TMI Blog2015 (3) TMI 802X X X X Extracts X X X X X X X X Extracts X X X X ..... All Cargo Global Logistics Ltd. vs. CIT (2012 (7) TMI 222 - ITAT MUMBAI(SB)) and others, we are of the opinion that the assessments framed under sec. 153A for the assessment years under consideration are not valid. - Decided in favour of the assessee. Validity of addition made on undisclosed investment in construction - basis of valuation report of the D.V.O. to make additions - Held that:- Sole addition made in these assessment years under consideration is on account of difference in construction as shown by the assessee in its books of account and as estimated by the D.V.O. in his report is also not sustainable in view of the decision of Hon’ble Supreme Court in the case of Sargam Cinema Vs. CIT (2009 (10) TMI 569 - Supreme Court of India ) holding that the Assessing Authority could not have referred the matter to the D.V.O. without the books of account being rejected. It was held that reliance placed on the report of the D.V.O. is misconceived. The additions made on account of undisclosed investment in the construction based on the valuation report of the D.V.O. are thus held as not justified - Decided in favour of the assessee. Validity of assessment framed under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer for adopting similar decoding of figure where ₹ 1,000 was written and thereafter no decimal with zero was put. We, however, find substance in the contentions of the learned AR that there was no concrete basis for doing so by the authorities below for the decoding of the figure. The additions in question are thus not sustainable in absence of any basis particularly in a search proceedings under sec. 153A of the Act. These additions are accordingly deleted. - Decided in favour of assessee. - ITA Nos. 1986 to 1991 & 2053/Del /2011, ITA Nos. 2273 to 2275& 2052/Del /2011 - - - Dated:- 13-3-2015 - Shri I.C. Sudhir And Shri T.S. Kapoor JJ For the Appellant : S/sh. Ashwani Taneja Tarun Kumar, Advocates For the Respondent : Smt. A. Misra, CIT, DR ORDER Per Shri I.C. Sudhir, JM: (A.Ys. 2001-02 to 2006-07): D.S. Doors Pvt. Ltd. - ITA Nos. 1986 to 1991/Del /2011 1. In all these appeals, the assessee has questioned the first appellate orders on the common grounds. In ground nos. 1 2, the validity of assessment framed under Section 153A read with section 143(3) of the Income-tax Act, 1961 (for short the Act ) has been questioned. In gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d AR submitted that no incriminating material was found during the course of search, nor any assessment based on the return of income originally filed was pending on the date of search, hence the A.O. was not justified in initiating the proceedings under Section 153A of the Act and in framing the assessment in furtherance to the said notice. He submitted further that the addition in question has been made by the A.O. not on the basis of seized documents but on the basis of estimation done by the D.V.O. to whom the valuation of the building was referred to be determined during the course of assessment proceedings. In support he referred the following decisions: i. MGF Automobiles Ltd. Vs. ACIT, ITA Nos. 4212 4213/Del/2011 (A.Y. 2004-05 2005-06), order dated 28.06.2013; ii. Jaisteel (India) Ltd. Vs. ACIT, (2013) 259 CTR 281 (Raj.HC); iii. Gurinder Singh Bawa Vs. DCIT and others, ITA No. 2075/Mum./2010 and others(A.Y. 2005-06), order dated 16.11.2012; iv. Kusum Gupta Vs. DCIT and others, ITA No. 4873/Del/2009 and others (A.Y. 2005-06 and others), order dated 28.03.2013; v. CIT Vs. Anil Kumar Bhatia, (2012) 211 Taxmann.com 453 (Del.); and vi. All Cargo Global Logi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders of the authorities below. He submitted that for reference to the D.V.O. for determination of valuation of a building/construction, rejection of books is not necessary. He submitted that the decisions relied upon by the learned AR in this regard having distinguishable facts are not helpful to the assessee. The assessee had not filed any evidence in support before the A.O. that the building in question were constructed before 01.04.2000. On the issue of validity of assessment in the absence of incrimination material found during the course of search, the learned DR submitted that the statements of Sh. Dhan Singh Sharma recorded during the course of search as well as the documents found and seized were sufficient to show that there was undisclosed income to initiate proceedings under Section 153A of the Act. He submitted that on the basis of those documents only, the assessee had made surrender. He submitted that during the course of search the property in question was visited and it was found that lavish construction has been made for which the assessee failed to furnish any explanation. The A.O. has made addition on account of unexplained investment in the construction an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents do not belong. 10. Even on the merits, the sole addition made in these assessment years under consideration is on account of difference in construction as shown by the assessee in its books of account and as estimated by the D.V.O. in his report is also not sustainable in view of the above cited decisions including decision of Hon ble Supreme Court in the case of Sargam Cinema Vs. CIT (supra) holding that the Assessing Authority could not have referred the matter to the D.V.O. without the books of account being rejected. It was held that reliance placed on the report of the D.V.O. is misconceived. Similar are the facts of the present case before us that the A.O. had referred the matter to the D.V.O. for the determination of the value of the property in dispute without rejecting the books of account of the assessee. Respectfully following the ratio laid down by the Hon ble Supreme Court in the above cited case of Sargam Cinema Vs. CIT (supra), we hold that the reference made to the DVO and reliance placed by the A.O. on the report of the D.V.O. for making the addition in question was misconceived. The additions made on account of undisclosed investment in the constructi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d considered the arguments advanced by the parties in view of the orders of the authorities below, material available on record and the decisions relied upon. Ground Nos. 1 to 7 3. The facts in brief are that during the course of search, some documents were seized by the search team. On the basis of these documents, it was alleged that the assessee was doing business outside the books of account also and thus the assessee had suppressed its sales, purchases and other expenses. The assessee offered to pay taxes on the undisclosed income aggregating to ₹ 96 lakhs out of the total offer of ₹ 1.60 crores. 4. In support of the grounds, learned AR submitted that there was no incriminating material found during the course of search, nor the assessment originally framed on the basis of return filed was pending and the surrender was made as an conditional offer that the amount of ₹ 1.60 crores shall cover all the alleged unaccounted investment in business of D.S. Woodtech in the alleged unaccounted accumulated stocks, production, sales, profits earned, expenditure incurred on account of unaccounted purchase, salary wages and other expenses for unaccounted pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this regard, the learned AR referred page nos. 4 to 6 and 10 to 29 of the paper book which are copies of reply and letters filed time to time before the A.O. He also referred page nos. 24 to 44 of the paper book which are the copies of written submission filed time to time on different dates before the learned CIT(A). He submitted that in the above stated letters and reply to the A.O., the assessee had made clear that all purchases, production, sales, expenditure, stock etc. have been duly accounted for in the return filed. The A.O. was requested for computation indicating how the value of stock has been arrived at such a huge figure so that proper reply/reconciliation can be furnished and reply on unaccounted sales was also submitted. Document and year-wise details of undisclosed investment and undisclosed expenditures were furnished before the A.O. Objections with regard to the valuation of stock was submitted to the A.O. with the request that on the basis of said objections, valuation of stock shall get reduced to ₹ 3.8 crores approximately. It was also pointed out to the A.O. that the area where stock was lying cannot by any means and ways store such huge piles of stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 1 to 7, we find that during the course of search in the premises of the assessee several documents including prima facie incriminating material were found and seized. Thus, it cannot be said that there was no incriminating material found during the course of search to concur with the contention of the assessee that the assessment framed under Section 153A of the Act was not valid. The ground Nos. 1 and 2 are thus rejected. We, however, find substance in the contention of the Learned AR that an addition cannot be made solely on the basis of surrendered amount dehors evidence in corroboration and ignoring subsequent retraction thereto by the assessee with valid reason. Here the case before us is that when surrendered income was objected by the assessee with sufficient reason then the same should have been duly considered by the Assessing Officer and Learned CIT(Appeals) while making and upholding the additions. The assessee vide several letters including letter dated 17.10.2008, 22.10.2008, 13.11.2008, 05.12.2008, 24.12.2008, 26.12.2008, wrote to the Assessing Officer and with written submissions dated 28.1.2010, 24.1.2011 before the Learned CIT(Appeals) tried to point out many di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the grievance of the assessee against the addition of ₹ 27,76,029/- on account of undisclosed investment in construction under Section 69B of the Act. 10. Similar arguments has been advanced by the parties as advanced by them on an identical issued hereinabove in the appeals for the assessment years 2001-02 to 2006-07. 