” IT(SS)A No.175/Ahd/2016 & IT(SS)A No. 160/Ahd/2016 A.Y. 2003-04 6 20. Indeed, each assessment year is a separate and independent year as observed by the Ld. CIT-A in his order but the principles of consistency should be maintained otherwise there will be a chaos among the taxpayers. Accordingly, we are of the view that no addition as discussed above is warranted in the given facts and circumstances on account of consistency as held by the Hon’ble Supreme Court as discussed above. Accordingly, we set aside the finding of the Ld. CIT-A, and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed. 21. In the result, the appeal of the assessee is partly allowed. Coming to the Revenue appeal in IT(SS)A 160/Ahd/2016 A.Y. 2003-04 22. The Revenue has raised the following grounds of appeal: “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) erred in deleting the addition of Rs. 2,30,00,000/- made on account of undisclosed investment in land on the basis of valuation made by the DVO. 2. The Ld. CIT(Appeal) erred in looking into technicalities of Valuation by DVO rather a fact that DVO’s valuation is binding to the assessee as well as the appellate authorities and A.O. 3. The Ld. CIT(Appeal) erred in holding that amount of Rs. 46.76 lacs pertains to prior period without appreciating the fact that the addition was warranted on the facet of material seized during the course of search and provisions of section 132(4A) of the Act are applicable to the case of the assessee. 4. The Ld. CIT(Appeal) erred in allowing Rs. 1.11 crores being payment to banakhat holders consequentl courts decree which was never accounted in the books of account as a liability and payment shall have to be allowed against the liability only since, the liability was not created in the books of account, the only probability of unaccounted payment stands which the Ld. CIT(A) failed to appreciate. 5. The appellant craves to add to, amend or alter the above grounds as may be deemed necessary.” 23. The only effective issue raised by the Revenue is that the Ld. CIT-A erred in deleting the addition made by the AO for Rs. 2.3 crores on account of difference in the value of the land between the books of accounts and the value determined by the DVO. IT(SS)A No.175/Ahd/2016 & IT(SS)A No. 160/Ahd/2016 A.Y. 2003-04 7 24. It is the second round of litigation before us. The ITAT on the earlier occasion in ITA No. 2758/Ahd/2008 vide order dated 03-04-2009 has set-aside the issue to the file of the AO to decide the issue as per seized materials and submission made by the assessee. 25. Based on the above direction, the AO framed the assessment under Section 153C r.w.s. 143(3) of the Act dated 27-12-2010 by making an addition of Rs.37 Lacs only. The amount of Rs. 37 Lacs was representing the difference between the cost of the land admitted by the assessee i.e. Rs. 2.46 crores viz a viz the valuation report submitted by the assessee for Rs. 2.83 crores. However, on appeal the Ld. CIT-A was pleased to delete the addition made by the AO vide order dated 21-12-2012 by holding that the valuation report as submitted by the assessee was prepared on the basis of non-agricultural land whereas when the land was acquired, it was agricultural land. Therefore, no addition is warranted. 26. Subsequently, the proceedings under Section 263 of the Act was initiated by the Ld. CIT on the reasoning that the AO while farming assessment has not followed the direction of Hon’ble ITAT. Consequently, the Ld. CIT set-aside the order of the AO holding the same as erroneous insofar prejudicial to the interest of the Revenue and directed the AO to make fresh assessment by way of speaking order. 27. The order of the Ld. CIT under Section 263 of the Act dated 25-03-2013 was not challenged by the assessee. Therefore, the finding of the Ld. CIT reached to its finality. 28. In consequence to the direction of the Ld. CIT under Section 263 of the Act, the AO initiated the proceedings by proposing the addition of Rs. 2.30 crores representing the difference between the cost of land shown by the assessee in the books of accounts viz a viz the value of the land determined by the DVO. In other IT(SS)A No.175/Ahd/2016 & IT(SS)A No. 160/Ahd/2016 A.Y. 2003-04 8 words, the assessee has shown the value of the land in the books of accounts at Rs. 1.35 crores whereas the DVO has determined the value at Rs.3.65 crores of the land in dispute. 29. The assessee before the AO also contended that it was liable to make the payment in connection with the purchase of land for Rs. 1.11 crores by virtue of MOU entered dated 30-01-2004 in consequence of the order of the Vadodra Civil Court dated 20-03-2003. Thus, as per the assessee, an amount of Rs. 1.11 crores was payable over and above the cost of land recorded in the books of accounts at Rs.1.35 crores. Thus, according to the assessee the effective cost of the land stands at Rs. 2.46 crores. The assessee also submitted that a payment of Rs. 34,49,900/- by execution of sale deed dated 17-11-2008 was made against the liability of Rs. 1.11 crores. 