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TMI Blog2013 (5) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... any assessment that are abated, AO retains the original jurisdiction as well as jurisdiction conferred on him u/s. 153A for which assessment shall be made for each assessment year separately. In favour of assessee. Unexplained investment in property - CIT(A) deleted the addition - Held that:- No finding by the CIT(A) as to what was the source of investment. Merely because the payment was made through the bank account, it could be presumed that the source is explained and verified. Further the investment in this case as reflected in the assessee's statement of account needs to be corroborated from the books of accounts and records maintained by the assessee. As the books of accounts and records do not corroborate the investments, the addition has been made in this case. Hence, assessee's contention that no addition can be made in the absence of any incriminating material found is not germane here. Hence, in the interest of justice, remit this issue to the file of the AO to consider the issue afresh, in light of the submissions made by the assessee. Addition made upon the valuation done by the DVO - value of the property in this case as reflected in the registered sale deed wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issues with respect to the orders of the authorities below for the assessment year 2002-03 (I.T.A. NO. 3105). 5. In this case assessee is a Civil Contractor having proprietary concern viz. M/s B.S. Tubewells. A search and seizure operation u/s. 132 of the I.T. Act, 1961 was carried out on 24.4.2007 on the assessee. Consequent upon the search assessment u/s. 153A of the I.T. Act was completed. The Assessing Officer estimated the net profit @10% of the gross receipt as against declared net profit rate of 8.03% by making the following observations:- i) Contract-wise books of accounts were not maintained. ii) In the case of Assessee's husband Sh. Vijay Kumar Kataria having identical activities, profit was declared at 24%. iii) Even the assessee has declared 10% in some of the years. 6. Upon assessee's appeal Ld. Commissioner of Income Tax (A) observed that assessee has been in the business from a number of years and the system of accounting has been the same as in the preceding years. That it is not understood on what basis the Assessing Officer has estimated the net profit at 10% of the gross profit. It was submitted that the assessee is executing small jobs of Rs. 15-20 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering the above, Ld. Commissioner of Income Tax (A) deleted the addition made by the Assessing Officer. He held that there was no case of estimation of trading. 7. Against the above order the Revenue is in appeal before us. 8. We have heard the rival contentions in light of the material produced and precedents relied upon. Ld. Departmental Representative relied upon the orders of the Assessing Officer and the grounds of appeal. Ld. Counsel of the assessee on the other hand made the following submissions:- "i) This is a case of search assessment and orders were passed u/s. 153A for A.Y. 2001-02 to 2006-07 vide respective orders dated 27.12.2009. ii) That no incriminating material or evidence was found or seized at the time of search and there is no reference of same even during regular assessment and appellate proceedings. iii) That on the basis of very same system, Assessing Officer has not made any additions in the Assessment Orders passed u/s. 153A for A.Y. 2001-02, 2004-05, 2005-06 2006-07 and as such there is clear cut contradiction in the approach of the Assessing Officer. iv) That original return was filed on the basis of audited accounts and declared income was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regard, we further placed reliance the Order of the Special Bench of the ITAT in the case of All Cargo Global Logistics Ltd. vs. DCIT 137 ITD 287. In this case with reference to the assessment u/s. 153A of the I.T. Act, it was held that any assessment that are abated, the Assessing Officer retains the original jurisdiction as well as jurisdiction conferred on him u/s. 153A for which assessment shall be made for each assessment year separately. In other cases in addition to the income that have already been assessed, the assessment u/s. 153A will be made on the basis of incriminating material which in the context of relevant provisions means (i) books of accounts, other documents found in the course of search, but not produced in the course of original assessment (ii) undisclosed income or property discovered during the course of search. 12. In the background of the aforesaid discussions and precedents, we do not find any infirmity in the order of the Ld. Commissioner of Income Tax (A). Accordingly, we affirm the same on this issue. 