I.T.O. vs. SHRI SUSHIL KR. LOHIA,

IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, PATNA Before Sh. N K Saini, AM and Sh. Sudhanshu Srivastava, JM IT No.63/Pat./2016, Asst: Year 2010-11. ITO,_Ward-3(2) Darbhanga Vs Shri Sushil Kumar,Darbhanga (APPELLANT) (RESPONDENT) PAN No.ABWPL 0066G Assessee by Shri K M: Mishra, Adv. Revenue by Shri Kausik Kr: Das, Sr: DRS Date of Hearing 13.03.2018 Date of Pronouncement : 15 .03.2018 ORDER Per Sudhanshu Srivastava_JM: This appeal has been preferred by the revenue against order dated 29.03.2016, passed by the Ld. CIT (Appeals) - Muzaffarpur, Camp Office Patna, for assessment year 2010-11 wherein vide the impugned order, the Ld. CIT (A) has deleted the addition amounting to Rs.66,37,628/- added by the AO u/s 69 of the Income Tax Act, 1961 (hereinafter called 'the Act ) on account of alleged undisclosed investment in construction of building: 2 The brief facts of the case are that there was a survey u/s 133A of the Act on 03.02.2010 and 04.02.2010 During the course of survey proceedings it was found that the assessee had ITA No.63/Pat./2016 made investment in construction of a three storied building: Thereafter , the details of investment in construction of the property were requisitioned by the AO_ The AO, in the assessment order, noted that during the course of survey, statement of the assessee was recorded and in the said statement the assessee had accepted in Para nos 17 to 23 that 90% of the construction in the first floor was complete and the structure of the second floor was complete whereas the finishing work in the second floor was complete only up to 50%. The total investment up to 4.2.2010, as per the assessee's statement, was Rs.1,95,00,000 /- The AO also directed the assessee to furnish the valuation report with respect to the investment made in the building: The assessee submitted two valuation reports. One of the valuation reports estimated the cost of construction at Rs.2,00,30,000 / - whereas the other report estimated the cost at Rs.2,20,16,070 / -. However , the AO estimated the cost of construction at Rs_ 2,14,52,337 / and worked out the differential cost at Rs.66,37,628 / - and added the same to the income of the assessee_ 3 ITA No.63/Pat./2016 2.1 Aggrieved, the assessee approached the First Appellate Authority who, relying on the judgment of the Hon 'ble Apex Court in the case Sargam Cinema VS _ CIT reported in 328 ITR 513 (SC), deleted the addition_ 2.2 Now the Department has approached the ITAT challenged the action of the Ld. CIT (A) 3_ The Ld_ DR referred to the assessment order in detail and submitted that the Ao had worked out the estimated cost of construction on the basis of valuation report/ s submitted by the assessee and the statement recorded during the course of survey and it was not the case that the Ao had made any reference to the DVO and, therefore, the Ld. CIT (A) had erred in deleting the addition relying on the judgment of the Hon'ble Apex Court in the case Sargam Cinema VS _ CIT (supra) 4 In response, the Ld_ AR submitted that the AO had not rejected the books of accounts which was apparent from the assessment order and further the AO had only required the assessee to obtain valuation report which was akin to the Ao making a reference to the DVO_ It ITA No.63/Pat./2016 was submitted that there was no evidence on record to show that the assessee had made any investment in the building over and above the investment shown in the books of accounts_ 5 We have heard the rival submissions and have also perused the material on record. It is an undisputed fact that the assessee, on the direction of the AO, got the building valued by the two approved valuers and submitted the same. It is also undisputed that the AO has not raised any issue regarding the correctness and completeness of the books of account and the AO has not also not mentioned that the books of accounts were defective and, thus, while directing the assessee to get the property valued by the approved valuer the AO neither recorded any defect in the books of accounts nor rejected the same. Further , the AO also failed to bring any material on record to establish that the assesee had made any unaccounted investment in the construction of the building and that the books of accounts did not reflect the correct cost of construction. So, although, the AO himself did not make any reference to the DVO, he directed the assessee to furnish a report from the 5 ITA No.63/Pat./2016 approved valuer which is akin to the AO making a reference to the DVO. Thus, the AO asked the assessee to obtain a valuation report without rejecting the books of accounts and we are of the considered opinion that the ratio of the judgment of the Hon ble Apex Court in the case of Sargam Cinema VS. CIT (SC) is squarely applicable to the facts of the case The Ld. CIT (A) has followed this judgment while allowing relief to the assessee_ Considering the facts of the case and the settled legal position, we find no reason to interfere with the findings of the Ld. CIT (A) and we dismiss the grounds raised by the Department_ 6 In the final result, the appeal of the Department stands dismissed. (Order Pronounced in the Court on 15/03/2018) (NK: Saini) ACCOUNTANT MEMBER / - (Sudhanshu Srivastava) JUDICIAL MEMBER Dated: 15 /03/2018 S.sinha*