Tribunal invalidates reassessment based on DVO report, revenue appeals dismissed, assessee appeals allowed. Stay applications dismissed.

The Tribunal quashed the reassessment proceedings as they were initiated without rejecting the books of accounts and solely based on the DVO's report. Consequently, the additions made in the reassessment were invalidated. The appeals filed by the revenue were dismissed as infructuous, while the appeals filed by the assessee were allowed. The stay applications filed by the assessee were also dismissed as infructuous.

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Issues Involved:
1. Delay in filing appeals by the assessee.
2. Validity of reassessment proceedings initiated by the Assessing Officer (AO).
3. Reference to the Departmental Valuation Officer (DVO) without rejecting the books of accounts.
4. Merits of additions made towards the cost of construction of properties.

Issue-Wise Detailed Analysis:

1. Delay in Filing Appeals by the Assessee:
The appeals were filed with a delay of 1274 days. The assessee claimed the delay was due to reliance on the advice of the previous authorized representative, who suggested that no further appeal was necessary as partial relief was granted by the CIT(A). The department initiated recovery proceedings, prompting the assessee to seek new representation, which led to the realization that the entire assessment was not maintainable. The Tribunal, referencing the Supreme Court's decision in the case of Collector, Land Acquisition Vs. MST. Katiju, condoned the delay to ensure justice, emphasizing that substantial justice should prevail over technical considerations.

2. Validity of Reassessment Proceedings:
The reassessment was initiated based on a DVO report after the original assessment was completed. The AO did not reject the books of accounts or express any doubt on the expenditure incurred on the factory buildings during the original assessment. The Tribunal noted that the AO must first express a lack of confidence in the books before referring to a DVO, as established in cases like Sargam Cinema Vs. CIT. The Tribunal found that the AO did not follow this procedure, making the reassessment invalid.

3. Reference to the DVO Without Rejecting the Books of Accounts:
The Tribunal observed that the AO referred the matter to the DVO without rejecting the books of accounts or indicating any suspicion about the valuation during the original assessment. The Tribunal cited precedents, including Sargam Cinema and Lakshmi Constructions, to assert that the AO should have first rejected the books before making such a reference. Since this procedure was not followed, the Tribunal concluded that the reassessment based on the DVO's report was not justified.

4. Merits of Additions Made Towards the Cost of Construction of Properties:
The Tribunal addressed the specific additions made for the properties at Roorkee and Hyathnagar. For the Roorkee property, the CIT(A) provided partial relief, excluding the cost of the second floor constructed in subsequent years. For the Hyathnagar property, the CIT(A) also provided partial relief, noting that the DVO incorrectly assumed both buildings were constructed in the same year. The Tribunal found that the DVO's estimates were based on the details provided by the assessee and physical inspections, but since the reassessment itself was invalid, the additions became infructuous.

Conclusion:
The Tribunal quashed the reassessment proceedings as they were initiated without rejecting the books of accounts and were based solely on the DVO's report. Consequently, the additions made in the reassessment were also invalidated. The appeals filed by the revenue were dismissed as infructuous, and the appeals filed by the assessee were allowed. The stay applications filed by the assessee were dismissed as infructuous.

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