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2024 (4) TMI 460 - ALLAHABAD HIGH COURTValidity of additions based on valuation report - Referring the matter to DVO without first rejecting the books of account - Best Judgement Assessment - Without rejecting the books of accounts, AO proceeded to make reference u/s 142A to Departmental Valuation Officer (DVO) but later, acting solely on the strength of estimation made by the DVO in his report, AO proceeded to reject the books of accounts and make the Best Judgement Assessment wherein he relied on the estimation of investment made by the assessee, as disclosed by the DVO. HELD THAT:- Undeniably, books of accounts of the assessee were not rejected on or before 5.4.2006. That consequence in law arose later after submission of the DVO report dated 14.9.2006. As decided in Sargam Cinema, Haldwani [2009 (10) TMI 569 - SC ORDER] Tribunal decided the matter rightly in favour of the assessee inasmuch as the Tribunal came to the conclusion that the assessing authority (AO) could not have referred the matter to the Departmental Valuation Officer (DVO) without books of accounts 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. Also see Lucknow Public Educational Society [2011 (3) TMI 1326 - ALLAHABAD HIGH COURT] as held language of section 142A mean that before proceeding to call for a report of the Valuation Officer, the books of account must be rejected. Decided against revenue.
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