TMI Blog2017 (8) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... aside the matter to the file of the ld CIT(A) to examine the same afresh in light of above discussions and as per law. In the result, the ground of the revenue is allowed for statistical purposes. Differential amount between amount shown under the head renovation expenses as per Balance Sheet found during survey and Balance Sheet submitted during the assessment proceedings - Held that:- The subject property is jointly owned by the assessee along with her mother-in law and total expenses of ₹ 54,40,605 have been incurred and 50% thereof have been debited to her mother-in law account. The expenses are supported by bills and vouchers and related payment details. The matter relating to estimation of construction expenses was also referred to the valuation officer and there is no deviation that has been brought on record in terms of expenses incurred and estimated by the valuation officer. In the result, there is no basis for making addition of ₹ 11,56,671 and the ground of revenue is dismissed. Undisclosed investment in construction of house property - Held that:- CIT-A correctly held that estimated addition has been made by the AO on the ground that the payments m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case and in law the Ld. CIT(A) has erred in deleting the addition of ₹ 20,00,000 made on account of income from undisclosed sources. 2. In ground no. 1 of revenue s appeal, the Revenue has challenged the deletion of addition of ₹ 21,46,179/- made by AO on account of difference in opening capital balance as per the Balance Sheet found during the course of survey at third party premises and balance sheet submitted during the course of assessment proceedings. 3. Brief facts of the case are that a survey u/s 133A was carried out on 10.12.2009 at M/s Gravita India Ltd. (a company in which husband of assessee Sh. Rajat Agrawal is director), wherein assessee is one of the shareholder. During the course of survey, certain documents pertaining to assessee were found and impounded, which were considered by Ld. AO while completing assessment. Documents found during survey inter alia included print out of Balance Sheet report of tally software, in which the opening balance of capital account was appearing at ₹ 18,54,035/-. However, as per final Balance Sheet furnished during the course of assessment proceedings, opening balance of capital was ₹ 39,92, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 26,04,746.94 is appearing and if the same is added to the opening balance of capital at ₹ 19,38,341.94, the resultant balance is more than the capital balance appearing in the final Balance Sheet prepared on the basis of the completed books of accounts. 5. We now refer to the relevant finding of the ld. CIT(A) which are under challenge. The same are reproduced as under:- 4. I have considered submissions made by the appellant and have also gone through the assessment order. It is noticed that the addition has been made by the AO primarily on the ground that in the course of survey carried out at the premises of M/s Gravita India Ltd. on 10/12/2009, a copy of balance sheet was found in which the capital as on 31/03/2009 was shown at ₹ 18,54,035/- while in the balance sheet filed with the return it was shown at ₹ 39,92,214/-. The difference in the amount of these two balance sheets was accordingly brought to tax by the AO. The AO did not accept the balance sheet filed with the return on the ground that the appellant had failed to furnish any supporting evidence for the opening capital and the books of account are not reliable. 4.1 It is, howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relates to difference in the opening balance in the capital account as on 1.4.2008 amounting to ₹ 21,46,179. The difference has arisen on account of balance sheet recovered during the course of survey carried out at the premises of M/s Gravita India Ltd and the balance sheet which has been filed during the course of assessment proceedings. In this regard, as we have noted above, the ld AR s contention is that it was submitted before the AO that the printout of Balance Sheet found during survey was incomplete as certain entries were yet to be incorporated. In fact the final Balance Sheet submitted during the course of assessment proceedings was prepared after making all the necessary reconciliation and taken into consideration the adjustments required for finalization of books of account and thus tallying with final report as per Tally software. It was further submitted that all the items of Balance Sheet were duly supported by information available on record, bank accounts and vouchers etc., however the same was not considered by AO. The AO didn t accept the assessee s contention on account of various reasons. The reasons which merit attention are as follows: opening balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n be given provided that when she is called upon by the department, she produces her correct state of affairs supported by books of accounts and financial statements. Therefore, in the instant case, what is relevant to examine is whether the balance sheet found during the course of survey was showing correct state of affairs of the assessee or not. As per the assessee, the said balance sheet was incomplete and doesn t show the correct state of affairs and after carrying out the necessary entries, a final balance sheet was filed during the course of assessment proceedings. Here, it is relevant to note that the AO then went about comparing the two balance sheets and found differences in the opening balances in the capital account and expenses under the head renovation which is again a ground of dispute dealt in subsequent paragraphs. The ld CIT(A) has given his findings in terms of other glaring differences in the two balance sheets and found the balance sheet found during the course of survey as not a reliable piece of evidence. In our view, what was equally relevant for the ld CIT(A) to examine and to give a finding relating to difference in the opening balance in the capital accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tails alongwith supporting documentary evidences in respect of the construction expenses incurred by her. The figures appearing in the Balance Sheet are taken from various ledger accounts. As per these details, the assessee incurred sum of ₹ 54,40,605/- towards the construction / renovation of the house during the financial year 2008-09 and thereafter ₹ 27,20,302.50 being 50% of the total sum so incurred has been debited to Mrs. Shashi Agrawal, mother-in-law and co-owner of the property to the extent of 50%. The ledger account of Mrs. Shashi Agrawal is at APB 150. 