SUNIL AMBWANI, ADITYA NATH MITTAL, J. - (1.) WE have heard Shri Shambhu Chopra, learned counsel appearing for the department. Shri Nikhil Agarwal appears for the respondent -assessee.
(2.) THIS Income Tax Appeal under Section 260 -A of the Income Tax Act, 1961 arises out of order of the Income Tax Appellate Tribunal, Allahabad Bench, Allahabad dated 8.10.2010 in I.T.A. No. 223 (Alld)/2010 for the assessment year 2006 -07. The department has raised following substantial questions of law: - "(1) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in deciding the cross - objection of the assessee first which only raised a factual controversy and on that basis rejecting the appeal of the department without deciding the controversy raised in the departmental appeal on merits? (2) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in deciding the cross -objection filed by the assessee in its favour by relying upon its own decision in I.T.A. No. 563/A/2000 and I.T.A. No. 151 and 152/Luc/03 in the case of Dy. C.I.T. vs. M/s Rohtas Projects Ltd, Lucknow despite the same having not been accepted by the department and is subject matter of appeal u/s 260 -A of the Act before the Hon'ble High Court? (3) Whether the decision of the Hon'ble M.P. High Court in the case of CIT vs. Abeson Hotel (P) Ltd. reported in (2004) 191 CTR 263, holding that if valuation estimated by the D.V.O is within 10% then no deduction should be made for the under statement of the investment in the building is at all applicable as neither the provisions of the Act nor the Rules contemplated that the difference upto 10% of the valuation shown by the assessee and that valued by the DVO has to be accepted? (4) Whether after recording a finding that the reference to the D.V.O by the A.O and calling for his report u/s 142 -A of Act was justified, the Tribunal is justified in law in not deciding the appeal filed by the department which clearly establishes that the report of the DVO regarding cost of construction was not in consonance with the disclosed investment made by the assessee in the case of Tulsiani Plaza and Chandan Vihar? (5) Whether when the supervision cost is added to the estimated expenditure as submitted by the DVO then the percentage of difference with the assessee's valuation comes to 22.15% in the case of Tulsiani Plaza and 17.80% in the case of Chandan Vihar, as such the CIT (A) and the Tribunal are justified in relying upon the Hon'ble M.P. High Court decision in the case of Abeson Hotels (supra)?"
(3.) THE assessee -respondent is a developer engaged in the business of construction and sale of buildings. During the assessment year 2006 -07 the assessee incurred expenses towards the cost of construction of various projects undertaken by it. The Assessing Officer referred the matter under Section 142 -A of the Act to the District Valuation Officer (DVO) on 30.10.2007 to give an estimate of the cost of construction of the various projects undertaken by the assessee. The AO allowed the assessee to file objections to the report of DVO and thereafter finding that there is difference in the two projects of Rs.5,75,368/ - and Rs.6,99,247/ - respectively, in the cost of construction as submitted by the assessee before the AO, and the estimated expenditure under Section 69B of the Act as unexplained investment to be taxed. The AO added Rs.12,74,615/ - to the income returned by the assessee and computed the assessment on total income of Rs. 59, 17, 215/ - with a direction to charge interest under Section 234 of the Act and to draw penalty proceedings under Section 271 (1) (c) of the Act.;