9911796707
TMI Blog2015 (12) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) on the basis of seized material. This issue has been raised by the assessee in its appeal for assessment year 2005-06 in I.T.A. No.254/Lkw/2014 as per ground No. 1, which is reproduced below: "1. The learned CIT(A) has erred in the law and facts of the case in confirming addition of Rs. 1,16,50,863/-." 4. Learned A. R. of the assessee reiterated the same contentions which were raised before learned CIT(A) whereas Learned D. R. of the Revenue supported the orders of the authorities below. 5. We have considered the rival submissions. We find that the contentions raised by the assessee on this issue before CIT(A) are noted by CIT(A) in Para 6 to 6.6 of his order, which are reproduced below for the sake of ready reference: "6. GROUND NO. 1 - ADDITION OF Rs. 1,16,50,863/- Your kind attention is invited towards the seized paper, on the basis of which the above mentioned addition has been made. The page no 95 of the seized material contain two set of entries, one is total amount received Rs. 74,00,000/-, in which dates for first two amounts viz Rs. 10,00,000/- on 5.3.2005 and Rs. 19,00,000/- on 9.3.2005 has been mentioned. Whereas against the amount of Rs. 45,00,000/-, no d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on these pages it can easily be inferred that the demand drafts were bought by the assessee by paying cash of equal amount. 6.5 It is true that the drafts were got prepared by the assessee out of cash but were used to pay the suppliers and as far as the source of such cash is concerned the same is out of cash available in the books. 6.6 The assessee relies upon the following judicial pronouncements in support of its contention: Chander Mohan Mehta v. Assistant Commissioner of Incometax [1999] 71 ITD 245 (PUNE) Section 158BB of the Income-tax Act, 1961 - Block assessment - Computation of undisclosed income - Assessment years 1986-87 to 1996-97 - Based on loose papers found during survey after search as well as subsequent statement of assessee recorded under section 131, giving nature and details of transactions indicated therein in regard to money-lending business, Assessing Officer made addition of entire borrowings received from certain persons even though confirmation letters were produced by them - Whether since said loose papers did not indicate name of assessee, from list of persons given in loose papers it could not be inferred that either any loan or any advance wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial pronouncements the addition of Rs. 1,16,50,863/- be deleted." 5.1 Thereafter, we find that this issue has been decided by learned CIT(A) against the assessee on the basis of following observations on pages 9 to 11 of his order, which are also reproduced below for the sake of ready reference: "I have perused the facts stated in the assessment order as well as facts stated in the assessee's submission. The Assessing Officer has made the addition of Rs. 1,16,50,863/- by observing that :During the course of search u/s 132 a register inventoried cm Annexure B-10 was found from the residence of Shri Abusad Ahmad at 4.202, Vishal Khand, Gomti Nagar, Lucknow and seized. The seized documents is a register belonging to the assessee (M/s Vijay Express Way Engineers Pvt. Ltd.) and which has entries of huge amounts received/paid from/to various persons especially on pages 95 and 97. At some places name of one Shri Vikas Singh is mentioned. At other place entry like "DD received from Aligarh" is mentioned. On page 95 entry of cash payment totaling Rs. 74,00,000/- and Rs. 6,12,863/- to 'Jhaji' is made. On the same page entry of Rs. 1,61,043/-against 'S. S. Singh is mentioned. .......... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor of the company. The relationship of the document with (the assessee company is further established from the fact that name of the company itself is mentioned on the cover page of the impugned register. In view of overall facts of the case it is established that the assessee failed to offer satisfactory explanation on this issue. Hence, the value of transaction effected through this document is treated as assessee's undisclosed income. From the entries recorded on these pages it can easily be inferred that the demand drafts were bought by the assess by paying cash of equal amounts. On page, 95, total expenses on demand drafts are worked out at Rs. 80,12,863/- and at the lower portion of the same page equal amount is paid in cash to 'Jhaji' apparently for this purpose. Similar is the positions for entries on page 97 also. The total of receipts through demand drafts/cheques, as mentioned on pages 95 & 97 is at Rs. 1,16,50,863/- (Rs.80,12,863/- being total of page 95+Rs. 36,38,000/-, being total of page 97), which is added to the assessee's total income in view of the above discussion. As the assessee has concealed particulars of its income on this account and furnished inaccura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2639/- (probably charged by the bank). Thereafter, it is further noted by learned CIT(A) that similar facts emerged from other entries also and vide questionnaire dated 08/02/2013 and subsequent queries, the assessee was required to explain nature and detail of such entries