THE ACIT (CENTRAL) II, Bhopal V. M/S Virasha Infrastructure, Bhopal

ITSSA 180/Ind/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6526 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-04-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-11-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 16-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S B PRASAD
• Assessee Lawyers: S S DESH
• Keywords: Reopening of assessment; Rejection of books of accounts; Unexplained investment; Value adopted by valuation officer; Retrospective amendment; Question of law; Fair market value; Valuation report; Block assessment; Commercial expediency; Onus to prove
• Section: 40A(3); 143(3); 153A; 260A; 69B; 201; 55A; 158BC; 43; 13; 22; 147; 69; 132; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HONBLE MANISH BORAD, ACCOUNTANT MEMBER AND HONBLE MADHUMITA ROY, JUDICIAL MEMBER IT(SS)A NO.179&180/IND/2018 ASSESSMENT YEAR 2013-14 & 2014-15 ACIT(CNTRAL)-II, BHOPAL : REVENUE V/S M/S VIRASHA INFRASTRUCTURE, 25, NEW FRIENDS COLONY, CHUNNA BHATTI, BHOPAL : RESPONDENT PAN : AAIFVO149F REVENUE BY SHRI S.B. PRASAD, CIT ASSESSEE BY SHRI S.S. DESHPANDE, CA DATE OF HEARING 08.0 4 .2021 DATE OF PRONOUNCEMENT 13 . 0 4 . 202 1 O R D E R PER MANISH BORAD, A.M THE ABOVE CAPTIONED APPEALS FILED AT THE INSTANCE OF THE REVENUE PERTAINING TO ASSESSMENT YEAR 2013-14 & 201 4-15 ARE DIRECTED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-3 (IN SHORT LD. CIT], BHOPAL DATED 25 .10.2018 WHICH IS ARISING OUT OF THE ORDER U/S 153A R.W.S. 143(3) FOR ASSESSMENT VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 2 YEAR 2013-14 AND U/S 143(3) FOR ASSESSMENT YEAR 201 4-15 OF THE INCOME TAX ACT 1961(IN SHORT THE ACT) DATED 22.03 .2016 FRAMED BY ACIT(CENTRAL)-II, BHOPAL. 2. REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL; ASSESSMENT YEAR 2013-14 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) ERRED IN DELETING THE ADDITION OF RS.4,38,75,127/- MADE BY THE ASSESS ING OFFICER ON ACCOUNT OF UNDISCLOSED INVESTMENT U/S 69B AS PER DV OS REPORT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) ERRED IN DIRECTING THE ASSESSING OFFICER TO PROVIDE DEDUCTION/SET OFF OF THE ADDITION MADE U/S 69B OF THE INCOME TAX ACT, 1961 IN VIEW OF THE SPIRIT OF SECTION 115BBE OF IT ACT, 1961. 3. THE APPELLANT RESERVES HIS RIGHT TO ADD, AMEND OR A LTER THE GROUNDS OF APPEAL ON OR BEFORE THE DATE; THE APPEAL IS FINALLY HEARD FOR DISPOSAL. ASSESSMENT YEAR 2014-15 (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ID. C[T(A) ERRED IN DELETING THE ADDITION OF RS. 6,60,08,850/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDISCLOSED INVESTMENT U / S 69B AS PER DVO'S REPORT. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE ID. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO PROVIDE DEDUCTIO N/SET OFF OF THE ADDITION MADE U/S 698 OF THE INCOME TAX ACT,1961 IN VIEW OF THE SPIRIT OF SECTION 1 15BBE OF THE INCOME TAX ACT, 1961. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE ID.CIT(A) ERRED IN VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 3 ALLOWING RELIEF OF RS. 21,50,000/- TO THE ASSESSEE AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLA INED INVESTMENT U/S 69 OF THE INCOME TAX ACT,1961 IN PURCHASE OF LAND A T SERNARI KALAN WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE OFF ERED RS. 225 LAKHS AS VOLUNTARY DISCLOSURE TOWARDS INVESTMENT IN LAND IN A GENERAL MANNER WITHOUT ANY REFERENCE TO ANY SPECIFIC LAND. (4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE ID. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 4,90,000/- MADE BY THE ASSESSING OFFICER U / S 40 A(3) OF THE INCOME TAX ACT, 1961 FOR PAYMENT OF SALE CONSIDERATION OF RS. 4,90,000/- IN CASH AGAINST PURCHASE OF LAND BEA RING KHASRA NO. 55 / 1 / 1 / 1 AT SERNARI KALAN.BHOPAL. (5) THE APPELLANT RESERVES HIS RIGHT TO ADD, AMEND OR A LTER THE GROUNDS OF APPEAL ON OR BEFORE THE DATE; THE APPEAL IS FINALLY HEARD FOR DISPOSAL. 3. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT MOST OF THE ISSUES RAISED IN THE INSTANT TWO APPEALS ARE SQUARELY COVERED BY THE DECISION OF THIS CO-ORDINATE BENCH IN THE CA SE OF SIGNATURE BUILDERS IT(SS)A NO.184 TO 186/IND/2018 AND FURTHER SUBMITTED THAT THE ASSESSEE NAMELY VIRASHA INFRASTRUCTURE IS PART OF SAME SIGNATURE GROUP WHICH WAS SUBJECTED TO SEARCH ON 29 .1.2014. THE ADDITION MADE BY THE LD. A.O FOR UNDISCLOSED INVEST MENT U/S 69B OF THE ACT ON THE BASIS OF DEPARTMENTAL VALUATION R EPORT WAS SIMILARLY MADE IN OTHER GROUP CONCERNS ALSO. EXCEPT THE FIGURES ALL VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 4 THE FACTS AND ISSUES BEFORE LD. A.O ARE SIMILAR AND THE IMPUGNED ADDITION FOR UNEXPLAINED INVESTMENT U/S 69 OF THE A CT WAS DELETED BY THE LD. CIT(A) GIVING ALMOST SIMILAR FINDING IN ALL THE GROUP CONCERNS WHILE DEALING WITH THIS ISSUE. THE VIEW T AKEN BY LD. CIT(A) HAS BEEN SUBSEQUENTLY CONFIRMED BY THE HON'B LE TRIBUNAL IN THE CASE OF SIGNATURE BUILDERS IT(SS)A NO.184 TO 186/IND/2018 VIDE ORDER DATED 8.1.2021. FOR THE REMAINING ISSUES LD. COUNSEL FOR THE ASSESSEE RELIED ON THE FINDINGS OF LD. CIT(A). 4. PER CONTRA DEPARTMENTAL REPRESENTATIVE VEHEMENT LY ARGUED SUPPORTING THE ORDER OF LD. A.O, HOWEVER HE FAILED TO CONTROVERT THE FACT THAT MOST OF THE ISSUES RAISED IN THE INSTANT APPEALS ARE SQUARELY COVERED BY THE DECISION OF THIS CO-ORDINAT E BENCH IN THE CASE OF SIGNATURE GROUP. 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE SUB MISSIONS MADE BY BOTH THE PARTIES. BRIEF FACTS OF THE CASE AS NAR RATED BY THE LD. COUNSEL FOR THE ASSESSEE ARE AS FOLLOWS:- BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS A P ARTNERSHIP FIRM AND FILED ITS RETURN OF INCOME AT RS.41,42,380 AND RS.3,31,1 7,300/- FOR ASSESSMENT YEAR 2013-14 AND 2014-15 RESPECTIVELY. T HE BOOKS OF ACCOUNTS ARE AUDITED AND TAR IS FILED. A SEARCH WAS CONDUCTED ON THE SIGNATURE GROUP ON 29.1.2014 AND IN THE COURSE OF W HICH SEARCH WAS VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 5 ALSO UNDERTAKEN ON THE ASSESSEE. NO INCRIMINATING M ATERIAL WAS FOUND DURING THE COURSE OF THE SEARCH. HOWEVER, THE ASSES SEE SURRENDERED THE ADDITIONAL INCOME OF RS 2.25 CRORES IN THE STATEMEN T RECORDED U/S 132(4). THE ASSESSEE OFFERED THIS INCOME IN THE RET URN FOR THE A.Y. 2014- 15. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS ALL THE INFORMATION AS REQUIRED BY THE AO FROM TIME TO TIME WAS FURNISHED. THE ASSESSEE IS IN THE BUSINESS OF REAL ESTATE, BUILDERS AND DEVELOPER S. THE ASSESSEE DURING THE RELEVANT PERIOD WAS DEVELOPING A RESIDENTIAL CO MPLEX IN THE NAME OF VIRASHA HEIGHTS. THE EXPENSE INCURRED ON THE PURCHA SE OF LAND AND CONSTRUCTION EXPENSES ON THE PROJECT WERE THE BUSIN ESS EXPENSES OF THE ASSESSEE. THE ASSESSEE HAD MAINTAINED REGULAR BOOKS OF ACCOUNT IN WHICH ALL THE EXPENSES INCLUDING THE COST OF CONSTR UCTION WERE DULY RECORDED. THESE BOOKS WERE PRESENTED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND WERE DULY CHECKED BY HIM AND NO DEFICIENCY WAS FOUND IN THE BOOKS OF ACCOUNT OR THE RECORDS MA INTAINED. NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH OR A FTER WORDS DURING POST SEARCH ENQUIRY OR PRE ASSESSMENT ENQUIRIES TO SUGGEST THAT THE ASSESSEE HAS INCURRED ANY UNRECORDED EXPENSE. HOWEV ER, THE ASSESSEE HAS OFFERED RS.2.25 CRORES IN THE RETURN AS SURREND ERED IN THE STATEMENT RECORDED U/S 132(4). DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS A REFERENCE WAS MADE TO THE DVO TO ESTIMATE THE COST OF CONSTRUCTION OF THE PROJECT WHO GAVE A HIGHLY INFLATED VALUATION TA KING INTO ACCOUNT UNSUBSTANTIATED RATES AND ADOPTING VAGUE PROCEDURES . THE ASSESSEE RAISED VARIOUS OBJECTIONS TO THE VALUATION MADE. IT WAS SUBMITTED THAT DURING THE COURSE OF THE SEARCH, THE SPOT VALUATION WAS MADE BY THE VALUER, WHO VALUED THE PROPERTY AT 23.63 CRORES AS AGAINST THE COST OF CONSTRUCTION SHOWN IN THE BOOKS WAS AT RS.23.10 CRO RES. IT WAS FURTHER SUBMITTED THAT THE DVO HAS VALUED THE PROPERTY ON T HE BASIS OF RATES OF DELHI PLINTH AREA WITHOUT THE MEANINGFUL PHYSICAL V ERIFICATION OF THE VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 6 PROPERTY. THE ASSESSEE ALSO DEMANDED AN OPPORTUNITY TO CROSS EXAMINE THE DVO. THE AO HOWEVER, DISREGARDED THE OBJECTIONS OF THE ASSESSEE WITHOUT MENTIONING ANY REASONS TO DO SO AND ALSO IG NORED THE REQUEST OF THE ASSESSEE TO PROVIDE OPPORTUNITY TO CROSS EXAMIN E THE DVO AND MADE ADDITIONS OF THE DIFFERENCE. ASSESSMENT U/S 153A R .W.S. 143(3) FOR ASSESSMENT YEAR 2013-14 AND U/S 143(3) FOR ASSESSME NT YEAR 2014-15 WAS COMPLETED ASSESSING INCOME AT RS.4,95,17,507/- ADDING RS.15,00,000/- U/S 69 B TOWARDS UNEXPLAINED UNSECUR ED LOAN AND RS.4,38,75,127/- TOWARDS UNDISCLOSED INVESTMENT FOR ASSESSMENT YEAR 2013-14 AND RS.10,39,76,150/- ADDING UNEXPLAINED IN VESTMENT IN SEMRI KALAN LAND AT RS.43,60,000/-, DISALLOWANCE U/S 40A( 3) AT RS.4,90,000/- AND UNDISCLOSED INVESTMENT U/S 69B AT RS.6,60,08,85 0/- FOR ASSESSMENT YEAR 2014-15. 