9911796707
TMI Blog2012 (7) TMI 617X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee are directed against the order passed by the Commissioner of Income Tax (Appeals) II, Madurai dated 04.05.2010 in ITA No. 177/2007- 08 for the assessment year 2003-04. Shri Anirudh Rai, CIT-DR represented on behalf of the Revenue and Shri R. Srinivasan, Advocate represented on behalf of the assessee 2. The only issue in the appeal of the Revenue is that the Commissioner of Income Tax (Appeals) erred in deleting the addition of Rs..46,63,000/- made under section 69 as unexplained investment in Hotel Hill View. 3. The brief facts of the case are that the assessee is a retired Railway Employee. A search under section 132 of the Act was conducted on 21.08.2005 at the residence-cum clinic of Dr. B.K.C. Mohanprasad, who is the father of the assessee. Consequent to search, a notice under section 153C was issued to the assessee to file return of income and in response to the said notice, assessee filed return of income on 20.12.2006 declaring income of Rs..2,65,730/-. The assessment was completed under section 143(3) read with section 153C of the Act on 26.12.2007 determining the income of the assessee at Rs..49,28,730/-. While completing the assessment, the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings are not validly initiated. The counsel for the assessee submitted that the Assessing Officer had not recorded any satisfactory reason in case of searched person as to whom the seized material belonged to. Therefore, the impugned proceedings are invalid. For this proposition, the counsel for the assessee relied on the decision of Chennai Bench of the Tribunal in the case of P. Sathyanarayanan v. ACIT [50 SOT 168]. On merits of the case, the counsel for the assessee relied on the order of the Commissioner of Income Tax (Appeals) and prayed that the order of the Commissioner of Income Tax (Appeals) can be sustained. 9. We have heard both sides, perused the materials available on record, orders of lower authorities and case law relied upon. The Commissioner of Income Tax (Appeals) elaborately dealt with this issue in his reasoned order and the findings are as under: 5. At the time of hearing before my predecessor, it was argued that the initiation of proceedings u/s 153BC were invalid. My predecessor required the Assessing Officer to clarify materials/documents referred to in the satisfaction note based on which the proceedings were initiated u/s 153BC of the Act. Accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn statement has been taken from him. In the statement, he had admitted construction of the building, though no agreement was entered into. Also, he has identified the above bills as issued by him though he had not maintained proper bill books or books of account. 9. The appellant had also submitted relevant papers/documents in proof of adequate resources of Mrs. Singh to construct the building (copy of partnership deed, copies of various investments, copy of passport for travel abroad etc.). These materials were stated to have been filed before Assessing Officer during assessment proceedings to establish the same cause but were ignored by the Assessing Officer. 10. The appellant had also submitted the following facts giving the circumstances under which the building was constructed by Mrs. Singh, the need and desire of Mrs. Singh to construct the building and also her financial resources to do the same. Affinity towards Mahalakshmi Prasad (a) Mrs. Sarala Prasad, daughter-in-law of the appellant and daughter of Mrs. Singh is the only child of Mrs. Singh and Dr. Mahalakshmi Prasad is their first grand child. Being the first grand child and having been brought up at Mumbai by M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Questioning of will The AO has questioned the genuineness of the will on the following issues: i) Non availability of door number when will was executed The will was executed in 2001 when the building was not completed, going by the valuation report. Hence, reference in the bill of the door number of the property which is yet to be completed is questioned by Assessing Officer. The appellant has responded that the door number for the property was put in the will in the normal sequence based on the door number of adjacent building which was in existence at that time and which had door number. In proof of the door number of the adjacent building that had already existed at that time, a certificate (addressed to Dr. Mahalakshmi Prasad) from the local municipality (Kodaikanal) mentioning the door number of the adjacent building is furnished by the appellant. I find the contention of the appellant to be in order, that too when the same is corroborated by the certificate from the municipality. The CIT(A) had in his remand order had also directed the AO to submit his observation on the acceptance of this certificate, but the AO has not responded to it in his reply. ii) Notary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... common goal of making a sizeable gift an immovable property, the appellant contributing his land and Mrs. Singh raising a building on it. After construction, settlement deed was executed by the appellant settling the land (which necessarily meant conveyance of superstructure also) and Mrs. Singh also executing a will, as an abundant caution, bequeathing the building to the same done. Hence, both persons being related and having common goal, necessity of transfer of land before construction was not felt, and by this, paying stamp duty twice for the same transfer was avoided. 14. Filing of application only by the appellant for building plan approval The appellant is also found to have made application to the local municipality for the building plan approval and this is found by AO as a strong reason for assessing the building on the appellant. The appellant submitted that the land at the time of construction as well as at the time of filing such application was standing in his name (settlement deed executed only subsequently). Hence, he only had to file such application for plan approval, as the owner of land as per municipal records and such application either by Mrs. Singh or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the power of attorney it was stated as under: That my eldest grand daughter K. Mahalakshmi Prasad will take over and enjoy item No. 4C mentioned above. This bequeathal to my eldest grand daughter is out of my specific affinity towards her as she was born in Bombay and I only brought her up during for childhood at Bombay. 17. Perusal of the above documents reveals that the said property was settled in favour of Mahalakshmi Prasad. They also reveal that the land originally belonged to the appellant and the construction was done by Mrs. A.K. Singh. There is no evidence brought on record that the construction was done by the appellant. No material evidence was brought on record to prove that the appellant had source for the construction amount of Rs..46,63,000/-. The addition in the hands of the appellant towards cost of construction is therefore not warranted. I delete Rs..46,63,000/- being the addition made here substantively as the building was not constructed by him. 10. On going through the order of the Commissioner of Income Tax (Appeals), we find that the proceedings under section 153BC of the Act are validly initiated as the seized materials indicate assessee s name ..... X X X X Extracts X X X X X X X X Extracts X X X X
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