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2013 (7) TMI 191 - AT - Income TaxAddition u/s 69C - AO referred the matter to the DVO u/s 142A - Held that - As decided in Sargam Cinema Versus. CIT 2009 (10) TMI 569 - Supreme Court of India asessing authority could not have referred the matter to the DVO without the books of account being rejected. Additions deleted in the present case as no books of account were rejected before referring the matter u/s 142A. In favour of assessee.
Issues involved:
1. Sustenance of addition made by Assessing Officer under section 69C of the Income-tax Act, 1961. 2. Justification of reference made to the Valuation Officer (VO) under section 142A of the Act. 3. Levy of interest under section 234B of the Act. Issue 1: Sustenance of addition under section 69C: The appellant challenged the sustenance of the addition of Rs. 9,83,649 out of the total addition of Rs. 19,29,071 made by the Assessing Officer under section 69C. The CIT(A) upheld the addition after modifying the valuation estimated by the DVO to Rs. 33,84,578. The appellant contended that the Assessing Officer could not have referred the matter to the DVO without rejecting the books of account. The ITAT, following the Supreme Court's ruling in a similar case, held that the addition made was not justified as the books of account were not rejected, and specific defects were not pointed out. Therefore, the addition sustained by the CIT(A) was deleted. Issue 2: Justification of reference to Valuation Officer under section 142A: The Assessing Officer referred the matter to the DVO under section 142A without rejecting the books of account maintained by the assessee. The CIT(A) allowed a reduction on CPWD rates applied by the DVO and made certain modifications in the valuation estimated by the DVO. The ITAT, relying on the Supreme Court's decision, held that the Assessing Officer was not justified in making any addition based on the DVO's report without rejecting the books of account. The ITAT allowed the appeal on this issue, deleting the addition made by the Assessing Officer. Issue 3: Levy of interest under section 234B: The appellant contended that interest under section 234B should have been levied only up to the date of the original assessment made under section 143(3) and not up to the date of the assessment order framed on the ITAT's direction. The ITAT directed the Assessing Officer to charge interest, if any, under section 234B only up to the date of the original assessment. Ground No. 5 was dismissed as not pressed, while grounds No. 6 & 7 were considered general in nature and did not require specific comments. In conclusion, the ITAT partly allowed the appeal of the assessee by deleting the additions sustained by the CIT(A) under section 69C and directing the Assessing Officer to charge interest under section 234B only up to the date of the original assessment. The ITAT emphasized the importance of rejecting books of account before referring the matter to a Valuation Officer under section 142A, as per legal precedents.
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