TaxTMI 
TaxTMI 
TaxTMI 
2016 (1) TMI 806
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....eflected in the books account were not susceptible for verification and unauthenticated and that manipulation of the same cannot also be over-ruled and the whole of the cost of construction as shown in the books cannot be accepted as true, the Ld.CIT(A) ought to have sustained the entire addition holding it as unexplained. 5. The Ld.CIT(A) ought to have appreciated that the decision of the ITAT rendered in the case of Salma A.Mehdi could be distinguished as the DVO already made certain adjustments to the 'plinth area rates with reference to the market conditions prevalent in the place of construction of the complex, viz., Mudidnepali of Krishna District, and hence the relief of 15% allowed is not justifiable; 6. The Ld.CIT(A) also ought to have noticed that the relief at 10% towards personal supervision allowed in the case of Salma A.Mehdi can not be extended to the instant case going by the fact that the husband of the assessee in the aforesaid case relied upon happened to be a qualified Engineer which is not so in the instant case and in this factual background, the relief of 6% already allowed by the DVO should have been considered to be reasonable; 7. Even otherwise, ....
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....oks of accounts and bills and vouchers. However, the A.O. did not satisfy with the explanations furnished by the assesse, held that the books of accounts were not maintained in orderly form and also noted that the assessee failed to produce the books of accounts with vouchers at the stage of original assessment proceedings, therefore doubted the genuineness of the books of accounts. The A.O. further observed that as per the report of the Executive Engineer, valuation cell, the assessee was holding 258 vouchers only, covering a cost of Rs. 38,83,959/- as against the cost of Rs. 43,20,606/- reported in the books of accounts. Therefore, the A.O. rejected the explanations offered by the assessee and adopted the D.V.O. valuation of Rs. 72.99 lakhs and made additions towards difference of Rs. 29,78,850/- as unexplained investments. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee submitted that he had maintained books of accounts and vouchers for the construction expenses, therefore, the A.O. was erred in making addition of Rs. 29,78,850/- by ignoring the books of accounts based on the DVO report. The assessee furt....
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....ments in building. While doing so, the A.O. has referred the matter to the district valuation officer and obtained the report from DVO and made the additions towards difference between value determined by the DVO and amount reported by the assesse. The assesse challenged the matter before CIT(A), but could not succeed. The assesse carried the matter to the ITAT. The ITAT, set aside the order passed by CIT(A) and remit the matter back to the file of A.O. by observing that the A.O. has referred to D.V.O. for valuation, without rejecting the books of accounts which is not permitted in law. The ITAT, further observed that the appellant was not given proper opportunity of hearing and thus, denied the assessee an opportunity to put forth his arguments. With these observations, the ITAT set aside the assessment to the file of the A.O. with a direction to re-examine the cost of construction along with books of accounts maintained by the assessee. Consequent to ITAT directions, the A.O. has taken up the case for re-examination. However, the A.O. ignored the books of accounts furnished by the assesse and confirmed the additions made on the basis of the DVO report. While doing so the A.O. hel....
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....orrect in considering the CPWD rates, when the state PWD rate is available for ascertaining the value of building. 9. The assesse relied upon the judgement of coordinate bench of this Tribunal in the case of Salma A. Mehdi in ITA No.697 & 698/Hyd/1995. We have examined the case laws relied upon by the assesse, in the light of the facts of the present case. The coordinate bench of this Tribunal, in the above mentioned case, while dealing with similar issue held as under: "The DVO estimated the cost of construction following the plinth area method of valuation. He applied the basic plinth area rates approved by the CEDT. . He applied the plinth area of New Delhi as fixed in 1976 and approved by the Government of India by duly enhancing the basic rate of similar structures with appropriate cost index as applicable to the locality during the period of construction. The Valuation did not appear to have taken into consideration the local rates that actually existed during the period for construction. It is common knowledge CPWD rates of New Delhi are far higher than local rates. Keeping that factor in view the first appellate authority would appear to have allowed some ad hoc deductio....
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.... the purpose of determining fair market rent of a property, whenever the State PWD awards a contract for construction of a particular property, very specific parameters are sent in the contract for the purpose of each individual project and, hence, it is not correct to say that the State PWD rates are the proper basis to arrive at the cost of construction. The applicability of CPWD rate with local indexing came up before the Tribunal in the case of Smt. Salma A. Mehdi, in ITA Nos. 697 & 698/Hyd/93 for asst. years 1985-86 and 1986-87 wherein the Tribunal vide paras 10 of this order held that in arriving at proper cost of construction, it would be justified if a discount of 15% is given for higher CPWD rate and further rate of 100/ 0 for personal supervision is allowed. The said paragraph-10 reads as under:- The DVO estimated the cost of construction following the plinth area method of valuation. He applied the basic plinth area rates approved by the CEDT. . He applied the plinth area of New Delhi as fixed in 1976 and approved by the Government of India by duly enhancing the basic rate of similar structures with appropriate cost index as applicable to the locality during the perio....