TMI Blog2013 (9) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... he did not doubt about that. He doubted about only opening balances. When the assessee has furnished the position of income from earlier/different years and the total income of the assessee and his mother comes to Rs.2,32,83,547/-, it can not disbelieve that the assessee was not having cash balance to the extent of Rs.10,85,231/- as opening balance in A.Y.2009-10 - Assessee has furnished sufficient material and discharged the burden, supporting the fact that the assessee was having cash balance of Rs.10,48,000/- in the beginning of the year, particularly under the facts and circumstances when no incriminating documents or other material was found during the course of search – Decided in favor of Assessee. Addition on estimation basis – estimation of larger sum of household expenses - A.O. noticed from the cash flow chart that the assessee has shown lower house hold withdrawals - Considering the size of family and social status of the assessee, the A.O. has estimated household expenses of Rs.22,000/- per month as against the total household withdrawal of Rs.1,80,424/- per annum shown by the assessee – Held that:- It is a search case and during the year no incriminating material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., electrical equipment, old structures and old boundary wall. The A.O. treated 20% of the cost of construction shown by the assessee at Rs.15,50,000/- and calculated amount of addition of Rs.1,55,000/- by treating it as expenditure incurred for furniture and furnishing over and above cost of construction – Held that:- The A.O. has failed to point out by making enquiry that how many A.C and other electrical equipments were there with the assessee - Adhoc addition is not warranted – In the lack of enquiry and making addition without considering complete facts, merely on the basis of conjecture or surmises addition cannot be made particularly in case of search – No justification of making addition of Rs.1,55,000/-, therefore, it has been ordered to delete the addition of Rs.1,55,000/- - Decided in favor of Assessee. - ITA No.68/A/2013 - - - Dated:- 25-6-2013 - Bhavnesh Saini and A L Gehlot,JJ. For the Appellants : Shri Anand Godbole Shri S P Agrawal, Advs. For the Respondent : Shri Sandeep Chauhan, CIT (DR) ORDER:- PER : A L Gehlot This is an appeal filed by the assessee against the order dated 20.11.2012 passed by the ld. CIT(A), Allahabad for the Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any view of the matter the manner of the addition on the basis of the cash flow statement as made by the Assessing Officer and confirmed by the Commissioner of Income Tax (Appeals) is totally wrong and the entire approach of the two lower authorities in adjudicating the issue is also not proper and their findings and observations in his regard in the order are for away from the truth and are liable to be ignored. 8. That in any view of the matter addition of Rs.97,900/- under the head house hold expenses as maintained by the Commissioner of Income Tax (Appeal) by ignoring the facts, family size and sources etc., is highly unjustified and incorrect hence the addition as maintained is unwarranted. 9. That in any view of the matter addition of Rs.38,77,589/- made by the Assessing Officer by alleging undisclosed investment simply on the basis of DVO s report who inspected the property on 13.09.2011 in a very casual manner when the investments fall in different assessment years is unjustified and incorrect because the DVO s report is nothing but an opinion based on his own whims and the same can not be considered as a gospel truth. Likewise the Commissioner of Income Tax (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds of appeal. The Ground Nos. 1 to 4 are general in nature and challenging the notice under Section 153A(b) of the Act. These grounds have not been much argued by the ld. Authorized Representative, therefore, the same are dismissed. 4. The Grounds No.5 to 7 are in respect of pertaining to addition of Rs.10,48,000/- made by the A.O. on account of cash flow statement furnished by the assessee. This ground has been raised by the assessee in Grounds No.5 to 7 in the grounds of appeal. During the assessment proceedings, the assessee furnished a cash flow chart showing opening balance of Rs. 1,98,651/- as on 01.04.2003. The A.O. asked the assessee to justify the opening balance of cash as on 01.04.2003. During the assessment proceedings, the assessee has furnished a cash flow chart. The A.O. accepted the inflow and outflow of the cash shown in the chart but he did not accept the opening balance of cash balance shown by the assessee. The comparative position of cash flow chart as per assessee and as per A.O. has been produced by the assessee of which copy has been placed at Page No.19 of the Paper Book. The same is reproduced as below :- (Page No.19, Paper Book) Comparison of Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osit in Bank ICICI Bank 15000.00 Total Cash out Flow 2247100.00 Closing Balance Under Dispute -1048000.00 5. The A.O. found that the assessee had no sufficient cash balance to meet out the expenses to the extent of opening balance of Rs.10,85,231/-, therefore, he