Undisclosed income: Reference to valuation officer: Ss. 69B and 142A: A. Y. 2007-08: When the books of account in respect of construction are maintained and the same are not rejected, the matter could not be referred to the DVO for assessing the value:

In the balance sheet filed along with the return of income for the A. Y. 2007-08, the assessee had shown investment of Rs. 5,73,000/- in the land account and Rs. 47,43,576/- in the building account. The Assessing Officer referred the case to the Departmental Valuation Officer(DVO) to determine the cost of construction. The DVO assessed the cost of the property at Rs. 1,02,54,500/-. The assessees furnished the copy of its building account as per its books of account along with the copies of the bills of items used in the building and vouchers on account of labour paid. The Assessing officer made an addition of Rs. 55,12,930/- u/s. 69B of the Act, being the difference of the cost shown in the books and the value determined by the DVO. The Tribunal deleted the addition.

On appeal by the Revenue, the Punjab and Haryana High Court upheld the decision of the Tribunal and held as under:

“i) In the present case, we find that the Tribunal decided the matter rightly in favour of the assessee in as much as the Tribunal came to the conclusion that the assessing authority could not have referred the matter to the DVO without the books of account being rejected.

ii) In the present case, a categorical finding is recorded by the Tribunal that the books were never rejected. In the circumstances, reliance placed on the report of the DVO was misconceived.

iii) Learned counsel for the Revenue was unable to justify that when the books of account in respect of cost of construction have been maintained by the assessee and the same were not rejected, how the matter could be referred to the DVO for assessing the value. Wherever the books of account are maintained with respect to the cost of construction, the matter can be referred to the DVO after the books of account are rejected by the Revenue on some legal or justified basis. In the absence of the same, the reference to the DVO cannot be upheld.

iv) In view of the above, we do not find any substance in the appeal. Dismissed.”