Section 142A – Reference to DVO cannot be made without rejecting the books of accounts – A.Y. 2005-06

Nirpal Singh vs. CIT (2013) 96 DTR (P&H) 385

The assessee was in the business of running a petrol pump and during the relevant year had constructed the petrol pump, and the said investment was duly recorded in the books of account.

The AO during the assessment proceedings referred the said investment to the DVO, and the AO while completing the assessment made addition to the income u/s. 69 on the basis of the DVO’s report. The CIT(A) allowed the appeal and the Tribunal held in favour of the Department. On appeal to the High Court, while allowing the appeal held that the AO cannot invoke the provisions of section 142A with rejecting the books of account, and therefore the additions made u/s. 69 cannot be sustained.