ITO, Ward 32(4), V. Madhu Arora,

ITA 1197/DEL/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3612 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 16-06-2010
• Assessment Year: 1999-2000
• Appeal Filed On: 12-03-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KISHORE
• Assessee Lawyers: DALEEP SINGH
• Keywords: Reopening of assessment; Unexplained investment; Value adopted by valuation officer; Capital asset; Business income; Fair market value; Valuation report; Onus to prove; Reason to believe; Set aside
• Section: 143(3); 133A; 143(1); 69B; 147; 148; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER I.T.A NO. 3806/DEL/07 ASSTT. YEAR 2006-07 INCOME TAX OFFICER, WARD-4 (3), NEW DELHI VS. M/S. LHASA CONSTRUCTION PVT. LTD., A-27, NDSE PART-II, NEW DELHI (APPELLANT) (RESPONDENT) AND I.T.A NO. 1197/DEL/07 ASSTT. YEAR 1999-2000 INCOME TAX OFFICER, VS. MS. MADHU ARORA WARD 32 (4), NEW DELHI. D-392, DEFENCE COLONY, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI B. KISHORE, DR RESPONDENT BY: SHRI DALEEP SINGH, CA ORDER PER RAJPAL YADAV, JM: THE PRESENT TWO APPEALS ARE DIRECTED AT THE INSTAN CE OF REVENUE AGAINST THE ORDERS OF LD. CIT(A) DATED 11.12.2006 I N THE CASE OF SMT. ITA NOS.3806,1197/DEL/07 ASSTT.YEAR 1999-2000 2 MADHU ARORA AND 25.5.2007 IN THE CASE OF M/S. LHASA CONSTRUCTION PVT. LTD. PASSED IN ASSTT. YEAR 1999-2000. THE ISSUES IN BOTH THE APPEALS ARE COMMON. THEREFORE WE HEARD THEM TOGETHER AND DEEM I T APPROPRIATE TO DISPOSE OFF THEM BY THIS COMMON ORDER. IN ITA NO. 3 806/DEL/07 THE REVENUE HAS CHALLENGED THE ORDER OF LD. CIT(A) MAINLY ON TWO COUNTS. HOWEVER THE GROUNDS TAKEN BY THE REVENUE AR E NOT IN CONSONANCE WITH RULE 8 OF ITAT RULES. IN THE FIRST FOLD OF GRIEVANCE IT IS CHALLENGING THE ACTION OF LD. CIT(A) ANNULLING THE REOPENING OF ASSESSMENT. WHEREAS ON MERIT IT IS CHALLENGING THE DELETION OF RS. 1,03,36,300/-. 2. IN ITA NO. 1197/D/07 I.E. IN THE APPEAL OF SMT. MADHU ARORA THE REVENUE IS CHALLENGING THE DELETION OF ADDITION OF RS.1,00,86,300/-. 3. AS FAR AS THE ISSUE WITH REGARD TO THE DELETION OF QUANTUM ADDITION IN BOTH THE APPEALS IS CONCERNED IT IS COMMON. M/S. LHASA CONSTRUCTION WAS OWNER AND IN POSSESSION, HALF SHARE OF A BUILDI NG BEARING NO. C-20, NDSE-PART-II, NEW DELHI. THIS BUILDING WAS SOLD BY M/S. LHASA CONSTRUCTION VIDE TWO SEPARATE SALE DEEDS TO SMT. M ADHU ARORA AND HER HUSBAND SHRI OM PRAKASH ARORA DURING THE ACCOUNTIN G YEAR RELEVANT TO ASSTT. YEAR 1999-2000. ACCORDING TO THE AO PURCHASE RS HAVE UNDERSTATED THE PURCHASE PRICE. MARKET VALUE OF THE PROPERTY WAS NOT LESS THAN EQUIVALENT TO THE ONE DISCLOSED IN THE SA LE DEED. THEREFORE A REFERENCE WAS MADE TO THE DVO WHO DETERMINED THE MA RKET VALUE OF THE ITA NOS.3806,1197/DEL/07 ASSTT.YEAR 1999-2000 3 PROPERTY AT RS. 2,84,72,600/-. THE DIFFERENCE BETWE EN RS. 83,00,000/- AND RS. 2,84,72,600/- WAS ADDED IN THE HANDS OF SMT . MADHU ARORA AND HER HUSBAND SHRI OM PRAKASH ARORA IN EQUAL SHARES O N ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PURCHASE OF PROPERTY. 4. IN THE CASE OF M/S. LHASA CONSTRUCTION THE ASSES SEE HAD SHOWN 50% OF SHARE OF PROPERTY BEARING NO. C-20,NDSE-PART II. IT HAS SHOWN THE SALE FOR A SUM OF RS.39,00,000/- VIDE SALE DEED DATED 1 ST DECEMBER, 1998. THE AO ON THE BASIS OF DVOS REPORT DETERMINE D THE VALUE OF THE PROPERTY AT RS. 1,42,36,300/- BEING HALF SHARE OF T HE VALUE DETERMINED AT RS. 2,84,72,600/-. THE SALE VALUE HAS BEEN DISCLOSE D BY THE ASSESSEE AT RS. 39,00,000/- AND THEREFORE THE DIFFERENCE BETWEE N THE ONE DISCLOSED BY THE ASSESSEE AND DETERMINED BY THE DVO HAS BEEN WORKED OUT AT RS. 1,03,36,300/-. THIS INCOME HAS BEEN ADDED IN IT S CASE AS UNDISCLOSED BUSINESS INCOME. 