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TMI Blog2014 (1) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee had no other option that the amount was surrendered on account of unaccounted amount of Rs. 22 lacs utilised by him - The only inference in such circumstances would be that the cost of construction shown in the books of account was due to the fact that they were not properly maintained - The reference by the Assessing Officer to the DVO was justified and cannot be faulted - The aggregate difference, duly accredited to A.Y.2007-08 comes to Rs.32,01,325/-, against Rs.22,00,000/- which has been disclosed - The balance of Rs.10,01,325/- is assessee's unexplained investment in construction of building which is added to his total income - The assessee failed to maintain quantitative details of major building material used in the construction of the building - In view of the cost of construction disclosed by the assessee in the regular books of account vis-a-vis the cost of construction determined by the DVO, the variance was not within the range of 15% - The Tribunal was right in sustaining addition - Decided against assessee. - ITA No.806 of 2010 - - - Dated:- 10-10-2013 - MR. AJAY KUMAR MITTAL AND MR. JASPAL SINGH, JJ. Mr. Ravish Sood, Advocate for the appellant Mr. Raj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the hands of the assessee? 2. Briefly, the facts necessary for adjudication of the controversy involved, as narrated in the appeal, may be noticed. The appellant is a doctor by profession. He is running a hospital under the name and style of M/s India Kidney Centre at Jalandhar. Search and seizure operations under Section 132 of the Act were conducted at the business-cum-residential premises of the appellant on 17.11.2006. In response to the notices issued by the revenue under Section 153A of the Act, the assessee filed his income tax return for the year under consideration on 24.10.2007, declaring an income of Rs. 44,04,250/- including an amount of Rs. 40,00,000/- which was surrendered by the assessee during the course of search proceedings. The return was processed under Section 143(1) of the Act. Thereafter, notices under sections 143(2) and 142(1) of the Act were issued to the assesse which were duly complied with by him. During the course of assessment proceedings, the Assessing Officer in exercise of powers vested with him under section 142A of the Act referred the valuation of the hospital premises, as had been constructed by the assessee in the assessment years 2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hown in the books of account after including sum of Rs. 22 lacs which was surrendered at the time of search and seizure, which was within the permissible limit and thus, no addition was called for. 4. On the other hand, learned counsel for the revenue besides supporting the orders passed by the Assessing Officer, CIT (A) and the Tribunal, submitted that the assessee before the CIT(A) had accepted that discrepancies, if any, on account of construction may be considered in this year on accredited basis and adjusted with Rs. 22 lacs surrendered in the course of search proceedings. It was submitted that the total addition was required to be made in this year itself. 5. After hearing learned counsel for the parties, we do not find any merit in the appeal. 6. It would be apposite to first examine whether the appellant was entitled to raise objection with regard to validity of the reference to the DVO without there being any specific order of rejection of books of account. In this regard, reference is made to the decisions rendered by the Karnataka and Calcutta High Courts. 7. The Karnataka High Court in M/s Distillers Co. Limited's case (supra) delving into this issue had noticed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interfere against the orders passed by the subordinate courts or Tribunals. Therefore, in our considered view, if a question urged before this Court involves a substantial question of law, even if it is not raised before the Appellate Tribunal, the said question could be raised and urged before this Court and in that event the same is required to be considered by this Court. Therefore, in the light of the discussion made above, we do not find any merit in the preliminary objection raised by Sri Prasad, referred to above. 8. Similarly, the Calcutta High court in CCAP Limited's case (supra) had observed as under:- 13. In any event, even if it is assumed that the Tribunal could not have passed any order since no appeal was preferred and no cross-objection was filed, even then in an appeal under section 260A in which the CPC is applicable as far as possible in view of sub section (7) of section 260A and by reason of the provisions contained in section 260A(6), this court is empowered to pass appropriate order in an appeal. Under Order 41 Rule 33 of the CPC, this court is empowered to pass any order in an appeal before it and grant relief to a party even though such p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. A plain reading of the provision shows that an Assessing Officer wherever considers fit to estimate the value of any investment referred to in Section 69 or Section 69B or the value of any bullion, jewellery or other valuable article referred to in Section 69A or Section 69B may require the Valuation Officer to make an estimate of such value and report the same to him. 13. The scope and rationale of the new provision was explained by the Central Board of Direct Taxes (in short, the Board ) in Circular No.5 of 2005 dated 15th July, 2005 (2005) 276 ITR (St.) 151 as under:- Clarificatory amendments regarding estimates by Valuation Officer in certain cases. The existing provisions of section 131 provide that the Assessing Officer shall have the same powers as are vested in a court under the Code of Civil Procedure, 1908, when trying a suit. One such power which has been provided in clause (d) of sub section (1) of section 131 is the power to issue commissions. Section 75 of CPC and Order XXVI of the Schedule thereto lays down the power of issuing commission , which inter alia, empowers the court to make a local investigation and also to hold a scientific, technical and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein. The Assessing Officer would not be justified in invoking the aforesaid provision in every case and in a routine manner. Where the assessee maintains regular books of account for the purpose of construction of the asset and produces the vouchers, it would not be appropriate for the Assessing Officer to refer the matter to the DVO without first rejecting the books of account by prima facie concluding that the valuation appears to be more than what has been depicted in the books of account. However, wherever the assessee has not maintained the regular books of account of cost of construction of the asset and claims its valuation on the basis of estimate of the report of the registered valuer, the Assessing Officer is empowered to make a reference to the DVO after forming a prima facie opinion that the value of the investment is not genuinely disclosed and is required to be assessed for the purposes of Sections 69, 69A or 69B of the Act. In other words, Section 142A of the Act, thus, cannot be invoked where valuation of the cost of construction is bonafide and based on books of account which has not been rejected. The report of the DVO would be dealt with by the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case here. The said contention is thus, rejected. 17. Examining the last argument, the surrender of Rs. 22 lacs on account of unaccounted investment in the construction of the hospital could not be taken for purposes of determining 15% variation as urged by the counsel for the assessee. The Tribunal had repelled similar contention with the following observations:- We have given our thoughtful consideration to the rival submissions, facts of the case, including the submissions filed by the assessee. We have also gone through the orders of the authorities below. The A.O. has recorded following findings in paras 8.6 and 8.7 of his impugned order: '8.6 Going by the books of accounts as reproduced by the assesse for the Assessing Years 2005-06 to 2007-08, the following conclusion is arrived at: A.Y:2007-08: Investment in building as per books Rs.4,14,198/- Investment in building as per valuation report Rs.7,49,043/- Difference (-) Rs.3,34,846/- A.Y.2006-07: Investment in building as per books Rs.13,88,036/- Investment in building as per V ..... X X X X Extracts X X X X X X X X Extracts X X X X
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