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TMI Blog2013 (9) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... the block assessments made determining the income at Rs.66,57,070/- as against the declared income of Rs.13,94,576/- is illegal, arbitrary and against the provisions of the Act hence such order passed is a nullify. 3. That in any view of the matter the Commissioner of Income Tax (Appeal) was highly unjustified and incorrect in confirming the major additions under various heads without considering the facts/submissions, evidences and law on the point in issue and allowing only a negligible relief under the head house hold expenses. In this way his order is not a judicious and valid order in the eyes of law. 4. That in any view of the matter the two lower authorities were wrong in ignoring the legal issues raised before them by challenging the validity of the assessment, hence their orders are liable to be quashed. 5. That in any view of the matter addition of Rs.10,48,000/- made by the Assessing Officer on the basis of cash-flow Statement furnished by the appellant during the course of assessment proceeding is highly unjustified and wrong because it was made by ignoring opening cash balance as on 01.04.2008 whereas the closing balance as on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port who applied higher rate of materials and labour charges etc. when the property was constructed at Sahson which is far away for the Allahabad City where labours and building materials were available on cheaper rates, hence reference to the DVO under section 142A of the Act was not proper and based on the DVO's report the addition of Rs.38,77,589/- as made by the Assessing Officer and confirmed by the Commissioner of Income Tax (Appeal) by invoking the provisions of Section 69 of the Act is highly unjustified and illegal in the facts and circumstances of the case. 11. That in any view of the matter the findings and observations of the two lower authorities for making and maintaining the addition of Rs.38,77,589/- simply on the basis of DVO's report and also by ignoring the case laws cited before them are also general, vague and casual, hence the entire actions of two lower authorities are nothing but a non-judicious action therefore the addition is liable to be deleted. 12. That in any view of the matter the addition of Rs.155000/- by alleging investment in furniture etc. as made by the Assessing Officer based on her own presumptions, surmises and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total Cash In Flow 1199100.00 Less : House Hold Expenses in Cash 80000.00 House Hold Expenses through ICICI Bank A/c No.62801522097 2100.00 Investment in Building at Sahson, in cash 1550000.00 Cash deposit to Firm - Kesarwani Zarda Bhandar 600000.00 Cash deposit in Bank - ICICI Bank A/c No. 62801522097 15000.00 Total Cash out Flow 2247100.00 Closing Balance 37,231.00 (2) As per Assessing Officer Cash Flow Chart redrawn by the A.O. at page 2 of the order (and 17) Particulars Availability of Balance Cash Opening Balance (as discussed above) under Dispute NIL Add : Withdrawal from Bank - Allahabad Bank S/B A/C No.115551 1197000.00 Withdrawal from Bank - ICICI Bank A/c No.62801522097 2100.00 Total Cash inflow 1199100.00 Less : House Hold Expenses in Cash 80000.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rized Representative submitted that the cash flow statement submitted before A.O. was based on assessee's withdrawal from the firms and his respective Bank accounts. The ld. Authorized Representative submitted that the A.O. has accepted the inflow and outflow of the cash, only he doubted the opening balance shown in the cash flow statement. The ld. Authorized Representative submitted that Revenue Authorities accepted the cash flow statement for 363 days but he doubted only two days i.e. 1st April and 31st March of each year. He further submitted that during the course of search operation, no documents or loose papers were found indicating that heavy expenditures which were not recorded. The ld. Authorized Representative submitted that the assessee's family consists of himself, his wife and one minor child. The assessee has furnished the position of income as well as his mother's income as she was assessed to tax. The details furnished by the assessee at page nos. 23&24 of assessee paper book is reproduced as below :- (Page Nos.23&24, paper Book) "Chart showing declared income by the appellant during the block period in the case of Praveen Kumar Kesarwani C/o Kesarwani Sheetalaya, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. D.R., on the other hand, relied upon the order of the CIT(A). 9. We have heard ld. Representatives of the parties and records perused. We noticed that during the course of search no incriminating documents were found relating to the fact that assessee was not having cash balances. The ld. CIT(A) confirmed the addition merely on the basis that the assessee never filed capital account showing for each of the cash balances. We noticed that assessee has furnished sufficient material including income of the various years of assessee as well as assessee's mother which sufficiently proves that the assessee must have opening balances. The assessee furnished cash flow statement for earlier year also i.e. A.Ys.2004-05 to 2010-11 of which copy has been placed in assessee paper book Page No.29 onwards. The cash flow of the earlier years clearly show that the assessee was having such an opening balances. The assessee discharged the burden regarding cash balances shown in the cash flow statement by furnishing total income and earning in earlier years and furnishing cash flow statements from A.Y.2004-05 onwards. The finding of the CIT(A) is contrary to the finding of the facts as the A.O. h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubstantial agricultural income and produce. The assessee is widow mother, who is a separate income tax payer since long, also resides with the assessee and she has also been withdrawing for household expenses. If we consider the assessee's submission, the household expenses cannot be made merely on the basis of presumption that the assessee has incurred expenses and has shown lesser amount. In the absence of material, particularly under the circumstances where the assessee has satisfactorily explained the household expenses shown by the assessee, in the light of these facts, we find that the CIT(A) is not correct in sustaining the addition of Rs.97,900/-. We therefore, delete the said addition of Rs.97,900/- sustained by the ld. CIT(A). In other words, the entire addition of Rs.1,81,900/- made by the A.O. on account of household expenses is deleted. 