6. AS REGARDS THE FIRST COMMON ISSUE RELATING TO TH E ALLEGED UNEXPLAINED INVESTMENT U/S 69B OF THE ACT MADE BY T HE LD. A.O ON THE BASIS OF DEPARTMENTAL VALUATION REPORT MADE FOR ASSESSMENT YEAR 2013-14 AND 2014-15 WHICH WAS SUBSEQUENTLY DEL ETED BY LD. CIT(A) AND THE REVENUE HAS RAISED GROUND NO.1 IN BO TH THE APPEALS FOR ASSESSMENT YEAR 2013-14 AND2014-15. ON PERUSAL OF THE FACTS OF THE INSTANT CASE, GROUND RAISED BEFORE US AND TH E FINDING OF BOTH THE LOWER AUTHORITIES WE FIND THAT VERBATIM SIMILAR ISSUE AND THE GROUNDS ARE RAISED IN THE CASE OF ANOTHER GROUP CON CERN M/S SIGNATURE BUILDERS IN IT(SS)A NO.184 TO 186/IND/201 8 WHEREIN WE VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 7 HAVE CONFIRMED THE VIEW OF LD. CIT(A) DELETING THE ADDITION FOR UNDISCLOSED INVESTMENT U/S 69B OF THE ACT BASED MER ELY ON THE BASIS OF DEPARTMENTAL VALUATION REPORT AND NO INCR IMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH FOR THE ALLEGED UNEXPLAINED INVESTMENT OBSERVING AS FOLLOWS:- 44. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE ORDERS OF LD. CIT(A) AS WELL AS THE SUBMISSIONS AND VARIOUS CASE LAWS RELIED AND REFERR ED TO BY LD. COUNSEL FOR THE ASSESSEE. REVENUES SOLE GRIEVANCE THROUGH GROUND NO.1 RAISED IN ITS APPEAL FOR ASSESSMENT YEAR 2012-13 TO 2014-15 I S WITH REGARD TO THE FINDING OF LD. CIT(A) DELETING THE ADDITION ON ACCO UNT OF UNDISCLOSED INVESTMENT U/S 69B OF THE ACT WHICH WAS MADE BY TH E LD. A.O TOWARDS THE DIFFERENCE IN COST OF INVESTMENT IN THE PROJECT S SIGNATURE RESIDENCY SHOWN IN THE BOOKS OF ACCOUNTS VIS-A-VIS ESTIMATED BY THE DEPARTMENTAL VALUATION OFFICER CALCULATED AT RS.2,73,48,559/-,RS .5,32,58,155/- AND RS.4,38,32,956/- FOR ASSESSMENT YEARS 2012-13, 2013 -14 & 2014-15 RESPECTIVELY. 45. WE OBSERVE THAT DURING THE COURSE OF SEARCH ONE OF THE PROJECT NAMELY SIGNATURE RESIDENCY SITUATED NEAR JK HOSPITA L, KOLAR ROAD, BHOPAL WAS VALUED BY THE REGISTERED VALUER ON 30.01 .AT RS.50.46 CRORES. THIS FACT WAS CONFRONTED BEFORE LD. A.O BY SHRI VIP IN CHOUHAN, PARTNER OF THE FIRM WHO STATED THAT THE ACTUAL COST INCURRED I N THE PROJECT HAS BEEN SHOWN IN THE BOOKS OF THE FIRM AT APPROX. RS. 29.08 CRORES. AS REGARDS THE DIFFERENCE HE STATED THAT SINCE THE VALUATION WAS D ONE ON THE BASIS OF ESTIMATION, THE DETAILED EXPLANATION REGARDING DIFF ERENCE WILL BE SUBMITTED AFTER EXAMINING THE VALUATION REPORT IN DETAIL. TH IS PROJECT WHICH WAS VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 8 COMMENCED DURING THE FINANCIAL YEAR 2010-11 WAS UND ER CONSTRUCTION DURING FINANCIAL YEAR 2015-16. AS PER THE BOOKS OF ACCOUNTS TOTAL COST OF CONSTRUCTION DECLARED IN THE BOOKS OF ACCOUNTS FOR THE PERIOD FINANCIAL YEAR 2010-11 TO FINANCIAL YEAR 2015-16 (UP TO 31.01.2016 ) WAS RECORDED AT RS.55,94,79,613/-, WHEREAS SUBSEQUENT TO THE REFERE NCE TO THE DEPARTMENTAL VALUATION OFFICER VIDE LETTER DATED 22 .12.2015 THE PROPERTY WAS INSPECTED ON 4.02.2016. THIS PROJECT IS SPREAD OVER AN AREA OF 6.6 ACRE COMPRISING OF 96 MIG FLATS, 336 HIG FLATS AND CLUB HOUSE. WITHIN FEW HOURS OF INSPECTION BY THE DEPARTMENTAL VALUATION O FFICER ON 4.02.2016, THE DVO SUBMITTED THE REPORT ON 14.3.2016 ESTIMATIN G THE VALUATION OF THE COST OF CONSTRUCTION IN THE PROJECT SIGNATURE RESID ENCY FOR THE FINANCIAL YEAR 2010-11 TO FINANCIAL YEAR 2015-16 (UP TO 31.1. 2016) AT RS.83,30,42,000/-. BEFORE THE ASSESSMENT WAS COMPL ETED ON 23.03.2016 THE ASSESSEE WAS CONFRONTED WITH THE VALUATION REPO RT DATED 14.3.2016 TO WHICH THE DETAILED REPLY WAS FILED ON 17.3.2016 BY THE ASSESSEE POINTING OUT VARIOUS ANOMALIES IN THE VALUATION REPORT ALONG WITH CHALLENGING THE METHOD OF VALUATION I.E COST INCREASING METHOD ADOP TED BY THE DVO AND ALSO CHALLENGED THE APPLICATION OF THE DELHI PLINTH AREA RATE. THE SUBMISSION MADE BY THE ASSESSEE WERE NOT SUFFICIENT TO CONVINCE THE LD. A.O AND HE MADE THE ADDITION FOR UNDISCLOSED INVEST MENT U/S 69B OF THE ACT. HOWEVER THE LD. A.O DID NOT REJECTED THE BOOK S OF ACCOUNTS AND ALSO FAILED TO BRING ON RECORD ANY POSITIVE MATERIAL OR COGENT EVIDENCE TO ESTABLISH THAT THE ASSESSEE HAS MADE INVESTMENT OUT OF BOOKS I.E. OVER AND ABOVE THE AMOUNT INVESTED AS SHOWN IN THE BOOKS. 46. THE ISSUE BEFORE US CAN BE SUMMARISED IN A QUES TION THAT WHETHER THE LD. A.O WAS JUSTIFIED TO MAKE ADDITION FOR UNDI SCLOSED INVESTMENT IN CONSTRUCTION OF BUILDING PROJECTS SOLELY ON THE BAS IS OF DEPARTMENTAL VALUATION REPORT WITHOUT REJECTING THE BOOKS OF ACC OUNTS AND WITHOUT BRINING ON RECORD ANY MATERIAL EVIDENCE TO PROVE SU CH UNACCOUNTED VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 9 INVESTMENTS IN THE CASE OF THE ASSESSEE WHO WAS SUB JECTED TO SEARCH U/S 132 OF THE ACT. 47. WE OBSERVE THAT LD. CIT HAS DEALT WITH THE ISSU E IN DETAIL EXAMINING THE FACTS AND ALSO REFERRING TO VARIOUS JUDGMENTS S QUARELY APPLICABLE ON THE INSTANT ISSUE RAISED BEFORE AUTHORITIES. THE R ELEVANT EXTRACT OF LD. CIT(A) FINDING IS REPRODUCED BELOW:- 5.8 AS FAR AS MERIT OF THIS ISSUE IS CONCERNED AO MADE ADDITION OF RS. 99,82,487/-, RS. 2,73,48,559/-, RS. 5,32,58,155/- AND RS. 4,38,32,956/- IN THE YEAR A.Y 2011-12 TO 2014-15 TOWARDS DIFFERENCE IN COST OF INVESTMENT IN THE PRO JECT 'SIGNATURE RESIDENCY' SHOWN IN THE BOOKS VIS-A-VIS ESTIMATED BY OVA. THIS IS AN UNDISPUTED FACT THAT THE IMPUNGED ADDITI ON WAS MADE SOLELY ON THE BASIS OF VALUATION REPORT AND A. O. DID NOT BRING ANY POSITIVE MATERIAL OR COGENT EVIDENCE TO E STABLISH THAT ACTUALLY ASSESSEE MADE INVESTMENT OUT OF BOOKS I.E. OVER AND ABOVE THE AMOUNT OF INVESTMENT SHOWN IN THE BOOKS. THIS IS SETTLED LAW THAT ADDITION MADE SOLELY ON THE BASIS OF VALUATION REPORT IS NOT SUSTAINABLE IN LAW. THIS PROPOSITION FINDS SUPPORT FROM THE FOLLOWING CASE LAWS:- (1) CIT VS. CHOUHAN RESORTS359 ITR 394 (P&H )- SECTION 698 OF THE INCOME-TAX ACT, 1961 - UNDISCLOSED INVESTMENTS - ASSESSMENT YEAR 2007-08 - NO ADDITION COULD BE MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN CONSTRUCTION OF BUILDING ON BASIS OF REPORT OF CVO WITHOUT BOOKS OF ACCOUNT BEING REJECTED, WHEREI N EVERY EXPENDITURE RELATING TO CONSTRUCTION WAS RECORDED (2) FAMILY OF SP 5.5.5. P- SUBRAMANIUM CHETTIAR VS. ITQ 372 ITR 203(MAD}- VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 10 SECTION 698 OF THE INCOME-TAX ACT, 1961 - UNDISCLOSED INVESTMENTS (VALUATION BY OVO) - ASSESSMENT YEAR 1996-97 - WHETHER PRIMARY BURDEN TO PROVE UNDER STATEMENT OR CONCEALMENT OF I NCOME IS ON REVENUE AND IT IS ONLY WHEN SUCH BURDEN IS DISCHARG ED THAT IT WOULD BE PERMISSIBLE TO RELY UPON VALUATION GIVEN BY DIST RICT VALUATION OFFICER (OVO) - HELD, YES - WHETHER OPINION OF CVO, PER SE, IS NOT AN INFORMATION AND CANNOT BE RELIED UPON WITHOUT BOOKS OF ACCOUNT BEING REJECTED - HELD, YES - WHETHER IN INSTANT CAS E, SINCE MATTER WAS REFERRED TO OVO WITHOUT REJECTING BOOKS OF ACCO UNT OF ASSESSEE, ASSESSING OFFICER WAS NOT ENTITLED TO RESORT TO SEC TION 698 - HELD, YES [PARAS 8 AND 9] 4. EVEN THOUGH THIS APPEAL WAS ADMITTED ON THE QUES TIONS OF LAW REFERRED TO SUPRA, THE LEARNED COUNSEL ON EITHER SIDE FAIRLY CO NCEDE THAT THE CORE ISSUE TO BE DETERMINED IN THIS APPEAL IS 'WHETHER THE ASSESSING OFFICER IS ENTITLED TO RESORT TO SECTION 698 OF THE ACT AND, CONSEQUENTLY, REFER THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER, WHEN THE BOOKS OF ACCOUNT WERE N OT REJECTED?' 5. THE MAIN PLEA TAKEN BY THE LEARNED COUNSEL FOR T HE ASSESSEE IS THAT THE ONUS PROBANDI LIES ON THE ASSESSING OFFICER TO ESTABLISH THAT THE ASSESSEE HAS UNDERSTATED OR CONCEALED THE ACTUAL COST OF CONSTRU CTION AND WITHOUT DISCHARGING THE ONUS, THE ASSESSING OFFICER IS NOT EMPOWERED TO RELY UPON THE VALUATION GIVEN BY THE DEPARTMENTAL VALUATION OFFICER, WHEN THE BOO KS OF ACCOUNT WERE NEVER REJECTED. 6. THE LEARNED STANDING COUNSEL FOR THE REVENUE IS NOT DISPUTING THE FACT THAT THE BOOKS OF ACCOUNT FURNISHED BY THE ASSESSEE WERE NEV ER REJECTED BY THE DEPARTMENT. 