THE ACIT (INTA. TAXA.), VADODARA V. SHRI CHANDUBHAI RAOJIBHAI PATEL, MUMBAI

ITA 189/AHD/2021

AI Insights

The case involves an appeal by the Revenue against the CIT(A)'s decision which had deleted the additions made by the Assessing Officer regarding unexplained deposits and unaccounted investments in construction by the assessee, Shri Chandubhai Raojibhai Patel, for the Assessment Year 2012-2013. The Revenue contended that the CIT(A) erred in law and facts by not appreciating the circumstances under which the returns were filed and the lack of documentary evidence supporting the assessee's claims. The Tribunal found that the CIT(A) had correctly interpreted the facts and law, particularly noting that the amounts in question had been duly reported in the assessee's tax returns and that the DVO's assessment did not substantiate the AO's additions.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 831918 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 04-08-2021
• Other Referred Cases: CIT Vs Taj Borewells (291 ITR 232 Madras), Sargam Cinema v/s CIT, CIT vs. Chohan Resorts (2013) 359 ITR 39/134 taxmann.com 644
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHER SINGH
• Assessee Lawyers: BIREN SHAH
• Keywords: Unexplained investment; Fair market value; Gift
• Section: 148; 69

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद \u0011ायपीठ “डी“, अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “ D ” BENCH, AHMEDABAD \u0015ी संजय गग\u001b, \u0011ाियक सद एवं अ पूण\u001b गु\"ा, लेखा सद क े सम&। ] ] Before Shri Sanjay Garg, Judicial Member And Annapurna Gupta, Accountant Member आयकर अपील सं /ITA No.189/Ahd/2021 िनधा \u000fरण वष\u000f /Assessment Year : 2012-13 The ACIT (Inta.Taxa. Race Course Circle Vadodara – 390 007 बनाम/ v/s. Shri Chandubhai Raojibhai Patel 42-B, Siddartha, Nepeansea Road Mumbai – 400 036 (Maharashtra) \u0013थायी लेखा सं./PAN:AQVPP 3868 Q (अपीलाथ)/ Appellant) (*+ यथ)/ Respondent) Assessee by : Shri Biren Shah, AR Revenue by : Shri Sher Singh, CIT-DR सुनवाई की तारीख/Date of Hearing : 18/12/2025 घोषणा की तारीख /Date of Pronouncement: 21/01/2026 आदेश/O R D E R Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)-12, Ahmedabad [hereinafter referred to as ‘CIT(A)’] dated 18/03/2021 passed u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) 2012-2013. 2. The Revenue, in this appeal has taken following grounds of appeal: Printed from counselvise.com ITA No.189/Ahd/2021 The ACIT (Inta.Taxa.) vs. Shri Chandubhai Raojibhai Patel Asst. Year : 2012-13 2 “1. On the facts and circumstances of case and in law, whether the Ld. CIT(A) erred in deleting the addition of Rs. 27,05,519/- made on account of deposits in the bank account by holding that the same has been offered in the return of income filed by the assessee without appreciating the facts that: 1.(i) the assessee has never filed the return of income u/s 139(1) of the Act voluntarily although a duty has been cast on the assessee to file the same as the income earned by the assessee is above the taxable limit. 1.(ii) the assessee has filed the return of income only in response to the notice issued u/s 148 of the Act thereby clearly establishing that the income of the assessee has escaped assessment 1.(iii) the assessee failed to submit any documentary evidence whatsoever in support of the Profit & Loss Account and Balance Sheet as these are the only documents submitted by the assessee along with the return of income in support of his claim for receipt and expenses: 1. (iv) the Profit & Loss Account and Balance Sheet, which were relied upon by the CIT(A) while allowing the claim of the assessee, were filed in response to the notice u/s 148 of the Act which cannot be considered as books of account within the meaning of books of account as defined in the Act and especially in view of the judgement of Hon'ble Madras High Court in CIT Vs Taj Borewells (291 ITR 232 Madras) wherein it was held that the assessee is duty bound to produce various books of account like cash book, bank book, ledger accounts, bills/vouchers etc., which the assessee has failed to produce before the Assessing Officer. 1.(v) the Profit & Loss Account and Balance Sheet, which were relied upon by the CIT(A) while allowing the claim of the assessee, have not been audited as per the provisions of Section 44AB of the Act although the turnover of the assessee was more than Rs.40 lacs during the assessment year under consideration and the assessee was duty bound to get the accounts audited. 1. (vi) the books of account relied upon by the CIT(A) shows total receipts of Rs.90 lacs and after claiming expenses, a profit of Rs. 11,66,217/- was offered and no details of the expenses with documentary evidences whatsoever were produced for the expenses claimed to have been incurred for the purpose of business. 1.(vii) the assessee, who is a non-resident, has managed to construct an entire building without being present in India and without even filing any return of income in India for any of the years. 2. On the facts and circumstance of the case and in law, whether the Ld. CIT(A) erred in deleting the addition of Rs.4,19,16,000/- made u/s 69 of the Act on account of unaccounted investment in flats without appreciating the facts that: Printed from counselvise.com ITA No.189/Ahd/2021 The ACIT (Inta.Taxa.) vs. Shri Chandubhai Raojibhai Patel Asst. Year : 2012-13 3 2.(i) the assessee has never filed the return of income u/s 139(1) of the Act voluntarily although a duty has been cast on the assessee to file the same as the income earned by the assessee is above the taxable limit. 2 (ii) the assessee has filed the return of income only in response to the notice issued u/s 148 of the Act thereby clearly establishing that the income of the assessee has escaped assessment. 2. (iii) the assessee failed to submit any documentary evidence whatsoever in support of the Profit & Loss Account and Balance Sheet as these are the only documents submitted by the assessee along with the return of income in support of his claim for receipt and expenses. 2.(iv) the Profit & Loss Account and Balance Sheet, which were relied upon by the CIT(A) while allowing the claim of the assessee, were filed in response to the notice u/s 148 of the Act which cannot be considered as books of account within the meaning of books of account as defined in the Act and especially in view of the judgement of Hon'ble Madras High Court in CIT Vs Taj Borewells (291 ITR 232 Madras) wherein it was held that the assessee is duty bound to produce various books of account like cash book, bank book, ledger accounts, bills/vouchers etc., which the assessee has failed to produce before the Assessing Officer. 2.(v) the Profit & Loss Account and Balance Sheet, which were relied upon by the CIT(A) while allowing the claim of the assessee, have not been audited as per the provisions of Section 44AB of the Act although the turnover of the assessee was more than Rs.40 lacs during the assessment year under consideration and the assessee was duty bound to get the accounts audited. 2. (vi) the books of account relied upon by the CIT(A) shows total receipts of Rs.90 lacs and after claiming expenses, a profit of Rs.11,66,217/- was offered and no details of the expenses with documentary evidences whatsoever were produced for the expenses claimed to have been incurred for the purpose of business. 2. (vii) the assessee, who is a non-resident, has managed to construct an entire building without being present in India and without even filing any return of income in India for any of the years. 3 On the facts and circumstance of the case and in law, whether the Ld. CIT(A) erred in deleting the addition of Rs. 4,19,16,000/- made u/s 69 of the Act on account of unaccounted investment in flats without appreciating the facts that: 3.(i) the assessee has not submitted all the deeds of 10 flats and the office of the Registrar also failed to provide sale deeds and gift deeds and, therefore, the AO was Printed from counselvise.com ITA No.189/Ahd/2021 The ACIT (Inta.Taxa.) vs. Shri Chandubhai Raojibhai Patel Asst. Year : 2012-13 4 duty bound to make a reference to DVO to determine the value of investment made in the building. 3. (ii) Section 142A of the IT Act empowers the AO to make a reference to the DVO whether or not the A.O. is satisfied about the correctness or completeness of the account of the assessee, rendering the rejection of books of account immaterial. 3.(iii) while deleting the addition made u/s 69 of the Act, the CIT(A) has made observation that the AO has not incorporated the findings of field inquiry in the assessment order although the CIT(A) could have called for such inquiry while deciding such appeal. 3.(iv) addition u/s 69 of the Act on account of unaccounted investment in flats was made by the AO as the assessee has completely failed to produce any evidence to justify source of investment in the flats. 4. Whether the Ld. CIT(A) was right in relying on judgments of Hon'ble Supreme Court in the case of Sargam Cinema v/s CIT and the High Court of Punjab & Haryana in CIT vs. Chohan Resorts (2013) 359 ITR 39/134 taxmann.com 644, in which it is held that the AO cannot refer the matter to DVO without rejecting Books of Accounts, without appreciating the facts that: 4. (i) the above judgements are for the cases in which addition was made u/s 69B of the Act and not u/s 69 of the Act, as per the facts of the present case as Section 69B is applicable when the amount of investment is partially disclosed in the books of account whereas section 69 is regarding unexplained investments which are not recorded in the books of account. 4. (ii) the assessee has failed to submit any books of account for his business and hence there cannot be any question of rejecting the books if the same has not been maintained/submitted 4.(iii) the judgement of Hon'ble High Court of Punjab & Haryana in CIT vs. Chohan Resorts (2013) 359 ITR 39/134 taxmann.com 644) in fact completely supports the case of the Revenue in which it has clearly been held by the Hon'ble High Court that when the assessee has not maintained the regular books of account, then after forming prima facie opinion that the value of investment is not genuinely shown, the AO can refer the valuation to DVO and make an addition u/s 69 of the Act. 5. That the revenue craves leave to alter, add, modify, delete any or all grounds of appeal.” Printed from counselvise.com ITA No.189/Ahd/2021 The ACIT (Inta.Taxa.) vs. Shri Chandubhai Raojibhai Patel Asst. Year : 2012-13 5 3. Ground No.1: Vide ground No.1, the Revenue has agitated the action of the Ld. CIT(A) in deleting the addition of Rs.27,05,519/- which was made by the Assessing Officer (AO) on account of unexplained deposits in bank account of the assessee. 4. The brief facts of the case are that the assessee during the year had constructed 10 residential flats on his ancestral land, out of which four flats were held on for his own purpose/given as gift and the remaining 6 flats were sold to outside parties. The assessee has sold five flats during the year under consideration and sale consideration of Rs.90 lakhs was shown as income in the Profit & Loss account submitted along with the return of income filed u/s.148 of the Act. The assessee explained before the ld.CIT(A) that the aforesaid amount of Rs.27,05,519/- was part of the sale consideration receipt. It was explained that Rs.27 lakhs was out of sale consideration of flats sold and Rs.5,519 was the interest credited to his bank account on such amount. The Ld. CIT(A) observed that since the aforesaid amount of Rs.27,05,519/- was already offered to tax by the assessee in the return of income being part of the sale consideration received, therefore, no separate addition was warranted. 5. Before us, though the Revenue has taken lengthy and argumentative grounds on this issue, but the Ld. DR could not rebut the factual finding given by the Ld. CIT(A) that the aforesaid amount of Rs.27,05,519/- was already offered for tax and there was no question for double addition of the same amount. Therefore, there is no merit in this ground of appeal of the Revenue and the same is, accordingly, dismissed. Printed from counselvise.com ITA No.189/Ahd/2021 The ACIT (Inta.Taxa.) vs. Shri Chandubhai Raojibhai Patel Asst. Year : 2012-13 6 6. Ground Nos.2 & 3:- Vide Ground Nos.2 & 3, the Revenue has agitated against the action of the Ld. CIT(A) in deleting the addition of Rs.4,19,16,000/- made by the AO on account of unaccounted investment made in construction of the Flats. 6.1. In this case, the assessment was reopened by the AO on account of unexplained deposits in the bank account of the assessee. However, since the assessee explained that the said deposits were out of sale consideration of flats and further that the sales-deed were executed as per the Collector rate, he, therefore, did not find any reason to make any addition on this point. However, the Ld. AO referred the matter to the Departmental Valuation Officer (DVO) to ascertain the cost of investment/construction in the aforesaid flats. The DVO, however, instead of estimating the cost of construction, just estimated the market value of the flats. The AO based on the DVO’s report, added the differential value as compared to the cost of construction claimed by the assessee as unexplained/unaccounted investment in construction of flats. 7. In appeal, the Ld. CIT(A) deleted the additions so made by the AO observing that the DVO had not determined the cost of investment, but the market value of the property. The Ld. CIT(A) observed that the DVO was supposed to determine the cost of construction after considering the prevailing construction rate as per the CPWD or State Printed from counselvise.com ITA No.189/Ahd/2021 The ACIT (Inta.Taxa.) vs. Shri Chandubhai Raojibhai Patel Asst. Year : 2012-13 7 PWD rates. He further observed that the DVO in his report has neither mentioned per square feet construction cost nor bifurcated the construction cost in material and labour. He observed that the DVO only determined the fair market value of the property, whereas, the fact on the file was that in the DVO’s report it was nowhere mentioned that construction cost shown by the assessee was incorrect or that the cost of construction was not determined by him on scientific basis. He held that the market value of the property as on 31/03/2012 could not be equated with cost of construction. He, therefore, held that provisions of section 69 of the Act cannot be made applicable in this case on the basis of fair market value estimated by the DVO to hold that the assessee had made unexplained investment. 8. Before us, the Ld.DR could not rebut the aforesaid factual findings arrived at by the Ld. CIT(A). Moreover, the Ld. Counsel for the assessee has explained that during the year under consideration, no construction/investment was made by the assessee, therefore, no addition could have been made by the AO on account of unexplained investment in construction in the year under consideration. He has further submitted that even otherwise the assessee has duly given the details of cost of construction about which the AO could not find any fault with. 9. After considering the rival submissions, we do not find any reason to interfere with the well-reasoned order of the Ld. CIT(A) on Printed from counselvise.com ITA No.189/Ahd/2021 The ACIT (Inta.Taxa.) vs. Shri Chandubhai Raojibhai Patel Asst. Year : 2012-13 8 these issues. The Ld. CIT(A) has rightly held that the addition in respect of unexplained investment on account of construction of flats cannot be made on the basis of the market value of the flats estimated by the DVO. The Ld. CIT(A) has given elaborate findings, in this respect, holding that the DVO was supposed to calculate per square feet rates of construction as per the CPWD guidelines or State PWED guidelines. He should have bifurcated the cost of material item-wise and also the cost of labour to arrive at the cost of construction. Even the DVO was supposed to take the cost of material from time-to-time during the period of construction of flats. However, no such exercise was made by the DVO. It is obvious that after the completion of the construction, the market value of the flats would rise up and, therefore, the market value of the flats cannot be considered as cost of construction. Moreover, in the year under consideration, no such investment has been made by the assessee on the development/construction of flats, therefore, no addition can be made on this account in the year under consideration. In view of the above, we do not find any merit in these Ground Nos.2 & 3 of the appeal of the Revenue and the same are, accordingly, dismissed. 10. Ground No.4:- Vide Ground No.4, the Revenue has agitated the action of the Ld. CIT(A) in holding that the AO could not refer the matter to the DVO without rejecting the books of accounts. Since we have adjudicated the issue on facts, therefore, at this stage, we do not deem it appropriate to deliberate upon this issue as the same has been Printed from counselvise.com ITA No.189/Ahd/2021 The ACIT (Inta.Taxa.) vs. Shri Chandubhai Raojibhai Patel Asst. Year : 2012-13 9 rendered academic in nature. This ground of Revenue’s appeal is, therefore, dismissed as infructuous. 11. In the result, the appeal of the Revenue is hereby dismissed. Order pronounced in the Open Court on 21/01/2026. Sd/- Sd/- (Annapurna Gupta ) Accountant Member ( Sanjay Garg) Judicial Member अहमदाबाद/Ahmedabad, िदनांक/Dated 21/01/2026 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS आदेश की \"ितिलिप अ#ेिषत/Copy of the Order forwarded to : 1. अपीलाथ$ / The Appellant 2. \"%थ$ / The Respondent. 3. संबंिधत आयकर आयु& / Concerned CIT 4. आयकर आयु& ) अपील ( / The CIT(A)-13, Ahmedabad 5. िवभागीय \"ितिनिध , अिधकरण अपीलीय आयकर , अहमदाबाद/DR,ITAT, Ahmedabad. 6. गाड\u000f फाईल / Guard file. आदेशानुसार/ BY ORDER, स%ािपत \"ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad 1. Date of dictation (dictation pad is attached with file) : 19.1.2026 2. Date on which the typed draft is placed before the Dictating Member. : 20.1.2026 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 21.1.26 7. Date on which the file goes to the Bench Clerk. : 21.1.26 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order : Printed from counselvise.com "