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Facts
A survey on 18/09/2018 found the assessee constructing a multistoried building valued at ₹1,48,95,586/- by DVO, significantly exceeding the assessee's reported investment, leading to an unexplained investment addition by the AO. The AO also made an addition of ₹55.54 lacs for demonetized currency deposits. The CIT(A) granted relief by allowing deductions for CPWD rates, self-supervision, considering the wife's investment, and deleting the demonetization-related addition.
Held
The Tribunal upheld the CIT(A)'s decision to allow deductions for construction costs (20% for CPWD rates, 15% for self-supervision) and confirmed the deletion of the addition for demonetized cash deposits due to lack of evidence for suppressed sales or stock variation. However, the assessee's claim for a ₹25.00 lacs bank loan to explain investment was dismissed due to insufficient evidence, and consequently, the assessee's cross-objection was also dismissed.
Key Issues
1. Whether the CIT(A) correctly reduced the unexplained investment in a building by allowing deductions for CPWD rates and self-supervision, and considering the wife's investment. 2. Whether the CIT(A) was justified in deleting the addition made by the AO for cash deposits of demonetized currency during the demonetization period. 3. Whether the assessee provided sufficient evidence for a claimed bank loan of ₹25.00 lacs.
Sections Cited
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Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI
Before: SHRI GEORGE MATHAN & SHRI RATNESH NANDAN SAHAYShri Upendra Prasad,
Assessee represented by Sri P.S. Paul, A.R. Department represented by Shri Khubchand T. Pandya, Sr.DR Date of hearing 07/10/2025 Date of pronouncement 07/10/2025 O R D E R PER: BENCH 1. is an appeal filed by the revenue against the order of the ld. CIT(A), Patna-3, Patna in appeal No. CIT(A), Ranchi/10747/2019-20 dated 23/05/2023 for the A.Y. 2017-18 and the C.O. No. 01/Ran/2023 is the cross objection filed by the assessee in the revenue's appeal in .
Shri Khubchand T. Pandya, ld. Sr.DR is represented on behalf of the revenue and Shri P.S. Paul, ld A.R. is represented on behalf of the assessee.
CO 01/Ran/2023 DCIT Vs Upendra Prasad 3. It was submitted by the ld. Sr. DR that there was a survey on the premises of the assessee on 18/09/2018. In the course of survey, the assessee had disclosed additional income of ₹ 32.00 lacs for the impugned assessment year. It was a submission that it was found that the assessee was constructing a multistoried building being ground plus four under the name and style of Beena Towers. It was a submission that the said building was valued and as per the valuation report by the DVO for the impugned assessment year, the cost of construction was determined at ₹ 1,48,95,586/-. It was the further submission that in the return filed by the assessee, the assessee had originally disclosed only ₹ 1,98,402/- for the impugned assessment year as his investment. It was the submission that subsequently, the assessee had disclosed the amount of ₹ 32.00 lacs as additional investment and had paid the taxes thereon also. It was a submission that the Assessing Officer when computing the difference in the cost of construction adopted the valuation of the DVO at ₹ 1,48,95,586/- and from that reduced the investment originally disclosed by the assessee at ₹ 1,98,402/- and his wife's investment of ₹ 34,14,150/- totaling to ₹ 36.12 lacs. The difference of ₹ 1,12,83,586/- was determined by the Assessing Officer as the difference in the cost of construction and treated as unexplained investment of the assessee. It was a submission that the ld. CIT(A) when adjudicating this issue had granted the assessee the benefit of additional ₹ 32.00 lacs disclosed in the revised return and had given 20% deduction in respect of CPWD rates and 15% rebate for self supervision. The ld. CIT(A) had also considered the balance of the investment at 50% and had restricted the addition to ₹ 5.96 lacs. The ld. Sr. DR drew our attention to page No. 13 of the order of the ld. CIT(A). It was a CO 01/Ran/2023 DCIT Vs Upendra Prasad submission that the ld. CIT(A) ought not to have given the 20% deduction rebate in respect of CPWD rates and the 15% rebate for self supervision as also 50% towards the investment by the assessee's wife. It was a further submission that in the course of assessment, the Assessing Officer had also made an addition of ₹ 55.54 lacs representing the demonetized currency deposited during the demonetization period. It was a submission that the assessee had shown substantial cash balance in its books when the assessee had a current account. It was a submission that the ld. CIT(A) had deleted the addition by holding that the assessee had disclosed the turnover in the VAT returns and the Assessing Officer had not produced any evidence to prove that the cash sales was not reliable. It was a submission that consequently, the additions as made by the Assessing Officer was deleted by the ld. CIT(A). It was a prayer that the order of the ld. CIT(A) is liable to be reversed.
In reply, the ld. Authorised Representative submitted that the investment in the property as per the revised return was ₹ 33,98,402/- and the investment by the wife has been already considered by the Assessing Officer while calculating the difference in the valuation at ₹ 34,14,150/-. It was a further submission that the ld. CIT(A) failed to appreciate that there was a bank loan also of ₹ 25.00 lacs. It was a submission that the assessee, if the bank loan is also considered, there would be no undisclosed investment at all. It was a submission that the order of ld. CIT(A) on this issue is liable to be modified for which he has filed cross objection. It was an alternate prayer that the order of the ld. CIT(A) is liable to be upheld.
CO 01/Ran/2023 DCIT Vs Upendra Prasad 5. In regard to the issue of the cash deposit in the bank account during the demonetization period, it was a submission that the deposits were out of the cash book of the assessee and the books of account of the assessee have not been questioned. In reply to a very specific query raised by the Bench as to whether there was any variation in the stock found in the course of survey, it was submitted by the ld. Sr. DR that there is no mention of variation in the stock in the course of survey anywhere in the assessment order.
We have considered the rival submissions. Coming to the issue of the investment in the building being Beena Towers, it is noticed that the ld. CIT(A) has considered the fact that the building is not constructed in an area where the CPWD is operating. For this purpose, the ld. CIT(A) has given the deduction of 20%. The ld. CIT(A) has also considered the fact that there was no contractor receipts nor contractor found supervising the construction during the period of survey. For this, the ld. CIT(A) has given 15% deduction towards self supervision. It is also noticed that the ld. CIT(A) has considered the fact that the assessee is a dealer in cement and steel, obviously, the substantial portion of the cost of construction is in the form of cement and steel. This has also weighed with the ld. CIT(A) when he has given deduction of 20% in respect of the CPWD rates and 15% in respect of the self supervision. We find no error in the findings as arrived at by the ld. CIT(A) in so far as these issues are concerned.
Coming to the issue of the additional ₹ 25.00 lacs which is being claimed by the assessee representing the bank loan, it must be mentioned here that no evidence has been brought to our attention to prove such claim of the loan of ₹ 25.00 lacs. This being so, we find no error in the order of ld. CIT(A) on the issue CO 01/Ran/2023 DCIT Vs Upendra Prasad as adjudicated by him. Consequently, findings given by the ld. CIT(A) on this issue stands confirmed.
Coming to the issue of the addition representing the cash deposited in the bank account, it is noticed that the Assessing Officer himself in page 7 of the assessment order recognizes that during the demonetization period, the assessee has deposited ₹ 60.54 lacs in SBN in the bank account and it has been claimed to be out of closing cash in hand as on 08/11/2016. The cash deposit being out of the cash in hand, we find no reason to interfere with the order of ld. CIT(A) where he has given relief on this issue. It would also be worthwhile to mention here that the Assessing Officer in page 6 and 7 of his order has also brought out the cash in hand as on 08/11/2016 at ₹ 61,32,081/-. It has also been noticed that there is no evidence of suppression of sales or undisclosed sales found in the course of survey. There is no variation in the stock found in the course of survey. The books of the assessee have not been brought on question, this also supports the findings of the ld. CIT(A) in his action in deleting the addition of the cash deposit in the bank account as made by the Assessing Officer. This being so, the findings of the ld. CIT(A) on both the issues stands confirmed and the appeal of the revenue stands dismissed.
Now coming to the cross objection filed by the assessee, as the assessee has not been able to substantiate the grounds as raised by the assessee in his cross objection and also the assessee has withdrawn the ground no. 5 in respect of the reopening of the assessment and has signed to that extent, the cross objection filed by the assessee stands dismissed.