TaxTMI 
TaxTMI 
2011 (7) TMI 1401
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....to have held that the notice issued u/s 148 is invalid and consequently ought to have held that the entire reassessment proceedings are void ab-initio. 3. The Ld. CIT(A) is not justified in confirming the addition of Rs.22,66,902/- made by the assessing officer towards unexplained cost of construction. 4. The Ld. CIT(A), ought to have considered the facts that the assessing officer did not give credit for sale proceeds of salvaged timber and bricks from the demolition of the old house. 5. The Ld. CIT(A) is not justified in confirming the disallowance of Rs.99,178/- made by the assessing officer towards interest on loan availed for construction. 6. Alternatively, the Ld. CIT(A) ought to have directed the assessing officer to allo....
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....y such a reference made without forming an opinion about rejection of books of account, which is a condition precedent, is illegal and consequently the addition made on the basis of valuation report so obtained is to be deleted as void ab initio." 3. During the course of hearing, the Ld. Counsel for the assessee has submitted that the issue with regard to the additional ground was also raised as ground no.2 before the CIT(A) in A.Y. 2006-07 but the CIT did not adjudicate this ground properly. Therefore, the assessee has raised this additional ground before the Tribunal as it is purely of legal in nature and it goes to the root of the case. We have carefully examined the submissions raised on the admission of additional ground and since th....
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....sessee at Rs.37.18 lakhs. Since there was conflicting figures of cost of construction of the property, the assessing officer made a reference to the DVO who furnished the detailed valuation report dated 11.12.2007 estimating the total investment in the construction of building spread over the financial years 2004-05 & 2005-06 at Rs.68.72 lakhs as against the assessee's figure of valuation of Rs.36.78 lakhs. As the cost of construction as valued by the DVO relatable to the financial year 2004-05 & 2005-06 worked out to Rs.49.07 lakhs and Rs.19.65 lakhs, respectively, which are more than the cost of construction shown by the assessee at Rs.27 lakhs and Rs.10.81 lakhs respectively, and the factum of undisclosed investment in the construction o....
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....07 and reference was made on 6.9.2007 to DVO for estimating the cost of construction. Thus, it is very much evident from face of the record that issue of notice u/s 148 precede the formation of belief, if any, towards understatement of cost of construction and further that the assessing officer referred the matter of cost of construction to the DVO much prior to the verification of the bills & vouchers, leave alone the rejection of books of accounts. Therefore, the action of the A.O. is contrary to the well settled legal principle that the rejection of books of accounts is a condition precedent for referring the cost of construction to the valuation officer. In support of this contention, the Ld. Counsel for the assessee has placed a relian....
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....aluation declared in the books of accounts that the valuation made by the registered valuer was less than the value declared in the books of accounts. In order to verify the difference in the valuation, the assessee was examined with regard to the cost of construction of properties. In response to the specific question, the assessee has replied that after the preparation of the valuation report by the registered valuer, some more construction was made. Therefore, the more cost of construction was shown in the books of accounts. The assessee was asked to furnish the bills & vouchers of the construction of the hospital. In response thereto, it was deposed by the assessee that he may produce the same tomorrow. Thereafter, the assessee was furt....
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....pital property, the assessing officer has made a reference to the DVO to determine the cost of construction of the hospital property. Therefore, the reference was made without verifying the books of accounts. Whereas, the requirement of law is that assessing officer is required to first examine the books of accounts along with the bills & vouchers with regard to the construction of property if he is not satisfied with the details furnished by the assessee, he would reject the books of accounts then make a reference to the DVO to determine the cost of construction. But the requirement has not been fulfilled in the instant case. 13. We have carefully examined the judgement of the apex court in the case of Sargam Cinema Vs. CIT (supra), in wh....