DCIT, V. Parmarth Iron Pvt. LTd,

ITA 2370/DEL/2008

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6561 (ITAT-DELHI)
• Duration Of Justice: 10 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 18-07-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 20-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: DR RAKESH GUPTA; SOMIL AGGARWAL S
• Keywords: Unexplained investment; Question of law; Fair market value; Valuation report; Competent authority
• Section: 205; 131; 68; 144; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NOS.2370 & 3211/DEL/2008 ASSESSMENT YEAR : 2004-05 DCIT, NAJIBABAD, DISTT. BIJNOR (UP). VS. M/S PARMARTH IRON PVT. LTD., NAI BASTI, BIJNOR. PAN: AADCP1049C ITA NO.1992/DEL/2008 ASSESSMENT YEAR : 2004-05 M/S PARMARTH IRON PVT. LTD., C/O M/S CORPORATE PROFESSIONAL, D-28, SOUTH EXTENSION, PART I, NEW DELHI 110 049. PAN: AADCP1049C VS. DCIT, NAJIBABAD, DISTT. BIJNOR (UP). (APPELLANT) (RESPONDENT) ASSESSEE BY : DR. RAKESH GUPTA, & SHRI SOMIL AGGARWAL, ADVOCATES REVENUE BY : SHRI SURENDER PAL, SR. DR DATE OF HEARING : 13.02.2019 DATE OF PRONOUNCEMENT: 21.02.2019 ORDER PER R.K. PANDA, AM: ITA NOS.1992/DEL/2008 AND 2370/DEL/2008 ARE CROSS A PPEALS. THE FIRST ONE IS FILED BY THE ASSESSEE AND THE SECOND ONE IS FILED B Y THE REVENUE AND ARE DIRECTED AGAINST THE ORDER DATED 24 TH MARCH, 2008 OF THE CIT(A) BAREILLY FOR ASSESSMENT YEAR 2004-05. ITA NOS.2370, 3211 & 1992/DEL/2008 2 2. ITA NO.3211/DEL/2008 FILED BY THE REVENUE IS DIR ECTED AGAINST THE ORDER DATED 16 TH JULY, 2008 PASSED U/S 154/250 OF THE CIT(A), BAREI LLY FOR ASSESSMENT YEAR 2004- 05. FOR THE SAKE OF CONVENIENCE, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLIN G OF MS BAR, COMMISSION AND PLYING OF TRUCK. IT FILED ITS RETURN OF INCOME ON 0 1.11.2004 DECLARING A LOSS OF RS.57,73,025/-. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THE ASSESSING OFFICER ASKED VARIOUS DETAILS AS PER PAGE 2 AND 3 OF THE AS SESSMENT ORDER. THE ASSESSEE FILED THE WRITTEN REPLY ON 13 TH FEBRUARY, 2006. THE ASSESSEE ALSO PRODUCED THE B OOKS OF ACCOUNT WHICH WERE EXAMINED BY THE ASSESSING OFFICE R. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSER VED THAT IT HAS STARTED PRODUCTION W.E.F. 4 TH FEBRUARY, 2004 ONLY. FURTHER, THE ASSESSEE COMPAN Y HAS DISCLOSED TOTAL INVESTMENT IN FACTORY BUILDING DURING THE YEAR AT R S.1,81,08,728/- AND, IN SUPPORT OF THE SAME, NO VALUATION REPORT OR DETAILED BUILDING ACCOUNT WAS FILED. THEREFORE, THE ASSESSING OFFICER DEEMED IT PROPER TO MAKE A REFERE NCE U/S 142A OF THE IT ACT, 1961 TO THE VALUATION OFFICER OF THE DEPARTMENT TO WORK OUT COST OF CONSTRUCTION OF THE FACTORY BUILDING. THE DVO DETERMINED COST OF THE F ACTORY BUILDING AT RS.5,64,07,000/- AS AGAINST THE COST OF CONSTRUCTIO N OF RS.1,81,08,729/-. HE FURTHER NOTED THAT THE VALUE DECLARED BY THE ASSESSEE AS CO ST OF CONSTRUCTION INCLUDES DEVELOPMENT EXPENSES OF RS.18,81,388/- WHICH IS NOT CONSTRUCTION COST. THEREFORE, ITA NOS.2370, 3211 & 1992/DEL/2008 3 THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE A MOUNTS TO RS.1,62,27,341/-. THE ASSESSING OFFICER, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN THE DIFFERENCE IN THE COST OF CONSTRUCTION AT RS.4,01,79,659/- (I.E., RS.5,64,07, 000/- (-) RS.1,62,27,341/-). THE ASSESSEE FILED DETAILED REPLY AND OBJECTED TO THE V ALUATION MADE BY THE DVO. HOWEVER, THE ASSESSING OFFICER REJECTED THE OBJECTI ONS RAISED BY THE ASSESSEE AND ADDED THE AMOUNT OF RS.4,01,79,659/- TO THE TOTAL I NCOME OF THE ASSESSEE AS UNEXPLAINED INVESTMENT. 4. THE ASSESSING OFFICER FURTHER NOTICED THAT THE A SSESSEE RECEIVED SHARE APPLICATION MONEY OF RS.20 LAKHS FROM THREE PERSONS , NAMELY, NEPOSTEL (INDIA) (P) LTD.- RS.10 LAKHS, RIA MARKETING SERVICES (P) LTD. RS.5 LAKHS, AND INVISH FINVEST (P) LTD. RS.5 LAKHS. ON BEING ASKED BY THE ASSESSING OFFICER TO PRODUCE THE ABOVE PARTIES FOR HIS EXAMINATION, IT WAS REPLIED BY THE ASSESSEE THAT THESE PERSONS BEING OF MEANS ARE BUSY IN THEIR SOCIAL AND OFFICIAL ENGAGEM ENTS CANNOT BE PRODUCED TODAY I.E., THE DATE GIVEN BY THE ASSESSING OFFICER. HOWEVER, IT WAS REQUESTED THAT THE GENUINENESS MAY BE VERIFIED FROM HIS END BY ISSUING NOTICES TO THEM OR BY OBTAINING CONFIRMATIONS FROM THEM. THE ASSESSING OFFICER, TH EREFORE, ISSUED SUMMONS U/S 131 OF THE ACT TO THE ABOVE THREE PERSONS ON 16.11.2006 . THE LETTER ADDRESSED TO RIA MARKETING SERVICES PVT. LTD. WAS RETURNED BACK BY T HE POSTAL AUTHORITIES WITH THE REMARKS BANDH PADA HAI. THE OTHER TWO PERSONS NEI THER ATTENDED IN PERSON NOR SENT ANY REPLY AND THE ENVELOPS WERE NOT RECEIVED B ACK. THEREFORE, THE ASSESSING OFFICER ASSUMED THAT THESE HAVE BEEN DELIVERED TO T HE PERSONS ADDRESSED TO IN ABSENCE ITA