TMI Blog2017 (6) TMI 1227X X X X Extracts X X X X X X X X Extracts X X X X ..... ddl.CIT) ORDER PER SHRI VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of Ld. CIT(A), Alwar dated 13.07.2015 for A.Y. 2011-12 wherein the assessee has taken the following three grounds of appeal:- 1. The ld CIT(A) has erred in confirming that the ld. AO has not erred in making reference to DVO u/s 142(2A) of the I.T. Act, 1961. 2. The ld CIT(A) has erred in confirming that the AO has not erred in rejecting the books of accounts u/s 145(3) of the I.T. Act, 1961. 3. The ld CIT(A) has erred in confirming the addition of ₹ 3,02,977/- out of total addition of ₹ 2,36,74,724/- made by the ld. AO on account of difference in cost of construction shown by the assessee and the valuation as per valuation report of DVO. 2. Regarding the first ground of appeal, the ld. AR submitted that Section 142(2A) of the I.T. Act, 1961 does not provide any power for the ld. AO to made any reference to the DVO. It is section 142A of the I.T. Act, 1961 which provides the power to the ld. AO for making reference to the DVO, but in terms of sub-section (1) of section 142A, the reference to DVO can only be made where an estimate of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld AR regarding reference to DVO under section 142(2A) as the said provisions does not provide any power for the ld. AO to made any reference to the DVO. It is noted from the report of the DVO available on record that the DVO has received the reference from the Assessing officer under section 142A(1) of the Act vide letter no. 1036 dated 13.01.2014. Further, the assessee has attended to the valuation proceedings and present through its AR at the time of physical inspection of the hotel property and submitted the necessary details as called for by the DVO. Given the above, it seems that the noting in the assessment order of section 142(2A) instead of section 142A is a mere typographical error and merely on account of such typographical error, it cannot be read as taking away the Assessing officer s powers to refer the matter to DVO under section 142A of the Act especially when DVO s report doesn t support the same. In light of the same, the said contention of the ld AR is devoid of any merit and cannot be accepted. 5. We now refer to the second contention of the ld AR that the ld. AO neither examined the books of accounts of the assessee nor rejected the books of account befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned counsel of the assessee, we are of the view that the assessee deserves to succeed in his legal ground. The Hon ble Supreme Court in the case of Sargam Cinema v. CIT (Supra) while reversing the order of the Hon ble High Court has held that the Tribunal decided the matter rightly in favour of the assessee in as much as the Tribunal came to the conclusion that the assessing authority could not have referred the matter to the DVO 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 Hon ble High court. In the circumstances, the reliance placed on the report of the DVO was misconceived . By observing these observations, the decision of Hon ble High Court was set aside and the order passed by the Tribunal was restored by the Honble Apex Court. The facts in the present case are similar as in this case also no books of account were rejected before referring the matter under section 142A of the Act. The learned CIT(A) has ignored the decision of Hon ble jurisdictional High Court which was binding in nature. However, he has considered the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in invoking the aforesaid provision in every case and in a routine manner. Where the assessee maintains regular books of account for the purpose of construction of the asset and produces the vouchers, it would not be appropriate for the Assessing Officer to refer the matter to the DVO without first rejecting the books of account by prima facie concluding that the valuation appears to be more than what has been depicted in the books of account. However, wherever the assessee has not maintained the regular books of account of cost of construction of the asset and claims its valuation on the basis of estimate of the report of the registered valuer, the Assessing Officer is empowered to make a reference to the DVO after forming a prima 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et of the assessment proceedings, we find that the same does not represent a clear sequence of events and proceedings leading to the production of the books of accounts, its examination and rejection thereof, reference to DVO and finally completion of the assessment proceedings. There is no mention of reference to the DVO as well as there is no mention of rejection of books of accounts of the assessee company though the assessment order talks about the rejection of books of account. The ld. CIT(A) has taken note of the assessee s said contention however we find that there is no finding recorded by the ld. CIT(A) in terms of rejection of books of accounts before a reference was made to the DVO u/s 142A of the Act. In absence of sufficient material available on record, we set aside the matter to file of the ld. CIT(A) to examine the said contention of the ld. AR afresh in light of above decision the Hon ble Supreme court in case of Sargam Cinema (supra) and Dr. Raghuvendra Singh (supra). 6. Since we set aside the matter relating to the reference to the DVO to the file of the ld CIT(A), the other two grounds relating to rejection of books of accounts and confirming the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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