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2013 (10) TMI 609 - AT - Income TaxBlock assessment - Undisclosed income - Advance amount received - unaccounted assets - Held that:- There has been no addition qua the cost of the construction of the project - which in fact is not the subject matter of dispute - in which case, the assessee could be considered to have been called upon to adduce evidence to substantiate its claim. The reliance on the valuation report is, thus, of little moment. Could, one may ask, the Revenue assess ‘undisclosed income’ on the basis of valuation report consequent upon a search, case law on which is legion. The valuation report could be sought by the Revenue, in satisfying itself with regard to the construction cost as debited or claimed by the assessee per its regular books of account, or verifying the assessee’s claim with regard thereto, even independent of a search or requisition. The said report becomes relevant in block assessment proceedings u/c. XIV-B and, accordingly, reliance thereon for assessment of undisclosed income becomes understandable, as where the assessee is ‘found’ during search to have placed no value on some or a specific part of the construction, or some other defect in the assessee’s claim discovered in search, viz. as where a difference or discrepancy is found with regard to the materials or the quality of goods used in construction, which is not consistent with that reflected per the books of account. It is in that case that the valuation report, pressed for by either party, in respect of its claim/s, may assume significance. The deduction of Rs.75.93 lakhs claimed and allowed to the assessee, it may be clarified, is not for under-valuation of the cost of project with reference to the regular books of account, but on account of it having established utilization of the money toward construction of the project, income from which is being brought to tax as undisclosed income, to that extent and, thus, deductible in computing the undisclosed income earned therefrom. The same is in our view rightly restricted by the Revenue to the sum as borne out of the materials as found as a result of search, i.e., Annexure A-1. The Revenue, by doing so, we may again clarify, is not in any manner certifying the construction cost of the project or in any manner validating the same at the said amount, i.e., in addition to the amount that may have been disclosed in its respect per the assessee’s regular accounts, but only basing the assessee’s claim for deduction in computing the undisclosed income, found to have been earned by way of on money on a project, against its utilization to the extent stands substantiated by the assessee with reference to the materials found as a result of search, which is the mandate of law - Decided against assessee.
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