TaxTMI 
TaxTMI 
1995 (6) TMI 42
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....ion of the twin theatres started in November, 1977 and it was completed somewhere in the middle of March, 1982. In the return filed, the cost of construction shown was Rs. 21.31 lakhs. The Assessing Officer did not accept this valuation. He made a reference to the Departmental Valuation Officer (DVO) whose report was received. He had estimated the cost at Rs. 35.48 lakhs as on 19th Oct., 1984, the day of his inspection. The assessee had maintained books of account in regard to construction. 4. The assessee had objected to the report of the DVO. The assessee also had furnished to the Assessing Officer the report of an approved valuer according to which the cost was Rs. 21,36,110. The Assessing Officer accepted the DVO's valuation. On the ....
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....bove the declared figure and the same was apportioned as done earlier. 7. Noticing a mistake the primary authority rectified the order on 23rd March, 1989 and he adopted a figure of Rs. 9 lakhs in place of Rs. 16 lakhs. 8. The assessee had again appealed from the order of the Assessing Officer. The CIT(A) called for a remand report from the Assessing Officer. In the meanwhile another thing had happened. 9. As mentioned earlier, the assessee had challenged the report of the DVO. There were specific attacks not only with regard to few items of work, rate, but also the area of construction. The DVO made a rectification on 10th Aug., 1989 and by that, he held that the cost of construction was Rs. 27.71 lakhs. The reason was this. The D....
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....ade by the registered valuer and this itself shows that the books of account could not be relied upon. According to him, this justifies estimation and the report of the DVO should, therefore, be accepted. It was also his submission that the assessee had not produced the books of account before the DVO as there was a dispute not only with regard to rates but also with regard to area of construction. 14. In reply, Sri Kishore Mallya stated that the remand report dt. 11th Dec., 1991 given by the Assessing Officer to the CIT(A) would furnish a complete answer to all the points raised on behalf of the Revenue in this appeal. 15. After a careful examination of the record we are convinced that the first appellate authority had not applied hi....
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....uction and that the accounts were kept only in connection with expenditure incurred for construction work. 17. The assessment order does not show that the Assessing Officer had found loopholes in the accounts. There is no mention that the accounts were being rejected to justify estimation. This is one aspect. The remand report sent by the Assessing Officer is on record. The three points which he considered according to the direction given by the CIT(A), in his order dt. 9th Sept., 1990, were: "(i) That the quantity of the materials purchased was not lesser than the quantity required for the construction; (ii) All the materials used in the construction have been accounted for; (iii) The quality and the quantity of the materials u....
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....extent of construction and fix up the cost taking reasonable rates. Majority of the work had been got done through contractors and this fact was before the DVO when he rectified his report on 23rd March, 1989. 21. In this case too much dependence on the report of the DVO would also be not proper. He had committed a great blunder valuing the theatres as if the auditoriums were of RCC construction. On being objected to, he could open his eyes and find that GI sheets and steel stresses had been used for roofing. That is the reason for bringing down the estimation from Rs. 38.41 lakhs to Rs. 27.71 lakhs. 22. Another point raised was in regard to parking space. It was submitted at the Bar that a common parking place was planned since they ....
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....CIT vs. Pratapsingh Amrosingh Rajendra Singh & Deepak Kumar (1993) 200 ITR 788 (Raj). It is pointed out that when proper books are maintained by an assessee, reference to valuation cell is not valid when accounts are not rejected. It is held that addition could not be made on the basis of the report of the valuation officer. The principle laid down in those two authorities is squarely applicable to the facts of the appeal before us. 26. We may also make reference to few decisions of the Tribunal which were cited on behalf of the assessee. Relevant of them are : the decision of the Madras Bench of the Tribunal in the case of K. Hari Rao vs. Second ITO (1979) 8 TTJ (Mad) 15; the decision of the Ahmedabad Bench of the Tribunal in the case o....