7. IN THE CASE ON HAND, IT IS BEYOND ANY CAVIL THAT THE BOOKS OF ACCOUNT FURNI SHED BY THE ASSESSEE WERE NEVER REJECTED. NO EXPLANATION WAS CALLED FOR FROM THE ASSESSEE STATING THAT THERE WAS CONCEALMENT OR UNDE RSTATEMENT OF AMOUNT IN THE BOOKS OF ACCOUNT. THE INITIAL BURDEN CAST ON THE DE PARTMENT TO PROVE THAT THERE WAS UNDERSTATEMENT OR CONCEALMENT OF INCOME HAS NOT BEEN DISCHARGED AND, VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 11 THEREFORE, THE ASSESSING OFFICER IS NOT EMPOWERED TO REFER THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER OR RELY ON SUCH REPO RT. 8. 'THE ABOVE SAID VIEW OF THIS COURT IS FORTIFIED BY THE FOLLOWING DECISIONS: (I) IN SARQAM CINEMA V. CIT {2010/328 ITR 513[2011]197 TAXMAN 203, THE SUPREME COURT HAS HELD AS UNDER (PAGE 514) : 'IN THE PRESENT CASE, WE FIND THAT THE TRIBUNAL DE CIDED THE MATTER RIGHTLY IN FAVOUR OF THE ASSESSEE INASMUCH AS THE TRIBUNAL CA ME TO THE CONCLUSION THAT THE ASSESSING AUTHORITY COULD NOT HAVE REFERRED TH E MATTER TO THE DEPARTMENTAL VALUATION OFFICER (DVO) WITHOUT THE B OOKS OF ACCOUNT BEING REJECTED. IN THE PRESENT CASE, A CATEGORICAL FINDI NG IS RECORDED BY THE TRIBUNAL THAT THE BOOKS WERE NEVER REJECTED. THIS ASPECT H AS NOT BEEN CONSIDERED BY THE HIGH COURT. IN THE CIRCUMSTANCES, RELIANCE PLA CED ON THE REPORT OF THE OVA WAS MISCONCEIVED.' (EMPHASIS SUPPLIED) (II) FOLLOWING THE ABOVE DECISION OF THE SUPREME C OURT, A DIVISION BENCH OF THE DELHI HIGH COURT IN CIT V. 8AJRANG LAL 8ANSAL [201 11335 ITR 572/200 TAXMAN 188 (MAQ.}/12 TAXMANN.COM 88, HAS HELD AS UNDER (HEADNOTE) : 'THE PRIMARY BURDEN TO PROVE UNDERSTATEMENT OR CONCEALMENT OF INCOME WAS ON THE REVENUE AND IT WAS ONLY WHEN SUCH BURDEN WAS DISCHARGED THAT IT WOULD BE PERMISSIBLE TO RELY UPON THE VALUATION GIVEN BY THE DISTRICT VALUATION OFFICER. THE OPINION OF THE DISTRICT VALU ATION OFFICER, PER SE, WAS NOT AN INFORMATION AND COULD NOT BE RELIED UPON WIT HOUT THE BOOKS OF ACCOUNT BEING REJECTED WHICH HAD NOT BEEN DONE IN THE ASSESSEE'S CASE. MOREOVER, THERE WAS NO EVIDENCE FOUND AS A RESULT OF THE SEARCH TO SUGGEST THAT THE ASSESSEE HAD MADE ANY PAYMENT OVER AND ABOVE THE CO NSIDERATION MENTIONED IN THE RETURN OF THE ASSESSEE.' (EMPHASIS1 SUPPLIED) (III) IN K.K. KESHAIYER V CIT (2000) 246 ITR 351/(2 001)114 TAXMAN 353 (MAD.), A DIVISION BENCH OF THIS COURT HELD AS UNDE R (HEADNOTE) : 'WHEN THE ACTUAL COST OF CONSTRUCTION WAS DULY RECO RDED BY THE ASSESSEE AND THAT COST ALSO WAS SET OUT IN THE AGREEMENT WITH TH E CONTRACTOR, SPECIFYING THE RATES, AND WHICH RATES HAD BEEN ACCEPTED BY THE TRIBUNAL, AND THERE WAS NO FINDING THAT THE BUILDING WAS LARGER THAN TH E ASSESSEE HAD CLAIMED OR HAD BETTER QUALITY OF CONSTRUCTION OR FIXTURES THAN THE ASSESSEE HAD VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 12 RECORDED IN HIS BOOKS, THE OPINION OF THE VALUER CO ULD NOT BE STRAIGHTAWAY SUBSTITUTED FOR THE ACTUAL COST THAT WAS RECORDED I N THE ASSESSEE'S BOOKS. THE TRIBUNAL HAD NOT FOUND THAT THE BOOKS MAINTAINE D BY THE ASSESSEE WERE NOT CREDIBLE. THEREFORE, THE TRIBUNAL WAS NOT RIGHT IN NOT ACCEPTING THE VALUATION OF HOUSE PROPERTY SUBMITTED BY THE ASSESS EE.' 9. IN VIEW OF THE FINDINGS RECORDED ABOVE AND THE L AW ENUNCIATED IN THE DECISIONS REFERRED TO SUPRA, THIS APPEAL DESERVES TO BE ALLOWED. (3) CITVS. KHUSHAL CHAND NIRMAL KUMAR 263 ITR 77 (M .P) SECTION 158BC OF THE INCOME-TAX ACT, 1961 - BLOCK ASSESSMENT IN SEARCH CASES - PROCEDURE FOR _ BLOCK PERIOD 1-4-1986 TO 31-3-1996 - WHETHER NO ADDITIONS COULD BE MADE IN INCOME OF ASSESSEE MEREL Y ON BASIS OF REPORT OBTAINED FROM DEPARTMENTAL VALUATION OFFICER , WHOSE EVIDENCE WAS NOT FOUND DURING COURSE OF SEARCH - HELD, YES - WHE THER, IN INSTANT CASE, SINCE NOTHING WAS FOUND DURING SEARCH IN ASSESSEE'S PREMISES WITH REGARD TO INVESTMENT IN HOUSE, TRIBUNAL WAS JUSTIFIED IN DELE TING ADDITIONS MADE BY ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION - HELD, YES CIT VS. MANOJ JAIN287 ITR 285(DELHI)- SECTION 158BC OF THE INCOME-TAX ACT, 1961 - BLOCK A SSESSMENT IN SEARCH CASES - PROCEDURE FOR - TRIBUNAL HAVING FOUN D AS A FACT THAT SEARCH ON ASSESSEE'S PREMISES DID NOT LEAD TO SEIZU RE OF ANY INCRIMINATING EVIDENCE TO SUGGEST THAT ANY INCOME H AD NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR TAX PURPOSE, DELE TED ADDITION MADE BY ASSESSING OFFICER ON BASIS OF REPORT OF VAL UATION OFFICER IN REGARD TO TWO OF PROPERTIES PURCHASED BY ASSESSEE - WHETHER IN VIEW OF CLEAR FINDING OF FACT BY TRIBUNAL NO SUBSTA NTIAL QUESTION OF LAW AROSE FOR CONSIDERATION - HELD, YES VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 13 (5) (IT VS. SADHNA GUPTA352 ITR 595 (DELHIJ- SECTION 69B OF THE INCOME-TAX ACT, 1961 - UNDISCLOS ED INVESTMENTS LLNVESTMENT IN PROPERTY] - ASSESSMENT YEAR 2007-08 _ WHETHER, WHERE THERE WAS NO OTHER MATERIAL TO INDICATE THAT ANY EXTRA CONSIDERATION HAD PASSED FROM ASSESSEE, OVER AND AB OVE DECLARED VALUE IN RESPECT OF PURCHASE OF PROPERTY, ADDITION UNDER SECTION 69B COULD BE MADE BASED MERELY ON REPORT OF DISTRICT VALUATION OFFICER - HELD, NO [PARA 4] [IN FAVOUR OF ASSESSEE] BADAR DURREZ AHMED, J. _ THIS APPEAL HAS BEEN FILED BY THE REVENUE UNDER SECTION260A OF THE INCOME T' ACT, 1961 (HEREINAFTER REFERRED TO AS THE SAID ACT) BEING AGGRIEVED BY THE ORDER DATED 30.11.2011 PASSED BY THE INCOME TAX APPELLATE TRIBUNA1 IN ITA NO.5266 (DEL/2010 REL ATING TO ASSESSMENT YEAR ' 200708. IT APPEARS THAT THIS HAD BEEN ADMITTED FOR HEARING BY AN ORDER PASSED BY THIS, COURT ON 30.07.2012. HOWEVER, LEARN ED COUNSEL FOR THE PARTIES POINTED OUT THAT THERE IS SOME TYPOGRAPHICA L ERROR IN THE QUESTION OF LAW WHICH HAS BEEN FRAMED. CONSEQUENTLY, WE REFRAME THE SUBSTANTIAL QUESTION OF LAW AS UNDER:- 'WHETHER THE TRIBUNAL FELL IN ERROR IN NOT PLACING RELIANCE ON THE DISTRICT VALUATION OFFICERS REPORT UNDER SECTION 1 42A AND THEREBY DELETING THE ADDITION OF RS. 2,81,83,000/- MODE BY THE ASSESSING OFFICER UNDER SECTION 69B OF THE INCOME TAX ACT, 19 61? 2. WE HAVE HEARD LEARNED COUNSEL FOR THE PARTIES. T HE [ACTS ORE THAT THE ASSESSING OFFICER MADE AN ADDITION OF RS.2,81,83,00 0/- UNDER SECTION 69B OF THE SAD ACT ON THE BASIS OF VALUATION REPORT WHICH HE RECEIVED FROM THE DISTRICT VALUTION OFFICER, (DVO). THIS WAS IN RESP ECT OF PURCHASE OF A PROPERTY BY THE RESPONDENT/ASSESSEE AT 2-B, GAEL LO NE, UNDER HILL ROAD, CIVIL LINES, DELHI. THE ASSESSEE HAD DISCLOSED THAT THE SAID PROPERTY HAD VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 14 BEEN PURCHASED THROUGH TWO SOLE DEED, DATED 03.05.2 006 FOR A TOTAL SUM OF RS.59,50,000/-. THE PURCHASE 'CONSIDERATION AS P ER THE SOLE DEEDS SIGNIFIED A ROTE OF RS. 8,500/- PER SQ. YD., WHICH APPEARED TO BE LOW TO T HE ASSESSING OFFICE, AND, THEREFORE, HE REFERRED THE M ATTER OF VALUATION TO THE DVO. THE DVO SUBMITTED HIS REPORT AND INDICATED TH AT IN HIS OPINION THE TOTAL FAIR MARKET VALUE OUGHT TO BE RS. 3,41,33,00 0/- AS AGAINST THE DECLARED VALUE OF RS. 59,50,000/-. THE DIFFERENCE OF RS. 2,81,83,000/- WAS ADDED BY THE ASSESSING OFFICER BY INVOKING THE PROV ISIONS OF SECTION 69B OF THE SAID ACT. 3. BEING AGGRIEVED BY THE SAID ADDITION THE RESPOND ENT ASSSSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS) WHO DELETED THE S AID ADDITION AFTER REFERRING TO THE DECISION K.P. VARGHESE V ITO (1981 ) 131 ITR 597/7 TAXMAN 13(SC). THE COMMISSIONER OF INCOME TAX (APP EALS) HELD THAT THE ADDITION HAD BEEN MADE ON THE BASIS OF THE VALUATIO N REPORT WITHOUT THERE BEING ANY OTHER MATERIAL TO INDICATE THAT ANY EXTRA CONSIDERATION HAD PASSED IN RESPECT OF THE SAID PURCHASE OF PROPERTY. THEREAFTER, THE REVENUE, BEING AGGRIEVED BY THE ORDER PASSED BY THE CIT(APPEALS),PREFERRED AN APPEAL BEFORE THE TRIBUNA L WHICH HAS BEEN DISMISSED BY THE TRIBUNAL BY CONFIRMING THE DELETIO N MADE BY THE CIT (APPEALS). 4. THE ONLY POINT TO BE CONSIDERED IS WHETHER THE V ALUATION RENDERED BY THE DVO IS TO BE TAKEN INTO ACCOUNT OR NOT. IT HAS BEE N ARGUED BY THE LEARNED COUNSEL FOR THE REVENUE THAT THE ASSESSING OFFICER WAS JUSTIFIED IN REFERRING THE MATTER TO THE DVO FOR AN OPINION WITH REGARD TO THE FAIR MARKET VALUE OF THE PROPERTY AND ONCE THAT OPINION HAS BEEN RENDER ED, THE SOME HAS TO BE TAKEN INTO ACCOUNT AND IF MOT WERE TO BE SO, THE AD DITION OF RS.2,81,83,000/- WOULD BE FULLY JUSTIFIED. CONSEQU ENTLY, IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE REVENUE THAT THE TRI BUNAL HAD ERRED IN VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 15 DELETING THE ADDITION. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE RESPONDE NT REFERRED TO A DIVISION BENCH DECISION OF THIS COURT IN THE CASE OF CIT V, PUNEET SABHARWAL (2011) 338 ITR 485 16 TAXMANN.COM 320 /(2 012) 204 TAXMAN16 (DELHI) (MAG.) IN THAT DECISION A SPECIFI C QUESTION HAD BEEN RAISED AS TO WHETHER THE INCOME TAX APPELLATE TRIBU NAL WAS RIGHT IN HOLDING THAT NOTWITHSTANDING THE REPORT OF THE DVO THE REVENUE HAD TO PROVE THAT THE ASSESSEE HAD RECEIVED EXTRA CONSIDE RATION OVER AND ABOVE THE DECLARED VALUE OF THE SAME. THAT QUESTION WAS A NSWERED BY THIS COURT IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE DIVISION BENCH IN THE CASE OF PUNEET SABHARWAL (SUPRA) HAD ALSO PLACE D RELIANCE ON THE DECISION OF SUPREME COURT IN K.P. VARGHESE (SUPRA) AS ALSO ON ANOTHER DECISION OF A DIVISION BENCH OF THISCOURT IN CIT V. SMT. SRAJ DEVI(2010) 328 ITR 604/(2011) 197 TAXMAN 173 (DELHI) (MAQ.) WHEREI N THIS COURT HELD THAT THE PRIMARY BURDEN WAS DISCHARGED THAT RELIANCE COU LD BE PLACED ON THE VALUATION REPORT OF THE DVO. THERE ARE SEVERAL OTH ER DECISIONS OF THIS COURT IN THE SAME VEIN. ONE SUCH CASE BEING THE CASE OF CIT V VINOD SINGHAL (IT APPEAL NO.482/2010 DECIDED ON 05.05.2010) WHERE, AG AIN, RELIANCE WAS PLACED ON THE VERY SAME DECISION OF THE SUPREME COU RT IN K.P. VARGHESE (SUPRA) AND ALSO ON A DECISION OF THIS COURT IN CIT V. SMT. SHAKUNTALA DEVI (2009)316 ITR 46. IT WAS OBSERVED THAT THERE MUST B E A FINDING THAT THE ASSESSEE HAD RECEIVED AN AMOUNT OVER AND ABOVE THE CONSIDERATION STATED IN THE SALE DEED AND FOR THIS THE PRIMARY BURDEN WA S CAST ON THE REVENUE. IT IS ONLY WHEN THIS BURDEN IS DISCHARGED BY THE RE VENUE THAT IT WOULD BE PERMISSIBLE TO RELY UPON THE VALUE AS GIVEN IN THE VALUATION REPORT OF THE DVO 5. THE LAW SEEMS TO BE WELL SETTLED THAT UNLESS AND UNTIL THERE IS SOME OTHER EVIDENCE TO INDICATE THAT EXTRA CONSIDERATION HAD FLOWED IN THE TRANSACTION OF PURCHASE OF PROPERTY, THE REPORT OF THE DVO CANNOT FORM THE BASIS OF ANY ADDITION ON THE PART OF THE REVENUE. IN THE PRESEN T CASE THERE IS NO VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 16 EVIDENCE OTHER THAN THE REPORT OF THE DVO AND, THER EFORE, THE SAME CANNOT BE RELIED UPON FOR MAKING AN ADDITION. IN THESE CI RCUMSTANCES, THE QUESTION WHICH HAS BEEN FRAMED IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE APPEAL IS DISMISSED. (6) CIT VS LAHSA CPVT. LTD 357 ITR 671 (DELHI)- SECTION 142A OF THE INCOME-TAX ACT, 1961 - ESTIMATE MODE BY VALUATION OFFICER - ASSESSMENT YEAR 1999-2000 _ WHETHER ADDIT ION CON BE MODE SOLELY RELYING UPON REPORT OF DEPARTMENTAL VALUATION OFFICER - HELD, NO [PARA 5) 1. REVENUE IN THIS APPEAL UNDER SECTION 260A OF THE INCOME TAX ACT, 1961 ('ACT' FOR SHORT) IMPUGNS ORDER DATED 25.06.2010, P ASSED BY THE INCOME TAX APPELLATE TRIBUNAL IN THE CASE OF M/S LABSA CON STRUCTION PVT LTD.' ON THE GROUND OF PERVERSITY. THE APPEAL PERTAINS TO T HE ASSESSMENT YEAR, 1999-2000. (INCORRECTLY MENTIONED IN THE IMPUGNED O RDER AS ASSESSMENT YEAR 2006-07). 2. PROPERTY IN QUESTION BEARING NO.C-20, NDSF, SOUT H EX., PART-II, NEW DELHI HAD TWO SELLERS. THE RESPONDENT/ASSESSEE- LA HSA CONSTRUCTION PVT. LTD. HAD SOLD 50 SHALE OF THE PROPERTY IN FAVOUR OF MRS. MADHU ARORA, WHEREAS THE SECOND GROUP OF OWNERS CONSISTING OF F OUR INDIVIDUALS HAD SOLD 50 OF THE PROPERTY IN FAVOUR OF MRS. MADHU ARO RA AND HER HUSBAND MR. OM PRAKASH ARORA. 3. IT IS STATED BY THE COUNSEL FOR THE RESPONDENT THAT REVENUE HAD ACCEPTED THE ORDER OF THE TRIBUNAL IN THE CASE OF S AID FOUR INDIVIDUAL> AS ADDITION WAS MAD' SOLELY ON THE REPORT OF THE DEPAR TMENTAL VALUATION OFFICER,. THIS STATEMENT IS NOT CONTROVERTED OR' AC CEPTED BY THE COUNSEL FOR THE REVENUE AS HE HAS NO INFORMATION.. VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 17 4. THE DEPARTMENTAL VALUATION OFFICER HAD OPINED TH AT THE VALUE OF THE PROPERTY AT THE TIME OF PURCHASE WAS RS.2,84,72,600/- AND TH IS BECAME THE BASIS OF THE ADDITION MADE BY THE ASSESSING OFFICER . THE RESPONDENT/ASSESSEE HAD DISCLOSED SALE CONSIDERATIO N OF AS RS. 39,00, 000/- FOR SALE OF THEIR 50% SHARE, IN THE PROPERTY O MRS. MADHU ARORA AND MR. OM PRAKASH ARORA PAID AN AMOUNT OF RS.44,00,000 /- TO THE FOUR INDIVIDUAL CO-OWNERS FOR PURCHASE OF THE BALANCE 50 % SHARE. THUS, IN ALL THEY HAD SHOWN SALE CONSIDERATION OF RS. 83, 00,000 /-, INSTEAD OF RS..2,84,72,600/-, AS OPINED BY THE DEPARTMENTAL VA LUATION OFFICER. THIS PROPERTY WAS SOLD IN THE PERIOD RELATING TO THE ASS ESSMENT YEAR 2004-05 FOR RS.1,00,00,000/- NO ADDITION WAS MADE BY THE A SSESSING OFFICER ON THIS SALE CONSIDERATION. 5. INANERAN ADDITION CAN BE MADE SOLELY AND ON THE BAS IS OF THE REPORT OF DEPARTMENTAL VALUATION OFFICER, IS NO LONGER RES INTEGRA AND IS COVERED BY THE DECISION OF THIS COURT IN CIT V S.K. CONSTRUCTION CO (2008)167 TAXMAN171, CIT V NAVIN GERA (2OIO) 328 ITR 516/[2011) 198 TAXMAN 93(DELHI), CIT V. SMT. SURAJ DEVI (2010) 328 ITR 604/2011 197 TAXMAN 173 (DELHI) (MAG.) ANDCIT V BAJ RANG LAL BANSAL (2011) 335 ITR 572/200 TAXMAN 188 (MAG.)/12 TAXMANN .,COM 88 (DELHI).. IT HAS BEEN REPEATEDLY HELD THAT ADDITION CANNOT BE JUSTIFIED SOLELY RELYING UPON THE VALUATION REPORT. DECISION OF THE SUPREME COURT IN THE CASE OF K.P. VARGHESE V ITO (1981) 131 ITR 597/7 TAXMAN 13 HAS B EEN FOLLOWED. 6. IN VIEW OF THE AFORESAID POSITION OF THE TRIBUN AL DOES NOT REQUIRE INTERFERENCE. NO SUBSTANTIAL QUESTION OF LAW ARISE S. THE APPEAL IS ACCORDINGLY DISMISSED. ' (7) CIT V/S PRATAP SINGH AMROSINGH RAJENDRA SINGH 2 00 ITR 788 HELD, THAT THERE WAS NO DISPUTE THAT THE ASSESSEE M AINTAINED PROPER BOOKS OF ACCOUNT AND THE SAME HAD BEEN ACCEPTED IN THE PAST AND NO VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 18 DEFECTS WERE POINTED OUT IN THE BOOKS. THE EXPENSES WERE FULLY SUPPORTED BY VOUCHERS. FALL DETAILS WERE ALSO MENTIONED IN RESPECT OF EACH ITEM IN THE BOOKS SIMPLY BECAUSE THE VALUATION REPORT WAS O F A HIGH AMOUNT, THE BOOKS COULD NOT BE SAID TO BE UNRELIABLE. THE TRIBU NAL WAS THEREFORE, JUSTIFIED IN DELETING THE ADDITION OF RS. 55,780/- (8) CIT V/S VIJAY KUMAR D GUPTA (2014) 365 ITR 470 (GUJ) ' ....MOREOVER, IT IS APPARENT THAT THE ONLY REASON FOR MAKING THE ADDITION UNDER SECTION 69 OF THE ACT IS THAT THERE IS A DIFF ERENCE IN THE COST OF CONSTRUCTION AS DETERMINED BY THE VALUATION OFFICER AND AS SHOWN BY THE ASSESSEE. AT NO STAGE OF THE ASSESSMENT PROCEEDING S DOES THE ASSESSING OFFICER APPEAR TO HAVE MENTIONED THAT THE BOOKS OF ACCOUNTS ARE DEFECTIVE OR THAT THE COST OF CONSTRUCTION AS SHOWN IN THE BO OKS OF ACCOUNT IS NOT THE TRUE COST OF CONSTRUCTION. THUS, WHILE MAKING THE REFERENCE TO THE VALUATION OFFICER, THE ASSESSING OFFICER HAS NOT RECORDED ANY DEFECT IN THE BOOKS OF ACCOUNT NOR HAS HE REJECTED THE SAME. EXCEPT FOR T HE DIFFERENCE IN THE ESTIMATED COST DETERMINED BY THE VALUATION OFFICER AND THE ACTUAL COST AS SHOWN BY THE ASSESSEE, THE ASSESSING OFFICER HAS NO T BROUGHT ANY MATERIAL ON RECORD TO ESTABLISH THAT THE ASSESSEE HAD MADE A NY UNACCOUNTED INVESTMENT IN THE CONSTRUCTION OF THE BUILDING IN Q UESTION AND THAT BOOKS OF ACCOUNT DO NOT REFLECT THE CORRECT COST OF CONSTRUC TION. UNDER THE CIRCUMSTANCES, THERE WAS NO OCCASION FOR THE ASSESS ING OFFICER TO MAKE A REFERENCE TO THE VALUATION OFFICER. AS HELD BY THE SUPREME COURT IN THE CASE OF SARGAM CINEMA (SUPRA) UNLESS THE BOOKS OF A CCOUNTS ARE REJECTED, THE ASSESSING OFFICER CANNOT MAKE A REFERENCE TO VA LUATION OFFICER. THE REFERENCE MADE TO THE VALUATION OFFICER, NOT BEING IN CONSONANCE WITH THE PROVISION OF LAW, WAS, THEREFORE, INVALID. ACCORDI NGLY, THE REPORT MADE BY THE VALUATION OFFICER PURSUANT TO SUCH AN INVALID R EFERENCE COULD NOT HAVE BEEN MADE THE BASIS FOR ADDITION UNDER SECTION 69 O F THE ACT. VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 19 9 WHETHER AN ADDITION CAN BE MADE SOLELY AND SIMPLY ON THE BASIS OF THE VALUATION REPORT SUBMITTED BY DVO, IS NO LONGER RES INTEGRA AND IS COVERED BY THE VARIOUS DECISION OF HON'BLE COURTS MENTIONED BELOW:- CIT V S.K. CONSTRUCTION CO. (2008) 167 TAXMAN 171 CIT V NAVIN GERA (2010) 328 ITR 516/(2011) 198 TAXM AN93 (DELHI) CIT V SMT. SURAJ DEVI (2010) 328 ITR 604/(2011) 197 TAXMAN 173 (DELHI) (MAG.) CIT V BAJRANG LAL BANSAL (2011) 335 ITR 572/200 TAX MAN 188 (MAG.)