2012 (7) TMI 992 - AT - Income Tax

Tribunal rules in favor of assessee due to unjustified reliance on Departmental Valuation Officer's report

The Tribunal allowed the assessee's appeal, holding that the Assessing Officer (AO) was unjustified in making additions based on the Departmental ... Reference to the matter to the DVO u/s 142A - no books of account were rejected before referring the matter u/s 142A of the Act - assessing officer was not justified in making any addition in view of the report given by the DVO and therefore, the appeal on this issue is allowed and the addition so made is deleted. Issues:1. Challenge against upholding the action of the AO under section 142A of the Act.Analysis:The appeal before the Appellate Tribunal ITAT Jodhpur involved the challenge against the action of the Assessing Officer (AO) under section 142A of the Income Tax Act. The proceedings under section 147/148 were initiated, and before the assessment was completed, the AO referred the matter to the Departmental Valuation Officer (DVO) in accordance with section 142A. Subsequently, the assessment was finalized with certain additions. The assessee appealed before the ld.CIT(A) contesting the reopening of the assessment, referral to the DVO under section 142A, and the addition made by the AO. The ld.CIT(A) upheld the AO's order, leading to the appeal before the Tribunal.In the specific context of challenging the action of the AO in referring the matter to the DVO under section 142A, the assessee contended that the ld.CIT(A) erred in not following the decisions of the Jurisdictional High Court. The assessee argued that no books of account were rejected before the referral to the DVO, citing relevant case law. The Tribunal noted the Supreme Court's decision in a similar case, emphasizing that the assessing authority cannot refer the matter to the DVO without rejecting the books of account. As no books were rejected in the present case, the reliance on the DVO's report was deemed unjustified. The Tribunal held that the AO was not justified in making any addition based on the DVO's report, and consequently, the addition was deleted.The Tribunal further clarified that since the legal ground regarding the referral under section 142A and the consequent addition was allowed and deleted, there was no need to address the issue of reopening the assessment. Additionally, the Tribunal directed the AO to provide the consequential relief to the assessee concerning the charging of interest. Ultimately, the appeal of the assessee was allowed, and the order was pronounced in open court on a specified date.In conclusion, the Tribunal's detailed analysis and application of relevant legal precedents led to the allowance of the assessee's appeal, primarily concerning the action of the AO under section 142A of the Income Tax Act. The judgment underscored the importance of adhering to legal principles and precedents in tax assessments and highlighted the significance of rejecting books of account before referring matters to valuation officers.