9911796707
TMI Blog2004 (1) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction shown by the assessee and the cost of construction adopted by the Assessing Officer on the basis of DVO's report. The assessee had contended that the addition made by the Assessing Officer is not sustainable in the eyes of law and in support thereof the assessee has taken various pleas as raised in the grounds of appeal. 4. Briefly stated the material facts as borne out from the orders of the authorities below are as under:- For assessment year 1991-92 the original assessment was completed under section 143(3) on 13-1-1993, for assessment year 1992-93 the return was processed under section 143(1)(a ) on 12-7-1993 determining nil income. For assessment year 1993-94 the return was processed under section 143(1)(a) on 21-3-1994 determining at nil income. For assessment year 1994-95 the return was also processed under section 143(1)(a) on 29-8-1996 determining at nil income and for assessment year 1995-96 the assessment was originally completed under section 143(3) on 17-3-1998 determining at a loss figure of ₹ 6,67,080, as returned by the assessee. Subsequently the proceedings under section 147 were initiated by the Assessing Officer and accordingly notices under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of proceedings and prior to receipt the valuation report the assessment was originally completed and as such the reference had become invalid. Several decisions were also cited by the assessee in support of its contentions. The Assessing Officer after considering the explanation of the assessee added the difference between the cost shown by the assessee and determined by the DVO by observing that entire details and evidences including the vouchers etc. were duly considered in the report and it is only after considering them the valuation was made and the valuation also has been made by the persons who are experts in their own line and as such the assessee's contention was not acceptable. Being aggrieved, the assessee preferred appeals before the CIT(A) who upheld the orders of the Assessing Officer by stating as under:- (1) Relying on various decisions including the decision of Gauhati High Court in the case of CIT v. Smt. Amiya Bala Paul [1999] 240 ITR 378, the CIT(A) held that the Assessing Officer is competent to make enquiry under section 131(1)(d) through his power to issue commission to enlist expert opinion on a technical matter involving fixation of the quantum of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee were verified by the Valuation Officer before determining the cost of construction by him. 9. We have heard both the parties and have gone through the orders of the authorities below. We have carefully perused the materials on record. We have deliberated upon the judicial decisions cited at the Bar. It is an admitted position that no addition on account of difference in the cost of construction shown by the assessee and the cost determined by the DVO were made in the course of original assessment proceedings. The assessee is engaged in the business of construction of apartments or buildings. The business of the assessee-company, as noted by the Assessing Officer, is admittedly of purchase and sale of land and also construction of property thereupon. It is also an admitted position that the assessee has been maintaining regular books of account in respect of its business carried on by it. It is also seen from the assessment order for assessment year 1991-92 made under section 143(3) on 13-1-1993 that the assessee had appeared before the Assessing Officer and filed details, produced cash book and ledgers which were duly examined and test checked by the Assessing Officer with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Valuation Officer unless the Assessing Officer formed an opinion that having regard to the nature of the asset and other relevant circumstances it was necessary to do so. If an account of the expenses of the construction of the asset are maintained regularly and supported by vouchers there should be no reason not to accept the same for determining the cost of construction of the asset. The Assessing Officer was required to assess the valuation of the asset on appreciation of material before him. 9.3 The jurisdictional High Court in the case of Smt. Uma Devi Jhawar (supra), has held that the valuation made by the DVO could not be lawful or relevant material on the basis whereof the ITO could have had any reason to believe or could bona fide and lawfully have believed that any income as regards the construction of the house property had escaped assessment. Similarly, the jurisdictional High Court in the case of Western Estates (supra) has also held that in that case the CIT(A) passed a detailed order after considering the various submissions and evidence including in particular the fact that the assessee-firm maintained regular books of account, the construction was carried out th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f DVO. 9.5 Further the Hon'ble Madras High Court in the case of K.K. Seshaiyer v. CIT [2000] 246 ITR 351, has held that when the actual cost of construction is duly recorded in the books of account the creditability of which is not doubted, the opinion of the DVO cannot straightway be substituted for the actual cost recorded in the assessee's books. 9.6 Similar proposition has also been laid down by the Agra Bench of ITAT in the case of Hind Lamps Ltd. v. Dy. CIT [2001] 119 Taxman 107, ITAT, Bench of Delhi in the case of Naresh Behal v. ITO [1992] 41 ITD 298and the Ahmedabad Bench of ITAT in the case of ITO v. Tandel Automobiles [1990] 35 ITD 191. 10. In the instant case the Assessing Officer has referred the matter to the DVO under section 131(1)(d) of the Act without rejecting the books of account regularly maintained by the assessee and without pointing out any defect therein. The Assessing Officer has also not given any valid reason for making a reference to the DVO so as to show that the reference to the Valuation Officer under section 131(1)(d) was necessary to ascertain the cost of construction. Admittedly the assessee is engaged in the business of construction of the hou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is apparent from the facts already stated hereinabove that the assessee had maintained regular books of account and that no defects were found by the Assessing Officer either in the books of account maintained by the assessee and/or the vouchers, documents produced by it in support of the construction cost incurred, and as such, the addition on account of construction cost cannot be made on the basis of the report of the DVO without pointing out any defects or irregularities in the books. In this view of the matter, the Assessing Officer was not justified in making an addition merely on the basis of the valuation report of the DVO. 12. Since the addition made by the Assessing Officer merely on the basis of a report of the DVO without rejecting books maintained by the assessee and without pointing out any defects therein, has been held unjustified and not sustainable, it is not necessary to go into other pleas or the contentions raised by the assessee, inasmuch as they would serve the academic purpose only. 13. In the result, the addition made by the Assessing Officer on account of cost of construction of the property stands deleted in each of the assessment years, by reversin ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
