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2016 (1) TMI 1374 - AT - Income TaxUndisclosed investments - provisions of section 55A read with rule 111AA applicability - joint purchase of property - Held that:- In the instant case, it is not in dispute that the assessees have jointly purchased the land alongwith the building for ₹ 30 lacs and thereafter the construction was carried on over a period of 3 years. Further, it is correct that provisions of section 55A read with rule 111AA are not applicable in the instant case but at the same time, we agree with the ld AR that similar factual matter was under consideration in case of Bimla Singh (2008 (10) TMI 62 - PATNA HIGH COURT) wherein the High court has allowed relief to the assessee in the matter of valuation of property. In the instant case, the difference in the cost of construction as determined by the assessee and as determined by the DVO is only 9.14% and the construction has spread over a period of 3 years. Further, given that the assessee has purchased the land alongwith building, the explanation of the assessee that they had used some of the building material recovered from the old building while constructing the new building appears to be bonafide -addition made in the hands of both the assessees on account of undisclosed investment in the house property is hereby deleted - decided in favour of assessee. Addition on account of undisclosed investment in purchase of machinery in hands of Rajan Jhiriwal - Held that:- Given the undisputed fact that the assessee had withdrawn a sum of ₹ 31,85,751 from its bank account. The explanation of the assessee that besides other expenses, machinery worth only ₹ 25,500 was also purchased out of said withdrawal appears reasonable. In light of this, addition of ₹ 25,500 is deleted and ground no. 2 is allowed. Levy of interest u/s 234B & 234C by not considering the adjustment of cash of ₹ 19 lacs seized in course of search and deposited in the PD a/c - where there is an advance tax liability and there is a cash which is seized and lying in the PD a/c, would the AO be empowered to adjust the same automatically or would that require a specific authorization from the assessee - Held that:- It would be difficult to say that showing adjustment of seized cash against advance tax liability in the return of income tantamount to an authorization to the AO. Rather, the said disclosure is akin to showing an intent to adjust and such adjustment is possible only on receipt of specific authorization. It is the letter dated 30.03.2011 filed by the assessee with the AO which authorizes the department to adjust the seized cash against advance tax liability. Accordingly, we are of the view that the seized cash of ₹ 19 lacs should be adjusted against the advance tax liability and the said adjustment should be effective from the date of authorization i.e. 30.03.2011. The AO is accordingly directed to adjust seized cash against the advance tax liability effective 30.03.2011 and recompute the interest liability u/s 234B & 234C of the Act. Accordingly this ground is partly allowed.
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