M/s Aman Cold Storage Pvt. Ltd., Shikohabad V. I.T.O., Ward-5(1), Firozabad

ITA 71/AGR/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0726 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 2 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-05-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 11-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R K AGARWAL; RAHUL AGARWAL S
• Keywords: Reopening of assessment; Unexplained investment; Valuation report; Reason to believe; Set aside
• Section: 143(3); 69B; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 70, 71 & 72/AGRA/2013) ASSTT. YEARS : 2006-07, 2008-09 & 2009-10 M/S. AMAN COLD STORAGE PVT. LTD., VS. INCOME-TAX O FFICER, AGRA GATE, SHIKOHABAD. WARD 5(1), FIROZABAD. DISTT. FIROZABAD. (PAN : AAFCA 0965 Q) (APPELLANT) (RESPONDENT) APPELLANT BY : S/SRI R.K. AGARWAL & RAHUL AGARWAL, ADVOCATES RESPONDENT BY : SRI WASEEM ARSHAD, SR. D.R. DATE OF HEARING : 01.05.2013 DATE OF PRONOUNCEMENT OF ORDER : 03.05.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS ORDER SHALL DISPOSE OF ALL THE ABOVE APPEALS FILED BY THE SAME ASSESSEE AGAINST DIFFERENT ORDERS OF LD. CIT(A)-II, AGRA. BO TH THE PARTIES MAINLY ARGUED IN ASSESSMENT YEAR 2006-07 AND STATED THAT THE ISSUE I S SAME IN THE REMAINING APPEALS, THEREFORE, FOR THE PURPOSE OF DISPOSAL OF APPEALS, WE TAKE UP ITA NO. 70/AGRA/2013 FOR THE ASSESSMENT YEAR 2006-07 AS UNDER : ITA NOS. 70, 71 & 72/2013 2 ITA NO. 70/AGRA/2013 (A.Y. 2006-07) : 2. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-II, AGRA DATED 01.02.2013 FOR THE ASSESSMENT YEAR 2006- 07 ON THE FOLLOWING GROUNDS : 1. BECAUSE ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, AGRA WAS N OT LEGALLY JUSTIFIED IN HOLDING THE REFERENCE MADE BY THE ASSE SSING OFFICER U/S. 142A AS VALID. LD. COMMISSIONER OF INCOME TAX (APPE ALS)-II, AGRA FAILED TO APPRECIATE THAT WITHOUT REJECTING BOOKS O F ACCOUNTS, THE REFERENCE U/S. 142A WAS WHOLLY ILLEGAL IN VIEW OF A UTHORITATIVE JUDICIAL PRONOUNCEMENTS. 2. BECAUSE ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, AGRA GROSS LY ERRED BOTH IN LAW AND ON FACTS IN SUSTAINING THE ADDITION OF RS.7 0,43,756/- ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S. 69B OF THE I NCOME TAX ACT. 3. BECAUSE ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, AGRA WAS N OT LEGALLY JUSTIFIED IN HOLDING THE PROCEEDINGS INITIATED BY I SSUE OF NOTICE U/S. 148 AS VALID. IN DOING SO, LD. COMMISSIONER OF INCO ME TAX (APPEALS)- II, AGRA HAS IGNORED SERIES OF JUDICIAL PRONOUNCEME NTS. 4. BECAUSE ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, AGRA WAS N OT LEGALLY JUSTIFIED IN HOLDING THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S. 148/147/143(3) AS VALID EVEN WITHOUT A NY SUBSTANTIAL MATERIAL ON RECORD. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT NOTICE U /S. 148 DATED 18/27.01.2010 WAS ISSUED ON THE BASIS OF REASONS RECORDED. IT IS A CA SE WHERE ON REFERENCE MADE U/S. 142A OF THE IT ACT, A REPORT DATED 07.12.2009 WAS R ECEIVED FROM DEPARTMENTAL VALUATION OFFICER (SHORTLY DVO), JAIPUR, WITH REFER ENCE TO WHICH THE AO ESTIMATED ITA NOS. 70, 71 & 72/2013 3 THE DIFFERENCE IN THE COST OF CONSTRUCTION FOR RS.7 0,43,756/-, RS.20,55,830/- AND RS.5,25,638/- IN THE ASSESSMENT YEARS 2006-07, 2008 -09 AND 2009-10 RESPECTIVELY. THUS, IN THE YEAR UNDER CONSIDERATION, AN AMOUNT OF ESCAPEMENT INVOLVED WAS FOUND OF RS.70,43,756/-. THE AO RECORDED REASONS FO R REOPENING OF ASSESSMENT AS UNDER : REASONS FOR INITIATING ACTION U/S. 148 OF THE I.T. ACT. M/S. AMAN COLD STORAGE (P) LTD., NEAR PETROL PUMP BHAGWATI AUTO SERVICE, AGRA GATE, SHIKOHABAD, FIROZABAD. A.Y. 2006-07 DURING THE ASSESSMENT PROCEEDINGS FOR THE A.Y. 2006 -07, IT WAS NOTICED THAT THE CONSTRUCTION OF COLD STORAGE BUILD ING WAS MADE FROM F.Y. 2005-06 TO 2008-09. THE ASSESSEE HAS NOT FURNI SHED THE VALUATION REPORT OF THE REGISTERED VALUER AT THE TIME OF ASSE SSMENT PROCEEDINGS. TO FIND OUT THE CORRECT COST OF CONSTRUCTION OF THE BUILDING OF COLD STORAGE, THE PROPOSAL FOR VALUATION OF THE BUILDING AND PLANT & MACHINERIES OF M/S. AMAN COLD STORAGE (P) LTD., SHI KOHABAD WAS REFERRED TO THE DISTRICT VALUATION OFFICER, JAIPUR ON DATED 26.12.2008. THE DISTRICT VALUATION OFFICER, JAIPUR HAS ESTIMAT ED THE COST OF CONSTRUCTION AS UNDER VIDE HIS REPORT NO. DVO/ITD/J PR/2009/IT- 1/308 DATED 07.12.2009. F.Y. A.Y. COST OF CONSTRUCTION OF THE BUILDING AS DECLARED BY ESTIMATED BY DIFFERENCE 2005-06 2006-07 1,16,04,211 1,86,47,967 70,43,756 2006-07 2007-08 NIL NIL NIL 2007-08 2008-09 33,86,870 54,42,700 20,55,830 2008-09 2009-10 8,50,000 13,17,633 5,25,638 IN VIEW OF THE ABOVE DIFFERENCE IN THE COST OF CON STRUCTION BETWEEN DECLARED BY THE ASSESSEE AND ESTIMATED BY T HE DVO, I HAVE ITA NOS. 70, 71 & 72/2013 4 REASON TO BELIEVE THAT THE INCOME OF RS.70,43,756/- HAS ESCAPED ASSESSMENT FOR ASSESSMENT YEAR 2006-07 WITHIN THE M EANING OF SECTION 147 OF THE IT ACT, 1961 AS UNDISCLOSED INCOME INVES TED IN CONSTRUCTION OF COLD STORAGE BUILDING. ISSUE NOTICE U/S. 148 FOR THE A.Y. 2006-07. 