NOS.2370, 3211 & 1992/DEL/2008 4 OF ANY COMPLIANCE FROM THE ABOVE PARTIES AND OBSERV ING THAT THE ASSESSEE COULD NOT DISCHARGE THE ONUS CAST ON HIM BY PROVING THE IDENT ITY AND CREDITWORTHINESS OF THE SHARE APPLICANTS AND GENUINENESS OF THE TRANSACTION S, THE ASSESSING OFFICER, INVOKING THE PROVISIONS OF SECTION 68, MADE ADDITION OF RS.2 0 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE. 5. IN APPEAL, THE LD.CIT(A) GAVE PART RELIEF TO THE ASSESSEE. SO FAR AS THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE FACTORY BUILDING IS CONCERNED HE SUSTAINED ONLY AN AMOUNT OF RS.1,18,54,248/- AND DELETED THE BALANCE AMOUNT. SO FAR AS THE ADDITION U/S 68 IS CONCERNED, THE LD.CIT(A) CONFIRM ED THE ADDITION MADE BY THE ASSESSING OFFICER. 6. AGGRIEVED WITH SUCH PART RELIEF GIVEN BY THE CIT (A), THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE THE TRIBUNAL BY RAISIN G THE FOLLOWING GROUNDS:- ITA NO.2370/DEL/2008 1. THAT THE LD.CIT(A) HAS ERRED IN LAW AND FACTS O F THE CASE IN DELETING THE ADDITION OF RS.2,83,25,411/- ON THE GROUND THAT VALUATION OFFICER INSPECTED THE BUILDING ON 21.08.2006 AND REPORT WAS GIVEN AS ON 03.03.04 WHILE SOME CONSTRUCTION WAS ALSO MADE BETWEEN 01.04 .2004 TO 21.08.2006. THE ASSESSING OFFICER HAS MADE ADDITION OF RS.4,01, 79,6591/- AFTER CONSIDERING THE REPORT OF THE VALUATION OFFICER. H ENCE ORDER OF ASSESSING OFFICER MAY BE RESTORED. 2. THE ASSESSING OFFICER HAS MADE ADDITION TO THE T UNE OF RS.20,00,000/- AS SHARE APPLICATION MONEY IN THE TH REE SHARE HOLDERS AFTER GIVING PROPER OPPORTUNITY TO THE ASSESSEE CO. AS UN EXPLAINED SHARE APPLICATION MONEY. THE LD.CIT(A) HAS DELETED THE A DDITION IN VIEW OF FACT THAT THE IDENTITY, GENUINENESS AND CREDIT WORTHINES S OF THE PARTIES HAVE BEEN ESTABLISHED. HENCE THE LD.CIT(A) HAS ERRED IN LAW AND FACTS OF THE CASE IN DELETING THE ADDITION. ITA NOS.2370, 3211 & 1992/DEL/2008 5 ITA NO.1992/DEL/2008 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT DELETING I N FULL THE ADDITION M ADE BY LD. AO OF RS.4,01,79,659/- ON ACCOUNT OF ALLEGED UNEXPL AINED INVESTMENT IN THE FACTORY BUILDING THAT TOO WITHOUT ANY BASIS, MATERI AL OR EVIDENCES AND HAS FURTHER ERRED IN SUSTAINING THE ADDITION OF RS.1,18,54,248/ - ON THIS ACCOUNT. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT DELETING I N FULL THE ADDITION MADE BY LD. AO OF RS.4,01,79,659/- ON THE GROUND THAT LD. AO HA S ERRED IN LAW AND ON FACTS IN MAKING A REFERENCE TO LD. DVO U/S 142A THAT TOO WITHOUT POINTING OUT ANY DEFECTS IN THE BOOKS OF ACCOUNT AND WITHOUT REJECTI NG THE BOOKS OF ACCOUNT AND HAS FURTHER ERRED IN RELYING UPON THE REPORT FU RNISHED BY THE LD. DVO AND IN ANY CASE VALUATION REPORT SUPPLIED BY THE VA LUATION OFFICER BEING BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT REVERSING THE ACTION OF LD. AO IN REJECTING THE BOOKS OF ACCOUNTS U/S 145(3) THAT TOO WITHOUT ANY BASIS, MATERIAL OR EVIDENCES. 4. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER ACTI ON OF LD. CIT(A) IN NOT QUASHING THE ASSESSMENT ORDER FRAMED BY LD. AO U/S 144 THAT TOO WITHOUT ANY BASIS, MATERIAL OR EVIDENCES. 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN RECORDING A CO NTRADICTORY FINDING THAT THE BOOKS OF ACCOUNTS COULD NOT BE PRODUCED COMPLETELY AS PER THE REQUIREMENTS OF LD. AO AND SOME BOOKS OF ACCOUNTS WERE PRODUCED BUT THEY WERE NOT COMPLETE IN ALL RESPECT AND THAT TOO WITHOUT POINTING OUT IN WHAT MANNER BOOKS WERE NOT COMPLETE IN ALL RESPECT AND WHAT WERE THOSE RECORDS WHICH COULD NOT BE PRODUCED WHEREAS LD. CIT(A) HAS HIMSELF RECORDED IN THE OTHE R PART OF THE ORDER THAT BOOKS OF ACCOUNTS WERE PRODUCED AND EXAMINED BY LD. AO ON 13-02-2006. 5A THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN GRANTING THE R EBATE OF SELF SUPERVISION @ 7.5% INSTEAD OF 10% AS CLAIMED BY THE ASSESSEE COMP ANY AND HAS FURTHER ERRED IN NOT GRANTING THE APPROPRIATE RELIEF AS SOUGHT BY TH E ASSESSEE IN THIS REGARD. 5B. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN MAKING ARITHME TICAL ERROR IN TOTALING AT PAGE 48 OF THE APPEAL ORDER BY MAKING ADDITION OF RS.4,6 0,856/- BEING THE ESTIMATED COST OF CONSTRUCTION OF RCC ROOF OF THE OIL TANK IN STEAD OF DEDUCTING THE SAME, ITA NOS.2370, 3211 & 1992/DEL/2008 6 THUS LEADING TO DOUBLE ADDITION O1 RS.9,21,712/- AN D HAS FURTHER ERRED IN NOT GRANTING THE APPROPRIATE RELIEF AS SOUGHT BY THE AS SESSEE IN THIS REGARD. 5C THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT GIVING REL IEF ON ACCOUNT OF OVER ESTIMATION OF COST OF CONSTRUCTION OF COMPOUND WALL (BOUNDRY WALL) AND HAS FURTHER ERRED IN NOT GRANTING THE APPROPRIATE RELIE F AS SOUGHT BY THE ASSESSEE IN THIS REGARD. 