Tribunal Upholds Appeal, Dismisses Department Challenge on DVO Reference (10)

The Tribunal dismissed the departmental appeal challenging the reference made to the DVO under section 142A, finding it unjustified as the assessee's accounts were audited and properly maintained. The ld. CIT(A) allowed the appeal and deleted the addition on account of the difference in the cost of construction, as the Assessing Officer had accepted the audited books without defects and granted the deduction under section 80IB(10). The Tribunal upheld this decision, confirming the unjustified nature of the DVO reference and dismissing the departmental appeal.

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Issues Involved:
The judgment involves the following Issues:
1. Justification of making reference u/s. 142A to the DVO
2. Deletion of addition on account of difference in cost of investment

Issue 1: Justification of making reference u/s. 142A to the DVO
The Revenue filed an appeal challenging the decision of the ld. CIT(A) regarding the justification of making a reference u/s. 142A to the DVO. The Assessing Officer had made an addition on account of a difference in the cost of construction reported by the assessee and the Departmental Valuation Officer. The assessee contended that the reference to the DVO u/s. 142A was invalid as the books of account were audited and no defects were found. The ld. CIT(A) found that the reference to the DVO cannot be made in a routine manner and can only be done if the Assessing Officer is not satisfied with the correctness of the account books. Since the accounts of the assessee were not rejected and were maintained properly, the reference to the DVO was deemed unjustified. The ld. CIT(A) allowed the appeal of the assessee on this ground and also deleted the addition on merit after considering the material on record.

Issue 2: Deletion of addition on account of difference in cost of investment
The ld. CIT(A) found that the Assessing Officer had accepted the audited books of the assessee without pointing out any defects and had allowed the deduction u/s. 80IB(10) of the Income-tax Act. Therefore, the reference to the DVO for ascertaining the cost of construction was considered unjustified. The Tribunal upheld the decision of the ld. CIT(A) stating that the reference to the DVO was highly unjustified as the assessee had maintained proper books of account and had been granted the deduction u/s. 80IB(10). The Tribunal confirmed the finding that the reference to the DVO was unjustified and dismissed the departmental appeal.

In conclusion, the Tribunal dismissed the departmental appeal and the cross-objection of the assessee was dismissed as withdrawn.

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