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2019 (10) TMI 846 - ITAT DELHICapital gain contribution - Reference to DVO - Difference between the value determined by the DVO and the value declared by the assessee - non rejection of books of accounts - HELD THAT:- Assessing Officer while passing the order for assessment year 2010-11 has himself accepted the value determined by the DVO and has made proportionate addition for assessment year 2010-11. Therefore, when the Ld.CIT(A), following the report of the DVO has reduced the disallowance, the Revenue should not have any grievance. Accordingly, the grounds raised by the Revenue are dismissed. Coming to the grievance of the assessee, it is an admitted fact that the books of account of the assessee have not been rejected before referring the matter to the DVO for determination of the cost of construction. The Hon'ble Supreme Court in the case of Sargam Cinema [2009 (10) TMI 569 - SC ORDER] has held that an assessing authority cannot refer any matter to the DVO without rejecting the books of account. Since, in the instant case, it is an admitted fact that the books of account of the assessee are not rejected and the assessee has maintained all bills and vouchers which are not found to be false or untrue, therefore, without rejecting the books of account of the assessee, the Assessing Officer could not have referred the matter to the DVO for determination of the cost of construction and thereby making addition on the basis of such difference. Even otherwise also, it is an admitted fact that the difference between the cost of construction declared by the assessee at ₹ 85.22 crores as against the value determined by the DVO of ₹ 82.68 crores is only 2.54 crores which is less than 3% of the total cost of construction declared by the assessee. Thus, the difference being less than 3% is very insignificant. We find the Hon'ble Delhi High Court in the case of CIT vs. Ambience Developers and Infrastructure (P) Ltd., [2012 (8) TMI 157 - DELHI HIGH COURT] has held that for insignificant difference between cost of construction as per books of account and that estimated by the DVO, addition on the basis of DVO’s report is not justified. Since, in the instant case, the assessee has maintained the books of account supported by bills and vouchers for the construction of the mall and hotel, which was not rejected by the Assessing Officer before sending the matter to the DVO for determination of the cost of construction and since the difference in the value declared by the assessee and the value determined by the DVO is also very insignificant being less than 3% of the total cost of construction declared by the assessee, therefore CIT(A) was not justified in sustaining the addition - Decided in favour of assessee.
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