11. On an identical issue in the appeals for the assessment years 2001- 02 to 2006-07 hereinabove, we after discussing it in detail has come to the conclusion that the action of the A.O. in making reference to the D.V.O. for determination of the value of the property without rejecting the books of account is not justified and no addition can be made on the basis of such valuation reported by the DVO. This view is well supported by the decision of Hon ble Supreme Court in the case of Sargam Cinema Vs. CIT, (2010) 328 ITR 513 (SC). Respectfully following the same we decide the ground nos. 8 and 9 in favour of the assessee with direction to the A.O. to delete the addition of ₹ 27,76,029/- made in this regard. Ground No. 10 12. It relates to the grievances of the assessee against the action of the learned authorities below in not allowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the grounds for the remaining assessment years 2005-06 and 2006-07 with the difference in amount of addition. In assessment year 2005-06, the addition made on account of cash receipt is ₹ 1,64,590 and in assessment year 2006-07, the addition made on this account is ₹ 4 lacs. 22. The learned AR advanced his arguments in support of the issue raised on the validity of addition made on account of cash receipts. He submitted that there was no undisclosed/unaccounted sales/cash receipts in the seized documents. The addition in question has been made on the basis of entries found recorded on the documents containing account of Shri Praveen Jain. The Assessing Officer held that the assessee has not shown the cash receipts in its books of account and made addition of that amount. Referring the different page Nos. 1 to 22 of Annexure A08 on the basis of which additions have been made in these assessment years; the learned AR submitted that page 1 to 7 contains some phone numbers of parties and rates etc., page Nos. 1 to 10 are blank, page No. 11 is rough estimate given to parties, the page No.12 is a blank paper; page No.13 contains transaction with Mr. K. P. Dass; page No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar Goswami and estimate cannot be accounted for in the books of account. The learned AR submitted further that page No. 17 contains transaction of Mr. Satish Sharma which is duly reflected in the books of account and referred page No. 6 of the paper book wherein the copy of the said ledger account has been made available. Regarding the contents of page No. 20, the learned AR submitted that there is transaction of Mr. R.K. Rane and all the transactions with Mr. R.K. Rane have been duly accounted for in the books of account and referred copy of ledger account in support made available at page No. 7 of the paper book. Regarding page No. 21, the learned AR submitted that it contains cheque entries of Mr. Satender Kumar which has been duly accounted for in the books of account. In the assessment year 2006-07, the learned AR submitted that the addition has been made and sustained by the authorities below on the basis of entries recorded on page No. 7 of Annexure A6 without verifying the correct facts. 23. The Learned DR on the other hand placed reliance on the orders of the authorities below with this contention that the additions in question have been made based on the documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ims and assumption by the Assessing Officer who has decoded the earlier code form used by the assessee without any supporting evidence. The Learned CIT(Appeals) did not agree and has upheld the addition. 27. In assessment year 2006-07, the Assessing Officer has made addition on the basis of entries recorded on page No. 7 of Annexure A-6 with these observations that the entries relating to D.C. Kothari and Demco Solution (P) Ltd. are in coded form. The cash payment of ₹ 10,000 in the case of Shri D.C. Kothari has been decoded by him as ₹ 1 lac not reflected in the books of account. He noted further that entries of cheques payment of ₹ 50,000, ₹ 1,50,000 and ₹ 1,11,538 are, however, reflected in the books. In the case of Demco Solution (P) Ltd., he read the cash amount of ₹ 30,000 as ₹ 3 lacs not shown in the books of account by adopting the same decoding method. Learned CIT(Appeals) upheld the addition of ₹ 1 lac made on account of decoding of receipt from Shri D.C. Kothari by following his earlier decision for the assessment years 2004-05 and 2005-06 but he upheld the addition of ₹ 30,000 out of ₹ 3 lacs made on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upheld by the Learned CIT(Appeals) has been questioned. 34. In ground No.4, the addition of ₹ 48 lacs by treating it as undisclosed stock of the assessee upheld by the Learned CIT(Appeals) has been questioned. 35. In ground No. 5, the action of the Learned CIT(Appeals) in upholding the assessment order in bringing to tax the alleged assessee s shares out of alleged surrender of ₹ 1.6 crores as surrendered has been questioned. 36. Ground Nos. 6 7 are in support of the above ground Nos. 3 to 5 in a more specific way. In ground No. 8 non-granting of the benefit of telescoping has been questioned. 37. In ground No.9, the addition of ₹ 64 lacs by treating it as undisclosed income/investment of the assessee has been questioned. In ground No. 10, charging of interest under sec. 234A, 234B and 234C of the Act has been disputed. 38. So far as issue raised in ground Nos. 1 and 2 on the validity of assessment framed under sec. 153A read with sec. 143(3) of the Act and violation of principal of natural justice by the Assessing Officer is concerned, the parties have adopted similar arguments as advanced by them in the case of D.S. Doors (P) Ltd. hereinabove ..... X X X X Extracts X X X X X X X X Extracts X X X X
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