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Income Tax Officer Versus M/s. Sri Sai Educational Society

2015 (6) TMI 355 - ITAT HYDERABAD

Unexplained investment - CIT(A) deleted the addition - Held that:- The cost incurred by the assessee on construction of college building at Nagasala, Jadcharla was duly reflected in its books of account regularly maintained for the relevant years including the years under consideration. A perusal of the assessment order passed by the Assessing Officer, however, shows that neither any specific or material defect has been pointed out by the Assessing Officer in the books of account maintained by t .....

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o the DVO for estimating the cost of construction itself was not valid and the additions made on the basis of the said report for both the years under consideration are not sustainable - Decided in favour of assesse. - ITA No.1617/Hyd/14, ITA No.1618/Hyd/14 - Dated:- 11-3-2015 - Shri P.M.Jagtap And Smt.Asha Vijayaraghavan JJ. For the Appellant : Shri Rajat Mitra DR Fot the Respondent : Shri Mohd. Afzal, AR ORDER Per P.M.Jagtap, Accountant Member : These two appeals preferred by the Revenue again .....

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the assessee on account of unexplained investment allegedly made in the construction of the college building, for assessment years 2007-08 and 2010-11 respectively. 3. The assessee in the present case is a society, which is engaged in the business of imparting intermediate education through Prathibha Junior College and higher education, B.Ed through Sri Sai College of Education. Since no returns of income were being regularly filed by the assessee, a survey under S.133A was carried out in this c .....

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closed by the assessee as under- Assessment Year Cost of Construction Rs. 2008-09 21,21,248 2008-09 13,15,551 2009-10 22,78,772 2010-11 20,01,650 2011-12 …. 2012-13 34,00,000 Total 1,11,17,221 During the course of assessment proceedings, a valuation report of the registered valuer was also submitted by the assessee in support of cost of construction shown in the books of account. A reference however, was made by the Assessing Officer to the Departmental Valuation Officer, Hyderabad to asc .....

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nder consideration. In reply, various objections were raised by the assessee to the valuation made by the DVO as per his report. The Assessing Officer, however, found the said objections to be unsustainable and overruling the same, he treated the difference of ₹ 72,02,277 as unexplained investment of the assessee made in the construction of the college building. The said amount accordingly was added by him to the total income of the assessee in the ratio of investments made by the assessee .....

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7-08 and 2010-11 respectively on account of unexplained investments made in the construction of the college building, in the assessments completed under S.143(3) read with S.147, vide orders dated 31.3.2013. 4. Against the orders passed by the Assessing Officer under S.143(3) read with s.147 for both the years under consideration, appeals were preferred by the assessee before the learned CIT(A) and after considering the submissions made by the assessee as well as the material available on record .....

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ation of construction of the building for the following reasons: (i) A survey u/s 133A was conducted in this case and some material was impounded. During the asst. proceedings, the assessee produced books of account and other documents and expenditure vouchers for verification, which was verified by the AO with reference to the material impounded. The AO had not found any .material contradicting the statements provided alongwith the returns of income. (ii) The A.O. without rejecting the books of .....

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Departmental Valuer, in the absence of any corroborative material found/brought on record. (iv) I agree with the submissions of the appellant mentioned in Para.5.2 (sub-paras 3 & 4) of this order regarding its objections in respect of valuation of the property by the Valuation Officer and supporting the justifiability of the cost of construction and hold that the A.O. was not justified in not considering the same, which are reasonable and acceptable. 5.4 On legal front, I also fully agree wi .....

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he case of CIT Vs. Aaar Pee Apartments 319 ITR 276 the Hon ble Delhi High Court held that where there is no evidence to disbelieve the expenditure shown by the assessee, reference to valuation Officer would be invalid and so would be the assessment order. It was also held as there is no reference to section 69C in Section 142A of the Act, which relates to unexplained exp the assessing officer does not have power to refer to the expenditure incurred in a construction projects to the valuation Off .....

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squarely applicable to the facts of the appellant and the A.O. was not justified in referring the matter to valuation officer and adopting the same, without rejecting books of account or pointing out any discrepancies in the books of account. Hence, I delete the addition of ₹ 13,74,290 pertaining to the asst. Year under consideration. Aggrieved by the orders of the disallowed CIT(A), Revenue has preferred these appeals before the Tribunal. 5. We have heard the arguments of both the sides .....

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y the assessee or in the bills/vouchers maintained in support of construction cost, nor has he rejected the books of account of the assessee, and this position is not disputed even by the Learned Departmental Representative at the time of hearing before us. 6. In the case of ITO V/s. Vijetha Educational Society (118 ITD 382), cited by the learned counsel for the assessee, Lucknow Bench of this Tribunal has held that where Assessing Officer found no defect in the books of account, reference to DV .....

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