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TMI Blog2011 (7) TMI 1401X X X X Extracts X X X X X X X X Extracts X X X X ..... ale proceeds of salvaged timber and bricks from the demolition of the old house. 5. The Ld. CIT(A) is not justified in confirming the disallowance of Rs.99,178/- made by the assessing officer towards interest on loan availed for construction. 6. Alternatively, the Ld. CIT(A) ought to have directed the assessing officer to allow depreciation for the addition made by him. 7. Any other grounds that may be urged at the time of appeal hearing. Grounds of ITA No.174 of 2011: 1. The order of the Ld. CIT(A) Rajahmundry is contrary to the facts and also the law applicable to the facts of the case. 2. The Ld. CIT(A) ought to have held that the notice issued u/s 148 is invalid and consequently ought to have held that the entire reassessment proceedings are void ab-initio. 3. The Ld. CIT(A) is not justified in confirming the addition of Rs.8,83,809/- made by the assessing officer towards unexplained cost of construction. 4. The Ld. CIT(A), ought to have considered the facts that the assessing officer did not give credit for sale proceeds of salvaged timber and bricks from the demolition of the old house. 5. The Ld. CIT(A) is not justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icate the main ground relating to the addition on account of unexplained investment in construction of a property. 6. Brief facts borne out from the orders of lower authorities are that during the course of survey operation carried out in the hospital premises of the assessee on 30th August, 2007, it was noticed interalia that a copy of valuation report by the registered valuer reflected the valuation of the hospital premises at a figure of Rs.36.78 lakhs which is lower by Rs.1.03 lakhs to that reflected in the books of the assessee at Rs.37.18 lakhs. Since there was conflicting figures of cost of construction of the property, the assessing officer made a reference to the DVO who furnished the detailed valuation report dated 11.12.2007 estimating the total investment in the construction of building spread over the financial years 2004-05 2005-06 at Rs.68.72 lakhs as against the assessee s figure of valuation of Rs.36.78 lakhs. As the cost of construction as valued by the DVO relatable to the financial year 2004-05 2005-06 worked out to Rs.49.07 lakhs and Rs.19.65 lakhs, respectively, which are more than the cost of construction shown by the assessee at Rs.27 lakhs and Rs.10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cinema Vs. CIT 241 CTR 179 and other various judgements which are as under: 1. Copy of Hon ble ITAT order dated 7.9.2001 (Sri K. Kasi Visweswara Rao) 2. Copy of Hon ble ITAT Order dated 10.12.2007 (M/s. DTE Exports) 3. Copy of Hon ble ITAT Order dated 21.8.2009 (Shri S.V.V. Subrahmanyam Shri Radhakrishna Vihar) 4. Income Tax Officer Vs. Nitesh Malieshwari (2011) 7 ITR (Trib) 645 (jp) 5. Smt. Prem Kumari Mudria Vs. ACIT (2008) 303 ITR 128 6. Smt. Saraswati Devi Gehlot Vs. ITO 123 ITD 605 7. Dr. Arjun D. Bharad Vs. ITO 83 ITD 774 8. ITO Vs. Vijeta Educational Society 118 ITD 382 9. The Ld. Counsel for the assessee has also invited our attention to the statements of the assessee recorded by the A.O. on 31.8.2007 and 7.9.2007. It was emphatically argued by the Ld. Counsel for the assessee that reference to DVO was made without rejecting the books of accounts. Therefore, the valuation report submitted in consequence thereto cannot be relied on and no addition on the basis of that valuation report is sustainable in the eyes of law. 10. The Ld. D.R. on the other hand has placed a heavy reliance upon the order of the CIT(A). 11. Having carefully examined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out having examined the books of accounts and the bills vouchers with regard to the construction of hospital property, the assessing officer has made a reference to the DVO to determine the cost of construction of the hospital property. Therefore, the reference was made without verifying the books of accounts. Whereas, the requirement of law is that assessing officer is required to first examine the books of accounts along with the bills vouchers with regard to the construction of property if he is not satisfied with the details furnished by the assessee, he would reject the books of accounts then make a reference to the DVO to determine the cost of construction. But the requirement has not been fulfilled in the instant case. 13. We have carefully examined the judgement of the apex court in the case of Sargam Cinema Vs. CIT (supra), in which the controversy in this regard has been set at rest and their Lordship have held in categorical terms that the assessing authority could not have referred the matter to the DVO without books of accounts being rejected and therefore, the reliance placed on the report of the DVO was misconceived. In that case, the Tribunal has concluded th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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