GITA KUMARI,RANCHI vs. ACIT, CENTRAL CIRCLE-2, RANCHI

The only issue raised by the assessee in the various grounds of appeal is against the part confirming the addition by the Ld. CIT(A) of Rs. 2,10,000/- as against the addition made by the AO of Rs. 23,71,298/- u/s 69 of the Act on account of

Facts in brief are that the assessee filed return of income declaring total income of Rs. 1,01,28,570/- on 01.11.2017. The assessee is practicing doctor in Ashok Nagar, Ranchi. A survey was conducted on the assessee i.e Dr. Hemant Narayan Ray and Comprehensive Care Unit concern u/s 133A of the Act on 6.9.2018 during which various documents relating investments were found besides the evidences of residential premises being constructed in Ashok Nagar, Ranchi. The AO referred the valuation of property to the DVO u/s 142A of the Act and the valuation officer submitted the report valuing the property constructed between the FY 2015-16 to 2018-19 at Rs. 2,32,94,261/- against the value of property/investment declared by the assessee in the return at Rs. 2,04,15,160/-. Accordingly the case of the assessee was reopened u/s 147 of the Act and addition was made of Rs. 23,71,298/-u/s 69 of the Act as an undisclosed investment in the property.

In the appellate proceedings, the Ld. CIT(A) partly allowed the appeal of the assessee by sustaining the addition to the tune of Rs. 2,10,000/- while remaining addition was deleted by holding that to arrive at the rate of construction cost in Jharkhand, Delhi rate should be reduced by 9% which the AO has not done while framing the assessment.

After hearing the rival contentions and perusing the material on record, we find that the DVO, Ranchi has valued the property by applying CPWD rate. However the house is situated at Ranchi and therefore as against CPWD rates the valuation should have been made at local PWD rates. We note that there is a lot of disputes value as per CPWD rates vis-à-vis PWD rate. We note that the business of the assessee was situated at Ranchi and therefore the valuation rate as per PWD rate applicable in Jharkhand should have been taken or CPWD rates as adjusted toward the rate difference in the basic material and labour cost to bring it to par with local rates. We note that the CBDT, while approving the valuation method of Plinth Area Rates, has approved the proforma for calculation of cost index. From the above, it is seen that 3 AY: 2017-18 Gita Kumari rate difference in the material in Delhi is Rs. 143.38 whereas the same in Jharkhand is Rs. 95 which is 50.93% higher. Even the calculation of brick work as per CPWD rates as on 1.10.2007 is Rs. 2,121.75 cum which is Rs. 1,442.35 cum as per rate of PWD in Jharkhand meaning thereby that CPWD rate is higher from 47.10%. Considering this manual, we hold that even the Ld. CIT(A) has not examined the issue in correct perspective as Jharkhand PWD should have been adopted. The case of the assessee is also squarely covered by the decision of Circuit Bench of Ranchi in the case of Smt. Poonam Devi vs. ACIT in ITA No. 96/Ran/2013 for AY 2005-06 dated 26.10.2015 wherein it has been held as under:

In the result, appeal of the assessee is allowed.