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TMI Blog2012 (7) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... roneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." 1.1. In other appeals the figures are as under:- ITA No. Amount 2615/Del/2011 Rs.1,53,05,051/- 2616/Del/2011 Rs.2,78,56,077/- 2617/Del/2011 Rs.1,44,38,380/- 2722/Del/2011 Rs.1,83,56,653/- 2723/Del/2011 Rs.2,95,92,793/- 2724/Del/2011 Rs.6,21,57,745/- 2725/Del/2011 Rs.5,71,22,742/- ITA Nos.2614 to 2617/Del/2011 2. A search and seizure action u/s 132 was taken at Ambience group of companies on 10th October, 2007 and the assessees in the present case are companies of this group. The group is engaged in the business of construction of commercial and residential properties viz., malls, townships, apartments, business towers, etc. in the National Capital Region of Delhi and other nearby areas. These companies undertook the construction of Ambience Mall at Vasant Kunj, New Delhi which was in progress at the time of search. It was noted by the Assessing Officer in the assessment order that major construction and development work of the project was carried out by the developer company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A to the Departmental Valuation Officer is not in accordance with law as Section 142A does not apply on section 69C and reliance was placed mainly on the decision of Hon'ble Delhi High Court in the case of CIT vs. AAR PEE Apartments Pvt. Ltd. (2009) 319 ITR 276 (Del). Secondly, the reference to DVO was challenged on the ground that no defect has been pointed out in the books of account which are regularly maintained by the assessee and are audited. Without pointing out any defects in the books of account no addition, whatsoever, could be made on account of difference in the cost of construction shown by the assessee and estimated by DVO and for raising such contention the reliance was mainly placed on the decision of Hon'ble Supreme Court in the case of Sargam Cinema vs. CIT (2010) 328 ITR 513 (SC). Thirdly, the addition was challenged on the ground that the difference in the cost of construction and estimate made by the DVO was less than 5% (2.43% in the case of Ambience Developers Pvt. Ltd. and 3.71% in the case of Ambience Hotels and Resorts Pvt. Ltd.) To assail the addition on this basis, the assessee placed reliance on the decision of Hon'ble Madras High Court in the case of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of these cases. He submitted that the difference in that case was only 3.86% which was a small percentage and, thus, he submitted that the issues raised by the department in the present appeals are covered by the aforementioned decision of the Tribunal. 7. On the other hand, the learned DR relied upon the order of Assessing Officer. 8. We have carefully considered the rival submissions in the light of the material placed before us. The relevant observations of the Tribunal from the aforementioned order dated 5th August, 2011 are reproduced below:- "13. We have heard the rival contentions and perused the relevant material on record. The main issues raised in seriatim are as under:- (A) Whether assessee's books of account are rejected ? 14. It has not been disputed that assessee maintains proper books of account which are audited and supported by vouchers except vague reference to some seized documents which we shall deal later. There is no reference to any specific order by the AO rejecting the books, Section 145(3) reads as under:- "Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected u/s 145. Therefore, the observation of the AO that the valuation proposal has been made u/s 142A cannot be upheld on the basis that cost of construction could not be ascertained, this inference has no tenable basis. Thus, there is neither rejection of books on the basis that the cost could not be said to be unexplained. In our view, assessee furnished proper explanation for seized material and no adverse inference can be drawn on this issue. (C) Whether the reference to DVO under Section 142A is proper? 17. Section 142A empowers the AO to refer to DVO valuation where an estimate of value referred to in Section 69 or Section 69B when the assessee is found to have invested more cosdt than reflected in the books. Both the Sections read as under:- "69. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been disputed that the assessee's mall is a huge property, involving various measurements based on architectural designs. The DVO's team visited the property on 3rd to 5th November, 2009 and the final report has been sent on 23rd December, 2009. The report is based on CPWD flat rates. 20. The DVO's report in the eyes of law is an estimate prepared by an expert. Nevertheless, legally, it remains an opinion based on estimates and, in this case, this opinion is totally based on CPWD flat rates. The assessee's books of account are written on day to day basis over the number of years which has not been disputed. According to the assessee, the books contained actual expenses incurred in construction of mall. The books of account of the assessee are not as such rejected. The difference between the DVO's opinion and assessee's books is 3.86%. Learned DR contends that the percentage may not be looked into as the consequential amount is very large. In our considered view, the preparation of an opinion based on an estimate invariably involves a difference as compared to other figures. In this case, the assessee's books are regularly maintained, audited and the construction spreads in years. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85/Del/2011 Rs.78,25,567/- 2386/Del/2011 Rs.1,48,33,224/- 2387/Del/2011 Rs.2,01,26,601/- 11. In these cases the difference in the cost of construction and estimated value assessed by DVO were considered to be receipts in the hands of this assessee on which GP was calculated. The year-wise calculations are as under:- Assessment Year 2003-04 1. Addition made in the case of Ambience Mall at Gurgaon on account of unexplained investment in the construction Rs.7,33,655/- Addition @ GP of 6.59% Rs.48,347/- Assessment Year 2004-05 1. Addition made in the case of Ambience Mall at Gurgaon on account of unexplained investment in the constrution for this Assessment Year Rs.1,09,11,624/- Addition @ GP of 10.65% Rs.11,62,087/- Assessment Year 2005-06 1. Addition made on account of unexplained investment in the construction for this Assessment Year in the cases of i) Ambience Mall at Gurgaon Rs.2,46,12,807/- ii) Five Star Hotel & Service Apptts. Project at Gurgaon Rs.1,85,56,653/- iii) Ambience Mall at Vasant Kunj, New Delhi. Rs.1,21,73,148/- Rs.5,53,42,608/- Addition @ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e main addition in the hands of the payer companies has already been deleted. For the sake of completeness the observations of the CIT (A) while deleting this addition are reproduced below:- "6. I have considered the Assessing Officer's order, his remand report and the submissions made by the appellant and the position of facts and law. In this respect it is observed that the additions made in the hands of the respective owner companies of the aforesaid projects, as unexplained investment, have been deleted by me, year by year, in the respective appeals of those companies as per my detailed orders separately passed by the orders dated 29.03.2011 in their respective cases, hence no adverse inference can be drawn in the case of the appellant company on the basis of the assessment orders passed in their cases. Further more, it is also observed that the Assessing Officer in this case also has not pointed out any specific defect in the books of accounts of the appellant company as well as those of the owner companies which are regularly maintained and audited. Hence, any difference between the cost of construction shown by the respective companies as per their books of accounts and as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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