5D THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT ACCEPTING THE RATES OF CONSTRUCTION OF UNDER GROUND WATER TANK AT RS.0.75 PL AS SHOWN BY T HE REGISTERED VALUER OF THE ASSESSEE COMPANY AND HAS FURTHER ERRED IN ACCEPTING THE RATES GIVEN BY LD. DVO AT RS.3.25 PL THAT TOO WITHOUT AND BASIS, MATERIAL OR EVIDENCES AND HAS FURTHER ERRED IN NOT GRANTING THE APPROPRIATE RELIEF AS SOU GHT BY THE ASSESSEE IN THIS REGARD. 5E THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT ACCEPTING THE QUANTITY OF OIL TANK STRUCTURE AT 136 KL AS SHOWN BY THE REGISTERED VALU ER OF THE ASSESSEE COMPANY IN ITS REPORT ON THE BASIS OF SANCTION OBTAINED OF THE COMPETENT AUTHORITY AND HAS FURTHER ERRED IN ACCEPTING THE SAME AT 1410 KL AS S HOWN BY LD. DVO IN ITS REPORT THAT TOO WITHOUT ANY BASIS, MATERIAL OR EVID ENCES AND HAS FURTHER ERRED IN NOT GRANTING THE APPROPRIATE RELIEF AS SOUGHT BY TH E ASSESSEE IN THIS REGARD. 5F THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT ACCEPTING THE RATES OF CONSTRUCTION OF OIL TANK STRUCTURE @ 2.10 PL AS SHOWN BY THE REGISTERED VALUER IN ITS REPORT AND HAS FURTHER ERRED IN ACCEPTING THE SAME @ 3.25 PL AS SH OWN BY LD. DVO IN ITS REPORT THAT TOO WITHOUT ANY BASIS, MATERIAL OR EVIDENCES A ND HAS FURTHER ERRED IN NOT GRANTING THE APPROPRIATE RELIEF AS SOUGHT BY THE AS SESSEE IN THIS REGARD. 6. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MODIFY, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL THE ABOVE GRO UNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 6.1 THE REVENUE HAS ALSO FILED THE FOLLOWING GROUND S IN ITA NO.3211/DEL/2008 WHEREIN THE CIT(A) HAS GIVEN FURTHER RELIEF TO THE ASSESSEE IN THE 154 PROCEEDINGS:- 1. UNDER THE CIRCUMSTANCES OF THE CASE WHETHER COMMISS IONER OF INCOME TAX (APPEAL), BAREILLY WAS JUSTIFIED IN INVOKING THE PR OVISIONS OF SECTION 154 OF THE I.T ACT-1961 IN RESPECT OF THE FOLLOWING ISSUES WHICH W ERE DULY DECIDED AFTER APPLYING FULL MIND IN HIS ORDER DATED.24/3/2008 : (I) REBATE ON SELF-SUPERVISION. ITA NOS.2370, 3211 & 1992/DEL/2008 7 (II) COST OF CONSTRUCTION OF UNDER GROUND WATER TANK. 2. UNDER THE CIRCUMSTANCES OF THE CASE WHETHER COMMISS IONER OF INCOME TAX (APPEAL), BAREILLY WAS JUSTIFIED IN INVOKING THE PR OVISIONS OF SECTION 154 OF THE I.T. ACT-1961 TO CONSIDER FOLLOWING ISSUES AGAIN AND PRO VIDING RELIEF TO THE ASSESSEE ON ACCOUNT OF: (I) COST OF CONSTRUCTION OF WATER TANK;AND. (II) COST OF CONSTRUCTION OF OIL TANK. 3. UNDER THE CIRCUMSTANCES OF THE CASE WHETHER PASSING OF ORDER U/S 154 IN RESPECT OF ABOVE MENTIONED ISSUES WOULD NOT AMOUNT TO RE-CONSIDERATION OF THE ISSUES ALREADY ADJUDICATED UPON ORIGINALLY? 4. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) BAREILLY HAS ERRED IN LAW AND FACTS IN APPLYING ENHANCED DEDUCTION FOR SE LF SUPERVISION AT THE RATE OF 10% ON THE BASIS OF SOME CPWD CIRCULAR IN SUPPRESSION O F HIS EARLIER FINDINGS OF TAKING 7.5% DEDUCTION AS REASONABLE AFTER CONSIDERING ALL FACTS AND CIRCUMSTANCES IN HIS ORDER DATED 24/3/2008. 5. UNDER THE CIRCUMSTANCES OF THE CASE THE COMMISSIONE R OF INCOME TAX (APPEAL), BAREILLY HAS ERRED IN LAW IN ALLOWING REL IEF TO THE ASSESSEE ON ACCOUNT OF OVER VALUATION OF COMPOUND WALL BY WRONGLY CONSIDER ING THIS ISSUE AGAIN U/S 154 AND ALLOWING RELIEF OF RS. 6,03,022/- TO THE ASSESS EE IN WRONG MANNER. 6. UNDER THE CIRCUMSTANCES OF THE CASE THE COMMISSIONE R OF INCOME TAX (APPEAL), BAREILLY HAS ERRED IN LAW AND ON THE FACT S IN ACCEPTING THE ASSESSEES STATEMENT REGARDING RATE OF CONSTRUCTION OF WATER T ANK BY WRONGLY CONSIDERING THIS ISSUE AGAIN U/S 154 AND DIRECTING THE ASSESSING OFF ICE IN WRONGFUL MANNER TO ADOPT THE RATE OF UNDERGROUND WATER TANK AT 0.75 PL(ADOPT ED BY REGISTERED VALUER OF ASSESSEE) AS AGAINST THE RATE OF 3.25PL (ADOPTED BY DVO IN HIS REPORT) 7. UNDER THE CIRCUMSTANCES OF THE CASE THE COMMISSIONE R OF INCOME TAX (APPEAL BAREILLY HAS ERRED IN LAW AND ON THE FACTS IN ACCEPTING THE RATE OF CONSTRUCTION AND CAPACITY IN RESPECT OF OIL TANK BY WRONGLY CONSIDERING THIS ISSUE AGAIN U/S 154 AND DIRECTING THE ASSESSING OFFICE IN WRONGFUL MANNER TO ADOPT THE MEASUREMENT OF 136KL TAKEN BY THE REGISTERED VALUER INSTEAD OF 1410KL TAKEN BY THE DVO AND AGAIN DIRECTING THE AO IN WRONGFUL MANN ER TO ADOPT THE RATES OF OIL TANK STRUCTURE AT THE RATE OF RS. 2.10 PL(ADOPTED B Y REGISTERED VALUER OF ASSESSEE) AS AGAINST THE RATE OF 3.25PL (ADOPTED BY DVO IN HIS R EPORT). 8. ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL), B AREILLY DATED: - 16- 09-08 MAY BE SET-A-SIDE AND THAT ORDER OF THE ASSES SING OFFICER DATED 26/12/2006 MAY BE RESTORED. ITA NOS.2370, 3211 & 1992/DEL/2008 8 9. ANY OTHER GROUNDS WHICH MAY BE TAKEN DURING THE COU RSE OF APPELLATE PROCEEDINGS. 7. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, AR GUED THE FIRST ISSUE I.E., THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F UNEXPLAINED INVESTMENT IN THE FACTORY BUILDING TOTALING TO RS.4,01,79,659/-. 8. THE LD. COUNSEL FOR THE ASSESSEE, REFERRING TO PAGE 4 OF THE ASSESSMENT ORDER, SUBMITTED THAT THE ASSESSING OFFICER HAS REFERRED T HE MATTER TO THE DVO U/S 142A OF THE ACT VIDE LETTER DATED 5 TH APRIL, 2006. HE SUBMITTED THAT BEFORE REFERRING T HE MATTER TO THE DVO, THE ASSESSING OFFICER HAD NOT REJECTED THE BOOKS OF ACCOUNT AND ONLY AFTER RECEIVING THE VALUATION REPORT FROM THE DVO, HE REJ ECTED THE BOOKS OF ACCOUNT. REFERRING TO PAGE 57 OF THE PAPER BOOK, HE SUBMITTE D THAT THE ASSESSEE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD PRODUCED ALL T HE BOOKS OF ACCOUNT SUCH AS CASH BOOK, LEDGER, JOURNAL, STOCK REGISTER, PURCHASE AND SALES BILLS AND VOUCHERS ETC., WHICH ARE MAINTAINED IN REGULAR COURSE OF BUSINESS. REFE RRING TO PAGE 38 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE REPLY GIV EN BEFORE THE ASSESSING OFFICER WHEREIN IT WAS STATED THAT THE BUILDING HAS BEEN VA LUED BY REGISTERED VALUER AND THE REPORT HAS ALREADY BEEN SUBMITTED. REFERRING TO PA GE 110 TO 113 OF THE PAPER BOOK, HE SUBMITTED THAT THE DVO, VIDE HIS REPORT DATED 20 TH JANUARY, 2006 HAS VALUED THE COST OF CONSTRUCTION OF THE COMPLEX AT RS.1,76,00,000/-. R EFERRING TO THE FOLLOWING DECISIONS INCLUDING THE DECISION OF THE HON'BLE ALLAHABAD HIG H COURT, WHICH IS THE JURISDICTIONAL HIGH COURT, HE SUBMITTED THAT THE ASSESSING AUTHORI TY CANNOT REFER THE MATTER TO THE DVO U/S 142A(1) OF THE IT ACT WITHOUT FIRST REJECTI NG THE BOOKS OF ACCOUNT:- ITA NOS.2370, 3211 & 1992/DEL/2008 9 (I) CIT VS. LUCKNOW PUBLIC EDUCATIONAL SOCIETY (2011) 339 ITR 588 (ALL); (II) CIT VS. SUBHASH CHANDRA GUPTA (2014) 105 DTR 295 ( ALL); (III) CIT & ORS. VS. ASHA CHAURASIA & ORS. (2017) 98 CCH 85 (ALL); (IV) NIRPAL SINGH VS. CIT (2013) 359 ITR 398 (P&H); (V) PR. CIT VS. SANJAY HIRALAL THAKKAR (2016) 97 CCH 1 68 (GUJ); AND (VI) CIT VS. VIJAYKUMAR D. GUPTA (2014) 365 ITR 470 (GUJ ). 9. HE ACCORDINGLY SUBMITTED THAT SINCE THE ASSESSING O FFICER IN THE INSTANT CASE HAS NOT REJECTED THE BOOKS OF ACCOUNT BEFORE REFERRING THE MATTER TO THE DVO, THEREFORE, THE SAME IS NOT IN ACCORDANCE WITH THE LAW. REFERRING TO THE ORDER OF THE CIT(A), THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE FINDINGS GIVEN BY THE CIT(A) WHEREIN HE HAS CATEGORICALLY HELD THAT HE FI NDS MERIT IN THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ACTION OF THE ASSESSING OFFICER IN MAKING REFERENCE TO THE DVO IS NOT IN ACCORDANCE WITH THE LAW. HOWEVER, AT THE SAME TIME, THE LD.CIT(A) DEVIATED FROM HIS FINDING AND UPHELD THE ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAS NOT PRODUCED CO MPLETE BOOKS OF ACCOUNT FOR WHICH THE ASSESSING OFFICER COULD NOT EXAMINE AND DETERMI NE THE DETAILED AND CORRECT COST OF CONSTRUCTION OF THE FACTORY BUILDING. REFERRING TO THE VARIOUS REPLIES GIVEN BY THE ASSESSEE, HE SUBMITTED THAT THE ASSESSEE HAS PRODUC ED ALL THE RELEVANT BOOKS OF ACCOUNT INCLUDING CASH BOOK, LEDGER, BILLS AND VOUCHERS, ET C. AND, THEREFORE, THE FINDING OF THE LD.CIT(A) IS NOT CORRECT. ITA NOS.2370, 3211 & 1992/DEL/2008 10 10. SO FAR AS THE MERIT OF THE CASE IS CONCERNED, THE L D. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AMOUNT SUSTAINED BY THE LD.CIT(A ) IS NOT JUST AND PROPER SINCE HE HAS NOT CONSIDERED THE ARGUMENTS ADVANCED BY THE AS SESSEE AND HAS NOT GRANTED SELF SUPERVISION CHARGES AT 10%. FURTHER, THERE ARE CER TAIN ARITHMETICAL ERRORS IN THE TOTALING AND APPLICATION OF ABNORMAL RATE OF CONSTR UCTION OF UNDERGROUND WATER TANK AND VARIOUS OTHER ITEMS. HE HAS NOT CONSIDERED THE REPORT OF THE REGISTERED VALUER IN THE RIGHT PERSPECTIVE. HE ACCORDINGLY SUBMITTED THA T BOTH LEGALLY AND FACTUALLY, THE ORDER OF THE CIT(A) IS NOT SUSTAINABLE AND, THEREFO RE, THE ADDITIONS MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(A) SHOUL D BE DELETED. SO FAR AS THE RELIEF GRANTED BY THE CIT(A) IS CONCERNED, HE STRONGLY SUP PORTED THE ORDER OF THE CIT(A) TO THIS EXTENT. 11. THE LD. DR, ON THE OTHER HAND, HEAVILY RELIED ON TH E ORDER OF THE CIT(A). HE SUBMITTED THAT THERE IS NO BAR IN REFERRING THE MAT TER TO THE DVO WHEN THE ASSESSING OFFICER IS NOT SATISFIED WITH THE BOOKS OF ACCOUNT MAINTAINED. THERE IS NO ILLEGALITY IN REFERRING THE MATTER TO THE DVO BEFORE REJECTING TH E BOOKS OF ACCOUNT. HE ACCORDINGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND TH E ORDER OF THE CIT(A) TO THE EXTENT HE HAS SUSTAINED THE ADDITION. SO FAR AS THE RELIEF GRANTED BY THE CIT(A) IS CONCERNED, THE LD. DR STRONGLY OBJECTED TO THE SAME AND SUBMIT TED THAT THE LD.CIT(A) WITHOUT APPRECIATING PROPERLY THE REPORT GIVEN BY THE DVO, HAS GRANTED SUBSTANTIAL RELIEF WHICH IS NOT JUST AND PROPER IN THE FACTS AND CIRCU MSTANCES OF THE CASE. HE ACCORDINGLY ITA NOS.2370, 3211 & 1992/DEL/2008 11 SUBMITTED THAT THE GROUNDS RAISED BY THE REVENUE SH OULD BE ALLOWED AND THE GROUNDS RAISED BY THE ASSESSEE BE DISMISSED. 12. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO CONSI DERED THE VARIOUS DECISIONS RELIED ON BY BOTH THE SIDES. WE FIND THE ASSESSING OFFICE R, IN THE INSTANT CASE, HAS MADE ADDITION OF RS.4,01,79,659/- U/S 69 OF THE IT ACT B EING UNEXPLAINED INVESTMENT IN THE FACTORY BUILDING. WE FIND THE LD.CIT(A) SUSTAINED AN AMOUNT OF RS.1,18,54,248/- IN THE FIRST ORDER AND DELETED THE BALANCE AMOUNT. SU BSEQUENTLY, IN THE ORDER PASSED U/S 154, THE LD.CIT(A) GAVE SOME FURTHER RELIEF. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSING OFFICER, WITHOUT RE JECTING THE BOOKS OF ACCOUNT FIRST COULD NOT HAVE REFERRED THE MATTER TO THE DVO U/S 1 42A OF THE IT ACT. WE FIND THE LD.CIT(A) WHILE DELIBERATING ON THIS ISSUE AT PAGE 41 TO 45 OF HIS ORDER HAS OBSERVED AS UNDER:- I HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMISSI ONS MADE BY AR, PERUSED THE ASSESSMENT ORDER AND OTHER MATERIAL ON RECORDS. IT IS OBSERVED THAT THE MAIN OBJECTION OF THE AR IS THAT THE ACTION OF AO T O MAKE A REFERENCE TO THE D.V.O IS NOT IN ACCORDANCE WITH LAW AND THE FACTS O F THE CASE. ACCORDING TO HIM, EVEN AFTER THE INSERTION OF SECTION 142A, IT IS A C ONDITION PRECEDENT FOR A.O. TO GIVE A FINDING THAT THE BOOKS OF ACCOUNT OF THE APP ELLATE ARE DEFECTIVE AND THE COST OF CONSTRUCTION CAN NOT BE ASCERTAINED FROM SUCH DE FECTIVE BOOKS OF ACCOUNT. SUCH FINDING HAS TO BE BASED ON MATERIAL AND PROPER REASONING. ON THE BASIS OF THESE FINDING A.O. IS REQUIRED TO FIRST REJECT THE BOOKS OF ACCOUNT AND ONLY THEREAFTER HE GETS THE AUTHORITY AS PER LAW TO MAKE ANY REFERENCE TO THE D.V.O FOR THE ASCERTAINMENT OF CORRECT AMOUNT OF COST INCURRE D BY THE APPELLANT COMPANY. A.R. HAS ARGUED REPEATEDLY THAT THIS IS A CONDITION PRECEDENT TO ENABLE A.O. TO ASSUME JURISDICTION TO MAKE REFERENCE TO THE D.V.O. HE HAS RELIED UPON PLETHORA OF DECISIONS OF VARIOUS HIGH COURTS AND THE INCOME TAX APPELLATE TRIBUNAL INCLUDING THE DECISIONS FROM HONBLE ALLAHABAD HIGH COURT. I HAVE CONSIDERED THE ARGUMENT OF A.R. AND I HAVE ALSO GONE THROUGH CASE LAWS RELIED UPON BY HIM. I FIND FORCE IN THE A RGUMENTS OF A.R. IT IS CLEAR ITA NOS.2370, 3211 & 1992/DEL/2008 12 FROM THE ASSESSMENT ORDER THAT THE BOOKS OF ACCOUNT S WERE PRODUCED AND EXAMINED BY A.O ON 13-02-2006. DURING THIS PERIOD, THE A.O. MADE THE DETAILED EXAMINATION OF RECORDS OF APPELLANT CO. AND NO DEFE CT WAS POINTED OUT BY HIM AND THERE WAS NO SUCH FINDING RECORDED IN THE ASSES SMENT ORDER THAT IT WAS NOT POSSIBLE FOR HIM TO ASCERTAIN COST OF CONSTRUCTION FROM THESE BOOKS OF ACCOUNT. THE APPELLANT IS A COMPANY WHOSE ACCOUNTS HAVE BEEN AUDITED AND THE AUDITORS HAVE NOT POINTED OUT ANY DEFECT. THE A.O. MADE REFE RENCE TO DVO ON 05-04- 2006 AND BEFORE DOING THAT A.O DID NOT REACH ON THE CONCLUSION NOR HE RECORDED A FINDING THAT AS PER FACTS OF THE CASE IT WAS NOT POSSIBLE FOR HIM TO ASCERTAIN THE COST OF CONSTRUCTION ON THE BASIS OF BOOKS OF ACCOU NTS OTHER RECORDS MAINTAINED BY THE APPELLANT CO.. THE D.V.OS REPORT WAS RECEIV ED BY THE A.O. DATED 14-09- 2006 IN WHICH THE DIFFERENCE IN COST OF CONSTRUCTIO N WAS POINT OUT BY D.V.O. IT WAS SUBSEQUENTLY ON THE BASIS OF D.V.OS REPORT ONL Y A.O. DREW THIS INFERENCE THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT CO. ARE NOT CORRECT AND COMPLETE. EVEN AT THIS STAGE A.O. HAS NOT RECORDED ANY INDEPE NDENT FINDING OBSERVING THAT THE BOOKS OF ACCOUNTS AND OTHER RECORDS OF THE APPE LLANT CO. ARE DEFECTIVE IN SUCH A MANNER THAT THE COST OF CONSTRUCTION COULD NOT BE ASCERTAINED FROM THESE BOOKS AND OTHER RECORDS. HE HAS MERELY STATED THAT HE WAS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNT OF THE A PPELLANT CO.. HE HAS NOT GIVEN ANY REASONS OR THE BASIS FOR SHOWING HIS DISSATISFA CTION ABOUT THE CORRECTNESS AND COMPLETENESS OF ACCOUNTS OF THE APPELLANT CO. EXCEP T THAT THERE WAS DIFFERENCE IN COST OF CONSTRUCTION AS SHOWN BY THE APPELLANT CO. AND AS ESTIMATED BY THE D.V.O THROUGH HIS REPORT. THUS THE ACTION OF A.O. IN MAKI NG REFERENCE TO D.V.O IS NOT IN ACCORDANCE WITH LAW FOR FOLLOWING TWO REASONS NA MELY:- 1. HE DID NOT RECORD A FINDING BEFORE MAKING REFERENC E TO D.V.O THAT BOOKS OF ACCOUNT AND OTHER RECORDS OF THE APPELLANT CO. PRODUCED BEFORE HIM WERE DEFECTIVE AND IT WAS NOT POSSIBLE T O ASCERTAIN THE COST OF CONSTRUCTION FROM THESE BOOKS OF ACCOUNTS AND OT HER RECORDS, WHICH WAS A CONDITION PRECEDENT. 