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2014 (9) TMI 607 - AT - Income TaxRejection of books of accounts u/s 145(3) – Difference in cost of construction of building of marriage palace – Held that:- The AO raised four objections while rejecting the books of account starting with earth filling expenses are not debited, fuel/diesel expenses are not debited, labour expenses appears to be on the lower side as proportionate to the material purchased and as per valuation report, the construction cost if estimated at ₹ 1,24,53,238/- as against declared by the assessee at ₹ 36,29,948/- during the year, there was a difference of ₹ 88,23,290/- and why the same should not be added to the income of the assessee as unexplained investment while rejecting the books of account u/s 145(3) of the Act - having not pointed out any defect in the same, the AO was not justified in sustaining the addition of ₹ 12,74,574/- on account of earth filling, which in fact, has been deleted by the ld. CIT(A) – assessee submitted that all the expenses and details were submitted before the AO and no specific defect has been pointed out on this account as well In the absence of any specific defect on this account, books of account cannot be rejected - relying upon Commissioner Of Income-Tax Versus Sheikhar Chand And Sons [1990 (5) TMI 24 - ALLAHABAD High Court] - the AO was not justified in rejecting the books of account and the CIT(A) was not justified in confirming the action of the AO with regard to invocation of provisions of section 145(3) of the Act – Decided in favour of assessee. Reference made to DVO – Held that:- Since, the order of the CIT(A) with regard to invoking the provisions of section 145(3) of the Act is set aside, therefore, the AO was not justified in referring the matter to the DVO. Following the decision in Sargam Cinema vs. CIT [2009 (10) TMI 569 - Supreme Court of India] - no addition could have been made by the AO and no addition could have been sustained by the CIT(A) – Decided in favour of assessee. The AO has got the valuation report of the building done from the DVO and the report was submitted to the assessee and the assessee got the valuation done from the registered valuer Mr. Manikant Garg in view of the DVO’s valuation, who pointed out the defect in the DVO’s report and the assessee submitted that the detailed report will be submitted in due course - But the AO did not provide any time since the assessment was time barring – it was prepared during the appellate proceedings, which has rightly been admitted by the CIT(A) and there was no defect in the same - CIT(A) is not justified in confirming the addition of ₹ 24,68,661 – Decided in favour of assessee.
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