TMI Blog2019 (3) TMI 905X X X X Extracts X X X X X X X X Extracts X X X X ..... under search should have been compared with the total surrender towards that particular property. The assessee in her reply to Assessing Officer, reproduced by us in earlier part of this order, had also confirmed that surrender was made by Shri K. N. Singh Patel on account of construction in various properties and there is no mention of yearwise construction. In the above assessments of Shri K. N. Singh, the Assessing Officer has not made any addition and has accepted the returns filed by him u/s 153A of the Act which means that he has accepted the declaration of surrender made by Shri K. N. Singh in the respective years of surrender. Therefore, keeping in view all the facts and circumstances, we set aside the order of learned CIT(A) on this account and remit the matter back to the office of the Assessing Officer to recalculate the addition, if any, after taking into account the total amount of surrender in various years with respect to the total investments in various properties, irrespective of the year of investment. Assessing Officer should compare the total investment during search period as valued by registered valuer towards various properties. For the purpose of comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar issues and these were heard together, therefore, for the sake of convenience, a common and consolidated order is being passed. For the sake of convenience concise/revised grounds of appeal taken by the assessee in assessment year 2003-04 are reproduced below:- 1. The Ld. Commissioner of Income-tax (Appeals) has erred in law and on facts in passing the order which is illegal, improper and against the principles of natural justice. 2. The Ld. Commissioner of Income-tax (Appeals) has erred in law and on facts in passing the order without giving adequate opportunity of being heard. 3. The Ld. Commissioner of Income-tax (Appeals)has erred in law and on facts in sustaining the addition u/s 69 of Income-tax Act on account of unexplained investment in the following properties on the basis of report Ld. Valuation Officer, which itself suffers from various infirmities: i. Plot No. 28, 29, 30 31, Gaura Bagh, Lucknow. ii. Plot No. 37 38, Gaura Bagh, Lucknow iii. Plot No. 25 26 Gaura Bagh, Lucknow iv. Plot No. 35, 45, 46 Khasra No.45 situated at Gaurabagh, Kursi Road, Lucknow (1/2 share, other 1/2 share belonging to Shri Mahesh Singh Patel). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and head-wise amount of undisclosed income/investment. In the affidavit, Shri. K. N. Singh Patel owned up the whole surrender of ₹ 10 crores and furnished details of assets/investments which were made by him during several years in the name of his family members, namely, Smt. Anju Singh, Shri Mahesh Singh, Smt. Rajni Patel, etc. The Assessing Officer during the assessment proceedings in the case of the assessee, required the assessee to prove and demonstrate the source of funds for making investment in various immoveable assets and in reply the assessee submitted that the plots were purchased by her in various years and construction was done by her father-in-law and the construction cost was duly covered by the declaration of surrender made by her father-in-law Shri. K. N. Singh Patel. The reply of the assessee to this effect as reproduced by the Assessing Officer at page 17 of his order is reproduced below:- 1. Plot No. 25 at Gaurabagh, Kursi Road, Lucknow. Purchased on 03.07.2007 for ₹ 2,29,760/- in cash. 2. Plot No. 26 at Gaurabagh, Kursi Road, Lucknow. Purchased on 02.06.2003 for ₹ 1,51,800/- vide demand draft no. 181040 dated 30.05,2003 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the matter relating to investment in construction in various properties to the Valuation Officer. In the Valuation Report submitted by the Valuation Officer and in those estimated investments declared by the assessee, there were certain differences and, therefore, the Assessing Officer held that the valuation as done by the Valuation Officer will have to be taken into account and, therefore, he added the difference in cost of construction between the cost of construction declared by the assessee and estimated by the Valuation Officer. When the Valuation reports were confronted to the assessee, the assessee submitted that the investment made in assessment year 2002-03 cannot be taken into account, as the same was beyond the period covered under search. However, the Assessing Officer did not accept the contention of the assessee and instead he divided the amount of investment in assessment year 2002-03 into six years and added back the proportionate amount from assessment years 2003-04 to 2008-09. After taking into account all these factors, the Assessing Officer held that the assessee had made total investments in various years as under:- A.Y. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by holding that the surrender made by Shri. K. N. Singh Patel was more than the amount of investment assessed in the hands of the assessee. During this year against the investment of ₹ 12,65,195/-, Shri K. N. Singh Patel had surrendered an amount of ₹ 1,25,00,000/- 7. All these facts noted together reflect that the Assessing Officer during these years though gave credit for the surrender made by Shri. K. N. Singh Patel wherein the surrendered amount was more than the investment made by the assessee, but, in the process, he ignored the excess surrender made by Shri. K. N. Singh Patel for these years. On the other hand, wherever as per Valuation Report, the assessee had made investment in a particular year which was not covered by the surrender of Shri K.N. Singh in that year he made the addition. This is what the grievance of the assessee is whereby it is aggrieved that the Assessing Officer and the ld. CIT(A) should have taken a holistic view of the issue and should have considered the entire surrender amount with respect to the declaration made by Shri K. N. Singh in the case of assessee irrespective of difference in years. 8. On appeal before the ld. CIT(A), th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears relevant to the assessment years for which the proceedings were pending before him, there does not appear any justification, for not accepting the investment made in the earlier years as no evidence has been brought on record in support of the claim that no investment was made in the assessment years prior to assessment year 2003-04 as claimed by the assessee. Thus, spreading over the investment of earlier years by the Assessing Officer in respect of properties being building at Plot No, 35, 45 46, Khasra No. 45, Gaura Bagh, Kursi Road, Lucknow and building at plots no. 37 38, Gaura Bagh, Kursi Road, Lucknow is not justified and the unexplained investment in various year shall be estimated by considering the valuation as made by the Valuation Officer in the respective years. Further, it has been held in Income-tax Officer v. Ram Nath Aggarwal [2004] 2 SOT 471 (ITAT ASR. Bench) (SMC) that the valuation of an asset is not an exact science. Mathematical calculation 'is not possible. The valuation of the immovable property is also estimated on the basis of the facts and circumstances. Therefore, it could not be said that whatever the Valuation Officer had stated was final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by Shri K. N. Singh Patel, as done by the Assessing Officer, the required credit shall be given. Hence, the investment made by the assessee during various years (in Rs.) is recomputed as under:- TABLE-A A.Y Investment in value of property at: Total Plots No. 28,29, 30 31 Gaura Bagh (as shown by the assessee) Plots No. 37 38, Gaura Bagh, Kursi Road, Lucknbw (as shown by the assessee) Plots No. 25 26, Gaura Bagh, Kursi Road, Lucknow (as estimated by the Valuation Officer) investment during the year. 2002-03 5552400 5552400 2003-04 2485258 2485258 2004-05 0 2005-06 2332200 4286242 6618442 2006-07 3543900 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 2003-04 2485258 1015000 3500258 2004-05 0 138400 138400 2005-06 6618442 129000 6747442 2006-07 5937917 137500 6075417 2007-08 4431658 112500 4544158 2008-09 3100390 1789100 4889490 2009-10 1174400 NIL 1174400 For the year under consideration, the total investment is recomputed at ₹ 3500258 in place of ₹ 9977772 computed by the Assessing Officer and after allowing credit for a sum of ₹ 8600000 for the disclosure made by Shri K. N. Singh Patel as done by the Assessing Officer, no addition is liable to be made for the A.Y. 2003-04 resulting into consequential relief of ₹ 1377772. Hence, grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty amounting to ₹ 23,800/-. It has not been made clear as to from which bank account this amount has been withdrawn. In the available bank accounts, no such entry is seen. This amount has, therefore, been paid out of the undisclosed income of the assessee and is, therefore, added to his total income u/s. 69 of the I. T. Act, 1961. Therefore, the total undisclosed investment in respect of cost of acquisition of properties is ₹ 8,06,600/- which is being added to the total income of the assessee u/s 69 of the LT. Act, 1961. Satisfaction is recorded that the assessee has furnished inaccurate particulars of his income and, therefore, penalty proceedings u/s 271(1)(c) of the Income-tax Act, 1961 are being initiated separately for this default (Addition, ₹ 8,06,600/') 4.3.1. During