TaxTMI 
TaxTMI 
2012 (11) TMI 464
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....lding at Rs. 16,17,040/- as against Rs. 13,29,552/- declared by the appellant as per account books and thus, sustaining addition to the extent of Rs. 2,87,468/- for unexplained investment in the factory building. 2. Because in the circumstances of the case the reference to the valuation officer was not justified, proper and legal in as much as the cost of construction was duly supported by the Account Books, bills and vouchers in which nothing wrong was found. The Account books have not been rejected. 3. Because the reliance placed on the valuation report of the Ld. Valuation Officer is wrong, improper and unjustified. The comments and the valuation report of the Registered Valuer have not been considered properly ....
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.... CIT(A) has also considered report of another registered valuer estimating cost of construction at Rs. 13,21,383/-. The CIT(A) rejected the assessee's contention that the cost of construction has been shown correctly in the books of account. The CIT(A) observed that the assessee did not maintain complete set of structural drawings and design along with T & P material and other consumables used in construction of building. Therefore, it was not possible to compute the correct amount of investment made in construction of the factory. The CIT(A) further observed that the assessee himself not being sure about the cost of construction declared by him in the books of account, therefore, he got it valued by two different registered valuers adoptin....
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....ied upon the order of CIT(A). 5. We have heard the ld. Representatives of the parties and records perused. The issue under consideration is under the facts and circumstances of determination of cost of construction of factory building. Whether estimation made by D.V.O's is to accept or construction cost shown in books of account regularly maintained by the assessee. To appreciate the issue, we would like to reproduce the relevant section 142A of the Act which reads as under :- "142A. (1) For the purposes of making an assessment or reassessment under this Act, where an estimate of the value of any investment referred to in section 69 or section 69B or the value of any bullion, jewellery or other valuable article referred to in section 69A ....
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....for the purposes of Chapter IV. The issue as whether the Valuation Officer under section 55A of the Act could be appointed for valuation of an asset if in the opinion of the Assessing Officer the amount expected in making the investment exceeds the amount recorded on the books. The issue of referring to the Valuation Officer, came up for consideration before the Supreme Court in the case of Smt. Amiya Bala Paul v. CIT [2003] 262 ITR 407. The Supreme Court, after considering the scope and ambit of section 55A of the Act, held that it would not apply to proceedings under section 69B of the Act. Apparently, it appears that section 142A of the Act was introduced to cover this omission. 7. Now question to be seen under what circumstances the A.....
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....nder the head "Profits and gains of business or profession" or "Income from other sources" shall, subject to the provisions of sub-section (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. Sub-section (3) of section 145 of the Act provides that where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) or accounting standards as notified under sub-section (2), have not been regularly followed by the assessee, the Assessing Officer may make an assessment in the manner provided in section 144 of the Act. About the correctness or completeness of the accounts,....
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....l presumption stated that the cost of construction recorded in the books of account is not supported by bills and vouchers without pointing out any specific instances. The CIT(A) has failed to point out any material in support of his finding that the books of account maintained by the assessee is liable to be rejected under auction 145(3) of the Act. We therefore, find that the in the case under consideration the A.O. made the reference under section 142A to D.V.O. without rejecting the books of account. In the light of law laid down by the Apex Court in the case of Sargam Cinema (supra), we find that in the case under consideration, the reference under section 142A by the A.O. is without jurisdiction. Even otherwise also, on merit, we noti....