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2015 (12) TMI 1454 - ITAT LUCKNOW

2015 (12) TMI 1454 - ITAT LUCKNOW - TMI - Addition u/s 69B - unexplained investment made on the basis of DVO's report - CIT(A) deleted the addition - Held that:- Following the judgment of CIT vs. Lucknow Public Educational Society [2011 (3) TMI 1326 - Allahabad High Court ] we hold that the reference to the DVO without rejecting the books of account is bad and therefore the valuation report submitted consequent thereto cannot be relied on for making an addition. Thus, no addition on account of u .....

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he respective orders of the ld. CIT(A) on common grounds except the difference in quantum of additions. For the sake of reference, we extract the grounds raised in I.T.A. No. 537/LKW/2013 as under:- 1. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of ₹ 39,65,300/- u/s 69B of the Act on account of unexplained investment in the property owned by the Assessee at 120/865 Ranjeet Nagar, Kanpur, which was properly made on the basis of DVO's report after giving th .....

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3. That the order of the Ld. CIT(A) being erroneous in law and on facts which needs to be vacated and the order of the A.O. be restored. 2. During the course of hearing, the ld. counsel for the assessee has invited our attention to the assessment order as well as the grounds raised before the ld. CIT(A) with the submission that the assessee has taken a plea that reference was made to the DVO without rejecting the books of account, therefore, the reference itself is not valid in the light of the .....

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.2007 stating therein that the books of account and vouchers are produced for verification. Thereafter the assessee has received another notice from the Assessing Officer along with questionnaire dated 21.11.2007 fixing the date for 27.11.2007 through which the assessee was again asked to produce the books of account, bills and vouchers for examination. But without waiting for the reply, the Assessing Officer has made a reference to the DVO on 25.10.2007. Copy of the DVO s report is placed on re .....

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rder. The ld. counsel for the assessee has further contended that in the light of these facts, the reference was made to the DVO without rejecting the books of account, therefore, the reference itself is bad and the report submitted consequent thereto is not sustainable in the eyes of law. Thus, the investment in the property cannot be valued on the basis of the valuation report. 3. The ld. counsel for the assessee has further placed reliance upon the judgment of the Hon'ble Punjab & Har .....

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books of account of the assessee regarding valuation is not a precondition for enquiring into the same under section 142A of the Act. Therefore, the reference without rejecting the books of account of the assessee does not invalidate the valuation report. 5. The ld. counsel for the assessee, in rejoinder, has contended that the judgment of the Hon'ble Andhra Pradesh High Court in the case of Bharat Cement Corporation Pvt. Ltd. vs. CIT & Others (supra) was considered by the Hon'ble P .....

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rdships have consistently held the judgment in the case of Sargam Cinema vs. CIT (supra) is to be followed and without rejecting the books of account, the reference is not valid. 6. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that during the course of original assessment proceedings, the Assessing Officer has made a reference to the DVO undisputedly without rejecting the books of account and before receipt of the valuation report, .....

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ce and during the course of hearing before us, the ld. counsel for the assessee has successfully demonstrated that the Assessing Officer has initially asked the assessee to produce the books of account and in response thereto the assessee has furnished the books of account. Thereafter again the Assessing Officer has asked the assessee to produce the books of account, bills and vouchers and fixed the date for hearing, but before that date hearing the Assessing Officer has made a reference to the .....

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ad High Court in the case of CIT vs. Lucknow Public Educational Society (supra) has categorically held that reference to the Valuation Officer under section 142A(1) of the Act cannot be made without rejecting the books of account. 8. Recently the Hon'ble Andhra Pradesh High Court has taken a contrary view and has held that rejection of the books of account of the assessee regarding valuation is not a precondition for enquiry into the same under section 142A of the Act. A heavy reliance was p .....

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