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2014 (4) TMI 154 - AT - Income TaxAddition made u/s 69C of the Act – Reference made to DVO u/s 142A of the Act - Difference between cost of construction and valuation made by the DVO – Held that:- The assessee has produced the books of account but the AO has not rejected or no defect was pointed out in the books of account regarding cost of construction of the project before reference to the DVO - Without causing any defects in books regularly maintained and without rejecting the books u/s.145, of the Act there is no reason to add any amount on the presumption that the cost/investment in construction is low - thus, without rejecting the books of account regularly maintained, the addition cannot be made only on the basis of the DVO’s report - the assessee has supplied requisite information to DVO and also produced before AO which he has seen and verified but has not commented on the genuineness of the bills and not pointed out any defects in the bills and hence not rejected the records maintained and produced by assessee. Reference to valuation cell u/s.142A can be made during the course of assessment and reassessment and not for the purpose for initiating assessment – the decision in Umiya Co-operative Housing Society Ltd. v ITO 2005 (3) TMI 382 - ITAT AHMEDABAD-B] followed - the provisions of Sec. 142A cannot be read in isolation to Sec.145 - if books of account are found to be correct and complete in all respect and no defect is pointed out and cost of construction of building is recorded, then the addition on account of difference in cost of construction could not be made even if a report is obtained within the meaning of Sec.142A from the DVO - thus, when AO has not rejected the books of account by pointing out any defects reference to the DVO will not be valid – thus, DVO’s report could not be utilized for framing assessment even if such a report is considered to be obtained u/s.142A - reference to DVO being held as invalid, the assessment/ reassessment framed thereafter would also be invalid. The decision in COMMISSIONER OF INCOME-TAX Versus AAR PEE APARTMENTS P. LTD. [2009 (8) TMI 256 - DELHI HIGH COURT] followed - Except the report of DVO, there was nothing on record to suggest that there was any Of the evidence to disbelieve the expenditure shown by the assessee - the Legislature has not included unexplained expenditure stipulated in Sec.69C of the Act for invocation of provisions of Sec.142A of the Act - even the CBDT Circular issued by it, explaining the Finance Bill, 2004, specifically omitted the word ‘expenditure’ as well as Sec.69 from the ambit of Sec.142A of the Act as inserted in the form as it appears on the statue book - If the intention of the Legislature to include unexplained expenditure as contemplated in Sec.69C of the provision of Sec.142A should have been specifically mentioning the same - the cost of flat being shown by the assessee as current assets not as an investment, it cannot be subject matter of reference u/s. 142A – Decided in favour of Assessee.
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