11. It was further submitted that for estimation of construction expenses, Ld. AO referred the matter to the Valuation Cell. The valuation officer also gave report without any deviation from the amount of expenditure shown as per the final Balance Sheet. Accordingly, the figures of construction expenses shown in the final Balance Sheet are duly backed by bills, vouchers, payment details etc. and further supported by report of Valuation Officer, which is completely independent having no scope of manipulation should be accepted. Further, nothing was brought on record to show that the amount of investment show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Balance Sheet of the assessee represent the amount debited to Shashi Agrawal in respect of the 50% portion of the property. As per the above working, only ₹ 16.89 lacs was charged to Shashi Agrawal as against the total amount of ₹ 27.20 lacs chargeable which is a reason of difference in the amount of investment as per the two Balance Sheets. Further, the Balance Sheet found during survey was print out from the incomplete records which were subject to many correction/new entries to be passed. The assessee never disowned the same but always contended that no conclusion should be drawn on the basis of it as it does not give true and fair picture of the states of affairs of the assessee. The final Balance Sheet only gives the true and correct picture as the same is supported with the necessary documentary evidences. Therefore, the AO s observation regarding ownership of the document has got no relevance. In view of the above it was submitted that the addition made by the Assessing officer of ₹ 11,56,671/- on account of investment in renovation from undisclosed sources being the differential amount of one shown under the head renovation of C-137 as per Balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deletion of addition of ₹ 4,00,000/-made by AO on account of undisclosed investment in construction of house property. 16. Brief facts of this case are that during the course of survey, certain documents were found showing various payments aggregating to ₹ 4,00,000/- during the year under consideration on account of labour, material, grid, sand etc. Ld. AO concluded that since the payments were not reflecting in cash book, addition was made. 17. The ld AR invited our attention to pages 1-6 of annexure A-6 found during the course of survey at M/s Gravita India Ltd. on perusal of which, it is evident that these papers depict certain expenditures incurred by the contractor on various dates. The assessee has made a total payment of ₹ 3,76,500/- during the year to the contractor as per the summary expenses sheet. The papers so found are the details maintained by the contractor and the same do not represent the payments made by the assessee to the contractor. Further the papers are not written in the systematic manner so as to arrive at any conclusion. It was further submitted that the entire construction expenses are subject to valuation by the valuation offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings of Gravita India, it was submitted that the premises was used for training to employees of overseas companies being subsidiaries of Gravita India and thus payments made to assessee were recovered back from those overseas companies. It was further stated that the rent of ₹ 20,00,000/- was claimed as expense in profit loss a/c rather was shown under head Loans Advances as Amount Recoverable from subsidiaries and joint Ventures in the audited Balance Sheet as on 31.03.2009. Further, on the basis of observations of ld. CIT(A) in appellate order that since valuation report was obtained after the construction work was completed, it cannot possibly determine the stages of construction. Hence, the observation of the AO that the building was not in a condition to be used in any manner does not appear to be factually correct , no addition was made by AO in case of Gravita India Ltd. In this scenario, since no expense whatsoever was claimed by Gravita India Ltd. in respect to payment made to assessee of ₹ 20,00,000/-, hence the fact that husband of assessee is director in Gravita India Ltd. makes no difference as no benefit has been passed on to that company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e property was let out. A detailed submission along with the additional evidences in the shape of certificate of the architects were also submitted before the ld. CIT(A) which is reproduced at pages 18 to 22 of the appellate order. Ld. CIT(A) after obtaining the remand report from the AO has admitted the additional evidences and after properly appreciating the facts that valuation officer has also not made any adverse observations about non user of the property during the period of construction deleted the additions so made. In this scenario, it is amply clear that the allegations of ld. AO are purely on the basis of his assumption that there was no basement at the time the house was purchased. This presumption of the assessing officer is without any basis or material on record and neither any specific question was asked from the assessee in this respect. With regard to the inspector report it is submitted that he had made visit in December 2011 when the work has been completed and prima facie without having any technical knowledge nobody could judge what was and how old the earlier construction was existed. It was further submitted that M/s Gravita India Limited is a publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e used only for store keeping etc. and training purposes. Hence, the time taken and expenditure incurred for furnishing etc. is not relevant in this case. Moreover, the fact that the building was given to a company whose director was the appellant s husband does not militate against the fact that the building was given on rent. The whole addition, therefore, appears have been made only on the basis of conjectures and surmises and, hence, cannot be sustained. The addition is, accordingly, deleted. 25. We have heard the rival contentions and perused the material available on record. The limited issue under dispute relates to whether the property at C-137, Dayanand Marg, Tilak Nagar, Jaipur was actually let out during the year or not to M/s Gravita India Ltd. Consequently, the amount of ₹ 20 lacs so received by the assessee is income under the house property or income from undisclosed sources. The case of the Revenue is that the construction of the building on the said plot of land was 30 years old and there was no basis to carry out fresh construction on the said piece of land without demolishing the existing structure. The case of the assessee is that the construction wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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