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Principal Commissioner of Income Tax, Rajkot 1, Rajkot. Versus M/s Rajni Developers Pvt Ltd.

2017 (12) TMI 310 - GUJARAT HIGH COURT

Addition u/s 69C - books of account seized during the search - rejection of books of accounts - Held that:- The amounts in question have been found to be entered in the regular books of account of the assessee. Therefore, inquiry, if any, in respect of valuation of the building ‘Dhanranjni’ was permissible in the course of regular assessment proceedings. The findings recorded by the Tribunal, therefore, are in consonance with the principles propounded in the above referred decisions of this cour .....

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e in this appeal under section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act ) has called in question the order dated 6.6.2017 passed by the Income Tax Appellate Tribunal, Rajkot Bench, Rajkot (hereinafter referred to as the Tribunal ) in IT(SS)A No.21/ RJT/ 1988 for the block period 1987-88 to 24.12.1996, by proposing the following questions, stated to be the substantial questions of law: (A) Whether in the facts and in the law ITAT is justified in deleting the addition m .....

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ssee company during the course of which books of account, incriminating documents, etc. of the assessee were seized. Pursuant to the search, a notice dated 20.8.1997 came to be issued to the respondent assessee, initiating proceedings under section 158BC of the Act. During the course of assessment proceedings the Assessing Officer found that the books of account which were seized during the search proceedings were not written up to the date of search and no cash balance was drawn. He further fou .....

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fy the cost of construction of the building Dhanranjni the Assessing Officer, referred the case to the Valuation Cell of the Department to work out the fair market value of the land and building. The Valuation Officer worked out the value of the land and building Dhanranjni as under: Cost/ value determined by DVO Cost/ value shown by the assessee Difference Land Rs.63,15,568/- Rs.61,00,000/- Rs.2,15,568/- Building Rs.1,87,18,104/- Rs.1,36,68,956/- Rs.50,49,148/- Rs.52,64,716/- 4. The stand of th .....

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fficer took note of the fact that the Valuation Officer had determined the value of the building at ₹ 1,87,18,104/-, whereas the assessee had shown the cost of the building at ₹ 1,36,68,956/- and held that the difference between the valuation of cost of construction determined by the Valuation Officer and the cost of construction shown by the assessee amounting to ₹ 50,49,138/- was the undisclosed income of the assessee under section 69C of the Act and added the same to the inc .....

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and that the entire assessment was devoid of incriminating material. The Tribunal was of the opinion that Chapter XIV-B of the Act is a complete code in itself and if the assessment has to be made for undisclosed income, such undisclosed income should be out of the result of search. The Tribunal held that there was no undisclosed income to this extent which could be said to have been detected as a result of search and set aside the addition of ₹ 50,49,138/- made on account of cost of cons .....

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d hence there was no check on the raw material. It was argued that the Assessing Officer was therefore, wholly justified in rejecting the books of account of the assessee and referring the matter to the Valuation Cell for estimating the cost of construction of the building. 8. From the facts as emerging from the record it is evident that insofar as the cost of construction of the building Dhanranjni is concerned, no incriminating material had been recovered during the course of search. The Asses .....

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