and how the same are recorded in the books of accounts. In reply, it was submitted by the assessee that, this is working paper made by the cashier of Sultanpur to reconcile the cash received by him and payments made. Thereafter, it is observed by CIT(A) that the reply furnished by the assessee is not satisfactory inasmuch as it lacks evidence and tries to disown the facts of the impugned document. This categorical finding of CIT(A) could not be controverted by Learned A. R. of the assessee before us and therefore, we do not find any reason to interfere in the order of CIT(A) on this issue. When the assessee could not bring evidence to establish that the cash transactions shown in seized material is duly recorded in books of the assessee, it has to be accepted that unaccounted cash was channelized in books by showing bank draft receipts. Hence, there is no infirmity in the order of CIT (A) on this issue. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y vouchers are self-made debit vouchers without verifiable detail of payees. Thereafter, he has also observed that the Assessing Officer could not point out any defect in any specific voucher nor did Assessing Officer invoke provisions of section 145(2) of the Act and the A.O. did not reject the books of accounts. Thereafter, he has held that in absence of specific defect, no ad hoc disallowance can be made. He has also held that the general observation of the A.O. that the vouchers are self-made cannot be a basis for addition. At best, it can be a starting point for enquiry but if the vouchers were defective, the Assessing Officer should have pointed out the defects and should have asked the assessee for a reasonable explanation. 9. So is the case in assessment year 2006-07. In this year also, the Assessing Officer made similar disallowance of Rs. 71,44,748/- to the extent of 1% of total expenses of Rs. 7144.74 lac with the same observation that the vouchers produced are neither full nor verifiable inasmuch as complete identity of the payees is not mentioned thereon and in this year also, the disallowance was deleted by CIT(A) on the same basis. 10. So is the case for assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Koya and Co. Construction (P) Ltd. vs. ACIT as reported in 32 CCH 43 (Hyderabad). On issue No. 4, Learned D. R. of the Revenue supported the order of Assessing Officer whereas Learned A. R. of the assessee supported the order of learned CIT(A) for assessment year 2009-10 and 2010-11. Regarding assessment year 2007-08 and 2008-09, he submitted that in these two years also, the issue should be decided in favour of the assessee because the claim was made in the return of income filed u/s 153A and as per the provisions of clause (a) of sub section (1) of section 153A, the return furnished u/s 153A should be considered as if such return was a return furnished u/s 139 of the Act. 14. We have considered the rival submissions. Regarding issue No. 3, we find that the decision of CIT(A) in assessment year 2009-10 is contained on page Nos. 36 to 44 of his order, which are reproduced below for the sake of ready reference: "For this year also the appellant had entered into contracts agreements with the NHA1 and UPPWD, and the facts are same therefore, I follow my order for A.Y. 2010-11 and A.Y. 2011-12 in which I had allowed the assessee's claim because the Assessing Officer f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of facility as a whole ; that material required was to be brought in by assessee by sticking to quality and quantity irrespective of cost of such material; that assessee utilized its funds, its expertise, its employees and took responsibility of developing infrastructure facility; and that assessee handed over developed infrastructure facility to Government on completion of development - Whether, on facts, assessee was a developer and not a works contractor and, therefore, was entitled to deduction under section 80-IA - Held, yes [In favour of assessee] Words & Phrases : 'Owned' as occurring in clause (1)(a) of section 80-1A(4) of the Income-tax Act, 1961. FACTS The assessee claimed deduction under section 80-IA(4) for the years under consideration for developing infrastructure projects under different authorities, like, HUDA, ICICI Park, HMWSSB, TNWSDB, TWAD, etc. The claim of the assessee was that the company had been allotted the work of development of infrastructure and handed it over to the Government as an infrastructure after completion and, hence, it was to be allowed as deduction under section 80-IA(4). The lower authorities were of the opinion that the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture facility includes Rail system, Highway project, Water treatment system, Irrigation project, a Port, an Airport or an Inland port which cannot be owned by anyone. Even otherwise, the word 'it' is used to denote an enterprise. Therefore, there is no requirement that the assessee should have been the owner of the infrastructure facility. [Para 22] The next question to be answered is whether the assessee is a developer or mere works contractor. It purely depends on the nature of the work undertaken by the assessee. Each of the work undertaken has to be analyzed and a conclusion has to be drawn about the nature of the work undertaken by