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2016 (9) TMI 1072 - ITAT INDORE

2016 (9) TMI 1072 - ITAT INDORE - TMI - Proceeding of assessment u/s 153A - income from house property - Held that:- CIT(A) has mentioned in para 4.4 of his order that certain loose papers relating to house property under consideration showing details of map of each room, doors and windows were found and seized. Therefore, the assumption of jurisdiction by the AO u/s 153A of the Act is in accordance with law, which is also supported by the land mark decision in the case of CIT vs. Kabul Chawla, .....

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house was undertaken during the course of assessment year under consideration, therefore, assumption of jurisdiction u/s 153A by the AO is justified. - 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 .....

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bour 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 DVO’s report is not justified and proper. Therefore, in the interest of justice and fair play, it would be reasonable to restrict the addition of .....

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EMEBR. These two appeals are filed by the assessee against the consolidated order of ld. Commissioner of Income-tax (Appeals)-I, Bhopal [hereinafter referred to as the CIT(A)] dated 06.02.2015 and pertains to assessment years 2005-06 and 2006-07 as against appeals decided in consolidated assessment order dated 26.03.2013 of ACIT,1(2), Bhopal [hereinafter referred to as the AO]. 2. Since both these appeals pertain to the same assessee and issue involved is also common, these are being disposed of .....

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5,61,761/- (correct amount ₹ 4,33,473/-) towards unexplained investment in construction of residential house. I.T.(SS)A.No.49/Ind/2015 - A.Y. 2006-07: 1. That the ld. CIT(A) erred in holding that in the facts and circumstances of the case the proceeding of assessment u/s 153A were not without jurisdiction as no incriminating document was found as a result of search. 2. That, in the facts and circumstances of the case, the ld. CIT(A) erred in maintaining addition of ₹ 5,66,527/- towar .....

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06-07 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 .....

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ain items of purchases for the house such as pages in seized documents BS-1/15. During the course of search itself, on the spot valuation of the house was got done from Registered Valuer and as per the Valuer s report, the investment in house was shown at ₹ 2,79,48,000/-, which was much more than the cost of construction shown by the assessee. The cost of plot of land was mentioned by the assessee at ₹ 1,80,00,000/- whereas cost of construction was estimated at ₹ 99,48,000/- ad .....

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there is slight variation in the built up area of these two reports. He, therefore, made addition of ₹ 15 lakhs in assessment year 2005-06 and ₹ 10 lakhs in assessment year 2006-07 on account of undisclosed investment in the house property. 5. The assessee carried the matter before the ld. CIT(A),wherein it was contended that the returns of income for assessment years was processed u/s 143(1) of the Act and no notice u/s 143(2) of the Act had been issued. Therefore, the assessment h .....

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d 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, v .....

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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 to Section 153A, scope of total income therein and various case laws from page nos. 9 to 25 and has given a finding that the contention of the assessee that the assessment u/s 153A can be made only based on incriminating material/documents found in the course of search is not correct and there was a material found dur .....

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ssee. 6. Thus, the assessee is in appeal before us on the ground that the ld. CIT(A) erred in holding that proceedings of assessment u/s 153A were not within the jurisdiction as no incriminating documents were found during the course of search and maintaining addition of ₹ 5,61,761/- for assessment year 2005- 06 and ₹ 4,33,473/- for assessment year 2006-07 towards unexplained investment in construction of residential house. 7. The ld. Authorized Representative of the assessee contend .....

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of search. The ld. Authorized Representative of the assessee contended that no material was found during the course of search showing unexplained investment shown in the construction of the house and, therefore, no addition could have been made. The ld. Authorized Representative of the assessee has also placed reliance on some of the case laws in this regard. As regards maintaining the addition of ₹ 5,61,761/- for the assessment year 2005-06 and ₹ 4,33,473/- for assessment year 2006- .....

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see 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 objecti .....

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BS-1/15 pertaining to construction/renovation of the house no. E-1/161, Arera Colony, Bhopal. 9. We have heard the rival contentions and perused the material available on record and findings recorded by the lower authorities. The provisions of Section 153A provides that the AO shall assess or re-assess the total income of each of six assessment years immediately preceding the assessment years relevant to the previous year in which the search was conducted u/s 132 or requisition was made u/s 132A .....

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ice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) asses .....

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[sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, 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 .....

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tal 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, the total income of any previous year of a person who is a resident includes all income from whatever source derived which - (a) is received or is deemed to be received in India in such year by or on behalf .....

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clear that u/s 153A, the AO shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. It is also pertinent to note that the definition of undisclosed income was specifically provided in Section 158B(b) in Chapter XIV-B, whereas no separate and distinct definition of total income has been provided in Section 153A because the total income has already been defined in Section 2(45) of the Act. Had the legislature intended to have the scop .....

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assessed u/s 143(3) of the Act. Therefore, we are of the considered opinion that the AO has to make assessment u/s 153A assessing or reassessing the total income of each of earlier six assessment years involved on the basis of incriminating material/documents found in the course of search. In the instant case, the ld. CIT(A) has mentioned in para 4.4 of his order that certain loose papers relating to house property under consideration showing details of map of each room, doors and windows were .....

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vered 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 d .....

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