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2012 (10) TMI 619 - HC - Income TaxRe opening of assessment - non disclosure of expenditure of earthwork - Re assessment notice based on DVO report - Held that:- Firstly the AO could not have referred the matter to DVO unless he had any doubts over the expenditure after examining the account books of the assessee, and on which he had rejected the accounts. The reference to DVO under Section 142-A is not to make a fishing and roving enquiry into the expenditure in constructions. The AO is not authorised to call for the report of DVO unless he forms an opinion that he cannot rely on the assessee's accounts and rejects the accounts books. In the present case, the accounts book were not rejected. The reference was made to DVO only for the purposes of ascertaining the expenditure on the earth work. The enormity of the earth work, by itself, without any other material on record, could not be a ground to make a reference to DVO The incomplete report of the DVO on the basis of which the assessment was reopened and for which the reasons were recorded on could not be accepted as the material on the basis of which the AO could have formed belief that the assessee-company had not truly disclosed the expenditure of earthwork. The DVO had only raised doubts on the methodology adopted by the assessee for valuation of the earth work. The AO acted casually in discharging his functions. AO did not call the assessee-company to explain the difference as up-front fees to IDBI for sanction of loan & the difference only in the share application money, thus the issuance of notice under Section 148 without calling for the explanation of the assessee on these grounds, and on the material could not be the grounds for reopening the assessment - in favour of assessee.
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