SHRI RAKESH GUPTA, Bhopal V. THE ACIT 1(2), Bhopal

ITSSA 49/IND/2015

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2419 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-04-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 28-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained investment; Search and seizure; Loose papers; Document seized; Fair market value; Valuation report; Documents seized
• Section: 143(3); 153A; 32; 147; 148; 132; 139; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER SHRI RAKESH GUPTA, E-1/161, ARERA COLONY, BHOPAL PAN: AAXPG9477C VS. ACIT, 1(2), BHOPAL APPELLANT RESPONDENT APPELLANT BY SHRI ANIL KHABYA, CA RESPONDENT BY SHRI RAJEEV VARSHANEY, CIT DR DATE OF HEARING 26.07.2016 DATE OF PRONOUNCEMENT 26.07.2016 O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR. THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINST THE CONSOLIDATED ORDER OF LD. COMMISSIONER OF INCOME-TA X (APPEALS)-I, BHOPAL [HEREINAFTER REFERRED TO AS THE CIT(A)] DATE D 06.02.2015 AND PERTAINS TO ASSESSMENT YEARS 2005-06 AND 2006-07 A S AGAINST APPEALS DECIDED IN CONSOLIDATED ASSESSMENT ORDER DA TED 26.03.2013 OF ACIT,1(2), BHOPAL [HEREINAFTER REFERR ED TO AS THE AO]. I.T.(SS)A.NOS.48 & 49/IND/2015 A.YS. :2005-06 & 2006-07 SHRI RAKESH GUPTA, BHOPAL VS. ACIT,1(2), BHOPAL I. T.(SS)A.NOS. 48 & 49/IND/2015 A.YS.2005-06 & 2006-0 7. PAGE 2 OF 17 2 2. SINCE BOTH THESE APPEALS PERTAIN TO THE SAME ASSESS EE AND ISSUE INVOLVED IS ALSO COMMON, THESE ARE BEING DISP OSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE AS UNDER :- I.T.(SS)A.NO.48/IND/2015 A.Y. 2005-06: 1 . THAT THE LD. CIT(A) ERRED IN HOLDING THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE PROCEEDING OF ASSESSMENT U/S 153A WERE NOT WITHOUT JURISDICTION AS NO INCRIMINATING DOCUMENT WAS FOUND AS A RESULT OF SEARCH. 2. THAT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) ERRED IN MAINTAINING ADDITION OF RS. 5,61,761/- (CORRECT AMOUNT RS. 4,33,473/-) TOWARDS UNEXPLAINED INVESTMENT IN CONSTRUCTION OF RESIDENTIAL HOUSE. I.T.(SS)A.NO.49/IND/2015 A.Y. 2006-07: 1 . THAT THE LD. CIT(A) ERRED IN HOLDING THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE PROCEEDING OF ASSESSMENT U/S 153A WERE NOT SHRI RAKESH GUPTA, BHOPAL VS. ACIT,1(2), BHOPAL I. T.(SS)A.NOS. 48 & 49/IND/2015 A.YS.2005-06 & 2006-0 7. PAGE 3 OF 17 3 WITHOUT JURISDICTION AS NO INCRIMINATING DOCUMENT WAS FOUND AS A RESULT OF SEARCH. 2. THAT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) ERRED IN MAINTAINING ADDITION OF RS. 5,66,527/- TOWARDS UNEXPLAINED INVESTMENT IN CONSTRUCTION OF RESIDENTIAL HOUSE. 4. THE BRIEF FACTS AS CULLED OUT FROM THE PROCEEDINGS OF LOWER AUTHORITIES ARE THAT THE ASSESSEE SHRI RAKESH GUPTA IS A DIRECTOR OF FLAGSHIP COMPANIES I.E. M/S. STAR DELTA PRIVATE LIM ITED AND M/S. BHOPAL WIRES PRIVATE LIMITED AND HE IS MEMBER OF GU PTASONS GROUP OF BHOPAL. THE ASSESSEE HAS FILED HIS REGULAR RETURNS OF INCOME FOR THE ASSESSMENT YEAR 2005-06 ON 25.2.2007 DECLARING INCOME OF RS. 7,03,500/- AND FOR ASSESSMENT YEAR 20 06-07 ON 27.07.2006 DECLARING TAXABLE INCOME OF RS. 4,89,777 /-. THESE RETURNS ARE PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961. A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON 28.10.2010. THEREFORE, THE AO ISSUED NOTICES U/S 153A OF THE ACT ON 16.01.2012 REQUIRING THE ASSESSEE TO FURNISH HIS RETURN OF INCOME, IN RESPONSE TO WHIC H THE RETURNS OF INCOME FOR ASSESSMENT YEARS 2005-06 AND 2006-07 WERE FILED ON SHRI RAKESH GUPTA, BHOPAL VS. ACIT,1(2), BHOPAL I. T.(SS)A.NOS. 48 & 49/IND/2015 A.YS.2005-06 & 2006-0 7. PAGE 4 OF 17 4 03.02.2012 DECLARING THE SAME INCOME AS WAS DECLARED IN THE ORIGINAL RETURNS OF INCOME. IT WAS FOUND DURING THE COURSE OF SEARCH THAT THE ASSESSEE HAD MADE INVESTMENT IN THE CONSTR UCTION/ RENOVATION OF HIS HOUSE SITUATED AT E-1/161, ARERA COLONY, BHOPAL. DURING THE COURSE OF SEARCH, CERTAIN DOCUMENTS WERE FOUND CONTAINING MAP OF THE HOUSE NO. E-1/161, ARERA COLO NY, BHOPAL CONSTRUCTED ON 6000 SQ.FT. OF LAND, WHICH DETAILS EA CH ROOMS, DOORS, WINDOWS ETC. AS WELL AS SOME LOOSE PAPERS WER E ALSO FOUND AND SEIZED CONTAINING LIST OF CERTAIN ITEMS OF PURC HASES FOR THE HOUSE SUCH AS PAGES IN SEIZED DOCUMENTS BS-1/15. DU RING THE COURSE OF SEARCH ITSELF, ON THE SPOT VALUATION OF T HE HOUSE WAS GOT DONE FROM REGISTERED VALUER AND AS PER THE VALUERS REPORT, THE INVESTMENT IN HOUSE WAS SHOWN AT RS. 2,79,48,000/-, WHICH WAS MUCH MORE THAN THE COST OF CONSTRUCTION SHOWN BY THE ASSESSEE. THE COST OF PLOT OF LAND WAS MENTIONED BY THE ASSESS EE AT RS. 1,80,00,000/- WHEREAS COST OF CONSTRUCTION WAS ESTIMA TED AT RS. 99,48,000/- ADOPTING THE COST OF CONSTRUCTION OF RS . 1500 PER SQ.FT. ON TOTAL BUILT UP AREA OF 6632 SQ.FT. IN THE REPORT , THE DVO HAS WORKED OUT THE YEAR-WISE UNDISCLOSED INVESTMENT IN TH E SAID RESIDENTIAL HOUSE AS UNDER :- SHRI RAKESH GUPTA, BHOPAL VS. ACIT,1(2), BHOPAL I. T.(SS)A.NOS. 48 & 49/IND/2015 A.YS.2005-06 & 2006-0 7. PAGE 5 OF 17 5 S.NO. A.Y. INVESTMENT IN HOUSE WORKED OUT BY VALUATION OFFICER INVESTMENT IN BOOKS OF THE ASSESSEE DIFFERENCE IN INVESTMENT AS PER VALUATION OFFICER AND ASSESSEE 1. 2005 - 06 16,93,761/ - 11,32,761/ - 5,61,761/ - 2. 2006 - 07 13,06,961/ - 8,73,488/ - 4,33,473 / - HOWEVER, THE AO HAS OBSERVED THAT THERE IS SLIGHT V ARIATION IN THE BUILT UP AREA OF THESE TWO REPORTS. HE, THEREFORE, M ADE ADDITION OF RS. 15 LAKHS IN ASSESSMENT YEAR 2005-06 AND RS. 10 LAKHS IN ASSESSMENT YEAR 2006-07 ON ACCOUNT OF UNDISCLOSED I NVESTMENT IN THE HOUSE PROPERTY. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A),WHEREIN IT WAS CONTENDED THAT THE RETURNS OF I NCOME FOR ASSESSMENT YEARS WAS PROCESSED U/S 143(1) OF THE ACT AND NO NOTICE U/S 143(2) OF THE ACT HAD BEEN ISSUED. THERE FORE, THE ASSESSMENT HAD BECOME FINAL AND WERE NOT PENDING ON THE DATE OF SEARCH. THEREFORE, THERE WAS NO QUESTION OF ABATEME NT OF ASSESSMENT, IN SUCH A CASE, NO ADDITION CAN BE MAD E UNLESS THERE WAS SOME MATERIAL FOUND DURING THE COURSE OF SEARCH. IT WAS SHRI RAKESH GUPTA, BHOPAL VS. ACIT,1(2), BHOPAL I. T.(SS)A.NOS. 48 & 49/IND/2015 A.YS.2005-06 & 2006-0 7. PAGE 6 OF 17 6 CONTENDED THAT NO MATERIAL WAS FOUND DURING THE COUR SE OF SEARCH AND, THEREFORE, NO ADDITION COULD HAVE BEEN MADE LE GALLY U/S 153A OF THE ACT IN THE CASES WHERE ASSESSMENTS WERE NOT P ENDING. THE ASSESSEE HAS ALSO PLACED RELIANCE ON SOME CASE LAWS, WHICH ARE DISCUSSED AT PARA 4.3 OF THE APPELLATE ORDER. HOWEVE R, THE LD. CIT(A) NOTED THAT DURING THE COURSE OF SEARCH, IT WA S FOUND THAT THE ASSESSEE HAS CONSTRUCTED/RENOVATED HIS HOUSE IN RES PECT OF WHICH CERTAIN DOCUMENTS CONTAINING MAP OF THE HOUSE WITH D ETAILS OF EACH ROOM, DOORS, WINDOWS ETC. AS WELL AS SOME LOOSE PAPE RS WERE ALSO FOUND AND SEIZED CONTAINING THE LIST OF CERTAIN ITE MS PURCHASED FOR THE HOUSE SUCH AS PAGES IN SEIZED DOCUMENTS BS-1/15 AND ALSO DURING THE COURSE OF SEARCH ITSELF, ON THE SPOT, VA LUATION OF THE HOUSE WAS GOT DONE FROM REGISTERED VALUER ACCORDING TO WHICH INVESTMENT IN HOUSE WAS MUCH MORE THAN THE CONSTRUCT ION SHOWN BY THE ASSESSEE. THUS, THE MATERIAL FOUND DURING TH E COURSE OF SEARCH ITSELF SHOWS THAT THE ASSESSEE MADE UNACCOUN TED INVESTMENT IN THE CONSTRUCTION OF RESIDENTIAL HOUSE . THEREFORE, IT CANNOT BE SAID THAT THERE WAS NO MATERIAL FOUND DURI NG THE COURSE OF SEARCH IN RELATION TO THE FACT OF INVESTMENT MAD E BY THE ASSESSEE IN CONSTRUCTION OF THE RESIDENTIAL HOUSE. ACCORDING LY, IT WAS HELD THAT THE AO HAD VALIDLY ASSUMED JURISDICTION U/S 15 3 OF THE ACT. IN SHRI RAKESH GUPTA, BHOPAL VS. ACIT,1(2), BHOPAL I. T.(SS)A.NOS. 48 & 49/IND/2015 A.YS.2005-06 & 2006-0 7. PAGE 7 OF 17 7 SUPPORT OF HIS FINDING, THE LD. CIT(A) HAS DISCUSS ED AT LENGTH THE PROVISIONS RELATING TO SECTION 153A, SCOPE OF TOTAL INCOME THEREIN AND VARIOUS CASE LAWS FROM PAGE NOS. 9 TO 25 AND HAS GIVEN A FINDING THAT THE CONTENTION OF THE ASSESSEE THAT TH E ASSESSMENT U/S 153A CAN BE MADE ONLY BASED ON INCRIMINATING MATERIAL/DOCUMENTS FOUND IN THE COURSE OF SEARCH IS NOT CORRECT AND THERE WAS A MATERIAL FOUND DURING THE COURSE OF SEARCH AND SEIZURE THAT THE ASSESSEE HAD MADE UNEXPLAINED INVE STMENT IN THE CONSTRUCTION OF HOUSE. HOWEVER, WITH REGARD TO THE A DDITION OF RS. 15 LAKHS IN ASSESSMENT YEAR 2005-06 AND RS. 10 LAKH S IN ASSESSMENT YEAR 2006-07, THE LD. CIT(A) HAS RESTRIC TED THE ADDITION TO RS. 5,61,761/- FOR ASSESSMENT YEAR 2005-06 AND R S. 4,33,473/- FOR ASSESSMENT YEAR 2006-07 BEING THE DIFFERENCE IN THE INVESTMENT DETERMINED IN THE VALUATION REPORT AND INVESTMENT S HOWN BY THE ASSESSEE. 6. THUS, THE ASSESSEE IS IN APPEAL BEFORE US ON THE G ROUND THAT THE LD. CIT(A) ERRED IN HOLDING THAT PROCEEDIN GS OF ASSESSMENT U/S 153A WERE NOT WITHIN THE JURISDICTION AS NO INCRI MINATING DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH AND MAINTAINING ADDITION OF RS. 5,61,761/- FOR ASSESSME NT YEAR 2005- SHRI RAKESH GUPTA, BHOPAL VS. ACIT,1(2), BHOPAL I. T.(SS)A.NOS. 48 & 49/IND/2015 A.YS.2005-06 & 2006-0 7. PAGE 8 OF 17 8 06 AND RS. 4,33,473/- FOR ASSESSMENT YEAR 2006-07 T OWARDS UNEXPLAINED INVESTMENT IN CONSTRUCTION OF RESIDENTI AL HOUSE. 7. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE CONTENDED THAT THE ASSESSMENTS FOR THE YEARS UNDER APPEAL WERE NOT PENDING ON THE DATE OF SEARCH. THEREFORE, THERE WAS NO QUESTION OF ABATEMENT OF ASSESSMENT. IT WAS CONTENDED THAT TH E TIME LIMIT FOR ISSUE OF NOTICE U/S 143(2) OF THE ACT HAD EXPIR ED IN BOTH THE ASSESSMENT YEARS ON THE DATE OF SEARCH AND, THEREFO RE, THE ASSESSMENTS WERE NOT PENDING AND THE JURISDICTION AS SUMED U/S 153A OF THE ACT WAS LEGALLY NOT CORRECT AS THE SAME CAN BE ASSUMED ON THE BASIS OF INCRIMINATING MATERIAL FOUND AS A R ESULT OF SEARCH. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE C ONTENDED THAT NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH SH OWING UNEXPLAINED INVESTMENT SHOWN IN THE CONSTRUCTION OF THE HOUSE AND, THEREFORE, NO ADDITION COULD HAVE BEEN MADE. T HE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS ALSO PLACED RELIANCE ON SOME OF THE CASE LAWS IN THIS REGARD. AS REGARDS MAINTAINING THE ADDITION OF RS. 5,61,761/- FOR THE ASSESSMENT YEAR 2005-06 AND RS. 4,33,473/- FOR ASSESSMENT YEAR 2006-07, IT WAS CONTE NDED THAT NO ADDITION CAN BE MADE SOLELY BASED ON VALUATION REPO RT OF DVO. IT WAS SUBMITTED THAT THE ENTIRE EXERCISE OF REFERENCE TO VALUER AND SHRI RAKESH GUPTA, BHOPAL VS. ACIT,1(2), BHOPAL I. T.(SS)A.NOS. 48 & 49/IND/2015 A.YS.2005-06 & 2006-0 7. PAGE 9 OF 17 9 PROCESS OF VALUATION IS VITIATED IN LAW. THE AO HAS REFERRED THE MATTER FOR DETERMINATION OF FAIR MARKET VALUE OF TH E PROPERTY WITHOUT RECORDING ANY FINDING AND REJECTING THE BOOK S OF THE ASSESSEE. THE REFERENCE WAS MADE FOR THE PURPOSE OF WEALTH TAX ACT AND NOT TO DETERMINE COST OF CONSTRUCTION. THE DVO HAS OBTAINED COMMENTS OF THE ASSESSEE ONLY ON ONE REPOR T DATED 14.03.2014, WHICH WAS ISSUED UNDER THE PROVISIONS OF THE WEALTH TAX ACT TO DETERMINE THE FAIR MARKET VALUE OF THE P ROPERTY ON VARIOUS DATES. THE DVO HAS ESTIMATED THE FAIR MARKE T VALUE OF THE PROPERTY FOR THE ASSESSMENT YEAR 2005-06 TO 2011-12 AND ASSESSEE WAS THEREAFTER SERVED WITH A COPY OF THE VALUATION RE PORT ON 22.03.2013 BY THE AO, WHO DIRECTED TO FILE THE OBJE CTION NEXT DAY ITSELF AS THE TIME ALLOWED BY THE AO WAS VERY SHORT, THE ASSESSEE FILED PRIMARY OBJECTIONS ON 22.03.2013 ITSELF. THE AO WHILE FRAMING THE ASSESSMENT HAS COMPLETELY IGNORED THE OBJECTION S OF THE ASSESSEE. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ALSO CITED SOME CASE LAWS IN HIS SUPPORT. 8. ON THE OTHER HAND, THE LD. CIT DR RELIED ON THE FIN DINGS OF THE LOWER AUTHORITIES. AND SUBMITTED THAT IT IS NOT CORRECT TO SAY THAT NO DOCUMENTS FOUND DURING THE COURSE OF SEARCH AS THE SAME IS EVIDENT FROM PARA 4.4 OF THE CIT(A)S ORDER THAT CERTAIN SHRI RAKESH GUPTA, BHOPAL VS. ACIT,1(2), BHOPAL I. T.(SS)A.NOS. 48 & 49/IND/2015 A.YS.2005-06 & 2006-0 7. PAGE 10 OF 17 10 DOCUMENTS WERE FOUND AS PER ANNEXRUE BS-1/15 PERTAI NING TO CONSTRUCTION/RENOVATION OF THE HOUSE NO. E-1/161, A RERA COLONY, BHOPAL. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND FINDINGS RECORDED BY THE LOWER AUTHORITIES. THE PROVISIONS OF SECTION 153A PROVID ES THAT THE AO SHALL ASSESS OR RE-ASSESS THE TOTAL INCOME OF EACH OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEARS RE LEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED U/S 1 32 OR REQUISITION WAS MADE U/S 132A. IT WOULD BE FRUITFUL T O REPRODUCE THE PROVISIONS OF SECTION 153A, WHICH READS AS UNDE R :- ASSESSMENT IN CASE OF SEARCH OR REQUISITION 153A. [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139 , SECTION 147 , SECTION 148 , SECTION 149 , SECTION 151 AND SECTION 153 , IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX SHRI RAKESH GUPTA, BHOPAL VS. ACIT,1(2), BHOPAL I. T.(SS)A.NOS. 48 & 49/IND/2015 A.YS.2005-06 & 2006-0 7. PAGE 11 OF 17 11 ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139 ; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THIS [SUB-SECTION] PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A , AS THE CASE MAY BE, SHALL ABATE. SHRI RAKESH GUPTA, BHOPAL VS. ACIT,1(2), BHOPAL I. T.(SS)A.NOS. 48 & 49/IND/2015 A.YS.2005-06 & 2006-0 7. PAGE 12 OF 17 12 FROM THE ABOVE, IT CAN BE SEEN THAT THE LEGISLATURE HAS PROVIDED IN CLEAR AND UNAMBIGUOUS LANGUAGE IN SECTION 153A THAT IN CASE OF A PERSON WHERE A SEARCH IS INITIATED U/S 132 AFTER 31. 05.2003, THE AO SHALL ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR REL EVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED. THI S IS AGAIN EXPLAINED IN THE FIRST PROVISO TO SECTION 153A WHICH PROVIDES THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH ASSESSMENT YEARS. THUS, WHERE THERE IS A SEARCH, THE AO HAS N O OPTION BUT TO ASSESS OR REASSESS THE TOTAL INCOME FOR EACH OF EAR LIER SIX ASSESSMENT YEARS. TOTAL INCOME HAS BEEN DEFINED I N SECTION 2(45) OF THE INCOME-TAX ACT AS UNDER :- (45) TOTAL INCOME MEANS THE TOTAL AMOUNT OF INCO ME REFERRED TO IN SECTION 5, COMPUTED IN THE MANNER LAI D DOWN IN THIS ACT. FURTHER, IN CASE OF AN ORDINARY RESIDENT IN INDIA, T HE SCOPE OF TOTAL INCOME HAS BEEN PROVIDED IN SECTION 5 OF THE ACT AS UNDER :- SCOPE OF TOTAL INCOME. SHRI RAKESH GUPTA, BHOPAL VS. ACIT,1(2), BHOPAL I. T.(SS)A.NOS. 48 & 49/IND/2015 A.YS.2005-06 & 2006-0 7. PAGE 13 OF 17 13 5. (1) SUBJECT TO THE PROVISIONS OF THIS ACT, THE T OTAL INCOME OF ANY PREVIOUS YEAR OF A PERSON WHO IS A RESIDENT INCLUDES ALL INCOME FROM WHATEVER SOURCE DERIVED WHICH (A) IS RECEIVED OR IS DEEMED TO BE RECEIVED IN INDIA I N SUCH YEAR BY OR ON BEHALF OF SUCH PERSON ; OR (B) ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR ARI SE TO HIM IN INDIA DURING SUCH YEAR; OR (C) ACCRUES OR ARISES TO HIM OUTSIDE INDIA DURING SUCH YEAR. 10. THUS, THE SCOPE OF ASSESSMENT OR RE-ASSESSMENT TO B E MADE U/S 153A IS TO DETERMINE TOTAL INCOME WHICH I NCLUDES BOTH REGULAR AND UNDISCLOSED INCOME. IT MAY BE PERTINENT TO NOTE HERE THAT THE LEGISLATURE HAD NOT REFERRED TO ANY CONCEP T OF UNDISCLOSED INCOME IN SECTIONS 153A TO 153C. THUS, THE INTENTI ON OF LEGISLATURE IS VERY CLEAR THAT U/S 153A, THE AO SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FAL LING WITHIN SUCH SIX ASSESSMENT YEARS. IT IS ALSO PERTINENT TO NOTE THAT THE DEFINITION OF UNDISCLOSED INCOME WAS SPECIFICALLY PROVIDED IN SECTION 158B(B) IN CHAPTER XIV-B, WHEREAS NO SEPARATE AND DISTINCT D EFINITION OF TOTAL INCOME HAS BEEN PROVIDED IN SECTION 153A BE CAUSE THE TOTAL SHRI RAKESH GUPTA, BHOPAL VS. ACIT,1(2), BHOPAL I. T.(SS)A.NOS. 48 & 49/IND/2015 A.YS.2005-06 & 2006-0 7. PAGE 14 OF 17 14 INCOME HAS ALREADY BEEN DEFINED IN SECTION 2(45) OF THE ACT. HAD THE LEGISLATURE INTENDED TO HAVE THE SCOPE OF TOT AL INCOME TO BE ASSESSED AS PER SECTION 153A DIFFERENT FROM THE DEF INITION U/S 2(45) OF THE ACT, IT WOULD HAVE PROVIDED A SEPARATE AND S PECIFIC DEFINITION OF TOTAL INCOME FOR THE PURPOSES OF SECTIONS 153A, 153B & 153C OF THE ACT. 11. THUS, THE AO HAS POWER U/S 153A TO MAKE ASSESSMENT F OR ALL THE SIX ASSESSMENT YEARS AND COMPUTE THE TOTAL INCOME OF THE ASSESSEE INCLUDING UNDISCLOSED INCOME, NOTWITHSTANDI NG, THE RETURN OF THESE ASSESSMENT YEARS HAVE ALREADY BEEN PROCESSED U/S 143(1) OR ASSESSED U/S 143(3) OF THE ACT. THEREFORE , WE ARE OF THE CONSIDERED OPINION THAT THE AO HAS TO MAKE ASSESSME NT U/S 153A ASSESSING OR REASSESSING THE TOTAL INCOME OF EACH O F EARLIER SIX ASSESSMENT YEARS INVOLVED ON THE BASIS OF INCRIMINA TING MATERIAL/DOCUMENTS FOUND IN THE COURSE OF SEARCH. I N THE INSTANT CASE, THE LD. CIT(A) HAS MENTIONED IN PARA 4.4 OF H IS ORDER THAT CERTAIN LOOSE PAPERS RELATING TO HOUSE PROPERTY UND ER CONSIDERATION SHOWING DETAILS OF MAP OF EACH ROOM, DOORS AND WINDO WS WERE FOUND AND SEIZED. THEREFORE, THE ASSUMPTION OF JURI SDICTION BY THE AO U/S 153A OF THE ACT IS IN ACCORDANCE WITH LAW, WHIC H IS ALSO SUPPORTED BY THE LAND MARK DECISION IN THE CASE OF CIT VS. KABUL SHRI RAKESH GUPTA, BHOPAL VS. ACIT,1(2), BHOPAL I. T.(SS)A.NOS. 48 & 49/IND/2015 A.YS.2005-06 & 2006-0 7. PAGE 15 OF 17 15 CHAWLA, (2016) 380 ITR 0573 (DEL), WHEREIN IT WAS HELD THAT COMPLETED ASSESSMENT CAN BE INTERFERED WITH BY THE A O WHILE MAKING THE ASSESSMENT U/S 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UN-EARTHED DURING THE COURSE OF SEARCH OR REQUISITION DOCUMENTS FOR UNDISCLOSED INCOME OR PRO PERTY DISCOVERED IN THE COURSE OF SEARCH, WHICH WERE NOT P RODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF OR IGINAL ASSESSMENT. SINCE IN THE CASE OF ASSESSEE, THE RENOVATION/CONSTRUCTION OF HOUSE WAS UNDERTAKEN DURI NG THE COURSE OF ASSESSMENT YEAR UNDER CONSIDERATION, THER EFORE, ASSUMPTION OF JURISDICTION U/S 153A BY THE AO IS JU STIFIED. 12. AS REGARDS THE MAINTAINING THE ADDITION OF RS. 5,61 ,761/- FOR ASSESSMENT YEAR 2005-06 AND RS. 4,33,473/- FOR ASSESSMENT YEAR 2006-07 BEING THE DIFFERENCE OF VALUATION REPO RT AND THE INVESTMENT SHOWN IN THE BOOKS OF ACCOUNTS, IT IS SEE N THAT THE DVO/A.O. HAS NOT PROVIDED PROPER OPPORTUNITY TO THE ASSESSEE AS ONLY ONE DAY FOR FILING THE OBJECTION WAS ALLOWED, WH ICH WAS ALSO IGNORED BY THE AO AND MADE AD HOC ADDITION AS PER H IS WHIMS. SINCE THE REPORT OF VALUATION OFFICER IS ALSO AN ES TIMATE, THOUGH IT IS BY TECHNICAL PERSON, IT IS NOTICED THAT THE DVO HAS APPLIED PAR 1992 RATES AS PER C.B.D.T. INSTRUCTION NO. 1671, WH ICH IS CLAIMED SHRI RAKESH GUPTA, BHOPAL VS. ACIT,1(2), BHOPAL I. T.(SS)A.NOS. 48 & 49/IND/2015 A.YS.2005-06 & 2006-0 7. PAGE 16 OF 17 16 TO BE DULY ADJUSTED FOR BHOPAL. HOWEVER, THE ASSESS EE HAS NOT BEEN SUPPLIED WITH ANY WORKING PAPER TO VERIFY THE CL AIM OF THE DVO. IT IS ALSO NOTICED THAT PAR 1992 RATES ARE REL EVANT FOR VERY HIGH CLASS BUILDING IN NEW DELHI OR METRO AREAS, WHER E COST OF CONSTRUCTION IS 30% HIGHER THAN THE COST OF MATERIAL AND LABOUR IN THE SMALL TOWN LIKE BHOPAL. IT HAS BEEN HELD IN SEVE RAL JUDICIAL CASES THAT WHERE THE STATE PWD RATES ARE PUBLISHED T HOSE RATES SHOULD BE APPLIED IN PREFERENCE TO PAR RATES. THE A CTUAL CONSTRUCTION ARE AWARDED AT RATES 20 % TO 30% BELOW PAR RATES. IN SUPPORT OF THIS CONTENTION, THE ASSESSEE HAS RELIED IN THE CASE OF S.K.JAIN VS. ACIT, 14 ITJ 434, (INDORE TRIBUNAL ), JAGMOHAN JAISWAL VS. ITO, 10 TTJ 187 (INDORE TRIBUNAL ) AND O THER CASE LAWS AS DISCUSSED IN THE APPELLATE ORDER. IN THE LIGHT O F THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITION CAN BE MADE SOLELY ON ESTIMATED BASIS BASED ON DVOS REPORT IS NOT JUS TIFIED AND PROPER. THEREFORE, IN THE INTEREST OF JUSTICE AND F AIR PLAY, IT WOULD BE REASONABLE TO RESTRICT THE ADDITION OF RS. 5,61, 761/- TO RS. 2,00,000/- FOR ASSESSMENT YEAR 2005-06 AND ADDITION OF RS. 4,43,473/- TO RS. 1,50,000/- FOR ASSESSMENT YEAR 20 06-07, WHICH WAS PRONOUNCED IN THE OPEN COURT. IN THE LIGHT OF TH E ABOVE SHRI RAKESH GUPTA, BHOPAL VS. ACIT,1(2), BHOPAL I. T.(SS)A.NOS. 48 & 49/IND/2015 A.YS.2005-06 & 2006-0 7. PAGE 17 OF 17 17 DISCUSSION, GROUND NO.1 OF THE APPEAL OF THE ASSESS EE IS DISMISSED AND GROUND NO. 2 IS PARTLY ALLOWED IN BOTH THE ASSES SMENT YEARS. 13. IN THE RESULT, THE APPEALS ARE PARTLY ALLOWED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON THE 26 TH JULY, 2016. SD/- (D.T.GARASIA) JUDICIAL MEMBER SD/- (O.P.MEENA) ACCOUNTANT MEMBER DATED : 4 TH AUGUST, 2016. CPU* COPY OF THE ORDER FORWARDED TO : THE ASSESSEE/ PCIT- INDORE/ CIT(A)-I, INDORE, AO/ D R- INDORE BENCH/ GUARD FILE BY ORDER ASSISTANT REGISTRAR OF ITAT, INDORE BENCH