The ACIT,(OSD)Circle-10, Ahmedabad V. Swaminarayan Avenue(Naranpura)Co.Op.Hsg.So.Ltd., Ahmedabad

ITSSA 274/AHD/2011

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2199 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-05-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 14-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A L THAKKAR
• Assessee Lawyers: R I PATEL
• Keywords: Unexplained cash credit; Unexplained investment; Document seized; Source of fund; Fair market value; Valuation report; Documents seized
• Section: 143(3); 153A; 69; 132; 144; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI RAJPAL YADAV, JM, & SHRI MANISH BORA D, AM. IT(SS)A NO. 273/AHD/2011 ASST. YEAR: 2005-06 SWAMINARAYAN AVENUE (NARANPURA) CO-. OP. HOUSING SOCIETY, LTD. C/O ASEEM THAKKAR, CA, KASHMIRA CHAMBERS, B/H. OLD HIGH COURT, NAVRANGPURA, AHMEDABAD. VS. ACIT, (OSD) CIRCLE-10, AHMEDABAD. APPELLANT RESPONDENT PAN AAEAS2037G AND IT(SS)A NO. 274/AHD/2011 ASST. YEAR: 2005-06 ACIT(OSD) CIRCLE-10, AHMEDABAD. VS. SWAMINARAYAN AVENUE (NARANPURA) CO- OP. HOUSING SOCIETY, LTD. C/O ASEEM THAKKAR, CA, KASHMIRA CHAMBERS, B/H. OLD HIGH COURT, NAVRANGPURA, AHMEDABAD. APPELLANT RESPONDENT IT(SS)A NO. 273 & 274/AHD/2011 ASST. YEAR 2005-06 2 APPELLANT BY SHRI A. L. THAKKAR, AR RESPONDENT BY SHRI R. I. PATEL, CIT, DR DATE OF HEARING: 5/5/2016 DATE OF PRONOUNCEMENT: 01/6/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THESE TWO CROSS APPEALS, ONE BY ASSESSEE AND THE O THER BY THE REVENUE ARE DIRECTED AGAINST THE ORDER OF LD. C IT(A)XVI, DATED 13.01.2011 IN APPEAL NO.CIT(A)-XVI/ACIT(OSD)10/296/ 09-10 PASSED AGAINST ORDER U/S 153C R.W.S. 153A OF THE IT ACT, 1 961 (IN SHORT THE ACT) FOR ASST. YEAR 2005-06 FRAMED ON 29.01.2010 BY ACIT(OSD), CIRCLE-10, AHMEDABAD. 2. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS A CO-OPERATIVE HOUSING SOCIETY ENGAGED IN THE BUSINESS OF CONSTRUCTION OF RESIDENTIAL HOUSES. PURSUANT TO SEARCH U/S 132 OF THE ACT CONDUCTED ON 9.2.2005 AT THE RESIDENTIAL P REMISES OF SHRI UMANG H. THAKKAR AND DHARMADEV FINANCE PVT. LTD., C ERTAIN DOCUMENTS PERTAINING TO TRANSACTIONS CARRIED OUT BY THE ASSESSEE WERE SEIZED. AFTER RECORDING SATISFACTION NOTE, PRO CEEDINGS WERE INITIATED U/S 153C R.W.S. 153A OF THE ACT AND INFOR MATION WAS RECEIVED IN THE OFFICE OF LD. ASSESSING OFFICER ON 13.8.2008 . IN THE SEIZED DOCUMENTS IT WAS OBSERVED THAT ASSESSEE SOCIETY HAD ACQUIRED 6535 SQ.M. OF LAND AT WADAJ, AHMEDABAD FOR A CONSIDERATI ON OF RS.2,28,72,500/- VIDE SALE DEED DATED 4.12.2004 AND SALE IT(SS)A NO. 273 & 274/AHD/2011 ASST. YEAR 2005-06 3 CONSIDERATION WAS PAID IN TWO PARTS FIRST ON 1.6.2 004 AT RS.60,00,000/- AND THE SECOND ON 3 RD DECEMBER 2004 AT