9911796707
TMI Blog2024 (11) TMI 1189X X X X Extracts X X X X X X X X Extracts X X X X ..... y, the appellant succeeds on this issue in these terms. Bench further noted that CIT(A) considered the submission and allowed the ground of the assessee. Further, it is noticed that ld. CIT(A) after considering the assessment order, documents and judgments placed on record, remand report and submissions of the assessee passed a detailed and reasoned order. Moreover, the department has merely challenged the quantum addition and not decision of the ld. CIT(A) with respect to allowance of legal ground no. 1 of the assessee in Form No. 35 wherein the legal ground as to challenging the assessment order as time barred and without jurisdiction was decided by the learned CIT(A) in favour of the assessee - Ground No. 1 raised by the revenue is dismissed. Undisclosed income from Garden Mahaveer Paradise - CIT(A) after considering the assessment order, documents and judgments on record, remand report and submissions of the assessee passed a detailed and reasoned order wherein we find no reason to interfere in his order. In this view of the matter, the Ground No. 2 of the Department is dismissed. Unexplained investment u/s 69 in respect of construction of residential house property - Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are concerned, these are duly recorded and declared by the assessee as construction investment. These are in the nature of material and not incriminating material. Each and every material found during search cannot be treated as incriminating. The assessing authorities nowhere pointed out any specific bill / document which was not declared by the assessee. CIT(A) duly considered all submissions, judgments, material on record, AO s remand report and allowed the appeal of the assessee by passing a detailed and reasoned order. - Dr. S. Seethalakshmi, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Assessee : Shri Tanju Agarwal Advocate For the Revenue : Shri Ajey Malik, CITa-DR ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM The Department has filed the captioned appeals against two different orders of the ld. Commissioner of Income Tax, Appeals-4, Jaipur [ for short ld. CIT(A) ] dated 29-01-2024. Even assessee also preferred Cross objections to the appeal so filed by the revenue against the same order of the ld. CIT(A). The grounds of appeal filed by the respective parties as to the appeal of the Revenue and C.O. of the assessee are mentioned here in below :- ITA NO.469/JP/2024 A.Y. 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts depicting the actual rate of booking per day were found and seized from the premises of the assessee, Furthermore, the CIT(A) erred in not appreciating the statements of the employees regarding booking of the garden for different occasions. (3) Whether on facts and in circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of Rs. 1,63,26,661/- made u/s 69 of the Act on account of unexplained investment in construction of residential property in partnership with the firm during the course of search proceedings, incriminating documents regarding investment in construction of building were found and seized from the premises of the assessee and the valuation of building was done by the DVD (4) A Whether on facts and circumstances of the case the 14. CIT(A) is justified in deleting addition made by the AO by relying upon the judgment of Hon'ble Supreme Court in the case of Abhisar Buildwell and UK paint without appreciating the fact that Judgment of Hon'ble Supreme Court in Abhisar Buildwell case is applicable where no incriminating documents on which the additions were made arm found whereas in the instant case, incriminating documents were found and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 132(1) of the Act was carried out on 28-09-2017 at the various premises of Chandalal Kalyanmal (CLKM) Group, Jaipur and the assessee was also covered. The ld. AO issued notice u/s 153A of the Act to the assessee on 21-12-2019, in response to notice, the assessee filed his return of income on 25-12-2019 for the A.Y. 2011-12 declaring a total income at Rs. 71,98,340/-. Finally, the AO completed the assessment vide order dated 30-12-2019 at a total income of Rs. 3,16,92,010/- by making addition of Rs. 1,87,93,585/- on account of unexplained investment in construction of Hotel K Mahaveer, addition of Rs. 39,283/- on account of undisclosed capital gain and a further addition of Rs. 56,60,800/- on account of undisclosed income of lawnGarden booking- Garden Mahaveer Paradise. 