NARENDRA SINGH DHADDHA,J. - (1.) This appeal under Section 260A of the Income Tax Act, 1961 has been preferred by appellant Principal Commissioner of Income Tax, Kota, assailing the order dated 20.12.2018 of the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur, in ITA No.416/JP/2018 for the assessment year 2013-14, whereby the Tribunal allowed the appeal of assessee M/s Om Rudra Priya Holiday Resort Pvt. Ltd. and set aside the order dated 31.01.2018 of the Principal Commissioner of Income Tax, Kota, passed under Section 263 of the Income Tax Act, 1961.
(2.) Facts of the case are that respondent M/s Om Rudra Priya Holiday Resort Pvt. Ltd. (hereinafter shall be referred to as 'the assessee') is a company engaged in the business of hotel and it follows the mercantile system of accounting. The assessment order under Section 143(3) of the Income Tax Act, 1961 (for short, 'the IT Act') was passed on 14.03.2016, whereby total income was assessed at Nil. The assessing officer examined the books of accounts randomly. Subsequent to passing of order dated 14.03.2016, it was found by the CIT that the order was erroneous and prejudicial to the interest of the revenue, therefore, a notice dated 22.09.2017 was issued to the assessee under Section 263 of the IT Act, which was duly served on the assessee. The issue was in respect of investment in fixed assets under the head "Income from Business or Profession", which was declared and accepted at Rs.2,20,03,275/-, whereas the same was valued at Rs.3.52 crore by the bank's surveyor-cum-valuer vide his valuation certificate dated 02.10.2012. Further, it was noticed that the assessee had shown total investment in fixed assets at Rs.2,69,26,206/- including land worth Rs.49,22,931/- as per Note 9 to the Balance Sheet as on 31.03.2013 against the amount of investment excluding land certified by the valuer vide work completion certificate dated 02.10.2012 of Rs.3.52 crores. The same value including land cost was to be taken as full value of investment in fixed assets at Rs.4,01,22,931/- which was neither taken by the assessee nor by the assessing officer. The said certificate was available on record while completing the assessment proceedings. However, the assessing officer had not taken proper cognizance on it and the assessing officer failed to deal with entire material on record including the valuation certificate of the surveyor-cum-valuer appointed by the bank. He did not give specific reasons why the valuation done by the surveyor-cum-valuer was not acceptable. There was a huge difference in the valuation done by the two valuers. Thus, the CIT was of the view that in such a situation the correct course of action would have been to refer the matter to the Departmental Valuation Officer (for short, 'the DVO') under Section 142A of the IT Act.
(3.) Ms. Parinitoo Jain, learned counsel for the revenue, has submitted that the Tribunal was not justified in setting aside the order passed under Section 263 of the IT Act because the project report, which was filed at the time of getting the loan, was prepared on 28.05.2011, wherein the cost was estimated at Rs.2.26 crores. Thereafter, the work completion certificate was prepared on 02.10.2012 after utilization of loan and the costs of construction was certified at Rs.3.53 crores. The Tribunal has wrongly considered the work completion certificate as project report filed with bank at the time of getting loan. The assessing officer made reference under Section 142(1) of the IT Act to the DVO estimated the cost of investment in construction of building at Rs.5.81 crores which is much higher than amount estimated in the work completion certificate dated 02.10.2012 issued by the bank valuer. The report was prepared by the revenue on the basis of specified and scientific rates of the CPWD, according to which the cost of construction was much higher than cost of Rs.1.81 crores recorded by the assessee in the books of accounts. The Tribunal was therefore not justified in holding that the assessing officer has made all equiries in respect to investment of Rs.1,81,49,072/- for construction of hotel building which was recorded by the assessee in its books of accounts, whereas the assessing officer has never made any inquiry regarding actual investment in construction of hotel building. The fact is that the assessing officer never referred the matter to the DVO for valuation of construction work and never made any inquiry in respect of amount mentioned in the work completion certificate.;