the course of the appeal, the appellant has submitted as under:- III Purchase of other properties, aggregating ₹ 13,22,860 40. The said addition winch pertains to different assessment years, is wholly inconsistent with the facts of the case and material and information available on record, as may be seen from tile details furnished below:- a). Addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the .Assessing Officer by observing as under:- The position of undisclosed investment in respect of above referred properties with regard to cost of acquisition is as under:- (i) Plot No. 418 420 at Mahona, Bakshi Ka Talab purchased for ₹ 2,00,000/- by the way of demand draft and stamp duty amounting to ₹ 86,500/-. It has not been made clear as to from which bank account this amount has been withdrawn. In the available bank accounts, no such entry is seen. This amount has, therefore, been paid out of the undisclosed income of the assessee and is, therefore, added to his total income u/s 69 of the I. T. Act, 1961. Therefore, the total undisclosed investment in respect of cost of acquisition of properties is Rs,2,86,500/- which is being added to the total income of the assessee u/s 69 of the I.T. Act, 1961, Satisfaction is recorded that the assessee has furnished inaccurate particulars of his income and, therefore, penalty proceedings u/s 271(1)(c) of the I.T. Act, 1961 are being initiated separately for this default. (Addition ₹ 2,86,500/-) 5.3.1 During the course of the appeal, the appellant has submitted as under: b) Assessment Ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ground no. 7 is rejected as for the year under consideration, no amount had been offered as undisclosed investment by Shri K. N. Singh Patel relating to the investment made by the appellant. . 7.3 Grounds no. 8 and 9 are general in nature and do not require any separate adjudication. 7.4 In the result, the appeal for A.Y. 2007-08 is partly allowed. 14. In assessment year 2008-09, the ld. CIT(A) allowed part relief by holding as under:- 8.1 Grounds no. 1, 2, 3 and 4 are rejected in view of the findings made in paras 3.3, 3.4.1, 3.5 and 3.6 in respect of these grounds of appeal in the appeal for A.Y. 2003-04. 8.2. Grounds no. 5 is partly allowed in view of the finding in paras 3.7 to 3.7.7 and the investment worked out is reduced to ₹ 4889490 in place of ₹ 5398482 made by the Assessing Officer. The Assessing Officer has not made any addition on account of unexplained investment in construction as a sum of ₹ 9000000 had been offered as undisclosed investment by Shri K. N. Singh Patel relating to the investment made by the appellant while the total investment during the year worked out to ₹ 5398482 as per the Assessing Officer in buildin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the investments made by the assessee was more than the amount declared by Shri K. N. Singh in that particular year. The ld. A.R. of the assessee submitted that this action of the authorities below is not justified at all, as the undisputed fact is that the properties in all the years remained the same and the surrender by K. N. Singh Patel was made against same properties. It was argued that the authorities below should have considered total value of various properties with the surrender amount of Shri K. N. Singh and should not have considered the comparison on year-to-year basis. It was further argued that even if the investment is to be considered year-wise, then in those years where the amount of surrender was more than the investment, the same should have been carried forward for adjustment in the next year. The ld. A.R. of the assessee further argued that in all the years, the ld. CIT(A) has ignored the valuation arrived at by the Valuation Officer by holding that the difference between the declared value and those estimated by the Valuation Officer was less than 15% and the ld. CIT(A) has accepted the valuation declared by the assessee. Therefore, it was argued that when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26/8/2010 which the Assessing Officer has rejected merely by saying that the name of the bank has not been given; whereas the name of the bank i.e. Allahabad Bank was mentioned in the said letter. The ld. A.R. of the assessee submitted that though investment was covered by explanation in letter dated 26/8/2010, but still addition can be set off against the surrender of Shri K. N. Singh. 19. Arguing the only ground No.5 of appeal in assessment year 2009- 10, the ld. A.R. of the assessee submitted that the Assessing Officer had made addition on account of low household expenses to the tune of ₹ 2.50 lakhs which was not based upon any incriminating material and the addition was made arbitrarily, therefore, it needs to be deleted. 