COMMISSIONER OF INCOME TAX Vs. K MANICKAM

JUDGEMENT

(1.) THIS is an appeal under Section 260A of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), and the appeal was admitted on the following question of law :

(2.) THE respondent (hereinafter referred to as "the assessee") is a building contractor and his business is the construction and sale of flats. THE assessee for the assessment year 1991-92 offered his income including the net profit that arose from the sale of flats. THE assessee, during the previous year relevant to the assessment year 1991-92, had constructed 12 flats and the cost of construction of the flats as admitted by him was Rs. 16.55 lakhs. THE assessee also filed a report of the approved valuer and the approved valuer estimated the cost of construction of the flats to be Rs. 15.72 lakhs. THE Assessing Officer referred the matter of valuation of the flats to the Departmental Valuation Officer and the Departmental Valuation Officer estimated the cost of construction at Rs. 38.95 lakhs. THE Income-tax Officer brought to tax the difference of the amounts, viz., a sum of Rs. 22.40 lakhs as unexplained investment under section 69 of the Act.

(3.) WE find that the ultimate finding of the Appellate Tribunal that no addition is warranted on the facts of the case is based on appreciation of evidence. The Appellate Tribunal has taken into account the nature of construction and the cost of construction and the profit margin of the assessee on the sale of flats. The Appellate Tribunal found that the Department has not established by any material that the assessee had really invested huge sum in the construction of flats. The Appellate Tribunal also found that the Department has not established that there was an understatement in the sale value of the flats.