A.D. Jain, J.M.

ITA No. 3194 (Del)2010:

1. This is Assessees appeal for the assessment year 2004-05, taking the following grounds:

1. That the learned Commissioner of Income Tax (Appeals)-I, Ludhiana has erred in confirming the addition of ` 16,77,500/- as alleged investment in the purchase of property in half share at Rewari. He has further erred in not considering the documents furnished by Shri Ram Lal, seller with affidavit, his statement before the ld. ACIT, Circle II, Faridabad and also the circumstances.

2. That the ld. CIT(A)I,Ludhiana has grossly erred in ignoring that the first statement of Shri Ram Lal of Sonipat, the seller is not according to the provisions of law as no notice Under Section 131(1) was ever issued for recording the statement Under Section 132(4) of the Income Tax Act.

3. That the ld. CIT(A)-I, Ludhiana has erred in not considering the facts of the illness, handicapped position and other circumstances elaborated by the seller of plot Sh. Ram Lal in his submission, duly sworned affidavit and also the statement before CIT, Circle II, Faridabad during the appellate assessment proceedings.

4. That the ld. CIT(A)-I, Ludhiana has also erred in upholding the addition of ` 7,81,000/- as an extra amount construction expenses by relying the report of DVO, Rohtak which is not according to the provisions of law. Further, he has erred in ignoring that the valuation of construction has already been accepted by the ld. AO, Rewari in assessment proceedings Under Section 143(3) while all the documents and valuation report as per law are on record.

2. During the year under consideration, the Assessee had bought a plot of land measuring 436 sq.yds. at Rewari, vide sale deed dated 8.10.03, from one Shri Ram Lal, resident of 105-R, Model Town, Sonepat. Search and seizure operation was carried out on 24.8.2006. On the same day, a statement of Shri Ram Lal was recorded by the officers of the Department at Sonepat. Therein, he stated that this plot of land was sold at ` 48.81 lakhs, whereas the registry was done for ` 15.26 lakhs only. He also stated as to how the money received out of the sale consideration of plot was utilized. In the assessment proceedings, on 17.12.08, Shri Ram Lal was produced before the AO. He was examined by the AO. In the assessment order dated 19.12.08, the AO observed, inter alia, that Shri Ram Lal had completely denied all that he had stated before the Investigation Wing of the Department, at the time of the search; that he had stated that he was sick at the time of recording of his statement by the Investigation Wing and finding so many people along with Armed Police Force in his residence, he had become nervous and scared; and that the Departmental Officers who recorded his statement did not read out the statement to him and he was forcibly made to sign the same. The AO observed that this was only an after-thought on the part of Ram Lal; that his statement before the Investigation Wing of the Department, recorded on 24.8.06, was impromptu and carried more weight as compared to what he had stated as a witness of the Assessee, before the AO, in the assessment proceedings. It was, therefore, that the AO held that an unaccounted investment of ` 33.55 lakhs had been made in the purchase of plot of land. Since the Assessee was the owner of 1/2 share of the plot along with his wife, the AO made an addition of ` 16,77,500/- in the case of the Assessee.

3. By virtue of the impugned order, the ld. CIT(A) confirmed the above action of the AO. This has given rise to ground Nos. 1 to 3 taken by the Assessee.

4. In the assessment order, the AO further observed that the Assessee had disclosed in the return of income, investment in the building, amounting to ` 7,29,895/-. The AO referred the building Under Section 142 A of the I.T. Act, for valuation, to the DVO. As per the report of the DVO, the cost of building was estimated at ` 60,03,600/-. The share of the Assessee therein came to ` 46,78,964/-. The balance was that of the Assessees wife, Dr. (Mrs.)Abha Goyal. The DVO, on a pro-rata basis, determined a sum of ` 17,78,602/- as investment in the building. After giving an allowance of 15% on account of subjectivity in the DVOs report and due to paucity of time, the AO made an addition of ` 7,81,900/-. The CIT(A) also confirmed this action of the AO. This has led to taking of ground No. 4 before us.

