TMI Blog2019 (4) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... e cause in filing the appeal belatedly. Reference to the Valuation Cell u/s 142A - reopening of assessment u/s 147 based on DVO report- reference to DVO without rejection of books of accounts in original proceedings - No information of reference given to asessee - allegation to failure to furnish the information despite sufficient opportunities - difference between the value determined in valuation report and the value accounted for in books of account - HELD THAT:- AO has not rejected the books nor informed the assessee that he is not accepting the valuation submitted by them or value adopted by them in the balance sheet are not proper. Without any hint, he has completed the assessment u/s 143(3). Even though, the reference was made to DVO on 17/11/2008, the assessee came to know only on 21/08/2009, when the DVO contacted the Assessee to submit various information to carryout inspection. Respectfully following the ratio laid down in the case of Lakshmi Constructions [2014 (10) TMI 223 - ANDHRA PRADESH HIGH COURT] we are of the view that the AO must have confronted the issue of not accepting the valuation of assessee and referred the issue to the DVO. In that case, AO can reope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiated recovery proceedings to recover the tax due from the assessee and accordingly collected. Meanwhile, assessee approached the present AR to represent the cases. Ld. AR after study advised the assessee that the whole assessment was not maintainable and the earlier AR has misguided and mis-represented the case and not approached the case technically. With the advise of the present AR, assessee enlightened and filed the present appeal with delay. The Courts should view on merit and deliver justice. For that proposition, relied on the following cases for condonation of delay: 1. M/s Midas Polymer Compounds Pvt. Ltd., Vs. ACIT, ITA No. 288/Coch/2017, order dated 25/06/2018. 2. CIT Vs. KSP Shanmugavel Nadar, [1987] 30 Taxmann 133 (Mad.) 3. Divya Jyothi Steels Ltd. Vs. ACIT, ITA Nos. 1176 29/Hyd/2016, order dated 28/03/2018. 3. On the other hand, DR, contended that the delay is not condonable, for which he filed written submissions, which are extracted below: 2.1 The assessee's appeals before the Hon'ble ITAT, for the above assmt. years is filed with a delay of 1274 days. The reasons for delay according to the assessee is that it relied on the version o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would rely on the version of its alleged Authorised Representative that it has got relief from the Ld. CIT (A) on its appeal and remain oblivious to the fact that, only partial relief has been granted to it by the Ld. CIT (Appeals), evident from the appellate order, consequential order passed to the appellate order received by the assessee on 12.11.2015 and the various notices issued by the TRO to the assessee as discussed above and to which the assessee has responded to. 2.4 It may be submitted here that, the Hon'ble High Court of Madras in the case of Madhu Dadha v. Assistant Commissioner of Income-tax, Central Circle-IV(2), Chennai (317 ITR 458) held that when the delay on the part of the assessee was deliberate and the assessee was clearly guilty of culpable negligence, such negligent attitude was not taken care of to preserve the right of appeal and having slept over for more than 558 days and having not explained the delay without any reasonable doubt, the assessee could not avail of sympathy or discretion of the High Court (Para 14.) In the case of the assessee the delay is of 1274 days for which no credible explanation has been provided with supporting evidences. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach is adopted on principle as it is realized that: 1. Ordinarily, a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. Every day's delay must be explained does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay ? The doctrine must be applied in a rational common sense and pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. 6. It must be grasped that the judicia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are in appeal before us. The assessee as well as revenue raised grounds against the order of CIT(A). Let us first deal with the assessee s appeal. 7. Before us, ld. AR submitted by way of three alternate submissions on validity of the reassessment, which are: a) AO cannot refer to DVO without rejecting the books, he submitted that a copy of the order sheet of original assessment which was completed u/s 143(3) as per which there is no trace of proposal to reject the books or any doubt expressed on the expenditure incurred on the factory building. The assessment was completed and assessee was under the impression that AO has accepted the records submitted before him. He submitted that AO before ordering the valuation of property, first he should have expressed his lack of confidence in the books submitted before him. The order sheet collected from the department clearly shows that AO has not recorded any suspicion on the books of the assessee. Therefore, the action of the AO is not as per the procedure of law. For this proposition, he relied on the case law below: 1. ITO Vs. Sri Sai Educational Society, 1617/Hyd/2014. 