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2013 (9) TMI 436 - ITAT ALLAHABADAdditions on the account of cash flow statement furnished by the assessee – Addition of the amount of Rs. 10,40,000/- Held that:- During the course of search no incriminating documents were found relating to the fact that assessee was not having cash balances - ld. CIT(A) confirmed the addition merely on the basis that the assessee never filed capital account showing for each of the cash balances - 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 - 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 - A.O. himself accepted inflow and outflow of the cash in the chart submitted and he did not doubt about that. He doubted about only opening balances. When the assessee has furnished the position of income from earlier/different years and the total income of the assessee and his mother comes to Rs.2,32,83,547/-, it can not disbelieve that the assessee was not having cash balance to the extent of Rs.10,85,231/- as opening balance in A.Y.2009-10 - Assessee has furnished sufficient material and discharged the burden, supporting the fact that the assessee was having cash balance of Rs.10,48,000/- in the beginning of the year, particularly under the facts and circumstances when no incriminating documents or other material was found during the course of search – Decided in favor of Assessee. Addition on estimation basis – estimation of larger sum of household expenses - A.O. noticed from the cash flow chart that the assessee has shown lower house hold withdrawals - Considering the size of family and social status of the assessee, the A.O. has estimated household expenses of Rs.22,000/- per month as against the total household withdrawal of Rs.1,80,424/- per annum shown by the assessee – Held that:- It is a search case and during the year no incriminating material or documents were found – A.O. made addition merely on the basis of general presumption, whereas, the assessee has furnished a reasonable explanation that the assessee is residing in remote area at 20 km. away from city having substantial 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 - 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, the CIT(A) is not correct in sustaining the addition of Rs.97,900/- - Therefore, deleted the said addition of Rs.97,900/- sustained by the ld. CIT(A). Undisclosed investment in property u/s 69 of the Income Tax Act - Addition of Rs.38,77,589/- made by the A.O. by alleging undisclosed investment on the basis of DVO’s report - Assessee is one of the co-owners of the building - 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 – Held that:- Construction period was from 2000-2001 to 2010-2011 i.e. for about 10 years, bifurcation of yearly investment has been given by the assessee, considering objection of the assessee in respect of DVO’s report particularly not allowing 10% self-supervising charges, 3% of architect fee etc. the difference is only 13% in comparison to cost declared by the assessee and estimated by the DVO and the effect of the entire difference given in a particular year is not justified. Therefore, the investment declared by the assessee is reasonable and the same is acceptable, because in totality the investment shown by the assessee is correct. The first DVO’s report supports to this fact - Therefore, no addition is warranted - Deleted the addition of Rs.38,77,589/- made by the A.O. on account of investment in property under Section 69 of the Act and sustained by ld. CIT(A) – Decided in favor of Assessee. Adhoc additions, without enquiry - The A.O. made addition of Rs.1,55,000/- on the ground that the DVO has shown the construction cost which does not include cost of land, furniture and furnishing, A.C., electrical equipment, old structures and old boundary wall. The A.O. treated 20% of the cost of construction shown by the assessee at Rs.15,50,000/- and calculated amount of addition of Rs.1,55,000/- by treating it as expenditure incurred for furniture and furnishing over and above cost of construction – Held that:- The A.O. has failed to point out by making enquiry that how many A.C and other electrical equipments were there with the assessee - Adhoc addition is not warranted – In the lack of enquiry and making addition without considering complete facts, merely on the basis of conjecture or surmises addition cannot be made particularly in case of search – No justification of making addition of Rs.1,55,000/-, therefore, it has been ordered to delete the addition of Rs.1,55,000/- - Decided in favor of Assessee.
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