TMI Blog2016 (4) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... particularly when the sales is supported by valid sale deeds. The CIT(A) has elaborately discussed the issue. We do not see any reasons to interfere with the order passed by the CIT(A). Hence, we inclined to uphold the order passed by the CIT(A) and direct the A.O. to delete the additions. - Decided in favour of assessee. - I.T.A.No.628/Vizag/2013, C.O. No.140/Vizag/2013 - - - Dated:- 25-2-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant by : Shri G. Gurusamy, DR For The Respondent : Shri P.Prabhakara Murthy, AR ORDER PER G. MANJUNATHA, Accountant Member: This appeal filed by the revenue and cross objection filed by the assessee are directed against the order of CIT(A), Guntur dated 25.7.2013 and it pertains to the assessment year 2008-09. Since, the issues involved in these appeals are common, they are clubbed, heard together and disposed of by way of this common order, for the sake of convenience. 2. The brief facts of the case are that the assessee is a partnership firm which is engaged in the business of development of apartments flats. A search and seizure operation was carried out in the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the assessee for the year under consideration is not reliable as the assessee has failed to bring on record the total sale receipts in the books of accounts. Therefore, issued a show cause notice and asked to explain why the value of ₹ 1,200/- per sq.ft. should not be adopted for the total built up area of project to arrive at sales for the year. In response to show cause notice, the assessee filed a reply and stated that the valuation report obtained by the prospective buyers from the registered valuer cannot be the basis for ascertaining the sale value of the flats. The assessee further submitted that these valuation reports are not obtained by the assessee. The valuation report obtained by the buyers and the value assessed by the valuer is a fair market value and not cost of construction or sale price of the apartment. 5. The A.O., however, after considering the explanation furnished by the assessee held that the assessee firm could not produced relevant supporting documents for expenses claimed, such as material labour expenses debited in the profit loss account. Though assessee disowned the valuation report found in its possession, the validity of such repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost of construction at ₹ 500/- per sq.ft. On verification of the books of accounts, it is seen that the price of the undivided area of land is at ₹ 889/- per sq.ft., which is higher than the amount estimated by the registered valuer. Similarly, the assessee has reported average sale price of ₹ 560/- per Sq. feet in respect of construction cost of apartment, as against this, the valuer has arrived at a cost of construction of ₹ 500/- per sq. ft., which is less than the value declared by the assessee. The CIT(A) further held that though the valuation report issued by registered valuer is not the basis for estimation of sale price, compared the sale value declared by the assessee in respect of 3 flats for which the valuation report was seized by the department and arrived at a difference of ₹ 8,65,000/- in respect of 3 flats. With these observations, the CIT(A) directed the A.O. to sustain the addition to the extent of ₹ 8,65,000/- and delete the balance amount of ₹ 65,84,620/-. Aggrieved by the CIT(A) order, the revenue as well as assessee are in appeal before us. 8. The Ld. D.R. submitted that the CIT(A) was erred in deleting the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in estimating the net profit by taking into account the valuation report issued by the registered valuer. 11. We have gone through the submissions of the assessee and orders of the authorities below. The CIT(A) discussed the issue in detail. The CIT(A) has categorically given his findings that the valuation report is not the basis for estimation of the sale price. The CIT(A) further held that the book results declared by the assessee are in line with the value arrived by the registered valuer. Though, valuation done by the registered valuer cannot be treated as evidence for determining the sale price, the CIT(A) has compared the sales reported by the assessee for the 3 flats, for which the valuation report was found during the course of search and finds that there is a difference between sale price declared by the assessee in respect of 3 flats and the value arrived by the registered valuer. Therefore, quantified the difference and sustained the additions. 12. The assessee maintained regular books of accounts and also maintained bills and vouchers in support of expenditure claimed in the profit loss account. The A.O. one side stated that assessee has not substantiated th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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