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TMI Blog2012 (7) TMI 617X X X X Extracts X X X X X X X X Extracts X X X X ..... .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 made addition of Rs..46,63,000/- under section 69 towards cost of construction of Hotel Hill View as per the valuation determined by the Department Valuation Officer. 4. Against this addition, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) allowed the appeal of the assessee holding that the construction was not done by the assessee and in the absence of evidence on record that the assessee has constructed the building, no addition can be made in the hands of the assessee towards unexplained investment in the construction of Hotel Hill View and therefore, deleted addition made by the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als 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. Accordingly Assessing Officer furnished the copies of documents relied on by the Assessing Officer for initiation of proceedings u/s 153BC of the Act. The authorised representative also gave his comments on the seized materials. The seized materials indicate assessee's names in the bills relating to some building, pension account of the assessee and the land purchased by the assessee. These materials go to prove that the proceedings were validly initiated u/s 158BC of the Act and the assessee's objections are overruled. Sufficiency of seized material is not the criteria for the proceedings. What is required is whether the Assessing Officer initiated the proceedings after recordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant 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 Mrs. Singh in her early childhood, the grand child earned all the affection of Mrs. Singh. This affection and affinity got reflected and translated itself into a prominent gift by way of building in the later days. Soundness of financial resources (b) Mrs. Singh had been living in Mumbai for about 4 decades along with her husband with varied business interest there. (c) Mrs. Singh was educationally qualified as a nurse and she had also been the medical attendant of retarded child in the family of Birla family for a considerable period. (d) Mr. and Mrs. Singh had varied business interest in Mumbai and Mrs. Singh is widely travelled abroad in her career. (e) With no dependent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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' not submitting his notary register The AO has summoned and examined the notary, who had testified the execution of 'will' by Mrs. Singh. While the notary had confirmed the execution of will by Mrs. Singh in his sworn statement, he was not able to produce his notary register as called for by AO. Non-production of notary register has led to the AO doubting the genuineness of the will. 13. The appellant has submitted the following in this regard: (a) the notary could not produce the notary register due to lapse of time of about 6 years after the date of execution of will, as the notary register was mislaid and not traceable immediately. (b) The notary himself has confirmed in his sworn state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 by the prospective done, Mrs. Mahalakshmi Prasad, would have no locus standi. 15. Purchase of additional and adjoining piece of land The Assessing Officer has referred to the subsequent purchase of a small piece of adjoining land by Mrs. Mahalakshmi Prasad, and by this, the AO sought to establish that land and hence the building constructed on it belonged only to the appellant, thus justifying the assessment of building on the appellant. The appellant has submitted a reason for the purchase of adjoining small piece of land. The land owned by him and on which Hotel Hill View was constructed an unapproved one. Since electric connection would not be given for building constructed on an unapproved plot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 in the bills relating to some building, pension account of the assessee and other purchases by the assessee. Therefore, we reject the additional ground raised by the assessee questioning the validity of the proceedings under section 153BC. 11. So far as merits are concerned, in our considered view, no interference is called for on the reasoning given by the Commissioner of Income Tax (Appeals) in deleting the addition made by the Assessing Officer towards unexplained investment as the Commissioner of Income Tax (Appeals) found that the construction was done by Mrs. A.K. Singh and there is no evidence brought on record that the construction was done by the assessee. No material evidence was brought ..... X X X X Extracts X X X X X X X X Extracts X X X X
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