5. Challenging the impugned order, the learned Counsel for the Assessee has contended that the ld. CIT(A) has gone wrong in confirming the addition of ` 16,77,500/-, as alleged investment in the purchase of property at Rewari; that the ld. CIT(A) has erred in not considering the documents furnished by Ram Lal, the seller, including his affidavit and his statement before the AO, besides the other connected circumstances; that the ld. CIT(A) failed to consider the fact that the first statement of Ram Lal was not in accordance with the provisions of law, as no notice under Section 131(1) of the I.T. Act was ever issued for recording the statement Under Section 132(4) of the Act; that moreover, it has been ignored that the statement recorded by the Investigation Wing of the Department was neither recorded by an Authorized Officer, nor by the AO of Ram Lal and that so, the same is not the least reliable; (Attention in this regard was drawn to copy of statement dated 17.12.08 of Ram Lal, the seller, Under Section 153 of the Act, by the ACIT(Faridabad) - pages 33 to 38 of the Assessees Paper Book); that the ld. CIT(A) has erred in failing to consider the facts of the illness and handicapped position of Ram Lal at the time of recording of the statement before the Investigation Wing and other related circumstances as elaborated by him in his statement before the AO; that the ld. CIT(A) has also erred in ignoring the duly sworn affidavit of Ram Lal; that the ld. CIT(A) has further erred in upholding the addition of ` 7,81,900/- representing extra amount of construction expenses; that in doing so, the CIT(A) erroneously relied on the report of the DVO, which report is not in accordance with law; and that the ld. CIT(A) also erred in ignoring the fact that the valuation of the construction stands already accepted by the AO in the assessment proceedings Under Section 143(3) of the Act and that all the documents and valuation report, as per law, were already on record.

6. The ld. DR, on the other hand, has strongly supported the impugned order. He has contended that the search took place on 24.8.06; that it has been found as a fact by the AO, that the Assessee had shown investment of ` 15.26 lakhs in land during the year; that this investment had been shown to have been made for purchase of a plot measuring 436 sq,yds. at Rewari, vide sale deed No. 3332 dated 8.10.03; that this investment was shown to have been made by the Assessee along with his wife, Dr. (Mrs.)Abha Goyal, on a 50-50 % basis; that in the course of search, no direct evidence was found to establish any investment/payment out of books; that however, as per the enquiries conducted from Shri Ram Lal, the seller, the total consideration for the plot was of ` 48.81 lakhs; that an amount of ` 33.55 lakhs was apparently paid by the Assessee and his wife over and above the registered value in cash to the seller, in lieu of the land; that a copy of the bank pass book of Ram Lal, as filed before the AO, is at pages 42 to 47 of the Assessees paper book; that therein, an amount of ` 3,50,000/- has been shown to have been credited in cash, on 20.5.03; that an amount of ` 5,00,000/- has been shown to have been credited in cash, on 9.7.03; that in the statement dated 24.8.06, of Ram Lal, (copy at APB pages 48 to 51), in the last para thereof (APB 51), it has been stated - "Whatever is stated above is true to the best of my knowledge and belief and nothing has been concealed. The statement has been given without any fear or coercion"; that this amply proves that the story put forward by Shri Ram Lal before the AO was a cock and bull story, merely an after-thought, on the tutoring of the Assessee; and that the said statement was recorded under oath; that remarkably, Ram Lal took two years time to retract his original statement. Referring to Section 142 A of the Act, the ld. DR has contended that for the purpose of making an assessment, where an estimate of the value of any investment is required to be made, the AO may require the Valuation Officer to make an estimate of such value. It has been contended that the reference to the DVO by the AO, was made perfectly in accordance with law.

7. We have heard the parties and have perused the material on record. The issue before us is as to which of the statements of Ram Lal, i.e., the one recorded by the Investigation Wing at the time of search, or that given by him before the AO, is to be relied on.

