TMI Blog2014 (11) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... without pointing out any defect in the maintenance of the books of account - No doubt, net profit rate can be re-estimated by the AO but it can only be done where the defects are pointed out in the maintenance of the books of account - Without pointing out any defect, re-estimation of net profit rate is not permissible – Decided against revenue. Receipts of school of nursing and paramedical – Held that:- CIT(A) has called for assessment record and verified himself the difference in fees of School of Nursing & Institute of Paramedical Science and noted that the AO has worked out the difference in fees of School of Nursing & Institute of Paramedical Science at ₹ 22,86,300/- as against ₹ 22,08,000/- shown by the assessee on the basis of documents impounded during the course of survey under section 133A of the Act on 7.3.2009 – the order of the CIT(A) is upheld – Decided against assessee. - ITA No.314/LKW/2013, C.O. No.16/LKW/2013 - - - Dated:- 10-11-2014 - Shri Sunil Kumar Yadav And Shri. A. K. Garodia,JJ. For the Petitioner : Shri. Y.P. Srivastav, D.R. For the Respondent : Shri. Abhinav Mehrotra, Advocate ORDER Per Sunil Kumar Yadav: Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to be restored. 3. In the cross objection, the assessee has assailed the order of the ld. CIT(A) on the ground that the ld. CIT(A) has erred in confirming the addition of ₹ 78,200/-. During the course of hearing, the ld. counsel for the assessee has also moved an application under section 253 of the Income-tax Act, 1961 (hereinafter called in short the Act ) read with rule 11 of the ITAT rules raising the additional grounds in the cross objection, which are as under:- (i) Because on the Facts and in the Circumstances of the case, the Ld. CIT(A) confirmed the action of the Assessing Officer who has made a reference to DVO, without lawfully rejecting the books of account of the assessee and has even computed the total income of the assessee, basing reliance on the book results, as is evident from the computation of income by the same. (ii) Because on the Facts and in the Circumstances of the case, the Ld. CIT(A) confirmed the action of the Assessing Officer who has made a reference to DVO, without lawfully rejecting the books of account of the assessee and as such the addition made on this score is bad in law as per the verdict of the Hon'ble Apex Court in Sarg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Sargam Cinema vs. CIT, 328 IR 513 (SC), has clarified the legal position with regard to the reference to the DVO for determining the cost of investment in the property by holding that the assessing authorities could not have referred the matter to the DVO without the books of account being rejected. Thereafter, the judgment of the Hon ble Apex Court has been followed by the subordinate Courts throughout the country and has been repeatedly held that a reference made without rejecting the books of account, is bad in law and addition cannot be made on the basis of the valuation report submitted consequent to the said reference. The ld. counsel for the assessee has further placed reliance upon the following judgments:- 1. CIT vs. Reghuraji Agro Industries (P) Ltd., 38 taxmann.com 318 (Alld). 2. ACIT-1, Kanpur vs. M/s Indus Technical Education Society, Kanpur (I.T.A. No. 296 297/LKW/2011). 3. Honest Group of Hotels (P) Ltd. Vs. CIT, 123 Taxman 464 (J K). 4. CIT vs. Raj Kumar, 182 ITR 436 (Alld.) 6. This factual matrix were confronted to the ld. D.R. and he has no answer as to why reference was made to the DVO even before issuing notice under section 142(1)of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of the ld. CIT(A), who has rightly deleted the addition. 9. The other ground in the Revenue s appeal is with regard to deletion of addition of ₹ 3.40 lakhs made by the Assessing Officer and estimated the net profit rate at 10% on the receipts of the hospital. 10. In this regard, we have noticed that the Assessing Officer has estimated the profit of business at 10% of the total receipt of ₹ 97,25,962/- without pointing out any defect in the maintenance of the books of account. The ld. CIT(A) has examined this issue in the light of the material available on record and deleted the addition. The relevant observations of the ld. CIT(A) are extracted hereunder:- 6(3) 1 have examined the facts and circumstances of the case. I have considered the findings of the AO in the assessment order and the submissions of the appellant. I have also called for and examined the assessment records. I find that the AO has failed to point out any discrepancy in the books of accounts as regards the business of the appellant. There is no finding that the receipts of the appellant are not properly disclosed or that bogus expenditure has been claimed. Discrepancies pointed out i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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