/12TAXMANN.COM 88(DELHI) IT HAS BEEN REPEATEDLY HELD THAT ADDITION CANNOT B E JUSTIFIED SOLELY RELYING UPON THE VALUATION REPORT. DECISION OF THE SUPREME COURT IN THE CASE OF K. P. VARGHESE V. ITO [1981) 131 ITR 5 97/7 TAXMAN 13 NIRPALSINGH VIS CIT (2013) 3591TR 398 (P & H) RAGHURAJ AGRO INDUSTRIES (P)LTD (2013) 38 TAXMANN.COM 318(AII). (10) CIT V/S VRIDNABAN REAL ESTATE (P) LTD (2012 ) 254 CTR (ALL)10 ALTHOUGH ABOVE CITED CASE PERTAINS TO RE-OPENING OF THE CASE BASED ON OVA'S REPORT BUT RATIO LAID DOWN IS EQUALLY APPLICA BLE TO THE INSTANT CASE. HON'BLE COURT HAS DELETED THE RE-OPENING OF ASSESSM ENT U/S 147 BY HOLDING THAT OVO'S REPORT PERSE IS NOT AN INFORMATI ON FOR THE PURPOSE OF REOPENING OF ASSESSMENT U/S147-AO HAS TO APPLY HIS MIND ON THE INFORMATION, IF ANY, COLLECTED AND MUST FORM A BELI EF THEREO N FOR RE-OPENING OF ASSESSMENT-THERE HAS TO BE SOMETHING MORE THAN T HE REPORT OF OVA FOR THE BELIEF OF AO BY OBSERVING SO, HON'BLE COURT DISMISSED THE APPEAL OF REVENUE. VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 20 5.9 C ONSIDERING THE AFORESAID FACT AND CIRCUMSTANCES OF THE MATTER AND THE LAW AS INTERPRETED BY SEVERAL HIGH COURTS A ND THE HON'BLE SUPREME COURT - THE FINDINGS ON THIS ISSUE IN RESPE CT OF PECULIAR FACTS OF THIS CASE ARE AS BELOW; ADMITTEDLY, THE ASSESSEE FIRM MAINTAINED ITS REGULA R BOOKS OF ACCOUNTS SUPPORTED BY BILLS/VOUCHERS AND OTHER RECO RDS WHICH WERE SUBJECTED TO AUDIT. THE AO HAS NEITHER POINTED OUT ANY DEFECT IN BOOKS NOR BROUGHT ANY POSITIVE MATERIAL ON RECORD T O ESTABLISH ALLEGED UNACCOUNTED INVESTMENT IN PROJECT 'SIGNATURE RESIDE NCY'. MOST IMPORTANTLY, AO HAS NOT EVEN REJECTED THE BOOKS OF ACCOUNTS EVEN ALTER RECEIPT OF VALUATION REPORT. IN VIEW OF THESE FACTS, VALUATION REPORT OBTAINED FROM DVO CANNOT FORM A FOUNDATION I PSO FACTO FOR MAKING ADDITION TOWARDS ALLEGED SUPPRESSION OF COST OF INVESTMENT. NEITHER DVO NOR AO HAS POINTED OUT THAT CERTAIN EXP ENDITURE ON CERTAIN ITEMS/CONSTRUCTION WAS INCURRED WHICH WAS N OT RECORDED IN THE BOOKS MAINTAINED BY THE ASSESSEE. HENCE, ADDITI ONS MADE BY AO IS NOT SUSTAINABLE IN LAW BEING BASED MERELY ON VAL UATION REPORT RECEIVED FROM DVO. II) THE A.O. HAS NOT MENTIONED ANY REASON IN THE AS SESSMENT ORDER OR IN THE REFERENCE TO THE VALUATION, THAT HE HAD ANY INCRIMINATING MATERIAL WHICH LED TO FORM HIS BELIEF THAT THE APPELLANT HAD UNDER SLATED THE COST OF CONSTRUCTION REFERRED FOR VALUAT ION. IT IS VERY RELEVANT TO UNDERSTAND THAT THE APPELLANT WAS SUBJECTED TO S EARCH AND SEIZURE AC1ION U/S 132 OF THE ACT WHICH APPARENTLY DID NOT YIELD TO SEIZURE O F ANY INCRIMINATING PAPERS/DOCUMENTS SUGGESTING UNACC OUNTED INVESTMENT IN THE PROJECT 'SIGNATURE RESIDENCY'. LA CK OF ANY INCRIMINATING MATERIAL/EVIDENCE REGARDING UNDER REP ORTING OF COST OF CONSTRUCTION BEING POINTED OUT BY THE A.O .. IN SPI TE OF SEARCH AND VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 21 SEIZURE AC1ION ADDITION SIMPLY MADE ON THE BASIS 01 OVO'S REPORT IS EVEN MORE UNJUSTIFIED AND UNWARRANTED. III) DURING ASSESSMENT PROCEEDINGS, APPELLANT RAISE D SEVERAL OBJECTIONS WITH REGARDS TO METHODOLOGY ADOPTED BY D VO AS WELL AS VALUATION ASPECT BUT AO HAS TOTALLY FAILED TO CONSI DER THE SAME. HE HAS MECHANICALLY ADOPTED THE ESTIMATE OF VALUE OF CONSTRUCTION PROVIDED BY DVO. ONE SHOULD NOT LOSE SIGHT PF THE FACT THAT AT THE END 01 THE DAY, COST DERIVED BY DVO IN HIS REPORT IS NOTHI NG BUT AN 'ESTIMATE' WHICH IS BOUND OF HAVE SOME AMOUNT OF ESTIMATION, GUESS WORK & OPINION INVOLVED AND ESTIMATE CANNOT BE 'EXACT'. AF TER ALL IT IS AN ESTIMATE DONE BY AN EXPERT AND IT IS A POPULAR M AXIM 'TO ERR IS HUMAN'. IT IS EVIDENT FROM THE VERY FACT THAT APPEL LANT HAS RAISED VARIOUS DISCREPANCIES IN THE DVO'S REPORT HOWEVER. A.O. DID NOT FIND IT APPROPRIATE TO INVITE COUNTER COMMENTS OF D VO ON OBJECTIONS RAISED BY THE ASSESSEE. ALTHOUGH, IT IS A SETTLED LEGAL PO SITION THAT VALUATION REPORT SUBMITTED BY DVO IS NOT BINDING UPON AO, BUT IN THE PRESENT CASE AO HAS ADOPTED AND USED THE VALUATION REPORT A S IT IS BINDING ON HIM. APPELLANT HAS POINTED OUT SEVERAL GLARING MIST AKES AND OMISSIONS IN VALUATION REPORT, ON WHICH AO HAS MAIN TAINED A CONSPICUOUS SILENCE WHICH IS UNBECOMING OF A QUASI-JUDICIAL AUTHORITY (IV) IT IS IMPORTANT TO NOTE THAT DVO HAS PREPARED HIS REPORT BASED ON DPAR- 2007 AFTER APPLYING COST INDEX ON ABOVE DPAR AS BASE 100. INTERESTINGLY, DVO HAS APPLIED SAME RATE FOR COST OF CONSTRUCTION OF THE PROJECT EVEN THOUGH THE INVESTMENT IS SPREAD O VER MANY YEARS. AS PER APPELLANT, OVO SHOULD HAVE ADOPTED MPPWD R ATES AFTER MAKING CERTAIN ADJUSTMENT FOR THE CONSTRUCTION DONE BY THE ASSESSEE IN DIFFERENT ASSESSMENT YEARS. HON'BLE ALLAHABAD H IGH COURT IN THE CASE OF CIT V/S RAJ KUMER 182 ITR 436 (ALL) HAS HELD THAT VALUE OF VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 22 PROPERTY UNDER PWD RATES IS MUCH LOWER THAN THE CO ST OF VALUE OF PROPERTY AS PER CPWD RATES. SIMILARLY, IN THE CASE OF CIT V/S PREM KUMERE MURDLYE 296 ITR 508 (RAJ) WHEREIN HON'BLE COURT REFUSED TO INTERFERE IN THE ORDER OF ITAT HOLDING THAT APPROP RIATE TO BE TAKEN INTO CONSIDERATION WOULD BE PWD RATES AND HOLDING DIFFER ENCE BETWEEN CPWD RATES AND PWD RATES AT 20. SIMILAR VIEWS HAVE BEEN EXPRESSED IN THE CASE OF ITO V/S NILESH MEHESHWERI (2011) 53 DTR 43 (ITAT JAIPUR). IN VIEW OF THIS, A DIFFERENCE OF 20 BETWEEN COST SH OWN IN BOOKS AND ESTIMATED BY DVO FALLS WITHIN 'TOLERANCE BAND' AS HELD BY VARIOUS COURTS. FURTHER, APPELLANT PURCHASED MATER IAL ON WHOLESALE BASIS WHICH BRINGS 'ECONOMY OF SCALE' INTO CONSTRUC TION COST WHICH AS PER APPELLANT WOULD RESULT INTO SAVINGS UPTO 25. A O HAS ACKNOWLEDGED THIS ASPECT BUT DID NOT PROVIDE ANY R ELIEF WHILE MAKING ADDITION. APPELLANT HAS ALSO ARGUED ABOUT S AVINGS IN COST OF CONSTRUCTION FOR OTHER REASONS AS WELL I.E. SE LF-SUPERVISION. CONSULTANCY CHARGES ETC. HOWEVER. AO FAILED TO AL LOW ANY BENEFIT TO THE ASSESSEE ON ANY OF THE COUNT WHICH IS NOT JUSTIFIED. I AM OF THE VIEW THAT AS A CONSEQUENCE OF SUCH UND ER REPORTING, THE AO IS REQUIRED TO REJECT THE BOOKS OF ACCOUNTS OF THE ASSESS E . IN THE CASE OF THE APPELLANT THE AO HAS NEITHER REJECT ED THE BOOKS OF ACCOUNTS BEFORE MAKING A REFERENCE TO DVO FOR VALUA TION OF PROPERTY NOR HE DID AFTER RECEIPT OF VALUATION REPORT FROM D VO. APART FROM THE CASE LAWS REFERRED IN PARA 5.8 OF THIS ORDER. IT IS PERTINENT TO REFER TO THE DECISION OF ITO V IS DREAMLAND ENTERPRISES 80 TAXMEN 143 (ITAT AHD) WHEREIN IT WAS HELD THAT WHEN THE COST OF CONSTRUCT ION DECLARED BY THE ASSESSEE WAS SUPPORTED BY REGULAR BOOKS OF A CCOUNTS AND VOUCHERS, CORRECTNESS OF WHICH WAS NOT DISTURBED BY THE AO OR DVO BY BRINGING ANY SPECIFIC MATERIAL ON RECORD, THE CI T{A) WAS FULLY JUSTIFIED IN HOLDING THAT NO ADDITION COULD BE VALI DLY MADE ON ACCOUNT VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 23 OF ANY UNDERSTATEMENT OF COST OF CONSTRUCTION MEREL Y BECAUSE OF DIFFERENCE AS ESTIMATED BY THE DVO. HENCE, ON THIS COUNT. I AM OF THE VIEW THAT ADDITION MADE MERELY ON THE BASIS OF DVO' S REPORT IS NOT SUSTAINABLE. VI) THE VALUATION REPORT OF DVO IS NOT BINDING ON THE AO BECAUSE IT IS MERELY AN OPINION OF AN EXPERT. IN THE CONTEXT O F THE CONTROVERSY IN ISSUE, IT MAY ALSO BE GERMANE TO NOTICE THE EXPRESS ION USED BY LEGISLATURE I.E. 'ESTIMATE'. THUS, RESORT CAN BE MA DE TO THE SAID PROVISION BY THE AO FOR THE PURPOSE OF 'ESTIMATING' THE VALUE OF ANY INVESTMENT. BULLION, JEWELLERY OR ANY VALUABLE ARTI CLE ETC. HOWEVER, THIS IS SETTLED LEGAL POSITION THAT ADDITION CANNOT BE MADE SOLELY ON THE BASIS OF VALUATION REPORT WHICH IS ONLY GIVE AN ESTIMATE AS HELD BY VARIOUS HIGH COURTS, DISCUSSED EARLIER. VII) IT IS APPARENT FROM RECORD THAT ASSESSING OFF ICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO ESTABLISH THAT THE ASSESS EE HAD MADE ANY UNACCOUNTED INVESTMENT IN CONSTRUCTION OF THE BUILD ING IN QUESTION AND THAT BOOKS OF ACCOUNTS DO NOT REFLECT THE CORRE CT COST OF CONSTRUCTION. IT IS EVIDENT THAT ONLY REASON FOR MA KING THE ADDITION U/S 69B OF THE ACT IS THAT THERE IS A DIFFERENCE IN THE COST OF CONSTRUCTION AS ESTIMATED BY THE VALUATION OFFICER AND AS SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS. VIII) THE AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT CONSTRUCTION ACCOUNT WAS NOT PRODUCED BEFORE HIM FO R VERIFICATION WHICH IS CONTRARY TO HIS STATEMENT IN PARA 2 OF THE ASSESSMENT ORDER WHEREIN HE HAS MENTIONED THAT BOOKS OF ACCOUNTS WER E PRODUCED AND VERIFIED BY HIM. HOWEVER DURING THE APPEAL PROCEEDINGS THE ASSESSEE WAS DIRECTED TO FURNISH THE COPY OF CONSTRUCTION AC COUNT FOR THE PERIOD VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 24 UNDER CONSIDERATION AND TO PRODUCE THE BOOKS OF ACCO UNTS AND SUPPORTING VOUCHERS FOR VERIFICATION WHICH WAS DULY COMPLIED BY THE ASSESSEE. 