TMI Blog2014 (11) TMI 949X X X X Extracts X X X X X X X X Extracts X X X X ..... corded by the AO - Nothing has been brought on record as regards to the conditions laid down in section 145(3) of the Act - no reference could have been made by the AO and reference made by the AO is not legal and assessment so framed on valuation report is bad in law - the difference in cost of construction declared by the assessee or as valued by the Valuation officer will be correct amount of investments made by the assessee - no defect has been pointed out by any of the authorities below with regard to the investments made by the assessee and therefore, no addition is required to be made u/s 69 - the benefit of valuation of raw structure existing at the site had not been allowed by the DVO – as such no substantial question of law arises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case, the order passed by the Hon ble ITAT is perverse being contrary to material on record? 3. A few facts relevant for the decision of the controversy involved as narrated in ITA No.371 of 2013 may be noticed. The assessee is an individual. He filed his return for assessment year 2008-09 on 28.2.2009 at total income of ₹ 6,44,140/-. In the statement of income, the assessee had shown business income as proprietor of M/s Hotel Namaskar and as partner of M/s Satish and Co. Malikpur and income from other sources being interest on deposits. The return was processed under Section 143(1) of the Act on 4.2.2010. The case was selected for scrutiny. While framing the assessment, it was noticed that during the previous year relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Tribunal. Vide order dated 23.5.2013, Annexure A.3, the Tribunal allowed the appeal relying upon the decision of the Apex Court in Sargam Cinema s case (supra) to the effect that Assessing Officer could not have referred the matter to the DVO without rejecting the books of account. Hence the instant appeal by the revenue. 4. Learned counsel for the revenue on the strength of the judgment of the Andhra Pradesh High Court in Bharathi Cement Corporation P. Limited v. Commissioner of Income Tax and others, (2013) 356 ITR 74 submitted that rejection of books of account was not a condition precedent for making assessment under section 142A(1) of the Act. It was urged that the Assessing officer had rightly referred the matter to the DV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a facie opinion that the value of the investment is not genuinely disclosed and is required to be assessed for the purposes of Sections 69, 69A or 69B of the Act. In other words, Section 142A of the Act, thus, cannot be invoked where valuation of the cost of construction is bonafide and based on books of account which has not been rejected. The report of the DVO would be dealt with by the Assessing Officer under sub section (3) of Section 142A of the Act. There is logic and reasoning for adopting the aforesaid view. There appears to be no occasion for the revenue not to accept the valuation of the cost of construction of an asset without rejecting the books of account maintained by the assessee. It would not only be unfair but against the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO s order is not under dispute. In the facts and circumstances of the case, the law is very clear by the decision of Hon ble Supreme Court in the case of Sargam Cinema vs. CIT(supra) where the AO could not have referred the matter to the DVO without books of account being rejected and therefore, reliance placed on the report of the DVO was misconceived in the present case as well. The AO has not applied his mind as to the correctness or completeness of the accounts of the assessee and no dissatisfaction has been recorded by the AO. Nothing has been brought on record as regards to the conditions laid down in section 145(3) of the Act. Therefore, in the present facts and circumstances and in view of the decisions relied upon by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the present case, the Valuation Officer and the authorities below have not taken the submission of the assessee in right perspective. In such circumstances and facts of the case,if the objection of the assessee mentioned in his written submissions and explanation put before the learned CIT(A) and the AO are taken into consideration, the difference in cost of construction declared by the assessee or as valued by the Valuation officer will be correct amount of investments made by the assessee. Moreover, as per our findings hereinabove, no defect has been pointed out by any of the authorities below with regard to the investments made by the assessee and therefore, no addition is required to be made under section 69 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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