30. However, the AO disregarded the contention of the assessee by observing that the amount payable as per MOU and actual payment claimed was not matching. Furthermore, the amount of Rs. 1.11 crores relates to the year under consideration i.e. A.Y. 2003-04 whereas the payment has been made after the gap of substantial time i.e. in the year 2008-09 which has no relevance. Thus, the AO, disbelieved the contention of the assessee. 31. In view of the above, the AO finally has treated the difference between the value of the land recorded in the books of accounts viz a viz the value determined by the DVO with respect to such land as unexplained investment in the impugned land. 32. Aggrieved assessee preferred an appeal to the Ld. CIT-A, who deleted the addition made by the AO by observing as under: “5.3.4 Thus, the letter on the basis of which the AO has adopted the market value of the land at Rs.3.65 crores is not a valuation report at all. It is a preliminary estimate made by the Valuation officer who has requested the AO to provide exact details of jantry rate, sale instances of adjoining areas etc. and has stated that he is also collecting the same. The AO in his assessment order dated 29.12.2006 has clearly stated on Page 4 that the project of IT(SS)A No.175/Ahd/2016 & IT(SS)A No. 160/Ahd/2016 A.Y. 2003-04 9 Krishna Valley was referred to the DVO for valuation of land and cost of construction. As per the letter dated 22.09.2006, he has estimated the cost of Krishna Valley land at Rs.3.65 crores @ Rs.250/- per square ft. for 1,45,873 sq.ft. which appears to be reasonable and just. Thus, the valuation report on which the AO is relying upon is not a valuation report at all. In the first round of appeal, the CIT(A) did not decide the issues by stating that the net taxable income accrued in the name of firm in the year which development agreement was entered. But, he also stated that the AO was completely at liberty to initiate action on Shri Mukeshbhai J Shah who transferred the land and brought it to the partnership firm (subsequent to purchase of land) as per the provisions contained in the Income-tax Law. 5.3.5. Another related issue is that the appellant had claimed that it was to pay an amount of Rs.1.11 crores to the persons mentioned in the MOU dated 30.01.2004 in pursuance to the court decree. A copy of the court decree and copy of the MOU has also been filed by the appellant during the course of the original assessment proceedings itself and it was claimed that this amount was payable as on 31.03.2005. But, this was not believed by the AO and he stated that no evidence to this amount was given and it was not entered in the books of account. Accordingly, it was held that the amount of Rs.1.11 crores was already paid by the appellant out of its undisclosed income and was not brought in its books. Thus, the AO had not doubted that the appellant's claim that the amounts of Rs.1.11 crores was a liability which had already accrued to the appellant on account of the court decree and MOU dated 31.03.2004. But, he only held that Rs.1.11 crores had been paid out of appellant's undisclosed income. Such addition had been without any evidences and only on the basis of surmises. In the current assessment proceedings also, the AO has only stated as follows: "6. As regards the assessee's claim that additional amount of Rs. 1.11 crores has been paid towards cost of land it may be mentioned that in the absence of any evidence and keeping in mind the fact that the additional amount of Rs. 1.11 crores was not mentioned by the assessee either in books or in course of search / assessment, till the time the assessee was confronted with the estimated value of the land at Rs. 3.65 crores. It is therefore, concluded that the amount of Rs. 1.11 crores was already paid by the assessee out of his undisclosed income and was not brought in its books. Moreover, before the Ld. CIT(A), the assessee has taken the following plea The appellant as per the consent terms entered into MoU on 11.02.2004 with the legal heirs of Shri Ramanbhai Motibhai Patel and others and also Shri Vinubhai Motibhai Patel and Shri Navinbhai Motibhai Patel whereby it was agreed that ion addition to the consideration paid a further amount of Rs. 1.11 crores shall be paid as final consideration for the land bearing Survey No. 141/2 being developed by the appellant firm in the form of four residential houses and three shops. In addition to the above, the assessee has submitted copies of four sales deed executed on 17/11/2008 of Rs 34,49,900/- which was beyond the year under consideration and the Moll itself denote that the decision was taken after the close of the FY 2002-03 relevant to AY 2003-04. This figure does not match with the figure of Rs. 1.11 crores and these documents have no relevance in the assessment year under consideration. Therefore, it can be justifiably held that all these additional evidences are an after- thought, fabricated and a concoted story to hide the truth. It is very significant to note there was no liability to pay against the land cost in the year under consideration because there was no such entry of IT(SS)A No.175/Ahd/2016 & IT(SS)A No. 160/Ahd/2016 A.Y. 2003-04 10 Rs. 1.11 crores in the books of accounts as on 31/03/2003, Therefore, the claim of the assessee of Rs. 1.11 crores is not found acceptable and allowable in the assessment year 2003-04." 