RS.1,68,72,500/-. ON FURTHER INVESTIGATION IT WAS O BSERVED THAT THE PAN DIRECTORY OF GUJARAT DID NOT CONTAIN THE NAME O F ASSESSEE. ACCORDINGLY, NOTICES WERE ISSUED ADDRESSED TO THE C HAIRMAN OF THE SOCIETY FOR FILING RETURN OF INCOME AND AFTER LOT O F PURSUATIONS, THE RETURN OF INCOME WHICH WAS REQUIRED TO BE FILED ON 24.9.2008 WAS FINALLY FILED ON 2 ND DECEMBER, 2009 IN COMPLIANCE TO NOTICE U/S 153C R.W.S. 153A OF THE ACT SHOWING INCOME AT RS.NIL, A ND COPY OF PAN CARD BEARING NO.AAEAS 2037G WAS FURNISHED ALONG WIT H BALANCE SHEET AND PROFIT AND LOSS ACCOUNT FOR FINANCIAL YEA R 2004-05. 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS O BSERVED BY LD. ASSESSING OFFICER THAT THERE WAS A CASH RECEIPT OF RS.23,86,030/- SHOWN IN THE CASH BOOK BUT NO SATISFACTORY REPLY WA S RECEIVED FOR THE SOURCE OF CASH RECEIVED AND THE SAME WAS TREATED AS UNDISCLOSED INCOME. ALSO IN REGARD TO PURCHASE OF LAND AT RS.2, 28,72,500/- ON 4.12.2004 FOR LAND MEASURING 6535 SQ.M. LD. ASSESS ING OFFICER OBSERVED THAT THE OFFICE POSSESSED THE ORDER U/S 16 A OF THE WEALTH TAX ACT (IN SHORT THE WTA) DATED 23.2.2005 OF D.V.O . SHOWING THE FAIR MARKET VALUE ON 10324 SQ.M. OF LAND AT RS.6,03 ,02,484/- AS ON 31.3.2002. ON THE BASIS OF THIS INFORMATION, LD. AS SESSING OFFICER PROPORTIONATELY CALCULATED THE VALUE OF 6535 SQ.M. I.E. 63.30% OF RS.6,03,02,484/- ARRIVING AT THE VALUE OF 3,81,71,4 72/- AND FURTHER ADDED 10% APPRECIATION IN THE VALUE OF LAND SINCE 3 1.3.2002 AT RS.38,17,147/- AND FINALLY ARRIVED AT THE COST OF T HE LAND AT RS.4,19,88,619/- AND THE DIFFERENCE AMOUNT OF RS.1, 91,16,119/- WAS IT(SS)A NO. 273 & 274/AHD/2011 ASST. YEAR 2005-06 4 TREATED AS UNACCOUNTED AND UNEXPLAINED INVESTMENT U /S 69 OF THE ACT. AFTER MAKING ADDITION OF RS.23,86.030/- AND RS .1,91,16,119/- ON ACCOUNT OF UNDISCLOSED INCOME AND UNEXPLAINED INVES TMENT, THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS.2,15,02,1 49/-. 4. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE LD. CI T(A). THE LD. CIT(A) CONFIRMED THE ADDITION OF RS.23,86,030/- AND DELETED THE ADDITION OF RS.1,91,16,119/-. 5. NOW THE ASSESSEE AND THE REVENUE BOTH ARE IN APP EAL BEFORE THE TRIBUNAL. 6. FIRST WE TAKE UP THE APPEAL OF ASSESSEE IN IT(SS )A NO.273/AHD/2011 FOR ASST. YEAR 2005-06 WHEREIN FOLL OWING GROUNDS HAVE BEEN RAISED :- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DISMISSING THE GROUNDS OF APPEAL CHALLENGING THE ACTION OF THE ASS ESSING OFFICER IN PASSING THE ORDER U/S.L53C R.W.S.153A OF THE I.T. ACT, 1961 WHI CH IS ILLEGAL AND BAD IN LAW AND THE ASSESSMENT SO MADE IN PURSUANCE THEREOF DESERVE S TO BE CANCELLED. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) OUGHT TO HAVE CONSIDERED THE FACT THAT NO INCRIMINATING MATERIAL & OTHER REC ORD WAS FOUND FROM THE PREMISES OF THE SEARCHED PARTY ON THE BASIS OF WHIC H PROCEEDINGS U/S.153C OF THE INCOME TAX ACT, 1961 CAN BE INITIATED IN THE CASE O F THE APPELLANT. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) OUGHT TO HAVE CONSIDERED THE FACT THAT NOTICE U/S.!53C COULD BE ISSUED ONLY FOR SIX YEARS IMMEDIATELY PRECEDING THE YEAR IN WHICH THE SEARCH OR REQUISITI ON TOOK PLACE AND THEREFORE THE ASSESSMENT SHOULD HAVE BEEN COMPLETED U/S,143(3) OR 144 OF THE I.T. ACT, 1961 AND NOT U/S.!53C R.W.S. 143(3) OF THE I.T. ACT, 196 1. . . : . 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) OUGHT TO HAVE CONSIDERED THE FACT THAT THE NOTICE FOR INITIATION OF PROCEEDI NGS U/S.!53C R.W.S. 153 A IN THE CASE OF THE APPELLANT HAS BEEN ISSUED ON 14.08.2008 I.E. AFTER TIME GAP OF MORE THAN THREE YEARS FROM THE DATE OF SEARCH I.E. 09.02 .2005 . FURTHER SATISFACTION NOTE IT(SS)A NO. 273 & 274/AHD/2011 ASST. YEAR 2005-06 5 RECORDED BY DCIT, C.C .L(L) AHMEDABAD WAS DTD.08.08 .2008 RECEIVED BY THE A.O. ON 13.08.2008, WHICH IS AFTER FINALIZING THE ASSESS MENTS IN THE CASE OF SEARCHED PARTY. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING THE ADDITION OF RS.23,86,030/- MADE BY THE ASSESSING OF FICER FOR THE ALLEGED UNDISCLOSED INCOME U/S,68 OF THE I.T. ACT, 1961. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, OR MODIFY ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEAVING OF APPEAL. 7. AT THE OUTSET THE LD. AR OF THE ASSESSEE HAS NOT PRESSED GROUND NOS. 1,2,3 & 4. SO THESE GROUNDS ARE DISMISS ED AS NOT PRESSED. 8. THROUGH GROUND NO.5 ASSESSEE HAS CHALLENGED THE ACTION OF LD. CIT(A) FOR CONFIRMING THE ADDITION OF RS.23,86,0303 /- MADE U/S 68 OF THE ACT. THE LD. AR SUBMITTED THAT CASH RECEIPT OF RS.23,86,030/- CANNOT BE TREATED AS UNEXPLAINED/UNDISCLOSED BECAUS E THE ENTRIES RELATING TO CASH RECEIPT AT RS.23,86,030/- HAVE BEE N MADE IN THE REGULAR BOOKS OF ACCOUNT PRODUCED BEFORE THE ASSESS ING AUTHORITY DURING THE COURSE OF ASSESSMENT PROCEEDINGS. LD. AR FURTHER SUBMITTED THAT DEVELOPMENT AND CONSTRUCTION WORK OF HOUSING FLATS TO BE CONSTRUCTED ON THE LAND OWNED BY THE SOCIETY, WA S GIVEN TO M/S SWAMINARAYAN ENTERPRISE, PROPRIETOR UMANG HIRALAL T HAKKAR AND IN ORDER TO GET THE REGISTRY OF THE LAND COMPLETED IN THE NAME OF THE SOCIETY SOME FUNDS IN THE NORMAL COURSE OF BUSINESS WERE TAKEN FROM SWAMINARAYAN ENTERPRISE ALSO. LD. AR ALSO SUBMITTED THAT DETAILS OF CASH RECEIPT ARE AS FOLLOWS :- IT(SS)A NO. 273 & 274/AHD/2011 ASST. YEAR 2005-06 6 1. CASH RECEIVED FROM SWAMINARAYAN ENTERPRISE ON 3 RD DECEMBER, 2004 RS.18,51,300/- 2. CASH RECEIVED FROM SWAMINARAYAN ENTERPRISE ON 4 TH DECEMBER, 2004 