TMI Blog2002 (9) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... marriage palace at Bagha Purana and in the Balance Sheet as on 31-3-1997, the assessee has shown building account at Rs. 14,32,104. The details of building account were filed by the assessee, during the course of assessment proceedings. To verify the genuineness of expenses debited for construction of the Marriage Palace, assessee s case was referred to the Asstt. Valuation Officer, Ludhiana vide this office letter Nos. 612-13 dated 21-5-1998. The Valuation Officer, I.T. Department, Ludhiana vide his officer letter No. 4/CC/VO/LDH/98-99/307 dated 31-12-1998 had determined the cost of construction of the said property at Rs. 42,55,600. Copy of the said valuation report was supplied to the ld. Counsel for the assessee. Sh. K.L. Arora, Adv. on 12-3-1999, for comments. Vide letter dated 8-4-1999, the assessee furnished his memorandum of objections and he requested for re-valuation of the property by the Valuation Officer. 3.1 Vide this office letter dated 11-10-1999, the assessee was pointed out that upto the date of completion i.e. December, 1997 he has shown investment of Rs. 16,03,018 whereas the Valuation Officer, Ludhiana has valued the property at Rs. 42,55,568 and he was requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Valuation report of the second approved value is almost the same as Valuation report of the first approved valuer. Further, after considering the assessee s objections in details, the Valuation Officer of Income-tax Department, Ludhiana has given valuation report determining the cost of construction at Rs. 33,09,558 against valuation shown by the assessee as on the date of inspection at Rs. 20,17,890. Except furnishing the Valuation reports of two different approved Valuers, the assessee has failed to explain the source of investment of balance sum of Rs. 12,91,668 and this sum of Rs. 12,91,668 is treated as assessee s income undisclosed sources and the same is added to the income of the assessee under section 69 of the Income-tax Act, 1961." From the above facts, it would be clear that the Assessing Officer has made the addition of Rs. 12,91,668 under section 69 of the Income-tax Act, 1961. 4. When the matter was taken to the CIT(A), in appeal, the assessee submitted that he has furnished a detailed objection against the report of the Valuation Officer vide letters dated 8-4-1999 and 25-11-1999 to state that entire addition estimated by the Assessing Officer was in a me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i)September 1996 to March, 1997 (ii)April, 1997 to March, 1998 and (iii)April, 1998 to May, 1998. The learned CIT(A) further found that while computing the assessment the Assessing Officer has added the difference of cost of construction as determined by the V.O. only in the year under consideration. According to the learned CIT(A), the above action of the Assessing Officer was unwarranted. He further observed that the V.O. in the original report has taken about 27% of the expenditure to be relating to the assessment years 1998-99 to 1999-2000. On the basis of this, the valuation would come to Rs. 24,15,978 against Rs. 33,09,558. Accordingly, the learned CIT(A) reduced a sum of Rs. 9 lakhs. The CIT(A) has also observed that all the three Valuers have proceeded to make valuation of the property treating it to be a scheduled building and applied rates of CPWD/PWD rates whereas actually the property, in question, was not a scheduled building but a Marriage Palace in the shape of temporary structure where more emphasis is given on decoration. He further observed that all the three Valuers as well as the Assessing Officer had not correctly valued the building, in question. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be said to be unreliable. Reliance was placed on the decision of the Hon ble Rajasthan High Court in the case of CIT v. Pratapsingh Amrosingh Rajendra Singh and Deepak Kumar [1993] 200 ITR, 788, Shri Mohan Lal, Advocate, the learned counsel for the assessee, vehemently argued that in the instant case, the Assessing Officer has not looked into the books of account maintained by the assessee. Similarly, the learned CIT(A) has not rejected the book results while stating that the assessee had not maintained proper books/vouchers. According to the learned counsel for the assessee, under the law, the Assessing Officer was required to examine the evidence produced by the assessee in support of his cost of construction, namely, the books of account, record a finding about the falsity or unreliability, not just by expressing a capricious view but by pointing out evidence, material and flows in the evidence, if any. According to the learned counsel for the assessee, in the instant case, the Assessing Officer as well as the CIT(A) has not rejected the book results and, therefore, both the authorities below were not justified in making the addition on account of difference in cost of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amrosingh Rajendra Singh and Deepak Kumar (supra) has held that, "If the assessee has maintained proper books of account and all the details are mentioned in such books of account, which are duly supported by vouchers and no defects are pointed out and the books are not rejected, the figures shown therein have to be followed". The Hon ble High Court further observed that "The valuation report can be taken into consideration only when the books of account are not reliable or are not supported by proper vouchers or the Income-tax Officer is of the opinion that no reliance can be placed on such books of account." In the instant case, the Assessing Officer has not examine the books of account at all. Similarly, the learned CIT(A) has not examined the books of account. However, his findings are based on the report of the V.O., who has said that there were certain defects as far as the maintenance of vouchers were concerned. While relying upon the report of the V.O., the CIT(A) should have given an opportunity to the assessee to rebut his findings. The learned CIT(A) has not asked the assessee to produce books of account, vouchers etc. before him for proper verification. In that view of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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