TaxTMI 
TaxTMI 
2004 (1) TMI 696
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....t of difference between the cost of construction shown by the assessee and the cost of construction adopted by the Assessing Officer on the basis of DVO's report. The assessee had contended that the addition made by the Assessing Officer is not sustainable in the eyes of law and in support thereof the assessee has taken various pleas as raised in the grounds of appeal. 4. Briefly stated the material facts as borne out from the orders of the authorities below are as under:- For assessment year 1991-92 the original assessment was completed under section 143(3) on 13-1-1993, for assessment year 1992-93 the return was processed under section 143(1)(a ) on 12-7-1993 determining nil income. For assessment year 1993-94 the return was processed under section 143(1)(a) on 21-3-1994 determining at nil income. For assessment year 1994-95 the return was also processed under section 143(1)(a) on 29-8-1996 determining at nil income and for assessment year 1995-96 the assessment was originally completed under section 143(3) on 17-3-1998 determining at a loss figure of Rs. 6,67,080, as returned by the assessee. Subsequently the proceedings under section 147 were initiated by the Assess....
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....ls submitted by the assessee in his report; (3) that the difference to the Valuation Officer was made during the course of proceedings and prior to receipt the valuation report the assessment was originally completed and as such the reference had become invalid. Several decisions were also cited by the assessee in support of its contentions. The Assessing Officer after considering the explanation of the assessee added the difference between the cost shown by the assessee and determined by the DVO by observing that entire details and evidences including the vouchers etc. were duly considered in the report and it is only after considering them the valuation was made and the valuation also has been made by the persons who are experts in their own line and as such the assessee's contention was not acceptable. Being aggrieved, the assessee preferred appeals before the CIT(A) who upheld the orders of the Assessing Officer by stating as under:- (1) Relying on various decisions including the decision of Gauhati High Court in the case of CIT v. Smt. Amiya Bala Paul [1999] 240 ITR 378, the CIT(A) held that the Assessing Officer is competent to make enquiry under section ....
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....y maintained by the assessee are found defective, we have also heard the ld. D.R., who supported the orders of the authorities below to contend that all the details submitted by the assessee were verified by the Valuation Officer before determining the cost of construction by him. 9. We have heard both the parties and have gone through the orders of the authorities below. We have carefully perused the materials on record. We have deliberated upon the judicial decisions cited at the Bar. It is an admitted position that no addition on account of difference in the cost of construction shown by the assessee and the cost determined by the DVO were made in the course of original assessment proceedings. The assessee is engaged in the business of construction of apartments or buildings. The business of the assessee-company, as noted by the Assessing Officer, is admittedly of purchase and sale of land and also construction of property thereupon. It is also an admitted position that the assessee has been maintaining regular books of account in respect of its business carried on by it. It is also seen from the assessment order for assessment year 1991-92 made under section 143(3) on 13-1-1....
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.... for the purpose of construction of the asset and not on the basis of the valuation of the registered valuer, it was not open to the Assessing Officer to make a reference to the District Valuation Officer unless the Assessing Officer formed an opinion that having regard to the nature of the asset and other relevant circumstances it was necessary to do so. If an account of the expenses of the construction of the asset are maintained regularly and supported by vouchers there should be no reason not to accept the same for determining the cost of construction of the asset. The Assessing Officer was required to assess the valuation of the asset on appreciation of material before him. 9.3 The jurisdictional High Court in the case of Smt. Uma Devi Jhawar (supra), has held that the valuation made by the DVO could not be lawful or relevant material on the basis whereof the ITO could have had any reason to believe or could bona fide and lawfully have believed that any income as regards the construction of the house property had escaped assessment. Similarly, the jurisdictional High Court in the case of Western Estates (supra) has also held that in that case the CIT(A) passed a detailed or....
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....not be relied upon for want of proper vouchers. It was, therefore, held therein that the Assessing Officer was not justified in making addition merely on the basis of the valuation report of DVO. 9.5 Further the Hon'ble Madras High Court in the case of K.K. Seshaiyer v. CIT [2000] 246 ITR 351, has held that when the actual cost of construction is duly recorded in the books of account the creditability of which is not doubted, the opinion of the DVO cannot straightway be substituted for the actual cost recorded in the assessee's books. 9.6 Similar proposition has also been laid down by the Agra Bench of ITAT in the case of Hind Lamps Ltd. v. Dy. CIT [2001] 119 Taxman 107, ITAT, Bench of Delhi in the case of Naresh Behal v. ITO [1992] 41 ITD 298and the Ahmedabad Bench of ITAT in the case of ITO v. Tandel Automobiles [1990] 35 ITD 191. 10. In the instant case the Assessing Officer has referred the matter to the DVO under section 131(1)(d) of the Act without rejecting the books of account regularly maintained by the assessee and without pointing out any defect therein. The Assessing Officer has also not given any valid reason for making a reference to the DVO so as to show tha....