3.2 Apropos Ground No. 1 of the Department, it is noticed from the order of the ld. CIT(A) who vide para 6 to para 6.1 has discussed the issue in detail and allowed the Ground of the assessee in para 6.2 of his order by observing as under:- 6.2 I have considered the facts of the case and written submissions of the appellant as against the observations findings of the AO in the assessment order for the year under co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice u/s 153A of the Act was issued to the assessee on 21.12.2019 and assessment was completed u/s 153A/143(3) of the Act on 30.12.2012 making addition on account of undisclosed investment in construction of hotel and on account of undisclosed income from garden Mahaveer Paradise. Thus, it is clear that notice u/s 153A of the Act was issued after finding the discrepancy between the amount of investment mentioned in seized data and in regular books. Therefore, the judgement of Hon'ble Supreme Court in the case of Abhisar Buildwell and UK paint is squarely not applicable in the case of the assessee. 2. On verification of documents seized during the search proceedings, it was gathered that the assessee has made huge investment in hotel construction which is not declared in the regular books(copy enclosed). Details of such documents are as under:- Address of the premise Exhibit No. Page No. Description 33-34, Gopal Gopalpura Shree Nagar, Bye pass, Jaipur AS-12 16 to 18 Draft sale deed of Hotel K Mahaveer AS-12 1 2 Specification of hotel K Mahaveer regarding land, building and furniture AS-11 27 to 26 Copy of Ikrarnama of Hotel K Mahaveer AS-7 21-27 Copy of draft sale deed of Hote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord. The brief facts in this case are that the assessee is a family member in Chandalal Kalyanmal group engaged in the business of wholesale as well as retail trade of timber, ply-boards, laminated sheets, teak wood etc. Search and seizure operations were carried out on 28.09.2017 at various premises of Chandalal Kalyanmal (CLKM) group. Copies of return of income filed by the applicant assessee and relied upon valuation report were furnished at paper book page no. 3 to 58.The AO made certain additions by passing assessment order u/s 143(3) read with section 153A of the Income-tax Act, 1961, without quoting DIN (Document Identification Number). It is noted that the AO issued notices u/s 153A for the AY 2012-13 to AY 2018-19 in 2018. It is also noticed that at fag end of the assessment proceedings, notices u/s 153A for AY 2010-11 and AY 2011-12 were also issued against which the assessee filed objections and reply but the AO proceeded ahead and framed the assessment directly without disposing off the objections by a separate speaking order. Even DIN was not quoted in the assessment order. In the hands of the assessee, an addition was made with regard to unexplained investment in cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 153A for allegation of escapement of income should have been issued to that partnership firm and not to the assessee who is merely a partner in that firm. Hence, the notice issued u/s 153A in the case of the assessee partner is illegal and time barred as the asset represented in the form of construction of Hotel K. Mahaveer building pertains to separate legal assessee M/s Kalyan Hotels Resorts [ AAJFK7695L ] and not to the assessee and this fact was also brought to the notice of the AO by way of objections raised during the assessment proceedings but the AO failed to consider the same while framing the assessment and the AO remand report is also silent on this issue. As is evident that the dispute is related to the assessment year 2011-12. Search was carried out on 28-09-2017 and the addition disputed by the revenue is based on the valuation report and that of the extrapolation of the revenue of Lawn-Garden. 3.7 As regards the quantum addition amounting to Rs. 1,87,93,584/- under section 69 as unexplained investment in construction in respect of construction of hotel property Hotel K. Mahaveer in the partnership firm M/s Kalyan Hotel And Resorts at Dr. Rajendra Prasad Nagar, Jai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at no incriminating material was found during search operations in respect of the construction of house property as is also evident from the assessment order passed u/s 153A wherein there is no mention about any incriminating material found for the relevant assessment year even no mention in the AO remand report. 2. SECOND REASON : NO ADDITION SOLELY ON THE BASIS OF DVO VALUATION REPORT AS IT IS MERE AN ESTIMATION/OPINION : It is now a settled law that no addition can be made solely on the basis of DVO Valuation report as it is mere an estimation and mere an opinion of a person. In this regard, reliance is being placed on the judgment of Hon ble Gujarat High Court in the case of PCIT Vs. J. Upendra Constructions Pvt. Ltd. in Civil Appeal No. 173-176/2015 decided on 30.03.2015 wherein at para no. 4.1 5 it was held that as under :- 4.1 At the outset, it is required to be noted that in the present case, the Assessing Officer made additions with respect to the difference in the cost of construction based upon and/or relying upon the DVO's report in the case of one M/s.Manjusha Estate Pvt.Ltd. from whom, the assessee subsequently got the project. It is true that in the present case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is well conversant with various construction persons/business viz. Architects, Builders, Contractors, Carpenters, Other Construction material suppliers etc. As a result, the assessee has taken good advantage of his contacts in construction line, material goods as well as construction services, resulting in further reduction in construction costs to a significant extent. Hence, it is humbly submitted that the assessee is further able to save around 10% of the construction costs in this regard. 