2013 (3) TMI 688 - AT - Income Tax

Reference u/s. 142A - Held that - Reference under section 142A of the Act by the A.O. is not in accordance with law as he referred the matter under section 142A without rejecting books of account. The order of A.O. on the issue is liable to be quashed and accordingly we quash the same. Entitlement to benefit of Section 11 or under Section 10(23C) - Held that - We set aside the orders of Revenue authorities and contention of the assessee is allowed that if any addition is sustained the assessee is entitled to benefit of Section 11/10(23C) of the Act. The A.O. is directed accordingly.

Summary

Issues:
1. Addition u/s. 69 for unexplained investment in building construction
2. Valuation of property under section 142A
3. Exemption u/s. 11 and 10(23c)(iiiad) on impugned addition
4. Legality of additions, interest charged, and assessment order

Issue 1 - Addition u/s. 69 for unexplained investment:
The assessee disputed the addition of &8377; 34,51,400 under section 69 for unexplained investment in building construction. The Valuation Officer estimated the value of the college building, revealing a significant variance from the assessee's declared value. The Assessing Officer (A.O.) concluded that the assessee did not disclose the actual investment, indicating unreliability in the books of account. The CIT (A) upheld the addition, emphasizing the lack of item-wise details and reliability concerns in the assessee's records.

Issue 2 - Valuation of property under section 142A:
The A.O. referred the matter to the Valuation Officer under section 142A without rejecting the books of account. The CIT (A) dismissed the assessee's appeal, citing the absence of item-wise material details and questioning the reliability of the books of account. However, the ITAT quashed the A.O.'s order, noting that the reference under section 142A was not lawful without rejecting the books of account as required under section 145(3) of the Act.

Issue 3 - Exemption u/s. 11 and 10(23c)(iiiad) on impugned addition:
The CIT (A) denied exemption under section 11 or 10(23c)(iiiad) for the addition made on unexplained construction costs. The ITAT, following the judgment of the Delhi High Court, allowed the assessee's claim for exemption if any addition is sustained, directing the A.O. accordingly.

Issue 4 - Legality of additions, interest charged, and assessment order:
The grounds challenging the additions, interest charged under section 234B, and the assessment order were raised. The ITAT partly allowed the appeal, setting aside the orders of Revenue authorities and directing the A.O. to grant benefits under Section 11/10(23C) if any addition is sustained. The A.O. was also directed regarding the charging of interest under section 234B.

This detailed analysis of the judgment covers the key issues raised by the assessee and the decisions made by the authorities and the ITAT, providing a comprehensive understanding of the legal implications and outcomes of the case.