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TMI Blog2013 (5) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... justify his conclusion that the average rate of Rs.177/- sq ft was very low. AO has estimated the cost of construction at Rs.210/ sq. ft. without justifying its basis. CIT(A) has given a finding that the inference drawn by the AO was based on suspicion, conjectures and surmises. Revenue has not placed any material in support of the findings of AO. Nothing is on record to justify the conclusion of CIT(A) that the rate adopted by Assessee was also not correct. It is a fact that Assessee has constructed the shops and incurred cost for its construction and without incurring the cost the Assessee could not have completed the shop for its sale. It is also a fact that the estimate made by the assessee of Rs. 133/ sq. ft. has been held to be two l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to furnish details and explain the discrepancy in response to which the Assessee inter alia replied that there was no discrepancy and the amount of Rs.22,29,498/- is wrongly taken and requested the Assessing Officer to drop the reassessment proceedings. The Assessing Officer did not accept the contentions of Assessee. From the details on record he found that Assessee had constructed total area of 33,722 sq feet (comprising of basement parking and various floors) in Hilton Plaza. He also noticed that the total cost of work done till 31.3.2002 as per the books of accounts was Rs.59,71,068/-. In the absence of details of different stages work, the Assessing Officer worked out the cost of construction per sq. ft. at Rs.177/- by dividing the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tures and surmises. The Assessing Officer is bound by the principles of natural justice. He cannot draw his inferences on the basis of suspicion, conjectures and surmises. Suspicion, howsoever strong, cannot take place of material in support of findings of the Assessing Officer. The Assessing Officer should act in a judicial manner, proceed with a judicial spirit and come to a judicial conclusion. While recognizing that the Assessing Officer is not fettered by technical rules of evidence, the Supreme Court laid down as early as in the case of Dhakeshwari Cotton Mills Ltd. V. CIT [1954] 26 ITR 775, that the Assessing Officer has to act fairly as a reasonable person and not arbitrarily or capriciously. An assessment based on no material at al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer. 7. On the other hand, the Ld. A.R. submitted that the Assessing Officer neither stated any reason nor produced any evidence to show that the cost of construction of Rs.177/sq.ft. was very low. He further submitted that the Assessing Officer was not a technical person or an expert to decide the cost of construction of Rs 177/ sq. ft was very low. The Ld. A.R. further submitted that the contract of construction was given to M/s. M.D. Corporation with material except cement and reinforcement. The bills of the contractor were accounted for in the books of accounts and no discrepancy was found in them. He thus submitted that the addition has been made by the Assessing Officer on assumption and was not backed by any tangible mate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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