COMMISSIONER OF INCOME TAX Vs. JAYENDRA N. SHAH

JUDGEMENT

(1.) THESE appeal involve the same assessee and the questions raised by the Revenue also overlap. These appeals are, therefore, heard together and are being disposed of by this common order. The Revenue has challenged the common judgment of the Income -tax Appellate Tribunal, Ahmedabad ("the Tribunal" for short) dated June 21, 2013, for three separate assessment years, i.e., 2008 -09; 2009 -10 and 2010 -11. The assessee was subjected to search proceedings during which, he disclosed that in the cost of construction of a house, an undisclosed income to the extent of Rs. 1.50 crores had gone into. However, this statement was later on retracted. In addition to the value of the house; including the land shown at Rs. 1.34 crores (rounded off), the assessee filed the return of income declaring further investment of Rs. 38.30 lakhs (rounded off) in such house from the undisclosed sources. The issue in these appeals center around the additions made by the Assessing Officer - -deleted by the Commissioner of Income -tax (Appeals) and the Tribunal towards undisclosed investment of the assessee for the purchase of land and construction of the house. Since the construction spells over the three assessment years, the cost thereof has been broken down by the Assessing Officer by giving effect in each year separately.

(2.) DURING the assessment proceedings, the assessee disputed an additional investment in purchase of land in excess of Rs. 42 lakhs shown in the books. With respect to the cost of construction, the assessee stuck to its return in which the additional cost of Rs. 38.30 lakhs from undisclosed sources was declared. To substantiate this claim, the assessee produced a report from a valuer who estimated the cost of construction; including furniture and fixtures at Rs. 1.36 crores. The Assessing Officer referred the matter for valuation of land and building to the Departmental Valuation Officer ("DVO" for short). As per the DVO's report, the cost of land would be Rs. 65.38 lakhs (rounded off) and the cost of construction excluding furniture and fixture would be Rs. 1,24,22,000. To such cost of construction estimated by the DVO, the Assessing Officer added a sum of Rs. 13.5 lakhs towards furniture and fixtures and came to a figure of Rs. 1,37,22,000. Thus, there was a minor difference of Rs. 1,22,000 in the cost of construction estimated by the DVO as compared to the report of the assessee's valuer. Despite such minor difference, strangely the Assessing Officer in the assessment order added a sum of Rs. 1.71 lakhs (rounded off) towards the cost of construction in the assessment year 2008 -09; Rs. 11.06 lakhs (rounded off) for the assessment year 2009 -10 and Rs. 14.90 (rounded off) for the assessment year 2010 -11. Thus, the total addition of Rs. 27.69 lakhs (rounded off) came to be made by the Assessing Officer for the three assessment years towards the cost of construction.

(3.) THESE additions were challenged by the assessee before the Commissioner (Appeals). The Commissioner of Income -tax (Appeals) deleted both the additions. With respect to the cost of construction, the Commissioner of Income -tax (Appeals) observed as under: