Quality & lavishness of construction is not incriminating material

CA Prarthana Jalan

Agra ITAT in the case of ACIT Vs. Shri Yogendra Kumar Singhal has held that Quality & lavishness of construction is not incriminating material.  Reference cannot be made to the Valuation Officer in the absence of incriminating material/document found during the course of search. Hon’ble  ITAT has held  as under :-

Having heard the rival contentions and having perused the material on record, we are of the considered view that on facts of the case it cannot be said that any incriminating material or evidence was found during the search & seizure operation. As for ld. Departmental Representative’s submission about the quality and lavishness of the construction, even if that is so, such a construction cannot constitute incriminating material because unless there is something to suggest that expenditure incurred has not been shown in the books of account there is no warrant for the inference that expenses have been suppressed from an account. As the ld. CIT(A) has rightly noticed that in the absence of any such material the very reference to Valuation Officer is vitiated in law. We also notice for a matter of record that no defect or shortcomings were found in the details submitted by the assessee so as to justify the reference to the Valuation Officer. The objections made by the assessee to the valuation report were also summarily brushed aside by the A.O. and now that they have been considered in detail. The difference between the value as per valuation report and expenses as per the books of account is reduced to less than 15% which can also be justified on account of normal permissible estimation difference. In view of these discussions, as also bearing in mind the entirety of the case, we approve and affirm the ld. CIT(A)’s very well resound order and decline to interfere in the matter.