SANJAY KUMAR,CHANDAULI vs. DY./ASSTT. CIT, RANGE - 3, VARANASI

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ITA 35/VNS/2022Status: DisposedITAT Varanasi29 September 2023AY 2017-20183 pages
AI SummaryAllowed

What did the Tribunal hold?

The tribunal held that any difference in the cost of construction, representing unexplained investment, should have been assessed in the years the construction actually took place (AY 2003-04 to 2013-14). The addition in AY 2017-18 was therefore incorrect.

What were the facts?

The assessee constructed a building over several financial years from 2002-03 to 2012-13. During assessment for AY 2017-18, the AO referred the valuation to the DVO. The difference between the assessee's declared cost and DVO's valuation was added to income in AY 2017-18.

What were the issues?

Whether the unexplained investment in the construction of a building can be assessed in a year subsequent to the years of actual investment, based on a survey conducted in that later year.

Which sections of the Income-tax Act were involved?

Section 133A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CIRCUIT BENCH : VARANASI

Before: SHRI B.R. BASKARAN & SHRI AMIT SHUKLA

For Appellant: Shri S.K. Garg, Advocate
For Respondent: Shri A.K. Singh, Sr. DR
Hearing: 27.09.2023Pronounced: 29.09.2023

ORDER

PER B.R. BASKARAN, AM:

1.

The assessee has filed this appeal challenging the order dated 10.08.2022 passed by Ld CIT(A), NFAC, Delhi, and it relates to the assessment year 2017-18.

2.

We have heard the parties and perused the record. The AO has referred the matter of valuation of a building constructed by the assessee to the DVO during the course of assessment proceedings relating to assessment year 2017-18. The said building was constructed by the assessee during the financial year starting from 2002-03 to 2012-13. The difference between the cost of construction declared by the assessee and that valued by the DVO was assessed by the AO in assessment year 2017-18 and the same was confirmed by the ld.CIT(A).

3.

At the outset, we notice that the construction has taken place during the financial years relevant to assessment years 2003-04 to 2013-14. Accordingly, if there is any difference by way of unexplained investment in the construction of the building, the said difference is liable to be assessed in the above-said years, namely, assessment year 2003-04 to 2013-14. However, the AO has assessed the difference in assessment year 2017-18 on the basis of statements given during the course of survey u/s 133A of the Act. Even if the assessee has surrendered the value of unexplained investment, yet, the cause of action would arise only in the year in which the investment was actually made. Hence, there is no merit in the action of the AO in assessing the difference in cost of construction in assessment year 2017-18. Accordingly, we are of the view that the ld. CIT(A) was not justified in confirming the wrong addition made in assessment year 2017-18. Accordingly, we set aside the order passed by the ld.CIT(A) and direct the AO to delete the addition made in assessment year 2017-18.

4.

In the result, the appeal filed by the assessee is allowed.

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