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2019 (5) TMI 1537 - AT - Income TaxRevision u/s 263 - conclusion of the CIT that rejection of books of account is not a pre-requisite for referring the valuation of asset u/s 142A - HELD THAT - The law on the date of referring the case to the Valuation Officer u/s 142A has to be applied. In this case, the AO referred for valuation u/s 142A of the I.T. Act on 06.12.2004. The law that is applicable as on 06.12.2004 is a provision prior to its insertion of section 142A with effect from 01.10.2014. Therefore, going by the judgment of the Apex Court in the case of Sargam Cinema 2009 (10) TMI 569 - SC ORDER which was in force at the relevant time states that it is mandatory that the books of account need to be rejected prior to referring the case for valuation u/s 142A . Further, we rely on the decision of the ITAT, Delhi Bench in the case of Jithendra Singh Chaddha 2019 (1) TMI 272 - ITAT DELHI wherein it was held that reference of matter to the DVO by the AO for valuation of property is not mandatory. In our opinion, the provisions of section 142A provides that the AO may refer the matter to the DVO for the purpose of estimation of the value of the asset, property or investment and get a copy of the report from the DVO. The word may makes it discretionary to refer the matter to the DVO. It cannot be said by any stretch of imagination that it is mandatory. Therefore, we are of the view that CIT is not justified in exercising jurisdiction u/s. 263 of the Act. Accordingly, we quash the order passed by CIT u/s. 263 of the Act. Since we have quashed the order of CIT passed u/s. 263 of the Act, we refrain from going into other grounds of appeal of the assessee. The appeal of the assessee allowed. Condonation of delay of 201 days - change of chartered Accountants - HELD THAT - We have heard the rival submissions and perused the affidavit. Originally the assessee s appeals were handled by the Chartered Accountant, Shri S. Sivaramakrishnan aged 70. Later, the assessee changed the chartered accountant by a new person. Hence, there was a delay of 201 days in filing the appeals before the Tribunal. We find that the reason explained by the assessee is bona fide and there is sufficient cause for filing the appeals belatedly by 201 days. Accordingly, we condone the delay and admit the appeals for adjudication. AY 2012-13 - CIT observed that there was difference in valuation for ascertaining the cost of construction of one of the properties - HELD THAT - In the present case, the Assessing Officer being satisfied about the value of the construction of the property declared by the assessee in its books of account, cannot refer the matter to the DVO. Therefore, it could be said that the Assessing Officer has taken one possible view in this case. Thus, it cannot be said that the assessment order passed was erroneous and prejudicial to the interests of the Revenue. In view of the ratio laid down by the Supreme Court in the case of CIT vs. Greenworld Corporation 2009 (5) TMI 14 - SUPREME COURT we find that the Assessing Officer has passed the assessment order after application of mind and considered the value of the property declared in the books of account of the assessee as correct, therefore, the CIT was not justified in interfering with the assessment order on the basis of the valuation report received after the assessment order was framed. Accordingly, we quash the order passed by the CIT u/s 263 of the Act for all the assessment years. - Decided in favour of assessee
Issues Involved:
1. Validity of the reference to the District Valuation Officer (DVO) without rejecting the books of accounts. 2. Jurisdiction of the Principal Commissioner of Income Tax (CIT) under Section 263 of the Income Tax Act. 3. Acceptance of the DVO report received after the completion of the assessment. 4. Condonation of delay in filing appeals by the assessee. 5. Validity of the CIT(A)'s decision to delete additions based on the DVO's valuation report. Detailed Analysis: 1. Validity of the Reference to the DVO Without Rejecting the Books of Accounts: The Tribunal emphasized that for a reference to the DVO under Section 142A of the Income Tax Act, the condition precedent must be the rejection of the books of accounts of the assessee. This position is supported by various judicial pronouncements, including the Supreme Court's judgment in CIT vs. Sargam Cinema, which held that the assessing authority could not refer the matter to the DVO without rejecting the books of accounts. Similarly, the High Court of Punjab & Haryana in CIT vs. Chohan Resorts and other courts have reiterated that the books of accounts must be rejected before making a reference to the DVO. The Tribunal found that the Assessing Officer (AO) did not reject the books of accounts before referring the matter to the DVO, rendering the reference invalid. 2. Jurisdiction of the Principal CIT Under Section 263 of the Income Tax Act: The Tribunal examined whether the Principal CIT was justified in exercising revisionary jurisdiction under Section 263. It was argued that for invoking Section 263, the CIT must be satisfied that the order of the AO is erroneous and prejudicial to the interests of the Revenue. The Tribunal noted that the AO had accepted the books of accounts and no defects were pointed out. The CIT's direction to consider the DVO report, which was received after the completion of the assessment, was found to be unjustified. The Tribunal quashed the orders passed by the CIT under Section 263, stating that the AO had taken a possible view and the assessment order was not erroneous or prejudicial to the interests of the Revenue. 3. Acceptance of the DVO Report Received After the Completion of the Assessment: The Tribunal observed that the DVO report was received after the completion of the assessment and hence could not be considered by the AO. The Tribunal held that the AO is not expected to consider a valuation report submitted after the assessment is finalized. The Tribunal further noted that the AO had completed the assessments based on the books of accounts of the assessee, which were found to be correct. Consequently, the Tribunal quashed the CIT's orders directing the AO to consider the DVO report. 4. Condonation of Delay in Filing Appeals by the Assessee: The Tribunal condoned the delay of 201 days in filing the appeals by the assessee, noting that the delay was due to the change of Chartered Accountant and the need for detailed discussions with legal advisors. The Tribunal found the reasons for the delay to be bona fide and admitted the appeals for adjudication. 5. Validity of the CIT(A)'s Decision to Delete Additions Based on the DVO's Valuation Report: The CIT(A) had deleted the additions made by the AO based on the DVO's valuation report, noting that the AO had not found any defects in the books of accounts maintained by the assessee. The Tribunal upheld the CIT(A)'s decision, emphasizing that valuation is an estimate and cannot take precedence over actual figures unless the real figures are defective. The Tribunal found that the AO had not justified the reliance on the DVO's report and had not considered the objections raised by the assessee. Consequently, the Tribunal dismissed the Revenue's appeals and allowed the appeals of the assessee. Conclusion: The Tribunal quashed the orders passed by the CIT under Section 263 for all the assessment years, allowed the appeals of the assessee, and dismissed the appeals of the Revenue. The Tribunal emphasized the necessity of rejecting the books of accounts before referring the matter to the DVO and found that the AO had taken a possible view based on the correct maintenance of books of accounts by the assessee.
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