4. FOURTH REASON : CONSTRUCTION ACTIVITY OF HOTEL K. MAHAVEER CARRIED BY SEPARATE ASSESSEE WHEREAS ADDITION MADE IN ASSESSEE HANDS : It is noted that the construction activity and running of Hotel K. Mahaveer was done by separate assessee M/s Kalyan Hotel Resorts having PAN : AAJFK7695L, a partnership firm who is an independent assessee under the Income-tax Act, 1961. This firms runs business activities of Hotel K. Mahaveer after obtaining necessary licenses and earns room rent and other income incidental thereto. The construction was duly recorded in the regular books of account maintained by the partnership firm whose books of accounts were audited. Building was shown in the fixed assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income-tax department u/s 143(3) were completed after due verification. Copy of the assessment orders have been submitted in the paper book at page no. 57 to 72. On the same of set of facts, now income-tax department has taken a different stand which is not permissible under law. It is further noted that the assessee is also partner in other partnership firm M/s Chandalal Kalyanmal (PAN : AABFC2171P) wherein for the AY 2018-19 addition of Rs. 1,52,29,857/- for excess unexplained stock found during survey was made by the same A.O. in the assessment order passed on the same day i.e. on 30.12.2019 u/s 153B/143(3) (copy placed on PB page 383 to 392). On one hand the A.O. made addition for unexplained stock of partnership firm in the hands of the partnership firm itself whereas on the other hand addition for construction in building of partnership firm was made by the ld. A.O. in the hands of one of the partner instead of the partnership firm, which is not justified and it tantamounts to blowing hot and cold at the same time which is not permissible. It seems that the. AO selected one of the partner instead of the partnership firm for issuing notice u/s 153A, keeping aside the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year or years : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years and for the relevant assessment year or years : xxx xxx xxx Relevant part of section 132 of the act Search and seizure. 132. (1) Where the Principal Director General or Director General or Principal Director or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner in consequence of information in his possession, has reason to believe that (a) anyperson to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents; (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search: Provided that bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business; (iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom; (v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing : xxx xxx xxx Relevant part of Rule 112 of the Income-tax Rules'1962 112. (1) The powers of search and seizure under section 132 shall be exercised in accordance with sub-rules (2) to 56 [(14)]. 57 [(2) (a) The authorisation under sub-section (1) of section 132 (other than an authorisation under the proviso thereto) by the 58 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aph 37, which is reproduced below:- Summary of the legal position 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under section 132 of the Act, notice under section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . iv. Although Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade in relation to that year in exercise of power under section 153A of the Act. The reference to the incriminating material in the above decisions of Hon'ble High Court is about incriminating material found as a result of search of the assessee's premises and not of any other assessee. Therefore, on a conjoint noticeable provision of section 153A read with section 132 of the act and the judgment of the Delhi Court, in our considered opinion only the material unearthed during the course of a search by virtue of execution of a particular warrant of authorization qua a person can be used for framing assessment u/s 153A of the act in case of such a person. This view of the Delhi High Court has been confirmed by the apex court in the case of PCIT Vs. Abhisar Buildwell (P) Ltd. [ 149 taxmann.com 399 (SC)] wherein the apex court has held as under: 13. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e search of any other person than the assessee in appeal cannot be considered in the assessment under 153A of the assessee. Even that finding of the ld. CIT(A) in the case of the assessee has been decided in detailed in the appeal of the assessee for A. Y. 2010- 11 wherein the ld. CIT(A) categorically held that if any income on this count, is liable to be assessed in the hands of the partnership firm and accordingly, the appellant succeeds on this issue in these terms. [ page 43 of order of the ld. CIT(A) ]. The Bench further noted that ld.CIT(A) considered the submission and allowed the ground of the assessee which is evident from Para No. 5.2 at page no. 39 of the ld. CIT(A) order for AY 11-12 and corresponding para no. 5.2 at page no. 41 of the ld. CIT(A) order for AY 10-11. Further, it is noticed that ld. CIT(A) after considering the assessment order, documents and judgments placed on record, remand report and submissions of the assessee passed a detailed and reasoned order. Moreover, the department has merely challenged the quantum addition and not decision of the ld. CIT(A) with respect to allowance of legal ground no. 1 of the assessee in Form No. 35 wherein the legal ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced on the judgment of Hon ble Supreme Court in the case of PCIT Vs. Abhisar Buildwell P. Ltd. in Civil Appeal No. 6580 Of 2021 recently decided on 24.04.2023 wherein it was held as under :- i. that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii. all pending assessments/reassessments shall stand abated; iii. in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the total income taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv. in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is garden is not let out by the assessee for earning any income. The first and only booking for which advance was charged was from a person named Hemant which was cancelled by him and the entire advance was refunded to him, resulting in no income. The seized document pertains not to the year under consideration but to the AY 2018-19 (paper book page no. 193) which contains the detail of Mr. Hemant. The booking was cancelled by him for the reasons best known to him. Another name of Mr. Sawariya is appearing on the seized documents. This booking is complementary booking without any rent and relates to Mr. Hoti Lal Sawariya (GST Department). During the assessment proceedings, the assessee requested the ld. AO to exercise her powers under law for verification of facts with Mr. Hemant and Mr. Sawariya but the ld. AO opted not to do so and passed the assessment order by making the impugned additions. Affidavit of Mr. Hoti Lal Sawariya was submitted before learned CIT(A) alongwith application of admission of additional evidence under Rule 46A wherein he has confirmed that the assessee has provided him the garden for his function free of cost on complimentary basis (paper book page no. 393 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which also was unfortunately cancelled and it pertains to AY 2018-19) to other earlier years in which the marriage garden was not functional. It is now a settled law that in case of search assessments, additions has to be made solely on the basis of incriminating material found during search and there is no scope for the AO to extrapolate and estimate undisclosed income. The additions are to be based solely on tangible material and not on the basis of estimation or extrapolation theory. In this regard, reliance is being placed on the following judgments in this regard :- A.Sivashankar Vs. DCIT, ITA No. 617 to 620/CHNY/2017 decided on 31.05.2022 (ITAT, Chennai Bench) (Para 8 9) In this case, except agreement to sale for one plot with Mr.M.A.Salim, the AO does not have any other credible evidence to support his estimation of income by extrapolation of rate on the basis of agreement to sale with Mr.M.A.Salim to remaining plots sold during the block period. In our considered view, the estimation made by the AO towards undisclosed income of under reporting of sales Revenue from sale of plots, is purely a guess work, which is based on the suspicion and surmises, but not based on any m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less there is corroboration by corresponding entry in regular accounts of both the parties to the transaction. . 11. The Hon ble High Court of Delhi in the case of CIT vs. Kulwant Rai (163 Taxman 585; 13.02.2017) held that since the assessee did not sign the agreement, no liability could be attributed qua the agreement towards the assessee and therefore, the additions made by AO was based on surmises, guess work and accordingly, liable to be deleted. The mere fact that the agreement was found from the possession of the assessee could not lead to any conclusion. While adjudicating the same, the Hon ble Court relied on the decision of Hon ble Supreme Court in the case of Dhakeswari Cotton Mills Ltd. (26 ITR 775) which held that AO was not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment order. Similar is the decision of same court in CIT vs. Akme Projects Ltd. (42 Taxmann.com 379) wherein it has similarly