M/s Verma Electronics (P) Ltd., Rajpura V. ACIT, Patiala

ITA 342/CHANDI/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0694 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-01-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 21-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJEET SINGH
• Keywords: Unexplained cash credit; Valuation report
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, A.M AND MS. SUSHMA CHOWLA, J M ITA NO. 342/CHD/2012 ASSESSMENT YEAR : 2007-08 VERMA ELECTRONICS (P) LTD V A.C.I.T. MAIN BAZAR CENTRAL CIRCLE RAJPURA PATIALA AABCV 3119 M (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SUDHIR SEHGAL RESPONDENT BY: SHRI MANJEET SINGH DATE OF HEARING 21.1.2013 DATE OF PRONOUNCEMENT 30.1.2013 O R D E R PER T.R.SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A)-I, LUDHIANA DATED 10.01.2012. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS: 1 THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT TH E INITIATION OF PROCEEDINGS U/S 153C BY THE ASSESSING OFFICER WHICH IS AGAINST THE FACTS AND CIRCUMSTANCE S OF THE CASE AND DETAILED SUBMISSIONS MADE BY US ALONG WITH VARIOUS CASE LAWS HAS NOT BEEN CONSIDERED PROPERTY AS PER PARA 6.7 OF THE ORDER OF LD. CIT(A)-I, LUDHIANA . 2. THAT NOTWITHSTANDING THE ABOVE GROUND NO. 1 OF APPEAL, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN REJECTING THE BOOKS OF ACC OUNT OF THE ASSESSEE U/S 143(3) OF THE INCOME-TAX ACT, 1961 AS PER PARA 4 OF THE LD. CIT(A)-I, LUDHIANA. 3 THAT THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THAT THE ASSESSEE MAINTAINED REGULAR BOOKS OF ACCOUNT, W HICH ARE AUDITED BY THE CHARTERED ACCOUNTANT AND DISCREP ANCY HAS BEEN NOTICED. 4 THAT THE LD. CIT(A) HAS ERRED IN RESTRICTING ADDI TION OF RS. 3600/- BEING 9% OF GROSS PROFIT EARNED ON SO CALLED SALES OF RS. 40,000/- OF HANDICAM OUTSIDE THE BOOKS (AS PER PARA 13 OF THE ORDER)AGAINST ADDITION OF ABOVE SO CALLED SALES OF RS. 40,000/-(OUTSIDE THE BOOKS) MAD E BY THE ASSESSING OFFICER. 5 THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE A DI OF RS. 1100/- IN RESPECT OF JUICER/MIXER AS PER PA RA 13 OF THE ORDER AGAINST THE ADDITION OF RS. 12,500/- ON T HE BASIS OF SO CALLED SALES OF ABOVE SAID ITEM OUTSIDE THE BOOKS MADE BY THE ASSESSING OFFICER. 6 THAT THE LD. CIT(A) HAS ERRED IN HOLDING ADDITION OF RS. 1,19,900/- ON ACCOUNT OF SO CALLED UNACCOUNTED PURCHASE OF NINE MUSIC AUDIOS MADE BY THE ASSESSING OFFICER AS PER PARA 13 OF THE ORDER. 7 THAT THE LD. CIT(A) HAS ERRED IN HOLDING ADDITION OF RS. 14,810/- IN RESPECT OF SALES RETURN OF INVENTO RY OF COMPUTER MATERIAL AS PER PARA 13 OF THE ORDER. 8 THAT THE LD. CIT(A) HAS ERRED IN HOLDING ADDITION IN RESPECT OF SO CALLED UNEXPLAINED CREDIT OF RS. 5,1 0,000/- IN THE CASH BOOK BY NOT CONSIDERING THE FACT THAT T HE SAID CASH PERTAINS TO CASH WITHDRAWAL FROM THE BANK AS P ER PARA 14 OF THE ORDER OF THE LD. CIT(A)-I, LUDHIANA. 