2. EVEN WHEN SUBSEQUENTLY A.O. HAS REJECTED THE BOOK S OF ACCOUNTS HE HAS NOT RECORDED HIS FINDINGS THAT AS PER FACTS OF THE CASE HOW THE BOOKS WERE DEFECTIVE IN SUCH A MANNER THAT IT WAS NOT POS SIBLE TO ASCERTAIN THE COST OF CONSTRUCTION FROM THE BOOKS OF ACCOUNT AND OTHER RECORDS. I HAVE GONE THROUGH VARIOUS JUDGMENTS ALSO REFERRED TO BY THE AR. IN MANY DECISIONS SUCH AS 1. CIT VS. MEERUT CEMENT COMPANY (P) LTD., SUPRA, 150 TAXMAN 7 (ALLAHABAD). DELIVERED ON 19-04-05. ITA NOS.2370, 3211 & 1992/DEL/2008 13 2. CIT VS HOTEL JOSHI 242 ITR 478 (RAJ) IT HAS BEEN HELD THAT IF THE ASSESSEE MAINTAINED B OOKS OF ACCOUNT IN REGULAR COURSE OF BUSINESS AND NECESSARY ENTRIES RELATED TO THE EXPENSES INCURRED TOWARDS COST OF CONSTRUCTION ARE PROPERLY MADE IN THE BOOKS OF ACCOUNTS, THEY ARE PRODUCED FOR VERIFICATION AND THEIR CORRECTANCE IS NOT DOUBTED THEN THESE SHOULD BE ACCEPTED AND AO HAS NO CAUSE FOR MAKING REFERENC E TO DVO. MOREOVER THE REJECTION OF BOOKS OF ACCOUNT IS A CONDITION PRECED ENT TO REFERENCE TO THE DVO. I INTEND TO AGREE TO THE AR THAT AFTER THE INSERT ION OF SECTION 142A OF THE I. T. ACT BY FINANCE ACT 2004, THE AO IS BOUND TO F OLLOW THE LAW AS PER BOUNDED BY JURISDICTION OF HIGH COURT. BESIDES, IF THE VALU E OF AN ASSET IS DETERMINED AND CLAIMED BY AN ASSESSEE ON THE BASIS OF REGULAR BOOK S OF ACCOUNTS MAINTAINED FOR THAT PURPOSE AND NOT ON THE BASIS OF REGISTERED VAL UERS VALUATION REPORT, THE REFERENCE TO THE DVO BY THE AO IS NOT PROPER. SECTI ON 55A OF I.T. ACT REQUIRES SPECIALLY VIDE SUB CLAUSE (II) OF CLAUSE (B) THAT T HE AO AS TO RECORD THE BASIS OR REASONS FOR MAKING A REFERENCE TO DVO FOR ASCERTAIN ING THE FAIR MARKET VALUE OF ASSET HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES. IN THE LIGHT OF DECISION OF CIT VS HOTEL JOSHI AS MENT IONED (SUPRA) IT IS ALSO NOT NECESSARY TO ACCEPT THE REPORT OF THE DVO BASED ON CPWD RATES NOR IT IS NECESSARY TO ACCEPT THE REPORT OF THE REGISTERED VA LUER BASED ON PWD RATES BECAUSE THE COST OF CONSTRUCTION VARIES FROM PLACE TO PLACE DEPENDING UPON LOCAL CONDITIONS. CPWD RATES ARE BASED ON INSTRUCTION NO 1671 WHICH SAYS THAT DATA COLLECTED BY VALUATION CELL IS IN THE NATURE OF BRO AD GUIDELINES AND IN ITS APPLICATION TO INDIVIDUAL CASE MAY VARY ON THE FACT S ON THE PARTICULAR CASE. THE SECTION 142A HAS BEEN BROUGHT IN STATUTE WITH A VIE W TO PUT THE CONTROVERSY ON REST AS TO WHETHER THE AO HAS AT ALL POWER TO MAKE REFERENCE TO THE VALUATION OFFICER OR NOT U/S 55A OF THE I. T. ACT. NOW IT IS UNDOUBTEDLY CLEAR AFTER THE INSERTION OF SECTION 142A THAT THE AO HAS THE POWER AS PER LAW TO MAKE REFERENCE TO THE VALUATION AFTER FULFILLING THE CONDITION PRE CEDENT. IN MY CONSIDERED VIEW THOUGH THE ASSESSEE HAS MAINTAINED REGULAR BOOKS OF ACCOUNT BUT IT IS FACT THAT THE SAME COULD NOT BE PRODUCED COMPLETELY AS PER REQUIR EMENT OF THE AO. FROM THE SUBMISSIONS MADE AND THE DOCUMENTS PRODUCED BY THE AR, IT APPEARS THAT SOME BOOKS OF ACCOUNTS WERE PRODUCED BUT THEY WERE NOT C OMPLETE IN ALL RESPECTS WHICH DID NOT HELP THE A.O. IN EXAMINING AND DETER MINING THE TOTAL AND CORRECT COST OF CONSTRUCTION OF THE FACTORY BUILDING YEAR W ISE. THIS PROMPTED THE AO TO MAKE A REFERENCE TO THE DVO TO GIVE HIS EXPERT OPIN ION. IN MY VIEW THERE IS NO INFIRMITY IN MAKING THE REFERENCE BY THE AO TO THE VALUATION OFFICER AND NO GRIEVANCE AROSE TO THE APPELLANT BY MERELY MAKING A REFERENCE TO A GOVERNMENTAL AUTHORITY, AN EXPERT ON THE SUBJECT. THIS GROUND OF APPEAL FAILS. 13. FROM THE VARIOUS REPLIES GIVEN BY THE ASSESSEE DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS VIS--VIS A PERUSAL OF THE FINDINGS GIV EN BY THE CIT(A) SHOWS THAT THE ITA NOS.2370, 3211 & 1992/DEL/2008 14 ASSESSING OFFICER IN THE INSTANT CASE HAS NOT REJEC TED THE BOOKS OF ACCOUNT BEFORE MAKING A REFERENCE TO THE DVO ON 5 TH APRIL, 2006. WE FIND THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF LUCKNOW PUBLIC EDUCATIONAL SOCIETY (SUPRA) HAS HELD THAT U/S 142A(1) THE ASSESSING AUTHORITY CANNOT REFER TH E MATTER TO THE DVO WITHOUT FIRST REJECTING THE BOOKS OF ACCOUNT. RELEVANT OBSERVATI ON OF THE HON'BLE HIGH COURT AT PARA 18 TO 20 OF THE ORDER READ AS UNDER:- 18. THE ISSUE FOR CONSIDERATION IS, WHETHER THE AS SESSING OFFICER, UNDER SECTION 142A (1), CAN REFER A MATTER TO THE VALUATI ON OFFICER, FOR THE PURPOSE OF MAKING AN ESTIMATE OF SUCH VALUE. UNDER SUB-SECTION (3) OF SECTION 142A, IT IS PROVIDED THAT ON RECEIPT OF THE REPORT OF THE VALUA TION OFFICER, THE ASSESSING OFFICER MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNI TY OF BEING HEARD, TAKE INTO ACCOUNT SUCH REPORT IN MAKING SUCH ASSESSMENT OR RE ASSESSMENT. WOULD THE LANGUAGE OF SECTION 142A MEAN THAT BEFORE PROCEEDIN G TO CALL FOR A REPORT OF THE VALUATION OFFICER, THE BOOKS OF ACCOUNTS MUST BE RE JECTED. 19. THE JUDGMENT IN BHAWANI SHANKAR VYAS (SUPRA) AL SO CAME UP FOR CONSIDERATION BEFORE THE SUPREME COURT IN THE CASE OF SARGAM CINEMA VS. COMMISSIONER OF INCOME -TAX, [2010] 328 ITR 513 (SC )], WHEREIN THE SUPREME COURT HAS HELD THAT THE ASSESSING AUTHORITY CANNOT REFER THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER WITHOUT FIRST REJECT ING THE BOOKS OF ACCOUNT. ONCE THAT BE THE LAW AS DECLARED BY THE SUPREME COU RT, IT IS NOT POSSIBLE FOR US TO CONSIDER THE CONTENTION ADVANCED ON BEHALF OF THE R EVENUE. 20. FOR THE AFORESAID REASONS, THE QUESTIONS OF LAW AS FRAMED WOULD NOT ARISE AND, CONSEQUENTLY, ALL THE APPEALS ARE DISMISSED. 14. WE FIND THE HON'BLE ALLAHABAD HIGH COURT IN THE CAS E OF CIT VS SUBHASH CHANDRA GUPTA (SUPRA) HAS HELD THAT THE ASSESSING OFFICER CANNOT REFER T HE MATTER TO THE DVO WITHOUT FIRST REJECTING THE BOOKS OF ACCOUN T. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF ASHA CHAURASIA & ORS. (SUPRA). IN THAT CASE, THE SUBSTANTIAL QUESTION OF LAW FORMULAT ED WAS AS UNDER:- ITA NOS.2370, 3211 & 1992/DEL/2008 15 'WHETHER THE HON'BLE ITAT HAS ERRED IN LAW AS WELL AS IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN HOLDING THAT THE BOOKS OF ACCOUNT HAS TO BE REJECTED BEFORE REFERRING TO THE D.V.O. U/S 142A AND IGNORIN G THE DECISION IN CASE OF BHARATHI CEMENT CORPORATION LTD. VS. CIT - 253 CTR 98 (AP) AND THE DECISION RENDERED BY THE DIVISION BENCH OF UTTRAKHAND HIGH C OURT IN CASE OF CIT VS. BHAVANI SHANKAR VYAS - 311 ITR 8 (UTTRAKHAND).' 14.1 THE HON'BLE HIGH COURT DECIDED THE ISSUE IN FA VOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY OBSERVING AS UNDER:- 4. LEARNED COUNSEL FOR THE PARTIES, AT THE OUTSET, STATED THAT QUESTION RAISED IN THESE APPEALS IS SQUARELY COVERED BY JUDGMENT DATED 25.01.2017 PASSED BY THIS COURT IN COMMISSIONER OF INCOME TAX, (CENTRAL) LUCK NOW VS. SHRI UDAI CHAND CHAURASIA SHRI RAM ROAD LUCKNOW (INCOME TAX APPEAL NO. 25 OF 2015), ALONGWITH OTHER CONNECTED MATTERS, WHICH READS AS U NDER: '1. HEARD MR. SIDHARTH DHAON, LEARNED COUNSEL FOR R EVENUE AND SRI ABHINAV MEHROTRA, LEARNED COUNSEL APPEARING FOR ASS ESSEES IN ALL THESE APPEALS AND PERUSED THE RECORD. 2. ALL THESE APPEALS HAVE ARISEN FROM JUDGMENT AND ORDER DATED 21.10.2014 PASSED BY INCOME TAX APPELLATE TRIBUNAL, LUCKNOW BENCH ''B', LUCKNOW (HEREINAFTER REFERRED TO AS THE 'TRIBUNAL') IN INCOME TAX APPEALS NO. 437/LKW/2013, 439/LKW/2013, 440/LKW/2013 AND 761/LKW/2013 AND RELATES TO ASSESS MENT YEARS 2005-06, 2007-08, 2008-09 AND 2004-05, RESPECTIVELY . 3. SUBSTANTIAL QUESTION OF LAW FORMULATED IN THESE APPEALS READS AS UNDER:- 'WHETHER THE HON'BLE ITAT HAS ERRED IN LAW AS WELL AS IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN HOLDING THAT THE BOOKS OF ACCOUNT HAS TO BE REJECTED BEFORE REFERRING TO THE D.V.O. U/S 142A AND IGNORING THE DECISION IN CASE OF BHARATHI CEMENT CORPORATION LTD . VS. CIT - 253 CTR 98 (AP) AND THE DECISION RENDERED BY THE DIVISI ON BENCH OF UTTRAKHAND HIGH COURT IN CASE OF CIT VS. BHAVANI SH ANKAR VYAS - 311 ITR 8 (UTTRAKHAND).' 4. IT IS SUBMITTED THAT A SIMILAR QUESTION HAS ALRE ADY BEEN DECIDED BY THIS COURT AGAINST REVENUE IN INCOME TAX APPEAL NO. 205 OF 2015 (COMMISSIONER OF INCOME TAX-I, KANPUR VS. M/S SAHYO G JAN KALYAN SAMITI, KANPUR) DECIDED ON 06.09.2016 FOLLOWING SUP REME COURT JUDGMENT IN SARGAM CINEMA VS. COMMISSIONER OF INCOM E TAX, 2009 (2010)328 ITR 513 (SC). ITA NOS.2370, 3211 & 1992/DEL/2008 16 5. SRI SIDHARTH DHAON, LEARNED COUNSEL FOR REVENUE, HOWEVER, SUBMITTED THAT THERE IS ANOTHER JUDGMENT OF ANDHRA PRADESH HIGH COURT IN BHARATHI CEMENT CORPORATION PVT. LTD. VS. COMMISSIONER OF INCOME TAX AND OTHERS, (2013) 356 ITR 74, WHICH IS A DECISION DISMISSING APPEAL OF ASSESSEE AT THE STAGE OF ADMIS SION. IT IS SUBMITTED THAT THEREIN A DIVERGENT VIEW HAS BEEN TA KEN. 6. WE FIND THAT IN THE JUDGMENT OF ANDHRA PRADESH H IGH COURT, JUDGMENT IN SARGAM CINEMA VS. COMMISSIONER OF INCOM E TAX (SUPRA) HAS BEEN NOTICED IN PARA 16 AND IT HAS BEEN HELD THAT SINCE IT IS A SHORT JUDGMENT AND FACTS ARE NOT VERY CLEAR, THER EFORE, SAME WILL NOT HELP THE ASSESSEE. 7. IT APPEARS THAT RELEVANT FACTS WERE NOT BROUGHT TO THE NOTICE OF THE BENCH WHICH CAUSED DECISION IN SARGAM CINEMA VS. CO MMISSIONER OF INCOME TAX (SUPRA) BUT SO FAR AS THIS COURT'S JUDGM ENT IN COMMISSIONER OF INCOME TAX-I, KANPUR VS. M/S SAHYOG JAN KALYAN SAMITI, KANPUR (SUPRA) IS CONCERNED, WE FIND THAT I N THE APPEAL PREFERRED BY REVENUE, IT WAS ADMITTED BY IT THAT LA W LAID DOWN IN SARGAM CINEMA VS. COMMISSIONER OF INCOME TAX (SUPRA ) ON THE SIMILAR QUESTION IS CLEARLY APPLICABLE AND HAS BEEN ANSWERED AGAINST REVENUE. IN THAT VIEW OF THE MATTER, FOLLOWING THE DECISION IN COMMISSIONER OF INCOME TAX-I, KANPUR VS. M/S SAHYOG JAN KALYAN SAMITI, KANPUR (SUPRA), WE ANSWER THE ABOVE QUESTIO N AGAINST REVENUE. 