TMI Blog2013 (1) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... found details from dairy during search for the A.Ys 2006-07 to 2008-09 A.O made addition for all the 6 A.Ys. on the basis of average number of patients Held that:- AO has computed the suppressed consultation fee by taking the details from the books of accounts maintained by the assessee and not on the basis of the seized record. The seized records numbered as MMA-1 and MMA-2 contained patient details for the years relevant to the A.Ys 2006-07 to 2008-09. Thus the department did not unearth any record pertaining to the years relevant to the A.Ys 2002- 03 to 2005-06. In view of the legal position discussed above, the AO could not make any addition for A.Ys 2002-03 to 2005-06. No addition could be made for A.Y. 2008-09 also, as the department has failed to bring on record any actual suppression of consultation fee on the basis of seized record. Partly allowed in favour of assessee Suppression of income from surgeries and sale of lenses Held that:- The profit on PMMA lens during the years relevant to the A.Ys. 2007-08 and 2008-09 can only be treated as the suppressed income in the hands of the assessee. It is also quiet common that the businessmen fixes different selling pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has discharged the primary burden of proof placed upon him. In favour of assessee Additions on the basis of fund flow statements Statements are prepared on the basis of books of account - Held that:- It is possible that the assessee might have maintained books only for his profession and hence the fund flow statements might have been prepared to combine both professional and non-professional items. Revenue authorities did not properly understood the significance of the financial statements. Accordingly, the additions made on account of cash deficiencies require re-examination. Remand back to AO Unexplained expenditure - Assessee claimed that items were gifted by his father in law - the father in law of the assessee did not declare cost of these items in his cash flow statement Held that:- It is the duty of the assessee to substantiate his claim that the imported interior decorated items have actually been gifted by his in laws. From the record, its notice that the assessee has failed to substantiate his claim. In favour of revenue Addition towards the difference in the purchase cost of property In sworn statement assessee mentioned that he paid the consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssailing the decision of Ld CIT(A) in reducing the income estimated by the AO and also his decision in allowing telescoping referred above. The assessee is challenging his decision in partially or fully confirming the additions made by the AO. 3. The facts relating to the case are set out in brief. The assessee is an ophthalmic surgeon practicing in Palakkad. He examines outpatients in a clinic called Vijayam Clinic and performs surgeries in a hospital named M/s Sai Nursing Home. The department carried search and seizure operations in the hands of the assessee on 05-12-2007. Consequent thereto the assessments for the years were re-opened and completed u/s 153A of the Act. While completing the assessment, the AO made additions under various heads, which are being contested in these appeals. We shall proceed to address various additions issue wise. 4. During the course of hearing, ld counsel for the assessee raised a legal issue with regard to the scope of assessment to be made u/s 153A of the Act. Though the Ld D.R objected to its consideration on the ground that this issue is being raised for the first time before the Tribunal, yet we are of the view that this legal issue nee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned this issue in detail by taking into account the views expressed by various co-ordinate benches of the Tribunal on the very same issue. We feel it convenient to extract below the relevant discussions made by the Mumbai bench in the above cited case. 19. On the second limb of his argument, that when no incriminating material is found, the AO does not get jurisdiction to re-open assessments which do not abate, the learned counsel placed reliance on the judgment in the case of Meghmani Organics Ltd. vs. DCIT, 36 DTR 187, wherein the Ahmedabad Bench of the Tribunal, held as follows:- The AO assumes jurisdiction for framing assessment under s. 153C where the AO is satisfied that any money, bullion, jewellery or other valuable articles or things or books of account or documents seized or requisitioned belongs or belongs to a person other than the person in whose case search is conducted under section 132(1). Therefore, for initiating action u/s. 153C for framing assessment u/s. 153A, the prerequisite is the satisfaction of the AO that the money etc. and documents etc. belongs to a person other than the person searched u/s. 132. The AO in the assessment order has categorically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed for reopening the assessment still applies to the cases reopened u/s. 153A. The intention of the legislature could not have been otherwise lest it should lead to unnecessary harassment upon the assessee s. Though the completed assessments can be reopened under section 153, the issues which have already been concluded in the earlier assessments should not be subject matter of reassessment unless some incriminating material concerning those issues were found during the course of search. Otherwise, in the concluded assessments which have been reopened u/s. 153A, the assessing officer should restrict himself with the additions arising out of the incriminating materials found during the course of search . Reliance was also placed on the decision of Kolkata Bench of the Tribunal in the case of LMJ International Ltd. vs. DCIT 119 TTJ 214 wherein the Tribunal held as under: Where nothing incriminating is found in the course of search relating to any assessment years, the assessment for such years cannot be disturbed; items of regular assessment cannot be added back in the proceedings u/s. 153C when no indiscriminating documents were found in respect of the disallowed amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Asst. Year Date of filing return Date on which Notice u/s. 143(2) should be issued. Date on which assessment become time barred 2003-04 31-10-2003 31-10-2004 31-03-2006 2004-05 31-10-2004 31-10-2005 31-12-2006 2005-6 28-09-2005 31-10-2006 31-12-2007 For all the three years notice u/s. 143(2) have not been issued. In the case of Anilkumar Bhatia (supra) the case was decided in favour of the assessee. Nevertheless in the case of Shivnath Rai Harnarain (India) Ltd. vs. CIT 304 ITR (AT) 271 (Del.), the Delhi Bench of the Tribunal held as follows:- Held, dismissing the appeals, (i) that there is no requirement for an assessment made u/s. 153A of the Act to be based on any material seized in the course of search. Further, since under the second proviso to section 153A pending assessment or reassessment proceedings in relation to any assessment year falling within the period of six assessment year referred to in s. 153A(b) of the Act shall come to an end, the Assessing Officer gets jurisdiction for six assessment years referred to in section 153A(b) of the Act for making an assessment or reassessment. Further, no income which was al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch, order dated 22-01-2010 has distinguished the decision in the case of Shivnath Rai Harnarain (India) Ltd. (supra) and at para 4.2 and 4.3 held as follows:- 4.2 We have perused the records and considered the rival contentions carefully. The legal dispute raised in this ground is whether issues considered and decided in the regular assessment can re-considered in an assessment proceedings initiated u/s. 153A. In case of search, the AO u/s. 153A is empowered to issue notices to the searched person requiring him to furnish the return of income in respect of each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made. Further the second proviso to section 153A also provides that assessment or re-assessment relating to any assessment year falling within the period of six assessment years referred to above pending on the date of initiation of search u/s. 132 or making of requisition u/s. 132A as the case may be shall abate. Normally, the assessments which are pending in appeal or in revision cannot be said to be complete and therefore assessment/re-assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng material found or seized in the search, the ground of the assessee has to be accepted by respectfully following the order of the Coordinate Bench . Thus, we notice that various co-ordinate benches have taken the view that the completed assessments shall not abate and only the assessments or reassessments relating to any of the six assessment years, which are pending on the date of initiation of search, shall abate. Further it has been held that the completed assessments, though automatically reopened as per the provisions of sec. 153A, yet they can be disturbed only in respect of those issues for which some incriminating materials requiring such disturbance is unearthed during the course of search proceeding. Since majority benches have taken the above said view in a consistent manner, we are also inclined to take the same view discussed above. However, we feel it pertinent to express the view that if the AO finds out any defect on any issue in respect of the pending assessments which got abated and such kind of issues are also available in other assessments, which have already been completed and did not abate, then in our view, the AO is entitled to examine those issues in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Consultation fee. The seized records found in respect of this issue are Booking Diary numbered as MMA-1 and MMA-2. These diaries contained the patients details for certain months as detailed below:- For Asst. year 2006-07 - 3 months. For Asst. year 2007-08 - 12 months. For Asst. year 2008-09 - 9 months. The department also seized three more diaries numbered as MMA-7, MMA-8 and MMA- 9, where in the number of patients were found recorded at a very low figure. The AO presumed that the records numbered as MMA-1 and MMA-2 only contain correct patient details and the other three diaries viz., MMA-7, MMA-8 and MMA-9 might represent the diaries prepared for income tax purposes in order to show lower collection. However, it is pertinent to note that the AO did not use the information found in the seized records referred supra for the purpose of computing the suppressed consultation fee. The methodology adopted by the AO in this regard is explained in the succeeding paragraph. 