9 THAT THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THAT ENTRY OF CREDIT OF RS. 5,10,000/- IN THE CASH BOOKS MADE ON DATES EARLIER TO THE DATES WHEN CASH WAS WITHDRA WAL FROM THE BANK WAS INADVERTENT MISTAKE ON THE PART O F THE APPELLANT AS THE SAID CASH REMAINED IN THE BOOKS AN D WAS NOT UTILIZED TILL ACTUAL CASH WAS WITHDRAWN FROM TH E BOOKS. 10 THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 3795/- AS PER PARA 15 OF THE ORDER AGAINST ADDITION OF RS. 2,46,991/- MADE BY THE ASSESSING OF FICER ON ACCOUNT OF DIFFERENCE BETWEEN THE COPY OF ACCOU NT OBTAINED FROM GOYAL ELECTRONICS, PROFIT AND LOSS AC COUNT AND THE ASSESSEE. 11 THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 6,66,953/- MADE BY THE ASSESSING OF FICER ON ACCOUNT OF COST OF CONSTRUCTION OF SHOW ROOM AT RAJPURA ON THE BASIS OF VALUATION MADE BY THE VALUE R OF THE DEPARTMENT. 12. THAT THE LD. CIT(A) HAS NOT CONSIDERED THAT THE APPELLANT MAINTAINED REGULAR ACCOUNT OF THE CONSTRU CTION OF SHOW ROOM IN HIS BOOKS OF ACCOUNT AND THE ISSUE IS COVERED BY THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF SANGRAM CINEMA, 328 ITR 513. 13 THAT THE LD. CIT(A) HAS NOT CONSIDERED THAT THE APPELLANT FILED VALUATION REPORT FROM APPROVED GOVE RNMENT VALUER AND THE SAME WAS NOT CONSIDERED PROPERLY BY THE ASSESSING OFFICER. 3. OUT OF ABOVE, BEFORE US GROUNDS NO. 1 TO 5, 7 & 10 WERE NOT PRESSED AND THEREFORE, THE SAME ARE BEING DISMI SSED AS NOT PRESSED. 4 GROUND NO. 6 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SHOWN CLOSING STOCK OF 39 MUSIC AUDIO SYSTEMS BUT AS PER INVENTORY PREPARE D IT WAS FOUND THAT THE ASSESSEE WAS HAVING 48 MUSIC AUDIO S YSTEMS IN THE CLOSING STOCK ON 31.3.2007. THE ASSESSEE WAS R EQUIRED TO EXPLAIN THE DISCREPANCY AND WHY THE SALE VALUE OF N INE MUSIC AUDIO SYSTEMS MAY NOT BE ADDED TO THE INCOME. THE ASSESSEE IN RESPONSE FILED REPLY VIDE LETTER DATED 11.12.200 9 AS UNDER: WE HAVE GONE THROUGH THE INVENTORY PREPARED BY YOU R GOODSELF AND ON THE TEST CHECK OF THE SAME, A NUMB ERA OF DISCREPANCIES HAVE BEEN OBSERVED. FOR INSTANCE: T WO ACS PURCHASED VIDE B NO. 3 DATED 1.4.2006 FROM GOEL ELECTROWOOD, ONE LCD PURCHASED FROM SONY INDIA VIDE B NO. 13156278 DATED 17.3.2007, ONE GYSOR FROM MULTIS TAR VIDE B NOS. 14 DATED 13.11.2006 AND 2 GYSOR PURCHAS ED FROM PB SHAH VIDE B NO. 128 DATED 8.1.2007 ARE NOT ENTERED BY YOUR GOODSELF. BILLS DATED 22.4.2006 OF AUDIO SYSTEM HAVE BEEN ENTERED IN HANDICAM AND ONE BILL O F 31.3.2006 HAS BEEN INCLUDED IN HANDICAM. 1 IRON WA S SOLD AGAINST INVOICE NO. 1450 DATED 13.5.2006 WHICH HAS BEEN ENTERED AS 21 (S NO. 8 OF INVENTORY): 8 IRONS WERE PURCHASED FROM PB. SHAH ON 10.10, 18.10 AND 30.10 BUT THE SAME HAVE NOT BEEN ADDED IN THE PURCHASE: THE PURCHASES OF 7 CTVS VIDE B NOS. 2388 DATED 8.8.2006 , BILL NO. 2593 DATED 24.8.2006 AND BILL NO. 4915 DA TED 27.12 HAVE NOT BEEN ENTERED. SALE OF ONE CTV AGAIN ST B NO. 1737 DATED 16.8.2006 HAS BEEN TAKEN AS 2 CTVS. THE ASSESSEE ALSO FILED A REPLY ON 23.12.2009 WHICH IS REPRODUCED AS UNDER: 9 AUDIO WERE IN OBSOLETE CONDITIONS HENCE WERE NOT INCLUDED IN THE STOCK. THE ASSESSING OFFICER DID NOT FIND MUCH FORCE IN TH IS REPLY BECAUSE THE ASSESSEE HAD FAILED TO GIVE ANY PLAUSIB LE EVIDENCE THAT NINE MUSIC SYSTEMS HAS BECOME OBSOLETE. FURTH ER SINCE THE ASSESSING OFFICER HAD ADMITTED TO PURCHASE OF O NE AUDIO MUSIC SYSTEM VIDE BILL DATE 31.3.2006, THEREFORE, H E ADOPTED THE SALE VALUE OF 10 MUSIC AUDIO SYSTEMS AT RS. 19, 900/- AND MADE ADDITION ACCORDINGLY. ON APPEAL THE LD. CIT(A ) CONFIRMED THE ADDITION. 5 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMIT TED THAT SOME OF MUSIC SYSTEMS HAD BECOME ABSOLUTELY OBSOLET E AND HAD NO REALIZABLE VALUE, THEREFORE, SAME WERE NOT I NCLUDED IN THE CLOSING STOCK. 6 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE STR ONGLY SUPPORTED THE ORDERS OF ASSESSING OFFICER AND THE L D. CIT(A). 7 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND T HAT IT IS POSSIBLE THAT SOME MUSIC SYSTEMS MAY HAVE BECOME OB SOLETE BUT EVEN THOSE OBSOLETE SYSTEMS WOULD HAVE SOME REA LIZABLE VALUE. IT IS VERY DIFFICULT TO IMAGINE THAT SUCH O BSOLETE ITEMS WILL HAVE ZERO VALUE. THEREFORE, IN OUR OPINION, I T WOULD SERVE THE ENDS OF JUSTICE IF THESE ITEMS ARE ESTIMATED AT 50% OF THEIR VALUE AND ACCORDINGLY WE SET ASIDE THE ORDER OF T HE LD. CIT(A) AND RESTRICT THIS ADDITION OF RS. 60,000/-. 8 GROUNDS NO. 8 & 9 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT DURING THE ASSESSMENT PROC EEDINGS IT WAS NOTICED THAT THE ASSESSEE HAD WITHDRAWN CASH AM OUNTING TO RS. 5 LAKHS AND RS. 10,000/- ON 18.8.2006 AND 29 .8.2006 RESPECTIVELY FROM BANK ACCOUNT NO. 11000253 WITH OB C, RAJPURA. THIS CASH WAS NOT ENTERED IN THE CASH BOO K. THE ASSESSEE WAS ISSUED A SHOW CAUSE NOTICE THAT WHY TH IS AMOUNT SHOULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE. IN RESPONSE IT WAS STATED THAT A SUM OF RS. 5 LAKHS WA S WRONGLY ENTERED ON 14.8.2006 INSTEAD OF 18.8.2006 BECAUSE O F CLERICAL MISTAKE. SIMILARLY CASH OF RS. 10,000/- WAS ENTERE D ON 18.8.2006 INSTEAD OF 28.8.2006 AGAIN ON A CLERICAL ERROR. IT WAS FURTHER POINTED THAT CASH BALANCE FROM 14.8.200 6 TO 18.8.2006 WAS ALWAYS MORE THAN RS. 5 LAKHS AND HENC E NO ATTEMPT CAN BE ATTRIBUTED TO ADJUST NEGATIVE CASH. THE ASSESSING OFFICER DID NOT ACCEPT THE REPLY AND OBSE RVED THAT CASH WITHDRAWN ON 18.8.2006 COULD NOT HAVE BEEN ENT ERED ON 14.8.2006 AND ACCORDINGLY MADE ADDITION OF RS. 5,1 0,000/-. ON APPEAL THE ADDITION WAS CONFIRMED BY THE LD. CIT (A) ON THE SAME REASONING. 9 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE REFERR ED TO PG 1 OF PAPER BOOK WHICH IS A COPY OF THE BANK STATEME NT TO SHOW THAT ACTUAL WITHDRAWAL OF RS. 5 LAKHS AND RS. 10,00 0/- WAS MADE ON 18.8.2006 AND 29.8.2006. HE REFERRED TO PG 4 OF THE PAPER BOOK WHICH IS A COPY OF DAILY CASH SUMMARY BE TWEEN 14.8.2006 TO 28.8.2006 AND POINTED OUT THAT BETWEEN 14.8.2006 AND 18.8.2006 CASH BALANCE WAS ALWAYS MORE THAN RS. 5 LAKHS. THIS CLEARLY SHOWS THAT WITHDRAWAL OF CASH WAS WRON GLY MADE IN THE BOOKS AND THEREFORE, THERE WAS NO INTENTION TO WIPE OUT ANY NEGATIVE BALANCE IN THE BOOKS. 10 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE RE AD OUT PARA 4 OF IMPUGNED ORDER AND STRONGLY RELIED ON THE SAME. 11 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY. PARA 4 OF CIT(A)S ORDER READS AS UNDER: 4 I HAVE CONSIDERED THE BASIS OF ASSESSING OFFICER S ACTION IN REJECTING THE BOOKS OF ACCOUNT AND THE ARGUMENTS OF THE A.R ON THE ISSUE. THE ASSESSING OF FICER HAS VERY CLEARLY BROUGHT ON RECORD THE UNRELIABLE N ATURE OF BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE ESPECIALLY IN VIEW OF WRONG ENTRY IN THE CASH BOOK OF CASH WITHDRAWALS OF RS. 5,10,000/- FEW DAYS PRIOR TO THE ACTUAL WITHDRAWAL. THE ASSESSEES CLAIM IN THIS REGARD TH AT IT HAS NOT MATERIALLY AFFECTED THE AVAILABILITY OF CAS H IN HAND ON THE GIVEN DATES IS NOT A SUFFICIENT EXPLANATION AND THIS ALSO HAD NOT BEEN SUBMITTED BEFORE THE ASSESSING OF FICER AS DETAILED IN THE ASSESSMENT ORDER. THIS CLEARLY REFLECTS THE POSSIBILITY OF ASSESSEE NOT WRITING HIS BOOKS O F ACCOUNT IN THE REGULAR COURSE OF BUSINESS BUT ON A PERIODICAL BASIS WHICH COULD BE AFTER A WEEK OR FOR TNIGHT, WHICH MEANS THAT THERE IS ALWAYS THE POSSIBILITY OF MANIPULATING THE BOOKS ACCORDING TO THE CONVENIENCE AND OBJECTIVES OF THE ASSESSEE. THIS MEANS THAT THE BO OKS OF ACCOUNT DONT REFLECT THE ACTUAL HAPPENINGS IN THE BUSINESS ON A DAY TO DAY BASIS AND THEREFORE, CAN N OT BE TAKEN TO BE A RELIABLE BASIS FOR WORKING OUT THE TR UE PROFITS. THE ASSESSING OFFICER HAS FURTHER POINTED OUT THE DISCREPANCIES IN THE STOCK REGISTERS WHEREIN SALES HAVE NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT. AS SUCH THE ASSESSING OFFICER HAS POINTED OUT MATERIAL DEFECTS IN THE MAINTENANCE OF BOOKS OF ACCOUNT BY THE ASSESSEE AND THEREFORE, REJECTION OF BOOKS OF ACCOUNT IS UPHELD. THE LD. CIT(A) HAS REJECTED THE EXPLANATION OF THE ASSESSEE BY OBSERVING THAT SUFFICIENT EXPLANATION WAS NOT GIVEN BEFORE THE ASSESSING OFFICER AND POSSIBILITY OF NOT WRITING TH E BOOKS OF ACCOUNTS IN THE REGULAR COURSE OF BUSINESS BUT ON A PERIODICAL BASIS COULD NOT BE RULED OUT. WE DO NOT FIND MUCH MERIT IN THESE OBSERVATIONS IF THE BOOKS WERE REJECTED THEN OVERALL PROFITS COULD HAVE BEEN ESTIMATED BUT IF ON THE BAS IS OF SAME BOOKS OF ACCOUNT WHICH HAVE BEEN REJECTED CERTAIN I TEMS ARE BEING BOOKED OUT FOR ADDITION THEN EXPLANATION FURN ISHED BY THE ASSESSEE HAS TO BE CONSIDERED BEFORE ARRIVING AT AN Y CONCLUSION. AS FAR AS THE ADDITION OF RS. 5,10,000 /- IS CONCERNED, NO DOUBT CASH HAS BEEN WITHDRAWN AT RS. 5 LAKHS AND RS. 10,000/- ON 18.8.2006 AND 29.8.2006 WHICH G ETS CONFIRMED FROM COPY OF BANK STATEMENT AT PAGE 1 OF THE PAPER BOOK. THE