TMI Blog2018 (2) TMI 1365X X X X Extracts X X X X X X X X Extracts X X X X ..... ing estimated details without supporting evidence would not help the case of the assessee - Decided against assessee Cost of construction adopted by the AO on the basis of DVOs valuation report as against the cost declared by the assessee - estimation of cost of construction by adopting State PWD rate by the ld. CIT(A) instead of CPWD rates adopted by DVO - Held that:- We find that it is settled proposition of law that when the assessee has claimed the deduction on accounts of self supervision then appropriate deduction ought to have been given on this account while determining the cost of construction. Further, when certain expenditure were incurred by the tenants of the shops as claimed in the affidavit as well as in their statements then, the said claim should not have been denied without bringing contrary material on record. Similarly the assessee has claimed that the ld. CIT(A) has adopted incorrect State PWD prescribed rates therefore, all these aspects require a proper verification and examination at the time of determination of cost of construction of the shopping complex in question. The other issues raised by the assessee are also required to be considered in light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting material was found during the course of survey U/s 133 A of the Act. ii. Taking the total cost of construction as per PWD rates at ₹ 2,81,71,198/- as against ₹ 2,65,33,114/- calculated by assessee. iii. Not allowing deduction for self supervision charges. iv. Not allowing deduction for electrical fittings paint cost incurred by the tenants. v. Considering the cost of purchases of lift in A.Y. 2011-12 to 2014-15 ignoring the fact that the said lift was purchased on 07/01/2015 i.e pertaining to A.Y. 2015-16. vi. Taking the value of lift at ₹ 19,03,500/- as estimated by DVO as against actual cost of purchases of lift for ₹ 3,78,420/-. vii. Taking the value of extra items at ₹ 20,02,130/- as against the value of extra items taken by approved valuer at ₹ 4,54,503/- viii Taking the Architect fees at ₹ 3,20,768/- i.e.1% of total cost as against actual payment of ₹ 2,00,000/- ix. Accepting the cost of construction for F.Y. 2013-14 at ₹ 10,19,596/- only as against ₹ 18,34,792/- declared by the assessee. x. Not accepting the cost of construction declared by the assessee in F.Y. 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has submitted that as per the reasons recorded, the AO has formed to belief on the basis of the statement of Shri Sunil Yadav partner of Ganpati Plaza recorded on 02.09.2013 wherein he has stated that a sum of ₹ 17 lacs has been invested in the construction of shopping complex. However, simply the investment in the shopping complex cannot be considered as income of the assessee firm. He has further submitted that the source of investment was explained in the statement and when there was no taxable income during the year then, there was no question of filing the return of income. Thus, non filing of return of income cannot be a reason to believe that the income chargeable to tax has escaped assessment. The ld. AR has further contended that there was no business activity during the year and there was no income either accrued or received by the firm during the year. Non maintenance of books of accounts also cannot be the reason to believe that some income chargeable to tax has escaped assessment. Thus, ld. AR has submitted that when there was no material before the AO to whisper in the form of investment in construction of building than how a belief was formed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02.09.2013 had given only estimated and general reply regarding the cost of construction/amount of investment in the construction of shopping complex and sources of the said investment. It was only a general statement without giving specific details of source of investment and further without any supporting documents. Shri Sunil Yadav partner of the assessee firm has stated that he will furnish the relevant record subsequently This is not a case of forming of opinion by the AO on the basis of statement recorded u/s 133A of the Act but the statements were recorded u/s 131 of the Act on the subject matter of shopping complex did exist at the ground. Therefore, when a tangible asset was found in existence and statements were regarding the investment and source of the investment then the same cannot be held as a mere statement without corroborating evidence. Where the facts of construction of shopping complex is not undisputed or in doubt then, the statement recorded about the investment and source of investment of the shopping complex along with physical existence of the shopping complex constitute a tangible material to form the belief that the income to the extent of investment made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 34,11,239/-. On appeal the assessee produced the books of accounts and other records in support of the cost of investment for construction of the shopping complex consequently the ld. CIT(A) forwarded the additional evidence filed by the assessee to the AO for examination and comments. The AO submitted its remand report and pointed out that during the course of remand proceedings the assessee produced the books of accounts along with supporting bills and vouchers. The assessee also produce the affidavit of the tenants to show that some work of finishing and furnishing of shops were done by tenants. However, the AO observed and stated that the assessee did not produce the complete books of account along with supporting evidence during the course of assessment proceedings despite numerous opportunities provided to it. After considering the said remand report the ld. CIT(A) has granted part relief to the assessee by applying State PWD rate instead of CPWD rates adopted by the DVO for the purpose of determining the value of construction of shopping complex. Thus, the ld. CIT(A) did not accept the contention of the assessee regarding the cost of construction as declared by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the affidavits of the tenants as well as some of the tenants were examined by the AO during the course of remand proceedings wherein all the tenants have accepted the fact that the electrical installations and paint inside the shop were got done the by themselves and assessee has not incurred any expenditure on electrical installation and inside paints of the shops. Since, the DVO while determining the cost of construction has not taken into consideration these factors. 9. Therefore, the Fair Market Value determined by DVO cannot be allotted the next dispute is regarding the cost of lift. The ld. AR has submitted that the assessee produce the purchase bill of lift of ₹ 3,78,420/- whereas the DVO took the values as per CPWD guidelines rate at ₹ 19,03,500/-. Therefore, ignoring the actual cost of lift the DVO has adopted the artificial rates which is not justified. The DVO has taken the value of extra items of ₹ 20,02,130/- as against the value of extra items taken by the approved valuer at ₹ 4,54,503/-. The ld. AR of the assessee has submitted that since the ld. CIT(A) has accepted the State PWD rates instead of CPWD rate therefore, the cost of extra ite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost of construction declared by assessee when the books of accounts were not maintained by the assessee regularly but were prepared on a subsequent date that too after more than 3 years. Therefore, the value shown by the assessee in the books of accounts, need not necessarily be accepted as correct. Thus, it was proper and justified on the part of the AO to examine the valuation of cost of construction through independent inquiry. Further, the reference to the DVO was made by the AO during the assessment proceedings and in the absence of relevant evidence and books of accounts. Therefore, the report of the DVO was available before the additional evidence filed by the assessee during the proceedings before the ld. CIT(A). Thus, once the DVO has already determined the value of cost of construction then, this objection of the assessee is devoid of merits. However, we find that some of the issues like allowing the self supervision rebated/deduction, the cost of electrical installations and paint inside the shops claimed to have been incurred by the tenants as per the affidavits filed as well as statements of the tenants recorded by the AO during the remand proceedings and further, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... say the assessee be given an appropriate opportunity of hearing before passing the fresh order on this issue. 12. Ground No. 5 is consequential to the ground No. 4 and no separate adjudication is required. 13. For the assessment year 2012-13 the assessee has raised the following grounds:- 1 On the facts circumstances of the case Ld. Lower authorities grossly erred in initiating reassessment proceedings u/s 147 of the Income Tax Act, 1961, 2. On the facts circumstances of the case in law also A.O. grossly erred in passing the assessment order without proper unlawful service of notice u/s 148,143(2) of the Act. 3. On the facts circumstances of the case Ld CIT (A), Alwar grossly erred in holding that the reference to the DVO u/s 142 of the Act for estimating cost of construction was justified. 4. On the facts circumstances of the case Ld CIT (A), Alwar grossly erred in i. Not accepting the cost of construction declared by the assessee in the books of accounts as in the remand proceedings Ld A.O. verified the books, Vouchers supporting and were accepted and nothing incriminating material was found during the course of survey U/s 133 A of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of difference found in the cost of construction as shown by the assessee and as determined in DVO s Report. 16. We have heard the ld. DR as well as ld. AR and considered the relevant material on record. This issue is common to the issue raised by the assessee regarding the estimation of cost of construction by adopting State PWD rate by the ld. CIT(A) instead of CPWD rates adopted by DVO. We find that this issue is covered by the various decisions of this Tribunal as well as the decision of Hon ble High Court relied upon by the ld. CIT(A) as held in para 7.22 and 7.23 as under:- 7.22 The appellant has placed reliance on the judicial decisions of Hon ble Rajasthan High Court in the case of CIT vs. Hotel Hoshi ( 242 ITR 478), CIT vs. Elegant Homes Pvt Ltd ( 259ITR232). It is further submitted by the appellant that Hon ble ITAT Jaipur have in the case of Sh Nirmal Kumar Agarwal in ITA No. 828, 829/JP/2013 vide order dated 15-01-2014, held after considering a number of decisions of the jurisdictional High Court that State PWD rates have to be applied for estimating the value of construction. 7.23 I have gone through the decisions of the Jurisdictional Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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