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TMI Blog2014 (11) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... ated cost of construction of the building - the total investment in the hospital building was adopted by the AO which was reflected in the books of account maintained for AY 2007-08 and it did not take into consideration the expenditure incurred by the assessee for the period from 01.04.2007 upto the date of survey - CIT(A) considered the report of a Government Approved Valuer and compared the value estimated by him with the cost of construction recorded in the books of account - The CIT(A) correctly noted that the difference between the two figures was insignificant, which cannot be ruled-out because valuation report is ostensibly only an estimation - the CIT(A) was justified in deleting the addition made by the AO – Decided against revenue. Unexplained investment in interior decoration – Held that:- The CIT(A) made no mistake in sustaining the addition on account of unexplained money spent on furniture, fixture and interior decoration - The explanation furnished by the assessee in the course of assessment proceedings has been aptly considered by the CIT(A) and found to be incorrect – there was no reason to interfere with his conclusion on this aspect – Decided against assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, on 13.05.2009 assessee furnished a written communication to the Assessing Officer retracting from the declaration of additional income made in the survey action on the ground that he was under tension at the time of survey; that the valuation of the hospital building made at the time of survey was on a higher side; that the building was incomplete on the date of survey; and, even the expenditure recorded in the books was not considered as the books of account were incomplete on the date of survey, etc.. Subsequently, the return of income for assessment year 2009-10 was also filed on 05.02.2010 wherein the additional income on account of unexplained investment made in the hospital building was also not offered as income. The Assessing Officer, however, added to the returned income a sum of ₹ 36,30,082/- declared by the assessee in the construction of3 hospital building as income of the assessee. 5. Assessee challenged the order of the Assessing Officer before the CIT(A) on law as well as on facts. The assessee pointed out that the declaration made at the time of survey on account of unaccounted investment in hospital building was based on a valuation made by one, Shri M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re. It is also observed that the cost of construction considered by Shri Dhere was the then prevailing market rates as on the date of valuation, thus, his valuation report connotes the 'current market value' of the building as on the date of preparation of valuation report and not the 'cost of construction' actually incurred by the appellant from time to time from 20/12/2004 to 20/02/2009. In his report dt. 20/02/2009, Shri Dhere has started his report with the sentence As per instructions, I inspected the property owner Dr. Sou Sanjivani Vikas Satre (Deshmukh) Dr. Vikas Ananda Satre (Deshmukh) for the purpose of assigning its present value ., . This sentence clearly indicates the fact that the valuation was made for estimating the present value of the building and not to estimate the cost of construction of the building. Whereas, the valuation report of Shri Ajit Patil, who is a Government Approved Valuer, has specified various details required for valuation. He has estimated the floor-wise cost of construction ranging from ₹ 550/- to ₹ 700/- per sq. ft. built up area, which was prevalent during the period of construction from the year 2004 to 2009. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional income declared in the course of survey was not based on any substantive material and was devoid of any factual support. The learned counsel has also referred to the Paper Book filed which, inter-alia, contains the valuation report of one, Shri Madhukar Dhere, which has been relied upon by the Assessing Officer to justify the impugned addition as well as the report of Shri Ajit Patil, a Government Approved Valuer. By referring to both the valuation reports, it is sought to be pointed out that the report of Shri Madhukar Dhere is unacceptable inasmuch as it does not even give the basis of the estimation. Moreover, according to the learned counsel, the said report refers to the value of construction at current rate meaning thereby that the rate adopted is for 20th February, 2009 and not with respect to the period in which the construction of the building has been actually undertaken. In sum and substance, the plea of the learned Representative for the respondent-assessee is that, the CIT(A) made not mistake in holding that the addition of ₹ 36,30,082/- is unsustainable. 9. We have carefully considered the rival submissions. The findings of the CIT(A), which we have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il, a Government Approved Valuer, who estimated the cost of construction of the building at ₹ 85,46,575/-. The CIT(A) conside7re d the said report of a Government Approved Valuer and compared the value estimated by him with the cost of construction recorded in the books of account. The CIT(A), in our view, correctly noted that the difference between the two figures was insignificant, which cannot be ruled-out because valuation report is ostensibly only an estimation. Considering the aforesaid, in our view, the CIT(A) was justified in deleting the addition of ₹ 36,30,082/- made by the Assessing Officer. The order of the CIT(A) is hereby affirmed and accordingly, Revenue fails in its appeal. 10. Now, we may take-up the appeal of the assessee wherein the following Grounds of Appeal have been raised by the assessee :- 1.1 The learned Commissioner of Income-tax (Appeals), Kolhapur [ the ld. CIT(A)] erred in partly confirming the action of the Income Tax Officer, Ward 2(2), Sangli ( the A.O. ) and making an addition of ₹ 15,210/- u/s 69 of the Income Tax Act, 1961 [ the Act ] being the difference in the amount found during the survey action and the cash balance a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he answer to question no. 3 of the statement recorded during the course of survey action that the hospital was run from a rented premises situated at Omkar colony , Peth-Sangli Road, A/P Islampur, Tal. Walva, Dist. Sangli. From the valuation report, it is seen that a new hospital building is being constructed, which is situated at Gat No.80, Plot No.13/A, 13/B, At Islampur, Tal. Walwa, Dist. Sangli. From the answer to question no.15 of the statement recorded during the course of survey, it is seen that the declaration of ₹ 3 lakhs was given for interior decoration, furniture and fixtures of the new hospital building. From the copy of the Bill of Janak Health Care Pvt. Ltd. dt. 13/10/2008 furnished by the appellant, it is seen the address mentioned on the said bill is of hospital of the appellant situated at Peth-Sangli Road, i.e. at the hospital situated at the rented premises. Now, the declaration of ₹ 3 lakhs given by the appellant was in respect of Interior decoration, furniture and fixtures etc. of the new hospital building, whereas it is clear from th9e bill of Janak Healthcare Pvt. Ltd. that the said bill of ₹ 4,68,246/- was in respect of purchase of Beds, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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