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Issues:
- Addition of undisclosed investment in the construction of a hotel building under the head "Income from other sources" for two assessment years. - Justification of deletion of additions by CIT(A) based on AO's report and expert opinions. Analysis: - The appeals filed by the Revenue concern the deletion of additions made by the AO for undisclosed investments in the construction of a hotel building in two assessment years. The AO referred the matter to the Departmental Valuation Officer (DVO) due to significant investment in construction. The DVO's report indicated a higher investment than what was shown by the assessee, leading to additions of Rs. 1,65,647 and Rs. 45,246 for the respective years. - The Departmental Representative supported the AO's decision, citing the reasonableness of the expert report and alleged defects in the assessee's vouchers. Conversely, the authorized representative of the assessee argued that proper books of account were maintained, and no specific defects were identified by the AO. The assessee presented reports from a valuer and a civil engineer, which were disregarded by the AO in favor of the DVO's report. The representative highlighted discrepancies in the DVO's report and referenced a previous court ruling emphasizing that valuation reports are opinions and cannot replace factual findings. - Upon careful consideration, the Tribunal noted that the AO failed to pinpoint any specific defects in the assessee's books and vouchers. Citing a previous judgment, the Tribunal emphasized that the AO must verify the books and vouchers, identify defects, and then refer the matter to a valuation officer if necessary. In this case, the AO directly referred to the DVO without assessing the assessee's records or justifying the rejection of reports from a registered valuer and a civil engineer based on State PWD rates. - The Tribunal concluded that the AO's reliance on the DVO's report without addressing the objections raised by the assessee was unjustified. Given that the reports from the valuer and civil engineer aligned with the investment recorded in the assessee's books, the Tribunal upheld the CIT(A)'s decision to delete the additions for both assessment years. Consequently, the appeals filed by the Revenue were dismissed.
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