ENTRIES IN CASH BOOK HAVE BEEN MADE ON 1 4.8.2006 AND 18.8.2006. FROM THE SUMMARY OF CASH BOOK AT PA GE 4 IT IS CLEARLY NOTICED THAT CASH BALANCE NEVER WENT BELOW RS. 5 LAKHS BETWEEN 14.8.2006 TO 18.8.2006. THEREFORE, IT CAN NOT BE SAID THAT ENTRY HAS BEEN WRONGLY MADE TO WIPE OUT NEGATI VE BALANCE. THERE CAN ALWAYS BE A CHANCE OF MISTAKE A ND AT LEAST IN THIS CASE IT SEEMS TO BE A CASE OF CLERICAL MIST AKE, THEREFORE, WE FIND NO MERIT IN THIS ADDITION AND AC CORDINGLY WE SET ASIDE THE ORDER OF LD. CIT(A) AND DELETE THE AD DITION. 12 GROUNDS NO. 11, 12 & 13 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT DURING THE ASSESSMENT PROC EEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CONSTRUCTED A SHOW ROOM AT 9A, KANIKA GARDEN, RAJPU RA AND HAD RECORDED FOLLOWING AMOUNTS TOWARDS COST OF CONS TRUCTION: F.Y 2006-07 RS. 2740709/- F.Y 2007-08 RS. 483264/- RS. 3223973/- TO SUPPORT THIS COST OF CONSTRUCTION THE ASSESSEE F ILED THE VALUATION REPORT FROM APPROVED VALUER. HOWEVER, TH E ASSESSING OFFICER REFERRED THE SAME TO THE DVO WHO ESTIMATED THE COST OF CONSTRUCTION AS UNDER: F.Y 2006-07 RS. 3404662/- F.Y 2007-08 RS. 600338/- RS. 4005000/- 13 A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE A S TO WHY THE DIFFERENCE IN COST OF CONSTRUCTION, AS ESTI MATED BY DVO AMOUNTING TO RS. 6,63,953/- MAY NOT BE ADDED TO TH E INCOME OF THE ASSESSEE. IN RESPONSE THE ASSESSEE FILED A REPLY VIDE LETTER DATED 11.12.2009 WHICH HAS BEEN EXTRACTED BY THE ASSESSING OFFICER AS UNDER: THE VALUATION OFFICER HAS PREPARED HIS REPORT ON ESTIMATED FIGURE WHICH IS NOT CORRECT. THERE A RE A NUMBER OF DISCREPANCIES IN THE VALUATION REPORT. W E HAVE ALSO GOT VALUATION DONE AT OUR END FROM A REGISTER VALUER, WHO HAS ESTIMATED THE VALUE OF THE BUILDING RS. 32. 16 LAKHS, WHICH IS COMPARABLE TO OUR BOOK VALUE. THE COMMENTS OF OUR VALUER ON YOUR VALUATION REPORT ALO NG WITH THE COPY OF OUR VALUATION REPORT IS ATTACHED, HENCE NO ADDITION TO BE MADE. 14 THE ASSESSING OFFICER DID NOT FIND ANY FORCE IN THE REPLY BECAUSE THOUGH IT WAS MENTIONED THAT VARIOUS DISCRE PANCIES IN THE VALUATION REPORT OF THE DVO WERE THERE BUT NO S INGLE DISCREPANCY WAS POINTED OUT. THE VALUATION REPORT OF THE ASSESSEE WAS SENT FOR THE COMMENTS OF THE DVO AND T HE COMMENTS RECEIVED FROM DVO WERE CONFRONTED TO THE A SSESSEE. AS PER THE COMMENTS OF DVO THE APPROVED VALUER HAD NOT APPLIED THE RATES APPROVED BY CBDT AND VARIOUS OTHE R DISCREPANCIES WERE ALSO THERE. THE REPORT OF THE A PPROVED VALUER WAS REJECTED AND ADDITION OF RS. 6,63,953/- WAS MADE TO THE INCOME OF THE ASSESSEE. ON APPEAL THE ADDITION WAS CONFIRMED BY THE LD. CIT(A). 