5.10 IT IS INTERESTING TO NOTE THAT VALUATION OF THE PROPE RTY UNDER CONSIDERATION WAS DONE BY THE DVO ALTER APPLYING COS T INDEX ON THE BASIS OF DPAR-2007 (AS BASE). IT IS SETTLED LAW THAT DPAR RATES ADOPTED BY DVO ARE HIGHER THAN PWO RATES. HON' BLE HIGH COURT OF RAJASTHAN IN THE CASE OF CIT V IS PREM KUMARI MURDIYA 296 ITR 344 (RAJ ) REFUSED TO INTERFERE IN THE ORDER OF IT AT HOLDING THAT APPROPRIATE RATE TO BE TAKEN INTO CONSIDERATION WOULD BE PWO RATES AND HOLDING DIFFERENCE BETWEEN CPWO RATES AND PWO RATES AT 20. SIMILARLY, IN THE CASE OF ITO V/ S NILESH MAHESHWARI (2011) 53 DTR 43 (ITAT JAIPUR) HELD ALTER RELYING ON THE DECISION OF TEK CHAND V/S ITO 51 TTJ (JPR) 607 THAT THERE IS VARIATION IN LOCAL PWD RATES AND CPWD RATE BY MAR GIN OF 20. IT HAS BEEN HELD IN THE CASE OF CIT V/ S LAHSA CONSTRUCTION (P) L TD (2013) 357 ITR 671 (DELHI) THAT NO ADDITION CAN BE MADE SOLELY ON THE BASIS OF VALUATION REPORT OF OVO. LD AR ALSO PLACED RELIANCE ON THE DECISION OF CIT V/ S VS PRALAP SINGH AMRO SINGH (1993) 200 ITR 788 (RAJ) THAT ADDITION TO INCOME COULD NOT BE MADE ON THE BASIS OF THE REPORT OF THE VALUATION OFFICER. 5.11 AS FAR AS CASE LAWS RELIED UPON BY THE A.O. ARE CONC ERNED, ON PERUSAL IT IS SEEN THAT NONE OF THE CASE LAWS RELIED UPON BY THE A.O. ARE APPLICABLE TO THE FACTS OF THIS CASE. THE CASE LAWS RE FERRED BY AO ARE AS UNDER:- A. CIT V OMPRAKASH BAGARIA (HUF) 2871TR 523 (MP) IN THIS CASE THE AD ISSUED A COMMISSION UNDER S. 13 1(1)(D) TO DISTRICT VALUATION OFFICER ON 23RD AUG, 1996, TO DETERMINE THE COST OF CONSTRUCTION VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 25 OF THE BUILDING FOR THE PURPOSE OF MAKING ON ESTIMATE OF THE INVESTMENT REFERRED TO IN S, 69, ADDITIONS WERE MODE ON THIS BASIS AND THE ASSES SEE HAD FILED ON APPEAL BEFORE THE HIGHER AUTHORITIES C HALLENGING THAT REFERENCE TO VALUATION OFFICER IS PERMISSIBLE ONLY U/S 55A OF THE ACT TO DETERMINE THE MARKET VALUE OF CAPITOL ASSET AND NO REFERENCE CAN BE MODE U/S 131(1)(D), THE APPEAL WAS PENDING BEFORE THE HIGH COURT. DURIN G THE PENDENCY OF THE APPEAL BEFORE THE HIGH COURT THE FINANCE ACT 2004 M ODE AMENDMENT IN SECTION 142A PROVIDING THE AO WITH POWER TO MAKE A REFERENCE TO THE DVO FOR ESTIMATING THE VALUE OF INVESTMENT AND THE AMEN DMENT WAS MADE EFFECTIVE WITH RETROSPECTIVE EFFECT FROM 15.11.72. THE PROVISO TO THE SECTION PROVIDED THAT THE AMENDED SECTION WILL NOT APPLY TO ASSESSMENT WHICH HAS BECOME FINAL AND CONCLUSIVE ON OR BEFORE 30.09.2004 . IN THESE CIRCUMSTANCES THE COURT HELD THAT OS THE APPEAL IS PENDING BEFORE IT, THE ASSESSMENT HAS NOT BECOME FINAL AND CONCLUSIVE AND HENCE THE AMENDED SECTION 142A OF THE ACT WILL BE APPLICABLE AS IT HA S BEEN AMENDED W.E,F 15.11.72 AND ACCORDINGLY THE REFERENCE MADE TO THE DVO WAS A VALID REFERENCE. THUS THE ISSUE FOR DECISION BEFORE THE COURT IN THA T CASE WAS WHETHER AMENDED PROVISIONS OF SECTION 142A MADE IN 2004 CON BE MADE APPLICABLE TO CASES IN WHICH ASSESSMENTS ORE ALREAD Y COMPLETED. THU' IT WOULD BE SEEN THAT THE ,AID JUDGMENT HA' NO APPLICA BLE TO THE CASE OF THE ASSESSEE. SHAKTI TOURIST HOME V CIT 308 ITR 228 (KERALA): THE CITATION MENTIONED IN THE ASSESSMENT ORDER IS NOT CORRECT. THE CORRECT CITATION IS 308 /TR 0028. IN THIS CASE THE ISSUE BEFORE THE HIGH COURT WAS WHETHER IT CAN MAKE CHANGES IN THE VALUATION MODE AND WHETHER THE ADDITION TOWARD, UNEXPLAINED INVESTMENT MODE BY THE AO IN ONE YEAR CAN BE SPREAD OVER MANY YEARS, IN THIS REFERENCE THE COURT HELD THAT 'WE DO NOT FIND WE HAVE ANY AUTHORITY TO ENTER INTO THE CONTROVERSY ON VALUATION OF ASSETS W HICH IS A PURE FACTUAL ISSUE' AND THE COURT FURTHER HELD THAT ''THE CLAIM FOR SPREADING OVER OF THE VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 26 INVESTMENT FOR SEVERAL YEARS CON BE GRANTED ONLY IF IT IS PROVED THAT THE INVESTMENT IS MODE IN SEVERAL YEARS. THERE IS NO SUCH EVIDENCE IN THIS CASE'. THUS IT WOULD BE SEEN THAT THE SAID JUDGMENT HAS NO APPLICABILITY TO THE CASE OF THE ASSESSEE. CIT V A O ALI MOHAMMAD 296 ITR 570 (MAD) THE ISSUE IN THIS CASE WAS THAT THE DVO HAD ESTIMAT ED THE COST OF CONSTRUCTION AT RS.64,88,000/- AS AGAINST RECORDED COST OF RS.47,42,629/-. THE ADDITION MODE WAS RESTRICTED TO RS. 9 LOKH AND TOO WAS, DIRECTED TO BE SPREAD OVER 0 PERIOD OF 5 YEARS BY THE CIT(A) AND THE ITAT BOTH. THIS WAS CHALLENGED BY THE DEPORTMENT BEFORE THE HIGH COURT AND THE COURT HELD THAT ''THE VALUATION IS NOT A MATHEMATICAL PRECISION AND THERE IS BOUND TO BE DIFFERENCE BETWEEN ONE VALUER TO ANOTHER VALUER AND IT IS, ONLY A PURE QUESTION OF FACT' CIT VS, P. MOHONOKALA (2007) 210 CTR (SC) 20 : (2007) 291 1 TR 278 (SC), REFERRED TO BY THE HIGH COURT HELD 'THAT WHENEVER T HERE IS A CONCURRENT FACTUAL FINDING BY THE AUTHORITIES BELOW, THE SOME SHOULD BE ACCEPTED AND NO INTERFERENCE SHOULD BE CALLED FOR BY THE HIGH CO URT' THUS IT WOULD BE SEEN THAT THE ISSUE BEFORE THE HIG H COURT WAS, ENTIRELY DIFFERENT 5.12 IN VIEW OF THE ABOVE DISCUSSION, I DO NOT FIND ANY MERIT IN TH E ADDITION 01 RS. 99,82.487/-, RS. 2,73.48,559/-, RS. 5,32,58, 155/- AND AS. 4,38,32,956/- IN A.Y 2011-12 TO 2014.15 MERELY MADE ON THE BASIS OF VALUATION REPORT WHICH IS NOTHING BUT AN ESTIMATE O F VALUATION OF 'COST OF INVESTMENT' AND DVO'S REPORT CANNOT BE TAKEN AS A C ONCLUSIVE PROOF OF UNDISCLOSED INVESTMENT MADE IN THE PROJECT SIGNATURE RESIDENCY OF THE ASSESSEE FIRM. THEREFORE APPEAL ON THIS GROUND IS ALLOWED. VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 27 48. FROM PERUSAL OF THE ABOVE DETAILED FINDING OF L D. CIT(A) AND VARIOUS CASE LAWS REFERRED AND RELIED BY THE LD. COUNSEL FO R THE ASSESSEE WE ARE OF THE CONSIDERED VIEW THAT THE RATIO LAID DOWN BY THE DECISION REFERRED HEREIN ABOVE ARE SQUARELY APPLICABLE TO THE ISSUE A ND FACTS RAISED BEFORE US BY THE REVENUE AUTHORITIES WITH REGARD TO THE AD DITION MADE FOR UNEXPLAINED INVESTMENT U/S 69B OF THE ACT FOR THE A MOUNT INCURRED FOR CONSTRUCTION OF THE PROJECT AND ADDITION MADE SOLEL Y ON THE BASIS OF DEPARTMENTAL VALUATION OFFICER REPORT EVEN THOUGH B OOKS OF ACCOUNTS OF THE ASSESSEE AS WELL AS THE BOOK RESULTS HAVE NOT BEEN REJECTED BY THE LD. A.O NOR ANY MATERIAL EVIDENCE WAS UNEARTHED DURING THE COURSE OF SEARCH AND IN THE ASSESSMENT PROCEEDINGS WHICH COULD PROVE THA T UNACCOUNTED INVESTMENT HAS BEEN MADE BY THE ASSESSEE IN THE RES IDENTIAL PROJECT SIGNATURE RESIDENCY. WE THEREFORE IN THE GIVEN FAC TS AND CIRCUMSTANCES OF THE CASE, RESPECTFULLY FOLLOWING JUDICIAL PRONOUNCE MENTS REFERRED AND RELIED BY THE LD. COUNSEL FOR THE ASSESSEE AND LD. CIT(A) AND ALSO IN THE LIGHT OF THE FACT THAT FIRSTLY THE ASSESSEE HAS MAINTAINED R EGULAR BOOKS OF ACCOUNTS WHICH ARE NOT FOUND TO BE INCOMPLETE OR UNRELIABLE AND ALSO HAVE NOT BEEN REJECTED BY THE LD. A.O AND SECONDLY VALUATION WAS DONE OF THE INCOMPLETE PROJECT WHICH HAS BEEN VALUED NOT ON THE BASIS OF L OCAL PRICE BUT ON THE BASIS OF DELHI RATES WHICH ARE UNIVERSALLY ACCEPTED ON HIGHER SIDE. THEREFORE SINCE NO DEFECTS WERE POINTED OUT IN THE BOOKS OF ACCOUNTS REGULARLY MAINTAINED BY THE ASSESSEE AND ARE DULY A UDITED AND NO INCRIMINATING MATERIAL WAS FOUND IN THE SEARCH TO S HOW THAT UNACCOUNTED INVESTMENT IN THE BUILDING PROJECT HAS BEEN MADE, A DDITION MADE PURELY ON THE BASIS OF DEPARTMENTAL VALUATION REPORT, WE FIND NO REASON TO INTERFERE IN THE FINDING OF LD. CIT(A) WHO WAS RIGHTLY DELETE D THE ADDITION FOR THE ALLEGED UNDISCLOSED INVESTMENT U/S 69B OF THE ACT M ADE BY THE LD. A.O AT RS.2,73,48,559/-, RS.5,32,58,155/- AND RS.4,38,32,9 56/- FOR ASSESSMENT YEARS 2012-13, 2013-14 AND 2014-15 RESPECTIVELY. WE ACCORDINGLY VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 28 CONFIRM THE FINDING OF LD. CIT(A) ON THIS ISSUE AND DISMISS REVENUES COMMON GROUND NO.1 RAISED FOR ASSESSMENT YEARS 201 2-13, 2013-14 AND 2014-15 IN ITA NO.174 TO 176/IND/2018. 7. WE THEREFORE TAKING A CONSISTENT VIEW AND RESPEC TFULLY FOLLOWING THE DECISION OF THIS TRIBUNAL IN THE CASE OF ANOTHER GROUP CONCERN M/S SIGNATURE BUILDERS (SUPRA) DISMISS REVENUES GROUND NO.1 FOR ASSESSMENT YEAR 2013-14 AND GROUND NO.1 FO R ASSESSMENT YEAR 2014-15. 