8. In the statement recorded on 24.8.2006, i.e., the date of the search, Shri Ram Lal deposed that the plot of land measuring 436 sq. yds, situated at Rewari, was sold for a sum of ` 48.81 lakhs, whereas the registry thereof was got done for ` 15.26 lakhs only. He stated that he had no source of income other than pension, since he had retired from the Food & Supplies Department, Sonepat; that he was maintaining the Savings Bank Account No. 23454 with Punjab National Bank, Main Branch, Sonepat; that there was no bank account either in the name of his wife or in the names of his children; that he had received a sum of ` 3,50,000/- as earnest money in cash from the purchasers, Shri Kaushal Goel and Smt. Abha Goel; that the same was deposited in his Savings Bank Account; that thereafter, he received a sum of ` 5,00,000/- in cash on 9.7.2003; that this amount was also deposited in his Savings Bank Account; that the balance amount of ` 40.31 lakhs was received at the time of registration; that the amounts of ` 6.26 lakhs and ` 9 lakhs, total amounting to ` 15.26 lakhs, were received through cheque dated 13.10.2003; that the balance amount of ` 25.05 lakhs was received in cash from the purchasers; that the deal was finalized for ` 38.81 lakhs with the broker, Shri Leela Dhar, resident of Rewari; that no separate commission was paid by him (Ram Lal), as the deal was finalized with him only; that there was a time of six months for getting the sale registered and the same was got registered before the expiry of the said period of six months; that the payment of ` 50,000/- was made on 19.6.2003, out of his (Ram Lals) Savings Bank Account to Shri Thakar Dass, a resident of Sonepat, a personal friend of Ram Lal; that Thakar Dass had received this amount from Ram Lal for personal use; that the exact address of Thakar Dass was not known to Ram Lal; that Ram Lal had purchased the plot in question in 1973; that Ram Lal had invested the sale proceeds of ` 48.81 lakhs, by investing ` 8.50 lakhs in cash in his Savings Bank Account and also depositing ` 6.26 lakhs and ` 9 lakhs, received through cheque, in the said bank account; that Ram Lal had also purchased a house bearing No. 53, Vijay Nagar, Sonepat for a sum of ` 24 lakhs, which amount included the amount concerning repair and renovation; that Ram Lal had also purchased FD Rs in joint name with his wife, Smt. Kamlesh Kumari, for a sum of ` 1.50 lakhs in Punjab National Bank, Sonepat; that this was the only investment made by Ram Lal out of sale proceeds of ` 48.81 lakhs, concerning the sale of the plot in question; that house No. 53, Vijay Nagar, Sonepat had been purchased by Ram Lal from Shri Avtar Singh, resident of Sonepat for ` 24 lakhs; that however, the registration of this house was got done for ` 5.82 lakhs and the balance was paid in cash; that Ram Lal was filing his returns of income in the Income Tax Office, Sonepat; and that his PAN was AADPL 7292.

9. A copy of the above statement of Shri Ram Lal is to be found at pages 48 to 51 of the Assessees paper book (APB for short).

10. An undated letter (stated to be a submission of Ram Lal, dated 24.11.2008), a copy whereof is at page APB 29 -30, was submitted by Ram Lal to the AO. As per this letter, Shri Ram Lal stated that he was a handicapped person; that a tumor had developed in his spine, due to which, both of his legs had got dilapidated and so, he was unable to walk properly; that besides, he was a diabetic; that he had retired from the Food & Supplies Department; that the statement recorded by the Income Tax Officers, Sonepat had been recorded by them of their own and Ram Lal had been forced to append his signature thereon; that the AO was being requested to cancel the said statement; that the plot at Rewari which Ram Lal had sold to Dr. Kaushal, had been sold for ` 15,26,000/- and the registration thereof was got done by Shri Ram Lal only for this very amount; that so far as regards the deposit of ` 3,50,000/- on 15.5.03 and of ` 5,00,000/- on 9.7.03, these amounts had been deposited by Shri Ram Lal out of the funds received by him from the Government on his retirement; that he had received GPF and leave encashment of ` 5,46,000/-, DCRG of ` 1,91,582/- and commuted pension of ` 2,09,242/-, total amounting to ` 9,47,824/-; that out of that, Shri Ram Lal had deposited ` 8,50.000/- in his bank account; that Ram Lal had joined service in the Food Department in 1962 as Inspector Food Supplies and he had retired in 2000, from the post of Assistant Food Supplies Officer; that as such, he had rendered service of 37 years and 6 months; that out of the amount saved during service, Ram Lal had purchased a house in Sonepat for ` 5,82,000/-, for his residential purpose and it had been got registered for this very amount; and that other than this, whatever expenses had been incurred for getting the registration done, had also been incurred by Ram Lal out of his savings. Along with this letter, Shri Ram Lal enclosed a copy of handicap certificate, a copy of registration of house, a copy of affidavit dated 18.11.08(copy at APB 31-32) and Income Tax documents.

