TaxTMI 
TaxTMI 
2016 (12) TMI 1657
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.... cost of construction declared by the assessee. 3. The Ld. CIT(A) has erred in law and on facts in ignoring the fact that the assessee never been objected the valuation report made by the AVO during the course of assessment proceedings. 4. That the order of the Ld. CIT(A) be set-a-aside and the order of the A.O. 2. The brief facts of the case are the assessee firm filed its return of income electronically on 30.9.2009 declaring total income at NIL. The return was processed u/s. 143(1) of the I.T. Act, 1961. Later the case was selected for scrutiny through CASS. The assessee claimed its unit as a manufacturing of Gold ornaments. In this case assessment was completed u/s. 143(3) of the I.T. Act on 28.12.2011.During the year factory was constructed at Ranipokhri Dehradun showing construction cost of Rs. 22,29,387/-. During the original assessment, a reference was made to AVO on 7.11.2011 for estimating cost of construction of factory. The AVOs' report dated 22.12.2-11 (before completion of assessment) was received by the AO on 5.1.2012. The AVO estimated the cost of construction at Rs. 56,40,100/-, thus difference of Rs. 34,10,713/-. The AO on the basis of AVO rep....
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.... on behalf of the revenue". In the present case it is quite clear that the assessee did maintain books of accounts for the construction and it did produce the ledger of construction account alongwith supporting vouchers for building material purchased and payments made to the labours for verification of the AO. However, the AO did not accept the same on account of the fact that the assessee did not produce a Map and a valuation report. He did not actually point out any defect in the accounts, being produced by the assesse, or if he did, he has not brought any such defect record in the assessment order from where it can be ascertained as to whether he noticed that these accounts were either incomplete or incorrect. Thus, the reference to the Departmental Valuation Officer without rejecting the audited construction account maintained by the assessee and produced before the AO alongwith supporting bills and vouchers and without recording any satisfaction of the need to make such reference, is not maintainable in law in view of the decision of the Hon'ble Supreme, Court in the case of Sargam Cinema Ltd (Supra). Thus, no cognizance can be taken of the report of the Assistant Valuati....
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....ot be the basis for a valid reopening of the assessee's case. 15. The next ground that has been agitated by the assessee is the fact that it had filed objections to the notice u/s 148 and the AO had proceeded to complete the assessment without disposing off the objections filed by the assessee, thus violating the principles laid down by the Hon'ble Supreme Court in the case of GKN Driveshafts India Ltd. 259 ITR 19 (SC). It has been argued that the Hon'ble Delhi High Court in its order dated 10.08.2015in the case of Pro CIT VS. Tupperware India Pvt Ltd has held that where the AO did not make compliance to the said Supreme Court order by passing a speaking order, the CIT(A) had committed an error in not quashing the reopening order and the consequent assessment. However, the AO disposed the objections of the assessee in the assessment order itself. Before me, the assessee has taken the plea that this renders the assessment order as bad in law. 16. I have duly considered the facts and circumstances of the case objection. The question whether the failure of the AO to pass a speaking order disposing off the objections prior to the framing of the assessment ....
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....ted that the AO was bound to dispose of the objections by passing a speaking order, it was not open to the authorities to contend that in the absence of any provision in the Act, the authorities could not have passed a speaking order. Hon'ble Delhi High Court in the case of Delhi Tourism & Transport Development Corporation Ltd. vs. ACIT [2004] 141 Taxman 361 (Delhi), while relying upon the aforesaid decision of the Hon'ble Apex Court in GKN Drivesharfts (India) Ltd.(supra) directed to follow the procedure laid down by the Hon'ble Apex Court and pass a speaking order before passing the assessment order.. 19. While adjudicating a similar issue, Hon'ble Gujrat High Court in the case of MGM Exports vs. DCIT [2010] 23 DTR 356 (Guj) observed as under:- "Applying the aforesaid settled legal position to the facts of the case it is apparent that the action of the respondent authority in framing the reassessment order, without first disposing of the preliminary Objections raised by the petitioner, cannot be sustained. Accordingly, the reassessment order dated December 16, 2008 is hereby quashed and set aside and the respondent authority shall dispose of the ....