3.1 ON THE BASIS OF ABOVE REASONS RECORDED, NOTICE U/S. 148 WAS ISSUED AND THE ASSESSEE SUBMITTED THAT THE ORIGINAL RETURN ALREADY FILED ON 30.11.2006 BE TREATED AS FILED IN RESPONSE TO NOTICE U/S. 148 OF THE IT ACT. THE MATTER WAS TAKEN UP FOR CONSIDERATION TIME TO TIME AND EXPLANATION OF THE A SSESSEE WAS CALLED FOR WITH SHOW CAUSE NOTICE AS TO WHY THE DIFFERENCE IN THE C OST OF CONSTRUCTION AS DECLARED BY THE ASSESSEE AND ESTIMATED BY THE DVO SHOULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE. IN THE ABSENCE OF ANY COMPLIANCE, THE AO MADE ADDITION OF RS.70,43,756/- ON THE BASIS OF DIFFERENCE IN THE CO ST OF CONSTRUCTION REPORTED BY THE DVO. 3.2 THE ADDITION AND THE REOPENING OF ASSESSMENT WI TH REFERENCE U/S. 142A WERE CHALLENGED BEFORE THE LD. CIT(A). IT WAS EXPLAINED THAT THE COST OF CONSTRUCTION OF THE COLD STORAGE WAS DISCLOSED IN THE BOOKS OF ACCO UNT, WHICH IS SUPPORTED BY THE BALANCE SHEET FILED WITH THE RETURN OF INCOME. THE AO NEVER STATED THAT THE ASSESSEE DID NOT REFLECT THE COST OF CONSTRUCTION I N THE BOOKS OF ACCOUNTS. THUS, IT WAS NOT A CASE OF THE AO THAT THE INVESTMENT HAS NO T BEEN SHOWN IN THE BOOKS OF ACCOUNTS. THE BOOKS OF ACCOUNT ARE ALSO NOT REJECTE D. THEREFORE, THE REFERENCE TO ITA NOS. 70, 71 & 72/2013 5 DVO IS ILLEGAL AND UNJUSTIFIED. THE LD. CIT(A) CALL ED FOR THE REMAND REPORT FROM THE AO, IN WHICH THE AO EXPLAINED THAT THE AO HAS M ENTIONED IN THE OFFICE NOTE THAT THE ASSESSEE HAS NOT SUBMITTED ANY VALUATION R EPORT AND THAT IN THE ORIGINAL ASSESSMENT ORDER DATED 30.12.2008, THE AO HAS MENTI ONED THAT THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNT. THE AO, THEREFORE, SUBMIT TED THAT SINCE THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT, THEREFORE, HOW HE CAN COMMENT ON REJECTION OF COST OF CONSTRUCTION. THE ASSESSEE IN THE REJOINDER FILED COPIES OF WRITTEN SUBMISSIONS FILED DURING THE COURSE OF ASSESSMENT P ROCEEDINGS AND SUBMITTED THAT IN EACH SUBMISSION, THE ASSESSEE HAS MENTIONED PROD UCTION OF BOOKS OF ACCOUNT BEFORE THE AO AT THE TIME OF HEARING OF THE MATTER AND THE AO HAS NOT BROUGHT THIS FACT NOTED IN THE ASSESSMENT ORDER. THE LD. CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND NOTED THAT THE REFERENCE TO DVO U/ S. 142A WAS JUSTIFIED BECAUSE THE ASSESSEE HAD NOT PRODUCED THE BOOKS OF ACCOUNT AND VALUATION REPORT OF REGISTERED VALUER AND VOUCHERS FOR COST OF CONSTRUC TION. THEREFORE, THE AO HAD NO OPPORTUNITY TO EXAMINE THE BOOKS OF ACCOUNT. THE LD . CIT(A) ALSO FOUND THAT IN THE ABSENCE OF ANY MATERIAL ON RECORD, REOPENING OF ASS ESSMENT ON THE BASIS OF DVOS REPORT WAS JUSTIFIED AND RESULTANTLY, THE ADDITION HAS BEEN CORRECTLY MADE AGAINST THE ASSESSEE. THE APPEAL OF THE ASSESSEE WAS ACCORD INGLY DISMISSED. ITA NOS. 70, 71 & 72/2013 6 4. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO WRITTEN SUBMISSIO NS FILED BEFORE THE AO AT THE ORIGINAL ASSESSMENT STAGE IN WHICH THE ASSESSEE EXP LAINED THAT THE BOOKS OF ACCOUNT HAVE BEEN PRODUCED BEFORE THE AO ALONG WITH ALL SUP PORTING DOCUMENTS. COPIES OF THE WRITTEN SUBMISSIONS FILED BEFORE THE AO DATED 1 5.10.2008, 12.11.2008 AND 29.12.2008 ARE FILED IN THE PAPER BOOK AT PAGES 20, 22 AND 26 RESPECTIVELY. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, DEMONSTRATED T HAT THE ASSESSEE PRODUCED COMPLETE BOOKS OF ACCOUNT BEFORE THE AO AT THE ORIG INAL ASSESSMENT STAGE. THEREFORE, REMAND REPORT OF THE AO IS INCORRECT. HE HAS ALSO FILED COPY OF THE COMPLETE ORDER SHEET RECORDED BY THE AO TO SHOW THA T THE AO NEVER RECORDED IN THE ORDER SHEET THAT THE ASSESSEE DID NOT PRODUCE B OOKS OF ACCOUNT BEFORE HIM. HE HAS ALSO REFERRED TO ORIGINAL ASSESSMENT ORDER DATE D 30.12.2008 (PB-1) IN WHICH THE AO ON THE ISSUE OF OPERATIONAL EXPENSES, NOTED THAT THE BOOKS OF ACCOUNT AND RELATED VOUCHERS OF THESE EXPENSES HAVE NOT BEEN PR ODUCED. HE HAS SUBMITTED THAT THE MATTER WENT UP TO THE TRIBUNAL IN ITA NO. 267/2 011 AND 257/2011 IN BOTH THE CROSS APPEALS AND THE TRIBUNAL DECIDED THE MATTER V IDE ORDER DATED 25.05.2012 AND ONLY THE ISSUE OF SHARE APPLICATION MONEY WAS RESTO RED TO THE FILE OF AO FOR RECONSIDERATION. THEREFORE, THERE IS NO MENTION IN ANY OF THE PROCEEDINGS ABOUT THE REJECTION OF BOOKS OF ACCOUNT BY THE AO WITH REGARD TO COST OF CONSTRUCTION. THUS, IN THE ABSENCE OF ANY REJECTION OF ACCOUNTS WITH RE GARD TO COST OF CONSTRUCTION, ITA NOS. 70, 71 & 72/2013 7 REFERENCE TO THE DVO U/S. 142A WAS INVALID AND UNJU STIFIED. HE HAS ALSO SUBMITTED THAT THE REFERENCE TO THE DVO WAS MADE ON 26.12.200 8 WHEN ORIGINAL ASSESSMENT PROCEEDINGS WERE GOING ON BEFORE THE AO, BUT THERE IS NO ORDER SHEET RECORDED ON 26.12.2008 AND AS SUCH, THERE WAS NO MATTER PENDING BEFORE THE AO FOR REJECTION OF BOOKS OF ACCOUNT OR FOR MAKING ANY REFERENCE TO THE DVO. HE HAS SUBMITTED THAT THE AO MERELY REOPENED THE ASSESSMENT ON THE BASIS OF DVOS REPORT WITHOUT APPLYING MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE, SAME IS ILLEGAL AND REOPENING OF ASSESSEE AND RESULTANT ADDITION IS NOT JUSTIFIED IN THE MATTER. HE HAS RELIED UPON THE DECISION OF HONBLE SUPREME COU RT IN THE CASE OF SARGAM CINEMA VS. CIT, 328 ITR 513, IN WHICH IT WAS HELD ASSESSING AUTHORITY COULD NOT HAVE REFERRED THE MAT TER TO THE DVO WITHOUT THE BOOKS OF ACCOUNT BEING REJECTED, AN D THEREFORE, RELIANCE PLACED ON THE REPORT OF THE DVO WAS MISCON CEIVED AND THE IMPUGNED JUDGMENT OF THE HIGH COURT IS SET ASIDE. 4.1 HE HAS SUBMITTED THAT THE SAME DECISION IS FOLLOWED BY HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. LUCKNOW PUBLIC ED UCATION SOCIETY, 339 ITR 588 AND THE DEPARTMENTAL APPEAL HAS BEEN DISMISSED. HE HAS ALSO RELIED UPON THE ORDER OF ITAT, AGRA BENCH IN THE CASE OF PRAHLAD KUMAR JI NDAL VS. ACIT, 27 TAXMAN.COM 17 (AGRA), IN WHICH ON THE IDENTICAL ISS UE, THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE AB OVE DECISION OF HONBLE SUPREME COURT AND ALLAHABAD HIGH COURT. ON THE SIMI LAR LINE, HE HAS RELIED UPON ITA NOS. 70, 71 & 72/2013 8 UNREPORTED DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF TIKAULA SUGAR MILLS LTD. VS. CIT DATED 16.10.2012. HE HAS ALSO RELIED U PON THE DECISION OF GUJRAT HIGH COURT IN THE CASE OF GOOD LUCK AUTOMOBILES PVT. LTD . VS. 26 TAXMAN.COM 254, IN WHICH SIMILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF T HE ASSESSEE. HE HAS RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F ACIT VS. DHARIYA CONSTRUCTION CO. 328 ITR 515 (197 TAXMAN 202), IN W HICH THE HONBLE SUPREME COURT HELD THAT THE OPINION OF THE DVO PER SE IS NO T AN INFORMATION FOR THE PURPOSE OF REOPENING OF ASSESSMENT U/S. 147 OF THE IT ACT. THE AO HAS TO APPLY HIS MIND TO THE INFORMATION, IF ANY, COLLECTED AND MUST FORM A BELIEF THEREON. THE SAME DECISION IS FOLLOWED BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SMT. SURAJ DEVI, 197 TAXMAN 173 (328 ITR 604) IN WHICH IN THE ABSENCE OF ANY INCRIMINATING EVIDENCE FOUND AS A RESULT OF SEARCH TO SUGGEST THA T THE ASSESSEE HAD MADE ANY PAYMENT OVER AND ABOVE THE CONSIDERATION MENTIONED IN THE REGISTERED PURCHASE DEED, THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESS EE. HE HAS ALSO RELIED UPON THE DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VRINDAVAN REAL ESTATE, 78 DTR 100. IN THAT CASE, THE ASSESSMENT WAS REOPENED AND THE TRIBUNAL FOUND THAT THE ADDITIONS WERE MADE ONLY ON THE BASIS OF OPINIO N OF DVO AND NOT ON ANY MATERIAL COLLECTED. THE TRIBUNAL FOUND THAT THERE W ERE NO GOOD REASONS TO ESCALATE THE VALUE OF COST OF CONSTRUCTION. THE HONBLE HIGH COURT DISMISSED THE DEPARTMENTAL APPEAL. THE LD. COUNSEL FOR THE ASSESS EE, THEREFORE, SUBMITTED THAT THE ITA NOS. 70, 71 & 72/2013 9 REFERENCE TO DVO WITHOUT REJECTING THE BOOKS OF ACC OUNT IS ILLEGAL AND REOPENING OF ASSESSMENT IS BAD IN LAW. THEREFORE, THE RESULTA NT ADDITIONS ARE REQUIRED TO BE DELETED. 5. ON THE OTHER HAND, THE LD. DR RELIED UPON THE OR DERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT SINCE THE ASSESSEE DID NOT PRODU CE THE BOOKS OF ACCOUNT BEFORE THE AO, THEREFORE, THERE IS NO QUESTION OF REJECTIO N OF BOOKS OF ACCOUNT AND SINCE THE ASSESSEE DID NOT PRODUCE THE REPORT OF REGISTER ED VALUER, THEREFORE, REOPENING OF THE ASSESSMENT U/S. 148 IS JUSTIFIED. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE FILED COPY OF ORIGINAL ASSE SSMENT ORDER DATED 30.12.2008 U/S. 143(3) AT PAGE 1 OF THE PAPER BOOK, IN WHICH T HE AO CONSIDERED THE ISSUE OF MANUFACTURING AND OPERATIONAL EXPENSES AND FOUND TH AT THE ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNT AND VOUCHERS RELATING TO THESE EXPENSES AS REQUIRED BY HIM. THE AO IN THE BODY OF THE ORDER CONSIDERED SEVERAL OTHER ISSUES, BUT DID NOT CONSIDER THE ISSUE OF COST OF CONSTRUCTION AND NO ADDITION ON THAT ACCOUNT WAS MADE. THE ADDITIONS MADE IN THE ORIGINAL ASSESSMENT ORDER REMAINED SUBJECT MATTER OF APPEAL BEFORE THE TRIBUNAL, WHO HAVE DECIDED THE CROSS APPEALS VIDE ORDER DATED 25.05.2012 AND DEPARTMENTAL APPEAL WAS DISMISSED WH EREAS THE APPEAL OF THE ITA NOS. 70, 71 & 72/2013 10 ASSESSEE WAS PARTLY ALLOWED FOR STATISTICAL PURPOSE S AND ISSUE OF SHARE APPLICATION MONEY WAS RESTORED TO THE FILE OF AO FOR RECONSIDER ATION. THE ASSESSEE FILED COPY OF ENTIRE ORDER SHEET RECORDED BY THE AO AT THE TIM E OF PASSING THE ORIGINAL ASSESSMENT ORDER DATED 30.12.2008 AND IN THE ENTIRE ORDER SHEET, THE AO DID NOT RECORD ANYWHERE IF THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT BEFORE HIM FOR HIS EXAMINATION. THE REFERENCE TO THE DVO FOR E STIMATING THE COST OF CONSTRUCTION IS STATED TO BE MADE ON 26.12.2008. PR IOR TO THAT DATE, LAST ORDER SHEET WAS RECORDED ON 24.12.2008 AND CASE WAS ADJOURNED T O 29.12.2008 AND ON THAT DATE, CASE WAS FINALLY DISCUSSED WITH THE ASSESSEE AND THE ASSESSMENT ORDER HAS BEEN PASSED ON 30.12.2008. THUS IN BETWEEN 24.12.20 08 TO THE DATE OF PASSING OF THE ORDER ON 30.12.2008, THERE WAS NO PROCEEDING PE NDING BEFORE THE AO IN THE CASE OF THE ASSESSEE ON 26.12.2008 FOR MAKING ANY R EFERENCE TO THE DVO. IN ANY OF THE ORDER SHEETS, THE AO DID NOT RECORD ANYWHERE AB OUT THE DOUBTS ON MAINTENANCE OF BOOKS OF ACCOUNT BY THE ASSESSEE OR COST OF CONS TRUCTION NOT RECORDED IN THE BOOKS OF ACCOUNT BY THE ASSESSEE. THERE IS NO REFER ENCE OF ANY DOUBT CREATED IN THE MIND OF THE AO BEFORE MAKING REFERENCE TO THE DVO F OR ESTIMATING THE COST OF CONSTRUCTION. THUS, ENTIRE ORDER SHEET AT THE ORIGI NAL ASSESSMENT STAGE IS SILENT WITH REGARD TO THE SATISFACTION OF THE AO FOR MAKING REF ERENCE TO THE DVO ON 26.12.2008. THE ASSESSEE HAS FILED COPIES OF THE SU BMISSIONS FILED BEFORE THE AO ON 15.10.2008, 12.11.2008 AND 29.12.2008 (PB-20, 22 & 26), IN WHICH THE ITA NOS. 70, 71 & 72/2013 11 ASSESSEE CATEGORICALLY SUBMITTED BEFORE THE AO THAT THE BOOKS OF ACCOUNT ALONG WITH SUPPORTING DOCUMENTS ARE PRODUCED BEFORE THE A O FOR HIS EXAMINATION. WHEN THE ASSESSEE SEVERAL TIMES MADE STATEMENT BEFORE TH E AO IN WRITING THAT HE HAS PRODUCED THE BOOKS OF ACCOUNT BEFORE THE AO FOR EXA MINATION, AND IF NO BOOKS OF ACCOUNT WERE PRODUCED BEFORE THE AO, THE AO WAS BOU ND TO NOTE THIS FACT IN THE ORDER SHEET OR IN REGULAR ASSESSMENT ORDER. BUT IN THE ABSENCE OF ANY SUCH FACT MENTIONED IN THE ORDER SHEET REGARDING NON-PRODUCTI ON OF BOOKS OF ACCOUNT, THERE IS NO REASON TO DISBELIEVE THE EXPLANATION OF THE A SSESSEE THAT THE ASSESSEE PRODUCED BOOKS OF ACCOUNT BEFORE THE AO AT THE ASSESSMENT ST AGE. IT IS, THEREFORE, CLEAR THAT THE AO MADE A REFERENCE TO DVO ON 26.12.2008 WITHOU T REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE REGARDING THE DETAILS MENTI ONED OF COST OF CONSTRUCTION IN THE BOOKS OF ACCOUNT. FROM THE FACTS NOTED ABOVE, I T IS CLEAR THAT THE OPINION OF THE AO FOR REOPENING OF ASSESSMENT U/S. 147 WAS BASED U PON THE REPORT OF DVO. FIRSTLY, THE AO COULD NOT HAVE REFERRED THE MATTER TO THE DVO UNLESS HE HAD ANY DOUBT OVER THE EXPENDITURE AFTER EXAMINING THE BOOK S OF ACCOUNT OF THE ASSESSEE AND ON WHICH HE HAD REJECTED THE ACCOUNTS. SAME ISS UE CAME UP BEFORE THE HONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA VS. CIT (SUPRA) WHEREIN HONBLE APEX COURT HELD THAT THE ASSESSING AUTHORITY CANNOT REFER THE MATTER TO THE DVO WITHOUT FIRST REJECTING THE BOOKS OF ACCOUNT. THE J URISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. LUCKNOW PUBLIC EDUCATION SOCIETY (S UPRA) FOLLOWED THE ABOVE ITA NOS. 70, 71 & 72/2013 12 JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF SA RGAM CINEMA (SUPRA) AND REJECTED THE CONTENTION ADVANCED ON BEHALF OF THE R EVENUE THAT THE REFERENCE U/S. 142A CAN BE MADE TO THE DVO WITHOUT REJECTING THE B OOKS OF ACCOUNT. THE COURT HELD THAT ONCE LAW IS DECLARED BY THE APEX COURT, R EFERENCE U/S. 142A CANNOT BE MADE WITHOUT REJECTING THE BOOKS OF ACCOUNT. IN THE LIGHT OF THE FACTS DISCUSSED ABOVE, IT IS CLEAR THAT THE AO DID NOT REJECT THE B OOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. THE LD. CIT(A) ACCEPTED THE REMAND REPORT OF THE AO THAT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT AT THE ORIGINA L ASSESSMENT STAGE, WHICH FACT IS CONTRARY TO THE ORDER SHEET RECORDED BY THE AO. THE REFORE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DECIDING THE ISSUE AGAINST THE ASSESSE E. IT IS, THEREFORE, CLEAR THAT THE REFERENCE TO THE DVO WAS MADE U/S. 142A WITHOUT REJ ECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE PARTICULARLY WHEN ON THE DATE OF RE FERENCE ON 26.12.2008, THERE WAS NO MATTER PENDING BEFORE THE AO AT THE ORIGINAL ASS ESSMENT STAGE. THEREFORE, REFERENCE TO THE DVO ITSELF WAS INVALID. HONBLE SU PREME COURT IN THE CASE OF DHARIYA CONSTRUCTION CO. (SUPRA) HAS ALSO HELD THAT OPINION OF THE DVO PER SE IS NOT INFORMATION FOR THE PURPOSE OF REOPENING OF ASS