the assessee. The agreement entered into with the Government or the Government body may be a mere works contract or for development of infrastructure. It is to be seen from the agreements entered into by the assessee with the Government. In the instant case, the Government handed over the possession of the premises of projects to the assessee for the development of infrastructure facility. It is the assessee's responsibility to do all acts till the possession of property is handed over to the Government. The first phase is to take over the existin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The circular issued by the Board, relied on by the assessee, clearly indicates that the assessee is eligible for deduction under section 80-IA(4). The department is not correct in holding that the assessee is a mere contractor of the work and not a developer. [Para 23] As per the provision of the section 80-IA, a person being a company has to enter into an agreement with the Government or government undertakings. Such an agreement is a contract and for the purpose of the agreement a person may be called as a contractor as he entered into a contract. But the word 'contractor' is used to denote a person entering into an agreement for undertaking the development of infrastructure facility. Every agreement entered into is a contract. The word 'contractor' is used to denote the person who enters into such contract. Even a person who enters into a contract for development of infrastructure facility is a contractor. Therefore, the contractor and the developer cannot be viewed differently. Every contractor may not be a developer but every developer developing infrastructure facility on behalf of the Government is a contractor. [Para 24] The decision in the case of Laxmi Civil Engineer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IA. The contracts which contain above features to be segregated, have to be granted deduction under section 80-IA, and the other agreements, which are pure works contracts hit by the Explanation to section 80-IA(13), are not entitled for deduction under section 80-IA. The profit from the contracts which involve design, development, operating & maintenance, financial involvement, and defect correction and liability period is to be computed by the Assessing Officer on pro-rata basis of turnover. The Assessing Officer is directed to examine the records, accordingly, and grant deduction on eligible turnover, [Para 25] I also place reliance on Hon'ble ITAT Pune Bench 'A' case of Rohan & Rajdeep Infrastructure. The Reverie, 1st Floor, 805, Bhandarkar Institute Road, Pune-411004 Vs. Assistant Commissioner of Income Tax, Cir.-3, Pune, ITA No.1214/PN/2010 A.Y. 2006-07 and order dated 05.04.2013. Which is on similar facts and they have held that widening and strengthening of road is bringing into existence a new infrastructure facility which is in the nature of road details are below.... "...8. We have heard the rival submissions of the parties and perused the record. The assessee com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ............. The above drawings (part of Bid Document) shows Existing Road (A) and New Road (B) which support the contention of the assessee that the thickness as well as the width of the road have been increased. Now the question is whether it can be said that it is merely repair and maintenance work ? And our answer should be in favour of the assessee that it is not merely a repair and maintenance work but doing entire restructuring of existing road The learned counsel has placed is reliance on the CBDT Circular No. 4/2010 dated 10.05.2010..." "...10 The CBDT has clarified the expression "New infrastructure facility". In fact the said circular supports the claim of the assessee that the widening of existing road by constructing additional lane as a part of the highway project is a new infrastructure facility. So far as the Hanumangarh -Suratgarh Road is concerned, the width is also increased as one additional lane is developed. In addition to increasing the thickness of the road, it is pertinent to note here that the project report which is the part of the agreement clearly suggest that the existing road was not capable of taking the increased load of the vehicles and hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad - Definition of a new infrastructure facility CIRCULAR NO. 4/2010 [F.NO.178/14/2010-IT(A-I)], DATED 18/05/2010 References have been received by the Board as to whether widening of existing roads constitutes creation of new infrastructure facility for the purpose of section 80-lA(4)(i) of the Income-tax Act, 1961. Section 80-IA(4)(i) provides for a deduction to an undertaking engaged in developing, or operating and maintaining, or developing, operating and maintaining any infrastructure facility subject to satisfaction of the conditions laid down in the section. The Explanation to section 80-IA(4)(i) states that for the purpose of this clause, infrastructure facility means inter alia :-(a)a road including toll road, a bridge or a rail system; (b)a highway project including housing or other activities being an integral part of the highway project;" The issue has been examined by the Board. It has been decided that widening of an existing Road by constructing additional lanes as a part of a highway project by an undertaking would be regarded as a new infrastructure facility for the purpose of section 80-IA(4)(i). However, simply relaying of an existing Road would not be cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and its handing over to the Government, the risk period of the appellant company was of 12 months for maintenance of the road. Further the appellant company has not subcontracted his work. In this case Statutory Report in form 10CCB under Rule 18BBB as prescribed by the CBDT was also filed along with the return. Wherein the Auditors have duly certified that the assessee was a developer of road and has maintained separate books of accounts wherein all details have been recorded and nothing adverse was noted by the Assessing Officer relating to this. Therefore, after considering all the facts the appellant company fulfills all the criteria of a developer as per section 80IA(4)(i) and by his works a new infrastructure facility in the nature of road has come into existence and is eligible for tax benefit under section 80IA(4)(i) of the Act. After considering the above stated facts, the assessee is entitled for the deduction u/s 80IA(4), therefore the addition of Rs. 10,34,06,532/ is hereby deleted and this ground of appeal is allowed." 14.1 From the above paras, reproduced from the order of CIT(A), we find that a categorical finding has been given by CIT (A) that the assessee compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd executes the development work i.e., carries out the civil construction work, he will be eligible for tax benefit under section 80 IA of the Act. In contrast to this, a assessee, who enters into a contract with another person including Government or an undertaking or enterprise referred to in Section 80 IA of the Act, for executing works contract, will not be eligible for the tax benefit under section 80 IA of the Act. We find that the word "owned" in sub-clause (a) of clause (1) of sub section (4) of Section 80IA of the Act refer to the enterprise. By reading of the section, it is clears that the enterprises carrying on development of infrastructure development should be owned by the company and not that the infrastructure facility should be owned by a company. The provisions are made applicable to the person to whom such enterprise belongs to is explained in sub-clause (a). Therefore, the word "ownership" is attributable only to the enterprise carrying on the business which would mean that only companies are eligible for deduction under section 80IA (4) and not any other person like individual, HUF, Firm etc. 22. We also find that according to sub-clause (a), clause (i) of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of a particular item as agreed to in the agreement or not. The agreement is not for a specific work, it is for development of facility as a whole. The assessee is not entrusted with any specific work to be done by the assessee. The material required is to be brought in by the assessee by sticking to the quality and quantity irrespective of the cost of such material. The Government does not provide any material to the assessee. It provides the works in packages and not as a works contract. The assessee utilizes its funds, its expertise, its employees and takes the responsibility of developing the infrastructure facility. The losses suffered either by the Govt. or the people in the process of such development would be that of the assessee. The assessee hands over the developed infrastructure facility to the Government on completion of the development. Thereafter, the assessee has to undertake maintenance of the said infrastructure for a period of 12 to 24 months. During this period, if any damages are occurred it shall be the responsibility of the assessee. Further, during this period, the entire infrastructure shall have to be maintained by the assessee alone without hindrance to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... astructure facility keeping in mind the present business models and intend to grant the incentives to such entities. The CBDT, on several occasions, clarified that pure developer should also be eligible to claim deduction under section 80IA of the Act, which ultimately culminated into Amendment under section 80IA of the Act, in the Finance Act 2001, to give effect to the aforesaid circulars issued by the CBDT. We also find that, to avoid misuse of the aforesaid amendment, an Explanation was inserted in Section 80IA of the Act, in the Finance Act-2007 and 2009, to clarify that mere works contract would not be eligible for deductions under section 80IA of the Act. But, certainly, the Explanation cannot be read to do away with the eligibility of the developer; otherwise, the parliament would have simply reversed the Amendment made in the Finance Act, 2001. Thus, the aforesaid Explanation was inserted, certainly, to deny the tax holiday to the entities who does only mere works contact or subcontract as distinct from the developer. This is clear from the express intension of the parliament while introducing the Explanation. The explanatory memorandum to Finance Act 2007 states that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 26th February, 2010 the Tribunal has taken the same view by inter-alia holding