8. ALL THESE APPEALS ARE, ACCORDINGLY, DISMISSED.' 15. THE VARIOUS OTHER DECISIONS RELIED ON BY THE LD. CO UNSEL FOR THE ASSESSEE IN THE CASE LAW COMPILATION ALSO SUPPORT ITS CASE THAT UNL ESS AND UNTIL THE BOOKS OF ACCOUNT ARE FIRST REJECTED BY THE ASSESSING OFFICER, THE AS SESSING OFFICER IS NOT JUSTIFIED IN MAKING REFERENCE TO THE DVO U/S 142A AND IF REFEREN CE IS HELD TO BE HAD IN LAW, THE DVOS REPORT IS TO BE IGNORED AND CANNOT BE THE BAS IS TO MAKE THE ADDITION. IN VIEW OF THE ABOVE DISCUSSION AND IN VIEW OF THE BINDING DEC ISIONS OF THE JURISDICTIONAL HIGH COURT CITED (SUPRA), WE HOLD THAT THE ASSESSING OFF ICER IS NOT JUSTIFIED IN REFERRING THE MATTER TO THE DVO U/S 142A(1) WITHOUT FIRST REJECTI NG THE BOOKS OF ACCOUNT. THEREFORE, ITA NOS.2370, 3211 & 1992/DEL/2008 17 SUCH REFERENCE TO THE DVO BEING NOT IN ACCORDANCE W ITH THE LAW, THE REPORT OF SUCH DVO HAS TO BE REJECTED AND NO ADDITION CAN BE MADE ON THE BASIS OF SUCH REPORT OF THE DVO. 16. SO FAR AS THE OBSERVATION OF THE LD.CIT(A) THAT THE ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNT COMPLETELY AS PER REQUIREMENT OF THE ASSESSING OFFICER IS CONCERNED, THE SAME IS CONTRARY TO THE FACTS. THE FINDING OF THE CIT(A) SHOWS THAT THE ASSESSEE HAS MAINTAINED REGULAR BOOKS OF ACCOUNT. THE REPLY OF THE ASSESSEE BEFORE THE ASSESSING OFFICER AS WELL AS THE OBSERVATION GIVEN BY THE ASSESSING OFFICER IN THE BODY OF THE ASSESSMENT SHOWS THAT THE ASSESSEE HAS PRODUCED THE BOOKS OF ACCOUNT. WE FIND THE ASSESSING OFFICER, AT PAGE 3 OF THE ORD ER HAS MENTIONED AS UNDER:- ON 13.02.2006 ASSESSEE FILED A WRITTEN REPLY. BOO KS OF ACCOUNTS PRODUCED AND EXAMINED WITH. 16.1 SIMILARLY, THE ASSESSING OFFICER AT PAGE 5 OF THE ORDER HAS OBSERVED AS UNDER:- ASSESSEE HAS FILED WRITTEN REPLIES TO THE QUERIES RAISED IN VARIOUS DATES. IN VIEW OF WRITTEN REPLIES FILED AND DETAILS PRODUCED, THE MANUFACTURING AND TRADING RESULTS DISCLOSED ARE NOT DISTURBED. 17. THEREFORE, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE OBSERVATION OF THE CIT(A) THAT THE ASSESSEE HAS NOT PRODUCED THE C OMPLETE BOOKS OF ACCOUNT FOR THE PERUSAL OF THE ASSESSING OFFICER IS INCORRECT. 18. IN VIEW OF THE ABOVE DISCUSSION, WE HOLD THAT NO AD DITION CAN BE MADE ON THE BASIS OF THE REPORT OF THE DVO SINCE THE ASSESSING OFFICER HAS MADE THE REFERENCE TO THE DVO WITHOUT FIRST REJECTING THE BOOKS OF ACCOUN T. THE GROUNDS RAISED BY THE ITA NOS.2370, 3211 & 1992/DEL/2008 18 ASSESSEE ARE ACCORDINGLY ALLOWED ON THIS ISSUE AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 19. NOW, COMING TO THE SECOND ISSUE I.E., THE ADDITION U/S 68 IS CONCERNED, WE FIND THE ASSESSING OFFICER, IN THE INSTANT CASE, MADE AD DITION OF RS.20 LAKHS BEING SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE FROM THE THREE PERSONS NAMED EARLIER ON THE GROUND THAT THE ASSESSEE FAILED TO PRODUCE THE ABOVE PARTIES FOR HIS EXAMINATION AND THE LETTERS ISSUED TO THE ABOVE THREE PARTIES W ERE NOT COMPLIED WITH SINCE ONE LETTER WAS RETURNED UNSERVED AND THE OTHER TWO PARTIES DID NOT RESPOND. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT PROPER OPP ORTUNITY WAS NOT GRANTED TO THE ASSESSEE AND, THEREFORE, HE HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO GIVE ONE FINA L OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE WITH EVIDENCE TO HIS SATISFACTION REGA RDING THE IDENTITY AND CREDIT WORTHINESS OF THE SHARE APPLICANTS AND THE GENUINEN ESS OF THE TRANSACTION. 20. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE A ND IN THE INTEREST OF JUSTICE, WE DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO GIVE ONE FINAL OPPORTUNITY TO THE ASSE SSEE TO SUBSTANTIATE WITH EVIDENCE TO HIS SATISFACTION REGARDING THE IDENTITY AND CREDIT WORTHINESS OF THE SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSACTION. THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AS PER FACT AND LAW. WE HOLD AND DIRECT ACCORDINGLY. THE SECOND ISSUE RAISED BY THE ASSESSEE IN THE GROUNDS OF APPEAL ARE ACCORDINGLY ALLOWED FO R STATISTICAL PURPOSES. ITA NOS.2370, 3211 & 1992/DEL/2008 19 21. IN THE RESULT, THE APPEAL FILED BY THE ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE AND BOTH THE APPEALS FILED BY TH E REVENUE ARE DISMISSED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 2 1.02.2019. SD/- SD/- (SUCHITRA KAMBLE) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMFBER DATED: 21 ST FEBRUARY, 2019 DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI