TaxTMI 
TaxTMI 
2024 (7) TMI 567
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....ingly we are disposing off the issues raised 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. ....
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....e has surrendered an amount of Rs. 6,62,66,000/- as undisclosed income in this head. Further, 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 resp....
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....ent, Baloda Bazar". Details of cost debited in books and the estimate of valuer are as under: - Project Name Cost 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....
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.... given to AO, DVO's report is not binding on him. It was held in ACIT vs Mfar Hotels & Resorts (P.) Ltd. in ITA no. 66 & 67/Coch/2017 dated 13.03.2019, (para no. 7.6), that DVO's report is not binding on AO. Guidelines for Valuation of Immovable Properties 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 conclud....
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....nor did he give any reason as to why such mistakes do not require consideration. (iv) Assessment order neither proved to be erroneous nor prejudice to Revenue established by Id. Pr. CIT. Revision order illegal. 6. Regarding difference in valuation of "Krishna Grand City, Bhilai" (Rs.2,04,78,900/-) i) Department's valuer Mr. Manish Pilliwar valued entire project (including sold part) at Rs. 30,61,89,900/- (as reduced 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 ....
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....e assessee on the report of the DVO before he can act upon the same. (ii) CIT vs Naveen Gera (2010) 328 ITR 516 (Del) 10. It was the further submitted by the Ld. AR that the assessee has raised of the objections against the report of the DVO's, which were raised before the AO after completion of the assessment when the report of the DVO's was confronted to the assessee, objections were raised before the Ld. PCIT also but Ld. PCIT who was bound to decide upon and dispose off such objections has refrained to do so, therefore, the conclusion that the order of Ld. AO was erroneous as well 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 th....
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....se. 11. Ld. CIT DR on the other hand has vehemently supported the order of Ld. PCIT u/s 263 and submitted that the AO has passed the order without considering the report of DVO, therefore, the same is undoubtedly an erroneous order and the differential valuation in the books of valuation of DVO itself justifies that the order of AO was prejudicial to the interest of revenue, thus the prompting of provision of section 263 to initiate the revisionary proceedings against the assessee was justified and correct course of action adopted by the Ld. PCIT. The order of Ld. PCIT, thus, is justified on facts as well as in terms of provisions of law, hence, the same 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 ....
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....et, property or investment to the best of his judgment, if the assessee does not co-operate or comply with his directions. (6) 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). (7) The Assessing Officer may, on receipt of the report from the Valuation Officer, and after giving the assessee an opportunity of being heard, take into account such report in making the assessment or reassessment. 13. In backdrop of aforesaid observations, certain admitted facts 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 evid....
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....various provisions of same sections, then both of them contain different meaning and the word "shall" shall mean "mandatory". As argued by the learned Counsel for the assessee, the AO was required to call for a report from the valuation officer within six months from the date of the reference and the valuation officer was bound to give such a report with such prescribed period. Further, as seen from the assessment order, the AO had directed the valuation officer to give the valuation of the property as on 8.2.2010, whereas the valuation officer has given the report as on the date of the execution of the sale deed. Therefore, the DVO has clearly not followed the directions of the AO and also not followed the timeline fixed 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....
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....eport to avoid the bar of limitation. In the facts and circumstances of the case, it is, however, found that sufficient time was still left for the Department to take steps to get the valuation report and to complete the proceedings within the statutory time-limit but failure of the Department to take necessary steps cannot be rewarded with a premium at the cost of the assessee. Lastly, reliance was placed in the case of Uma Debi Jhawar v. WTO , where M.N. Roy J. held in a proceeding for making assessment if pending, a reference to the Valuation Officer could be made. The reasons given in the said decision make it amply clear that where the assessment is completed and proceeding for reopening of such assessment was not in existence, 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 thos....
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.... completed in the meantime. In such circumstances, to allow the assailed valuation proceeding to continue, would militate against well-known canons of strict construction of taxing statutes. 8. The Rule is, therefore, made absolute and the impugned proceedings is quashed by a writ of certiorari. Let a writ of mandamus also issue directing the respondents to forbear from proceeding any further with, or making any valuation under or pursuant to, the impugned reference. There will be, however, no order as to costs. 17. In terms of aforesaid guiding principle led by the Hon'ble High Courts referred to supra and respectfully following the decision of ITAT Hyderabad in the case of Zulfi Revdjee (supra), in absence of any contrary information or decision by the revenue to counter these observations, we have no hesitation to concur with the contentions raised by the Ld AR that the non- disposal of the objections of the assessee on DVO's report by the Ld PCIT in revisionary proceedings against the principle of natural justice, though set aside to AO for opportunity to assessee, however the report of DVO was prepared, completed and furnished by the DVO to the department beyond th....