ITO v. Vijeta Educational Society
A.Ys. : 1998-99 to 2001-02 and 2003-04 to 2004-05
Dated : 28-9-2007
S. 142A r/w S. 143 — Reference to valuation cell u/s.142A
can be made during the course of assessment and reassessment, and not for the
purpose of initiating reassessment — Where Assessing Officer had not rejected
books of accounts by pointing out any defect, reference to DVO for valuation
of cost of construction of building incurred by the assessee was not valid,
and hence, the DVO’s report could not be utilised for framing
assessment/reassessment even though the same was obtained u/s.142A.
The assessee society was granted registration u/s. 12A. In
the course of assessment, the AO referred the valuation of building
constructed by the assessee to valuation cell. However the AO completed the
assessment without considering the report as the DVO’s report was not received
in time. Subsequently, the AO received the report from the DVO, wherein it was
shown that the assessee had made additional investment of Rs.46.87 lacs in the
building. On the basis of the said report, the AO initiated reassessment
proceedings, treating the differential amount as income from undisclosed
sources.
The CIT(A) held that even if the said addition was to be
added to the assessee’s income, the same would be exempt u/s.11, and deleted
the addition.
On second appeal by the department, it was held :
1. If the assessee has maintained proper books of
accounts and all details are mentioned in such books, which are duly
supported by vouchers, no defects are pointed out and the books are not
rejected, then the figures mentioned therein will have to be followed. The
valuation report has to be taken into consideration only when the books of
accounts are not reliable, in the opinion of the ITO.
2. Further, there cannot be any reference u/s.142A when
there is no process of assessment which is initiated after filing of return
of income, or issuance of notice u/s.142(1).
3. The process of reassessment can be initiated only
after issuance of notice u/s.148(1) after duly fulfilling the formalities
mentioned therein. It is clear that invoking S. 142A is a process after
re-opening of the assessment. The use of the word ‘require’ in S. 142A is
not superfluous but signifies a definite meaning, whereby some preliminary
formation of mind by the Assessing Officer is necessary which requires him
to make a reference to the DVO u/s.142A.
4. The provisions of S. 142A cannot be read in isolation
to S. 145. If books of accounts are found to be correct & complete in all
cases, no defect being pointed out therein, then addition made on account of
difference in cost of construction on the basis of DVO’s report is not
correct. Use of such a report obtained u/s.142A is not mandatory, but
discretionary.
Hence, the order of the CIT(A) was to be upheld, though on
different grounds.
