The case involves an appeal by Gajendra Singh of Etah against the DCIT, Central Circle, Ghaziabad. The case is related to the assessment year 2017-18, filed on 2021-09-14, with the final tribunal order pronounced on 2022-10-10.
Gajendra Singh filed an appeal challenging the assessment made by the DCIT under section 153A of the Income Tax Act, 1961. The assessment followed a search and seizure operation conducted on the premises of Gajendra Singh, leading to the discovery of alleged unexplained investments.
Gajendra Singh argued that the assessment under section 153A was beyond jurisdiction and void ab initio. He contended that no incriminating material was found during the search that could justify the initiation of proceedings under section 153A. Furthermore, the appellant challenged the mechanical approval granted under section 153D, alleging lack of application of mind.
The DCIT argued that the search operation revealed substantial evidence indicating unexplained investments by the appellant. The documents found during the search were claimed to be sufficient to initiate proceedings under section 153A. The respondent defended the approval under section 153D, asserting that it was granted after due consideration of the case details.
The tribunal observed that the assessment under section 153A requires incriminating material found during the search. In this case, the tribunal noted that the documents found during the search were related to the appellant’s investments and justified the initiation of proceedings under section 153A.
The tribunal examined the approval process under section 153D. It found that the approval was not merely a mechanical exercise but was granted after due consideration of the facts and circumstances of the case.
The appellant challenged the addition of Rs. 8,33,505 made under section 69, alleging unexplained investment in property. The appellant argued that the addition was based solely on the DVO’s report, which adopted CPWD rates instead of state PWD rates, and did not allow a rebate for self-supervision charges.
The tribunal found merit in the appellant’s argument regarding the adoption of CPWD rates. It directed the AO to adopt state PWD rates for estimating the cost of construction and to grant a deduction for self-supervision charges at 10%. The tribunal observed that the evidence provided by the appellant about the construction expenses was not disproved by the revenue authorities.
The tribunal upheld the validity of the assessment under section 153A and the approval under section 153D. However, it directed the AO to recompute the cost of construction using state PWD rates and to grant a deduction for self-supervision charges. Consequently, the addition under section 69 was revised.
In summary, the tribunal’s decision provided partial relief to Gajendra Singh by directing the AO to apply appropriate rates and deductions while maintaining the validity of the assessment proceedings.
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