as follows: "7. Moreover, the reasons for introducing the Explanation were clarified as providing a tax benefit because modernisation requires a massive expansion and qualitative improvement in infrastructures like expressways, highways, airports, ports and rapid urban rail transport systems. For that purpose, private sector participation by way of investment in development of the infrastructure sector and not for the persons who merely execute the civil construction work or any other work contract has been encouraged by giving tax benefits. Thus the provisions of section 80IA shall not apply to a person who executes a works contract entered into with the undertaking or enterprise referred to in the section but where a person makes the investment and himself executes the development work, he carries out the civil construction work, he will be eligible for the tax benefit under section 80IA." 26. The above order was followed in subsequent assessment years 2007-2008 & 2008-09 in ITA Nos. 1312 & 1313/Mds/2011 vide order dated 18.11.2011 in the case of the same assessee. 27. Further in the case of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is admissible u/s 80IA or s. 80IAB or s.80IB or s. 80IC or s.80ID or s.80IE, no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139. 16. We find that this aspect was decided by CIT(A) by making following observations on page No. 36 of his order in assessment year 2009-10, which is reproduced below for the sake of ready reference: "I have perused the facts stated in the assessment order as well as assessee's submission. For this Assessment year 2009-10 due date for filing of Income Tax Return was 30-09-2009 and the appellant had filed the Income Tax Return on 25-09-2009 vide acknowledgement Number 91215411250909 without claiming deduction u/s 801A. Later on in response to notice u/s 153A dt 07-02-2012,which was received by the appellant on 03-03-2012 the appellant had filed return of Rs. 3,79,90,641/- and the appellant had also claimed 80IA deduction for Rs. 103406532/-, The time limit to revise the return was till 31/03/20U i.e. after the date of search but because of search the assessee could not file revise return he could file return in response ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised return of income to revise the return filed u/s 139 (1) had not expired on the date of search on 14.09.2010 as it was available up to 31/03/2011 and for assessment year 2010-11, the due date for filing return u/s 139 (1) was up to 31.10.2010 and for revising the return up to 31/03/2012 and the search has taken place before this i.e. on 14/09/2010. He has also noted that in both these years i.e. assessment year 2009-10 and 2010-11, the original return of income was filed by the assessee without claiming deduction u/s 80IA but within the time available u/s 139(1) because in assessment year 2009-10, the original return of income was filed by the assessee on 25/09/2009 whereas time available for filing the return was 31/10/2009 and in assessment year 2010-11, time available for revising the return was up to 31/03/2012 and the return u/s 133A was filed on 31/03/2012 i.e. within the time available for filing the revised return of income and till the date of search, due date of filing the return has not expired. Considering these facts that in these two years i.e. A.Y. 2007 - 08 & 08 - 09, where the time available for filing the revised return has expired before the date of search, C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /21, Vishal Khand, Gomti Nagar, Lucknow, on 13.05.2008.The Assessing Officer in the assessment order has mentioned that as the assessee could not explain the investment made in the subject property before the Assessing Officer, the A.O. referred the matter or investment in house construction u/s 142A of the I.T. Act to the Departmental Valuation Officer(DVO), Accordingly, vide this office letter dated 08-012-2013, reference was made u/s 142A to the DVO to elucidate correct cost of construction (reconstruction/furnishing as claimed by the assessee). The Valuation Officer submitted his report dated 16-03-2013 estimating the cost of construction in the aforesaid house property at Rs. 2,10,61,200/- which was confronted to the assessee. The assessee submitted his comments on 18-03-29013 by raising the following objections to the valuation report stating therein the following facts: That the assessee is maintaining regular books of accounts which are part of the seized record and there was nothing contained in the seized material which could suggest that the assessee has not accounted for the investment in the office premises at 5/21 Vishal Khand Gomti Nagar, Lucknow. The section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmit regarding the valuation report of the DVO as under: 2. That the assessee had purchased land and building vide purchase deed dated 13-05-2008, which included a land and constructed building area of 511 sq.mts as stated in the deed (copy enclosed). An additional area of 377.49sq.mts..