8. AS REGARDS SECOND GROUND COMMONLY RAISED FOR ASS ESSMENT YEAR 2013-14 AND 2014-15 REVENUE HAS CHALLENGED THE FINDING OF LD. CIT(A) DIRECTING THE LD. A.O TO PROVIDE DEDUCT ION/SET OFF OF THE ADDITION MADE U/S 69B OF THE ACT IN VIEW OF SECTION 115BBE OF THE ACT. SINCE WE HAVE ALREADY CONFIRMED THE FINDING O F LD. CIT(A) DELETING THE ADDITION MADE BY LD. A.O U/S 69B OF TH E ACT THIS COMMON GROUND NO.2 RAISED FOR ASSESSMENT YEARS 2013 -14 AND 2014-15 BECOMES INFRUCTUOUS AND THUS DESERVES TO B E DISMISSED. WE ACCORDINGLY DISMISS GROUND NO.2 FOR ASSESSMENT Y EARS 2013-14 AND 2014-15 RAISED BY THE REVENUE. VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 29 9. GROUND NO.3 RAISED BY THE REVENUE FOR ASSESSMENT YEAR 2013- 14 IS GENERAL IN NATURE WHICH NEEDS NO ADJUDICATI ON. 10. NOW WE TAKE UP REVENUES REMAINING GROUNDS FOR ASSESSMENT YEAR 2014-15. AS REGARDS GROUND NO.3 REVENUE HAS CH ALLENGED THE FINDING OF LD. CIT(A) ALLOWING RELIEF OF RS.21,50,0 00/- AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F UNEXPLAINED INVESTMENT U/S 69 OF THE INCOME TAX ACT,1961 IN PUR CHASE OF LAND AT SERNARI KALAN CONSIDEDRING THE FACT THAT THE ASS ESSEE OFFERED RS. 225 LAKHS AS VOLUNTARY DISCLOSURE TOWARDS INVESTMEN T IN LAND IN A GENERAL MANNER WITHOUT ANY REFERENCE TO ANY SPECIFI C LAND. 11. BRIEF FACTS RELATING TO THIS GROUND ARE THAT DU RING THE COURSE OF SEARCH, PAGE NO.10 OF LPS-2 WAS FOUND AND SEIZED FR OM THE RESIDENTIAL PREMISES OF SHRI VIPIN CHOUHAN WHICH C ONTAINS DETAILS OF PURCHASE OF LAND AT SEMARI KALAN, BHOPAL. THE A O DURING ASSESSMENT PROCEEDINGS FOUND THAT THE PURCHASE OF T HE SAID LAND HAS BEEN MADE UNDER THE HEAD W AND C AND THE LA ND PURCHASED UNDER THE HEAD C WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS, THEREFORE, AO REQUIRED ASSESSEE TO EXPLAIN AND SHOW CAUSE AS TO VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 30 WHY THE ADDITION SHOULD NOT BE MADE ON ACCOUNT OF U NEXPLAINED INVESTMENT. 12. WE FURTHER OBSERVE THAT LD. CIT(A) DELETED THE ADDITION FOR RS.21,50,000/- BY GIVING TELESCOPIC BENEFIT TO THE ASSESSEE AGAINST INCOME OF RS.225 LAKHS OFFERED TO TAX WHICH WAS SUR RENDERED DURING THE COURSE OF SEARCH WITHOUT SPECIFYING THE TRANSACTION. RELEVANT EXTRACT OF FINDING OF LD. CIT(A) IS REPROD UCED BELOW:- DISCUSSION AND APPELLATE DECISION:- 7.3 SUBMISSION FILED BY APPELLANT ALON WITH THE DET AILS/ MATERIAL BROUGHT ON RECORD AND THE CONTENTS OF THE LOOSE PAPER UNDER CONSIDERATION HAVE BEEN DULY CONSIDERED . CASE LAWS RELIED UPON BY THE APPELLANT HAVE BEEN PERUSED AND CONSIDERED. DUE CONSIDERATION HAS BEEN GIVEN TO THE LINDINGS ARRIVED AT IN THE ASSESSMENT ORDER. ON CARE LULL PERUSAL 01 THE LOOSE PAPER IT IS OBSERVED THAT THE PAPER CONTAINS DETAILS 01 LAND PURCHASED BY THE ASSESSEE IN IRONT 01 WHICH AMOUNTS RS. 27.15. RS. 30.50 AND RS. 4.90 IS WRITTEN AGAINST WHICH A (W) IS MENT IONED AND THIS (W) IS INLERRED BY THE AO AS THE PAYMENT M ADE IN WHITE. ALL THESE AMOUNTS REPRESENT PURCHASE CONSIDE RATION MENTIONED IN LACS PAID BY THE ASSESSEE AND ARE APPE ARING VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 31 IN THE PURCHASE DEEDS TOR PURCHASE 01 THE RESPECTIVE PROPERTIES AND WHICH IS DULY RECORDED IN ITS REGULA R BOOKS 01 ACCOUNT. THUS THE ENTRIES APPEARING IN THE LOOSE PA PER AND MARKED AS (W) ARE CORROBORATED BY INDEPENDENT EVIDENCE. THERE IS A CORRESPONDING ENTRY 01 RS.9.60. RS. 11.50 AGAINST THE LAND PURCHASED WHEREIN THE AMOUNTS ARE RECORDED WITH A LETTER (C) WHICH HAS BEEN INLERRED BY THE AO AS THE CASH PORTION PAID TOR PURCHASE 01 THE LANDS UNDER CONSIDERATION AND IS DECIPHERED TO HAVE BEEN MENTIO NED IN LAKH. THE ASSESSEE HAD CONTENDED THAT THE AMOUNT MENTIONE D AS (C) REPRESENTS THE COMMISSION PAYABLE TO MR. MUKESH SHAH, A BROKER FOR ARRANGING A CUSTOMER FOR PURCHASE OF THE LAND UNDER CONSIDERATION AS THE ASSESSEE WAS NOT ABLE TO COMME NCE ANY PROJECT ON THE LAND. THE SUBMISSIONS 01 THE ASSESSEE ARE NOT VERY CONVINCING. IT IS SEEN THAT THERE IS NO MENTION 01 (C) IN FRONT 01 THE LAND PURCHASED FROM MR. KOTWANI TOR RS. 4.90 LAKH WHICH IMPLIES THAT THE SAID LAND WAS BEING OFFERED TOR SA LE WITHOUL COMMISSION. NO BROKER WOULD AGREE TO MAKE A NY TRANSACTION ON BEHALL 01 ANY CUSTOMER WITHOUT COMMISSION AND THUS THE EXPLANATION 01 THE ASSESSEE IS NOT ACCEPTABLE. FURTHER A COMMISSION OF RS. 9.60 LAC AND RS. 11.50 LAKH IS VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 32 OFFERED ON A LAND PURCHASED TOR RS.27.15 LAKH AND R S. 30.50 LAKH MAKING THE COMMISSION AT APP 30. BROKERAGES OF THESE HIGH AMOUNTS ARE NOT GENERALLY PAID AND THE ASSESSE E HAS FAILED TO BRING ON RECORD ANY SPECIAL CIRCUMSTANCES JUSTIFYING SUCH HEAVY OFFER OF COMMISSION. THE ASSESSEE HAS PURCHASED THE LAND IN JANUARY 2014 AND THE LOOSE PAPER UNDER REFERENCE WAS SEIZED ON 29.01 .2014. THE ASSESSEE HAS FAILED TO EXPLAIN THE CIRCUMSTANCES WA RRANTING HIM TO DECIDE THAT THE PROJECT CANNOT BE COMMENCED ON THESE LANDS IN SUCH A SHORT OF PERIOD OF TIME. 'THUS THE EXPLANATIONS OF THE ASSESSEE ARE NOT CONVINCING AND THE AO IS CORRECT IN HOLDING THAT THE AMOUNTS MENTIONED AG AINST (C) REPRESENT PAYMENTS MADE IN CASH FOR PURCHASE OF THE CORRESPONDING LANDS. IT IS HOWEVER SEEN THAT (C) IS MENTIONED AGAINST T OTAL AMOUNTS OF RS. 21.10 LAKH ONLY AS AGAINST THE ADDI TION OF RS. 43,60,000/- MADE BY THE ASSESSEE. THE DIFFE RENCE IS ON ACCOUNT OF ADDITION OF RS. 22.50 WHICH IS AN AM OUNT MENTIONED IN THE LOWER PORTION OF THE PAPER AS DE TAILED BELOW: '83.65', ' 60.00', 11 23.65', ' 22.50', '46.15'. ON CARE FULL CONSIDERATION OF THE LOOSE PAPER IT IS DECIPHERED THAT '83.65' DENOTES RS.83,65,OOO/- ( RS. 27.15 (+) RS. 30.50 (+) RS. 4.90 = RS.62.55 (PAYMENT RECORDED IN THE BOOKS) PLUS (RS. 9.60 (+) RS. 11.50 = 21.10 BEING ON MONEY PAID) BEING PURCHASE VALUE OF THREE LANDS INCLUSIVE OF ON MONEY PAID AS DETAILED IN THE SEIZED PAPER. '60' & '23.65' MENTIONED IN THE LOOSE VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 33 PAPER SHOULD LOGICALLY DEMONSTRATE THE PAYMENT MADE AND THE BALANCE DUE. HOWEVER THE PAYMENT MADE BY CHEQUE IS 62.55 LA KH AND UNRECORDED CASH PORTION IS NOT VERY PROBABLE TO REMAIN UNPAID AFTER THE REGISTRATION OF PURCHASE/SALE DEED AND THUS NO LOGICAL EXPLANATION IS AVAILABLE FOR THESE TWO FIGURES. SIMILARLY NO LOGIC IS POSSIBLE TO BE M ADE OUT FOR '22.50' ADDED BACK. THUS NO LOGICAL EXPLANATION FOR APPEARANCE O F SUCH AMOUNT COULD BE GIVEN BY THE ASSESSEE OR THE AO. IN ABSENCE OF ANY LOGICAL EXPLANATION OF THIS AMOUNT ESPECIALLY WHEN THE UNEXPLAINED CASH PO RTION OF THE PURCHASE OF THE LANDS UNDER CONSIDERATION HA S ALREADY BEEN DETERMINED AND QUANTIFIED NO COGNIZANC E COULD HAVE BEEN GIVEN FOR THIS FIGURE AND NO ADDITI ON WAS WARRANTED. THE ADDITION MADE BY THE AO IS THEREFORE RESTRICTE D TO RS. 21,10,000/ (RS. 9,60,000 + RS. 11,50,000/-). IT IS ALSO SEEN THAT DURING THE COURSE OF SEARCH, STATEMENT OF MR. VIPIN CHOUHAN ONE OF THE PARTNERS WAS RECORDED ON 02.02.2014 IN WHICH HE STATED THAT THE SAID FIRM HAS RECEIVED CASH AMOUNT OUTSIDE ITS BOOKS, AN D CASH PAYMENTS HAVE BEEN MADE FOR LAND. THE ASSESSEE HAS OFFERED AN AMOUNT OF RS. 225 LAKH TOWARDS SUCH INCO ME RECEIVED AND UTILIZED IN MAKING UNRECORDED INVESTM ENT IN LAND. THE DETAILS OF LAND PURCHASED OR THE LOOSE PA PERS BASED ON WHICH THE DECLARATION WAS MADE IS NOT SPEC IFIED IN THE STATEMENT RECORDED AND HENCE IT CANNOT BE DE NIED THAT THE SURRENDER MADE COVERED THE INVESTMENT IN T HE VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 34 LANDS UNDER CONSIDERATION. AS THE ASSESSEE HAS ALREADY OFFERED RS. 225 LAKH TOWARDS INVESTMENT IN LAND IN A GENERAL MANNER WITH OUT REFERENCE TO ANY SPECIFIC LAND, CREDIT FOR INCOME D ECLARED IN SUCH DECLARATION NEEDS TO BE GIVEN, ACCORDINGLY THE AMOUNT OF UNEXPLAINED INVESTMENT CAN BE ATTRIBUTED TO THE DISCLOSURE MADE AND NO SEPARATE ADDITION IS WARRANT ED TO BE MADE FOR RS.21,50,000/CONFIRMED IN THE ABOVE PAR A. THIS GROUND # 5 OF AY 2014-15 OF APPEAL IS ALLOWED. 13. FROM PERUSAL OF THE ABOVE FINDING WE OBSERVE TH AT LD. CIT(A) HAS GIVEN TELESCOPING BENEFIT TO THE ASSESSEE AGAIN ST THE INCOME SURRENDERED DURING THE COURSE OF SEARCH. REVENUE FAILED TO PROVE THAT THE ALLEGED SURRENDER FOR RS.225 LAKH WAS GIVE N WITH REGARD TO A SPECIFIC TRANSACTION. IT WAS A GENERAL SURRENDER NOT HAVING ANY NEXUS WITH ANY SPECIFIC TRANSACTION TO LAND AND THE REFORE LD. CIT(A) HAS RIGHTLY GIVEN THE CREDIT FOR INCOME DECLARED IN SUCH DECLARATION. WE THEREFORE CONFIRM THE FINDING OF LD. CIT(A) DELE TING THE ADDITION FORRS.21,50,000/- TREATING IT TO BE A PART OF SURRE NDER OF RS.225 LAKH MADE BY THE ASSESSEE DURING THE COURSE OF SEAR CH. THUS GROUND NO.3 OF THE REVENUE STANDS DISMISSED. VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 35 14. AS REGARDS GROUND NO.4 RAISED BY THE REVENUE RE LATING TO DISALLOWANCE U/S 40A(3) OF THE ACT MADE BY THE LD. A.O TOWARDS CASH PAID AGAINST PURCHASE OF LAND AT SEMRI KALAN, BHOPAL, WE FIND THAT LD. CIT(A) AFTER EXAMINING THE FACTS OF THE C ASE DELETED THE DISALLOWANCE U/S 40A(3) OF THE ACT AT RS.4,90,000/- OBSERVING AS FOLLOWS:- 8. GROUND # 6 OF AY 2014-15: DISALLOWANCE MADE U/S 40A(3) OF RS. 4,90,000/- DISCUSSION AND APPELLATE DECISION:- 8.4 SUBMISSION FILED BY APPELLANT ALONG WITH THE DETAIL S / MATERIAL BROUGHT ON RECORD HAVE BEEN DULY CONSIDERE D. CASE LAWS RELIED UPON BY THE APPELLANT HAVE BEEN PE RUSED AND CONSIDERED. DUE CONSIDERATION HAS BEEN GIVEN TO THE FINDINGS ARRIVED AT IN THE ASSESSMENT ORDER AND IN THE REMAND REPORT. THE GENUINENESS OF THE PAYMENTS AND THE IDENTITY OF THE SELLERS OF THE LAND ARE ESTABLISHED BEYOND ANY DOUB TS AND THE AO HAS ALSO NOT RAISED ANY DOUBT ABOUT THE SAME . THE ONLY POINT FOR CONSIDERATION IS WHETHER THE PAYMENT THOUGH GENUINE SHOULD BE DISALLOWED ON ACCOUNT OF VIOLATIO N OF SECTION 40A (3) OF THE ACT AND NOT BEING COVERED BY THE VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 36 SPECIFIC EXEMPTIONS PROVIDED IN SECTION 6 DD. IT IS SEEN THAT THE ASSESSEE HAS PURCHASED THE LAND UNDER CONSIDERATION FOR RS. 4,90,000/- AND THE ENTIRE PAY MENT IS MADE IN CASH ON THE DAY WHEN THE PURCHASE DEED IS REGISTERED. THE CASH PAYMENT AND THE PURCHASE OF L AND ARE DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNT. THE MARKET VALUE OF THE LAND IS RS.7,09,000/- AS PER COLLECTOR GUIDELINES AND THE ASSESSEE HAS PURCHASED THE LAND FOR RS. 4,90,000/-. THE LOOSE PAPER SEIZED LPS-2 PAGE 10 WH ICH IS HELD BY THE AO TO BE CONTAINING THE ACTUAL PURCHASE CONSIDERATION OF THE LAND PURCHASED BY THE ASSESSEE ALSO MENTIONS THAT THE ASSESSEE HAS PURCHASED THE LAND F OR RS. 4,90,000/- AND NO ADDITIONAL PAYMENT HAS BEEN MADE. THE PARTNER OF THE ASSESSEE THROUGH WHOM THE TRANSACTIO N WAS UNDER TAKEN HAS CONFIRMED ON OATH TROUGH HIS AFFIDA VIT THAT THE PURCHASER WAS NOT KNOWN AND WAS INSISTING THAT THE PAYMENT IF REQUIRED TO BE MADE BY CHEQUE SHOULD BE MADE IN ADVANCE BEFORE THE DATE OF REGISTRATION OF THE S ALE DEED AND THE ASSESSEE NOT HAVING MUCH TRUST ON THE SELLE R WAS NOT WILLING TO MAKE ANY PAYMENT IN ADVANCE AND AS T HE PURCHASE OF PROPERTY WAS NEGOTIATED AT A VERY ATTRA CTIVE RATE AND IT WAS NOT ADVISABLE FOR THE ASSESSEE NOT TO PURCHASE THE LAND AND TO LEAVE THE TRANSACTION AND HENCE THE ASSESSEE WAS FORCED TO MAKE CASH PAYMENT AS DEMANDED BY THE SELLER. THUS THE IDENTITY OF THE SE LLERS, THE VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 37 GENUINENESS OF THE TRANSACTION AND THE EXCEPTIONAL CIRCUMSTANCES WARRANTING CASH PAYMENT IN THE INTERE ST OF BUSINESS ARE DULY ESTABLISHED. NOW THE ONLY ISSUE W HICH REMAINS FOR ADJUDICATION IS WHETHER A GENUINE RECOR DED TRANSACTION UNDERTAKEN IN CASH IN THE BEST INTEREST OF THE BUSINESS AND OTHERWISE ALLOWABLE CAN BE DISALLOWED ONLY ON A MERE TECHNICAL DEFAULT. REFERENCE IN THIS REGARDS IS MADE TO THE DECISION O F THE HONBLE SUPREME COURT IN THE CASE OF ATTAR SINGH GURMUKH SINGH V. ITO 59 TAXMANN.COM 11 WHEREIN THE OBJECT OF INSERTION OF SECTION 40A(3) AND RULE 6DD WAS EXPLAI NED BY THE HONBLE COURT AS UNDER: 'THE TERMS OF SECTION 40A (3) ARE NOT ABSOLUTE. CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE NOT EXCLUDED. THE GENUINE AND BONA FIDE TRANSACTIONS ARE NOT TAKEN OUT OF THE SWEEP OF THE SECTION. IT IS OPEN TO THE ASSESSEE TO FURNISH TO THE SATIS FACTION OF THE ASSESSING OFFICER THE CIRCUMSTANCES UNDER WHICH THE PAYMENT IN THE MANNER PRESCRIBED IN SECTION 40A (3) WAS NOT PRACTICABLE OR WOULD HAVE CAUSED GENUINE DIFFICULTY TO THE PAYEE. IT IS ALSO OPEN TO THE ASSESSEE TO IDENTIFY THE PERSON WHO HAS RECEIVED THE CASH PAYMENT .. ' RELYING ON THESE OBSERVATION OF THE SUPREME COURT H ON'BLE VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 38 RAJASTHAN HIGH COURT IN THE CASE OF HARSHILA CHORDI A VS. ITO 298 ITR 349 HAS HELD THAT LIST OF EXCEPTIONS PROVID ED UNDER RULE 6DD IS NOT EXHAUSTIVE. MEANING THEREBY THAT MORE CO ULD BE READ INTO IT, IF THE SAME DOES NOT VIOLATE THE REASON FO R WHICH SECTION 40A (3) WAS INTRODUCED. THE COURT HELD THAT ' APPARENTLY, THIS PROVISION WAS DIRECTLY RELATED TO CURB THE EVASION OF TAX AND INCULCATING THE BANKING HABITS. THEREFORE, THE CONSEQUENCES, WHICH WERE TO BEFALL ON ACCOUNT OF NON-OBSERVATION OF SUB-SECTION (3) OF SECTION 40A MUST HAVE NEXUS TO THE FAILURE OF SUCH OBJECT. THEREFORE THE GENUINENESS OF THE TRANSACTIONS AND IT BEING FREE FROM VICE OF ANY DEVICE OF EVASION OF TAX IS RELEVANT CONSIDERATION WHICH HAS BEEN OVERLOOKED BY THE TRIB UNAL' THE JAIPUR BENCH OF THE IT AT IN ITS RECENT JUDGMEN T IN THE CASE OF M/S A DAGA ROYAL ARTS V ITO (ITA 1065/JP/2016) DELIVERED ON 15.05.2018 HAVE CONSIDERED VARIOUS DECISIONS OF VARIOUS COURTS AND TRIBUNALS AND CONCLUDED THAT 'IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE LEGAL PROPOSITION LAID DOWN BY THE VARIOUS COURTS AND COORDINATE BENCHES REFERRED SUPRA, WE ARE OF THE VIEW THAT THE IDENTITY OF THE PERSONS FROM WHOM THE VARIOUS PLOTS OF LAND HAVE BEEN PURCHASED VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 39 AND SOURCE OF CASH PAYMENTS AS WITHDRAWALS FROM THE ASSESSEE'S BANK ACCOUNT HAS BEEN ESTABLISHED. THE GENUINENESS OF THE TRANSACTION HAS BEEN ESTABLISHED AS EVIDENCED BY THE REGISTERED SALE DEEDS AND LASTLY, THE TEST OF BUSINESS EXPEDIENCY HAS BEEN MET IN THE INSTANT CAS E. FURTHER, AS HELD BY THE HON'BLE RAJASTHAN HIGH COURT IN CASE OF HARSHILA CHORDIA (SUPRA), THE CONSEQUENCES, WHICH WERE TO BEFALL ON ACCOUNT OF NON OBSERVATION OF SUB- SECTION (3) OF SECTION 40A MUST HAVE NEXUS TO THE FAILURE OF SUCH OBJECT. THEREFORE THE GENUINENESS OF THE TRANS ACTIONS AND IT BEING FREE FROM VICE OF ANY DEVICE OF EVASIO N OF TAX IS RELEVANT CONSIDERATION. THE INTENT AND THE PURPO SE FOR WHICH SECTION 40A (3) HAS BEEN BROUGHT ON THE STATUTE BOOKS HAS BEEN CLEARLY SATISFIED IN THE INSTANT CAS E. THEREFORE, BEING A CASE OF GENUINE BUSINESS TRANSACTION, NO DISALLOWANCE IS CALLED FOR BY INVOKING THE PROVISIO NS OF SECTION 40A (3) OF THE ACT. IN THE CASE OF THE ASSESSEE THE GENUINENESS OF THE PAYMENTS ARE FREE FROM DOUBT AND THERE IS NO ATTEMPT MADE BY THE ASSESSEE FOR EVASION OF ANY OF ITS TAX LIABILITY BY MAKING PAYMENT IN CASH AND ACCORDINGLY RESPECTING THE JUDG MENTS OF THE VARIOUS COURTS MENTIONED ABOVE THE ADDITION MAD E OF RS. 4,90,000/- IS DIRECTED TO BE DELETED. IN VIEW OF TH E ABOVE DISCUSSION GROUND OF APPEAL # 6 OF AY 2014- 15 IS ALLOWED. VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 40 15. ON PERUSAL OF THE FINDING OF LD. CIT(A) AND ON EXAMINING THE FACTS OF THE CASE WE OBSERVE THAT THE CASH PAYMENT OF RS.4,90,000/- WAS MADE AT THE TIME OF REGISTERING PURCHASE DEED. THE PAYMENT MADE IS DULY RECORDED IN THE BOOKS OF ACCOUNTS AS W ELL AS IN THE PURCHASE DEED WHICH WAS REGISTERED BEFORE THE REGIS TERING AUTHORITY. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAD ATTEMPTED TO EVADE ANY TAX LIABILITY BY MAKING PAYM ENT IN CASH. GENUINENESS OF THE TRANSACTION IS NOT IN DOUBT. AS SESSEE BEING IN THE BUSINESS OF REAL ESTATE HAS ENTERED INTO SUCH T RANSACTION FOR BUSINESS AND COMMERCIAL EXPEDIENCY. WE THEREFORE A RE OF THE CONSIDERED OPINION THAT LD. CIT(A) HAS RIGHTLY DELE TED THE DISALLOWANCE IN LIGHT OF SETTLED JUDICIAL PRECEDENC E AND THE DECISIONS REFERRED BY HIM IN HIS APPELLATE ORDER, WHICH DO NO T CALL FOR ANY INTERFERENCE. ACCORDINGLY GROUND NO.4 RAISED BY TH E REVENUE IS DISMISSED. 16. GROUND NO.5 IS GENERAL IN NATURE WHICH NEEDS NO ADJUDICATION. VIRASHA INFRASTRUCTURE ITA NO.179 & 180/IND/2018 41 17. IN THE RESULT BOTH THE APPEALS FILED BY THE REV ENUE FOR ASSESSMENT YEAR 2013-14 AND ASSESSMENT YEAR 2014-15 ARE DISMISSED. ODER PRONOUNCED IN THE OPEN COURT ON 13.04.2021. SD/- SD/- (MADHUMITA ROY) (MA NISH BORAD) JUDICIAL MEMBER ACCOUNTAN T MEMBER / DATED :13 TH APRIL, 2021 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE