M/s. Om Shivam Corporation, Baroda V. The ACIT.,Cent.Circle-1, Baroda

ITSSA 595/AHD/2012

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0175 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 11-07-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 06-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Unexplained investment; Opportunity of being heard; Corroborative evidences; Valuation report; Revised return
• Section: 143(3); 69

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , !' # $% $% $% $% &, # BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER APPEAL(S) BY APPELLANTS VS. RESPONDENTS SL. NO(S) IT(SS)A NO(S)/ITA NO. ASSESSMENT YEAR(S) APPELLANT RESPONDENT 1. IT(SS)A NO. 595/AHD/2012 2001-02 M/S.OM SHIVAM CORPORATION 45/46, EARTH COMPLEX AKSHAR CHOWK OLD PADRA ROAD BARODA 390 020 PAN: AAAFO 0443 E THE ASST.CIT CENTRAL CIRCLE-1 BARODA 2. 601/AHD/2012 2000-01 ITO WARD-2(4) BARODA M/S.OM SHIVAM CORPORATION 11, SUDHA NAGAR, JETALPUR ROAD BARODA- 390007 PAN:AAAF O 0443E 3. 602/AHD/2012 2001-02 -DO- -DO- 4. 603/AHD/2012 2002-03 -DO- -DO- 5. 604/AHD/2012 2003-04 -DO- -DO- 6. 605/AHD/2012 2004-05 -DO- -DO- 7. ITA NO. 2773/AHD/2012 2005-06 -DO- -DO- ASSESSEE BY : SHRI MUKUND BAKSHI, A.R. REVENUE BY : SHRI VIMALENDU VERMA, CIT-DR ' ( ' / / / / DATE OF HEARING 11/07/2014 *+, ( ' / DATE OF PRONOUNCEMENT 25/07/2014 !- / O R D E R PER BENCH : OUT OF THESE SEVEN BUNCH OF APPEALS; ONE APPEAL BY THE ASSESSEE (FOR ASST.YEAR 2001-02) AND REST OF TH E SIX APPEALS BY THE IT(SS)A NO.595/AHD/2012 (BY ASSESSEE) AND IT(SS)A NOS.601 TO 605/AHD/12 & ITA NO.2773/AHD /2012 (BY REVENUE) M/S.OM SHIVAM CORPORATION VS. THE ACIT/ITO AYS 2001-02(ASSESSEE) AND 2000-01 TO 2005-06 RESPE CTIVELY - 2 - REVENUE ARE DIRECTED AGAINST THE COMMON ORDER OF TH E LD.COMMISSIONER OF INCOME TAX(APPEALS)-IV, AHMEDABAD (CIT(A) IN S HORT) DATED 26 TH SEPTEMBER-2012 PERTAINING TO ASSTT.YEARS (AYS) 2000 -01 TO 2005-06. SINCE COMMON ISSUES AND FACTS ARE INVOLVED, THESE A PPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS C ONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE ASSESSEES APPEAL IN IT(SS )A NO.595/AHD/2012 FOR AY 2001-02. THE ASSESSEE HAS R AISED THE FOLLOWING GROUND(S) OF APPEAL:- 1. THE LD.CIT(A)-IV, AHMEDABAD HAS ERRED IN LAW A ND IN FACTS CONFIRMING THE ACTION OF THE LD.A.O. IN CONFIRMING THE ADDITION MADE BY THE LD.A.O. OF RS.36,40,000/- OUT OF THE TOTAL A DDITION OF RS.83,80,000/- BEING THE AMOUNT ALLEGEDLY PAID FOR PURCHASE OF LAND OUT OF UNDISCLOSED SOURCES. THE ADDITION OF RS.36, 40,000/- BEING CONTRARY TO FACTS AND IN LAW IS PRAYED TO BE DELETE D. 2. YOUR APPELLANT CRAVES THE LIBERTY TO ADD, ALTER, AM END OR DELETE ANY OR ALL THE GROUNDS OF APPEAL STATED ABOVE. 2.1. BRIEFLY STATED FACTS ARE THAT A SEARCH ACTION U/S.132 OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS CARRIED OUT ON 04/03/2005, COVERING THE RESIDENTIAL AND BUSINESS P REMISES OF KABHAI CHAUHAN AND GROUP OF CASES AND SURVEY U/S.133A ON T HE BUSINESS PREMISES OF M/S.OM SHIVAM CORPORATION. DURING THE COURSE OF SEARCH, CERTAIN DOCUMENTS FROM THE RESIDENCE OF SHRI DINESH PATEL WERE SEIZED WHICH PERTAINED TO THE ASSESSEE. AFTER RECORDING T HE SATISFACTION NOTE, A NOTICE U/S.153C OF THE ACT WAS ISSUED AND THE ASSES SMENT U/S.153C R.W.S. 143(3) OF THE ACT WAS FRAMED, THEREBY THE ASSESSIN G OFFICER (AO IN SHORT) MADE ADDITION(S) ON ACCOUNT OF UNDISCLOSED I NVESTMENT IN IT(SS)A NO.595/AHD/2012 (BY ASSESSEE) AND IT(SS)A NOS.601 TO 605/AHD/12 & ITA NO.2773/AHD /2012 (BY REVENUE) M/S.OM SHIVAM CORPORATION VS. THE ACIT/ITO AYS 2001-02(ASSESSEE) AND 2000-01 TO 2005-06 RESPE CTIVELY - 3 - CONSTRUCTION AMOUNTING TO RS.17,740/- IN THE ASSTT. YEAR IN THIS APPEAL AND UNACCOUNTED INVESTMENT IN LAND AMOUNTING TO RS. 83,80,000/- AGAINST WHICH ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A) , WHO AFTER CONSIDERING THE SUBMISSIONS, PARTLY ALLOWED THE APP EAL. MATTER TRAVELED UPTO THE STAGE OF TRIBUNAL BY WAY OF ITA NOS.1232, 1650, 1651, 1652, 1653 1654 AND 1655/AHD/2008 AND THE HONBLE ITAT V IDE ORDER DATED 15/07/2008 RESTORED THESE APPEALS WITH THE DIRECTIO N THAT THE APPEALS REQUIRE FRESH ADJUDICATION ON MERITS AFTER GIVING P ROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEES BY THE LD.CIT(A). 2.2 THE LD.CIT(A) IN REMAND PROCEEDINGS DECIDED THE ISSUE OF ADDITION ON ACCOUNT OF ALLEGED UNDISCLOSED INVESTMENT IN THE COST OF CONSTRUCTION OF EARTH COMPLEX IN FAVOUR OF THE ASSESSEE AND THE ISSUE OF ADDITION OF RS.83,80,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT WAS PARTLY ALLOWED, THEREBY THE ADDITION TO THE EXTENT OF RS.36,40,000/ - WAS CONFIRMED OUT OF TOTAL ADDITION MADE BY THE AO OF RS.83,80,000/-. T HE ASSESSEE HAS CHALLENGED THE PRESENT APPEAL. 3. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE LD.CIT(A) IS NOT JUSTIFIED IN PARTLY ALLOWING THE APPEAL AND CONFIRM ING THE ADDITION TO THE TUNE OF RS.36,40,000/-. HE SUBMITTED THAT TOTAL AM OUNT OF RS.1,68,30,000/- WAS REQUIRED TO BE PAID BY THE ASS ESSEE BY 31/12/2001, BUT THERE WERE LITIGATION BETWEEN THE PARTIES. HE SUBMITTED THAT THE CONFIRMATION IS MADE ON THE BASIS OF THE ADMISSION MADE IN THE SUIT FILED FOR SPECIFIC PERFORMANCE AGAINST THE SELLERS, NAMEL Y SMT.PARIKH & OTHERS. HE SUBMITTED THAT PAYMENT OF RS.20 LACS WA S MADE TO IT(SS)A NO.595/AHD/2012 (BY ASSESSEE) AND IT(SS)A NOS.601 TO 605/AHD/12 & ITA NO.2773/AHD /2012 (BY REVENUE) M/S.OM SHIVAM CORPORATION VS. THE ACIT/ITO AYS 2001-02(ASSESSEE) AND 2000-01 TO 2005-06 RESPE CTIVELY - 4 - SMT.LATABEN PARIKH ACTUALLY APPROPRIATED AGAINST AL LOTMENT OF FLAT IN THE BUILDING PRIOR TO DATE OF SURVEY AND REFLECTED IN T HE ACCOUNTS FILED. THE ADVANCE IS INCLUDED IN THE SCHEDULE OF ADVANCE FROM MEMBERS. THE PAYMENT OF RS.16,40,000/- MADE TO SHRI BABUL PARIKH BY WAY OF THREE CHEQUES AND SHRI BABUL PARIKH HAS DISCOUNTED THESE CHEQUES WITH THE SHROFF M/S.PUNAMCHAND DEVCHAND AND RECOVERED THE MO NEY. HE SUBMITTED THAT THE EVIDENCES INDICATE THAT PAYMENT IS MADE ON A DATE SUBSEQUENT TO 31.12.2001. HE FURTHER SUBMITTED THA T THE LD.CIT(A) HAS CONFIRMED THE ADDITION ON THE BASIS OF THE SETTLEME NT ARRIVED IN THE SUIT. HE SUBMITTED THAT THE SUIT IS DATED 16.09.2002 AND, THEREFORE, IN ABSENCE OF ANY EVIDENCE TO SHOW THAT THE PAYMENT WAS MADE I N THE FINANCIAL YEAR 2000-01, THE ADDITION BASED ON THE SUIT DATED 16.09 .2002 CANNOT BE TAKEN AS MADE DURING THE YEAR UNDER CONSIDERATION. HE SU BMITTED THAT THE ADDITION U/S.69 CAN BE MADE ONLY IN THE FINANCIAL Y EAR IN WHICH THE PAYMENT IS PROVED TO HAVE BEEN MADE. IN SUPPORT OF THIS CONTENTION, LD.COUNSEL FOR THE ASSESSEE RELIED ON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF USHAKANT PATEL V S. CIT REPORTED AT 282 ITR 553(GUJ.) AND THE DECISION OF THE COORDINAT E BENCH (ITAT AHDMEDABAD) RENDERED IN THE CASE OF ROSHAN ALIAS RA KESH G.SHAH VS. DCIT REPORTED AT 53 TTJ 267 (AHD.). HE SUBMITTED T HAT THE ONUS IS HEAVY ON THE REVENUE THAT ANY EXCESS PAYMENT IS MAD E THAN RECORDED IN MAKING AN ADDITION U/S.69 OF THE ACT. HE RELIED ON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF DCIT VS. JIVANLAL NEBHUMAL (HUF) REPORTED AT 134 TAXMAN 660 (GUJ.) AN D THE DECISION OF COORDINATE BENCH RENDERED IN THE CASE OF BHARAT A.M EHTA VS. ITO REPORTED AT 86 TTJ 369 (AHD.). IT(SS)A NO.595/AHD/2012 (BY ASSESSEE) AND IT(SS)A NOS.601 TO 605/AHD/12 & ITA NO.2773/AHD /2012 (BY REVENUE) M/S.OM SHIVAM CORPORATION VS. THE ACIT/ITO AYS 2001-02(ASSESSEE) AND 2000-01 TO 2005-06 RESPE CTIVELY - 5 - 4. ON THE CONTRARY, LD.S.DR SUBMITTED THAT THERE IS NO INFIRMITY IN THE ORDER OF THE LD.CIT(A) SO FAR AS CONFIRMATION OF TH E DISPUTED ADDITION IS CONCERNED. HE SUBMITTED THAT THE ASSESSEE ITSELF HAS MADE ADMISSION BEFORE THE PROCEEDINGS IN CIVIL COURT THAT THE MONE Y HAS BEEN PAID AS PER AGREEMENT DATED 29/06/2000. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDGEMENTS RELIED UPON BY THE LD.COU NSEL FOR THE ASSESSEE. WE FIND THAT THE LD.CIT(A) IN PARA-10.8 OF HIS ORDE R HAS OBSERVED AS UNDER:- 10.8. IN VIEW OF THE ABOVE, IT IS CLEARLY INFER RED THAT ENTIRE PAYMENT OF RS.1,24,80,000/- HAS BEEN MADE BY THE APPELLANT FIRM TO SMT.LATA PARIKH AND SHRI BABUL PARIKH BY 31-12-2001 IN ACCOR DANCE WITH THE TERMS OF THE AGREEMENT SINCE THE APPELLANT FIRM HAS ALREADY SUBMITTED BEFORE THE COURT BY WAY OF SUIT FILED BEFORE THE CI VIL JUDGE, BARODA FOR SPECIFIC PERFORMANCE OF CONTRACT. THEREFORE, ONCE SUBMISSION IS MAE BEFORE THE HONBLE CIVIL COURT STATING THE ENTIRE P AYMENT OF RS.1,24,80,000/- HAS BEEN MADE IN ACCORDANCE WITH T HE TERMS OF THE CONTRACT AND PAID TO THE PARTIES CONCERNED BY 31-12 -2001. IT IS FURTHER NOTED THAT IN THE CASE OF SMT.LATA PARIKH, PAYMENT OF RS.20,00,000/- IS CLAIMED TO HAVE MADE IN 2003/2004/2005 WHEREAS THE SUIT HAS BEEN FILED BEFORE THE COURT ON 16-09-2002. FURTHER, IT IS NOTED THAT SHRI BABUL PARIKH HAS ALREADY ADMITTED TO HAVE RECEIVED RS.86,30,000/- (WHICH CONSISTS OF RS.69,90,000/- ALREADY PAID BY C HEQUE BY 31-12-2001 AND RS.16,40,000/-) FROM THE APPELLANT FIRM OUT OF THE TOTAL PAYMENT TO BE RECEIVED OF RS.1,17,30,000/- WHICH HE HAS DISCLO SED IN HIS REVISED RETURN OF INCOME FOR AY 2001-02. IN THE ORDER OF H ONBLE ITAT IN THE CASE OF SHRI BABUL PARIKH ALSO, IT IS NOTED BY THE ITAT ALSO THAT SHRI BABUL PARIKH HAS ADMITTED TO RECEIPT OF RS.86,30,00 0/- ON ACCOUNT OF LAND WHICH WAS DISCLOSED IN THE REVISED RETURN FILE D IN RESPONSE TO NOTICE U/S.153C FOR AY 2001-02. THEREFORE, FROM TH E AVERTMENTS OF SHRI BABUL PARIKH AS NOTED IN THE ITATS ORDER AS WELL A S THE FACT THAT SHRI BABUL PARIKH HAS REVISED THE RETURN OF INCOME FOR A Y 2001-02 AND SHOWN RECEIPT OF RS.86,30,000/- RECEIVED FROM THE A PPELLANT FIRM, IT IS IT(SS)A NO.595/AHD/2012 (BY ASSESSEE) AND IT(SS)A NOS.601 TO 605/AHD/12 & ITA NO.2773/AHD /2012 (BY REVENUE) M/S.OM SHIVAM CORPORATION VS. THE ACIT/ITO AYS 2001-02(ASSESSEE) AND 2000-01 TO 2005-06 RESPE CTIVELY - 6 - CONCLUDED THAT THE PAYMENT OF RS.20,00,000/- TO SMT .LATA PARIKH AND RS.16,40,000/- TO SHRI BABUL PARIKH CLAIMED TO HAVE PAID AFTER 31-12- 2001 IS CONTRARY TO THE EVIDENCE ON RECORD IN VIEW OF CATEGORICAL ADMISSION OF THE APPELLANT FIRM THAT THE ENTIRE PAY MENT OF RS.1,24,80,000/- HAS BEEN PAID TO SMT.LATA PARIKH A ND SHRI BABUL PARIKH BY 31-12-2001 IN ACCORDANCE WITH THE TERMS O F THE AGREEMENT AS EVIDENCED FROM THE CONTENTS OF THE SUIT FILED BEFOR E CIVIL COURT DATED 16-09-2002 AS WELL AS ADMISSION AND DISCLOSURE OF S UCH RECEIPT BY SHRI BABUL PARIKH OF RS.86,30,000/- (INCLUDING THE PAYME NT OF RS.16,40,000/- CLAIMED TO HAVE BEEN MADE AFTER 31-12-2001) IN HIS RETURN OF INCOME FOR AY 2001-02. IN VIEW OF THE ABOVE, THE TOTAL PA YMENT OF RS.20,00,000/- TO SMT.LATA PARIKH AND RS.16,40,000/ - TO SHRI BABUL PARIKH IS HELD TO BE MADE BY THE APPELLANT FIRM BY 31-12-2001 IN TERMS OF THE AGREEMENT. SINCE SUCH PAYMENT IS NOT RECORD ED IN THE BOOKS OF ACCOUNT OF THE APPELLANT FIRM, THE SAME IS HELD TO BE MADE OUT OF UNDISCLOSED INCOME OF THE FIRM. 5.1. THE CONTENTION OF THE ASSESSEE IS THAT THIS PA YMENT OF RS.36,40,000/- WAS MADE TO SUBSEQUENT TO THE DATE O F 31/12/2001 AND NOT MADE DURING THE FINANCIAL YEAR UNDER CONSIDERATION. THE LD.COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TOWARDS PAGE N OS.55 TO 59 OF THE PAPER-BOOK TO BUTTRESS THE CONTENTION THAT THIS AM OUNT WAS, IN FACT, PAID ON THE DATES MENTIONED IN THE STATEMENT OF ACCOUNT AS ENCLOSED. 6. AS PER PARA-3 OF THE PLAINT, THE ASSESSEE MADE AVERMENT THAT THE DEFENDANTS HAVE RECEIVED FULL PAYMENT OF CONSIDERAT ION AS STATED IN THE DEVELOPMENT AGREEMENT. HOWEVER, IT IS NOT COMING O UT OF THE COMPROMISE DEED AS PLACED BEFORE THE LD.CIVIL COURT FOR SETTLEMENT AS TO WHEN THE PAYMENTS WERE MADE. THEREFORE, THIS ISSUE IS REMITTED BACK TO THE FILE OF LD.CIT(A) TO VERIFY THE CONTENTION OF T HE ASSESSEE THAT THE AMOUNT WAS PAID SUBSEQUENT TO 31/12/2001 AND DECIDE THIS ISSUE IN ACCORDANCE WITH LAW. THUS, THIS GROUND OF ASSESSEE S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. IT(SS)A NO.595/AHD/2012 (BY ASSESSEE) AND IT(SS)A NOS.601 TO 605/AHD/12 & ITA NO.2773/AHD /2012 (BY REVENUE) M/S.OM SHIVAM CORPORATION VS. THE ACIT/ITO AYS 2001-02(ASSESSEE) AND 2000-01 TO 2005-06 RESPE CTIVELY - 7 - 6.1. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I T(SS)A NO.595/AHD/2012 FOR AY 2001-02 IS ALLOWED FOR STATI STICAL PURPOSES. 7. NOW, WE TAKE UP THE REVENUES APPEALS IN IT(SS)A NOS.601, 602, 603, 604, 605/AHD/2012 AND ITA NO.2773/AHD/2012. T HE REVENUE HAS RAISED THE FOLLOWING COMMON GROUNDS IN IT(SS)A NOS. 601, 603, 604, 605 AND ITA NO.2773/AHD/2012. EXTRACTED FROM IT(SS)A N O.601/AHD/2012 FOR AY 2000-01. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF ` 2,78,247/- ( ` 30,30,707/- FOR AY 2002- 03, ` 63,82,412/- FOR AY 2003-04, ` 80,84,291/- FOR AY 2004-05 AND ` 78,65,036/- FOR AY 2005-06) MADE DURING THE YEAR ON ACCOUNT O UNDISCLOSED INVESTMENT WITHOUT APPRECIATING THAT TH E ASSESSEE HAS CONSIDERABLY UNDER-VALUED COST OF CONSTRUCTION OF T HE PROPERTY SINCE THE OVERALL DIFFERENCE IN THE COST OF CONSTRUCTION OF T HE PROPERTY ESTIMATED BY THE DISTRICT VALUATION OFFICER AND THAT BY THE A SSESSEE IS ` 2,64,39,507/- WHICH SHOWS THAT THE ACCOUNTS SUBMITT ED BY THE ASSESSEE WAS NOT RELIABLE. 2. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR ALTER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. RELIEF CLAIMED IN APPEAL IT IS PRAYED THAT THE ORDER OF THE CIT(APPEALS) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 7.1 IN IT(SS)A NO.602/AHD/2012 FOR AY 2001-02 THE R EVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF ` 17,740/ - MADE DURING THE YEAR ON ACCOUNT O UNDISCLOSED INVESTMENT WITHOUT APPRECIATI NG THAT THE ASSESSEE HAS CONSIDERABLY UNDER-VALUED COST OF CONSTRUCTION OF THE PROPERTY SINCE THE OVERALL DIFFERENCE IN THE COST OF CONSTRUCTION OF THE PROPERTY IT(SS)A NO.595/AHD/2012 (BY ASSESSEE) AND IT(SS)A NOS.601 TO 605/AHD/12 & ITA NO.2773/AHD /2012 (BY REVENUE) M/S.OM SHIVAM CORPORATION VS. THE ACIT/ITO AYS 2001-02(ASSESSEE) AND 2000-01 TO 2005-06 RESPE CTIVELY - 8 - ESTIMATED BY THE DISTRICT VALUATION OFFICER AND THA T BY THE ASSESSEE IS ` 2,64,39,507/- WHICH SHOWS THAT THE ACCOUNTS SUBMITT ED BY THE ASSESSEE WAS NOT RELIABLE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(APPEALS) ERRED IN RESTRICTING THE ADDITION O F ` 83,80,000/- MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN LAND TO ` 36,40,000/- OVERLOOKING THE FACT THAT NO SUPPORTING DOCUMENT IN RESPECT OF THE AGREEMENT OF ` 1,68,30,000/- BETWEEN THE ASSESSEE FIRM WITH SMT.LATABEN PARIKH AND SHRI BABUL PARIKH WAS EVER P RODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. 3. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR ALTER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. RELIEF CLAIMED IN APPEAL IT IS PRAYED THAT THE ORDER OF THE CIT(APPEALS) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 8. GROUND NO.1 IS COMMON IN ALL THE APPEALS AND IN IT(SS)A NO.602/AHD/2012 FOR AY 2001-02 GROUND NO.2 HAS BEEN TAKEN AGAINST THE CONFIRMATION OF ADDITION TO THE EXTENT OF RS. 36,40,000/- OUT OF TOTAL ADDITION OF RS.83,80,000/-. 8.1. BRIEFLY STATED FACTS ARE THAT THE ASSESSING OF FICER (AO IN SHORT) MADE ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMENT IN CONSTRUCTION OF EARTH COMPLEX BASED ON THE DVOS REPORT. THE ADD ITION MADE BY THE AO ON ACCOUNT OF UNDISCLOSED INVESTMENT IN EACH ASS ESSMENT YEAR ON THE BASIS OF DVOS REPORT IS TABULATED AS UNDER:- A.Y. ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMENT (RS.) 2000-01 2,67,247 2001-02 17,740 2002-03 30,30,707 2003-04 63,82,412 2004-05 80,84,291 IT(SS)A NO.595/AHD/2012 (BY ASSESSEE) AND IT(SS)A NOS.601 TO 605/AHD/12 & ITA NO.2773/AHD /2012 (BY REVENUE) M/S.OM SHIVAM CORPORATION VS. THE ACIT/ITO AYS 2001-02(ASSESSEE) AND 2000-01 TO 2005-06 RESPE CTIVELY - 9 - 2005-06 78,65,036 2006-07 8,02,075 TOTAL 2,64,39,507 8.2. SO FAR AS FIRST GROUND OF REVENUES APPEAL IS CONCERNED, IN THE YEAR UNDER CONSIDERATION AY 2000-01, THE ADDITION WAS MA DE AMOUNTING TO RS.2,67,247/-. THE LD.COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE ADDITION HAS BEEN MADE ON THE BASIS OF THE DVOS REPORT. HE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LD.CIT(A) AND S UBMITTED THAT THE LD.CIT(A) HAS RIGHTLY DELETED THE ADDITION(S). HE RELIED ON THE DECISION OF THE LD.CIT(A). 8.3. ON THE CONTRARY, LD.SR.DR SUBMITTED THAT THE L D.CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS GIVEN A DETAILED FIN DING IN HIS ORDER IN PARA-6 TO 6.6, BY OBSERVING AS UNDER:- 6. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E BY THE APPELLANT AND HAVE GONE TROUGH THE ASSESSMENT ORDER S PASSED BY THE ASSESSING OFFICER. I HAVE ALSO GONE THROUGH THE VA RIOUS JUDICIAL DECISIONS RELIED UPON BY THE APPELLANT. 6.1. SECTION 142A PRESCRIBES THAT FOR MAKING AN ASS ESSMENT OR RE- ASSESSMENT UNDER THIS ACT, WHERE AN ESTIMATE OF THE VALUE OF ANY INVESTMENT REFERRED TO IN SECTIONS 69 OR 69A OR 69B IS REQUIRED TO BE MADE, THE ASSESSING OFFICER MAY REQUIRE THE VALUATI ON OFFICER TO MAKE AN ESTIMATE OF SUCH VALUE AND REPORT THE SAME TO TH E A.O. FURTHER IN TERMS OF SECTION 142A(3) OF THE ACT, THE VALUATION REPORT HAS TO BE USED BY THE AO FOR MAKING ASSESSMENT OR REASSESSMENT. IT(SS)A NO.595/AHD/2012 (BY ASSESSEE) AND IT(SS)A NOS.601 TO 605/AHD/12 & ITA NO.2773/AHD /2012 (BY REVENUE) M/S.OM SHIVAM CORPORATION VS. THE ACIT/ITO AYS 2001-02(ASSESSEE) AND 2000-01 TO 2005-06 RESPE CTIVELY - 10 - 6.2. THERE IS NO DISPUTE TO THE WELL-SETTLED LEGAL PROPOSITION THAT NO ADDITION CAN BE MADE MERELY ON THE BASIS OF VALUATI ON REPORT, WHICH IS JUST AN ESTIMATE PREPARED BY A TECHNICAL PERSON ON THE BASIS OF PHYSICAL INSPECTION AND MEASUREMENT OF BUILDING, WITHOUT POI NTING OUT SPECIFIC DEFECTS IN THE CONSTRUCTION ACCOUNT KEPT IN THE BOO KS OF ACCOUNT AND/OR REJECTING THE BOOKS OF ACCOUNT UNDER S.145. WHENEV ER THE AO WANTS TO ADOPT THE VALUATION AS MADE BY THE DVO, HE IS FIRST OF ALL REQUIRED TO POINT OUT THE DEFECTS IN THE CONSTRUCTION ACCOUNT M AINTAINED BY THE ASSESSEE OR TO INDICATE THAT CONSTRUCTION COST SHOW N IN THE BOOKS OF ACCOUNT ARE NOT CORRECT OR THAT COST OF CONSTRUCTIO N COULD NOT BE CORRECTLY DEDUCED DUE TO THE INFORMATION ASKED FROM THE ASSESSEE BUT NOT SUPPLIED BY HIM TO THE AO. 6.3. IN THE PRESENT CASE, THE AO HAS NOT POINTED OU T ANY DEFECT IN THE BOOKS OF ACCOUNT BASED ON WHICH REFERENCE U/S.142A CAN BE JUSTIFIED. THERE IS NOTHING ON RECORD TO SUGGEST THAT THERE IS ANY DEFECT IN THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT FIRM S O AS TO CONCLUDE THAT BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT F IRM CANNOT BE RELIED UPON SO FAR AS THE COST OF CONSTRUCTION IS CONCERNE D. THE AO IN THE ASSESSMENT ORDERS HAS CLEARLY MENTIONED THAT THE BO OKS OF ACCOUNT WERE PRODUCED AND TEST CHECKED. HOWEVER, NO DEFECT HAS BEEN POINTED OUT BY THE AO. 6.4. IN THIS REGARD, THE DECISION OF THE HONBLE IT AT, AHMEDABAD IN THE CASE OF RAJHANS BUILDERS (2010) 41 SOT 331 IS Q UITE RELEVANT. THE FINDINGS OF THE HONBLE TRIBUNAL WHICH INVOLVES IDE NTICAL FACTS ARE REPRODUCED AS UNDER: PERUSAL OF THE ASSESSMENT ORDER SHOWED THAT THERE WAS NO REFERENCE TO AY MATERIAL/EVIDENCE/INFORMATION ON THE BASIS OF WHICH IT COULD BE SAID THAT THE COST OF CONSTRUCTION SHOWN BY THE ASS ESSEE WAS UNDERSTATED OR ANYTHING ABOVE WHAT WAS DISCLOSED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT. IT WAS A CLEAR CUT CASE THAT THE ASSESSEE HAD PRODUCED THE BOOKS OF ACCOUNT BUT THE ASSESSING OFF ICER HAD NOT REJECTED OR NO DEFECT WAS POINTED OUT IN THE BOOKS OF ACCOUNT REGARDING COST OF CONSTRUCTION OF THE PROJECT. IT WAS ALSO FOUND FROM THE CASE RECORDS THAT EVEN BEFORE VERIFYING THE BOO KS OF ACCOUNT REGULARLY MAINTAINED AND WITHOUT PAINTING OUT ANY D EFECTS IN THE BOOKS THE COST OF CONSTRUCTION WAS REFERRED TO THE DVO. IT WAS APPARENT, ON THE BASIS OF EVIDENCES PRODUCED, THAT THE ASSESSEE HAD REGULARLY MAINTAINED BOOKS OF ACCOUNT AND VARIOUS RECORDS ALO NG WITH SUPPORTING EVIDENCES OF VARIOUS RAW MATERIALS LIKE CEMENT, STEEL, BRICKS, SAND, WOOD, LABOUR COST, SANITARY WARES, ET C. THE ASSESSING IT(SS)A NO.595/AHD/2012 (BY ASSESSEE) AND IT(SS)A NOS.601 TO 605/AHD/12 & ITA NO.2773/AHD /2012 (BY REVENUE) M/S.OM SHIVAM CORPORATION VS. THE ACIT/ITO AYS 2001-02(ASSESSEE) AND 2000-01 TO 2005-06 RESPE CTIVELY - 11 - OFFICER HAD NOT FOUND OUT ANY DEFECT IN THE BOOKS/R ECORDS/BILLS, ETC., AND HAD NOT REJECTED BOOKS OF ACCOUNT. WITHOUT CAU SING ANY DEFECTS IN THE BOOKS REGULARLY MAINTAINED AND WITHOUT REJECTIN G THE BOOKS UNDER SECTION 145, THERE WAS NO REASON TO ADD ANY AMOUNT ON THE PRESUMPTION THAT THE COST/INVESTMENT IN CONSTRUCTIO N WAS LOW. THUS, WITHOUT REJECTING THE BOOKS OF ACCOUNT REGULARLY MA INTAINED, THE ADDITION COULD NOT BE MADE ONLY ON THE BASIS OF THE DVOS REPORT. FURTHER, IN THE CASE OF SARGAM CINEMA VS. CIT (2010 ) 328 ITR 513 (SC), IT HAS BEEN HELD THAT THE ASSESSING AUTHORITY CANNOT REFER THE MATTER TO THE DVO WITHOUT FIRST REJECTING THE BOOKS OF ACCOUNT. 6.5. IN THE PRESENT CASE, THE AO HAS MADE THE ADDIT ION MAINLY ON THE BASIS OF VALUATION REPORT MADE BY THE DVO. THE AO HAS NOT POINTED OUT ANY MATERIAL DEFECTS IN THE BOOKS OF ACCOUNT REGULA RLY MAINTAINED BY THE APPELLANT WHICH ARE CLAIMED TO BE SUPPORTED BY RELE VANT BILLS AND VOUCHERS. THE AO HAS NOT POINTED OUT ANY SPECIFIC DEFECTS OR DISCREPANCIES IN THE BOOKS OF ACCOUNT REGULARLY MAI NTAINED BY THE APPELLANT RELATING TOT H COST O CONSTRUCTION OF PRO JECT. VALUATION REPORT OF THE DVO IS ONLY INFORMATION OF ESTIMATE OF COST OF CONSTRUCTION CARRIED ON BY THE APPELLANT. THE INFIRMITIES IN TH E SAID REPORT POINTED OUT BY THE APPELLANT FIRM ON THE BASIS OF GOVT.APPR OVED REGISTERED VALUERS REPORT HAS NOT BEEN CONSIDERED BY THE AO. THERE IS NOT A SINGLE STANCE TO SHOW THAT THE APPELLANT HAD ACTUAL LY INCURRED THE EXPENDITURE THAT WAS MORE THAN THAT RECORDED IN THE BOOKS OF ACCOUNT. THERE IS NO REFERENCE TO ANY SUCH EVIDENCE FOUND EV EN DURING THE COURSE OF SEARCH PROCEEDINGS. IT IS FURTHER NOTED THAT AT THE TIME OF MAKING REFERENCE TO THE DVO AS PER 42A OF THE ACT REGARDIN G ASCERTAINMENT OF COST OF CONSTRUCTION OF THE PROJECT, ASSESSMENT PRO CEEDINGS WERE NOT PENDING. THE REFERENCE WAS MADE BY THE ADDL.DIT (I NV.), BARODA ON 06-07-2005 WHEREAS NOTICE U/S.153C WAS ISSUED BY TH E AO ON 08-11- 2005. IRRESPECTIVE OF THE FACT THAT THE ADDL.DIT(I NV.), BARODA IS NOT EMPOWERED TO MAKE AN REFERENCE U/S.142A AS IT IS ON LY THE AO HAVING THE VALID JURISDICTION OVER THE CASE CAN EXERCISE T HE OPTION OF MAKING A REFERENCE U/S.142A OF THE ACT FOR THE PURPOSE OF MA KING AN ASSESSMENT, THE CRUX OF THE MATTER AS HAS BEEN DECIDED BY THE V ARIOUS COURTS IS THAT BEFORE MAKING ANY REFERENCE TO THE DVO, SPECIFIC DE FECTS IN THE BOOKS OF ACCOUNT MAINTAINED HAVE TO BE POINTED OUT SO AS TO INDICATE THAT COST O CONSTRUCTION AS SHOWN IN THE BOOKS OF ACCOUNT IS NO T CORRECT OR IS UNDERSTATED BASED ON WHICH IT CAN BE CONCLUDED THAT BOOKS OF ACCOUNT IT(SS)A NO.595/AHD/2012 (BY ASSESSEE) AND IT(SS)A NOS.601 TO 605/AHD/12 & ITA NO.2773/AHD /2012 (BY REVENUE) M/S.OM SHIVAM CORPORATION VS. THE ACIT/ITO AYS 2001-02(ASSESSEE) AND 2000-01 TO 2005-06 RESPE CTIVELY - 12 - MAINTAINED BY THE APPELLANT ARE NOT RELIABLE SO FAR AS THE COST OF CONSTRUCTION IS CONCERNED. 6.6. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT SO FAR AS THE ADDITI ON ON ACCOUNT OF UNEXPLAINED INVESTMENT MADE IN THE CONSTRUCTION OF THE PROJECT ON THE BASIS OF VALUATION REPORT IS CONCERNED, NO SOLE REL IANCE ON THE DVOS REPORT CAN BE MADE FOR THE PURPOSE OF MAKING ADDITI ON OF ENTIRE DIFFERENCE WITHOUT FIRST POINTING OUT THE SPECIFIC DEFECTS IN THE BOOKS O ACCOUNTS. IN VIEW OF THE ABOVE, IT IS HELD THAT SI NCE THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNT BY POINTING OUT ANY D EFECTS IN THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT FIRM, REFERENCE TO THE DVO CANNOT BE HELD LEGALLY VALID AND, THEREFORE, THE DVOS REP ORT CANNOT BE UTILIZED FOR FRAMING THE ASSESSMENT EVEN IF SUCH REPORT IS C ONSIDERED TO BE OBTAINED U/S.142A OF THE ACT. IN VIEW OF THE ABOV E, THE ADDITION MADE BY THE AO AS UNDISCLOSED INVESTMENT ON THE BASIS OF DVOS REPORT IS DELETED IN EACH ASSESSMENT YEAR. THE FIRST GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 9.1. THE UNDISPUTED FACTS REMAINS THAT THE ADDITION IS M ADE BY RELYING ON THE DVOS REPORT AND THE DISPUTED ADDITION HAS B EEN MADE BY THE AO SOLELY ON THE BASIS OF DVOS REPORT. THE CONTENTIO N OF THE ASSESSEE BEFORE THE LD.CIT(A) WAS THAT NO DEFECT IN THE BOOK S OF ACCOUNTS WAS POINTED OUT BY THE AO, THEREFORE IT IS NOT OPEN TO HIM TO MAKE REFERENCE U/S.142A OF THE ACT. RELIANCE IS PLACED ON THE JUD GEMENT OF APEX COURT RENDERED IN THE CASE OF SARGAM CINEMA VS. CIT REPOR TED AT (2010) 328 ITR 513(SC). ADMITTEDLY, THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNTS AND PROCEEDED TO MAKE REFERENCE U/S.142A O F THE ACT AND MOREOVER THE ADDITION IS MADE SOLELY ON THE BASIS O F THE DVOS REPORT. WE FIND THAT THE LD.CIT(A) HAS GIVEN A FINDING ON F ACT THAT THERE IS NO REFERENCE TO ANY SUCH EVIDENCE FOUND EVEN DURING TH E COURSE OF SEARCH PROCEEDINGS. HE HAS OBSERVED THAT AT THE TIME OF M AKING REFERENCE TO THE IT(SS)A NO.595/AHD/2012 (BY ASSESSEE) AND IT(SS)A NOS.601 TO 605/AHD/12 & ITA NO.2773/AHD /2012 (BY REVENUE) M/S.OM SHIVAM CORPORATION VS. THE ACIT/ITO AYS 2001-02(ASSESSEE) AND 2000-01 TO 2005-06 RESPE CTIVELY - 13 - DVO AS PER 142A OF THE ACT REGARDING ASCERTAINMENT OF COST OF CONSTRUCTION OF THE PROJECT, ASSESSMENT PROCEEDINGS WERE NOT PENDING. THE REFERENCE WAS MADE BY THE ADDL.DIT (INV.), BARO DA ON 06/07/2005, WHEREAS NOTICE U/S.153C WAS ISSUED BY THE AO ON 08/ 11/2005. THESE FACTS ARE NOT DISPUTED BY THE REVENUE. MOREOVER, T HE LD.CIT(A) HAS ALSO GIVEN A FINDING ON FACT THAT NO SPECIFIC DEFECT IN THE BOOKS OF ACCOUNT MAINTAINED IS POINTED OUT SO AS TO INDICATE THAT CO ST OF CONSTRUCTION AS SHOWN IN THE BOOKS OF ACCOUNT IS NOT CORRECT OR IS UNDERSTATED BASED ON WHICH IT CAN BE CONCLUDED THAT BOOKS OF ACCOUNT MAI NTAINED BY THE ASSESSEE ARE NOT RELIABLE SO FAR AS THE COST OF CON STRUCTION IS CONCERNED. THIS FINDING OF THE LD.CIT(A) HAS NOT BEEN CONTROVE RTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. THEREF ORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) SINCE H E HAS RIGHTLY FOLLOWED THE JUDGEMENT OF THE HONBLE SUPREME COURT RENDERED IN THE CASE OF SARGAM CINEMA VS. CIT(SUPRA) AND ALSO THE DECISION OF THE COORDINATE BENCH RENDERED IN THE CASE OF RAJHANS BUILDERS (201 0) 41 SOT 331, SAME IS HEREBY UPHELD. THUS, THIS GROUND OF REVENU ES APPEAL IN ALL THE CASES ARE REJECTED. 10. THE SECOND GROUND IS AGAINST IN RESTRICTING THE ADDITION TO THE EXTENT OF RS.36,40,000/- OUT OF THE TOTAL ADDITION OF RS.83,80,000/-. THE LD.CIT-DR SUPPORTED THE ORDER OF THE AO AND SUBMITT ED THAT LD.CIT(A) WAS NOT JUSTIFIED IN RESTRICTING THE ADDITION TO TH E EXTENT OF RS.36,40,000/-. ON THE CONTRARY, LD.COUNSEL FOR TH E ASSESSEE SUBMITTED THAT AS PER THE AGREEMENT, THE ASSESSEE WAS REQUIRE D TO PAY TO THE PARTIES AFTER RECEIVING COMPENSATION FROM THE MUNICIPAL COR PORATION. IT(SS)A NO.595/AHD/2012 (BY ASSESSEE) AND IT(SS)A NOS.601 TO 605/AHD/12 & ITA NO.2773/AHD /2012 (BY REVENUE) M/S.OM SHIVAM CORPORATION VS. THE ACIT/ITO AYS 2001-02(ASSESSEE) AND 2000-01 TO 2005-06 RESPE CTIVELY - 14 - 11. WE HAVE HEARD THE REPRESENTATIVE OF THE RESPECT IVE PARTIES AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS GIVEN A FINDING ON FACT THAT OUT OF T HE TOTAL PAYMENT TO BE MADE OF RS.1,68,30,000/-. THE PAYMENT MADE AFTER 3 1.12.2001 IS RS.36,40,000/- AND THE AMOUNT WHICH IS STILL TO BE PAID IS RS.31 LACS. THE LD.CIT(A) HAS ALSO GIVEN FINDING ON FACT THAT OUT O F THE TOTAL PAYMENT RECEIVED BY SHRI BABUL PARIKH OF RS.1,17,30,000/-. HE HAS ALREADY ADMITTED TO HAVE RECEIVED RS.86,37,000/-. WHILE MA KING THIS OBSERVATION, LD.CIT(A) HAS RECORDED THE FINDING OF THE COORDINATE BENCH OF THIS TRIBUNAL PASSED IN ITA NO.280/AHD/2008 DATE D 01/07/2011. THIS FINDING ON FACT IS NOT CONTROVERTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. THEREFORE WE DO NOT S EE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) TO THIS E XTENT. THUS, THIS GROUND OF REVENUES APPEAL IS REJECTED. 12. IN THE COMBINED RESULT, ASSESSEES APPEAL IN I T(SS)A NO.595/AHD/2012 IS ALLOWED FOR STATISTICAL PURPOSES , WHEREAS REVENUES APPEALS IN IT(SS)A NO.601, 602, 603, 604, 605/AHD/2012 AND IN ITA NO.2773/AHD/2012 ARE DISMISSED. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( ) ( &) !' # # ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 25/ 07 /2014 0.., .../ T.C. NAIR, SR. PS IT(SS)A NO.595/AHD/2012 (BY ASSESSEE) AND IT(SS)A NOS.601 TO 605/AHD/12 & ITA NO.2773/AHD /2012 (BY REVENUE) M/S.OM SHIVAM CORPORATION VS. THE ACIT/ITO AYS 2001-02(ASSESSEE) AND 2000-01 TO 2005-06 RESPE CTIVELY - 15 - !- ( 23 4!3, !- ( 23 4!3, !- ( 23 4!3, !- ( 23 4!3,/ COPY OF THE ORDER FORWARDED TO : 1. 56 / THE APPELLANT 2. 2756 / THE RESPONDENT. 3. %% 8 / CONCERNED CIT 4. 8() / THE CIT(A)-IV, AHMEDABAD 5. 3&9 2 , , / DR, ITAT, AHMEDABAD 6. 9: ;' / GUARD FILE. !- !- !- !- / BY ORDER, 73 2 //TRUE COPY// < <<