TMI Blog1993 (8) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... ll on 13th Dec., 1985 which estimated its cost of construction as on 30th Sept., 1985 at Rs. 7,31,000. However, when it was brought to their notice that the construction took place between January, 1981 and October, 1982, they took the mean date as December, 1981 and estimated its cost of construction at Rs. 5,26,000. The Assessing Officer thereafter issued a notice under s. 148 on 24th Feb., 1986. The assessee filed the return of income under protest showing total income at Rs. 10,520. After issuing necessary notices to the assessee and after recording her statement the Assessing Officer held that the cost of construction was Rs. 5,26,000 as against Rs. 3,24,465 disclosed by the assessee. He, therefore, treated the difference of Rs. 2,02,165 as assessee's undisclosed investment in the house property and added it to the total income of the assessee. Further for explaining the investment of Rs. 3,24,465, the assessee had stated that she had savings in form of cash to the tune of Rs. 70,000 which she had invested in the construction of this house. The learned Assessing Officer did not accept this explanation and, hence, added this amount of Rs. 70,000 also as unexplained investment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of land in January, 1980, she had drawn from her account in the firm M/s Ghindmal Kauromal where she was a partner, which she should not have done if she really had savings of Rs. 70,000 (approximately) with her at that time. The CIT(A), therefore, dismissed the appeal filed by the assessee. He also rejected the objection of the assessee regarding the validity of reopening the assessment under s. 148. 3. The first objection contested on behalf of the assessee was regarding the validity of issue of notice under s. 148. It was argued by Shri Gargieya that since assessee's income as known to her was below taxable limit, she was not obliged to file a return of her income and, hence, it could not be said, as alleged by the Assessing Officer in the reasons recorded by him for issue of notice under s. 148, that assessee's income had escaped assessment for failure on her part to file a return of her income. 4. We have carefully considered the submissions of the learned counsel and the case law relied upon by him, namely, that of Hari Babu vs. CIT (1974) 96 ITR 118 (All). However, we are unable to agree with him because after the search when the Assessing Officer came to know that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount could not be added in one year because admittedly the period of construction is spread over a period of three financial years. This is supported by the decision in the case of ITO vs. Smt. Santosh Khanna (1985) 20 Taxman 15 (Jp-Trib) 110 of the paper book. 7. Regarding the amount of Rs. 70,000 the learned counsel submitted that the assessee had told about her savings in her statement, copy of which has been given on pages 9 to 12 of the paper book and on page 13 in her statement recorded at the time of search. The learned counsel submitted that it would be incorrect to presume that a lady in assessee's position could have had no savings at all. 8. The assessee has also objected to charging of interest under s. 139(8)/217 because her assessment has been completed after issue of notice under s. 148. For this proposition, the learned counsel relied on the decisions reported in B. Babu Co. vs. ITO (1987) 60 CTR (Kar) 44 : (1987) 163 ITR 654 (Kar), CIT vs. Padma Timber Depot (1988) 67 CTR (AP) 109 : (1988) 169 ITR 646 (AP) and the decisions of the Hon'ble Rajasthan High Court given in the cases of CIT vs. Multi Metals Ltd. (1990) 88 CTR (Raj) 1 : (1991) 187 ITR 98 (Raj) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce in his comments. We have taken note of the fact that whereas Shri R.B. Shah so also Shri C.B.L. Mathur have given justifications for their reports, no justification has been given by the Departmental Valuation Officer, except saying that his report is based on rates approved by CBDT (CPWD). We may observe that merely because the rates have been approved by the CPWD for Delhi it would not mean that the rates worked out by applying formula of cost index for different years and then at different places would automatically give a correct valuation of cost of construction in Jaipur. In a case like this where two independent registered valuers had worked out the estimated cost of construction which were very near to each other and if there was a substantial difference in the estimate given by the Departmental Valuation Officer, in our opinion, it was necessary for the Departmental Valuation Officer to have substantiated his estimate with actual evidence regarding the prices of materials and labour obtaining at the relevant time rather than to have arbitrarily rejected the estimate given by two registered valuers on the basis of the Rajasthan PWD BSR. We further find that although Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we cannot ignore the arguments of the learned counsel for the assessee that the assessee had started construction of this house in January, 1981 and it was completed in October, 1982. This would mean that financial years 1980-81, 1981-82 and 1982-83 were involved during which those investments were made. If those additions have to be made under s. 69 or s. 69C, the addition have got to be made on financial year basis. None of the lower authorities has made out a case to the effect that the entire amount of Rs. 70,000 was invested by the lady in any one financial year. On the other hand, both the authorities have discussed in detail that it could not be believed that the lady could have had a cash balance of Rs. 70,000 lying in her almirah for such a long period. Thus, according to the arguments and logic of the Assessing Officer as well as the CIT(A), the assessee had been regularly earning this income from undisclosed sources in the three financial years, which she is supposed to have invested in the construction of this house property. The total period works out to approximately two months in the financial year 1980-81, 12 months in financial year 1981-82 and 7 months in financi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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