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2018 (2) TMI 1365 - AT - Income TaxValidity of reopening assessment - unexplained investment - survey u/s 133A - no books of accounts were found at the business premises of the assesses - Held that:- It is not a matter of case of dispute about the quantum of investment or the source of investment but the assessee has neither maintain the books of accounts or accounts of the construction of the shopping complex nor has filed the return of income for the assessment year under consideration. Therefore, all these facts are sufficient to form the belief that the income assessable to tax has escaped assessment. At the stage of initiation of proceedings u/s 147/148 what is required is prima facie reasons to belief that the income assessable to tax has escaped assessment and the AO is not required to establish the correctness of the reasons at this stage. Therefore, when the assessee firm has failed to produce a single document during the course of survey proceedings and post survey inquiry to show the source of investment which cannot be treated as income of the assessee firm then, the vague statements giving estimated details without supporting evidence would not help the case of the assessee - Decided against assessee Cost of construction adopted by the AO on the basis of DVOs valuation report as against the cost declared by the assessee - estimation of cost of construction by adopting State PWD rate by the ld. CIT(A) instead of CPWD rates adopted by DVO - Held that:- We find that it is settled proposition of law that when the assessee has claimed the deduction on accounts of self supervision then appropriate deduction ought to have been given on this account while determining the cost of construction. Further, when certain expenditure were incurred by the tenants of the shops as claimed in the affidavit as well as in their statements then, the said claim should not have been denied without bringing contrary material on record. Similarly the assessee has claimed that the ld. CIT(A) has adopted incorrect State PWD prescribed rates therefore, all these aspects require a proper verification and examination at the time of determination of cost of construction of the shopping complex in question. The other issues raised by the assessee are also required to be considered in light of the relevant evidence produce by the assessee. There is no points in adopting two separate rates when the CIT(A) has impermissible accepted the State PWD rates of determining the cost of construction then the cost of extra items are also be determined by applying the State PWD rates. The assessee has claimed to have paid architecture fee of ₹ 2 lacs whereas the DVO has adopted the estimated fee @ 1% of total cost. We are of the considered view that estimation of fee is required only when the assessee has failed to produce the evidence in support of the actual fee paid. Thus, if the assessee has claimed to have made the payment of ₹ 2 lacs only on account of architecture fee then, without examination of the correctness of the payment and relevant evidence, the estimated value cannot be adopted. Therefore, the issue of determination of cost of construction is remitted to the record of the Assessing officer to examine and decide afresh.
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