TMI Blog2014 (12) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout rejecting book results or not, to DVO for estimating cost of construction, particularly when no defects were found in books of account except disallowance of small discrepancies and other preliminary expenses being capital in nature, which were added, while completing assessment u/s. 143(3) - Held that:- Following the decision in ITO Vs. M/s. Sahul India Limited [2011 (8) TMI 1038 - ITAT KOLKATA] - there is no whisper about any discrepancy in books of account and there is no rejection of books of account by AO – the AO should not have referred the matter to the DVO for estimating cost of construction particularly when the cost of construction is fully described in the books of account. A clear finding to that effect, along with materials on which such finding is based, has to be made out and given by AO - no assessment under the first proviso to section 145(1) of the Act or under section 145(2) of the Act can be sustained if the AO has not considered and recorded a finding against the assessee as to whether he has been regularly employing a method of accounting or whether his income, profits or gains can properly be deduced from his method of accounting if he has been re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs. Both parties are informed in the Open court. Again on 25.06.2013 at Sl. No. 25 to produce assessment record and tell the status of substantive addition, as under: Sl. No. 25 1. Heard the parties. 2. DR directed to produce assessment record of the assessee in whose hands substantive assessment was made. 3. Adj. to 19.07. for compliance to this requisition. Technically, p/h matter Again on 19.07.2013 at Sl. No.27 to produce assessment record and tell the status of substantive addition and final opportunity was given, as under: Sl. No. 27 Final opportunity for 9th October. Failure to produce record on that day will result in adverse inference. Adj. to 09/10. Again on 08.09.2014 at Sl. No.33 for the same reasons it was adjourned as under: Sl. No.33 as per reason noted in the order sheet entry dated 25.06.2013, the case is adjourned to 17.11.14. Both parties are informed in the open court. And finally on 20.11.2014 at Sl. No. 36, the bench noted as under: Sl. No. 36 In this case, vide order sheet entry dated 26.09.12, the Revenue was asked to produce assessment records. Again on 14.02.2013, the DR was directed to verify whether the substant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleted in the hands of Siliguri Prabhupada International Research Society and there is a direction that this addition should be considered in the hands of the assessee, then they may get this order recalled as per the provisions of the Act. In term of the above, this appeal of assessee is allowed and protective addition is deleted. 5. Coming to ITA No. 1105/Kol/2010. The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of AO in making addition of difference being the investment made in the cost of construction as disclosed in books of account and cost of construction as per DVO s report at ₹ 15,77,260/-. 6. At the outset, Ld. Counsel for the assessee stated that this issue is covered in favour of assessee and against the revenue for the reason that the AO has not rejected the book results. The Ld. Counsel for the assessee stated that the assessee is a property developer and is engaged in construction and sale of property developed by it. During the course of assessment proceeding assessee furnished details in respect of construction of property and sale thereof. The assessee produced complete books of account along with bills, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax as well as in civil law, namely, if there is no challenge to the transaction represented by the entries or to the genuineness of the entries, then it is not open to the revenue or other side to contend that what is shown by the entries is not the real state of affairs. When a return is furnished and accounts are put in, in support of that return, the accounts should be taken as the basis for assessment. They should not be rejected because they are complicated. The procedure of the Assessing Officer is of a judicial nature and in making assessment he should proceed on judicial principles. If evidence is produced by the assessee in support of his return it should be accepted unless it is rebutted by other admissible evidence and not by mere hearsay. As the Assessing Officer examines the accounts of an assessee, he has to consider the following questions: (1) Whether the assessee has regularly employed a method of accounting? (2) Even if regular adoption of a method of accounting is there, whether the annual profits can properly be deduced from the method employed? (3) Whether the accounts are correctly maintained? (4) Whether the accounts maintained are complete in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Department Valuation Officer (DV)) without the books of account 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. Further Hon ble Rajasthan High Court in the case of CIT V Pratap Singh Amro Singh Rajendra Singh (1993) 200 ITR 788 (Raj) held as under:- We have considered the matter. In respect of the investment which is made in the property, there can be only two methods to find out the correct position (i) when proper books of account are maintained, and (ii) valuation report. If the assessee has maintained proper books of account and all 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 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 acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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