9. The AO worked out the average collection per day from the return of income filed for the assessment years 2002-03 to 2008-09. Then he calculated the percentage of variation in per day collection re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of these four years, as the same is in accordance with legal position discussed in the preceding paragraphs. 11. For assessment years 2006-07 and 2007-08, the AO himself did not make any addition as he did not find any suppression as per his computations. For assessment year 2008-09, the seized record was available for first nine months of the financial year and the average number of patients per month visited in these nine months worked out to 1035. Accordingly, the number of patients visited for whole year was projected to 12,428. Though the AO did not consider this information for arriving at the suppressed fee, the Ld CIT(A) has used the same for computation purposes. In our view, the methodology adopted by the Ld CIT(A) also does not appear to be a correct one. The total number of patients who visited the doctor during April 2007 to December 2007 as per the seized record was 9321. The tax authorities could have compared this figure with the regular books maintained by the assessee and arrived at the difference, if any. We are unable to understand, why the tax authorities preferred to make estimation instead of comparing these actual figures with the reported figures. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only. Hence, it has to be concluded that the assessee did not make any profit on the amount charged from patients on acrylic lens, i.e., there is no difference between the cost of purchase and the amount charged from the patients. 14. In respect of PMMA lens, the amount charged from patients was found to be Rs.2000/-. The seized record showed that the PMMA lens were supplied by a concern named M/s J N Surgicure. According to the assessee, the supplier of lens viz., M/s J.N Surgicure, directly raises bill on the patients and collects money from them. It was further submitted that the lens are brought personally by M/s J.N. Surgicure or sent by courier. During the course of search, the department seized blank bill books pertaining to M/s J.N Surgicuare from the premises of the assessee. The department also seized a bill raised by M/s J.N. Surgicuare, which was sent along with the courier parcel and in that bill, the sale price of PMMA lens was shown at Rs.208/-. Based on this information, the AO questioned the assessee about the huge price difference. Though the assessee maintained his stand that the lens are supplied by M/s J.N. Surgicure directly to the patients, yet he confesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear at Rs.89,49,900/-. In the above said computation, the AO presumed that the cost of acrylic lens was Rs.600/- only. Based on the annual collection of Rs.89,49,900/- referred above, the AO proceeded to compute the annual collection for other years. The AO, on some basis, noticed that there was an increase of 10% only in the fee charged for surgeries over a period of 7 years. Accordingly, he proceeded to compute the annual collection for other years by reducing 5% every year from the amount computed for the assessment year 2008-09. The difference between the gross receipts estimated by him and that reported by the assessee was treated as the suppressed surgery receipts. 17. The ld CIT(A) was not convinced with the methodology adopted by the AO, as he noticed many deficiencies in the computations made the AO. For the sake of convenience, we extract below the observations made by Ld CIT(A):- I, however find that observations of the Assessing officer in para 20 of the assessment order that the appellant was charging Rs.8400/- for an acrylic lens with a cost of only Rs.600/- are factually incorrect. This is duly explained by the appellant in his submissions of 28th January, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reason that the Assessing officer has wrongly reduced cost of acrylic lens and also theatre charges which are not excluded by the appellant in gross receipts shown. In para 8.29 the Assessing officer himself has worked out profit on per PMMA lens of Rs.1800, whereas in the calculation in para 8.30, the Assessing officer has added Rs.2000 per PMMA lens as profit. The Assessing officer has compared incomparable figures for the reason that in A.Y 2008-09, the appellant has included sale of lenses in the gross receipts where as in earlier years the sale of lens is not included in the gross receipts. The sum total of all evidences gathered during the course of search and investigations conducted thereafter was that the appellant was suppressing profit margin on sale of PMMA lenses. 