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TMI Blog2002 (11) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... ed CIT(A) has erred in law and on facts in not dealing with all the contentions raised before her during the course of appellate proceedings, in the matter of cost of construction of the cold storage building". 4. Briefly stated, facts are that the assessee in its balance sheet declared the cost of construction of cold storage building at Rs. 23,56,127 excluding value of land. The AO mentioned that the assessee did not file any report from any technical expert or details to substantiate the valuation shown by it. The matter was, therefore, referred to the District Valuation Officer (DVO), Jaipur under s. 131(1)(d) of the Act for estimating fair cost of construction of cold storage building. The DVO, Jaipur vide his report dt. 31st March, 1992, estimated the cost of building at Rs. 29,13,000. A copy of the said report was given to the assessee. The assessee filed its objections against the valuation of the DVO. The objection as raised by the assessee have been mentioned at p. 2 of the AO. The objections so raised by the assessee were forwarded to the DVO for his comments. The comments/reply of the DVO on the said objections have also been extracted in pp. 2 and 3 of the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference and in getting expert opinion in order to arrive at the correct cost of construction incurred by the assessee in the construction of cold storage building. 7. Before us, the learned counsel for the assessee has submitted that the assessee is a private limited company incorporated under the provisions of Companies Act, 1956. It was required to get its account audited and the audited balance sheet and P&L a/c together with the auditor report were placed before the AO. It is a matter of record that all the books of account together with all the vouchers were produced before the AO. He has further mentioned that as has been borne out from assessment order the assessee-company constructed its factory building and the cost of construction according to the books of account was amounting to Rs. 23,56,127. He has contended that it is well-settled that the entries in the account books maintained in the regular course of the things are relevant and admissible in evidence and in a sense carry with them a presumption of their correctness unless the contrary is proved. He has mentioned that in the instant case there is no finding that the provisions of proviso to s. 145(1) or 145(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report from technical expert or details to substantiate the valuation shown by him. He has further submitted that the AO without applying his mind has adopted the valuation made by the DVO. Thus, the learned counsel has urged that the addition made on the basis of the said report of the DVO is liable to be deleted. 8. On the other hand, the learned Departmental Representative has submitted that s. 131(1)(d) r/w O. 26, r. 1, CPC, empowers the AO to make reference for valuing/estimating the correct value of the constructed building. The DVO being technical authority his report is based on technical finding. Since the objections raised by the assessee against the finding of the DVO were found to be not tenable by the AO, he has rightly rejected the same. Thus, the learned Departmental Representative while relying upon the order passed by the lower authority has urged that the grounds of appeal raised by the assessee are liable to be rejected. 9. We have heard the parties and perused the records of the case. The AO under the heading "Construction of cold storage building" has observed thus: "The assessee in its balance sheet has declared the cost of construction of cold storage buil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a marginal difference in the actual investment and the report of the valuation officer for a number of reasons as the valuation report is prepared on the basis of norms prescribed by the CPWD for the construction of buildings and the difference may be with regard to quality of the materials, etc. The ITO could have examined the matter in detail with regard to the books of account in order to say that the books are not reliable. Simply because the valuation report is of a higher amount, the books cannot be said to be unreliable unless, by a deeper probe, any defect is found in the maintenance of the books of account. The Tribunal was, therefore, justified in deleting the addition of Rs. 55,780." In the case of Modern Construction Development & Project Promotion vs. Asstt. CIT (1997) 63 ITD 235 (Cal), the Tribunal, Calcutta 'E' Bench has held that for the purpose of making an addition towards unexplained investment, the AO is under legal obligation to verify the books and vouchers maintained by the assessee in support of the cost of construction shown by him and point out defects. Upon rejection of the books or upon pointing out defects, the AO would acquire the right to refer the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redits added amount to Rs. 10,65,000. The AO has discussed the merit of each credit and had also mentioned that no addition was being made in respect of those persons who were being assessed to tax and who had filed confirmation letters admitting that they had advanced money out of their own sources of income and had reflected the same in their income-tax records. It is only in respect of those persons who filed confirmation letters and affidavits but were not produced before the AO inspite of repeated insistence by him for their production in person for cross-examination, the additions have been made. 14. Before CIT(A), the learned counsel has submitted that the following amounts have not been found credited in the books of the assessee during the previous year under appeal. Hence, the same cannot be added in any circumstances in the assessment year under consideration: Name Amount Date of Credit 1. Surendra Kumar, Advocate, Gwalior 70,000 17-02-1989 2. Smt. Javitri Devi 20,000 10,000 dt. 24-2-1989 10,000 dt. 25-2-1989 3. Ram Kumar Aggarwal, Gwalior 10,000 25-01-1989 Total 1,00,000 15. However, the learned CIT(A) after having gone through the statement of these pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the investment made by its shareholders. Therefore, any addition made on account of the alleged inability to substantiate the shares application money is required to be deleted in view of the decision of Supreme Court in the case of CIT vs. Steller Investment Ltd. (2000) 164 CTR (SC) 287 : (2001) 251 ITR 263 (SC). In the said case the Hon'ble Supreme Court found itself in agreement with the decision of the Delhi High Court in the case of CIT vs. Steller Investment (1991) 99 CTR (Del) 40 : (1991) 192 ITR 287 (Del). Thus, the Hon'ble Supreme Court confirmed the said order passed by the Delhi High Court. The order of the Delhi High Court (1991) 99 CTR (Del) 40 : (1991) 192 ITR 287 (Del) reads as under: "The subscribed capital of the respondent-company had been increased and the ITO accepted the increase and assessed the company. The CIT, in revision, set aside the order of assessment, being of the view that there had been a device of converting black money into white by issuing shares with the help of formation of an investment company, and that the AO did not make any enquiries with regard to the genuineness of the subscribers to the share capital. On appeal, the Tribunal revers ..... X X X X Extracts X X X X X X X X Extracts X X X X
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