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TMI Blog2012 (12) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... nion that there happened to be an escapement of income - for the years under consideration admittedly the assessee had declared the net income by taking the shelter of section 44AD of IT Act. It is also been gathered that regular books of account have not been maintained by the assessee – against assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... ned. Assessee was served with a notice, however unable to produce regular books of accounts required to be maintained u/s.45 of IT Act. As per AO, only a trial balance, copies of certain ledger account and bank were furnished. According to AO, those details could not be treated as regular books of accounts. Not only for A.Y. 2003-04 but for A.Y. 2004-05 and A.Y. 2005-06 income-tax returns were filed showing income u/s.44AD of IT Act. The AO has finally concluded that for the year under consideration as per DVO the cost of expenditure was at Rs.19,65,615/- as against that the assessee had shown Rs.10,66,553/-, therefore the balance of Rs.8,99,062/- was held as unaccounted investment u/s.69 of IT Act. 3. At the outset, ld.AR Mr.A.C. Shah has stated that for A.Y. 2003- 04, the Revenue has challenged the addition of Rs.8,99,062/- and the tax on the said amount being below Rs.3 lacs, therefore in the light of the CBDT Circular this appeal of the Revenue is not maintainable. Computation of tax placed before us is as follows:- "Computation of Tax Payable Addition Rs.8,99,062 Tax payable @ 30% Rs.2,69,719 Surcharge @ 10% Rs. 26,971 Total Tax Payable Rs.2,96,690 Tax is below Rs.3,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This objection; which is raised for the first time by the respondent-assessee before us has no force, therefore rejected. 6. As far as the merits of the case is concerned, the basic fallacy in the DVO's report is that the entire calculation was based upon the Delhi CPWD rates applied on the property situated at Himatnagar; refer para 8 & 8.1 of the DVO's report. In our considered opinion, ld.CIT(A) was justified in deleting the addition, relevant portion is reproduced below:- "10. I have carefully considered the submissions. I find that construction work of the commercial complex was being undertaken through an Engineer who was running such construction work in the name of Samir K. Shah, HUF. The said person was also examined by the Assessing Officer and he had also stated that work was being carried out by him. It is also seen that the DVO has worked out the entire cost of construction after shops etc. were sold out and it is not clear whether he has valued the cost after deducting the extra work undertaken by the respective owners or not. The value has been determined by him of the entire complex. Apart from that it is seen that, as the work was being done by the contractor, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the submissions of both sides and after perusing the contents of the paper book, we hereby affirm the view taken by the Learned CIT(Appeals) who has categorically over-ruled the method of valuation as adopted by the DVO. The deletion of difference in the valuation for the year under consideration is hereby confirmed. This ground of the Revenue is hereby dismissed. [B] Assessee's cross Objection No.103/Ahd/2007 8. As far as the cross objection for A.Y. 2003-04 of the Assessee is concerned, no legal or factual aspect is agitated before us, hence the same is hereby dismissed. [C] Revenue's Appeal 9. For A.Y. 2004-05, Revenue has raised the following grounds:- 1. The Ld. CIT(A) has erred in law and on facts in restricting the addition made U/s.69 of the I T Act without properly appreciating the Remand Report submitted by the Assessing Officer. 2. The Ld. CIT(A) has erred in law and on facts in restricting the addition to Rs.3,33,850/- as against the addition of Rs.11,27,230/- made by the A.O. U/s.69 of the I T Act. 9.1. In this year as well, the assessee has raised the preliminary objection of the tax effect involved and submitted the following computation:- "Computation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o evidence of any underhand dealing between the assessee and Samir K.Shah - HUF. 11.1 Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) r.w.s. 147 of the IT Act dated 6/12/2007 were that the assessee-firm is in the business of civil construction. For this year the gross receipts were at Rs.6,35,000/- over which 8% profit was calculated u/s.44AD of IT Act amount to Rs.50,800/-. Based upon the DVO's report dated 22/03/2006 bearing No.2(2)/VO-II/200-06/700, the cost of construction for the A.Y. 2004-05 was worked out at Rs.26,44,545/- as against that the assessee had declared the construction expenditure at Rs.15,17,332/-. The said difference, thus has resulted into an addition of Rs.11,27,213/- u/s.69 of IT Act. The matter was carried before the first appellate authority. 12. Ld.CIT(A) has examined the DVO's report as also the submissions of the assessee and, thereafter, held as under:- "5.9. The DVO's report is also not free from various infirmities on account of the fact that he carried out the valuation of the property much after the date of the completion besides when it was occupied by the tenants. The allegation of the appellant that the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aluation was done on the higher figure. Ld.AR has emphasised that if the amount of expenditure incurred by the tenants is reduced, then there is no difference in the two valuations. 14. We have heard both the sides at some length. We have also perused the orders of the authorities below in the light of the compilation filed. A fallacy has been pointed out to us in the DVO's report that he had adopted the Delhi CPWD rates. Those rates were towards higher side comparing the rate of construction in a small town stated to be Himatnagar. This argument of the assessee appears to be logical. An another contention is that the renovation expenditure was incurred by the tenants and few of them have given confirmation. Revenue's objection was that the DVO had inspected the property on 19/12/2005 and at that time of inspection, it was not reported that the expenditure on renovation, etc. was incurred by the tenants. In our considered opinion, since the date of handing over of the possession and the date of inspection by the DVO were the matter of past and after the lapse of time it was not possible even for the DVO to ascertain that at what stage of construction the property was handed over t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereby dismissed. (ii) Second, the ld.AR has pleaded that without rejection of books of account, a reference cannot be made u/s.142A of I.T. Act. For this legal proposition, case laws cited are; ITO vs. Vijeta Educational Society 118 TTD 382 (Luck.), Dr.Sooryamani Dwivedi vs. ACIT 132 TTJ 240 (Luck.) and Sargam Cinema 328 ITR 513 (SC), wherein an observation was made that the provisions of section 142A cannot read in isolation to section 145 of IT Act. We have already observed while discussing the facts of the case, in above paras, that for the years under consideration admittedly the assessee had declared the net income by taking the shelter of section 44AD of IT Act. It is also been gathered that regular books of account have not been maintained by the assessee. The return was filed on an estimation as prescribed under the said section at 8% of the gross receipts. Due to this basic reason that no book of account were maintained, then there was no question of detection of any defect in the books of account by the Assessing Officer had arisen. This plea of the assessee is also dismissed. 16. In the result, Revenue's appeals for A.Ys. 2003-04 & 2004-05 & the cross objection for A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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