18. The Ld CIT(A) took the view that profit on sale of PMMA lens should be taken at Rs.1800/- in the year relevant to the assessment year 2008-09 and for other years, the profit should be reduced by Rs.50/- per year. He rejected the plea of the assessee that M/s J.N. Surgicure has started business only in the year relevant to the assessment year 2007-08. The observations made by Ld CIT(A) in this regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted the number of surgeries performed by him and it is also an undisputed fact that there was no difference in the surgery fees charged by the assessee. Both the AO as well as Ld CIT(A) has proceeded to compute the profit on sale of PMMA lens by following their own methods. From the observations of Ld CIT(A), which were extracted in the preceding paragraphs, we notice that the methodology adopted by the AO was suffering from many defects and consequently it has given illogical results. Besides the mistakes pointed out by Ld CIT(A), we notice that the AO has made many assumptions while working out the suppressed receipts and such assumptions did not have any basis. Accordingly, we agree with the Ld CIT(A) that the methodology adopted by the AO cannot be considered as correct method of working out the suppressed surgery receipts. However, we notice that the Ld CIT(A) has also made certain assumptions without any basis. The department has noticed the price difference in sale of PMMA lens only in respect of the lens supplied by M/s J.N Surgi cure. The Ld CIT(A) also accepts the fact that the said concern came into existence only in the financial year relevant to the assessment year 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the assessee is the reply given by him to the question no.27 posed to him, wherein he had admitted that there was some profit margin on sale of PMMA lens to the assessee. Similarly, Shri S.M. Ouseph, the proprietor of M/s J.N. Surgi cure also could not give any convincing explanation with regard to the difference in selling price of PMMA lens. Accordingly, since the department has found some evidence concerning M/s J.N. Surgicure and since the assessee has also accepted the existence of some profit element in respect of supplies made by that concern, we are of the view that the estimate, if any, in respect of suppressed surgical fee receipts could be made only in respect of PMMA lens supplied by M/s J.N. Surgi cure and not by any other concern. Since the said concern has started business only in the year relevant to the assessment year 2007-08, in our view, the estimation of profit could be made only for assessment year 2007-08 and 2008-09 only in respect of the PMMA lens supplied by M/s J.N. Surgi cure. For other years, the department did not unearth any incriminating material to suggest that such kind of practice was in vogue in those years also. The AO also did not examine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee. The details of salary claimed by the assessee, allowed and disallowed by the AO are tabulated below: ASST. YEAR SALARY CLAIMED ALLOWED DISALLOWED 2008-09 500000 120000 380000 2007-08 500000 120000 380000 2006-07 480000 114000 366000 2005-06 360000 114000 246000 2004-05 360000 108300 251700 2003-04 336000 108300 227700 2002-03 336000 102885 233115 In the sworn deposition, the assessee had stated as under with regard to the salary payments:- The entire charges received as surgical kit charges, eye scan charges and nursing charges totaling Rs.1000/- per surgery is spent for the purpose for which it is received. There are two staff in Vijayam Eye clinic who are paid Rs.5000/- and Rs.2000/-. Sweeper is paid Rs.500, driver is paid Rs.2500 and two cousin brothers who help me (Raveendran and Surendran) in personal and family matters are paid Rs.6000 per month . On the basis of this sworn statement, the AO came to the conclusion that the assessee was incurring a sum of Rs.10,000/- per month as salary (Rs.5000+2000+500+2500) and accordingly restricted the salary pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ===== The salary for assistant and driver has been increased by the difference amount of Rs.500/- relating to the main employee. It is customary to pay two months bonus and also to make payments during festival seasons. Accordingly, the annual payment is taken as 14.5 months salary, i.e, 12 months + 2 months bonus + customary payment month. The AO has reduced the salary payments by 5% once in two years. The same methodology is adopted here also. Though the salary paid to the cousins was stated as Rs.6000/- per month, since their services were also used for personal purposes, we have restricted the salary pertaining to the profession at Rs.5000/- per employee. Accordingly, allowable salary expense is worked out below for the years under consideration. Asst. year Salary amount 2008-09 3,11,750 2007-08 3,11,750 2006-07 2,96,200 2005-06 2,96,200 2004-05 2,81,350 2003-04 2,81,350 2002-03 2,67,300 Asst. year Salary amount 2008-09 3,11,750 2007- We direct the Assessing officer to work out the disallowance on the basis of the salary amount estimated above. The order of Ld CIT(A) stands modified accordingly. 27. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of receipt of gift. a) Shri K.V.Balagangadharan, Father in law - Rs.77,81,571/- b) Shri Santhosh Balagangadhar, Brother in law - Rs. 8,96,000/- c) Shri P. Girikumar, Brother - Rs.13,04,030/- d) Smt. Devi Balagangadhar, Mother in law - Rs. 2,36,000/- It is to be noted that these persons have been/are NRI and they have issued gift cheques from their respective NRE bank Account . The Assessing officer has made the addition on the ground that these donors have failed to prove their respective credit worthiness by not producing following documents viz., a) Failure to produce the bank account abroad. b) Failure to furnish remittance details. c) Failure to produce salary certificate abroad. d) Failure to notarize all documents evidencing the credit by an authorized person in the Indian consulate of that country, as per judicial decisions. The Assessing officer placed reliance on the decision of Hon ble Supreme Court in the case of CIT Vs. C.P.Mohanakala Others (2007) (291 ITR 278)(SC). The AO further noticed that these donors have failed to furnish a copy of Form No.BCI, which is required to be submitted under the Foreign Exchange Managemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of detailed enquiries conducted by the department, it was informed by the assessees, by a letter dated 25th April 1996, that both Ariavan Thotan and Suprotoman are one and the same person. Subsequently, in a letter dated 30th August 1996, the assessees therein introduced another person named Sampath Kumar and thereafter it was stated that the names of Ariavan Thotan and Suprotoman are the other names of Sampath Kumar. To a pointed query raised to Mr. Sampath kumar as to whether there is any evidence to show that he was also known by any other name other than Sampath Kumar, he stated that no evidence. Only Mr. Srinivasan (one of the assessees) used to call me as Suprotoman . Thus it can be seen that the assessees in the case of C.P.Mohanakala s case have failed to establish the identity of the donors. Further the gifts were received in the form of foreign bank s instruments issued abroad. Further there were evidences to show that the said receipts did not fulfill the basic characteristic of gifts, which is evident from the following observations made by the Hon ble Supreme Court:- The AO while appreciating the contents of the letters brought on record came to the conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w, the AO has reached such conclusions on the basis of surmises and conjectures. 34. Under the Indian Tax laws, the Non Resident External Accounts always enjoyed a special status. According to sec. 10(4)(ii) of the Income tax Act, the interest earned on NRE account is exempt. Under the old scheme of Wealth tax Act, the balance outstanding in the NRE account was exempt from wealth tax. Similarly under the old scheme of Gift tax Act, the gifts given from out of NRE account was exempt from the Gift tax. 35. There is no dispute with regard to the fact that the donors have made deposits into these NRE accounts by bringing foreign currencies from abroad. The assessee herein, being resident Indian, could not have foreign currencies with him. The AO has taken adverse view on the ground that the donors have failed to produce copies of certain forms required to be filed under the Foreign Exchange Management Act. In our view, the failure on the part of the donors to comply with the procedural formalities, if any, under any other Act cannot be used to take adverse view against the assessee. Since the donors have made deposits by bringing money from abroad and since the impugned gifts hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) on this issue and direct the AO to delete the additions relating to the gifts. 39. The next issue relates to the additions made in various years on the basis of fund flow statements submitted by the assessee under the heading Deficiency in Cash flow . It appears that the assessee has filed fund flow/cash flow statements during the course of hearing. The AO compared the said statements with the Balance sheet and found certain differences. Though the assessee explained that some of the items are appearing in the books of accounts maintained by the assessee and some of the investments are explained in the assessment of the assessee s wife, yet the AO was not convinced with the said explanations. The AO opined that the assessee is evading from giving specific replies. Accordingly he added the differences/deficiencies noticed by him in various assessment years. The Ld CIT(A) also confirmed the said additions. 40. We have heard the parties on this issue. It is not in dispute that the assessee is maintaining books of account. The funds flow statement, Cash flow statements, Profit Loss account, Balance sheet are different types of financial statements and there is an established ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correct the mistakes, if any, committed in preparing the fund flow statements. The AO should objectively consider the reconciliations and explanations furnished by the assessee and then decide the issues in accordance with law. 42. Now we shall deal with specific issues. In the appeal relating to the assessment year 2005-06 filed by the assessee, the addition of Rs.15,59,880/- relating to the interior decoration is being contested. The AO noticed from the seized materials numbered as PCA-1, PCA-2 and PCA-4 that the assessee has spent a sum of Rs.15,59,880/- on furniture, electronic items, kitchen equipments, swimming pool equipment etc. It was seen that items costing Rs.3,59,880/- was purchased in India and other items costing Rs.12.00 lakhs were found to have been imported. The assessee initially claimed that these items were gifted by his father in law. However, it was noticed that the father in law of the assessee did not