SMT. NISHA KESHWANI,AGRA vs. DY. C.I.T., CENTRAL CIRCLE, AGRA

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH: AGRA

BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER, AND DR. MITHA LAL MEENA, ACCOUNTANT MEMBER

I.T.A No.199/Agra/2013 (ASSESSMENT YEAR-2008-09)

Smt. Nisha Keshwani, Vs.. DCIT, Central Circle, 92, Surya Nagar, Agra. Agra. PAN:AHZPK7326B (Appellant) (Respondent)

Appellant by Karishma, Adv. Assessee by Shri Sunil Bajpai, CIT. DR.

Date of Hearing 01.08.2019 Date of Pronouncement 16.09.2019

ORDER Per Dr. M. L. Meena, A.M.: This appeal emanates from the order of the ld. Commissioner of Income Tax (Appeals)-1, Agra [(in short ‘the ld. CIT(A)], dated 11.02.2013, for A.Y. 2008-09, challenging confirmation of addition of Rs.28,36,777/- out of addition of Rs.65,91,318/- made by AO u/s 69C of the IT Act on the basis of valuation report. 2. The AO after considering the material seized from the assessee during the course of search u/s 132(1) of the Act, and considering the submissions of the

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assessee, noted that the assessee had purchased a property 5/157, Plot No.1 and 2 Transport Nagar, Agra where the assessee has incurred expenditure on construction of property in addition to purchase price. In order to ascertain the quantum of investment made by assessee in the said property, a reference was made u/s 142A to the valuation officer, valuation sale, income tax department, Agra to determine year-wise construction in the aforesaid property. On the premise of valuation report and finding no merits in the objection raised by the assessee, in absence of supporting evidences, the AO determined unexplained investment in the said property at Rs.65,91,318/- u/s 69C, and accordingly he made the addition. 3. Aggrieved assessee went in appeal before the ld. CIT(A) where ld. CIT(A) has rejected the appeal of the assessee vide para 10 of the impugned order after considering the written submissions, objection of the assessee to valuation report filed by the assessee, report of the AO, remand report and rejoinder of the assessee. 4. The ld. CIT(A) has observed vide para 10 as follows: “10. I have considered the entire facts relating to valuation of the property under consideration as discussed above from para 5 to 9. The ld. AR has first argued in the written submission challenging the reference made u/s 142A for valuation of the property as taken up in Ground No. 2 and 3 contending that no material has been found during search indicating either any undisclosed income of the assessee from undisclosed sources or any material indicating any unexplained investment in the

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construction of impugned property was found. In support of his arguments, he relied upon the decision of the Hon'ble Allahabad High Court in the case of CIT Vs. B.K. Agarwal (2009) 183 Taxman 434. He also argued that before invoking provisions of section 142A, there should be something on record to show that the assessee in first place has made such investment in the property outside the books or investment so made by him is not fully disclosed in the books of account and once, this condition is satisfied, the quantum of such investment made can be ascertained by the AO by making reference u/s 142A in order to made addition u/s 69 or 69B. In order to examine the above contention of the Ld. AR, I have gone through the assessment record. In order to examine the correctness of the cost of construction of the property under consideration, the AO required the assessee (appellant) vide his notice issued u/s 142(1) dated 08.09.2009, to produce relevant books of a/c, bills, vouchers etc. In response to this query, the assessee (appellant) replied that no books of account are maintained. It has also been found that the assessee has surrendered an income of Rs.25,00,000/- on account of investment in construction of this property during the search conducted in Shanker Gutkha Group to which, the assessee(appellant) belongs and the same has been shown in her return of income. This surrender was made because many bills and vouchers for purchase of materials used in

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construction of this property was found during search and these expenditures could not be explained from the known source of the income of the assessee (appellant). Therefore, it is not correct to say that no material indicating any unexplained investment in the construction of impugned property was found as contended by the Ld. AR in the written submission otherwise, the assessee (appellant) would not have surrendered an amount of Rs.25,00,000/- on account of investment in construction of the property. Therefore, the case law of CIT Vs. B.K. Agarwal (supra) of the Jurisdictional Allahabad High Court would not apply in this case. Now, the second issue to be decided is whether the AO was satisfied about the investment made outside the books of account in construction of the property on the basis of something on record to show that the assessee in first place has made such investment outside the books. In the present case, no books are being maintained by the assessee (appellant). In view of the facts that the assessee (appellant) has declared undisclosed investment of Rs.25,00,000/- in construction of the above mentioned property at Transport Nagar, the unaccounted investment made by the assessee (appellant) is prima facie established and in absence of any books of account, it was not possible for the AO to determine whether the declaration of unaccounted investment in the said house property as surrendered by the assessee (appellant) after search was sufficient or not. Therefore, the condition for making reference

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u/s 142A of the Act for estimating the investment made in the above property in Transport Nagar that there should be something on record to show that the assessee in first place has made such investment outside the books, is very much satisfied keeping in view the fact that the assessee (appellant) has herself admitted about making of unaccounted investment in the said property by surrendering Rs.25,00,000/- and in absence of any books of account, it was not possible for the AO to determine whether such surrender made by the assessee (appellant) was sufficient or not. In fact, after submitting the valuation report of the registered valuer (Er Dinesh Kumar Sharma) in which, the valuation of the said property has been shown at Rs.1,03,59,000/-, the Ld. AR has not emphasized on the ground taken by the appellant challenging the validity of reference made to the Valuation Officer because this registered valuer is the same person who has made drawing and design for the construction of the said house property and even as per his Valuation Report, the cost of construction has been computed at Rs. 1,03,59,000/- as compared to Rs.92,82,560/- declared by the assessee (appellant). Therefore, it has been found that as per the valuation report of the registered valuer as obtained by the assessee (appellant) herself, the cost of valuation of construction of the property is coming more than what has been declared by her without maintaining proper record of the construction of this property. Such fact showing the valuation

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of property determined by the registered valuer engaged by the assessee (appellant) coming more than the value declared by her clearly shows that action of the AO for referring the property for 'valuation u7s 142A was justified and therefore, the Ld. AR did not argue further for the ground taken to challenge the validity of reference made u/s 142A and he only argued on the reasonability of the value determined by the Departmental Valuation Officer that has been dealt by me in the subsequent para while dealing with Ground No. 4. After considering the above facts and circumstances of the case, as discovered by me from the assessment record, I find that none of the objections taken by the Ld. AR in the written submission objecting to reference made to the Valuation Officer u/s 142A is justified and therefore, in view of my finding that the AO has made reference to the Valuation Officer u/s 142A after satisfying all the conditions and as per the settled law in various judicial pronouncement , I hold that action of the AO making reference u/s 142A to the Valuation Officer for estimating the cost of the construction of the property is legally valid and hence, Ground No. 2 & 3 taken by the appellant challenging the reference made to the Valuation Officer u/s 142A of the Act has been dismissed.” 5. The ld. CIT(A) further noted that the second valuation report of the DVO was not accepted by the AO without assigning any reason as to why he preferred the valuation report made on the basis of plinth area rate as not reasonable than the report

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made on the basis of detailed item wise rate method. He was not convinced with the

objection of the AO regarding rejecting the valuation report prepared on the basis of

item wise method holding that the valuation made on the basis of item wise method

was more realistic and justified. He refers to the valuation report made by CPWD who

also confirms that plinth area rate is an approximate method and is used for

preliminary.

valuation report prepared by the valuation officer on the basis of detailed item wise

method which is more scientific in arriving correct investment as even admitted by the

valuation officer and thereby the objection of the AO for not considering the second

valuation report was rejected and the assessee was granted part relief. Considering the

objection of ld. AR and taking into consideration the facts that registered valuer of the

assessee has taken amount of such contingency/miscellaneous items as 1% and the

valuation officer has taken as 3% and therefore he has taken this amount as 2% arrived

at more reasonable amount. The ld. CIT(A) after disposing of the objection of the ld.

AR and considering the judicial pronouncements as well as reasonability of estimation

made by the valuation officer, determined the unaccounted investment made in the

construction of the property during the year under consideration to be sustained at Rs.

28,36,777/- by allowing the relief of 37,54,541/-.

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formed the opinion that books of account were not maintained properly, reference

made to DVO, addition made on the basis of report of DVO was to be upheld. In

support he filed the following case law: i. Indira Hospital Research & Diagnostic Centre vs. ACIT 19 taxmann.com 130 (Kar.). 11. Heard the rival contention and material placed on record and cited case laws

relied upon. It is undisputed fact that appellant assessee has made investment in

construction of said property No. 5/157.

submissions filed by the assessee, valuation report, remand report of the AO and

rejoinder of the assessee on the remand report as well as the objections raised by the

assessee to the valuation report. The CIT(A) has accommodated the assessee by and

large allowing relief of Rs.37,54,541/- that considering contingency and miscellaneous

items @2% and the method of valuation on the basis of detailed item wise as per

second valuation report wherein more scientific method was followed in arriving

correct investment as even admitted by valuation officer.

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since Assessing Officer had not specifically set aside accounts maintained by assessee, matter could not be remitted to DVO and, therefore, impugned order passed by Tribunal was perverse and arbitrary - It was apparent from records that Tribunal had taken a specific view that matter was referred to DVO only after it was found that account had not been properly maintained which would necessarily mean that account of assessee had been rejected and reference had been made by DVO - Moreover, Tribunal had already given substantial relief to assessee by adding only 25 per cent of cost of construction - Whether in view of aforesaid, impugned order passed by Tribunal did not require any interference Held, yes [In favour of revenue].” 16. Again in the case of Dr. Raghuvendra Singh vs. CIT 49 taxmann.com 544 Punjab & Haryana High Court held that: “I. Section 142A, read with section 69 of the Income-tax Act, 1961 - Estimate by Valuation Officer in certain cases (Reference to DVO) - Assessment year 2007-08 - Whether wh.ere it was only during search when assessee had no other option then assessee surrendered certain amount on account of unaccounted amount utilised by him, only inference in such circumstances would be that cost of construction shown in books of account was due to fact that they were not properly maintained and, thus, reference by Assessing Officer to DVO

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would be justified - Held, yes [Paras 14,16 &17] [In favour of revenue].” 17. Considering the factual and legal matrix of the case, we hold that the ld. CIT(A)

was justified in confirming the above such addition. Therefore, we find no reason to

interfere in the order of the ld. CIT(A).

Order pronounced in the open court on 16/09/2019.

Sd/- Sd/- (Laliet Kumar) (Dr. M.L. Meena) JUDICIAL MEMBER ACCOUNTANT MEMBER *AKV* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT Sr. PRIVATE SECRETARY ITAT, AGRA