been held that the additions made on the basis of unsigned draft agreement could not be sustained when AO had not made any investigation. The draf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is the nature of evidence/material discovered. If the materials discovered relate to any particular assessment year, those cannot be utilised for making assessment of other years unless the relevance to other years is established by the officer. This view was taken by the concerned Court in the decisions of Allahabad High Court in Babu Ram Vishnoi v. CST [1972] 29 STC 392 and Hukam Chand Mahendra Kumar v. CST [1972] 29 STC 394 and relied upon in the present case. Principal Commissioner of Income-tax v. Rameshbhai Jivraj Desai, High Court of Gujarat [2020] 121 taxmann.com 333 (Gujarat)] Section 153A of the Income-tax Act, 1961 - Search and seizure - Assessment in case of (Absence of incriminating material) - Assessment year 2008-09 - Pursuant to search, proceedings under section 153A were initiated against assessee - Whether since no incriminating material against assessee in respect of an earlier assessment year for which assessment had already attained finality was unearthed during course of proceedings under section 153A, Assessing Officer while completing assessment under said section could not disturb completed assessment of assessee in respect of such earlier assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect. These documents submitted by the department it its paper book are draft agreement for purchase-sale of immovable property and are not in the nature of any incriminating material for construction of building and thus are irrelevant for the issues under consideration in the present appeals. 4.5 From the entire conspectus of the case, the Bench considered all the documents and submissions of both the parties and noticed that the ld.CIT(A) duly considered all submissions, judgments, material on record, AO remand report and allowed the ground of the assessee which is evident from Para No. 8.2 at page no. 56 of the ld. CIT(A) order for AY 11-12 and corresponding para no. 8.2 at page no. 78 of the ld. CIT(A) order for AY 10- 11. The ld CIT(A) after considering the assessment order, documents and judgments on record, remand report and submissions of the assessee passed a detailed and reasoned order wherein we find no reason to interfere in his order. In this view of the matter, the Ground No. 2 of the Department is dismissed. 4.6 So far as ground no. 3 of the revenue is concerned it is evident that no incriminating material was found during search otherwise the AO would have dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisclosed income from Garden Mahaveer Paradise and addition of Rs. 1,63,26,661/- on account of unexplained investment in construction of Hotel K Mahaveer. 6.3 Apropos to Ground No. 1 of the Department which relates to an addition of Rs. 152,531/- as unexplained investment u/s 69 in respect of construction of residential house property. It is noticed that the ld. CIT(A) has allowed this ground of appeal of the assessee by observing as under:- 6.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the consideration. under year The contentions/submissions of the appellant are being discussed and decided as under: (i) A reference was made to the District Valuation Officer for valuation of construction expenses on the residence of the assessee i.e. Plot No. 21, 22, 33 and 34 Shree Gopal Nagar, Jaipur. The District Valuation Officer has furnished his report on 23.10.2018. As per the valuation report furnished by the DVO total investment in the construction of house was Rs. 5,72,26,401/- during the F.Y. 2011-12 to 2014-15. However, the appellant has declared total investment of Rs. 2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared by the appellant is not commensurate with the investment made in the house property. However in this regard it is noticed that no addition has been done in the assessment in connection with the declared investment in the house property Further the appellant has stated that this observation of the Id. A.O. is erroneous as it does not consider the housing loan and other funds utilized for construction of house property. (iii) Having perused the material on record it is noticed that on the issue, a reference to the DVO was made and the report of DVO was received and following the due procedure of law addition was done by the learned assessing officer in the hands of the appellant with reference to the unexplained investment in the house property, considering the fact of higher valuation then the amount claimed to have been spent. There is no reference neither in the assessment order nor in the remand report to any documents or other incriminating material found during search like emails exchanged or whatsapp messages or unaccounted bills or cash payment documents etc. showing unaccounted payments or investment. The addition has been done solely on the basis of valuation repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction to assess or reassess the total income taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns, and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. (emphasis supplied) On the issue there is similar judgement of Hon'ble Supreme Court in the case of Deputy Commissioner of Income-tax v. U. K. Paints (Overseas) Ltd. [2023] 150 taxmann.com 108 (SC)/[2023] 454 ITR 441 (SC)[25-04-2023). The judgement has been carefully cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oinder reply of the appellant on the remand report, all have been duly and carefully considered. The status of assessments before issuance of notice u/s 153A has been discussed in pre-paragraphs. There was no pending/abated assessment for the assessment years involved in the subject appeals. (viii) In the case of CIT v. Bimal Auto Agency [2009] 314 ITR 191 (Gauhati), Hon'ble Gauhati High Court has held as follows:- 13. In the present case, admittedly, no evidence or materials was discovered in the course of the search of the premises of the group to which the assessee belongs. The undisclosed income in so far as the building is concerned was solely made on the basis of the report of the Departmental Valuation Officer as obtained by the search party. The report of the Departmental Valuation Officer does not constitute materials or information relatable to the search. Such a view have been recorded in the judgments of the Madhya Pradesh High Court in CIT v. Khushlal Chand Nirmal Kumar reported in (2003) 263 ITR 77 and Delhi High Court in CIT vs. Manoj Jain (2006) 287 ITR 285 and CIT v. Ashok Khetrapal (2007) 294 ITR 143. While expressing our respectful agreement with the said vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidential bungalow by the assessee. Here also, Chapter XV Bhas no application. The Tribunal, rightly, found that the addition is made on the basis of the report of the department's valuer According to the Assessing Officer, during the search it was found that the assessee had constructed a bungalow. It was found that the assessee had incurred expenses of Rs. 4.16 lakhs. The Assessing Officer thereafter referred the matter to the departmental valuer, who valued the property at Rs. 6.66 lakhs and, accordingly, the difference has been added to the income of the assessee as an undisclosed income. The above basis clearly shows that the department has not understood the scope of Chapter XIV-B. By no stretch of imagination, the impugned addition fell within Chapter XIV-B. There would be no finality if the department a permitted to add back to the income of the assessee on the basis of the departmental valuer's report obtained subsequent to the order of the regular assessment. Hence, the Tribunal was right in deleting the said addition. Accordingly, question No. 3 is answered in the affirmative, le, in favour of the assessee and against the department In the case of in CIT vs. Mano ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to make statements on technical matters for which there is no material on record, particularly when no evidence was found as a result of action under section 132(1) on the assessee regarding undisclosed income in respect of all the properties under consideration. Such a view stands fortified by the decision of the Apex Court in Saraswati Industrial Syndicate Ltd. v. CIT 237 ITR 1. 2. The above is in tune with the decision of this Court in CIT v. Ravi Kant Jain [20011 250 ITR 1411 and CIT v. Sudhish Kumar [2005] 146 Taxman 612 (Delhi). 3. No substantial question of law arises for our consideration. The appeal fails and is hereby dismissed In view of the above discussion cannot be said that the addition has been done in the assessment order on the basis of incriminating material unearthed during the course of search and seizure action. The judgement of Hon'ble Supreme Court in the case of Abhisar Buildwell (supraj and UK. Paints (supral are squarely applicable to the facts of the case Accordingly, following the judgment of honorable Supreme Court the impugned addition made in assessment order u/s 153A cannot be sustained and is hereby deleted as the same is not made on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ARCH, IF NO INCRIMINATING MATERIAL FOUND DURING SEARCH : It is now a settled law that no addition can be made in search u/s 153A in respect of completed/unabated assessments, if no incriminating document found during search. Reliance is being placed on the judgment of Hon ble Supreme Court in the case of PCIT Vs. Abhisar Buildwell P. Ltd. in Civil Appeal No. 6580 Of 2021 recently decided on 24.04.2023 wherein it was held as under :- i. that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii. all pending assessments/reassessments shall stand abated; iii. in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the total income taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv. in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, it