TMI Blog2010 (5) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer on account of investment made in construction of Bungalow at Prabhu Darshan Society, Dhaneli Nagar, Varachha Road, Surat." 2. Facts in brief; as emerged from the corresponding assessment orders which are identically dated, i.e., 28-3-2006; were that both these assessees were subjected to search under section 132 of the Income-tax Act, 1961 which was carried out on 10-12-2003. During the course of search, a Valuation Report in respect of Bungalow situated at Prabhu Darshan Society, Lambe Hanuman Road, Surat was found. An enquiry was raised and it was found that the assessee has purchased the property jointly with others. An approved Valuer has valued the property for a sum of Rs. 1,01,80,000 as on 20-8-2001. The basic objection of the Assessing Officer was that as per the books, the cost of construction was at a much lower figure, therefore, the difference was to be taxed in the hands of the assessee. In this regard, to streamline the preliminary facts it is worth to reproduce the explanation offered by the assessee before the Assessing Officer. "The assessee along with his mother Smt. Savitaben D. Thesia and brother Shri Haresh D. Thesia had purchased the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18-8-2001. The value arrived at Rs. 1,01,80,000 by Government approved valuer in his valuation report dated 20-8-2001 includes land value of Rs. 50,55,000 and construction cost of Rs. 51,25,000. Since the land was purchased in the year 1994-95 for Rs. 4,00,000. The date of purchase of land is outside preview of block period. The construction of the bungalow was carried out by the assessee and others themselves. And the construction work was completed in the year 1997." 2.1 The Assessing Officer was not convinced and placing reliance on the said Valuation Report he has arrived at the conclusion that the assessee had made certain extra investment towards the purchase of land as well as towards the construction of Bungalow. An amount of Rs. 41,39,897 was computed as an investment towards construction of Bungalow as per the following observations : "3.6 The assessee has constructed the bungalow along with his mother Smt. Savitaben Dhirubhai Thesia, and his brother Shri Haresh Dhirubhai Thesia. The total investment in the three hands is shown to the extent of Rs. 19,00,205 i.e., Rs. 7,51,250 in the account of Smt. Savitaben D. Thesia, Rs. 6,06,610 in the account of Shri Hare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aspects, the addition was deleted. Now the revenue Department is in appeal. 4. With this brief factual background, we have heard both the sides. We have also carefully perused the orders of the authorities below in the light of the compilation filed and submissions made. The first and foremost issue which was vehemently raised by the Learned Authorised Representative of the assessee Mr. M.G. Patel is that the entire exercise of assessing the unexplained investment in the hands of co-owners for assessment year 2002-03 was futile and not as per law. He has categorically stated that the construction of the property was completed in the month of December 1997. In support of this contention, he has placed on record a notice of municipal tax department issued by Surat Municipal Corporation rele-vant for the year 1-4-1997 to 31-3-1998 through which he has tried to demonstrate that in the Financial Year 1997-98, the said property was duly occupied by the co-owners. This fact was stated to be brought on record through a written submission before the revenue authorities, placed at page No. 57 of compilation; relevant portion reproduced below : "The construction activity was on the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion report of the property. Vide his report dated 20-8-2001 arrived the market value of the property at Rs. 1,01,80,000. In his valuation report he is clearly mentioned that the purpose of valuation report is for bank purpose only. The Assessing Officer contention that the assessee had not taken any bank loan on said property is not correct. M/s. P. Ashish Brothers was enjoying various export bank facilities from Dena Bank. The report was taken to offer the same as a collateral security against enhancement of the bank facility. No any other document and loose sheet was found during the course of search which could show that appellant had made more investment than declared in Sales Deed. Since the land was purchased in the year 1995 and construction thereon was completed in the year 1997 which is outside the preview of the block period." 4.1 It was also explained that the co-owners have purchased the said plot on 26-9-1994 for a consideration of Rs. 4 lakhs. However, at that time only Rs. 3 lakhs was paid through "A/c payee cheque" and the remaining amount of Rs. 1 lakh was paid at the time of registration of the sale-deed. There was a "possession deed" dated 7-5-1995 throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eby he had not made the valuation to determine the cost of construction of the building, therefore, it was of no help to throw any light on the amount invested for construction. The other relevant point is that in both these Valuation Reports, the Valuers have categorically stated that the year of completion was December-1997. In the light of the above corroborative evidences, the main argument of the Learned Authorised Representative of the assessee was that the addition in the respective hands of the co-owners was made by invoking the provisions of section 69 of the Income-tax Act, 1961, and the section says that where in the financial year immediately preceding assessment year the assessee has made investment which are not recorded in the books of account, if any, maintained by him for any source of income and no satisfactory explanation is offered in respect of the nature and source of investment, then the value of investment may be deemed to the income of the assessee of such financial year. This line of argument is judicially correct and has to be accepted. Once the property in question has undisputedly not been constructed during the financial year under consideration, then ..... X X X X Extracts X X X X X X X X Extracts X X X X
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