(888.49-511) along with some changed in the internal structure was added to this construction. However, the Ld. D.V.O. not given the credit for such existing construction which was purchased by the assessee, as the cost of the same was included in the cost of the purchase. The purchase price consists of Rs. 22,17,600/- towards the cost of land and Rs. 3582400/- towards the cost of constructed area, totalling to Rs. 58,00,000/-. The valuation of land and building for the purpose of section 50C of the I.T. Act, by the revenue authority was determined at Rs. 57,94,600/-. However, the assessee had purchased the same for Rs. 58,00,000/- which was more than the value taken by the Stamp Authorities for the purpose of section 50C of the I.T. Act. Thus the cost of land and building purchased earlier stands fully disclosed in the books of accounts. Therefore, this cost of land and building cannot be dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for the area constructed by the assessee and renewals is Rs. 95,96,1166/- 9. The point of discrepancies in DVO area as under: a. Area of 511 st.mts. as per deed valued at Rs. 35,82,400/- should be taken and not at the value worked as per CPWD rates. The areas of construction and its photo at the time of purchase are being enclosed as slated above. b. The base rate have been taken as 2007 rates and additions of 83% have been added to the value worked out by the DVO which is the index rate for February 2013. However, as the construction had taken place between September 2008 and March 2009 so the average rate for this period should be taken. As per the CPWD circular (copy enclosed) the index rate for March 2009 was 113. So instead of 183 taken by the DVO 113 should be token. c. The %age cost for services should be taken on the value of construction for 377.49 sq mts. only. d. Credit for self supervision and assessee being into construction activities should also be given which is about 8 to 10%. If only the area and index rates are corrected in the DVO report the cost of investment shall be Rs. 66,83,271/-against which the assessee had shown an investment of Rs. 95,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... averments under Para 2. (b)Already replied under Para 3. Cost index enclosed by assessee is for Delhi and not Lucknow. (c)Percentage of services has been rightly taken for entire new structure area. (d)No credit for self supervision is admissible in absence of its proof. The Assessing Officer observed that: In view of the above comments of the Valuation Officer, the objections raised by the assessee regarding quantum of valuation of construction in the said house property was rejected and value of construction is taken as that estimated by the DVO vide his report dated 26.03.2023 prepared on the basis of his inspection of the property on 19.02.2013. So far as assessee's claim of construction of the property in financial year 2008-09 i.e. the year under consideration is concerned the same is accepted and the value estimated the DVO i.e. Rs. 2,20,62,200/- taken as correct cost of investment in the house property. As observed by the Ld. DVO the present structure is not possible without dismantling entirely the old structure, the whole building is taken as constructed during the year in question anew. In its reply dated 22.03.2013 the assessee has claimed investment of Rs. 95 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt of lndia) that.. 1 Valuation report has been considered to be only an opinion, so that it cannot form a firm basis either for assessment or for assumption of jurisdiction for reassessment . It has been so seceded in various contests, some of which are available even in the present volume. Where the assessee's expenditure on construction of property was supported by the assessee's books, the question of getting valuation report cannot possibly arise. It was so held by the Supreme Court in Sargam Cinema v. CIT (2010) 328 ITR 513 in the context of the categorical finding of the Tribunal that where the books were not rejected, reference to departmental Valuation Officer is misconceived. It is on this view that the Supreme Court set aside the High Court judgment to the contrary restoring the decision of the Tribunal..." There are other case Laws on similar facts which are as under: (1) CIT vs BAJRANG LAS BANSAL [2011] 335 ITR 572 (DELHI) UNDISCLOSED INVESTESTMT- ADDITION ON BASIS OF REPORT OF DISTRICT VALUATION OFFICER- NO EVIDENCE SUGGESTING ASSESSEE MADE ANY PAYMENT ABOVE CONSIDERATION MENTIONED IN RETURNBOOKS OF ACCOUNT NOT REJECTED-ADDITION NOT PERMISSIBLE-INCOME TAX ACT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd as a result of the search to suggest that the assessee had made any payment over and above the consideration mentioned in the registered purchase deed -Addition not justified. Held: It is settled law that the primary burden of proof to prove understatement or concealment of income is on the Revenue and it only when such burden is discharged that it would be permissible to rely upon the valuation given by the DVO, In any event, the opinion of the DVO, per se, is not an information and cannot be relied upon without the books of account being rejected which has not been done in the present case. Moreover, in the present case, no evidence much less incriminating evidence was found as a result of the search to suggest that the assessee had made any payment over and above the consideration mentioned in the registered purchase deed. A reading of the AO's order does not disclosed that the assessee had