2010 (6) TMI 791 - AT - Income Tax

Tribunal partially allows assessee's appeals, dismisses Revenue's appeals. DVO valuation deemed unreliable.

Dr. Surya Mani Dwivedi Versus Assistant Commissioner of Income-tax

The Tribunal allowed the assessee's appeals partly, deleting the additions based on the DVO's report, and dismissed the Revenue's appeals as infructuous. ... - Issues Involved:1. Sustaining addition as unexplained investment based on DVO's report.2. Disallowance of expenses.3. Acceptance of assessee's submission regarding discrepancies in DVO's report.4. Deduction in respect of self-supervision.Summary:1. Sustaining Addition as Unexplained Investment Based on DVO's Report:The assessee contested the addition of Rs. 2,46,515 sustained by the CIT(A) as unexplained investment, arguing that the investment in the construction of 'Jagat Hospital' was fully recorded in the books of account. The AO had referred the matter to the DVO, who estimated the cost of investment at Rs. 80,31,500 against the disclosed Rs. 41,84,472. The assessee objected to the DVO's valuation, claiming it was erroneous and not reflective of the actual market prices. The Tribunal noted that the AO did not find any specific discrepancies in the assessee's records and relied solely on the DVO's report. Citing the jurisdictional High Court's decision in CIT v. Meerut Cement Co. (P) Ltd., the Tribunal held that the expenditure shown in the books of account should be accepted if the DVO's report is proven unreliable. Consequently, the addition was deleted.2. Disallowance of Expenses:Ground No. 4 related to disallowance of expenses was not pressed by the assessee and hence dismissed.3. Acceptance of Assessee's Submission Regarding Discrepancies in DVO's Report:The Revenue's appeals (ITA Nos. 245 and 246/Luck/2010) contested the CIT(A)'s acceptance of the assessee's claims regarding discrepancies in the DVO's valuation and the deduction for self-supervision. Since the Tribunal deleted the additions in the assessee's appeals, the Revenue's grounds became infructuous and were dismissed.4. Deduction in Respect of Self-Supervision:The CIT(A) had accepted the assessee's claim for a 10% deduction for self-supervision instead of the 7.5% allowed by the DVO. The Tribunal's decision to delete the additions rendered this issue moot.Conclusion:The Tribunal allowed the assessee's appeals partly, deleting the additions based on the DVO's report, and dismissed the Revenue's appeals as infructuous.