TaxTMI 
TaxTMI 
1999 (11) TMI 56
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....he expenses to the extent of Rs. 71,000. They were not supported by vouchers because the nature of the expenses was such that the maintenance of the vouchers was not practicable. The respondent-assessee filed an yearwise break-up of the day-to-day expenses incurred as per details below : Asst. yr. Amount 1. 1980-81 225.00 2. 1981-82 12,562.71 3. 1982-83 39,967.50 4. 1983-84 ....
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....O made an addition of Rs. 6,30,807 as unexplained investment in the hotel. The assessee preferred an appeal against the said addition before the CIT(A). The CIT(A) accepted the cost as worked by the registered valuer on the itemwise basis at the rate of each item issued by the State PWD. In the opinion of the CIT(A) as the construction account maintained is subject to full verification both with regard to the material and labour used and the construction made, the AO was justified in rejecting the cost of construction shown as per the books of account. On scrutiny of the record, the CIT(A) also found that the reference was made to the Valuation Officer both under s. 16A of the WT Act and s. 55A of the IT Act. In the opinion of the CIT(A), since the AO was to see the adequacy of the investment made in the construction of the hotel building, the reference made both under s. 16A of the WT Act and s. 55A of the IT Act was unauthorised. The CIT(A) also held that the report given by the Department Valuation Officer being technical in nature can serve as a guide for determining the actual cost of construction. On appreciation of material on record, the CIT(A) arrived at the conclusion tha....
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....has erred in not making a reference. It is also submitted that in the D.B. IT Ref. No. 115/1996, the cost was based on the basis of PWD rates of the State but in the instant case, valuation of the cost of the building is not solely based X-3 circular of the Rajasthan Government but the cost of the building has been estimated on the basis of the cost of each item of construction and otherwise referred and used in construction. It is also submitted that the Tribunal, on principle, held that if the books do not show any serious infirmity, they should be accepted. In the instant case, the Tribunal did not interfere with the order of the CIT(A) as the assessee himself had procured the valuation of the registered valuer based on the rates of the Rajasthan PWD. It is also submitted that the finding of the Tribunal is based on appreciation of material on record and, as such, no question of law arises from the order of Tribunal. 4. We have considered the rival contentions. At the first instance, we are in agreement with the view of the CIT(A) that in the facts of the case, the AO was in error in making reference to the Valuation Officer under s. 55A of the Act to ascertain the fair marke....
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....ed to form an opinion on the basis of material on record that reference to the District Valuation Officer for ascertaining the fair market value of the asset is necessary having regard to the nature of the asset and other relevant circumstances. It is also necessary to record as to why it is necessary to adopt such a course. 6. If the account of the expenses of the construction of the asset are maintained regularly in the books of account and an assessee also produces the vouchers, there should be no reason not to accept the same for assessing the value of the assets. It is unfair and against the public policy to proceed on the assumption that the assessee is dishonest and he must have submitted an incorrect account of expenses. In case, the assessee has not maintained the regular books of account of construction of asset and he relies upon the reports of the registered valuer, it will be open for the AO under the provisions of s. 55A of the Act to refer to the District Valuation Officer for valuation of the asset. In that event also, there cannot be a straightjacket formula that it is only the report of the District Valuation Officer based on the CPWD rates, which should be acc....