11. In the aforesaid affidavit, Shri Ram Lal reiterated the aforesaid facts.

12. A copy of the statement of Shri Ram Lal, recorded on 17.12.2008, during the assessment proceedings, is at APB 33 - 38. As per this statement, Shri Ram Lal deposed, inter alia, that he had a tumor in his spinal chord and had to undergo surgery twice, i.e., in 1973 and 2002; that gradually, his legs were going numb and weak and he was not able to walk or climb stairs; that he had a lingering pain so as to handicap him from his normal functions and due to the additional problem of diabeties, he got nervous and scared very soon; that he recognized his signature on his statement before Shri Manjit Singh, ITO, recorded on 24.8.06, in the course of search proceedings in the case of Dr. Kaushal Goel; that he did not remember as to what he had told the ITO in the said statement; that as per that statement, he had sold a plot measuring 456 sq.yds, situated at Rewari, to Dr. Kaushal Goel; that it had wrongly been recorded in the said statement that he had sold the plot for ` 48,81,000/- on 8.6.2003; that in fact, the plot had been sold for ` 15.26 lakhs only; that the officers who recorded the statement had come well prepared with the figures quoted in the statement and though Shri Ram Lal had stated the correct figures, they had recorded the figures which they had apparently heard from somebody or from some source and they had compelled Shri Ram Lal to sign on whatever they had recorded; that Ram Lal, being sick, got nervous and signed the documents against his will, only to buy peace; that the ITO, who had come to his residence along with several police officers, entered his house without any warrant or authorization; that they were carrying the copies of bank account statement and they made up the entire statement by looking into the bank entries; that he was not allowed to explain the entries and was coerced into signing the statement without even reading it; that the amount of ` 8.50 lakhs in his bank account, was out of his retirement benefits of ` 9,47,824/-, i.e., GPF and leave encashment of ` 5,46,000/-, DCRG of ` 1,91,582/- and commuted pension of ` 2,09,242/-; that though this amount had been received by him in 2000-01, it had been lying with him till May - July 2003; that he had deposited ` 8.50 lakhs out of the same, in his bank account on 15.5.03 and on 9.7.2003; that he had purchased house No. 53-Vijay Nagar, Sonepat, for ` 5,82,500/- plus stamp duty of ` 90,290/- plus other incidental expenses of about ` 1,000/-; that apropos his having allegedly stated in his earlier statement that he had purchased the said house for ` 24 lakhs, he did not know what had been written in his earlier statement and he had been forced to sign that statement, without it having been read over to him; that regarding the FD Rs of ` 1.5 lakhs, made on 22.2.2004 jointly in his name and his wifes name, these FD Rs were made out of his savings in his Savings Bank Account; that the Income Tax Officers who had recorded his statement on 24.8.2006, had come with all the data collected from the bank or from other source and they had made up this story of the FD Rs having been made out of receipts from the sale of the plot; that since he had sold the plot and had purchased a house immediately out of the proceeds of such sale, there was no incidence of capital gain; that he had submitted a sworn affidavit in support of his instant statement (dated 17.12.2008) which affidavit had been sent to the ITO at Faridabad (Shri Alok Nath, ACIT, Central Cir.II, Faridabad), by post, along with copies of his Income Tax returns and the deed in respect of the property purchased by him in 2003; and that these documents be also considered.

13. The above statement dated 17.12.2008 was recorded by the ACIT, Cen. Cir.II, Faridabad, in the presence of Shri M.L. Gulati, Authorised Representative of Dr. Kaushal Goel. It was certified to have been read over to the deponent and to have been correctly recorded. The deponent also certified that no coercion, threat or undue influence had been brought upon him while recording the said statement.

14. Therefore, whereas as per the initial statement dated 24.8.2006, Shri Ram Lal had allegedly contended that the land at Rewari had been sold for ` 48.81 lakhs and that the registry thereof had been got done for ` 15.26 lakhs only, in his subsequent statement dated 17.12.2008, recorded by the AO, in the assessment proceedings, Shri Ram Lal retracted from his said earlier stand and stated that the plot had been sold for ` 15.26 lakhs only and not for ` 48.81 lakhs, as wrongly recorded in his earlier statement, which he was never allowed to read, nor was read over to him and on which, his signature was obtained forcibly

15. Shri Ram Lal, as such, retracted from his earlier statement recorded during the search operation.

16. The AO held that the second statement dated 17.12.2008, given by Shri Ram Lal, was merely an after-thought, whereas his first statement dated 24.8.2008 was an impromptu statement and that it was this first statement which carried more weight than his statement as the witness of the Assessee. The AO, on this basis, held that an unaccounted investment of ` 33.55 lakhs had been made in the purchase of the plot of land. As such, he made addition of ` 16,77,500/- in the case of Dr. Kaushal Goel, he being 1/2 share owner of the plot along with his wife.

