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TMI Blog2015 (2) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... of the finding that the appellant had accounted for the entire amount of cost construction to the contractor and that the Assessing Officer did not find any defect in respect of cost account for in the books of account, is valid in law insofar as it has agreed with the order of the CIT (Appeals) in arriving at the estimated cost of construction for the purpose of addition assessment u/s.69B of the Act as deemed income? (ii)Whether the Tribunal is right in law in sustaining the estimated cost of construction as arrived at by the CIT (Appeals) when the Tribunal has found the appellant had accounted for the entire cost of construction in the account books and that no flaw was found? (iii)Whether the Tribunal is right in law in holding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,070/-. The Assessing Officer referred the matter to the Valuation Cell, Income Tax Department, Madurai and the Department's Valuer estimated the cost of construction of the complex at Rs. 58,09,000/-. The assessee's objections to the valuation report were considered by the Assessing Officer and thereafter, the assessment order was passed treating the difference in valuation to the tune of Rs. 16,61,000/- as income for three assessment years, namely, 1994-1995, 1995-1996 and 1996-1997. Accordingly, a sum of Rs. 4,84,610/- was added to the total income of the assessee in the assessment year 1996-1997 and assessment was completed. 2.2. The assessee appealed to the Commissioner of Income Tax (Appeals), who partly allowed the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of cost accounted for in the books of account and the Department Valuation Officer has valued the property at plinth area rates. The Department Valuation Officer has taken into account excess plinth area compared to the actual and the rate adopted by the Department was also excessive as he has applied the C.P.W.D. Rates. Since the construction was carried out in a moffusil area and the quality was ordinary, the State P.W.D. Rates should have been applied. It is observed that the CIT (Appeals) has reasonably reduced the cost of construction by 15% taking into consideration the local area rates, quality of materials in construction etc. 2.4. Impugning the said order, the assessee has preferred this appeal on the questions of law, ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment to prove that there was understatement or concealment of income has not been discharged and, therefore, the Assessing Officer is not empowered to refer the matter to the Departmental Valuation Officer or rely on such report. 8. The above said view of this Court is fortified by the following decisions: (i) In Sargam Cinemas v. Commissioner of Income Tax (2010) 328 ITR 513 (SC), the Supreme Court has held as under: "In the present case, we find that the Tribunal decided the matter rightly in favour of the assessee inasmuch as the Tribunal came to the conclusion that the assessing authority could not have referred the matter to the Departmental Valuation Officer (DVO) without the books of account being rejected. In the present case, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad claimed or had better quality of construction or fixtures than the assessee had recorded in his books, the opinion of the valuer could not be straightaway substituted for the actual cost that was recorded in the assessee s books. The Tribunal had not found that the books maintained by the assessee were not credible. Therefore, the Tribunal was not right in not accepting the valuation of house property submitted by the assessee.
9. In view of the findings recorded above and law enunciated in the decisions referred supra, this appeal deserves to be allowed.
Ex consequenti, this appeal is allowed by answering the question of law formulated by this Court in favour of the assessee and against the Revenue. No costs. X X X X Extracts X X X X X X X X Extracts X X X X
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