made any admission in her alleged statement under s. 132(4), In fact, no such statement has been produced. It is also pertinent to mention that no adjustment on account of sales consideration has been made by the Revenue in the case of the seller. Consequently, no substantial question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment valuer estimating cost at higher amount-No evidence that cost shown was not correct-Books of account not held incomplete or incorrect-Addition of difference as unexplained investment- Not justified." (iii) ACIT v. CITY Associates 2009 (13) MTC 926 (Trib. Lko) Headnote: "Income-tax Act, 1961-Sections 69 and 145- Construction of commercial property forming part of business assests- Cost of construction recorded in the accounts maintained by the assessee- DVOs report estimating construction cost at higher figures-Addition for unexplained investment could not be made without rejecting books of accounts. Even on the merit the appellant has a strong case as the appellant has pointed various defects in the valuation report as evident from pages 16 to 18 and 30 to 33 of this appeal order, which has not been adjudicated by the Assessing Officer. He has simply relied on DVO's technical expertise. Had this been so legislature would not have provided further opportunity to the assessee granted by the Assessing Officer to give comments. He has not considered that this property was directly purchased by the assessee and then renovated and photograph of the building before renovatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... becomes Rs. 1,45,000/-, then no addition can be made of Rs. 45,000/- being difference between investment in April, 2003 and fair market value in December, 2003. Learned D. R. of the Revenue could not point out any defect in this finding of CIT (A) on merit also and considering the totality of facts, we find no infirmity in the order of CIT (A) on this issue also. This issue is decided in favour of the assessee. 20. The issue No. 6 is regarding disallowance u/s 14A, which has been deleted by CIT (A). This issue has been raised by the Revenue vide ground No. 8 in assessment year 2009-10 and 2010-11. 21. Learned D. R. of the Revenue supported the order of Assessing Officer whereas Learned A. R. of the assessee supported the order of learned CIT (A). 22. We have considered the rival submissions. We find that the disallowance was made by the Assessing Officer u/s 14A as per Rule 8D in assessment year 2009-10 and 2010-11 and the same was deleted by CIT (A) on this basis that since there was no exempt income in these two years, no disallowance u/s 14A can be made. While holding so, CIT(A) has followed the judgment of Hon'ble Allahabad High Court rendered in the case of DCIT vs. Shivam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer that the transaction is duly recorded in the books of accounts but the Assessing Officer did not accept the contention of the assessee as it failed to furnish any supporting evidence. This addition was deleted by CIT (A) on the basis that the Assessing Officer has not mentioned the section of I.T. Act in which he has disallowed whether it is section 69C or 37 etc. and books of accounts were also not rejected and therefore, the disallowance was deleted. We are of the considered opinion that the order of CIT (A) is not sustainable because although section 69C is not mentioned by the Assessing Officer, this comes out from the language of Para 7 of the assessment order that the assessee could not explain as to how this payment found recorded in the seized paper was recorded in the books of accounts. If the assessee fails to establish by bringing evidence that the entry of expenses found in seized material was recorded in books of accounts or that the same was paid out of known sources of fund, addition has to be made u/s 69C and deduction for corresponding expenditure is not allowable. Since the assessee could not establish by bringing evidence on record before us or befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter in appeal before the CIT(A), he deleted the disallowance. It is noted by CIT(A) on page No. 31 of his order that part of expenses are related to assessment year 2008-09 and in that year, when the A. O. asked the assessee to explain, it was submitted by the assessee before the Assessing Officer that cash payments were not made to one single person on one single day and there was no bar under the provisions of IT Act for multiple payments being made to different persons which were less than Rs. 20,000/- for each person. The CIT(A) has noted down some instances also that amount of Rs. 85,894/- has been stated to have been made in cash consisting of payments of Rs. 19,894 + Rs. 20,000 + Rs. 18,000 + Rs. 15,000 + Rs. 15,000. Regarding one more payment of Rs. 1.05 lac, it was noted by CIT(A) that this is not a single payment to one party but is being paid to various parties and in support, copies of accounts are enclosed. Similarly payment of Rs. 1,10,000/- and Rs. 10,01,420/- was made but it was stated the same is duly recorded in the books of accounts being paid to various persons as per books of accounts produced. Considering these facts that the cash payment in excess of Rs. ..... 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