13. Another ground raised in A.Y. 2003-04 relates to deletion of the addition made by the Assessing Officer of Rs. 17,29,000/- on account unexpl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was placed on record. Hence, Ld. Commissioner of Income Tax (A) deleted the addition. 17. Against the above order the Revenue is in appeal before us. 18. We have heard the rival contentions. Ld. Departmental Representative argued that assessee has not at all been able to produce the evidence regarding the source of investment of Rs. 17,29,000/-. Accordingly, he placed reliance upon the order of the Assessing Officer and pleaded that the addition may be sustained. Ld. Counsel of the assessee in this regard has submitted that the addition is not based on any incriminating material. There is no case of abatement of original assessment proceedings or incriminating material and as such the whole basis of addition is illegal and without jurisdiction. Furthermore, Ld. Counsel of the assessee placed reliance upon the Order of the Special Bench in the case of All Cargo Global Logistics Ltd. (Supra). He further submitted that even otherwise investment in property is supported from bank statement, as per details given therein. 19. We have carefully considered the submissions and perused the records. We find that addition in this regard has been made as there was shortfall in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while there is no Mall in Soami Nagar. 3. The assessee has calculated the cost of land as Rs. 25,69,834/-adopting the rate of land notified by the Government of Delhi and applying cost inflation index. 4. The assessee argued that the Valuation Officer has valued the property sitting in this office without any basis. 5. The value of the property was Rs. 33,00,000/- as on agreement of sale, prevailing in the area. The above submissions were not accepted by the Assessing Officer. The Assessing Officer gave the following reasons for the same.:- 1. The reconstruction of the property has nothing to do with the determination of land value. 2. The value (FMV) of the land arrived at by the Valuation Officer at Rs. 45,88,669/ was based on comparable sale instance of the local nearby area which was cleared by the appropriate authority, Income Tax Department. The method adopted by the Valuation Officer is superior and more reasonable and scientific than the one adopted by the assessee in determining the value of land. 3. Taking the property at Saket as basis for valuation the valuation officer gave allowance to the factor that the Saket property is situated in a better location a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal before us. 26. Ld. Departmental Representative submitted that the addition in this case has been made upon the valuation done by the DVO. Hence, he claimed that the value of the property is much more than that reflected by the assessee. Hence, he supported the order of the Assessing Officer and pleaded that the addition can be sustained in this regard. 27. Ld. Counsel of the assessee on the other hand submitted that this addition was made pursuant to search on the assessee on 24.4.2007 and there was no material or evidence regarding the undisclosed income or dispute about the correctness of purchase consideration. The reference to the Valuation Officer was made much after the date of search and as such as per the settled proposition in respect of the assessment u/s. 153A, no addition could have been made by having post search enquiries. Furthermore, it has been pleaded that full value of the investment in the property is duly reflected through the registered sale deed. In this regard, assessee has made the reference to the following case laws:- - K.P. Varghese vs. ITO, Ernakulam Anr. (1981) 131 ITR 597 (SC) - C.I.T. vs. Gulshan Kumar (2002) 257 ITR 703 (Del.) - C.I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xman 415 (DHC) Where no evidence could be gathered that assessee had invested more than value declared in registered sale deed of plots purchase and, comparable instances taken by the Valuation Officer were situated for way, addition made under section 69 on account of unexplained investment with respect of purchase of said plots was not justified. 30. From the above, it is evident that in the absence of any evidence that the assessee has invested more than value declared in the registered sale deed of property purchased, the addition in this regard on the basis of Valuation Report by the DVO is not sustainable. 31. Furthermore, we find that in this case the assessment was made u/s. 153A of the I.T. Act. Hence, reliance upon the decision of the Special Bench in the case of All Cargo Global Logistics Ltd. (Supra) is also germane and support the case of the assessee. As expounded in this case assessment u/s. 153A can be made only on the basis of incriminating material found during the course of search. 32. Hence, in the background of the aforesaid discussions and precedents, we do not find any infirmity in the order of the Ld. Commissioner of Income Tax (A) on this issue. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s found that the payment was made through bank account and there is no dispute between various debit and credit entries in the bank account, there is no case of any addition. He held that the Assessing Officer has made only general observation and totally disregarded the bank statement which was placed on record. Hence, Ld. Commissioner of Income Tax (A) deleted the addition. 38. Against the above order the Revenue is in appeal before us. 39. We have heard the rival contentions. Ld. Departmental Representative argued that assessee has not at all been able to produce the evidence regarding the source of investment of Rs. 13,30,000/-. Accordingly, he placed reliance upon the order of the Assessing Officer and pleaded that the addition may be sustained. Ld. Counsel of the assessee in this regard has submitted that the addition is not based on any incriminating material. There is no case of abatement of original assessment proceedings or incriminating material and as such the whole basis of addition is illegal and without jurisdiction. Furthermore, Ld. Counsel of the assessee placed reliance upon the Order of the Special Bench in the case of All Cargo Global Logistics Ltd. (Supra). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the lay out plan of Lok Sevak Cooperative House Building Society Ltd. and the same was reconstructed before acquiring by the assessee. 2. The Valuation Officer has compared the cost of land with the property E-10, Saket, New Delhi which is situated on M.B. Road and the property at E-10 is on a prime location. 3. The assessee has also quoted the provisions of the Delhi Stamp (Preventive of under Valuation of Instruments), Rules, 2007. 4. The assessee has argued that the valuer's report is after all, a statistical hypothesis that leaves wide room for error on either side quoting from certain case laws. 5. The assessee is also argued that the department valuer has not considered the fact of reconstruction of the property, and the property at Saket is on 50% more prime location than the assessee's property. The above submissions were not accepted by the Assessing Officer. The Assessing Officer gave the following reasons for the same.:- 1. The reconstruction of the property has nothing to do with the determination of land value. 2. The land and building method adopted by the Valuation Officer is the correct method and the value arrived at therein is based on establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or material regarding under hand consideration, or any dispute in respect of genuineness and correctness of sale consideration. That the Assessing Officer has merely made the addition on notional basis. That the property was purchased through registered sale deed and in the absence of any under hand consideration for the purchase of property, it was not incumbent upon the Assessing Officer to consider any addition u/s. 69 of the I.T. Act. 45. Considering the above, Ld. Commissioner of Income Tax (A) observed that legal principles in support of the above said proposition is well established, as per the reference made to various case laws by the assessee. Ld. Commissioner of Income Tax (A) opined that in respect of transactions relating to purchase and sale of property, there is no requirement for any reference to Valuation Cell, as the addition has been made on the basis of actual sale consideration. Accordingly, Ld. Commissioner of Income Tax (A) held that there is no case for addition of Rs. 15,36,000/-. 46. Against the above order the Revenue is in appeal before us. 47. Ld. Departmental Representative submitted that the addition in this case has been made upon the valuati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is correct in this regard. Addition in this case has been made pursuant to search on the basis of Valuation Report of the DVO. It has been settled that in case of search in the absence of any incriminating material found during search, no addition can be made on the basis of Report of the DVO. In this regard, the case laws referred by the assessee are germane and support the case of the assessee. We may further refer to the following case laws:- a) C.I.T. vs. Abhinav Kumar Mittal [2013] 351 ITR 20 (DHC) Held, dismissing the appeal, that there was no material found in the search and seizure operations, which would justify the Assessing Officer's action in referring the matter of the District Valuation Officer for his opinion on valuation of the properties. Therefore, the valuation arrived at by the District Valuation Officer would be of no consequence. In any event, the Tribunal had also, on facts, held that the District Valuation Officer's valuation was based on incomparable sales, which is not permissible in law. b) C.I.T. vs. Mahesh Kumar (2011) 196 Taxman 415 (DHC) Where no evidence could be gathered that assessee had invested more than value declared in registered sale ..... X X X X Extracts X X X X X X X X Extracts X X X X
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