15 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE IN RESPECT OF COST OF CONSTRUCTION AND HAS NOT FOUND ANY MATERIAL TO PROVE THAT EXTRA EXPENDITURE WAS INCURRED THAN DISCLOSED IN THE BOOKS OF ACCOUNT AND THEREFOR E, THE MATTER COULD NOT HAVE BEEN REFERRED TO THE DVO. IN THIS REGARD HE RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN CASE OF SARGAM CINEMA V CIT, 328 ITR 513 (SC). HE FURTHER SUBMITTED THAT DVO APPLIED CWPD RATES WHICH ARE NOT APPLICABL E IN CASE OF SMALLER CITIES WHERE MATERIAL AS WELL AS LABOUR IS CHEAPER AND ONLY STATE PWD RATES CAN BE APPLIED. FURTHER T HE DVO HAS APPLIED 7.5% SELF SUPERVISION CHARGES WHEREAS GENER ALLY 10% SELF SUPERVISION RATES ARE ACCEPTABLE. THE ASSESSEE HAD CONSTRUCTED A SIMPLE SHOW ROOM WHICH DOES NOT INVOL VE ANY FANCY CONSTRUCTION. ONLY VERY FEW BATH ROOMS WERE REQUIRED TO BE PROVIDED, NO KITCHEN OR WOOD WORK IS REQUIRED FO R A SHOW ROOM, THEREFORE, VALUATION ADOPTED BY THE DVO IS ON A VERY HIGH SIDE AND MAY BE RESTRICTED TO A REASONABLE EST IMATE. 16 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE ST RONGLY SUPPORTED THE ORDERS OF ASSESSING OFFICER AND THE L D. CIT(A). 17 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY. NO DOUBT HON'BLE SUPREME COURT HAS HELD IN CASE OF SARGAM CI NEMA V CIT, 328 ITR 513 (SC) THAT THE MATTER CANNOT BE REF ERRED TO DVO UNLESS BOOKS OF ACCOUNT ARE REJECTED. BUT IN T HE CASE BEFORE US, THE BOOKS OF ACCOUNT WERE REJECTED BY TH E ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) AND GROUND REGARDING REJECTION OF BOOKS OF ACCOUNT WAS NOT PRESSED BEFOR E US. THEREFORE, IN CASE BEFORE US, THE BOOKS OF ACCOUNT HAS BEEN REJECTED AND THERE IS NO SEPARATE REQUIREMENT TO RE JECT THE CONSTRUCTION ACCOUNT SEPARATELY BECAUSE REJECTION O F BOOKS MEAN THAT RESULTS SHOWN IN THE BOOKS OF ACCOUNT ARE NOT ACCURATE AND SUCH ACCOUNTS ARE NOT TRUST WORTHY. T HEREFORE, WE FIND NOTHING WRONG IN THE ACTION OF THE ASSESSIN G OFFICER IN REFERRING THE MATTER TO THE DVO. HOWEVER, AT THE SA ME TIME COST OF CONSTRUCTION IS AFTER ALL A MATTER OF OPINI ON. NO TWO EXPERTS WOULD HAVE SAME CONCLUSION. THERE IS FURTHE R FORCE IN THE SUBMISSIONS THAT DVO HAS ADOPTED CPWD RATES AND HAS NOT CONSIDERED THE FACTS THAT IT WAS A CASE OF CONS TRUCTION OF SHOW ROOM WHICH DOES NOT REQUIRE ANY KITCHEN, ALMIR A WHICH MEANS LESSER WOOD WORK ETC. CONSIDERING THESE FACT S WE ARE OF THE OPINION THAT THE DVO HAS ESTIMATED THE COST OF CONSTRUCTION AT A VERY HIGH SIDE. FURTHER THE DVO HAS NOT ALLOWED EVEN 10% OF COST AS SELF SUPERVISION CHARGE S WHICH IS GENERALLY ACCEPTED BY THE VARIOUS COURTS. THEREFOR E, IN OUR OPINION, ADDITION OF RS. 2 LAKHS ON ACCOUNT OF COST OF CONSTRUCTION WOULD MEET THE ENDS OF JUSTICE AND THI S PROPOSAL WAS CONCEDED BY THE LD. COUNSEL OF THE ASSESSEE. A CCORDINGLY WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO MAKE AN ADDITION OF RS. 2 LAKHS ON ACCOU NT OF UNDISCLOSED INVESTMENT TOWARDS COST OF CONSTRUCTION OF SHOW ROOM AT 9A, KANIKA GARDEN, RAJPURA. 18 IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 30.01.2013 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 30. 01.2013 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR