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Issues involved: Initiation of assessment proceedings u/s 147, reference to DVO u/s 142A, addition on account of unexplained investment.
For the assessment year 2001-02, the assessee challenged the initiation of reassessment proceedings u/s 147 and the reference to the DVO u/s 142A. The AO initiated proceedings based on a survey revealing discrepancies in the cost of construction of a property. The DVO's report valued the property higher than the assessee's declaration, leading to an addition of Rs. 25,07,483. The CIT(A) upheld the AO's decision. The assessee argued that the Inspector's report and DVO's valuation were not valid grounds for reassessment. The Tribunal agreed, stating that the AO lacked concrete evidence to believe income had escaped assessment. The reference to the DVO was deemed invalid as complete accounts were maintained, and the AO did not have valid reasons for suspicion. The Tribunal allowed the assessee's appeal on these grounds. Regarding the merit of the addition, the AO rejected the books of account and made the addition based on the DVO's report. However, the Tribunal found that the registered valuer's report, valuing the property lower than the DVO, was not contested by the AO. As no defects were found in the valuer's report, the Tribunal reversed the CIT(A)'s decision and allowed the assessee's appeal on this ground. For the assessment year 2002-03, similar issues arose as in the previous year. The Tribunal applied the decision from the 2001-02 assessment year to allow the assessee's appeals on the grounds related to initiation of assessment proceedings u/s 147, reference to DVO u/s 142A, and addition on account of unexplained investment. The general ground raised by the assessee was not adjudicated upon. In conclusion, the Tribunal allowed the appeals of the assessee for both assessment years, finding in favor of the assessee on the issues related to reassessment proceedings, reference to the DVO, and addition on account of unexplained investment.
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