TaxTMI 
TaxTMI 
2016 (9) TMI 1598
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....o 2007-08, relevant to the AYs 2006-07 to 2008-09. The assessee's share in the building was 2/3rd, while Sri P. Shyam Sunder and his brother owned 1/3rd share of the building. The Assessing Officer referred the property to the District Valuation Officer, Hyderabad to verify the exact cost of construction. The valuation cell estimated the cost of construction of Rs. 186.28 lakhs after allowing self supervision @ 7.5%. The assessee has shown the cost of construction at Rs. 1,03,78,639/- before the valuation cell and as per books of accounts it is Rs.ll0.63 lakhs only. The Assessing Officer asked the assessee to explain the reason for the difference of Rs. 75,64,363/- (Rs. 1,86,28,002 - Rs. 1,10,63,639). The assessee stated that he al....
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....ased on "plinth area rate & cost index method". According to the assessee, he could only be questioned about the cost of construction of the cellar and not about the rest of the building. As far he was concerned, he paid the market rates for construction and if required, the builder's books should have been subjected to scrutiny. 2.1 The assessee also alleged defects in the District Valuation Officer's report because while he ignored the agreement, he did not allow the rebate for self-supervision. The cost of lift constructed by Sri P. Shyam Sunder was paid directly to the lift supplier was not included as a part of the cost but was added separately. The assessee also questioned the applicability of section 153A as no incrim....
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....n supervision or had got it done through a contractor. The point for consideration was that based on the report of the valuation officer there was a variation in the cost of construction which was required to be brought to tax. An Assessing Officer had naturally to rely on the report of the valuation officer for arriving at the cost of construction. The Assessing Officer quoted the observation made by the valuation officer in his report: "Having considered the nature of construction, specifications adopted facts and circumstances of the case gathered by me during the physical inspection, I estimate the cost of construction of the subject property (building) located at Plot No. 62, 8-2- 293/82/A, Road No.5 & 1, Jubilee Hills, H....
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....ssessing Officer was that there was a difference in the cost of construction disclosed by the assessee and estimated by the Valuation Officer. He further observed that before going to the merits of the addition, it is necessary to examine as to what occasioned such reference to be made to the Valuation Officer. A search was conducted in the business and residential premises of the assessee and the Assessing Officer has brought nothing on record to show that any incriminating material was found during the search. The assessee in response to notice u/s 153A of the IT Act filed a letter stating that his original return should be treated as a return filed in response to the notice u/s 153A. The original return was filed on 31.7.2008 on a t....
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....e ITAT in All Cargo Global logistics (137) ITO 287 (se). Mumbai. Secondly, the reference for valuation was also without any reason justifying the same. On overall appreciation of facts and circumstances of the case and Provisions of law it is held that the assessment made therein is not justified. The addition is deleted. 6. Aggrieved by the order of the CIT(A) the revenue is in appeal before us raising the following grounds of appeal: 1) The Learned CIT(A) has erred in both facts and in law. 2) The Learned CIT (A) ought to have appreciated the fact that the AO has referred the property to the valuation cell as per the provisions of the section 142A of the IT Act. As per sub-section (2) of section 142A, the AO has discretion to make refe....
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.... law as there is no incriminating material found during search. For this proposition, he relied on the following case laws: 1. Srinivasa Ferro Alloys Ltd. Vs. ACIT [2014] 51 Taxmann.com 512 (AP). 2. Gopal Lal Bhadruka Vs. [2012] CIT, 346 ITR 106 (AP) 3. CIT Vs. Kabul Chawla, [2016] 380 ITR 573 (Del.) 8.1 Ld. AR further submitted that the AO cannot refer to DVO without rejecting the books. In the given case, AO referred to the DVO before rejecting books of the assessee. For this proposition, he relied on the following case laws: 1. Sargam Cinema Vs. CIT [2011] 197 Taxmann 203 (SC) 2. CIT Vs. Lakshmi Constructions [2015] 55 taxmann.com 253 (AP). 9. Considered the submissions of both the counsels....