RS. 3,43,170/- 3. TAKEN AMOUNT OF RS.1,54,550 FROM TEN ORIGINAL MEMBERS RS. 1,54,550/- 4. ENTRY FEES OF 266 MEMBERS @ 255 PER MEMBER RS. 16,830/- 5. FROM GANESH N. THAKKAR ON 31.10.2004 RS. 20 ,000/- 6. FROM SWAMINARAYAN ENTERPRISES RS. 180/ - 21.12.2004 ------------------------- - RS.23,86,030/- ------------------------- - 9. REFERRING TO THE ABOVE DETAILS, LD. AR SUBMITTED THAT THE MAJOR PORTION OF CASH RECEIPT OF RS.23,86,030/- IS ON ACC OUNT OF AMOUNT RECEIVED FROM SWAMINARAYAN ENTERPRISES AT RS.21,94, 650/- (RS.18,51,300 + RS.3,43,170/- + RS.180/-) AND THIS AMOUNT WAS SPECIFICALLY USED FOR LAND REGISTRATION FEES AND ST AMP CHARGES INCURRED BY THE ASSESSEE FOR GETTING THE REGISTRY O F THE LAND DONE IN THE NAME OF ASSESSEE ON 4 TH DECEMBER, 2004 AND THE SAME IS VERIFIABLE FROM THE DETAILS OF CASH BOOK SHOWN AT P AGES 51 TO 58 OF THE PAPER BOOK. LD. AR FURTHER SUBMITTED THAT AS R EGARDS THE SOURCE OF FUND WITH M/S SWAMINARAYAN ENTERPRISE, REFERRED TO THE AUDITED FINANCIAL STATEMENT AND COPY OF INCOME-TAX RETURN A ND ALSO THE COPY OF CASH BOOK OF SWAMINARAYAN ENTERPRISE WHICH WAS H AVING SUFFICIENT CASH BALANCE IN ORDER TO JUSTIFY THE SOURCE OF CASH RECEIVED BY THE IT(SS)A NO. 273 & 274/AHD/2011 ASST. YEAR 2005-06 7 ASSESSEE. LD. AR ALSO SUBMITTED THAT THE PROPRIETOR SHRI UMANG H. THAKKAR WAS THE MAIN PERSON AGAINST WHOM THE SEARCH PROCEEDINGS WERE INITIATED AND THE ASSESSMENT YEAR 2005-06 WAS COMPLETED IN HIS CASE ON 29.3.2006 AT AN ASSESSED INCOME OF RS.15,09 ,65,386/- AFTER MAKING AN ADDITION OF RS.14,84,96,066/- WHICH ALSO REFERRED TO THE PROPRIETARY CONCERN OF UMANG H. THAKKAR IN THE NAME OF M/S SWAMINARAYAN ENTERPRISE AND THE NECESSARY DETAILS I NCLUDING BOOKS OF ACCOUNT RELATING THERETO WERE PRODUCED. LD. AR, THEREFORE, SUBMITTED THAT SWAMINARAYAN ENTERPRISE HAD SUFFICIE NT SOURCE AND CASH OUT OF WHICH RS.21,94,650/- WAS GIVEN TO THE A SSESSEE ON VARIOUS DATES AND THE SAME IS THEREFORE, EXPLAINED AND FOR THE REMAINING AMOUNT OF RS.1,91,380/- WHICH INCLUDES PE TTY AMOUNT OF RS.255/- RECEIVED FROM 66 MEMBERS, RS.15,455/- EACH RECEIVED FROM 10 MEMBERS AND RS.20,000/- FROM GANESH N. THAKKAR O F WHICH NECESSARY NAMES AND DETAILS ARE ALREADY AVAILABLE O N RECORD AND, THEREFORE, LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMI NG THE ADDITION OF UNDISCLOSED INCOME OF RS.23,86,030/- U/S 68 OF THE ACT. 10. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THROUGH THIS GROUND, THE ASSESSEE IS AGG RIEVED WITH THE ACTION OF LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.23,86,030/- AS UNDISCLOSED INCOME MADE U/S 68 OF THE ACT. FROM GOI NG THROUGH THE SUBMISSIONS MADE BY LD. AR AS WELL AS RELEVANT PAGE S OF THE PAPER BOOK RELATING TO CASH BOOK OF THE ASSESSEE AS WELL AS M/S IT(SS)A NO. 273 & 274/AHD/2011 ASST. YEAR 2005-06 8 SWAMINARAYAN ENTERPRISE, WE FIND THAT THE ASSESSEE SOCIETY PURCHASED A PIECE OF LAND ON 4.12.2002 FOR THE PURP OSE OF CONSTRUCTION OF RESIDENTIAL HOUSES FOR ITS MEMBERS. THE PROMOTER MEMBER FOR THE ASSESSEE SOCIETY IS MR. UMAN H. THAK KAR WHO ALSO RUNS A SOLE PROPRIETARY CONCERN M/S SWAMINARAYAN EN TERPRISE AND DURING THE COURSE OF PURCHASE OF LAND IT WAS DECIDE D THAT THE RESIDENTIAL HOUSES WILL BE DEVELOPED AND CONSTRUCTE D BY M/S SWAMINARAYAN ENTERPRISE. FURTHER REQUIREMENT OF FUN DS BY THE ASSESSEE SOCIETY WAS MADE MOSTLY BY SWAMINARAYAN EN TERPRISE IN THE FORM OF CHEQUE/CASH AND ON THE OTHER HAND THE B OOKING AMOUNT AS WELL AS PRICE OF THE PROPOSED FLATS WAS RECEIVED BY M/S SWAMINARAYAN ENTERPRISE ON BEHALF OF THE ASSESSEE S OCIETY. WE FURTHER OBSERVE THAT ASSESSEE SOCIETY NEEDED CASH F UNDS FOR MAKING FINAL PAYMENT OF LAND PURCHASE AS WELL AS TO PAY TH E STAMP CHARGES AND LAND REGISTRATION FEES AND IN THIS PROCESS ON 3 .12.2004 AND 4.12.2004 SWAMINARAYAN ENTERPRISE GAVE CASH SUM OF RS.18,51,300/- AND RS.3,43,170/- TO THE SOCIETY AND AGAINST WHICH ASSESSEE SOCIETY PAID THE STAMP FEES OF RS.18,21,30 0/-, LAND PURCHASE RELATED EXPENSES AT RS.1,50,000/- AND LAND REGISTRATION FEES AT RS.3,43,350/-. 12. NOW GOING THROUGH THE ASPECT THAT WHETHER SWAMI NARAYAN ENTERPRISE HAD SUFFICIENT SOURCE OF CASH FUND WHICH WAS HITHERTO GIVEN TO ASSESSEE SOCIETY, WE OBSERVE THAT SWAMINAR AYAN ENTERPRISE IS THE SOLE PROPRIETARY CONCERN OWNED BY MR. UMAN H . THAKKAR, REGULAR INCOME-TAX RETURN ARE FILED, BOOKS OF ACCOU NTS ARE AUDITED AND MORE SPECIFICALLY GOING THROUGH THE CASH BOOK SHOWN AT PAGES 59-61 IT(SS)A NO. 273 & 274/AHD/2011 ASST. YEAR 2005-06 9 OF M/S SWAMINARAYAN ENTERPRISE WE OBSERVE THAT THER E IS A REGULAR FLOW OF CASH TRANSACTION IN THE BOOKS AND SUFFICIEN T CASH BALANCE WAS AVAILABLE ON THE DATE WHEN CASH FUNDS WERE GIVEN IN THE REGULAR COURSE OF BUSINESS TO THE ASSESSEE SOCIETY. 13. WE FURTHER OBSERVE THAT ASSESSMENT U/S 143(3) F OR ASST. YEAR 2005-06 WAS COMPLETED ON 29.12.2006 IN THE CASE OF UMAN H. THAKKAR WHEREBY ADDITION OF RS.14,84,96,066/- WAS M ADE AND INCOME WAS ASSESSED AT RS.15,09,65,390/-. ADDITION OF RS.14,84,96,066/- INTER ALIA INCLUDED ADDITION ON A CCOUNT OF UNEXPLAINED CREDITS IN THE CAPITAL ACCOUNT AND CASH CREDITS AT RS.7,95,80,751/-. 14. THEREFORE, WE ARE OF THE VIEW THAT M/S SWAMINAR AYAN ENTERPRISE HAD SUFFICIENT CASH AVAILABLE IN THEIR B OOKS OF ACCOUNT, WHICH WAS IN TURN USED TO GIVE BUSINESS ADVANCES TO THE ASSESSEE SOCIETY AND, THEREFORE, THE SUM OF RS.23,86,030/- S HOULD NOT BE TREATED AS UNEXPLAINED INCOME AND, ACCORDINGLY, WE DELETE THE IMPUGNED ADDITION MADE BY LD. ASSESSING OFFICER AND ALLOW THE GROUND OF ASSESSEE. 15. GROUND NO.6 IS GENERAL IN NATURE, WHICH NEEDS N O ADJUDICATION. 16. ASSESSEES APPEAL IS PARTLY ALLOWED. IT(SS)A NO. 273 & 274/AHD/2011 ASST. YEAR 2005-06 10 17. NOW WE TAKE UP REVENUES APPEAL IN IT(SS)A NO.274/AHD/2011 FOR ASST. YEAR 2005-06. REVENUE HAS RAISED FOLLOWING GROUNDS:- 1. THE LD. CIT(A)-XVI, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,19,16,119/- MADE BY THE AO ON ACCO UNT OF UNEXPLAINED INVESTMENT U/S.69 OF THE ACT, WITHOUT PROPERLY APPR ECIATING THE FACTS OF THE CASE AND THE MATERIALS BROUGHT ON RECORD BY THE ASS ESSING OFFICER. 1.2 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ADDITION HAS BEEN MADE BY THE AO ON THE BASIS OF VALUATION REPOR T OF THE REGISTERED VALUER AND THEREAFTER, INCREASING THE VOLUTE ON EST IMATE BASIS AND NOT ON THE BASIS OF MATERIAL SUGGESTING INVESTMENT OR EXPENDIT URE FOR THE PURCHASE OF THE PROPERTY WITHOUT APPRECIATING THAT THE COST OF LAND DETERMINED BY THE DVO WAS BASED ON VARIOUS COMPARABLE SALE INSTANCES AVAI LABLE IN THE VICINITY AND CONSIDERING VARIOUS FACTORS WHICH AFFECTS THE LAND RATE OF THE RELEVANT PERIOD AND DESPITE SUFFICIENT OPPORTUNITY HAVING BEEN ALLO WED TO THE ASSESSEE BY THE AO THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE BEFO RE THE A.O. TO REBUT THE RATES ADOPTED BY THE DVO. 1.3 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N NOT APPRECIATING THAT THE FACTS OF THE PRESENT CASE IS DIFFERENT FROM THAT OF THE R ELIED UPON CASES? 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. . 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT(A) BE SET ASIDE AND THAT OF A.O. BE RESTORED TO THE ABOVE EXTENT. 18. FROM GOING THROUGH THE ABOVE GROUNDS WE OBSERVE THAT GROUND NOS. 2 & 3 ARE OF GENERAL NATURE AND GROUND NO. 1 R EVOLVES ROUND A SINGLE ISSUE AGAINST THE ACTION OF LD. CIT(A) DELET ING THE ADDITION OF RS. 1,19,16,119/- MADE BY ASSESSING OFFICER U/S 69 OF THE ACT. 19. DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD. ASSESSING OFFICER PERUSED THE SEIZED DOCUMENTS AND OBSERVED T HAT ASSESSEE HAS ACQUIRED 6535 SQ.M. OF LAND AT VADAJ ON 4.12.20 04 FOR A IT(SS)A NO. 273 & 274/AHD/2011 ASST. YEAR 2005-06 11 CONSIDERATION OF RS.2,28,72,500/-. ON FURTHER EXAMI NING THE ASPECT AS TO WHETHER THERE IS ANY UNDISCLOSED INVESTMENT IN T HE PURCHASE OF LAND, LD. ASSESSING OFFICER REFERRED THE MATTER TO THE D.V.O. WITH REFERENCE TO THE ORDER U/S 16A OF W.T. ACT ON 22.3. 2005 WHO HAS VALUED 10324 SQ.M. OF THE SAID LAND ON 31.3.2002 AT RS.6,03,02,484/- AND ACCORDINGLY CALCULATED PROPORTIONATE VALUE FOR 6535 SQ.M. LAND AT RS.3,81,71,472/- AND ADDED RS.38.17.147/- AS APPREC IATION IN THE VALUE OF LAND @ 10% AND CALCULATED THE FAIR MARKET VALUE OF THE PURCHASED LAND AT RS.4,19,88,619/- AND AFTER GIVING CREDIT TO THE AMOUNT PAID BY THE RESPONDENT AT RS.2,28,72,500/- A DDED THE DIFFERENCE AMOUNT AT RS.1,91,16,119/- AS UNEXPLAINE D AND UNACCOUNTED INVESTMENT U/S 69 OF THE ACT. THIS OBSE RVATION OF LD. ASSESSING OFFICER WAS DULY SUPPORTED BY LD. DR IN T HE COURSE OF PROCEEDINGS BEFORE THE TRIBUNAL. 20. ON THE OTHER HAND, LD. AR SUPPORTED THE ORDER O F LD. CIT(A) AND PLEADED THAT ASSESSEE HAD NOTHING TO DO WITH THE VA LUATION REPORT DATED 31.3.2002 AS THE ASSESSEE WAS NOT IN EXISTENC E AT THAT POINT OF TIME AND SUCH VALUATION REPORT WAS FOR WEALTH TAX P URPOSES IN THE CASE OF THIRD PARTY AND THE SAME CANNOT BE USED FOR INVOKING SECTION 153C OF THE ACT. MORE SOEVER THE TOTAL AREA OF THE LAND SHOWN IN THE VALUATION REPORT IS 10324 SQ.M., WHEREAS THE LAND PURCHASED BY THE ASSESSEE SOCIETY MEASURES 6535 SQ.M. ONLY AND, THER EFORE, LD. ASSESSING OFFICER HAS MADE THE ADDITION ON ESTIMATI ON, SURMISES AND CONJECTURES AND, THEREFORE, LD. CIT(A) HAS RIGHTLY DELETED THE IMPUGNED ADDITION OF RS. 1,91,16,119/-. IT(SS)A NO. 273 & 274/AHD/2011 ASST. YEAR 2005-06 12 21. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. REVENUE IS AGGRIEVED WITH THE ACTION OF LD. CIT(A) DELETING THE ADDITION OF RS. 1,91,16,119/- ON ACCOUNT OF UNE XPLAINED INVESTMENT U/S 69 OF THE ACT. WITH REFERENCE TO THE FACTS DISCUSSED ABOVE, WE FIND THAT LD. ASSESSING OFFICER HAS TAKEN THE BASIS OF THE VALUATION REPORT MEANT FOR WEALTH TAX PURPOSES FOR A PIECE OF LAND MEASURING 10324 SQ.M. VALUED ON 31.3.2002 AT RS. 6, 03,02,484/- AND ON THE BASIS OF THIS INFORMATION CALCULATED THE FAI R MARKET VALUE OF THE LAND PURCHASED BY ASSESSEE BY VALUING IT AT RS.4,19 ,88,618/- BY APPLYING THE FOLLOWING FORMULA :- 63.3% OF 6,03,02, 484 (6535 SQ.M. 10324 X 100) 63.3% = RS.3,81,71,472/- AND 10% APPR ECIATION IN THE VALUE OF LAND = RS.38,17,147/- I.E. TOTAL RS.4,19,8 8,619/-. 22. WE FURTHER OBSERVE THAT LD. CIT(A) HAS DELETED THE ADDITION BY OBSERVING AS UNDER :- 4.3 I HAVE CONSIDERED THE SUBMISSION MADE BY THE A PPELLANT AND OBSERVATION OF THE AO. THE ADDITION HAS BEEN MADE BY THE AO ON THE BASIS OF THE VALUATION REPORT OF THE REGISTERED VALUER AND THEREAFTER INCR EASING THE VALUE ON ESTIMATE BASIS AND NOT ON THE BASIS OF MATERIAL SUGGESTING I NVESTMENT OR EXPENDITURE FOR THE PURCHASE OF THE PROPERTY. AS PER THE DECISION O F HON'BLE ITAT DELHI IN THE CASE OF SANJAY CHAWLA (SUPRA) A VALUATION REPORT IS ONLY AN EXPERT OPINION AND NOT EVIDENCE WHEREAS REGISTERED DEED IS EVIDENCE AN D HENCE VALUATION REPORT CANNOT BE THE BASIS FOR MAKING ADDITION. SIMILARLY FOR ADDITION A.O. HAS TO BRING MATERIAL ON RECORD AS STATED BY SUPREME COURT IN TH E CASE OF K P VARGHESE (SUPRA). IN THE CASE OF HOTEL HILLTOP ALSO THE HON' BLE ITAT HAS STATED THAT IT(SS)A NO. 273 & 274/AHD/2011 ASST. YEAR 2005-06 13 VALUATION REPORT CANNOT BE THE BASIS OF ADDITION. S IMILARLY IN THE CASE OF BALKRISHNA PODDAR ITA NO 3412, 3413, 3414/AHD/2008 THE ITAT AHMEDABAD HAS ALSO DECIDED THAT VALUATION REPORT CANNOT BE THE BA SIS OF ADDITION. IN VIEW OF THE DECISION RELIED UPON BY THE APPELLANT NO ADDITION U /S.69 AS UNEXPLAINED INVESTMENT CAN BE SUSTAINED BASED ON THE VALUATION REPORT OF THE VALUER. THE ADDITION IS THEREFORE DELETED AND THIS GROUND OF AP PEAL IS ALLOWED. 23. WE FURTHER OBSERVE THAT THE SEIZED MATERIAL ON THE BASIS OF WHICH INFORMATION WAS EXTRACTED ABOUT THE INVESTMEN T IN THE PURCHASE OF LAND AT RS.2,28,72,500/- WERE DOCUMENTS WHICH WERE EXECUTED ON STAMP PAPER AND DULY REGISTERED WITH TH E APPROPRIATE AUTHORITIES AND THE PURCHASE CONSIDERATION IS DEBIT ED IN THE REGULAR BOOKS OF ACCOUNT AND NO DEFECT HAS BEEN POINTED OUT IN THE SOURCE OF THE INVESTMENT MADE AND THE CREDIT OF THE SAME HAS BEEN GIVEN BY LD. ASSESSING OFFICER WHILE CALCULATING THE UNEXPLAINED INVESTMENT. FURTHER STAMP AUTHORITIES HAVE ACCEPTED THE VALUE O F PURCHASE CONSIDERATION AND THERE IS NO REDOING OR ENHANCEMEN T IN THE SAME AND THERE WAS NO OTHER DOCUMENT FOUND IN THE COURSE OF SEARCH WHICH COULD PROVE THAT THERE WAS UNEXPLAINED INVEST MENT IN THE PURCHASE OF 6535 SQ.M. OF LAND AND LD. ASSESSING OF FICER HAS RELIED ON VALUATION REPORT MADE FOR THE PURPOSE OF WEALTH TAX PURPOSES THAT TOO ON 31.3.2002 FOR LAND MEASURING 10324 SQ.M. EVE N WHEN VALUATION REPORT WAS NOT A PART OF THE SEIZED RECOR D. IT(SS)A NO. 273 & 274/AHD/2011 ASST. YEAR 2005-06 14 24. WE ARE OF THE VIEW THAT ADDITIONS WERE MADE BY THE ASSESSING OFFICER ON ASSUMPTION, CONJECTURES AND SURMISES AND WITHOUT BRINGING ANY MATERIAL ON RECORD WITH CERTAINTY AND CONVICTIO N THAT THERE WAS AN UNEXPLAINED INVESTMENT IN THE LAND IN EXCESS OF THE PRICE MENTIONED IN THE PURCHASE DOCUMENTS AND, THEREFORE, WE FIND N O REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). WE UPHOLD T HE SAME. ACCORDINGLY THIS GROUND OF REVENUE IS DISMISSED. 25. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALL OWED AND THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST JUNE, 2016 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 01/06 /2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD IT(SS)A NO. 273 & 274/AHD/2011 ASST. YEAR 2005-06 15 1. DATE OF DICTATION: 27/05/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 30/05/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 1/6/2016 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: