TMI Blog2015 (2) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis that father was not aware of the actual investment. When the investment has been done by the assessee and the same is reflected in the assessee's books it is not understood as to how the father has to give a categorical statement regarding the actual investment in the property. In this situation AO has referred the matter for valuation vide letters dated 13.12.2010 and 16.12.2010. The valuation cell's report was received on 21.12.2011 and 27.12.2011 respectively. Thus there is no satisfaction of the AO nor there is any basis to make reference to valuation cell. Thus we hold that there was no reason or basis for the AO to hold that he was satisfied that the investment in flats reflected by the assessee in his books was unreasonable as compared to fair market value and the AO has not rejected the books of account. In such situation the mandate emanating from the case laws referred above clearly provide that the AO cannot make a reference to the Valuation Officer u/s 142A of the Act. Accordingly we hold that reference to the Valuation cell was bad and AO cannot make addition in this case on the basis of the Valuation report obtained under such reference . - Decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year, which were not disputed. According to the assessee, he had invested ₹ 23,20,000/- during the assessment year under dispute for purchasing 3rd floor and also paid the sum of ₹ 8,30,000/- being the balance price of his father's flat on 4th floor. Therefore, the total investment claimed to have been made by the assessee during the assessment year under dispute for the aforesaid two flats including car parking space and cost of land was ₹ 31.50,000/-. The AO determined the total cost of acquisition of these two flats on the basis of report of the Departmental Valuation Cell at ₹ 38,20,700/- (assessee's flat on 3rd floor) and ₹ 11,26,800/- (father's flat on 4th floor), totaling to ₹ 49,47,500/-. After deducting initial investments in earlier assessment year by the respective owners of the property, the AO found the difference in assessee's investment of ₹ 15,46,700/- which is given in the following table :- 5. Upon assessee's appeal the ld. CIT(A) considered the issue as under :- 5.1. During the assessment proceedings, the appellant failed to submit any valuation report form a registered valuer. However, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was found that the 'a' had shown 'Advance against Flat' of ₹ 33,50,000/-. For the purpose the 'a' availed a H.B.Loan from Bank of Baroda, Lake Market Branch. During the year, the assessee, had claimed deduction of ₹ 1,39,038/- as per sec 24(b) of the I.T.Act, 1961. As per sec 24(b) of the I.T.Act'1961 deduction from income from house property is allowed. - where the property has been acquired, constructed, repaired, renewed or reconstructed . Since the 'a' had only shown 'Advance against Flat', deduction u/s 24(b) of the I.T.Act, 1961 is not allowable. During the year, the 'a' had received gift of ₹ 2,00,000/- from his mother. From records it was found the 'a' is receiving gift from his mother almost every year. Genuineness of the gift and needs verification. Moreover, from discrete enquiry, it was found that the assessee owns a flat of area 3000sq.flat on the 3rd floor and a flat of area 1500 sq.ft on the 4th floor. The assessee is showing investment of ₹ 33,50,000/- on total area of 4500 sq.ft. which seems to be unreasonable and far below the fair market value. In view of the above, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus, on a plain reading of section 142A of the Act, it is apparent that the question of estimating the value of any investment would arise only when the books of account are not reliable. Accordingly, the Assessing Officer would first be required to reject the books of account before making a reference to the Valuation Officer. The rejection of books of account should precede the reference to the Valuation Officer. The report of the Valuation Officer cannot form the foundation for rejection of the books of account. 6.3. Further the Hon'ble Apex Court in the case of Sagam Cinema vs CIT 328 ITR 513 has held as under :- In the present case, we find that the Tribunal decided the matter rightly in favour of the assessee in as much as the Tribunal came to the conclusion that the assessing authority could not have referred the matter to the Departmental Valuation Officer (DVO) without the books of account being rejected. In the present case, a categorical finding is recorded by the Tribunal that the books were never rejected. This aspect has not been considered by the High Court. In the circumstances, reliance placed on the report of the DVO was misconceived. For the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property. In this situation AO has referred the matter for valuation vide letters dated 13.12.2010 and 16.12.2010. The valuation cell's report was received on 21.12.2011 and 27.12.2011 respectively. Thus there is no satisfaction of the AO nor there is any basis to make reference to valuation cell. Thus we hold that there was no reason or basis for the AO to hold that he was satisfied that the investment in flats reflected by the assessee in his books was unreasonable as compared to fair market value and the AO has not rejected the books of account. In such situation the mandate emanating from the case laws referred above clearly provide that the AO cannot make a reference to the Valuation Officer u/s 142A of the Act. Accordingly we hold that reference to the Valuation cell was bad and AO cannot make addition in this case on the basis of the Valuation report obtained under such reference . Hence we set aside the orders of the authorities below and decide the issue in favour of the assessee. 6.6. Since we have already decided the issue on jurisdiction against the revenue we have not adjudicated the issue pertaining to the merits of the addition. 7. In the result the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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