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TMI Blog2021 (9) TMI 1220X X X X Extracts X X X X X X X X Extracts X X X X ..... - 07 2. ITA No. 2479/Del/2017 is filed by the assessee for Assessment Year 2006-07 against the order passed by the ld CIT(A)-35, New Delhi dated 23.02.2017, wherein, the ld CIT(A) passed a common order for Assessment Year 2006-07 and 2008-09. 3. The ground of appeal raised by the assessee are as under:- "1) THAT in the facts and circumstances of the case, the Learned CIT(A) erred in confirming the decision of the Learned A.O. in initiating proceedings u/s 153C. 2) THAT in the facts and circumstances of the case, the Learned CIT(A) erred in confirming the decision of the Learned A.O. in initiating proceedings u/s 153 A. 3) THAT in the facts and circumstances of the case, the Learned CIT(A) erred in confirming the decision of the Learned A.O. to refer the matter to seek opinion of the Valuation Department regarding the Cost of acquisition of land by appellant. 4) THAT in the facts and circumstances of the case, the Learned CIT(A) erred in confirming the decision of the Learned A.O. to refer the matter to seek opinion of the Valuation Department regarding the cost of construction of residential house by the appellant 5) THAT in the facts and circumstances of the case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of appellant's spouse, Shri Madan Kukreja. 15) THAT in the facts and circumstances of the case, the Learned CIT (A) erred in confirming the addition of Rs. 1,11,71,941/- made by Learned A.O. 16) THAT the appellant craves leave to add, alter, amend or drop any of the above grounds at the time of hearing." 4. The fact shows that on 10.11.2010 search was carried out at the residence of one Shri Madan Kukreja. Search warrant was also in the name of Madan Kukreja. Some jewellery and cash were found. Cash of Rs. 15.50 lakhs were seized. No seizure of the jewellery was made. Certain loose papers were also found and Panchanma were prepared in the name of Madan Kukreja. 5. For Assessment Year 2006-07 the assessee filed original return on 28.07.2006 and income declared of Rs. 43,230/-. Subsequently, on conclusion of search on 11.11.2010 certain book of account and cash was seized. The assessee was issued a notice u/s 153A on 08.02.2013. The assessment u/s 153A was passed wherein, there were an addition of Rs. 1,10,67,000/- on account of difference in the purchase of land during the year as well as a minor addition with respect to the construction cost of the house property.. The to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s situated. The assessee also contested that the self supervision deduction in the cost of construction is also not granted. The ld CIT(A) rejected all these arguments except with case of minor reduction for self supervision, she upheld the addition. Against this, the assessee is in appeal before us. 9. The ld AR raised following arguments that Search took place on 10.11.2010, Assessment Year 2006-07 is concluded assessment, no incriminating material has been found during the course of search and therefore, no addition can be made in the hands of the assessee. He relied on the decision of the Hon'ble Delhi High Court in CIT Vs. Kabul Chawla 380 ITR 573. He stated that the statement u/s 132(4) couldn't constitute an incriminating material in absence of any corroborative evidence. 10. On merits, The addition based on the DVO's report cannot be sustained, and The reference to the DVO without finding an infirmity in the cost of construction and land acquisition cost disclosed by the assessee. Coming to the merits of the addition based on the report of the District valuation officer, He further pointed out several infirmities in the valuation report. Even otherwise he submitted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year was a concluded assessment. Same could have been only disturbed if there would have been any incriminating material found during the course of search. In the order of the ld AO as well as the ld CIT(A), we do not find that any incriminating material found during the course of search which even remotely shown that assessee has made a payment beyond what is recorded in her books of account for purchase of land and shown in the purchase deed of the property. The total addition of Rs. 1,10,67,000/- is made by the ld AO based on the report of the DVO. Further, the addition on account of cost of construction was also made on the basis of estimation of DVO determining the cost of construction. The Hon'ble Delhi High Court in CIT Vs. Kabul Chawla 380 ITR 573 categorically stated that in concluded assessment no addition could have been made in the hands of the assessee in absence of any incriminating material found during the course of search. The ld CIT(A) also called for remand report where the ld AO records that no incriminating material was found during the course of search. In view of this, as per ratio laid down by the Hon'ble Delhi High Court, we delete the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return in normal course is concerned was not examined either in Kabul Chawla (supra) or Indu Lata Rangwala (supra). As notice by the Punjab & Haryana High Court in Vipan Khanna (supra), the CBDT circular makes it abundantly clear that once an Assessee does not receive a notice under Section 143(2) of the Act within the period stipulated then such an Assessee "can take it that the return filed by him has become final and no scrutiny proceedings are to be started in respect of that return." 22. The inevitable conclusion, therefore, in the present case, is that the ITAT was in error in holding that the assessment for AY 2008-09 should be treated as 'pending' whereas in terms of the above CBDT circular it should be treated as final in respect of which no scrutiny are to be started. 19. Thus it is apparent that on the date of search i.e. 10/11/2010, no notice u/s 143 (2) of the act was issued to the assessee before the expiry of the time available for issue of such notice, therefore, the assessment for assessment year 2007 - 08 was a concluded assessment and could have been disturbed only on the basis of the incriminating material found during the course of search. 20. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by 30/9/2010. The search took place on 10/11/2010. 28. The learned assessing officer issued notice u/s 153A of the act on 8/2/2013. The assessment order u/s 153A was passed on 28.03.2013 pursuant to search dated 10.11.2010 wherein, the addition of Rs. 15,03,474/- was made on account of cost of construction or house repair based on the report of DVO. 29. The ld CIT(A) confirmed the above addition. 30. As the assessee has filed return of income on 11.07.2009, the time limit for issuance of notice u/s 132 expired on 30.09.2010 and the search took place on 10.11.2010 therefore those assessment year also is concluded assessment which could have been disturbed by the ld AO only on account of any incriminating material found during the course of search. Admittedly, the addition has been made by the ld AO merely on the basis of the valuation report of DVO therefore, in this assessment year the addition has been made by the ld AO and confirmed by the ld CIT(A) deserves to be deleted. Accordingly, appeal of the assessee for Assessment Year 2009-10 for the reason given by us for Assessment Year 2006-07 and 2008-09 the appeal of the assessee is allowed. Assessment Year 2010-11 31. ITA 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rried out. 13. THAT the Report of the Valuation Officer suffers from serious infirmities including non-consideration of factum of construction of premises under self supervision by assessee. 14. THAT the CIT(A) erred in allowing Self Supervision allowance only to the extent of 5% of the cost of construction. 15. THAT the CIT(A) erred in confirming the A.O/Valuation Officer view that expenditure had been incurred on horticulture of Rs. 2,00,000/-. 16. THAT the CIT(A) erred in not considering rates of purchase of marble paid by appellant, but confirmed the application of arbitrary rates for purchase of marble, other items. 17. THAT the CIT(A) erred in confirming the action of the DVO/A.O/ in not considering the amount of expenditure on the acquisition of Generator by company in which assessee's spouse is director. 18. THAT in the facts and circumstances of the case, the Learned CIT (A) erred in confirming the decision of the Learned A.O. in not considering the factum of money for acquisition/construction of residential house has been made through receipts from the appellant's spouse, Shri Madan Kukreja. 19. THAT in the facts and circumstances of the case, the Lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uation Officer. The property was inspected on 8 February 2013. There is no purchase of land during this assessment year and therefore the issue with respect to only cost of construction is required to be examined. The assessee has disclosed the total construction cost of Rs. 148,42,836/-. Before the District valuation, Officer assessee submitted valuation report of its registered valuer who has calculated the construction cost of the building based on length area rate, which was rejected. The learned DVO calculated the plinth area rate is based on CP WD PAR 1959 and duly enhanced with the cost index. The respective rate for other miscellaneous items was also included. The learned assessing officer determine the cost of construction of buildings spread over in six different years at Rs. 1 96,37,000/-. The assessee has pointed out several infirmities and one of the glaring mistakes that was pointed out by the assessee that the generator valued at Rs. 5 lakhs was included in the cost of construction whereas the assessee purchased an old generator and bill was also submitted before the lower authorities for the reference where the actual cost was only Rs. 402,000. The assessee also obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of appellate proceedings before the learned CIT - A, remand report was submitted by the AO on 15/7/2015 wherein para number 2.2 it was specifically stated that the reference to the valuation Officer for determining the cost of construction was made only on the basis that some substantial repair and alteration work was being carried out by the assessee at the time of search. Therefore, it is apparent that reference to learned DVO was made without first verifying the cost of construction shown by the assessee and without first making a specific observation that assessing officer does not have any confidence in the cost of construction submitted by the assessee. Unless the assessee is found to have incurred some additional expenditure which are not recorded in the books of accounts or for which source of withdrawal from the bank or the cash available with the assessee is found to be not reliable, then only the learned assessing officer would have been justified in referring the matter to the learned DVO. This is also the dictum of the decision relied upon by the learned authorised representative. 35. In view of the above-encompassed facts collectively, we do not find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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