TMI Blog2022 (12) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... ully. First the AO is an investigating officer thereafter he is an adjudicating officer. Considering the entire facts on the order passed by the AO, which is erroneous and prejudicial to the interest of the revenue, we uphold the action of the ld.Pr.CIT and dismissed the appeal of the assessee. Revision u/s 263 as AO has not referred the matter to DVO in the original proceedings us/ 143(3) of the Act - We do not find any substance on the order of the ld.Pr.CIT that the AO passed order in a hurry without waiting for the DVO report. DVO submitted report on 25/04/2018 u/s 142A of the Act after 6 months from the receipt of reference, therefore, the DVO report has no value in the eye of law as per sec. 142A(6) of the Act. In support of our view, we rely on the decision Narula Educational Trust [ 2021 (2) TMI 459 - ITAT KOLKATA] . Therefore, the AO will not get any benefit of extended period of 60 days as per sec. 153 of the Act. The ld.Pr.CIT is also not justified for reckoning the period for completion of assessment by the AO as per the limitation is also wrong. We set aside the order passed by the ld.Pr.CIT for exercising his power u/s 263 of the Act. Hence, the order passed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt the valuation as offered by the appellant, thus was beyond the scope of revision, on the facts and circumstances of the case. 8. The learned CIT was not justified in appreciating that the provision of section 263 of the Act shall be attracted only when the order is both erroneous and prejudicial to the interest of revenue and since the order passed under section 143(3) of the Act was not erroneous, much less prejudicial, the invoking of section 263 was not warranted, on the facts and circumstances of the case. 9. The Appellant craves leave to add, alter, amend, substitute, change and delete any of the grounds of appeal. 10. For the above and other grounds that may be urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed and justice rendered. 2. The Registry has pointed out that in ITA No.6/Bang/2021 there is a delay by 1322 days. In this regard the AR of the assessee has filed Affidavit and has justified for delay in filing the appeal and he has also filed an Affidavit from the concerned CA having membership No.210927, The relevant part is as under:- 3. Thereafter, an order of revision, under section 263 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the cost as per the highest valuation report. That thereafter, the Appellant chose not to contest the revision order passed dated 22.03.2017 passed under section 263 of the Act under a bonafide belief that not contesting would result in finality. That pursuant to the assessment order being set aside, the Assessing Officer made a reference to the DVO for ascertaining the valuation of the construction. However, the report from the DVO was not received in time and subsequently, the Assessing Officer concluded the assessment proceedings by adopting the valuation as per the report of a registered Valuer and assessed the total income at Rs. 1,12,46,510/-, thereby making an addition of Rs. 1,67,580/- being difference in opening capital balance and Rs. 4,80,295/- being difference in construction cost as per Appellant and the Registered Valuer's Report vide order dated 27.12.2017 passed under section 143(3) r.w.s. 263 of the Act. 8. That when the consequential assessment order dated 27.12.2017 passed under section 143(3) r.w.s. 263 of the Act was once again subjected to revision under section 263 of the Act, Itook instructions from the Appellant and approached the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tune of Rs.53,77,264/- has been introduced by you during the F Yr 2012-2013, the sources for which is not inquired by the AO during the assessment proceedings. Thus there is a lack of verification by the AO on this issue. (ii) The AO has not verified the correct value of investment in construction of the building. In absence of any valuation report or other guiding factors the action of the AO in accepting the value of investment in construction of building at Rs.1,11,01,622/- as on 31- 03-2013 is found to be without any verification or enquiry and as such the order passed by the AO is erroneous as well as prejudicial to the interest of Revenue. (iii) A survey under Section 133A of the Act was carried out, during which the assessee has admitted additional income of Rs.65.73 Lacs on account of unexplained investment in construction of hospital building and Rs.5,03,505/- as unexplained cash, which should have been taxed by the AU under the provisions of Sections 69 and 69A of the Act r.w.s. II 5BBE. However, the AU has not made any verification or inquiry about this while completing the assessment and as such the order passed by the AO is erroneous as well as prejudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H) 9. On the other hand, the ld.DR relied on the order of the ld.Pr.CIT and he objected for the condonation of delay. The ld.Pr.CIT has pointed out that the AO has ignored the issue which was the subject matter of the survey carried out u/s 133A of the Act and the AO should have examined in detail with regard to the valuation of the cost of construction carried out by the assessee for hospital building. The matter for the purpose of valuation of the building should have been referred to the DVO, which was not done by the AO and he merely accepted the documents /submissions made by the assessee during the course of scrutiny proceedings. Therefore, the order passed by the AO is erroneous and prejudicial to the interest of the Revenue. The case law relied on by the ld.AR is not applicable in the present set of facts. 10. After hearing both the sides and pursing the entire material on record and also on examining the order of the lower authorities, we observe that the survey us/ 133A of the Act was carried out in the premises of the assessee and during the course of survey, the assessee had admitted additional income of Rs.65.73 lakhs on account of unexplained inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of construction of the building shown and construction cost was determined at Rs.1,17,20,594/- but the assessee declared Rs.1,12,40,299/-. The AO did not receive the DVO report within the specified period as per the sec. 142A(6) of the Act. The case was getting time barred on 03/12/2017, therefore, the assessment was completed after adding amount of difference in cost of construction as reported by the approved valuer at Rs.4,80,295/- (in Rs.117,20,594 Rs.112,40,299) and he also added difference of opening balance in the capital account at Rs.1,67,580/- and computed the assessment on 27/12/2017. Later on, the ld.Pr.CIT issued show cause notice to the assessee on 09/09/2019 proposing to exercise his power u/s 263 of the Act and details of show cause notice which is placed at page Nos.126 to 128 of the paper book. 14. After receiving the show cause notice the assessee submitted detailed written submissions and considering the reply of the assessee, the ld.Pr.CIT passed order as under:- 3. I have gone through the submissions of the assessee and also case record. In this case, survey was conducted on the premises of the assessee on 06.09.2012 and the assessee was admitted add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rior to amendment to section 142A with effect from 1.10.2014, the AO was not empowered to refer the issue of cost of construction to the Valuation Officer, unless he found discrepancies in accounts and the books of accounts are rejected, it is seen from the record that the survey was conducted under section 133A on 06.09.2012 when the books are not closed as the accounting year was not yet closed. During the course of survey, the assessee has stated that he had invested a sum of Rs.1,27,00,000 as on 6.09.2012. As regards sources of investment, the assessee was not able to substantiate the sources of investment, the assessee was not able to substantiate the sources of investment and based on the sources recorded in the books of account, the difference of Rs.65,73,000 was arrived. Similarly, cash of Rs.5,03,5050 was found excessive not recorded in the books of account. Thus, the claim of the assessee that there were discrepancies in the books of account is incorrect. In fact, during the course of survey huge difference of sources in investment as well as excess cash found clearly go on to show that the books of account were not depicted the true investment and as such, reference to V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17. After hearing both the sides and pursuing the entire material on record and examining the order of the lower authorities, we do not find any substance on the order of the ld.Pr.CIT that the AO passed order in a hurry without waiting for the DVO report. The DVO submitted report on 25/04/2018 u/s 142A of the Act after 6 months from the receipt of reference, therefore, the DVO report has no value in the eye of law as per sec. 142A(6) of the Act. In support of our view, we rely on the decision of Kolkata Bench in the case of Narula Educational Trust in ITA No. 126 taxmann.com 158 (Kolkata - Trib.) vide order dated 05/02/2020. Therefore, the AO will not get any benefit of extended period of 60 days as per sec. 153 of the Act. The ld.Pr.CIT is also not justified for reckoning the period for completion of assessment by the AO as per the limitation is also wrong. Considering the totality of facts and circumstances of the case, we set aside the order passed by the ld.Pr.CIT for exercising his power u/s 263 of the Act. Hence, the order passed by the AO cannot be revised us/ 263 of the Act. Therefore, the order passed by the AO is neither erroneous nor prejudicial to the interest of reve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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