20. The ld. D.R., on the other hand, placed reliance on the orders of the ld. CIT(A) and submitted that ld. CIT(A) has allowed substantial relief to the assessee wherever the year of investment and year of surrender was same. It was submitted that investment made by assessee in earlier years cannot be covered by surrender of Shri K. N. Singh in succeeding years. 21. We have heard the rival parties and have gone through the material placed on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatements referred to above i.e. the statements given by (i) Shri Mahesh Singh Patel, (ii) Shri Om Narain Singh Patel, (iii) Smt. Anita Singh and (iv) Smt. Anju Singh pertain to the disclosure of consolidated sum of ₹ 10 Crores (Ten crores), as additional income. 11. That looking to the fact that the deponent himself has been instrumental in setting up various business entities and/or creating various source of income acquisition of capital assets etc, and he himself has been playing a pivotal role in running and managing such business entities /'source of income and investments appearing in the names of various business and other entities, individuals , groups of individuals , and in keeping with letter and spirit of the statements referred to in paras 8, 9 10 hereinfore, the deponent himself has owned the said disclosure of income of ₹ 10 Crores (Ten Crores) and he undertakes and agrees to pay taxes as are payable with reference to the same. 12. That, in this respect, it is clarified that pursuance of the said undertaking, the deponent himself had already arranged for payment of taxes aggregating ₹ 1 Crores, through four separate cheque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the manner mentioned above and hi lieu number of the persons who felt benefited, both socially as well as economically by the advice and assistance rendered by the deponent. All these sources taken together constitute the ''manner in which the deponent got enriched to the extent of the disclosure of ₹ 10 Crores (Ten) as made during the course of search that had commenced oh 19.11.2008. 15. That the sums so collected by the deponent from time and over a period of years, remained invested on the date of search as per details given below:- (a) Financial Year 2002-03 SI. No. Name. Head of Expenditure/Investment etc. Rs. (i) Anju Singh Construction acquisition of Capital Assests At Gaura Bagh, Kursi Road, Lucknow 75,00,000 (ii) Anju Singh Mahesh Singh Construction acquisition of Capital Assests At Gaura Bagh, Kursi Road, Lucknow 22,00,000 (iii) Other unexplained investment/ Expenditure Etc. 2,00,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Other unexplained investments/ Expenditure etc. 3,00,000 Total 10,00,000 Financial Year 2007-08 Sl. No. Name Head of Expenditure/Investment etc. Rs. (i) Anju Singh Construction acquisition of Capital Assets at Gaura Bagh, Kursi Road, Lucfcnow 90,00,000 (ii) Mahesh Patel Anita Singh Construction acquisition of Capital Assets at Faizabad Road, Lucknow 50,00,000 (iii) Other unexplained investment/Expenditure etc. 10,00,000 Total 1,50,00,000 Financial Year 2008-09 SI. No Name Head of Expenditure/Investment etc. Rs. (i) Anju Singh Construction acquisition of Capital Assets at Gaura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax Department, so as to avoid litigation and to buy mental peace for the deponent himself and his family members, and for the sake of expeditious completion of assessment and/or other related proceedings. 19. That the additional income as aforesaid, has been surrendered on the stipulations that: - (i) the statements that is being given in terms of the present sworn statement should be treated as statement given by the deponent under section 132(4) read with explanation 5 to section 271(1)(c). (ii) the income so disclosed by the deponent should be treated to cover the effect of all such material/ information, in whatever form, that had been found during the course of search/ survey and/or that may be found to be so related later to the said search/survey in *Patel Group* as a whole, that had commenced on 19.11.2008. (iii) entire income as aforesaid shall be assessed in the hands of the deponent only, without affecting the assessments of any other business entities other entities individuals and or group of individuals forming the Patel Group etc. (iv) the additional income so surrendered by the deponent shall be allowed to be accounted for in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 67,47,442/- Assessment year 2006-07 Rs.60,75,417/- Assessment year 2007-08 Rs.45,44,158/- Assessment year 2008-09 Rs.48,89,490/- Assessment year 2009-10 Nil Total Rs.2,58,95,165/- 24. Against the above year-wise sustained addition, the ld. CIT(A) allowed relief to the assessee on account of his surrender in various years and upheld the addition for balance while he ignored the excess surrender during some years. The working of such addition is as per table below:- Assessment year Addition sustained by ld. CIT(A) Relief allowed on account of surrender Net addition Excess surrender ignored 2003-04 Rs.35,00,258 Rs.86,00,000/- Nil Rs.50,99,742/- 2004-05 Rs.1,38,400/- Nil Rs.1,38,400/- Nil 2005-06 Rs.67,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side by the valuation wing. The assessees were confronted with the valuation report and their comments and counter comments of the valuation wing were obtained. Thereafter, the final comments of the assessee were once again obtained. Vide reply dated 30.12.2010, the assessee has submitted as under: With reference to the above cied subject and regarding explanation for construction in the following building before 01.04.2002: 1. Construction at Plot No. 32, 49, 50, 52, 53 and Khasra No.46, Gaura Bagh, Kursi Road, Lucknow. 2. Construction at Plot 37, 38, Gaurabagh, Kursi Road, Lucknow. 3. Construction at Plot No. 35, 45, 46, Gaurabagh, Kursi Road, Lucknow. We are here to submit that as the some construction was done before 01.04.2002 as already mentioned in the report submitted by the DVO and in support to which affidavit of the assessee, before your honour is being enclosed at Annexure-A, B and C respectively. In addition to above we are enclosing the comparison at annexure-D, between the amount surrendered by the assessee in various properties and valuation done by the DVO of Income Tax Department. Your honour will appreciate that even if n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahesh Singh 2200000 9700000 2003-04 Construction of Mahesh Singh 7000000 2005-06 Construction of Rajni Patel 3000000 2007-08 Construction of Anju Singh 9000000 Out of unexplained investment/ Expenditure for Vikas Nagar 500000 Megha Bajaj 5000000 14500000 2008-09 Construction of Anju Singh 12500000 Construction of Mahesh Singh 17500000 Construction of Om Narain Singh 3000000 Construction of Baijnath Charitable trust 4000000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets. The difference in cost of construction that remains after allowing the benefit of surrendered amount is therefore, being added in the respective hands with respect to various properties in various years. As far as the comments on the three affidavits being submitted now, it will be sufficient to state that no supporting evidences have been enclosed to substantiate the claim made in the affidavits. Therefore, these cannot be taken to be true. In this regard, reference is again drawn towards the case of Sri Krishna Vs CIT, Kanpur Others reported in 142 ITR 618 (Alld.),. This is a judgment delivered by the jurisdictional High Court and the ratio laid down by this judgment is as under:- It is neither a rule of prudence nor a rule of law that the statements made in an affidavit which remains uncontroverted, must invariably be accepted as true and reliable. Ordinarily, in the absence of denial, the statements may be accepted as true but if there are circumstances which suggest that the statements on affidavit should not be accepted as true, the absence of denial by the other side, would not by itself be sufficient to clothe the statements .on .affidavit. with truthf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1,66,600/- has been upheld and learned CIT(A) held that no evidence was filed to explain the source of expenditure. Learned A. R., before us, has argued that the balance amount of ₹ 1,66,600/- should have been considered as part of surrender made by Shri K. N. Singh. We find that the addition of ₹ 8,06,600/- was made by the Assessing Officer on account of acquisition of various properties as mentioned by him in his order at page No. 20 and the undisclosed investment, sustained by learned CIT(A), cannot be set off by the surrender of Shri K. N. Singh as the surrender was made for construction only. The learned CIT(A) has already allowed appropriate relief therefore, we do not intend to interfere in his findings and in view of the above, ground No. 5 in assessment year 2004-05 is dismissed. 28. Now coming to ground No. 5 in assessment year 2005-06, we find that learned CIT(A) has confirmed the addition on account of property purchased on 17/02/2005. The learned CIT(A) has noted in his order that the Assessing Officer had rejected the explanation by saying that name of the bank was not mentioned. The learned CIT(A) has held that no further evidence was filed be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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