17. The learned CIT(A), while upholding the aforesaid action of the AO, observed, inter alia, that the assertion of Shri Ram Lal during the assessment proceedings, to the effect that he, at the time of recording of the initial statement, had been scared and had been made to sign it under duress, could not be taken on its face value; that there was nothing on record to suggest that Shri Ram Lal was threatened or coerced to sign the statement recorded on 24.8.2006; that the statement recorded on 24.8.2006 had been denied by him in the form of an affidavit dated 24.11.2008 after a lapse of more than 2 years; that if he was made to sign the statement under duress and coercion, he should have retracted the same at the first available opportunity and not waited for such a long period of time; that Ram Lal was an educated person, retired as Assistant Food & Supplies Officer; that the statement made by him on 24.8.2006 was the first spontaneous and impromptu version; that the same would take precedence over the subsequent statement given by him in the assessment proceedings; that the subsequent statement had apparently been made by him, on having been tutored; that the sale proceeds received by him on account of sale of the plot of land stood corroborated with the entries in the bank pass book; that his later stand that these entries represented the benefits received by him on retirement, was not credible; that the retirement benefits of Government employees are generally received through cheques; that it was for Shri Ram Lal to show as to how he had utilized his retirement benefits and as to how cash was available with him for making deposit in the bank account, as claimed; that the strong circumstantial evidence led to the irresistible conclusion that on money had been paid for the purchase of the plot by the Assessee; and that as such, the AO had rightly made the addition.

18. At the outset, admittedly, no material adverse to the Assessee was found by the Department in the search and seizure operation. Now, though it cannot be denied that in Income Tax proceedings, preponderance of probability is, of necessity, a major consideration, it is to be seen whether in the present case, there is any such preponderance against the Assessee.

19. The first observation of the ld. CIT(A) in this regard is that there is nothing on record to suggest that Ram Lal was threatened or coerced to sign the statement dated 24.8.2006, recorded at the time of the search. In this regard, firstly, it remains unrebutted that no notice Under Section 131 of the I.T. Act was ever served on Shri Ram Lal. Shri Ram Lal has taken this position in his statement before the AO and also in his affidavit dated 24.11.2008. The AO nowhere refuted such stand taken by Shri Ram Lal. The ld. CIT(A) has completely ignored this aspect of the matter. The statement of Shri Ram Lal was recorded Under Section 131 at Sonepat by ITO, Sonepat, when no proceedings were pending against him. In the following cases, it has been held that when no proceedings are pending, no summons Under Section 131(1) can be issued:

1 ACIT v. Baldev Plaza 93 ITD 579(All);

2 Choudhary Builders (P)Ltd. v. Principal Secretary, Union of India and Ors. 209 CTR 133 (MP): 295 ITR 98 (MP);

3 Rina Sen v. CIT, : 235 ITR 219 225-26(Pat);

4 Jamna Das Madhav Ji&Co. v. ITO : 162 ITR 331 (Bom).

20. Further, Shri Ram Lal had categorically contended before the AO that he was sick at the time of recording of his statement on 24.8.2006, since he was a handicapped person and a tumor had developed in his spinal chord, due to which, both of his legs had got dilapidated and he was unable to walk properly and besides, he was suffering from diabetes ; that the search team had come to his residence without any warrant; that he had become nervous due to the presence of so many officers/officials; that the search team had come prepared with all bank details and FD Rs; that they had asked questions and not writing what he was stated, they just wrote down whatever they wanted from details of bank accounts that they were carrying; that the statement recorded by the search team had been recorded of their own accord and he had been forced to append his signature thereon; and that they did not read over the statement to him, nor was he allowed to read it. These specific averments were made by the Assessee by way of a letter to the AO along with other documents. A copy of his handicapped certificate had also been filed. Besides, he has also furnished his affidavit.

21. However, the AO did not meet any of his averments point-wise. He merely observed that his subsequent statement was an after-thought, whereas that made before the officials of the Investigation Wing of the Department on 24.8.2006 had been impromptu and as such, it carried more weight.

22. The ld. CIT(A) has also not taken this aspect of the matter into consideration at all. In the impugned order, he has not even made reference to these specific assertions made by Ram Lal and it has been observed that there is nothing on record to suggest that Shri Ram Lal was threatened or coerced to sign the statement recorded on 24.8.2006. The ld. CIT(A) disbelieved Ram Lals affidavit, saying that it had been filed after a lapse of more than two years and that if he had been coerced into signing the statement, he would have retracted it on the first available opportunity.

