2011 (8) TMI 1038 - AT - Income Tax

Summary

Issues involved: Appeals by revenue and Cross Objections by assessee regarding the validity of referring to the Department Valuation Officer (DVO) for estimating cost of construction without rejecting books of account.

Cross Objections by Assessee:
The assessee raised the legal issue that referring to the DVO for estimating cost of construction without rejecting the books of account is not valid. The Assessing Officer did not reject the books of account but referred the matter to the DVO based on discrepancies in details furnished by the assessee and replies given by outside parties. The Assessing Officer reopened assessments for multiple years based on the DVO's report, which showed differences in investment declared by the assessee and the estimated cost of construction. The Tribunal analyzed the legal principles related to the acceptance of accounts by the Assessing Officer and the necessity of rejecting books of account before making a reference to the DVO. Citing legal precedents, including a decision by the Hon'ble Apex Court and the Hon'ble Rajasthan High Court, the Tribunal concluded that the addition based on the DVO's report estimating cost of construction without rejecting the books of account was not valid. Therefore, the Cross Objections of the assessee were allowed.

Revenue's Appeals:
Since the Cross Objections of the assessee were allowed on the legal issue regarding the validity of the DVO's report without rejecting the books of account, the revenue's contentions on merit were not accepted. The revenue's appeals were dismissed by the Tribunal.

Conclusion:
The Tribunal allowed the Cross Objections of the assessee and dismissed the appeals of the revenue, emphasizing the importance of rejecting books of account before referring to the DVO for estimating the cost of construction. The decision was based on established legal principles and precedents, ensuring the proper maintenance and acceptance of accounts in income tax assessments.