The ITO, Ward-1, Nadiad V. Shri Dinesh Harshadbhai Patel, Nadiad

ITSSA 75/AHD/2009

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7717 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 27-02-2012
• Assessment Year: misc
• Appeal Filed On: 01-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Business income; Income from undisclosed sources; Loose papers; Valuation report; Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI, A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER IT(SS)A NO.75/AHD/2009 & CO NO.285/AHD/2009 (ARISING OUT IT(SS) A NO.75/AHD/2009) BLOCK PERIOD 1/4/96 TO 28/2/03 INCOME TAX OFFICER, WARD-1, 1 ST FLOOR, AAYKAR BHAVAN, GEETANJALI CHOKADI, PIJ ROAD NADIAD DINESH HARSAHD PATEL BY HIS P/A HOLD ALPESHBHAI M PATEL, CHIDKASH BUNGLOW, 4, SUBHLAXMI SOC. NQADIAD V/S . V/S . DINESH HARSHDBHAI PATEL, CHIDAKASH BUNGALOW, 4, SUBHLAKHMI SOC. INDRA GANDHI MARG, NADIAD PAN NO.ADFPB1428D ITO WARD-1, 1 ST FLOOR, AAYKAR BHAVAN, GITANJALI CHOKDI, PIJ ROAD NADIAD (APPELLANT) .. (RESPONDENT) ASSESSEE BY SHRI S.N.DIVETIA, AR REVENUE BY SHRI SHELLLEY JINDAL, CIT-DR /DATE OF HEARING 27-02-2012 /DATE OF PRONOUNCEMENT 16-03-2012 O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THE REVENUE AND ASSESSEE HAVE FILED APPEAL AND CRO SS OBJECTION (CO) RESPECTIVELY AGAINST THE ORDER OF LD. COMMISSI ONER OF INCOME-TAX (APPEALS)-IV, AHMEDABAD DATED 30-06-2009 FOR THE BL OCK PERIOD FROM 01-04- 1996 TO 28-02-2003. IT(SS)A NO.75/AHD/2009 & CO 285/A/09 B.P.1/4/96 TO 28/2/03 ITO WD-1, NAIDAD V. DINESH H PATEL PAGE 2 WE FEEL IT APPROPRIATE TO ADJUDICATE AND DISPOSE OF THE APPEAL AND CO BY A COMMON ORDER. FIRST WE TAKE UP REVENUES APPEAL IN IT(SS)A NO.75/ AHD/2009. 2. IN THIS CASE, A SEARCH WAS CONDUCTED ON 11-02-20 03 AT THE PREMISES OF THE ASSESSEE. ACCORDINGLY A NOTICE U/S.158BC OF THE INCOME-TAX ACT, 1961 WAS ISSUED ON 25-08-2003 CALLING UPON THE ASSESSEE TO FILE BLOCK RETURN INCLUDING THE UNDISCLOSED INCOME FOR THE BLOCK PERI OD. IN RESPONSE THERETO, THE ASSESSEE FILED RETURN FOR THE BLOCK PERIOD ON 30-12 -2003 DECLARING UNDISCLOSED INCOME AT RS.33,80,777/-. THE ASSESSMENT PROCEEDING S WERE COMPLETED VIDE ORDER DATED 28-02-2005, WHEREIN THE ASSESSING OFFIC ER DETERMINED THE UNDISCLOSED INCOME OF THE ASSESSEE AS UNDER:- 6. AFTER DISCUSSION AS WELL AS WRITTEN SUBMISSION OF THE ASSESSEE, THE UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PE RIOD IS DETERMINED AS UNDER:- UNDISCLOSED INCOME AS PER BLOCK RETURN RS. 33,8 0,777 1. UNACCOUNTED INVESTMENT IN OM PARK RS.1,01,32,89 8 2. LONG TERM CAPITAL GAIN TREATED AS - -------------------- BUSINESS INCOME RS.1,70,27,544 3. THE ASSESSEE FEELING AGGRIEVED BY THE ORDER OF T HE ASSESSING OFFICER FILED APPEAL BEFORE LD. CIT(A). IT IS PERTINENT TO MENTION HERE THAT THERE WAS A DEFECT INTO THE APPEAL FILED BY THE ASSESSEE BEFORE LD. CIT(A) AND SAME WAS CURED BY THE ASSESSEE. THE LD. CIT(A) IN PURSUANCE OF THE ORDER DATED 17-03- 2006 PASSED BY THIS TRIBUNAL IN IT(SS)A NO.191/AHD/2005 IN THIS CASE OF THE ASSESSEE WAS POSTED FOR HEARING THE ASSESSEE HAD TA KEN FOLLOWING GROUNDS:- 1. THE LEARNED ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN AS MUCH AS THE ASSESSMENT ORDER FOR THE BLOCK PERIOD 01.04. 1996 TO 28.022003 OUGHT TO HAVE BEEN SERVED UPON THE APPELLANT ON OR BEFORE 28.02.2005. ACTUALLY THE SAME WAS SERVED ON 1203.2005. 2. THE LEARNED ASSESSING OFFICER ERRED IN LAW AND O N FACTS IN MAKING ADDITION OF RS.1,01,32,898/- AS UNDISCLOSED INCOME OF THE APPELLANT ON THE GROUND THAT THE SAME REPRESENTED UNACCOUNTED CO ST OF CONSTRUCTION OF OM PARK COMPLEX U/S. 69B OF THE I.T. ACT OVER AND ABOVE THE DISCLOSURE MADE BY THE APPELLANT IN THE BLOCK RETUR N. IT(SS)A NO.75/AHD/2009 & CO 285/A/09 B.P.1/4/96 TO 28/2/03 ITO WD-1, NAIDAD V. DINESH H PATEL PAGE 3 3. THE LEARNED ASSESSING OFFICER ERRED IN LAW AND O N FACTS IN MAKING ADDITION OF RS.36,14,780/- BY TREATING THE LONG TER M CAPITAL GAINS DISCLOSED IN THE REGULAR RETURN OF INCOME AS BUSINE SS INCOME OF THE BLOCK PERIOD. IT IS PERTINENT TO NOTE THAT THE SAME INCOME EARNED ON REGULAR RETURN AND FURTHER IN BLOCK ASSESSMENT. 4. THE LEARNED ASSESSING OFFICER ERRED IN LAW AND O N FACTS IN CHARGING INTEREST U/S. 158BFA(1) AND INITIATING PENALTY PROC EEDINGS U/S. 158BFA(2) OF THE I.T. ACT. THE APPELLANT, THEREFORE, RESPECTFULLY SUBMITS AND PRAYS IN THIS APPEAL BEFORE YOUR HONOUR AS UNDER:- THAT THE ASSESSMENT PROCEEDINGS BE DIRECTED AS TIME BARRED AND THE ASSESSMENT ORDER FOR THE BLOCK PERIO D BE ANNULLED THAT THE ADDITION OF RS.1,01,32,898/- AS UNDISCLOSE D INCOME BE DELETED. THAT THE ADDITION OF RS.36,14,780/ AS UNDISCLOSED I NCOME BE DELETED. THAT THE INTEREST CHARGED U/S. 158BFA(1) BE DIRECTE D TO BE DELETED AND PENALTY PROCEEDINGS INITIATED U/S. 158B FA(2) BE DIRECTED TO BE DROPPED. 4. AFTER CONSIDERING THE SUBMISSIONS OF AR FOR THE ASSESSEE AND PERUSAL OF RECORDS, THE LD. CIT(A) DISMISSED THE FIRST GROU ND AND PARTLY ALLOWED GROUND NO.2 AND GROUND NO. 3 IN FAVOUR OF THE ASSESSEE. GR OUND NO.4 BEING CONSEQUENTIAL, THE ASSESSING OFFICER WAS DIRECTED A CCORDINGLY. 5. THE REVENUE FEELING AGGRIEVED BY THE ORDER OF TH E LD. CIT(A) HAS PREFERRED THE PRESENT APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS:- 1. THE CIT(A) ERRED ON FACTS AND IN LAW IN SCALIN G DOWN THE ADDITION FROM RS.1,01,32,898 TO RS.22,04,568 MADE U/S. 69B B Y IGNORING THE DVOS VALUATION REPORT VIZ. ASSESSEES VALUERS REP ORT WITHOUT ASSIGNING ANY COGENT REASONS. 2. THE CIT(A) ERRED ON FACTS AND IN LAW IN DELETING THE BUSINESS INCOME OF RS.36,14,780/- FOR THE BLOCK PERIOD WHICH THE AS SESSEE HAD DECLARED AS INCOME FROM CAPITAL GAINS, IGNORING THE FACT THA T THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND HE WAS NOT AN INVESTOR. IT(SS)A NO.75/AHD/2009 & CO 285/A/09 B.P.1/4/96 TO 28/2/03 ITO WD-1, NAIDAD V. DINESH H PATEL PAGE 4 GROUND NO.1 6. THE LD. CIT(A) HAS DEALT THIS GROUND IN PARA-5 A ND 5.1 OF HIS ORDER, AND SAME IS REPRODUCED HEREINBELOW FOR THE SAKE OF CLAR ITY:- 5. THE SECOND ISSUE RAISED IN THIS APPEAL IS THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS.1,01,32, 898/- AS UNDISCLOSED INCOME OF THE APPELLANT ON THE GROUND THAT THE SAME REPRES ENTED UNACCOUNTED COST OF CONSTRUCTION OF OM PARK COMPLEX U/S.69B OF THE I. T. ACT OVER AND ABOVE THE DISCLOSURE MADE BY THE APPELLANT IN THE BLOCK RETUR N. ON THE ABOVE THE APPELLANT PRAYS TO DELETE THE ADDITION MADE AS ABOV E. FURTHER, LD. COUNSEL CONTENDED AS UNDER:- I. THE ON MONEY RECEIVED IN TWO DEALINGS OF THE PRO PERTIES NAMELY; DIVYESH PARK & JALARAM PARK FOR THE SALE EXECUTED D URING THE BLOCK PERIOD WERE OFFERED FOR TAXATION IN THE RETUR N OF BLOCK PERIOD AS UNDISCLOSED INCOME AND THEREFORE, IT WAS NOT JUSTIFIED TO MAKE ANY ADDITION ON THE BASIS OF ALLEGED ON MON EY NOT SHOWN. IN DIVEYESH PARK, AS PER THE PAPER FOUND & S EIZED, UNDISCLOSED INCOME OF RS.24.40 LAKHS WAS ADMITTED & OFFERED. IN JALARAM PARK, FOUR PLOTS OF LAND WITH OBSOLETE H OUSES ERE SOLD DURING THE BLOCK PERIOD AND THROUGH THERE WAS NO EV IDENCE WHATSOEVER FOUND OR SEIZED DURING THE COURSE OF THE SEARCH REGARDING ON MONEY RECEIVED BUT ONLY ON THE BASIS O F STATEMENT U/S. 132(4) THE ON MONEY WERE ADMITTED BY THE APPEL LANT AND WEE OFFERED FOR TAXATION. THE TOTAL ON MONEY OF RS. 29.53 LAKHS RECEIVED FROM THE SALE OF ABOVE TWO PROPERTIES, WER E INTRODUCED IN OM PARK SHOPS & FLATS AND THEREFORE, ON MONEY RE CEIVED IN OM PARK BELOW THE AMOUNT OF RS.29.53 LAKHS ARE NOT TAXABLE AT ALL AS THEY ARE TAXED ON THE PREVIOUS TRANSACTIONS. BESIDES, FOR THE INCOMPLETE SEIZED MATERIAL MADE AVAILABLE TO TH E APPELLANT, FURTHER DISCLOSURE OF UNDISCLOSED INCOME RELATED TO THE PAPERS WAS MADE BY THE APPELLANT. THUS, APPELLANT HAS MADE TRUE & FULL DISCLOSURE OF HIS INCOME IN THE BLOCK RETURN. II. THE SO CALLED NON-ACCOUNTEDNESS OF VARIOUS SEIZ ED PAPERS AS STATED BY THE LD. A.O IN THE ASSESSMENT ORDER IS WI THOUT ANY NOTICE BEING GIVEN TO THE APPELLANT. WITHOUT PREJUD ICE TO THE SAME, THE APPELLANT HAS FURNISHED FULL & TRUE EXPLA NATION OF THE PAPERS / DOCUMENTS CITED BY THE LD. A.O, IN THE PRE SENT PROCEEDINGS AND ACCORDINGLY, NO ADVERSE INFERENCE O N THE FACTS OF THE CASE IS JUSTIFIED. III. THE INVOKING THE PROVISIONS OF SEC. 142A OF TH E ACT TO THE BLOCK ASSESSMENT PROCEEDINGS WAS NOT MAINTAINABLE IN LAW AND THEREFORE, THE ENTIRE REFERENCE TO THE VALUATION CE LL AND REPORT RECEIVED ON SUCH REFERENCE WAS BAD IN LAW AND ACCOR DINGLY, THE ADDITIONS MADE UPON SUCH VALUATION REPORT IS LEGALL Y ALSO NOT MAINTAINABLE. IV. THE APPELLANT FURTHER SUBMITS HE HAD ACCEPTED T HAT THE RATIO OF WHITE MONEY TO ON MONEY AS 60:40. THE RETURN FOR BL OCK PERIOD WAS FIELD DECLARING UNDISCLOSED INCOME AT RS.338077 7. IT IS IT(SS)A NO.75/AHD/2009 & CO 285/A/09 B.P.1/4/96 TO 28/2/03 ITO WD-1, NAIDAD V. DINESH H PATEL PAGE 5 FURTHER STATED THAT AS PER VARIOUS COURTS DECISIONS ONLY NET PROFIT RATE SHOULD BE APPLIED WHILE COMPUTING THE UNDISCLO SED INCOME. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS:- ABHISHEK CORPORATION VS. DY CIT (1999) 63 TTJ 651 ( AHD) IT WAS HELD THAT THE ASSESSING OFFICER HAD NOT PROV ED THAT THE ASSESSEE DID MAKE ENTIRE UNACCOUNTED SALES PROCEEDS OF RS.11 5859400/- IN ANY INVESTMENT AND THEREFORE ONLY NET PROFIT ON SALE CA N BE ADDED. KISHORE MOHANLAL TELWALA VS. ACIT (1999) 64 TTJ 543 (AHD) THOUGH THERE WAS MATERIAL FOR ON MONEY PAYMENTS, AP PELLATE TRIBUNAL HELD THAT THE ENTIRE ON MONEY RECEIPTS CAN NOT BE A DDED AS INCOME BUT ONLY THE NET PROFIT. D.N. KAMANI (HUF) VS. DCIT (2000) 241 ITR 85 (PAT) THE ADDITION IN RESPECT OF ON MONEY FOR ONE FLAT RE CEIVED FROM MR. GREWAL SUPPORTED BY EVIDENCE WAS UPHELD BY BOTH MEM BERS OF THE APPELLATE TRIBUNAL AND THE ADDITION OF RS.42,18,134 /- IN RESPECT OF 15 FLATS ONLY WAS REFERRED TO 3 RD MEMBER. THERE WAS NO MATERIAL FROM SEARCH OF HUF FOR ON-MONEY PAYMENTS FROM SALE OF OTHER 15 FLATS AS IN THE CASE OF GREWAL. THE TRIBUNAL HELD THAT PRESU MPTION HOWSOEVER STRONG CAN NOT TAKE THE PLACE OF EVIDENCE AND DELET E THE ADDITION OF RS.42,18,134/- THE APPELLANT SUBMITS THAT WHATEVER UNACCOUNTED INC OME WAS THERE, IT WAS ALREADY OFFERED FOR TAX. THE TOTAL UNDISCLOSED INCOME TAKING THE NET PROFIT RATE WILL NOT EXCEED THE UNDISCLOSED INCOME AS RETURN IN THE BLOCK RETURN. FURTHER, NO EVIDENCE WAS FOUND DURING THE S EARCH PROCEEDING WHICH MY INFER SO MUCH UNACCOUNTED INVESTMENT AND T HE A.O HAS ALSO NOT BROUGHT ON RECORD ANY COGENT EVIDENCE TO SUPPOR T HIS ADDITION THAT SPECIFIC UNACCOUNTED INVESTMENT WERE MADE BY THE AP PELLANT. ACCORDINGLY, THE ADDITION MADE BY THE A.O DESERVES TO BE DELETED. V. THUS, OVERALL, THE LD. AO HAS ERRED IN LAW AND O N FACTS IN MAKING THE IMPUGNED ADDITION OF RS.1,01,32,898/- BY TREATING IT AS UNACCOUNTED INVESTMENT IN OM PARK. IN THE BOOKS OF ACCOUNTS OF THE APPELLANT, THE ENTIRE INVESTMENT WA S RECORDED AND WHATEVER FALSE ENTRIES WERE MADE HAVE BEEN ACCE PTED BY THE APPELLANT IN THE BLOCK RETURN. IN VIEW OF THE ABOVE, IT IS RESPECTFULLY SUBMITTED AND PRAYED THAT, THE ADDITION MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT MAY KINDLY BE DELETED. 5.1 I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE LEARNED COUNSEL AS WELL AS GONE THROUGH THE RECORDS. ON PERUSAL OF ASSESSME NT ORDER, IT HAS BEEN NOTICED THAT THE APPELLANT HAD DISCLOSED UNACCOUNTE D INCOME OF RS.62 LACS IT(SS)A NO.75/AHD/2009 & CO 285/A/09 B.P.1/4/96 TO 28/2/03 ITO WD-1, NAIDAD V. DINESH H PATEL PAGE 6 DURING THE COURSE OF SEARCH. THE DVO HAD VALUED THE OMPARK PROJECT AT RS.1,87,38,330/-. THE APPELLANT HAD OBJECTED TO THE VALUATION MADE BY THE DVO AND HAD PLACED DON RECORD OF THE A.O VALUATION REPORT OBTAINED FROM HIS VALUER M/S. JAY ENGINEERS WHICH VALUED COST OF CONS TRUCTION OF THE OM PARK PROJECT AT RS.1,08,10,000/-. THE VALUER IS A MERE E XPERT TO GUIDE THE ASSESSING OFFICER. IT WOULD MEAN THAT THERE IS NO D IFFERENCE IN THE CONTEXT OF RELIABILITY OF REPORTS AS BETWEEN THE VALUATION OFF ICER AND THE PRIVATE REGISTERED VALUER, SINCE BOTH ARE EXPERTS IN THEIR OWN RIGHT. IN THE PRESENT CASE, THE APPELLANT HAD SPECIFICALLY SATED THAT COS T OF CONSTRUCTION AS PRESUMED BY THE DVO WAS INCORRECT AND ON VERY HIGHE R SIDE. THE APPELLANTS VALUATION REPORT WAS SENT TO THE DVO BY THE AO BUT AS NO REPLY WAS RECEIVED BY THE AO IN THIS REGARD, THE VALUATION MADE BY THE DVO WAS TAKEN FOR FRAMING ASSESSMENT. HENCE, THE ADDITION ON THE BASI S OF ESTIMATE OF THE COT VALUED BY THE DVO HAS TO BE CONSIDERED AFTER GIVING THE ASSESSEE AN OPPORTUNITY AND CONSIDERING BOTH THE REPORTS WHICH WAS NOT DONE IN THE PRESENT CASE. SIMILAR VIEW WAS HELD BY THE THIRD ME MBER OF HONBLE ITAT PATNA BENCH IN THE CASE OF SHANTI COMPLEX V/S ITO ( 237 ITR 27 (AT). THEREFORE, THE AO WAS NOT JUSTIFIED TO ADOPT THE CO ST OF CONSTRUCTION AS STATED BY THE DVO WHEN THE APPELLANT HAD CLAIMED THAT THE ACTUAL COST OF CONSTRUCTION WAS SIGNIFICANTLY LESS. NO SUCH LOOSE PAPERS / EVIDENCES WERE FOUND FROM THE APPELLANT WHICH MAY SUPPORT THAT APP ELLANT HAD EARNED SO MUCH UNACCOUNTED INCOME AND UTILIZED THE SAME IN TH E OMPARK PROJECT. HOWEVER, THE DISCLOSURE MADE BY THE APPELLANT WILL COVER THE PETTY AMOUNT WHICH MAY FIND FROM LOOSE PAPERS. THE APPELLANT BY PLACING VALUATION REPORT OF HIS VALUER HAD ADMITTED THE COST OF CONSTRUCTION AT RS.1,08,10,000/- AND BY ADDING RS.108305/- FOR THE LAND AND TUBEWELL, TOTAL CONSTRUCTION COST COMES TO RS.1,09,18,305/- WHEREAS THE APPELLANT HAD DISCLOSE D COST OF CONSTRUCTION IN HIS RETURN AT RS.8713737/- AND ACCORDINGLY UNDISCLO SED INCOME UTILIZED IN OM PARK PROJECT COMES TO RS.2204568/-, WHICH WAS NOT D ISCLOSED BY THE APPELLANT. KEEPING IN VIEW OF ABOVE FACTS AND CIRCU MSTANCES AS WELL AS RESPECTFULLY FOLLOWING THE CASES (SUPRA) THE ADDITI ON OF RS.10132898/- IS REDUCED TO RS.224568/- WHICH TOGETHER WITH THE EXTR A DISCLOSURE MADE BY THE APPELLANT, WILL COVER THE UNACCOUNTED RECEIPTS FROM OMPARK PROJECT. THE AO IS ACCORDINGLY DIRECTED TO TAKE UNDISCLOSED INCOME AT RS.2204568/-. THE APPELLANT GETS RELIEF OF RS.7928330/-. THEREFORE, T HE SECOND GROUND OF APPEAL IS HEREBY PARTLY ALLOWED. FROM THE ABOVE, IT IS EVIDENT THAT THE LD. CIT(A) A CCEPTED THE VALUE OF THE PROPERTY AS SUBMITTED BY THE VALUER OF THE ASSESSEE . THEREFORE THE VALUATION OF THE PROPERTY AS RELIED BY THE ASSESSEE IS TAKEN AS ADMITTED COST OF THE OM PARK COMPLEX. LD. DR CONTENDED THAT THIS APPROACH O F LD. CIT(A) IS NOT CORRECT AND MORE PARTICULARLY IN DISCARDING THE VAL UE REPORTED BY THE DVO WITHOUT CONSIDERING THE SAME. HE RELIED UPON THE OR DER OF THE ITAT JODHPUR BENCH IN THE CASE OF ITO V. BALRAM JHANWAR (2010) 35 SOT 6 (JODH) (URO), IT(SS)A NO.75/AHD/2009 & CO 285/A/09 B.P.1/4/96 TO 28/2/03 ITO WD-1, NAIDAD V. DINESH H PATEL PAGE 7 WHEREIN THE REFERENCE TO DVO WAS FOUND TO BE VALID. HE SUBMITS THAT NO COGENT REASON ARE GIVEN AS TO WHY DVOS REPORT IS I NCORRECT. 7. LD. CIT-DR FURTHER CONTENDED THAT WHATEVER HAS B EEN REFLECTED BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT CANNOT BE TAKEN AS A GOSPEL TRUTH. IN SUPPORT OF THIS SUBMISSION, LD. DR RELIED UPON THE JUDGMENT PASSED BY THE HONBLE UTTARKHAND HIGH COURT IN THE CASE OF SMT. KIRAN LATA V. ITAT (2009) 177 TAXMAN 420 (UTTARAKHAND). THE LD. DR STRONGLY S UPPORTED THE ORDER OF ASSESSING OFFICER QUA REFERENCE TO DVO AND ALSO FOR ADOPTING THE COST REPORTED BY THE DVO. THE LD. DR SUBMITTED THAT THE AO WAS RIGHT IN TERMING THE REPORT SUBMITTED BY THE ASSESSEE AS ARRANGED ON E. ON THE CONTRARY, LD. AR REITERATED THE SUBMISSIONS MADE BEFORE THE LD. C IT(A). HE ARGUED THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CA SE, ACTION OF THE AO FOR MAKING REFERENCE U/S. 142A OF THE ACT IS ILLEGAL AN D UNJUSTIFIED. HE SUBMITTED THAT THE ASSESSEE WAS NOT GIVEN OPPORTUNITY TO PRES ENT THE FACTUAL DETAILS BEFORE THE DVO. HE SUBMITTED THAT FIRSTLY THE REFER ENCE TO DVO IS BAD AND SECONDLY, EVEN IF THE ACTION OF AO IS CORRECT FOR M AKING REFERENCE, THE ASSESSEE WAS NOT AFFORDED OPPORTUNITY TO FURNISH TH E NECESSARY EVIDENCE IN SUPPORT OF HIS CLAIM. FURTHER, LD. AR SUBMITTED THA T IN CASE, THE TRIBUNAL DOES NOT ACCEPT THE COST AS COMPUTED BY THE VALUER OF TH E ASSESSEE MATTER MAY BE REMITTED TO AO AND ASSESSEE MAY BE GIVEN LIBERTY TO FURNISH THE NECESSARY DETAILS BEFORE THE DEPARTMENTAL VALUING OFFICER. TH E AR FURTHER SUBMITTED THAT THE DVO DID NOT COMMENT UPON THE REPORTS SUBMITTED BY THE ASSESSEE. THEREFORE, IT WOULD CAUSE MISCARRIAGE OF JUSTICE IF THE ASSESSEE IS NOT ALLOWED TO FURNISH THE FACTUAL DETAILS. 8. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO TH E SUBMISSIONS MADE BY THE RESPECTIVE PARTIES AND PERUSED THE RECORD AND O RDERS PASSED BY THE AUTHORITIES BELOW. LD. CIT(A) ACCEPTED THE COST AS VALUED BY THE VALUER OF THE ASSESSEE BY OBSERVING THAT DURING SEARCH NO EVIDENC E WAS COLLECTED SUGGESTING THE UNDISCLOSED INCOME AND INVESTMENT OF SUCH INCOME INTO OM IT(SS)A NO.75/AHD/2009 & CO 285/A/09 B.P.1/4/96 TO 28/2/03 ITO WD-1, NAIDAD V. DINESH H PATEL PAGE 8 PARK COMPLEX. LD. SR-DR ARGUED THAT SUFFICIENT MATE RIAL WAS COLLECTED DURING THE SEARCH SUGGESTING THAT THE ASSESSEE HAD IN FACT UNDISCLOSED INCOME. ON THE CONTRARY, LD. AR ARGUED THAT WHATEVER UNACCOUNT ED INCOME WAS THERE, IT WAS DULY OFFERED FOR TAX IN THE RETURN PERTAINING T O THE BLOCK PERIOD. 9. ADMITTEDLY, IN THIS CASE, THE PROCEEDINGS WERE I NITIATED AND COMPLETED UNDER CHAPTER-XIVB OF THE INCOME-TAX ACT, 1961 AND THE SCOPE OF PROCEEDINGS UNDER THIS CHAPTER IS QUITE DIFFERENT F ROM THE SCOPE OF THE PROCEEDINGS UNDER THE REGULAR ASSESSMENT. THE LD. C IT(A) HAS CONSIDERED ENTIRE FACTUAL POSITION AND THOUGHT IT APPROPRIATE TO TAKE THE VALUE ASSESSED BY THE GOVERNMENT APPROVED VALUER OF THE ASSESSEE AS T HE ADMITTED VALUE OF OM PARK COMPLEX PROJECT. FURTHER, THE LD. CIT(A) CA TEGORICALLY OBSERVED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED TO ADOPT TH E COST OF CONSTRUCTION AS STATED BY THE DVO WHEN THE ASSESSEE HAD CLAIMED THA T THE ACTUAL COST OF CONSTRUCTION WAS SIGNIFICANTLY LESS. NO SUCH LOOSE PAPERS / EVIDENCES WERE FOUND FROM THE ASSESSEE WHICH MAY SUPPORT THAT ASSE SSEE HAD EARNED SO MUCH UNACCOUNTED INCOME AND UTILIZED THE SAME IN TH E OM PARK COMPLEX PROJECT. NO EVIDENCE IN RESPECT OF UNDISCLOSED INCO ME WAS PLACED ON RECORD INCLUDING EVIDENCE TO SHOW THAT THE SAME WAS INVEST ED INTO OM PARK COMPLEX PROJECT OF THE ASSESSEE. THUS, CONSIDERING THE TOTA LITY OF THE FACT AND SUBMISSIONS MADE BEFORE US, WE FIND NO INFIRMITY IN TO THE ORDER OF LD. CIT(A) ON THIS ISSUE. THEREFORE, THIS GROUND OF REVENUE IS REJECTED AND THE ORDER OF LD. CIT(A) IS CONFIRMED. 10. FOR GROUND NO.2, LD. DR ARGUED THAT ASSESSEE WA S ENGAGED IN THE BUSINESS OF CONSTRUCTION ACTIVITY. THE ASSESSING OF FICER WAS JUSTIFIED IN TREATING THE CAPITAL GAINS AS DECLARED BY THE ASSES SEE IN HIS RETURN OF INCOME AS INCOME EARNED FROM BUSINESS. LD. DR SUBMITTED TH AT THE VIEW EXPRESSED BY LD. CIT(A) IS ERRONEOUS AS THE ASSESSEE HIMSELF HAS ADMITTED THE FACT THAT HE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND T HE MANNER IN WHICH THE PROJECT IS EXECUTED WOULD DEMONSTRATE THAT THE ASSE SSEE HAS BEEN CARRYING IT(SS)A NO.75/AHD/2009 & CO 285/A/09 B.P.1/4/96 TO 28/2/03 ITO WD-1, NAIDAD V. DINESH H PATEL PAGE 9 OUT BUSINESS ACTIVITY AND THEREFORE, SAME CANNOT BE TERMED MERELY AN INVESTMENT PROJECT. ON THE CONTRARY, LD. AR CONTENDED THAT THE SCOPE AND AMBIT OF SECTION 158BC DOES NOT EMPOWER THE ASSESSING OFFICER TO CHA NGE HEAD OF INCOME. THE LD. AR ARGUED THAT ALL PARTICULARS OF INCOME WERE DECLA RED AND RIGHTLY CLAIMED AS CAPITAL GAINS AND THEREFORE, THERE IS NO QUESTION OF UNACCO UNTED OR UNDECLARED INCOME. THEREFORE SAME WAS BEYOND THE POWER AND SCOPE OF TH E ASSESSMENT MADE U/S. 158BC. HE FURTHER ARGUED THAT ON MERIT ALSO, MERELY BECAUSE THE ASSESSEE IS ENGAGED IN CONSTRUCTION ACTIVITY, IT WOULD NOT PREC LUDE HIM FROM MAKING INVESTMENT IN OTHER PROPERTY. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE RESP ECTIVE PARTIES. IT IS NOTEWORTHY THAT LD. CIT(A) FOLLOWING THE RATIO LAID IN THE JUD GMENTS AS RELIED BY THE LD. AR HELD THAT INCOME SHOWN IN THE RETURN OF INCOME FILED BEF ORE SEARCH CANNOT BE TREATED AS UNDISCLOSED INCOME SO AS TO ATTRACT THE PROVISIONS OF SECTION 158BC. WE DO NOT FIND ANY INFIRMITY IN THE VIEW EXPRESSED BY THE LD. CIT( A) AS ADMITTEDLY AS THERE IS NO DISPUTE WITH REGARD TO DECLARATION IN THE REGULAR R ETURN FILED BY THE ASSESSEE, WHEREIN THE INCOME HAS BEEN DECLARED UNDER THE HEAD CAPITA L GAINS. IN VIEW OF THE AFORESAID, WE FIND NO INFIRMITY WITH THE ORDER PASS ED BY LD. CIT(A) ON THIS ISSUE ALSO. THIS GROUND OF REVENUE IS ALSO DISMISSED. NOW WE TAKE UP ASSESSEES CO NO.285/ADDITION/2009 12. THE GROUND RAISED BY ASSESSEE ARE AS UNDER:- 1.1 THE LD. CIT(A) HAS ERRED IN LAW AND OR ON FACT S IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.22,04,568 AS UNDISCLOSED COST O F CONSTRUCTION 1.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) OUGHT NOT TO HAVE CONFIRMED THE ADDITION OF RS.22,04,568. 2.1 THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE AP PELLANT HAD ADMITTED THE COST OF CONSTRUCTION AT RS.1,08,10,000. 3.1 WITHOUT PREJUDICE TO THE ABOVE, THE ADDITION OF RS.22,04,568 AS CONFIRMED BY CIT(A) IS HIGHLY EXCESSIVE AND CALLS FOR SUBSTAN TIAL REDUCTION. 13. ALL THE ISSUES ARE INTERCONNECTED AND ARE BEING TAKEN TOGETHER. IT(SS)A NO.75/AHD/2009 & CO 285/A/09 B.P.1/4/96 TO 28/2/03 ITO WD-1, NAIDAD V. DINESH H PATEL PAGE 10 14. LD. AR OF THE ASSESSEE HAS ARGUED THAT THIS ADD ITION TO THE EXTENT OF RS.22,04,568/- IS WRONG. BUT SINCE WE HAVE CONFIRME D THE VIEW TAKEN BY THE LD. CIT(A) IN REVENUES APPEAL, THEREFORE WE FIND NO ME RIT INTO THE SUBMISSIONS MADE BY THE LD. AR. 15. FOR GROUND NO.2.1, LD. AR FOR THE ASSESSEE SUBM ITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN TREATING THE COST OF CONSTRUCT ION AS TAKEN BY HIS VALUER AS ADMITTED VALUE BY ASSESSEE. THE SUBMISSION OF THE A SSESSEE IS BASELESS. IT IS THE ASSESSEE WHO SUBMITTED AND RELIED UPON THE REPORT O F THE GOVT. APPROVED VALUER MEANING THEREBY THAT THE ASSESSEE RELIED ON THE COS T OF CONSTRUCTION AS DECLARED BY THE GOVT. APPROVED VALUER. WE FIND NO MERIT INTO TH ESE SUBMISSIONS OF THE AR AND HENCE, THIS GROUND OF ASSESSEE IS DISMISSED. IN THI S VIEW OF THE MATTER, WE REJECT ALL THE GROUNDS OF ASSESSEES CO. 18. IN THE RESULT, APPEAL OF REVENUE AND CO OF THE ASSE SSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 16/03 /2012 SD/- SD/- (A.K.GARODIA) (KUL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP - 16/03/2012 ! '#$ '#$ '#$ '#$ %&&'() %&&'() %&&'() %&&'() *#( *#( *#( *#( / COPY OF ORDER FORWARDED TO:- 1. ),'-. / APPELLANT 2. %/0-. / RESPONDENT 3. &1 '0 '02 / CONCERNED CIT 4. '0 '02- ),' / CIT (A) 5. (56,0 %&&&1, '0 ),',0 &1, / DR, ITAT, AHMEDABAD 6. 689 :;' / GUARD FILE. BY ORDER/ '#$ #, /TRUE COPY/ <)/0 )=, '0 ),',0 &1, !