5.3.6. Thus, the appellant had provided evidence of payment of Rs.34,44,990/- in the form of four sales deed in relation to the amount to be paid as per MOU dated 11.02.2004. But, again, the AO has not believed the claims of the appellant. Such action of the AO is not acceptable. The appellant has filed details of the court decree and MOU as per which it was required to pay a sum of Rs.1.11. crores to certain persons in relation to this land. Only because this amount was not incorporated in the books of account, these evidences cannot be ignored. Besides, the appellant had already made payment of a part of this amount. Thus, the total investment of the appellant in the land comes to 2.46 crores. 5.3.7. It may be mentioned here that the appellant had also obtained the valuation report from its own valuer as per which the cost of land comes to Rs.2,83,36,000/-. Thus there is a difference of Rs.37,36,000, The valuer has valued the land as non agricultural land with a rate of Rs.2,500/- per sq. mtr. The appellant has claimed that at the time of the signing of the development agreement the land was agricultural land and hence, the land rate was lower,, Accordingly, the investments of Rs.2.46 crores is correct. It may be mentioned here that addition of this amount had been made by the AO in his order u/s 153C rws 143(3) passed on 27/12/2010 in pursuance of the setting aside of the original assessment order by the ITAT. This addition had been deleted by CIT(A)-V, Baroda vide his order dated 21.02.2012 in appeal no CAB/(A)V-192/10-11 by stating as follows: "5.2 I have considered the facts of the case as well as the observation of the AO and the arguments put forth by the AR of the appellant. As can be seen from the submission made by the appellant that the appellant firm came into existence on 20.01.2003 and the developmental rights of the impugned and was acquired by the appellant on 01.03.2003 from the three co-owners. As pointed out by the appellant, the partners in the appellate Firm were having interest in the land much prior to that date and a lot of litigations were pending. The acquired land was an agricultural and N A permission was obtained subsequently. The assessment order has been passed under section 153C rws 143(i) of the IT Act. No evidence has been found in the course of search to show that any consideration over and above the sum of Rs. 2.46 crore was paid for the purchase of the land. The valuation report of the valuer, on which the addition has been based has valued the land as on 04.03.2005 whereas the appellant acquired developmental rights two years prior to the date. The Approved valuer has valued the land as N A land whereas the same was acquired as an agricultural. Looking into all these factors, I'm of the opinion that difference of about 13% in the value shown by the appellant and the value as per report of the Approved Valuer is not significant and in absence of any evidence the AO was not justified in making the addition of Rs. 37 lakh on this account The addition of Rs. 37 lakh made by the AO is hereby deleted. This ground of appeal is therefore, allowed," 5.3.7.1. The observations made in the above appellate order are still correct, 1 fully agree with the observations made by CIT (A)-V, Baroda as reproduced above. Thus, the appellant's claim that the value of Rs.2.46 IT(SS)A No.175/Ahd/2016 & IT(SS)A No. 160/Ahd/2016 A.Y. 2003-04 11 crores which has been disclosed by it is comparable to the market price of Rs.2.83 crores determined by the registered valuer, if the difference of agricultural and non agricultural land is taken into account is acceptable. 5.3.8. The third basis of addition made by the AO is that the seized documents reveal that the amount of Rs.46.76 lakhs had been paid out of books of account by the appellant., In this regard, the appellant has filed detailed submission and has established that such payments have made prior to incorporation of the appellant firm and same cannot be taken into consideration while deciding its income for the AY 2003-04. These submissions of the appellant are acceptable as the AO has nowhere made any discussion to controvert such claims. As a matter of fact, in the current assessment year, the seized documents have not been discussed at all. 5.3.9. Thus the addition made by the AO on account of undisclosed investment in land cannot be sustained and is accordingly directed to be deleted.” 33. Being aggrieved by the order of the Ld. CIT-A, the Revenue is in appeal before us. 34. Both the Ld. DR and the AR before us vehemently supported the order of the authorities below as favourable to them. 35. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the assessee has shown the value of the land in its books of accounts as on 31-03- 2003 at Rs.1.35 crores whereas the value of the land has been determined by the DVO at Rs. 3.65 Crore as alleged by the AO. The difference between these two figures amounting to Rs. 2.3 crore was treated as unexplained/unaccounted investment made by the assessee. However, the Ld. CIT-A on appeal was pleased to delete the addition made by the AO by holding that there was no investment made by the assessee which could be said as undisclosed investment. 36. Admittedly, the entire basis of making the addition by the AO was the difference between the cost of land shown by the assessee in the books of accounts viz a viz the valuation report of the DVO. The report of DVO is annexed along with written submission of the Ld. AR. On perusal of such report, we note IT(SS)A No.175/Ahd/2016 & IT(SS)A No. 160/Ahd/2016 A.Y. 2003-04 12 that it was not any valuation report at all. Rather it was preliminary estimation made by the valuation officer, as such the valuation officer sought various detail to reach to the final valuation. The relevant contents of the report is reproduced as under: “5.3.3. A copy of this alleged DVO's Report had been submitted by the appellant during the course of the appellate proceedings as a part of its paper book. A perusal of so called valuation report shows that it is a letter dated 18.09.2006 sent on 22.09.2006, written by the District Valuation Officer, Valuation Cell, Income-tax Department, Ahmedabad to the Asst. Commissioner of Income-tax, Central Circle1, Baroda. The subject matter of the letter is estimating the cost of construction/cost of investment in the property known as Krishna Valley Project. In this letter, the DVO has asked the AO to carry out several investigation /enquiries and at the end has written as follows: "Total land area of Krishna Valley project is 1,45,873 sq. ft., considering land rate of Rs. 250/- per sq. ft. about as on 1.3.2003, value of land may work out to Rs. 3.65 crore. Exact details are yet to be get verified, sale instance of adjoining area / Jantri Rate be collected for reference and same be provided to us. I am also collecting sale instances of Land etc.”” 37. A plain perusal of the above report reveals that there was no report at all from the DVO. The documents which has been referred by the AO for making the impugned addition was of preliminary estimate as discussed above which is not a valid valuation report in the eyes of law. Accordingly we are of the view that addition to the income of the assessee cannot be based upon such report/details. Accordingly, we are of the view that no addition in the given facts and circumstances is warranted based on the letter issued by the DVO dated 18-09- 2006 as discussed above. 38. As regards the liability of Rs.1.11 crores, we note that such liability was arising upon the assessee in pursuance to the direction of the Hon’ble Civil Court of Vadodra. The relevant extract of the court direction is extracted below: “In the same way between the land owners plaintiffs and defendant No. 4,5,6 and 7 the deed executed in favour of them on the date of the deed when the said compromise agreement that is Memorandum of Understanding shall be complied with or if any definite amount required to be paid to them shall be paid by defendant amount required to be paid to them shall be paid by the defendant No. 4 to 5 and the said amount shall be debited paid through the new partnership firm “Krishna Developers” and regarding this defendant No. 1,2 have made agreement of understanding and defendant No. 4,5 have made memorandum of understanding with plaintiff separately the parties shall be liable.” IT(SS)A No.175/Ahd/2016 & IT(SS)A No. 160/Ahd/2016 A.Y. 2003-04 13 39. On the basis above direction of Hon’ble Civil Court a MOU was entered dated 30-01-2004 with land owner and an amount of Rs. 1.11 Crores agreed to be paid. From the above, there is no ambiguity to the fact that there was the ascertain liability upon the assessee for making the payment of Rs. 1.11 crores. It has been alleged by the AO that such payment must have been paid by the assessee outside the books of accounts. However, such finding of the AO is based on the surmise and conjecture. As such no material evidence has been brought on record by the AO indicating that the assessee has paid the impugned liability outside the books of accounts. In the absence of any documentary evidence, we are not convinced with the finding of the AO. On the contrary the assessee before the AO has contended that it has made the payment of Rs. 34,44,990/- in the form of four sale deed executed as on 17-11-2008 which has not been disputed based on the cogent materials. 40. In view of the above and after considering the facts in totality, we do not find any infirmity, in the order of the Ld. CIT-A. Accordingly, we direct the AO to delete the addition made by him. Hence, the ground of appeal of the Revenue is by dismissed. 41. In the result, appeal filed by the Revenue is dismissed. 42. In the combined results, assessee’s appeal is partly allowed and Revenue’s appeal is dismissed. Order pronounced in the Court on 28/01/2022 Sd/- Sd/- (MADHUMITA ROY) JUDICIAL MEMBER (WASEEM AHMED) ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 28/01/2022 Tanmay TRUE COPY