INCOME TAX OFFICER Vs. HOTEL SHYAMA

JUDGEMENT

(1.) THIS appeal was admitted on 28th April, 2009 on the following substantial question of law :

(2.) LEARNED counsel for respondent/assessee at the outset submitted that in this appeal the substantial question of law as framed does not involve and this appeal may be dismissed. Per contra, Shri Sanjay Lal, learned counsel appearing for the appellant refuted the aforesaid contention and submitted that the report of the DVO was wrongly not believed by the CIT(A) and the Tribunal. It is submitted that the AO rightly sought for the report of the DVO to ascertain the valuation of the construction of the building and as per report of the DVO rightly reassessed the income of the assessee, but the CIT(A) and the Tribunal erred in not considering this aspect.

(3.) IN this case, the substantial question of law on which this appeal was admitted on 28th April, 2009 relates to powers to make reference to Valuation Officer by the Dy. Director of Inspection (Inv.) under s. 131(1A) of the IT Act. The substantial question of law presupposes that such powers were exercised by the Dy. Director of Inspection (Inv.) and the Tribunal affirmed such powers, but from the perusal of record, we find that no such powers were exercised by the Dy. Director of Inspection (Inv.) to make reference to the Valuation Officer under S. 131(1A) of the IT Act. From the perusal of the orders passed by the AO, the CIT(A) and the Tribunal, we do not find that any of the authorities recorded a finding that the Dy. Director of Inspection (Inv.) was having no power to make reference to Valuation Officer under S. 131 (1A) of the IT Act. As aforesaid provision was not invoked by the Dy. Director of Inspection (Inv.) and none of the authorities has dealt with the case in the light of S. 131(1) of the Act, so aforesaid question does not arise for consideration by this Court. Apart from this, from the perusal of the orders passed by the AO and the CIT(A), it is apparent that both the authorities have dealt with the matter on facts. The AO while relying on the report of the DVO assessed the income of the assessee while the CIT(A) in appeal reappreciated the matter of the assessee in respect of the valuation of the construction. The CIT(A) found that to determine valuation of the property, various aspects have to be taken into consideration like purchase of the material, cost of labour, supervision by the assessee himself, factor of profit which usually the contractor takes while material is purchased by the assessee himself, freight charges which were taken into consideration by the DVO while the assessee transported the material by its own truck, the plinth was on pile system which was not estimated by the DVO and other expenses. The CIT(A) relying on the report of the approved valuer had recorded the findings in respect of cost of construction and found that the cost of construction shown by the assessee was correct and the report of DVO was not accepted. Aforesaid findings of the CIT(A) and the Tribunal are based on appreciation of the facts.