made addition of Rs.10,48,000/-. The CIT(A) has confirmed the addition as under:- (Page No.11 and 12, CIT(A)) 4.2 Decision: I have gone through the assessment order and the submission of the appellant. The Assessing Officer has examined the cash flow chart submitted by the appellant. The assessee has shown the opening balance as on 01.04.2009 at Rs.10,85,231/-. The Assessing Officer has not accepted the opening balance in view of the discussion made in para 2 of the assessment order. The Assessing Officer has disbelieved the opening balance of Rs.1,98,651/- as on 01.04.2003 and subsequent opening balances of intermediary financial years. In this regard the appellant s contention is that he has been filing return of income showing substantial income from year to year. He has with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0774.50 2007-2008 1516104.00 2008-2009 1466075.00 2009-2010 1394576.00 2010-2011 1286601.00 Total 7559822.50 Chart showing declared income by the Appellant s widow mother Smt. Urmila Devi during the block period Sahson, Allahabad Assessment Year Declared Income in the Return 2004-2005 1754590.00 2005-2006 1882863.00 2006-2007 2197633.00 2007-2008 2476220.00 2008-2009 2584967.00 2009-2010 2453359.00 2010-2011 2374093.00 Total 15723725.00 Submission Total Assessed figure of the appellant is Rs.75,59,822.50 Total Assessed figure of the appellant s mother is Rs.1,57,23,725.00 A- That from the above chart it will appear that the income declared by the appellant and his mother during the block period is Rs.75,59,822.50 + 1,57,23,725 = 2,32,83,547.50 where as opening and closing cash balance is doubted by the two lower authorities without any material brought on the records. B- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om A.Y.2004-05 onwards. The finding of the CIT(A) is contrary to the finding of the facts as the A.O. himself accepted inflow and outflow of the cash in the chart submitted and he did not doubt about that. He doubted about only opening balances. When the assessee has furnished the position of income from earlier/different years and the total income of the assessee and his mother comes to Rs.2,32,83,547/-, it can not disbelieve that the assessee was not having cash balance to the extent of Rs.10,85,231/- as opening balance in A.Y.2009-10. We find that the assessee has furnished sufficient material and discharged the burden, supporting the fact that the assessee was having cash balance of Rs.10,48,000/- in the beginning of the year, particularly under the facts and circumstances when no incriminating documents or other material was found during the course of search. We find that addition is not warranted, we, therefore, set aside the orders of Revenue Authorities and delete the addition of Rs.10,48,000/-. 10. The next effective ground is in respect of addition of Rs.97,900/- which has been raised by the assessee as Ground No.8 of the grounds of appeal. During the assessment proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seizure operation under Section 132(1) of the I.T. Act was carried out on 27.08.2009 in the group cases of Kesarwani Zarda Bhandar, Sahson, Allahabad. The assessee is a partner one of the firm of this group namely Kesarwani Zarda Bhandar and Kesarwani Sheetalay. The notice under Section 153A was issued on 07.07.2010. The assessee filed return of income declaring as income of Rs.13,94,576/- on 16.08.2010. During the assessment proceedings, the A.O. noticed that the assessee has stated in the cash flow statement that Rs.15,50,000/- was utilized in the construction of building at Sahson known as Fulwaria . The A.O. asked the assessee to produce the bills and vouchers to ascertain the actual cost of the construction. The A.O. referred the matter to the DVO on 10.08.2011 who has submitted his report on 20.09.2011. The report was confronted to the assessee on 22.11.2011. The DVO determined the valuation of property from financial year 1999-2000 to 2004-05. Since the cases are pending from the assessment year 2004-05 to 2010-11, hence the A.O. requested DVO to determine the cost of property from the financial year 2003-04 to the date of inspection. The Valuation Officer vide his report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I have gone through the order of the Assessing Officer, who reports of the DVO and the submission of the appellant. The Valuation Officer has submitted two reports dated 20.09.2011 and 07.10.2011. In the report dated 20.09.2011, the Valuation Officer has estimated cost of the construction at Rs.75,69,500/- as against Rs.65,70,000/- declared cost. This report was not accepted by the Assessing Officer on the ground that the construction shown in F.Y. 1999-2000 and 2004-05 was based on the information provided by the assessee to the Valuation Officer. She, therefore, asked the Valuation Officer to make the assessment of the cost of construction as on the date of inspection. Accordingly the Valuation Officer had submitted the report dated 07.10.2011 determining the cost of construction at Rs.1,30,30,085/-. But in this report, the DVO has remarked that this determination has been made by interpolation of cost index which is not in accordance with the provisions contained u/s 14 of the I.T. Act. The DVO also remarked that the cost of investment is always based on declaration by the assessee or A.O. wherever the cost of construction is not intimated by the assessee. In this way, the DVO h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pel truth. In this connection, it is to be understood that the provision of reference to the Valuation Officer is for the purposes of making estimate of the value of the investment. No doubt, the A.O. may not be an engineer/architect/expert to estimate the value of the construction. Therefore, the I.T. Act has met the provision to refer such matter to the Valuation Officer, the A.O. has to be satisfied that he has not been able to work out the correct value of the investment made by an assessee on the basis of books of account, produced, support bills and vouchers. If the A.O., on account of the nature of books of account, be it incomplete or having no relevant particulars of investment, reaches the conclusion that the correct value of the investment cannot be ascertained, he is not advised to make while guess. At this juncture the institution of Valuation Officer comes into the picture to assist the A.O. It is also true that A.O. has to examine the report of the Valuation Officer and afford the assessee an opportunity to submit his comments on the report. The A.O. is supposed to pass the order after taking into account the report of the Valuation Officer and the objection, if any, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estimated the cost of construction of property for Rs.75,69,500/-. As per the second report dated 07.10.2011, the DVO has estimated the total value of construction of Rs.1,30,30,085/-. The ld. Authorized Representative further submitted that the DVO in his report dated 07.10.2011 clearly stated that the valuation of the property amounting to Rs.1,30,30,085/- by interpolation of cost index is not in accordance with provisions contained in Section 142A of the I.T. Act. It was further stated that the cost of investment is always based on investment declared by the assessee. The ld. Authorized Representative submitted that the A.O. has taken value of property amounting to Rs.1,30,30,085/- as per DVO s report dated 07.10.2011 simply for the purpose of making higher addition. The ld. Authorized Representative further submitted that calculation done by the A.O. in the assessment order to arrive at the share of undisclosed investment by the assessee in the property is not understandable and A.O. has not clarified how this amount has been determined. The ld. Authorized Representative submitted that the building known as FULWARIA was jointly owned by several persons and assessee is one of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Commissioner of Income Tax Central Circle, I.T. Deptt. Allahabad. Sub:- Estimating cost of investment in the property in the name of Praveen Kumar Kesarwani-Regarding. Ref :- Your Office letter No. DCIT(cc)/Alld/Ref for Valuation/2011-12 dt. 29.09.2011 Please refer to your letter on the subject mentioned above. In this connection it is intimated that total value of construction of property as on date at inspection works out to Rs.1,30,30,085/-. (Rupees one crore thirty lac thirty thousand eighty five only) --by interpolation of cost index which is not accordance with provision contained u/s 142A of the IT Act 1961. It is pertinent to mentioned here that cost of investment is always based on investment declared by Assessee or A.O. whereas in the above cost of construction, no investment intimated by Assessee or A.O. Submitted for further action at your end please. 20. The CIT(A) while giving his finding noted that the second report has been submitted by the DVO under protest on the ground that as per the provisions of Section 142A of the Act, the DVO has taken the basis of investment as declared by the assessee. However, the CIT(A) held that second report of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 70,000/- 21. The Revenue has failed to point out that the building owned by co-owners and what steps have been taken in case of the co-owners whether any addition is made or not. The Revenue has failed to point out any information in this regard. After considering the totality of the facts of the case, we are of the considered view that when a property is constructed by various co-owners, assessee is one of the coowner construction period was from 2000-2001 to 2010-2011 i.e. for about 10 years, bifurcation of yearly investment has been given by the assessee, considering objection of the assessee in respect of DVO s report particularly not allowing 10% self-supervising charges, 3% of architect fee etc. the difference is only 13% in comparison to cost declared by the assessee and estimated by the DVO and the effect of the entire difference given in a particular year is not justified. Therefore, we are of the view that the investment declared by the assessee is reasonable and the same is acceptable, because in totality the investment shown by the assessee is correct. The first DVO s report supports to this fact. We, therefore, are of the view that in the light of detailed d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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