TMI Blog2016 (9) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... Addition being the difference of valuation report and the investment shown in the books of accounts - Held that:- As it is seen that the DVO/A.O. has not provided proper opportunity to the assessee as only one day for filing the objection was allowed, which was also ignored by the AO and made ad hoc addition as per his whims. Since the report of Valuation Officer is also an estimate, though it is by technical person, it is noticed that the DVO has applied PAR 1992 rates as per C.B.D.T. Instruction No. 1671, which is claimed to be duly adjusted for Bhopal. However, the assessee has not been supplied with any working paper to verify the claim of the DVO. It is also noticed that PAR 1992 rates are relevant for very high class building in New Delhi or Metro areas, where cost of construction is 30% higher than the cost of material and labour in the small town like Bhopal. It has been held in several judicial cases that where the State PWD rates are published those rates should be applied in preference to PAR rates. The actual construction are awarded at rates 20 % to 30% below PAR rates. We are of the considered opinion that the addition can be made solely on estimated basis based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director of flagship companies i.e. M/s. Star Delta Private Limited and M/s. Bhopal Wires Private Limited and he is member of Guptasons group of Bhopal. The assessee has filed his regular returns of income for the assessment year 2005-06 on 25.2.2007 declaring income of ₹ 7,03,500/- and for assessment year 2006-07 on 27.07.2006 declaring taxable income of ₹ 4,89,777/-. These returns are processed u/s 143(1) of the Income-tax Act, 1961. A search and seizure operation u/s 132 of the Act was conducted in the case of the assessee on 28.10.2010. Therefore, the AO issued notices u/s 153A of the Act on 16.01.2012 requiring the assessee to furnish his return of income, in response to which the returns of income for assessment years 2005-06 and 2006-07 were filed on 03.02.2012 declaring the same income as was declared in the original returns of income. It was found during the course of search that the assessee had made investment in the construction/ renovation of his house situated at E-1/161, Arera Colony, Bhopal. During the course of search, certain documents were found containing map of the house no. E-1/161, Arera Colony, Bhopal constructed on 6000 sq.ft. of land, which de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are discussed at para 4.3 of the appellate order. However, the ld. CIT(A) noted that during the course of search, it was found that the assessee has constructed/renovated his house in respect of which certain documents containing map of the house with details of each room, doors, windows etc. as well as some loose papers were also found and seized containing the list of certain items purchased for the house such as pages in seized documents BS-1/15 and also during the course of search itself, on the spot, valuation of the house was got done from Registered Valuer according to which investment in house was much more than the construction shown by the assessee. Thus, the material found during the course of search itself shows that the assessee made unaccounted investment in the construction of residential house. Therefore, it cannot be said that there was no material found during the course of search in relation to the fact of investment made by the assessee in construction of the residential house. Accordingly, it was held that the AO had validly assumed jurisdiction u/s 153 of the Act. In support of his finding, the ld. CIT(A) has discussed at length the provisions relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report of DVO. It was submitted that the entire exercise of reference to valuer and process of valuation is vitiated in law. The AO has referred the matter for determination of fair market value of the property without recording any finding and rejecting the books of the assessee. The reference was made for the purpose of Wealth Tax Act and not to determine cost of construction. The DVO has obtained comments of the assessee only on one report dated 14.03.2014, which was issued under the provisions of the Wealth Tax Act to determine the fair market value of the property on various dates. The DVO has estimated the fair market value of the property for the assessment year 2005-06 to 2011-12 and assessee was thereafter served with a copy of the valuation report on 22.03.2013 by the AO, who directed to file the objection next day itself as the time allowed by the AO was very short, the assessee filed primary objections on 22.03.2013 itself. The AO while framing the assessment has completely ignored the objections of the assessee. The ld. Authorized Representative of the assessee also cited some case laws in his support. 8. On the other hand, the ld. CIT DR relied on the findings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A, as the case may be, shall abate. From the above, it can be seen that the legislature has provided in clear and unambiguous language in Section 153A that in case of a person where a search is initiated u/s 132 after 31.05.2003, the AO shall assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted. This is again explained in the first proviso to Section 153A which provides that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such assessment years . Thus, where there is a search, the AO has no option but to assess or reassess the total income for each of earlier six assessment years. Total income has been defined in Section 2(45) of the Income-tax Act as under :- (45) total income means the total amount of income referred to in Section 5, computed in the manner laid down in this Act. Further, in case of an ordinary resident in India, the scope of total income has been provided in Section 5 of the Act as under :- Scope of total income. 5. (1) Subject to the provisions of this act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision in the case of CIT vs. Kabul Chawla, (2016) 380 ITR 0573 (Del), wherein it was held that completed assessment can be interfered with by the AO while making the assessment u/s 153A only on the basis of some incriminating material un-earthed during the course of search or requisition documents for undisclosed income or property discovered in the course of search, which were not produced or not already disclosed or made known in the course of original assessment. Since in the case of assessee, the renovation/construction of house was undertaken during the course of assessment year under consideration, therefore, assumption of jurisdiction u/s 153A by the AO is justified. 12. As regards the maintaining the addition of ₹ 5,61,761/- for assessment year 2005-06 and ₹ 4,33,473/- for assessment year 2006-07 being the difference of valuation report and the investment shown in the books of accounts, it is seen that the DVO/A.O. has not provided proper opportunity to the assessee as only one day for filing the objection was allowed, which was also ignored by the AO and made ad hoc addition as per his whims. Since the report of Valuation Officer is also an estimate, tho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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