declare cost of these items in his cash flow statement. Accordingly, the AO added the above said amount of Rs.15.59,880/- to the income of the assessee. Before Ld CIT(A), the assessee represented that he has shown a sum of Rs.10.00 lakhs towards interior dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and the books of account, the assessee submitted that he originally contemplated to purchase a property jointly with another person named Shri Michael of Ernakulam for a sum of Rs.50.00 lakhs. Subsequently, they decided to register the property separately in their respective names. Accordingly, the assessee purchased his property by paying the consideration by way of cheque. With regard to the cash withdrawal, he submitted that the same was withdrawn at the request of Shri Michael, but could not be utilized by him as he did not purchase his property. 45. The said explanation was not convincing to the AO and accordingly he made an addition of Rs.16.50 lakhs as difference in consideration. The Ld CIT(A) also confirmed the said addition. The case of the assessee is that the AO did not find any material to show that the assessee has actually paid Rs.45.00 lakhs for purchase of Bangalore property. 46. We also notice that the AO did not bring on record any material in this regard except placing heavy reliance on the sworn statement given by the assessee. It is pertinent to note that the assessee had mentioned in the sworn statement that he paid the entire consideration in cash, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Similarly, the inflation of expenses also would give rise to unaccounted cash and the same may be used by an assessee to fund his unaccounted investments/expenses. Thus, in principle, the Ld CIT(A) was justified in allowing telescoping benefit to the assessee. 48. The specific issue raised in the appeal of the revenue relates to the addition of difference in cost of construction of residential building made in the assessment years 2004-05 to 2006-07. The facts relating to the same are stated in brief. The assessee constructed a residential building and declared the cost of construction at Rs.1,10,05,000/-. During the course of search, the department seized a report given by a registered architect for the purpose of bank, in which the cost of construction was shown at Rs.1,70,00,000/-. The AO treated the difference of Rs.59,95,000/- between the two figures cited above as the income of the assessee and assessed the same in three years as detailed below:- Assessment year 2004-05 - 10,79,000 Assessment year 2005-06 - 23,98,000 Assessment year 2006-07 - 25,18,000 It is pertinent to note that the AO had referred the matter of valuation to the DVO during the course of assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uilding in all the three years with the following observation. 29. I have considered the relevant facts and provisions of law with regard to the issue involved. I find that the addition based by the Assessing Officer on the basis of certificate of registered architect seized during the course of search action which estimated the cost of construction of residence of the appellant at Rs. 1.7 cr as against Rs. 1,00,05,000 disclosed by the appellant during period relevant to A.Yrs. 2004-05 to 2006-07. The Assessing Officer accordingly made addition in respective assessment years in proportion to the investments shown by the appellant in these years. I find that the property was referred by the Assessing Officer for valuation to the DVO, who valued the cost of construction at Rs. 99.94 lakhs as against investment of Rs. 1.05 crore shown by the appellant. The argument put forth by the Assessign Officer is that the valuation of DVO was not binding an therefore, should not be relied upon in preference to the seized document wherein higher estimation is done by a registered architect and on the basis of which the addition has been made. The Assessing Officer also pleaded that no addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l person of the department and there was no reason to disbelieve the valuation done by the DVO with detailed reasoning and on the basis of actual measurement of construction work and inspection of the property on 29.10.2009. No defect in the report of the DVO has been brought on record to justifiably discard the same. It is an admitted position that the construction of residential building of the appellant was completed in March 2006 and therefore, the seized document dated 17.11.2006 prepared for procuring a bank loan from HDFC Bank was only projecting further construction of Rs. 90 lakhs. Such Construction was not done by the Appellant upto 29.10.2009 when his property was inspected by the DVO. The Appellant also informed to the Assessing Officer vide letter of 15.12.2009 that no part of this loan from HDFC Bank procured on 20.11.2006 was used for any further construction. The issue in any case was not relevant in this assessment year and cannot be made basis for making an addition. In view of above, I hold that the addition made by the Assessing Officer on this account was not sustainable. The same is therefore, directed to be withdrawn. This ground of appeal is therefore, allow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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