23. Apropos the issue of Shri Ram Lal having made the retraction after two long years of recording of his statement on 24.8.2006, it is noted that the first opportunity to do this became available to Shri Ram Lal only in the assessment proceedings of the Assessee and it was at this first available opportunity that he made the retraction by way of the aforesaid letter and his statement before the AO, accompanied by his affidavit, handicap certificate and other documents. In this view of the matter, the lapse of two years between the recording of the first statement of Ram Lal on 24.8.2006 and his subsequent statement in the assessment proceedings cannot be taken to be a circumstance going against the Assessee.

24. As for the CIT(A)s observations of the first statement of Ram Lal being his first spontaneous impromptu version, which ought to take precedence over the second statement, in the face of the unrebutted assertion of Ram Lal regarding no notice Under Section 131 of the Act having been issued to him, he being a handicapped person having a tumor in his spinal chord affecting both his legs, due to which he was unable to walk properly and his being a diabetes, coupled with the fact that the search team comprised of numerous officers/officials who entered without warrant of authorization and recorded the statement and his having become nervous due to his condition, Shri Ram Lals first statement cannot at all be said to be any statement in the eye of law, much less an impromptu statement.

25. The ld. CIT(A) is further not correct in observing that the statement made by Shri Ram Lal on 24.11.2008 before the AO, was a doctored statement. There is nothing on record to arrive at such a conclusion.

26. Sofar as regards the CIT(A)s observations that the sale proceeds received by Ram Lal on account of the sale of plot of land stood corroborated with the entries in his bank pass book and that it was not believable that the retiral benefits received by him were what had been reflected in the bank pass book, Shri Ram Lal had produced before the AO, a certificate from the Supdt., Food and Supplies Department, Sonepat, concerning the release of his retirement benefits. A copy of this certificate is at APB 57. According to this certificate, the following were the retiral benefits received by Shri Ram Lal:

1.

Commutation of pension

2,09,242/-

2.

DCRG

1,91,582/-

3.

GPF

4,29,175/-

4.

Leave encashment

1,16,950/-

5.

GIS

7,724/-

27. Now, sofar as regards the AO, though he has noted in para 6.6 at page 7 of the assessment order that this certificate was produced before him, there is no finding that this certificate was false. Accordingly, it is to be taken that this certificate was not disputed by the AO. As for the ld. CIT(A), he has not even mentioned this certificate in the impugned order and he has gone by the general proposition that the retiral benefits of Government employees are generally received by cheques.

28. The ld. CIT(A) has then observed that it was for Ram Lal to show as to how he utilized his retiral benefits by help of his bank pass book and to show that the cash was available with him for depositing in the bank account, as claimed. Shri Ram Lal, as observed in the assessment order (page 7, para 6.6) also explained that an amount of ` 3.5 lakhs was deposited in his bank account on 15.5.2003 and that of ` 5 lakhs was deposited on 9.7.2003 and that these amounts were out of his retiral benefits and not out of the sale proceeds of the plot in question. Neither of the Authorities below has brought anything to the contrary on record. That being so, the ld. CIT(A) has erred in disbelieving the stand taken by Ram Lal in this concern.

29. Further, Ram Lal produced a copy of the registered sale deed of his new house to substantiate that it was purchased for ` 5,82,000/- only and not for ` 24,00,000/-, as allegedly recorded in the statement dated 24.8.2006, at the time of the search. Moreover, there is no evidence on record to the effect that the agreement of the property in question was done near 15.5.2003, when cash of ` 3.50 lakhs was found to have been deposited in his bank account. Still further, remarkably, no action was taken by the Department against Ram Lal by assessing the purported sale consideration of ` 41.81 lakhs.

30. In view of the above, we are unable to subscribe to the view of the ld. CIT(A) that herein, the circumstantial evidence is so strong as to lead to the conclusion that on money was paid by the Assessee for the purchase of the plot.

31. Furthermore, it is trite law that in the absence of the documentary evidence to the contrary, the recitals in a sale deed are to be accepted as they are.

32. In view of the above discussion, the grievance of the Assessee in this regard is found to be correct and is accepted as such. We hold that the ld. CIT(A) has erred in confirming the addition of ` 16,77,500/- as alleged investment by the Assessee in the purchase of property in 1/2 share at Rewari.

33. The other issue raised by the Assessee is that the ld. CIT(A) has erred in upholding the addition of ` 7,81,900/- as an extra amount of construction expenses, by relying on the report of the DVO, Rohtak.

34. The AO observed that the Assessee had disclosed an amount of ` 7,29,895/-, as investment in the building. The AO referred the valuation to the DVO Under Section 142 A of the Act. The DVO estimated the cost of building at ` 60,03,600/-. The share of the Assessee was estimated at ` 46,78,964/- and the balance was attributed to the Assessees wife, Dr. (Mrs.)Abha Goel. The investment during the year under consideration was determined by the DVO at ` 17,78,602/-. The AO made addition of ` 7,81,900/-, giving allowance of 15% on account of subjectivity in the DVOs report.

35. By virtue of the impugned order, the ld. CIT(A) confirmed this addition.

36. In this regard, the stand of the Assessee is that there was no evidence found as a result of the search conducted, to show that more investment had been made in construction than had been shown; that the AO based his findings merely on the DVOs report; and that the issue of investment in construction cannot be reopened Under Section 153 A of the Act, in view of the following decisions:

1 Sh. Anil Kumar Bhatia in ITA 2660-2665/2009, date of order 01.01.2010 and finding of this very judgment has been affirmed by Honble Mumbai ITAT in the case of Anil P. Khimani v. DCIT in ITA 2855-2860/2008, date of order 23.02.2010;

2 Meghmani Organics Ltd. v. DCIT in ITA 2909-2913/2008, date of lorder 19.01.2009(ITAT, Ahmedabad);

3 DCIT v. Meghmani Industries in ITA 3400-3402/2008, date of order 16.01.2009. (ITAT, Ahmedabad);

4 LMJ International Ltd. v. DCIT 119 TTJ 214.

37. The ld. DR has, on the other hand, strongly supported the impugned order, contending that the Assessee has more than reasonably been granted 15% margin out of the value as determined by the DVO.

38. In order to prove more investment having been made than that declared, it is for the Department to bring material on record. In the present case, in the search conducted, or as a result thereof, no evidence was found to show any such investment over and above that shown to have been made in the construction. Moreover, this issue stood duly considered by the AO in the original assessment proceedings. The findings in the original assessment proceedings were based on the report of the registered valuer. In the assessment proceedings for assessment years 2001-02 to 2007-08, all the seized documents were checked and cash was also tallied. No addition was made to the returned income. The Department, thereby accepted the stand taken by the Assessee.

39. In view of the above, we hold that since no material was found during the course of search, the addition was not warranted. Accordingly, this grievance by way of ground No. 4 of the Assessee is also accepted.

40. Consequently, ITA No. 3194 (Del) 2010 filed by the Assessee is allowed.

ITA Nos. 3194 & 3195 (Del) 10 & 3197 & 3198 (Del) 10 ITA No. 3195 (Del) 2010:

41. In this appeal for assessment year 2005-06, the Assessee has contended that the ld. CIT(A) has erred in confirming the addition of ` 11,95,700/- on account of extra construction cost by considering the report of the DVO, ignoring that the construction cost has already been accepted by the Department in the assessment proceedings Under Section 143(3) of the Act in the case of the Assessee, supported with all documents, chart and valuation of registered valuer, when no material was found during the course of the search.

42. This issue is exactly similar to ground No. 4 in ITA No. 3194 (Del) 2010 (supra). Our observations made therein are, therefore, mutatis mutandis, applicable hereto also.

43. Accordingly, the grievance of the Assessee in this regard is also accepted and consequently, ITA No. 3195 (Del) 2010 is allowed.

ITA No. 3197 (Del) 2010:

44. This is Assessees appeal for Assessment year 2004-05. Ground Nos. 1 to 4 are similar to grounds in ITA No. 3194(Del)10. Our observations made therein are, therefore, mutatis mutandis, applicable hereto also. Consequently, ITA No. 3197(Del)2010 is allowed.

ITA Nos. 3194 & 3195 (Del)10& 3197 & 3198 (Del) 10 ITA No. 3198 (Del)2010:

45. This is Assessees appeal for Assessment year 2005-06. Ground Nos. 1 & 2 are exactly similar to grounds in ITA No. 3195(Del)10. Consequently, ITA No. 3198 (Del)2010 is allowed.

46. In the result, both the appeals filed by the Assessee are allowed. Order pronounced in the open court on01.06.2011