13. The grounds raised in Grounds No. 9 to 11 are pertaining to addition of Rs.38,77,589/- made by the A.O. by alleging undisclosed investment on the basis of DVO's report. 14. The brief facts of the case are that the search and seizure operation under Section 132(1) of the I.T. Act was carried out on 27.08.2009 in the group cases of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.9,87,296/- (Rs.75,11,296 by Valuation Officer Rs. 65,24,000/- shown by assessee i.e. difference of amount of valuation between Valuation Officer and assessee before F.Y. 2003-04 relevant to the A.Y. 2004-05) was excluded as difference before block period. Remaining amount of Rs.69,33,510/- includes Rs.10,76,704/- difference of amount on Valuation Officer and assessee for the F.Y.2003-04 and 2004-05. Balance difference comes to Rs.58,56,806/- difference of amount belongs to the A.Y.2009-10 and 2010-11. Share of assessee as per his ratio of investment comes to Rs.38,77,589/- for the year under consideration. The A.O. noticed that during the year under consideration, total investment for construction in the above property have been shown by all the co-owners at Rs.35,31,000/- before the Valuation Officer whereas share of investment of the assessee comes to Rs.38,77,589/- as per DVO's report for the year under consideration. The A.O. made addition of Rs.38,77,589/- under Section 69 of the I.T. Act. The CIT(A) confirmed the addition as under :- (CIT(A) Page Nos. 19 to 23) "I have gone through the order of the Assessing Officer, who reports of the DVO and the submission o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er consideration only two persons had made the investment namely Sri Praveen Kumar Kesarwani and Urmila Devi. The Assessing Officer has taken the ratio of unexplained cost of construction which is available in the sheet reflecting the investments made by the family members in different financial years. The appellant has made exclusive submission on the earlier report of the DVO as per which there remains the difference of Rs.9,99,500/-. Referring to this report the appellant also stated that if deduction for self supervision @ 10% is allowed. And if the difference comes down below 10% there would not be any addition. But I have already held that earlier report of the DVO was not correct and justified. I have before me the issue of determination of cost of construction during F.Y.2008-09 relevant for A.Y.2009-10. The construction in this particular financial year is not denied by the assessee as is evident from the chart showing the cost of the construction by him during the financial year under consideration. The appellant's another objection is that the A.O. has taken the report of the DVO as gospel truth. In this connection, it is to be understood that the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he DVO and the A.O. The correct course of action with the appellant, if it thought that the investment recorded in the books by it are correct, it should have produced the relevant bills & vouchers against each alleged higher estimate by the DVO. The DVO has adopted the prescribed norms fixed by the CBDT and has also followed sound engineering practice. The A.O. has taken into account all these material facts. The appellant has referred to various case laws claiming them to be in its favour. But I note that the facts of the assessee are different from all the case laws cited by the assessee. I am also of the considered view that the A.O. has followed correct method and procedure for making the addition. Hence, the above grounds of the appellant are dismissed. In the light of above discussion, the addition made by the A.O. is confirmed and related grounds taken by the appellant are dismissed." 15. The ld. Authorized Representative submitted that the DVO has submitted two valuation reports. As per the first report dated 20.09.2011 which was based on physical inspection of the property on 13.09.2011, the DVO has estimated the cost of construction of property for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is about 6% higher in comparison to UPPWD rates. 18. The ld. D.R., on the other hand, relied upon the order of the CIT(A). 19. We have heard ld. Representatives of the parties and records perused. The admitted facts of the case are that the assessee is one of the co-owners of the building. The construction was carried out jointly by all the co-owners. The construction of the building was carried out from F.Y. 1999-2000 to F.Y. 2004-05. The DVO has furnished two reports of valuation. The DVO while submitting the second report estimated cost of Rs.1,30,30,085/- and clearly stated that the value determined by interpolation of cost index which is not in accordance with provisions of Section 142A of the Act. This fact has been pointed out to the A.O. by the DVO vide his letter dated 7.10.2011 from page no.50 of the assessee's paper book. A copy of said letter/valuation report which is reproduced as under :- (Page No.50, Paper book) "To, The Deputy Commissioner of Income Tax Central Circle, I.T. Deptt. Allahabad. Sub:- Estimating cost of investment in the property in the name of Praveen Kumar Kesarwani-Regarding. &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t rates of material and labour etc. were considered but the same was rejected by the CIT(A) stating reason that the assessee did not furnish any evidence in this regard. But the fact is that material and labour rates prescribed in CPWD, the rates are higher than the local PWD or local area rates, therefore, there is substance in making objection of DVO's report by the assessee. The total investment made by all the co-owners furnished by ld. Authorized Representative is reproduced as below :- (Page Nos. 10 & 11, Paper Book) YEAR WISE BREAKUP INVESTMENT IN HOUSE PROPERTY SITAUTED AT SAHSON, ALLAHABAD IN THE CASE OF PRAVEEN KUAR KESARWANI & OTHER A.Y. AMOUNT 2000-2001 4,27,000/- 2001-2002 8,35,000/- 2002-2003 9,88,000/- 2003-2004 12,37,000/- 2004-2005 13,75,000/- 2008-2009 17,08,000/- 2009-2010 20,50,000/- 2010-2011 10,50,000/- TOTAL 96,70,000/- 21. The Revenue has failed to point out that the building owned by co-owners and what steps have been taken in case of the co-owners whether any addition is made or not. The Revenue has failed to point out any information in this regard. After considering the totality of the facts of the case, we are of the considered vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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