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2019 (2) TMI 2103 - AT - Income TaxValidity of additions based on valuation report - Referring the matter to DVO u/s 142A without first rejecting the books of account - addition u/s 69 being unexplained investment in the factory building - HELD THAT:- AO in the instant case has not rejected the books of account before making a reference to the DVO. We find in the case of Lucknow Public Educational Society (2011 (3) TMI 1326 - ALLAHABAD HIGH COURT] has held that u/s 142A(1) the assessing authority cannot refer the matter to the DVO without first rejecting the books of account. We find also in the case of CIT vs Subhash Chandra Gupta [2013 (12) TMI 784 - ALLAHABAD HIGH COURT] has held that the Assessing Officer cannot refer the matter to the DVO without first rejecting the books of account. Thus unless and until the books of account are first rejected by the Assessing Officer, the Assessing Officer is not justified in making reference to the DVO u/s 142A and if reference is held to be had in law, the DVO’s report is to be ignored and cannot be the basis to make the addition. Thus AO is not justified in referring the matter to the DVO u/s 142A(1) without first rejecting the books of account. So far as the observation of the ld.CIT(A) that the assessee has not produced the books of account completely as per requirement of the Assessing Officer is concerned, the same is contrary to the facts. The finding of the CIT(A) shows that the assessee has maintained regular books of account. The reply of the assessee before the Assessing Officer as well as the observation given by the Assessing Officer in the body of the assessment shows that the assessee has produced the books of account. Decided in favour of assessee. Addition u/s 68 - share application money received by the assessee from the three persons - Addition made as assessee failed to produce the above parties for his examination and the letters issued to the above three parties were not complied with since one letter was returned unserved and the other two parties did not respond - Assessee argued that proper opportunity was not granted to the assessee - HELD THAT:- Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to give one final opportunity to the assessee to substantiate with evidence to his satisfaction regarding the identity and credit worthiness of the share applicants and the genuineness of the transaction. The Assessing Officer shall decide the issue as per fact and law. Assessee's ground allowed for statistical purposes.
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