cannot be said that the learned Tribunal has committed any error in deleting the additions made by the Assessing Officer on account of difference of the cost of construction which was solely based upon the DVO's report. In view of the above, it is found that the impugned addition made solely on the basis of DVO report without any other material on record is unjustified THIRD REASON : VALUATION REPORT OF REGISTERED VALUER IGNORED BY THE LD. AO AS WELL AS THE DISCREPANICES POINTED OUT BY THE APPELLANT IN DVO S REORT NOT CONSIDERED BY LD. AO : It is noticed that that the AO not only ignored the valuation report of a registered valuer Mr. Purshottam Khandelwal at Rs. 2.80 Crores (paper book page no. 42 to 66) submitted during the assessment proceedings but also not considered various discrepancies pointed out by the assessee during the assessment proceedings while making the impugned addition. The discrepancies pointed to the ld. A.O. during the assessment proceedings have been summarized as under:- 1. The DVO has used the CPWD rates for valuation whereas the registered valuer has used the State PWD rates. It is well settled by a number of decisions that for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has done direct procurement as relevant from the bills. The assessee being in the same line of business since last number of years has been able to procure the material from its suppliers on much cheaper rate. Thus the rates adopted by DVO are totally unralistic 4. False Ceiling:- Cost of false ceiling by DVO is also on higher side as compared to the cost taken by above mentioned valuer. Since assessee is from the same field he had been able to save a lot of money in it. 5. Rates for bath fitting have already been taken at 12 % extra at the time of Calculation of the cost of Construction of the house by DVO. In the house Jaquar fitting is used and Assessee has bills for the same. Jaquar basic range has been used in the house and additional cost of Jaquar fitting is not more than Rs. 400000/- as against Rs. 1545000/- taken by DVO. No Base has been provided by the DVO in ascertaining how he had arrived at the figure Rs. 1545000/-. Basic cost of sanitary has already been included in the arriving of the cost of house. Only difference in cost should have been added to the basic sanitary cost. Further, no bathtubs have been used in the house. It is again submitted that alre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of registered valuer report and DVO report. Instead, the ld. AO made the addition without considering the objections raised by stating that the objections should have been raised before the DVO. Further, the A.O. generally mentioned in the remand report that there are various discrepancies in the valuer report but no specific discrepancy is mentioned in the remand report except PWD rate. However, the ld. CIT(A) considered this and allowed the ground of the assessee which is evident from Para No. 6.2 at page no. 44 of the ld. CIT(A) order. The learned CIT(A) after considering the assessment order, documents and judgments on record, remand report and submissions of the assessee passed a detailed and reasoned order and we do not find any infirmity in his order. Thus Ground No. 1 read with ground no. 4 of the Department is dismissed. 7.1 Ground No. 2 of the Department pertains to the addition of Rs. 62,37,040/- on account of undisclosed income from Garden Mahaveer Paradise and this issue has been decided by the ld. CIT(A) in favour of the assessee by observing as under:- 8.2 I have considered the facts of the case and written submissions of the appellant as against the observati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly. Accordingly, this ground of appeal is hereby allowed. It is not required to repeat the facts of the case as the issue has already been disposed off (supra) against the Department and we concur with the findings of the ld. CIT(A). Thus Ground No. 3of the Department is dismissed. 9.1 The Ground No.4 of the department pertains to the application of Judgements of Hon ble Supreme Court in case of Abhisar Buildwell U.K.Paints. vis a vis incriminating documents/ material. 9.2 After hearing both the parties and perusing the materials available on record, it is noted that incriminating material and not merely material should be found during the course of search for making addition in respect of unabated assessments. The term incriminating is a negative term which means to provide evidence that somebody is guilty of a crime . There is no whisper about any incriminating material found during search in the assessment order or in the remand report. Moreover, it is pertinent to mention here that the AO in Notice u/s 142(1) dated 19.07.2019 (paper book page no. 335) at para no. 7 had asked :- Please explain whether any incriminating document/electronic device pertaining to you for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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