TaxTMI 
TaxTMI 
2025 (11) TMI 747
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....t any basis in making the subject additions on the basis of a faulty valuation report. 3. The Ld. CIT (Appeals) has sustained the subject additions based on imaginary installation charges, which is unjustified. 4. An offer letter is always issued on the basis of estimations w.r.t. to the quantity and specifications of the items required, and the Purchase Invoice is issued on the basis of actual items sold. It is very normal that both the documents may have some variations because of the requirement assessed correctly at the time of installation, commissioning, etc. Rejection of such a document is highly unjustified. 5. The Ld. CIT (Appeals) has sustained the subject additions based on the installation charges that were not part of the Departmental Valuation Report in the first place and are a pure figment of imagination, which is highly unjustified. 6. There can be no inference with regard to having undisclosed investments u/s 69B merely with reference to the opinion of the Valuation Officer in absence of any evidence regarding such additional outlay, as per the judgement given by various Hon'ble Courts, and therefore the subject addition is ....
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....ed. 7. Whether in the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition amounting to Rs. 76,92,927/-, on account of addition u/s 69B in respect of cost of cold storage machinery installed during the year. 8. Whether in the facts and circumstances of the case, the Ld. CIT(A) has erred in ignoring that the valuation has been done on a particular date considering the bills/vouchers and value decided by DVO is irrespective of assets capitalization in different FYs. 9. The order of the CIT(A) is erroneous and is not tenable on facts and in law. 10. The grounds of appeal are without prejudice to each other. 11. The appellant craves to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." 4. Briefly stated, the facts of the case are that the assessee is engaged in the business of trading in Spices & Kiryana items during the year under consideration. The assessee filed its Return of Income on 30.11.2014 declaring an income of (-) Rs. 11,94,75,549/-. Return was selected for scrutiny assessment through CASS and accordingly, statuto....
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....vehemently argued that the 1st Valuation report had many inconsistency which rebutted by the Assessee and confronted to the DVO, resulted in an admission by the DVO that his valuation could need revision. The ld. counsel for the assessee further submitted that the DVO has also made reference to the value as per Income tax Rules. When the assessee gets construction done, or purchases machinery, the cost thereof is as per market forces, and not Income tax Rules. To seek to match the same is a technical exercise at best. 10. Even otherwise, the ld. counsel for the assessee continued by saying that on a comparison of the two sets of reports, once the errors of the DVO are taken aside, all that remains is a difference of opinion on the value of identical construction and machinery. It is the say of the ld AR that on a perusal of the two sets of reports, it may be seen that both quantitatively tally as to the quantum of machinery deployed. 11. The ld AR of the Assessee pointed out only three out of several basic errors in the DVO report: * Item at Serial No.16 of the Building Report (Page 18) values 'PUF Panel & PUF Slat at Rs. 1.44 crores. This is actually not part of....
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.... that the ld. CIT(A) at Paras 7 and 8 pages 62 to 68 of his order has dealt with the issues as under: "7. Ground nos.1 to 9: In these grounds, the appellant has challenged the addition made by the AO on account of unexplained investment of Rs. 11,12,94,857/-u/s 69B which was computed on the basis of reports of Departmental Valuation Officer (DVO). The computation of unexplained investment as adopted by the AO u/s 69B of the Act is reproduced as under: Particulars Declared by the assessee (Rs) Estimate Valuation Cell (Rs) Difference Cold Building/ structure storage 5,39,90,0 00/- 15,27,53,400/- Rs 9,87,63,400/- Cold Storage Machinery 2,17,54,5457/- 3,42,86,002/- Rs 1,25,31,457/- Total 7,57,44,545/- 18,70,39,402/- Rs.11,12,94,857/- 7.1 The AO has observed in the assessment order that the case was selected for limited scrutiny under CASS and it was noted in the computation of income that the assessee has claimed deduction u/s 35AD. References to District Valuation Officer (DVO), Jaipur and Valuation Officer (P&M), (VO) Income Tax Department, Delhi was made during the assessment proceedings by the AO for Valuati....
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....nting. For eg. The "Metallic swing/ hinged doors" at Sl. No.6 on Page 18 of the subject valuation report for Rs. 15,94,260/- are part of plant and machinery and included in the plant and machinery valuation report too a liem No.5 in Annexure 2(A). The same is true for Item No. 16 on Page 18 of the subject valuation report "PUF panels & PUF slab" for Rs. 1,44,40,730/ - which has not been part of the buildings and was also included in the plant and machinery valuation report too Sl No. 1, 2 and 3 in Annexure 2(A). c. Major areas of construction have not been taken as per the actual measurements and there were significant mistakes. d. While the Ld. Valuation Officer was to value only the cold storage building, two additional buildings were also included in the subject valuation report as Block A (Front Part) and Block B (Rear Part), valued at a total of Rs. 7,51,45,589/-, thus inflated the value." The appellant submitted that there were gross mistakes in the original valuation report which were apparent on its face. Therefore, this report was not reliable the revised valuation report was prepared by the same office in which these mistakes were remov....
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.... for landors 9:7 The Cold Storage Building Block B was having very inferior specification from a normal public school building as per PAll Therefore plinth area rate for normal school building is being considered anth suitable adjustment factors as per site condition and architecture. 9.8 Measurements were rechecked during revnspectioncon. dated 04.12 2019 and found same as per previous report. Accordingly this "Revised Valuation Report has been prepared. 9.9 it would be appreciated that the report of this office has been prepared in a fair & transparent manner & is a speaking report and the assessee has not pointed out any other deficiency in the previous report of this office & therefore no further comments are offered regarding assessee submission 10 VALUATION 10 Having considered the documents furnished by the Assessing Officer and the assessee and having taken into consideration all relevant materials gathered, 1 estimate the cost of investment in construction of building structure as follows: XXXX 7.4 The AO has not mentioned in his assessment order why the revised report of the DVO was not acceptable to him. The ....
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....purchased / capitalized during the later years amounting to Rs. 76,92,927/- were unjustifiably included in the report whereas the report was issued for and up to FY. 2013- 14 only. The appellant submitted that it had purchased 4 chambers of air conditioning for a total value of Rs. 2,94,47,472/- which was capitalized as under: Date of capitalization Amount 01.01.2014 Rs.72,51,515/- 01.02.2014 Rs. 72,51,515/- 01.03.2014 Rs. 72,51,515/- 30.06.2014 Rs.76,92,927/- Total Rs.2,94,47,472/- 8.1 The appellant further submitted that against the above purchases an amount of Rs. 2,17,54,545/- was capitalized during the year under appeal and the balance amount of Rs. 72,51,515/- was kept under work in progress and was capitalized during the subsequent year with further addition of Rs. 4,41,412/. On perusal of valuation report and the balance sheet of the appellant, it is noted that the valuation officer has also incorporated plant and machinery in his valuation report which were capitalized by the appellant in subsequent year. It is also noted that the invoices in respect of machinery worth Rs. 72,51,515/ were though raised during the year under cons....