2. CIT Vs. Lakshmi Constructions, 55 Taxmann.com 253 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate proceedings all the details submitted by the appellant during appeal proceedings were remanded to the Assessing Officer for fresh consideration. The AO also sent her remand report dated: 11.3.2014 and such remand report were sent to appellant for his comments by the Ld. CIT(Appeals). However, no reply was received from the assessee by the Ld. CIT (Appeals) on the same (Para 6.1 on Page 5 of the appellate order) 5. Roorkee Building: 5.1 Before the Ld. CIT(A) the assessee raised objections to the value determined of factory building at Roorkee. The assessee submitted report of the approved valuer in support of its claims. The Ld. CIT(A) for discussions made at Para 7.4 (a) at Page 9 of the appellate order held that, the second floor of the Roorkee property was constructed during the FY: 2008-09 and 2009-10 and not in the financial years 2005-06 to 2007-08. As per the DVO's Report cost of construction of the second floor was ₹ 13, 82,826/-. The Ld. CIT (A) has held that since the amount does not pertain to the AY: 2006-07 to 2008-09 the same shall not be considered by the AO for the purpose of section 69. The revenue is on appeal against the relief grante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cost of construction of the property during the stated financial years, after carrying in out an inspection of the property which was carried out in the presence of the MD of the company. 5.4 In the light of the discussion made above, it is respectfully submitted that the appeal filed by the assessee on this ground is devoid of merits. 6. Hyathnagar Property: 6.1 Regarding the building at Hyathnagar, Hyderabad, the DVO determined the cost of building at ₹ 177.42 lakhs. According to the AO the amount reflected in books of accounts was ₹ 16.03 lakhs. Difference of ₹ 161.38 lakhs was added u/s 69. The Ld. CIT (A) has observed at Para 7.5 of the appellate order on Page 11 that, in the year 2005-06 and 2006-07 the appellant renovated the old building constructed in 1997-98 and also started construction of a small building additionally. It is observed by the Ld. CIT (A) that the DVO determined the value assuming that both the buildings were constructed in the year 2005-06 to 200607 itself. On this account, the Ld. CIT (A) provided partial relief to the assessee. Revenue is on appeal against the relief granted by the Ld. CIT (Appeals). The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is any reference to the non-satisfaction of the valuation or books submitted before the AO. The AO had referred the valuation to DVO on 17/11/2008. The DVO has issued notice for submission of requisite information to assessee on 21/08/2009, when the assessment was already completed by the AO on 31/12/2008. Even though, the matter was referred to DVO on 17/11/2008, the DVO has issued notice to AO only on 21/08/2009 calling for information. At the time of completion of assessment, there was no recording to such reference to DVO nor any indication of unsatisfaction on the records submitted by the assessee. 9.1 Now, before us, the assessee has rightly raised the issue that AO has not rejected the books before reference to DVO and also DVO report per se is not reason to reopen the completed assessment. For the rejection of books, assessee has relied on the case law of Sargam Cinema, [2010] 328 ITR 513 and Lakshmi Constructions (supra) wherein the ratio laid down by the Hon ble Court is as under: 7. Even the Commissioner (Appeals) was of the view that the books of account commended their own acceptability and any addition of amount towards unexplained investment could have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int of any doubt on the figures submitted by the assessee. The assessee was never confronted with the valuation submitted and adopted by them in the books. Assessee came to know about the reference only after completion of the assessment u/s 143(3) i.e. when the assessee receives a letter from DVO office only 21/08/2009 (refer page 35 of the paper book). In the case of Bharati Cement, the AO did not accept the valuation shown by the assessee in the balance sheet, the observations in the said case are reproduced for the sake of clarity: 18. Even otherwise it may be noted here that in the course of previous assessment proceedings, as will be presently seen under the third plea, the third respondent did not accept the valuation shown by the petitioner in its balance sheet and accounts and he was asking for more information to arrive at the fair market value of the petitioner's plant and civil works connected with it. In fact, that can be treated as amounting to rejecting the books of account of the petitioner by implication and no formal order rejecting the books of account is necessary. This is also a negative point for the petitioner and the petitioner's contention unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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