TMI Blog1999 (3) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case as also the evidence submitted by the appellant in support of the value of investment shown. The addition, thus, being unjustified in law and on facts, may kindly be heard." 2. The assessee is a private limited company and was incorporated on 8th Feb., 1995, with total share capital of Rs. 30 lakhs. A search and seizure operation was conducted on Kamat Group of cases of which the assessee is a member, on 27th June, 1996. During the course of search, the search party noted that the assessee-company was constructing a hotel building i.e. Hotel Vrishali (P) Ltd. Kolhapur. The hotel building construction was in progress at the time of search and according to the AO the total cost of construction was not available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .A. Sathe the learned counsel for the assessee submitted that the valuation was made de hors the search operation as it had no relation to anything found as a result of search. As a matter of fact no material or evidence was found direct or indirect to suggest that any undisclosed income was utilised in meeting the cost of construction. Indeed, there was no occasion for the assessee-company which had just taken birth and was not carrying on any business and was only engaged in constructing the hotel building. In support of his contention, he relied upon the decision of the Supreme Court in the case of CIT vs. Bharat Engineering Construction Co. 1972 CTR (SC) 247 : (1972) 83 ITR 187 (SC) and further submitted that the valuation report was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther submitted that in cases of unexplained investment there cannot be any positive evidence all the time showing unrecorded expenditure since it was a common knowledge that lot of unexplained investment goes into the construction of properties. He further submitted that the action of the Department in referring the case for estimating the cost of construction to the Valuation Cell of IT Department cannot be challenged by the assessee since this is a reference made by the AO for its own benefit to a person who is technically qualified for this purpose. Moreover, a copy of the report was given by the AO to the assessee and comments were not only obtained by him but also duly discussed in the block assessment order. Therefore, no arguments c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained regular books of accounts and filed its return of income for the asst. yr. 1996-97 declaring total, income at Rs. NIL" Whatever expenditure was incurred by the assessee on the cost of construction, was reflected in the books of accounts written upto the date of search. Accordingly, the addition is based on the report of the DVO and it cannot be said that anything was hidden from the knowledge of the Department. Even in the course of assessment proceedings, the AO brought no material on record that any particular sum was incurred on the cost of construction outside the books of accounts. He has simply followed the DVO's report which was not accepted by the assessee because it was based on pure estimate. Therefore, without going into t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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