Assessee's appeals allowed, protective assessment deleted, addition based on DVO's report nullified.

The Tribunal allowed both appeals of the assessee. The protective assessment was deleted as the Revenue failed to provide the status of the substantive addition. The addition based on the DVO's report was also deleted since the AO had not rejected the books of account, following established legal principles and precedents from higher courts.

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Issues Involved:
1. Confirmation of protective assessment in the hands of the assessee.
2. Addition of difference in investment made in the cost of construction as disclosed in books of account and cost of construction as per DVO's report.

Issue-wise Detailed Analysis:

1. Confirmation of Protective Assessment:
The primary issue in ITA No. 1104/Kol/2010 was the confirmation of the protective assessment in the hands of the assessee. The substantive addition was made in the hands of Siliguri Prabhupada International Research Society based on the difference between the investment shown by the assessee in the cost of construction of a building and the cost estimated by the DVO's report, amounting to Rs. 20 lacs.

The Tribunal had repeatedly directed the Revenue to provide the status of the substantive addition in the hands of Siliguri Prabhupada International Research Society. Despite multiple adjournments and clear instructions, the Revenue failed to produce the assessment records or provide the status of the substantive addition. The Tribunal noted the non-cooperative attitude of the Revenue and the failure to comply with the directives. Consequently, the Tribunal decided to delete the protective addition in the hands of the assessee due to the Revenue's inability to provide the necessary information. The Tribunal allowed the appeal of the assessee, stating that if the Revenue could later show that the substantive addition had been deleted in the hands of Siliguri Prabhupada International Research Society and directed to be considered in the hands of the assessee, they might get the order recalled as per the provisions of the Act.

2. Addition of Difference in Investment Made in the Cost of Construction:
In ITA No. 1105/Kol/2010, the issue was the addition of Rs. 15,77,260/- based on the difference between the investment in the cost of construction as disclosed in the books of account and the cost estimated by the DVO's report.

The assessee argued that the AO had not rejected the book results and had referred the matter to the DVO without finding any defects in the books of account. The Tribunal noted that the assessee, a property developer, had provided complete books of account, bills, vouchers, bank statements, and other details during the assessment proceedings, which were verified by the AO. The AO, without rejecting the books of account, referred the cost of construction to the DVO, who estimated a higher cost.

The Tribunal referred to the decision in the case of ITO Vs. M/s. Sahul India Limited, where it was held that the AO cannot refer the cost of construction to the DVO without rejecting the books of account. The Tribunal also cited the Hon'ble Supreme Court's decision in Sargam Cinema Vs. CIT, which held that the assessing authority could not refer the matter to the DVO without rejecting the books of account. Additionally, the Tribunal referred to the Hon'ble Rajasthan High Court's decision in CIT V Pratap Singh Amro Singh Rajendra Singh, which emphasized that the valuation report could only be considered if the books of account were found to be unreliable or not supported by proper vouchers.

Based on these precedents, the Tribunal concluded that the AO's reference to the DVO without rejecting the books of account was not justified. The Tribunal deleted the addition based on the DVO's report, as the books of account were properly maintained by the assessee. Consequently, the appeal of the assessee was allowed, and the addition was deleted.

Conclusion:
Both appeals of the assessee were allowed. The protective addition was deleted due to the Revenue's failure to provide the status of the substantive addition, and the addition based on the DVO's report was deleted as the AO had not rejected the books of account. The Tribunal's decisions were based on established legal principles and precedents from higher courts.

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