Facts of the case
Assessee is a Director of a company having more than 10% of voting power. The said Company is involved in the business of construction in real estate. The assessee has entered into an agreement for construction of Assessee’s house. During the year under consideration, the work-in-progress was of Rs.32,81,823/-. As no payment was made by the assessee to the company during the year under consideration, an amount of Rs.32,81,823/- was treated by the Assessing Officer as deemed dividend under section 2(22)(e). Final bill of Rs.3,47,12,678/- was raised by the company on 31.5.2012 which was paid by the assessee as per schedule of payment. There is no amount remaining unpaid to the company.
Question of Law
Whether the ld. CIT(A) was justified in accepting belated disclosure of investment of Rs.3,47,12,678/- towards cost of construction of house and also in holding that there is only a minor difference of Rs.11,26,422/- (approx 3.24%) in aggregate cost of construction determined by the DVO and that has been disclosed by the assessee?
Contention of the Assessee
The ld. counsel for the assessee has contended that the DVO has not taken the investment made in assessment year 2011-12. He has estimated the investment at Rs.32,81,823/- in assessment year 2008-09. If the total investment estimated by the DVO and declared by the assessee is examined, the difference would be at Rs.11,22,422/- which is about 3.24% and for this minor difference, no addition is called for in the light of the Judgment in the case of ITO vs. Smt. Pramila Agarwal 88 TTJ 91 and CIT vs. Abesson Hotels (P) Ltd., 191 CTR 263.
Contention of the Revenue
The ld. CIT(A) ought to have made addition with respect to the difference between the cost determined by the DVO and declared by the assessee.
Held by the Tribunal
The Hon’ble Tribunal held that the DVO has estimated the cost of investment at Rs.3,58,39,100/- against the cost of investment declared by the assessee at Rs.3,47,12,678/-. Therefore, the difference is about 3.24% and for this minor difference, no addition is called for. Since the difference is very nominal, no addition is called for in this regard. Accordingly the order of the ld. CIT(A) was confirmed and the Revenue appeal was dismissed.
