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TMI Blog2002 (12) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... essee and Valuation made by the Valuation Officer. 3.That the learned CIT (Appeals), Amritsar has grossly erred in not allowing 10% deduction for bona fide difference of opinion in the cost of construction as estimated by Regd. Valuer and as estimated by Departmental Valuer. 2004] DALJIT SINGH v. ASSTT. CIT (ASR.) 255 4.That the ld. CIT(A) Amritsar has grossly erred in confirming the addition of Rs. 58,000 made by the Assessing Officer on account of investment made by the assessee in FDRs. 5.That the learned CIT(A). Amritsar has grossly erred in sustaining the addition of Rs. 1,00,000 out of an addition of Rs. 3,00,000 made by Assessing Officer on account of cash found at the residence of the assessee. 6.That the learned CIT (Appeals), Amritsar, has grossly erred in not appreciating the fact that the Cash Book of the assessee-firm showed a cash of Rs. 4,76,346. 7.That the learned CIT(A), Amritsar, has grossly erred in confirming the addition of Rs. 55,000 made by the Assessing Officer on account of investment in Chit Fund. 8.That the learned CIT(A), Amritsar has grossly erred in not dealing with the ground of Appeal No. 5 pertaining to addition of Rs. 48,000 on account of Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch, the cash of Rs. 3,10,550 was found at the residence of the assessee. Before starting search, the Authorised Officer recorded the statement of the assessee and asked him as to how much cash was available with him. It was stated that the cash belonging to the firm was kept in safe custody at the residence. At the time of search no cash book was produced. However, subsequently, the cash book was produced which showed cash-in-hand at Rs. 4 lacs & odd. During the assessment proceedings, the assessee submitted that the cash found at the residence was available from the cash of the firm M/s. Narula Filling Station. It was stated that a sum of Rs. 1 lac was sent to the Bank for making a draft and remaining amount of Rs. 3 lacs and odd was kept at the residence. However, the Assessing Officer did not accept the contention of the assessee and made the addition of Rs. 3 lacs by stating that the availability of the cash in hand of the assessee remained unexplained. He also mentioned that a day before the search i.e., 8-10-1997, the sale from 2.30 p.m. onward amounted to Rs. 12,183 only, and there was not much of stock at the petrol station. On the aforesaid basis, the Assessing Officer c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Service Station. However, before the Assessing Officer it was claimed that a sum of Rs. 3 lacs pertained to M/s. Narula Service Station and was duly appearing as cash in hand in the cash book of the aforesaid firm. It was submitted that the photocopy of the cash book for 9-10-1997 was filed before the Assessing Officer and the same is available on the assessment record but the Assessing Officer as well as the learned CIT(A) both disbelieved the cash book of the assessee in which the cash in hand was Rs. 4,76,346 on 9-10-1997. The learned Counsel for the assessee submitted that it was difficult for any person to remember the exact availability of the cash in house and since cash book showed sufficient cash in hand to explain the entire cash found at the residence, there was no occasion to sustain the addition of Rs. 1 lac when the learned CIT(A) himself admitted that the cash available as per cash book was Rs. 4 lacs and odd. He stressed that the learned CIT(A) held that the Assessing Officer had not doubted or disputed the cash availability in the cash book of the firm and the cash availability for the purchase of the draft, however, he is allowed the relief of Rs. 2 lacs only a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition of Rs. 1 lac. Accordingly, the same is deleted. In this manner, the ground raised by the department is dismissed and that of the assessee is allowed. 7. Now we will proceed to the remaining grounds of the assessee's appeal. Vide ground No. 1, the assessee is aggrieved by the confirmation of addition of Rs. 24,765 on account of unexplained investment in lands. 7.1 The Assessing Officer noted in the block assessment order dated 25-10-1999 that the value of the investment in the property was at Rs. 79,765, for which the assessee did not furnish the source of the investment. However, he accepted the submissions of the assessee that the surrender on account of investment in land amounted to Rs. 37,000 and Rs. 18,000 on account of truck income was added in the block return. According to him, the balance of Rs. 24,765 remained unexplained and the same was added to the income of the assessee as undisclosed income. 7.2 Before the learned CIT(A), it was stated that the assessee had a truck income of 24,000 and further surrendered a sum of Rs. 24,508, as such funds of Rs. 48,508 were available with the assessee for the purchase of the land for Rs. 24,508 and, therefore, he was left ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 194000 59340 237008 891785 370000 118000 -- 164208 158140 786340 2004] DALJIT SINGH v. ASSTT. CIT (ASR.) 261 7.4 In his rival submissions, the learned Sr. D.R. strongly supported the order of the learned CIT(A) and stated that the addition made by the Assessing Officer and confirmed by the learned CIT(A) was as per law and, therefore, deserved to be upheld. 7.5 We have considered the rival submissions and perused the cash flow statement furnished by the assessee (it was claimed that the same was furnished before the Assessing Officer as well as the learned CIT(A)). It seems that the authorities below had not properly appreciated the explanation of the assessee that the assessee was having the cash in hand in accordance with the cash flow statement. It is also true that no finding has been given by the authorities below on the contentions of the assessee which were based on the cash flow statement. Therefore, to meet the ends of natural justice, we deem it appropriate to remand the issue back to the file of the Assessing Officer with the direction to verify this contention that the sufficient cash was available with the assessee to explain the investment of Rs. 24, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 991 to 1995 and in this regard, an inquiry was raised by the ITO Survey-cum-CIB vide letter dated 16-1-1996 and the assessee vide his reply dated 25-4-1997 fully explained the cost of construction before him at Rs. 10,16,925. It was stated that no action was taken on the basis of the explanation of the assessee. In other words, it was submitted that the explanation given by the assessee was accepted by the ITO Survey-cum-CIB during the regular course of the assessment. It was further submitted that the Assessing Officer referred the Valuation to the DVO for the block assessment and the DVO valued the same at Rs. 11,90,200 whereas the Assessing Officer further allowed the deduction for the following items :-- (1) Architect charges 17,245 (2) Builder's Efforts 23,338 (3) 10% for Self Supervision 1,14,223 1,54,806 After reducing the aforesaid amount of Rs. 1,54,806, the valuation was worked out at Rs. 10,35,394 as against which the assessee had already shown an expenditure of Rs. 10,16,925, so there was no justification in making the further addition of Rs. 1,23,850 merely on the basis of the DVO's report. It was vehemently argued that since the assessee had explained the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milar question was before the Hon'ble Bombay High Court in the case of Vinod Danchand Ghodawat (supra) where in on a reference the Hon'ble High Court observed as under :-- "The said question refers to an addition of Rs. 2,49,350 made on account of unexplained expenses in the construction of a residential bungalow by the assessee. Here also, Chapter XIV-B has no application the Tribunal rightly, found that the addition is made on the basis of report of the Departmental Valuer. According to the Assessing Officer, during the search, it was found that the assessee had constructed a bungalow. It was found that the assessee had incurred expenses of Rs. 4.16 lakhs. The Assessing Officer, thereafter, referred the matter to the Departmental Valuer, who valued the property at Rs. 6.66 lakhs and, accordingly, the difference has been added to the income of the assessee as undisclosed income. The above basis clearly shows that the Department has not understood the scope of Chapter XIV-B of the Income-tax Act. By stretch of imagination, the impugned addition fell within the Chapter XIV-B. There would be no finality, if the Department is permitted to add back to the income of the assessee on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.5 per cent on estimated contractors profit. On the other hand, while determining the profit on sale of part portion had estimated the profit at 35 per cent. No plausible explanation could be given by the revenue for adopting different yardstick as above. The assessee had disclosed the profit at 24.42 per cent in respect of portion of the complex sold by it. If this rate of profit was reduced as against 7.5 per cent reduced by the DVO, the cost of construction worked out to almost similar to the cost of construction disclosed by the assessee and the difference remained negligible. Therefore, the additions made by the Assessing Officer were neither tenable on facts nor on law." In the instant case also, it is noticed that the assessee disclosed the cost of construction at Rs. 10,16,925 and the DVO valued the same at Rs. 11,90,200 while the Assessing Officer estimated the same at Rs. 10,35,394, as such the difference was negligible i.e., the difference in the value worked out by the Assessing Officer and the value disclosed by the assessee was negligible. In that view of the matter also we are of the view that the Assessing Officer was not justified in making the addition on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. In our view, the facts of this issue are identical to the fact given to the ground No. 1 of the assessee's appeal (supra). We have already remanded the issue raised by the assessee vide ground No. 1, so this issue is also remanded back to the file of the Assessing Officer and the directions given while disposing of ground No. 1 will also be applicable for this ground. 10. Ground Nos. 5 & 6, we have already dealt with while disposing of the appeal of the Department i.e., in IT (SS) A. No. 11 (Asr.)/2001 (supra). In view of the detailed discussions made therein, these grounds of the assessee's are allowed. 11. The next ground i.e., ground No. 7 relates to the confirmation of addition of Rs. 55,000 on account of investment in Chit Fund. 11.1 For making this addition, the Assessing Officer observed that the receipts of Rs. 25,000 each were issued by M/s. Shri Ram Chander Finance Company, Pathankot, on 10-4-1997 and no name has been mentioned on them. In his view, it was the assessee's responsibility to explain the nature of the document and moreover, if the ownership of the document was denied by the assessee, even then he was required to express the state of ownership of those d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee had not produced any evidence in support of his contention. He, therefore, made the addition of Rs. 48,000. 12.2 The learned CIT(A) has not discussed this issue at all. It is noticed that this ground was raised by the assessee vide ground No. 5 of the grounds of appeal he filed before the learned CIT(A) which is apparent from the grounds raised by the assessee before the ld. CIT(A) (copy on the record). 12.3 Before us, the learned Counsel for the assessee submitted that the truck No. PCR-4935 and PCM-9762 were out of order for the year relevant to the assessment year 1997-98 and, therefore, no income was earned from those trucks. It was stated that Panchanama was prepared at the premises of M/s. Daljit Singh & Bros.; on 9-10-1997 and detail of papers was prepared by the search party in which tipper No. PCR-4935 was listed at S. No. 10 and was recorded as not working. He referred to page 19 of the paper book. Accordingly, it was submitted that no income accrued to the assessee in respect of those two trucks, therefore, no addition was required. Alternatively, it was stated that the truck income if any, may be incorporated in the cash flow statement to explain other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in their Block assessment returns which was available with the assessee for making various investment alleged to have been made from personal undisclosed income of the assessee." From the above ground No. 9 raised before the learned CIT(A), it is noticed that the assessee had not narrated how much cash was available from the firms in which the assessee was partner and also had not stated that how much investment had been made from the personal undisclosed income of the assessee. From this fact, it would be clear that the assessee failed to establish nexus between the disclosed income and the funds available. However, while disposing of the other grounds raised by the assessee namely ground No. 1, 4 & 7, we have restored the issue back to the file of the Assessing Officer and directed the Assessing Officer to consider the cash flow chart furnished by the assessee. 268 SELECTED ORDERS OF ITAT [Vol. 1 In that view of the matter, we do not think it appropriate to remand this issue back to the file of the ld. CIT(A) as the issue had already been remanded back to the Assessing Authority i.e., the Assessing Officer. 14. Ground No. 10 is corelated with ground No. 9 and as such no speci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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