ESSMENT U/S. 147 OF THE IT ACT. MOREOVER, IN THE PRESENT CASE, NO EVIDENCE, MUCH LE SS INCRIMINATING EVIDENCE, HAS BEEN BROUGHT ON RECORD TO SUGGEST THAT THE ASSESSEE HAD MADE MORE INVESTMENT IN THE PROPERTY AS AGAINST THE INVESTMENT RECORDED IN THE BOOKS OF ACCOUNT. THE AO DID NOT BRING ANY OTHER MATERIAL ON RECORD TO SUPPO RT HIS FINDING AND IT APPEARS THAT ITA NOS. 70, 71 & 72/2013 13 THE AO REOPENED THE ASSESSMENT MERELY ON THE BASIS OF REPORT OF THE DVO DATED 07.12.2009. IT FURTHER APPEARS THAT THE AO WITHOUT EXAMINING THE ISSUE ACCEPTED THE DIFFERENCE IN THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE AND ESTIMATED BY THE DVO. THEREFORE, REOPENING OF ASSESSMENT IS ALSO UNJUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. CONSIDERING THE ABOVE DI SCUSSION IN THE LIGHT OF THE DECISION CITED BY THE LD. COUNSEL FOR THE ASSESSEE, WE ARE OF THE VIEW THAT THE REFERENCE TO THE DVO WITHOUT REJECTING THE BOOKS OF ACCOUNT BY THE AO IS WHOLLY UNJUSTIFIED AND REOPENING OF ASSESSMENT ON MERE DVO S REPORT IS ALSO NOT JUSTIFIED. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHOR ITIES BELOW AND QUASH THE REOPENING OF ASSESSMENT. RESULTANTLY, ALL ADDITIONS MADE BY THE AO STAND DELETED. IN THE RESULT, THE APPEAL OF THE ASSESSEE ON ALL TH E GROUNDS IS ALLOWED. ITA NO. 71 & 72/AGRA/2013 : 7. BOTH THE APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST DIFFERENT ORDERS OF THE LD. CIT(A)-II, AGRA DATED 28.02.2013 FOR THE ASSESS MENT YEARS 2008-09 AND 2009- 10 ON THE SIMILAR GROUNDS OF APPEALS MENTIONED ABOV E EXCEPT THAT THE ADDITION MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) ARE IN A SUM OF RS.20,55,530/- AND 5,25,628/- RESPECTIVELY. BY FOLLOWING OUR ORDER IN ASSESSMENT YEAR 2006-07 ABOVE, WE SET ASIDE THE ORDERS OF THE AUTHORITIES B ELOW AND QUASH THE REOPENING OF ASSESSMENT AND DELETE THE RESULTANT ADDITIONS AS AB OVE. IN APPEAL FOR THE ITA NOS. 70, 71 & 72/2013 14 ASSESSMENT YEAR 2009-10, THE ASSESSEE HAS ALSO RAIS ED GROUND NO. 5 REGARDING ADDITION OF RS.37,763/- ON ACCOUNT OF DISALLOWANCE OF EXPENSES, WHICH THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS. THE SAME IS ACCORDINGLY DISMISSED AS WITHDRAWN. ACCORDINGLY, ON ALL THE FOUR GROUNDS OF APPEALS, AS HAVE BEEN DECIDED IN ASSESSMENT YEAR 2006-07, BOTH THESE APPEALS OF T HE ASSESSEE ARE ALLOWED. IN THE RESULT, APPEAL OF ASSESSEE FOR ASSESSMENT YEAR 2008 -09 IS ALLOWED AND THAT FOR A.Y. 2009-10 IS PARTLY ALLOWED, AS INDICATED ABOVE. 8. IN THE RESULT, APPEALS OF ASSESSEE IN ITA NOS. 7 0 & 71/AGRA/2013 ARE ALLOWED WHEREAS THE APPEAL OF THE ASSESSEE IN ITA N O. 72/AGRA/2013 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY