AI Drafter 
TaxTMI 
TaxTMI 
2004 (2) TMI 33
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....ebruary 10, 1999, for the assessment years 1987-88 and 1988-89, have been dismissed. During the course of proceedings relating to the assessment years 1989-90 and 1990-91, the Assessing Officer referred the matter of valuation of the cinema building owned by the assessee to the District Valuation Officer. The District Valuation Officer, vide his report dated April 2, 1992, estimated the cost of construction at Rs. 42,26,000 as against the sum of Rs. 24,40,000 debited in the books of account of the assessee. Since the construction had been effected from September 1986, to April, 1990, the cost of construction was bifurcated year-wise as under: --------------------------------------------------------------------- Assessment &nbs....
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....67 ---------------------------------------------------------------------- The report of the District Valuation Officer was confronted to the assessee during the course of assessment proceedings relating to the assessment years 1989-90 and 1990-91. The assessee submitted its objections to this report and also filed the valuation report of an approved registered valuer in support of the investment as per books. The Assessing Officer referred the objections of the assessee along with the report of its approved registered valuer to the District Valuation Officer for his comments. The District Valuation Officer did not respond to the objections of the assessee nor did he comment on the report of the approved registered valuer. The Assessin....
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....ort of the approved registered valuer, which was based on detailed measurements and in which the cost of construction was estimated at the scheduled rates of the PWD, was more scientific and reliable. Accordingly, it was held that without pointing out any discrepancy in the said report, no addition could be made. The Tribunal also upheld the additional reason for deleting the addition that unless and until the books of account were rejected, no addition on account of unexplained cost of construction could have been made. In this factual backdrop, the Assessing Officer also initiated proceedings under section 147 of the Act for assessing the unexplained investment as per the District Valuation Officer's report for the assessment years 198....
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.... 44,01,100 Less: Rebate for self-supervision 4,40,100 ----------- Total cost of construction 39,61,000 &nbs....
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.... 18,861 ---------------------------------------------------------------------- On the basis of the above, he determined unexplained investment in the construction of the cinema building for the assessment year 1987-88 at Rs. 4,26,714 (11,31,714-7,05,000) and Rs. 2,58,163 (6,60,163-4,02,000) for the assessment year 1988-89. Since there was no other income, the assessment was framed vide a common order dated August 6, 1998, at the aforesaid figures. The assessee preferred appeals before the Commissioner of Income-tax (Appeals) which were allowed by a common order dated February 10, 1999. The Commissioner of Income-tax (Appeals) observed that although, in the relevant two assessment years, no books of account had bee....
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....ained investment is the report of the District Valuation Officer. It is now settled law that no reference can be made by the Assessing Officer to the Valuation Officer for estimating the cost of construction of house property under the Act. For this purpose, we may refer to the observations of the Supreme Court in Smt. Amiya Bala Paul v. CIT [2003] 262 ITR 407, wherein it has been held as under: "From this it is clear that whenever reference to a Valuation Officer appointed under the Wealth-tax Act is permissible under the Income-tax Act, it has been statutorily so provided. Apart from the aforesaid, the Valuation Officer is appointed under the Wealth-tax Act and can discharge functions within the statutory limits under which he is ap....