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TaxTMI 
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TaxTMI 
2024 (7) TMI 567
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....against the impugned orders, under this common order: First, we shall be taking ITA No.95/RPR/2022, pertains to the assessee "Shree Krishna Colonisers", as the lead case, result of which shall mutatis mutandis apply in the case of ITA No. 96/RPR/2022. 3. The Grounds of Appeal raised by the assessee in ITA No. 95/RPR/2022 are extracted the same as under: 1. In the facts, circumstances and material on all records relating to the assessment proceedings under the Income tax Act, 1961, the order u/s 143(3) dated 30/12/2019 is not erroneous in so far as it is prejudicial to the interests of the revenue. 2. In the facts, circumstances and material on all records relating to the assessment proceedings under the Income tax Act, 1961, the learned PCIT has erred to hold that in the order u/s 263 dated 25/03/2022, difference in column no. 7 in para no.2 which reckons to Rs. 2,80,08,200/-, is actual expenditure incurred by the assessee, as per section 69C or is unexplained expenditure incurred by the Assessee. 3. In the facts, circumstances, and material on all records relating to the assessment proceedings, the A.O. had passed the order u/s 143(3) dated 30/12/2019 after taking into acc....
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.... in statement dated 30.01.2017 Mr. Taparia has accepted a surrendered amount of Rs. 28,37,645/- in the hands of M/s Krishan Colonisers. Subsequently, the assessee has retracted from the above statement and has submitted that the entries found in the loose papers have been entered in the respective books of account and submitted that the ledger account in respect of entries made. The retraction of the assessee was considered as change of opinion to evade tax and penalty proceedings; therefore, the AO has added the amount of Rs. 28,37,645/- to the income declared by the assessee and has culminated the assessment. While finalizing the assessment order Ld. AO recorded that the assessee has raised certain observations regarding valuation of Work in Progress (WIP), which has been kept on record. A reference u/s 142A(1) of the Act has been made vide later dated 29.12.2019 to the valuation officer, Income Tax Department, Bhopal for elucidation of valuation of immovable property for assessment, with a request to submit the report in 45 days. The issue pertaining to discrepancies found in WIP in respect of the assessee was kept in abeyance to be decided after the receipt of the record of the....
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....t of WIP as per books of accounts Rs. Value estimated by registered valuer Mr. Pilliwar Rs. Krishna Grand Cit , Bhilai 4,23,67,000/- 8,76,47,000/- Krishna Cit , Bhatapara 4,71,41,000/- 6,21,41,000/- Krishna Apartment, Baloda Bazar 1 ,46,19,000 20,65,000/- Total 10,41,27,000/- 15,18,53,000/- Copy of valuer's report is at page no. 42 to 54, 82 to 92 and 123 to 127 of PB. 2. During assessment proceedings, assessee objected to valuation done by the Department's valuer Shri Manish Pilliwar. The assessment order came to be passed on 30.12.2019. However, in view of objection raised by assessee, the AO made reference u/s 142A(l) to DVO on 29.12.2019 i.e., just one day prior to passing of the assessment order. The AO completed assessment u/s 143(3) accepting the value of WIP as per books, subject to a note that the issue of difference in WIP would be decided after receipt of the DVO's report. 3. DVO submitted his report dt. 21.12.2020 (Krishna Grand City), 1 1 .01 .2021 (Krishna City) & 21.01.2021 (Krishna Apartment) as per which the valuation came as under: - Project Name WIP as per books as on 27.01.2017 Value estimated by DVO (Rs.) Difference (IRS.) ....
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....ties 2009 Chapter 9 (Coordination with Assessing Officer), point (v) of guidelines states that report of DVO is not binding and therefore, the affected person should be confronted with it before same is utilized against him. It also states that AO should allow reasonable opportunity of being heard to such person and consider all his objection, against the valuation report in accordance with law. Pratap Vitthal Bandal vs UOI (2020) 116 taxmann.com 919 (Bom.), on sec. 142A (7). -CIT vs Naveen Gera (2010) 328 ITR 516 (Del) ii) After allowing assessee opportunity in terms of sec. 142A(7), AO to take into consideration various objections that may be raised in respect of DVO's report. Unless objections of assessee are considered and decided upon, no action can be taken in the matter of assessment. Therefore, whether any addition is required or not, can be concluded only after deciding upon the objections of assessee. iii) DVO's report is not final. Unless objections of assessee were invited in terms of sec. 142A (7) & decided by AO/ Id. Pr. CIT/ DVO, no decision could be arrived at as to whether any addition was required which not having been made, resulted into prejudi....
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....duced by DVO) while total cost debited in books of assessee is Rs. 31,04,91,251/- . No excess expenditure. ii) Differences requiring further reduction in valuation of "Krishna Grand City, Bhilai: . 7. Regarding difference in valuation of "Krishna Apartment, Balodabazar" Differences explained in letter dated 26.07.2021 filed before AO & DVO, at PN 182 to 192 of PB. i) Deduction on account of architectural & design work, Rs. 9,69,800/-, PN 183 of PB, para no. 1. ii) Deduction on account of "other development works, Rs. 3,31,594/-, PN 183 of PB, para no. 2 (below). iii) Deduction on account of tubewell cost, Rs. 1,30,330/-, PN 183 of PB, para no. 3 (below). iv) Deduction on account of lifting charges, Rs. 4,20,504/-, PN 184 of PB, para no. 4. v) Deduction on account of different items, Rs. 8,13,900/-, PN 184 of PB, para no. 5. vi) Deduction on account of flooring cost, Rs. 8,55,712/-, PN 184 & 195 of PB, para no. 6 & 4 respectively. Submission reiterated vide letter dt. 08.02.2022 & ()8.03.2022 filed before Pr. CIT (PN 9 to 16 & 27 to 33 of PB respectively), relevant explanation on PN 15 (top portion) & 30 of PB. 8. Regarding difference in valuation of "Krishn....
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.... as prejudicial to the nature of revenue was not established. Ld. AR placed his reliance in this respect from the following judgment. Metacaps Engineering & Mahendra Construction Co. (JV) vs CIT in ITA no. 2895/Mum/2014 dated 11.09.2017, relevant findings at para no. 13 & 14 of order: 13. However, we find that the CIT without pointing out any infirmity in the reply/explanations of the assessee, and as to why the same could not be accepted had rather hushed through the matter and concluded that the assessment order passed by the AO. was found to be erroneous and prejudicial to the interest of the revenue. 14. We are of the considered view that it is obligatory on the part of the CIT to consider the reply of the assessee in respect of the issues on which the order of the A.O. is sought to be revised by him. We are of the considered view that the CIT after receiving the reply/objections of the assessee in respect of the issues on which the order of the A.O. is sought to be revised, in all fairness, is required to deliberate on the same, and thereafter on the basis of the logical reasoning conclude as to whether in the backdrop of the reply/ explanations of the assessee can the o....
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....ame merits to be upheld. 12. We have considered the rival contentions, perused the material available on record in his case laws raised before us for our consideration. In the present case the controversy raised by the assessee was w.r.t. initiation of revisionary proceedings u/s 263 based on the DVO's report called for under the provisions of section 142A(1) by the Ld. AO, which was received after the culmination of the assessment. In this respect, the assessee has contended that DVO's report is not binding on AO to be followed to support this contentions reliance was placed on order of the coordinated bench of ITAT, Cochin wherein in ITA No.66/Coch/2017 for the AY 2002-2003 vide order dated 13.03.2019, it was the observation of bench that "The AO had stated that the DVO's report is binding on him, this statement of AO is incorrect. The report of DVO's is only an advisory in the nature and not binding on the AO." Ld. AR further submitted that as per section 142A (7), the AO may consider the DVO's report in making assessment, but only after giving assessee an opportunity of being heard. No such opportunity during the assessment proceedings were provided to the assessee, however, a....
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....cts of the case are that the Ld PCIT has not dealt with the objections raised by the assessee regarding anomalies in the report of the DVO, which was the sole basis for invoking and initiating the proceedings u/s 263. Moreover as per subsection (4) of section 142A, it was incumbent upon the valuation officed to "The Valuation Officer shall, estimate the value of the asset, property or investment after taking into account such evidence as the assessee may produce and any other evidence in his possession gathered, after giving an opportunity of being heard to the assessee., apparently no such opportunity was provided to the assessee. Further as per sub section (6) of section 142A "The Valuation Officer shall send a copy of the report of the estimate made under sub-section (4) or sub-section (5), as the case may be, to the Assessing Officer and the assessee, within a period of six months from the end of the month in which a reference is made under sub-section (1)", in present case the report of the DVO was send to department way beyond the stipulated time period which shows complete violation of provisions of section 142A. Under such circumstances the report of DVO barred by limitatio....
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.... under the Act. When it is mandatory for an officer to follow the timeline prescribed under the Act, such delay cannot be condoned. Therefore, we agree with the contentions of the learned Counsel for the assessee that the report of the Valuation Officer has to be filed within the time given u/s 142A(vi) of the Act and therefore, the assessment order passed on the basis of such report of Valuation Officer beyond the time limit is not sustainable. Therefore, we allow the assessee's appeal and the assessment order is set aside. 15. The interpretations in the order of ITAT Hyderabad in the case of Shri Zulfi Ravdjee (supra) is based on principle of law laid down by Hon'ble Delhi Highcourt in the case of B.K. Khanna & Co. vs Union Of India And Others on 14 September, 1984 reported in 156 ITR 796, wherein Hon'ble Highcourt has categorically interpreted the seriousness of word 'Shall' placed in the sections and provisions of the Act and the significance and prerequisite of its mandatory compliance. Non adherence to such strict mandatory provision thus entails the proceedings illegal and the outcome as not est. 16. The issue regarding valuation report without adhering to prerequisite....
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.... the valuation became incompetent. Applying the said principles to the facts of the present case, it was argued on behalf of the petitioner that a valuation reference, even if validly made, lost its utility and should not be allowed to continue and is liable to be quashed. On behalf of the respondents, Mr. Balai Pal appearing with Mr. Rupen Mitra contended that the cases cited on behalf of the petitioner were distinguishable on facts inasmuch as all those cases referred to valuation after completion of the assessment and, as such, can have no application to the facts of the present case. In fact, it was repeated that the ITO was compelled to complete the assessment to avoid the same getting time-barred. 6. Reliance was also placed on the decision in the case of Satyendra Chunder Ghosh v. WTO , where it was held by B.C. Basak J. that in the case of a completed assessment, which was not reopened, the WTO was not entitled to make a reference under Section 16A of the W.T. Act. It has been urged that although the aforesaid case was distinguishable on facts, yet the principle laid down 'therein applies on all fours to the facts of the present case inasmuch as during the pendency of....