5. AS FAR AS THIS ISSUE IS CONCERNED LD. REPRESENTA TIVES OF THE ASSESSEES AT THE VERY OUTSET SUBMITTED THAT LD. CIT (A) HAS DELETED THE ADDITION FROM THE HANDS OF BOTH THE ASSESSEE AS WEL L AS FROM THE HANDS OF SRI OM PRAKASH ARORA. THE REVENUE HAS CHALLENGE D THE ORDER OF THE LD. CIT(A) IN THE CASE OF OM PRAKASH ARORA BEFORE THE TRIBUNAL IN ITA NO. 1303/D/2007. THE TRIBUNAL HAS UPHELD THE ORDER OF THE LD. CIT(A) VIDE ITS ORDER DATED 31 ST MARCH, 2010. THE LD. COUNSEL FOR THE ASSESSEE PLACED ON RECORD COPY OF THE TRIBUNALS ORDER. ON T HE STRENGTH OF THIS ITA NOS.3806,1197/DEL/07 ASSTT.YEAR 1999-2000 4 ORDER LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT I N THE PRESENT TWO APPEALS LD. CIT(A) HAS RELIED UPON THE ORDER OF HIS PREDECESSOR IN THE CASE OF SHRI OM PRAKASH ARORA AND THEREFORE THE ISS UE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. LD. DR WAS UNABL E TO CONTROVERT THE CONTENTION OF LD. COUNSEL FOR THE ASSESSEE. 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE TRIBUNALS ORDER. WE FIND THAT THERE IS NO DISP ARITY ON FACTS. SHRI O.P. ARORA IS THE CO PURCHASER WITH SMT. MADHU ARORA WHE REAS M/S. LHASHA CONSTRUCTION IS A VENDOR TO THE EXTENT OF HALF SHAR E OF THE PROPERTY. IN THE CASE OF SHRI OM PRAKASH ARORA IT HAS BEEN ACCEPTED THAT NO UNEXPLAINED INVESTMENT HAS BEEN MADE BY THE ASSESSE E. THEREBY THERE IS NO UNEXPLAINED BUSINESS INCOME HAS ARISEN TO M/S , LHASA CONSTRUCTION. THE OBSERVATION OF THE TRIBUNAL IN TH E CASE OF OM PRAKASH ARORA READ AS UNDER :- 8. THE FIRST ISSUE FOR CONSIDERATION CONTAINED IN GROUND NOS.1 & 2 RELATES TO DELETING THE ADDITION OF RS.1,00,86,300 ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PURCHASE OF PROPERTY. 9. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT D URING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE P URCHASED A BUILDING BEARING NO. C-20, NDSE-II, NEW DELHI BY TW O SALE DEEDS ENTERED INTO DURING THE YEAR FOR TOTAL CONSIDERATIO N OF RS.83 LAKHS IN CO- OWNERSHIP WITH HIS WIFE SMT. MADHU ARORA. IN THE V IEW OF THE AO, THE CONSIDERATION OF THE PROPERTY DECLARED BY THE ASSES SEE WAS UNDERSTATED AND ACCORDINGLY A REFERENCE WAS MADE TO THE DEPARTMENTAL VALUATION OFFICER (DVO) FOR DETERMININ G ITS MARKET VALUE. THE DVO VIDE HIS REPORT DATED 21.3.2006 VALUED THE PROPERTY AT RS.2,84,72,600/-. THE AO REQUIRED THE ASSESSEE TO SHOW-CAUSE AS TO WHY 50% OF DIFFERENCE OF RS.2,84,72,600/- SHOULD NO T BE ADDED TO THE TAXABLE INCOME OF THE ASSESSEE AS UNEXPLAINED INVES TMENT IN THE PROPERTY. THE ASSESSEE FILED HIS EXPLANATION ALONG WITH A REPORT FORM ITA NOS.3806,1197/DEL/07 ASSTT.YEAR 1999-2000 5 REGISTERED VALUER WHICH WAS, HOWEVER, REJECTED BY T HE AO BY HOLDING THAT REPORT OF DVO WAS MORE RELIABLE THAN THE REPOR T OF THE REGISTERED VALUER CONSIDERING THE LOCATION OF THE PROPERTY. T HE AO ACCORDINGLY HELD THAT TOTAL INVESTMENT MADE BY THE ASSESSEE IN THIS IMMOVEABLE PROPERTY ALONG WITH HIS WIFE WAS RS.2,84,72,600/- A S DETERMINED BY THE DVO. 50% OF DIFFERENCE AMOUNTING TO RS.1,00,86,300 /- WAS THUS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 10. BEFORE CIT(A), THE ADDITION WAS AGITATED BY TH E ASSESSEE. IT WAS SUBMITTED THAT THERE WERE CERTAIN INFIRMITY IN THE VALUATION REPORT OF DVO. IT WAS POINTED OUT THAT DVO HAD ERRED IN DETE RMINING THE FAIR MARKET VALUE OF THE PROPERTY IN FY 1998-99 ON THE B ASIS OF SALE INSTANCE IN FY 1995-96. THE DVO HAD FAILED TO ACCO UNT FOR THE FACT THAT THE PROPERTY PRICE IN 1995-96 WERE AT ITS PEAK AND IN FY 1998-99 THEY HAD FALLEN CONSIDERABLY. THAT THE SALE INSTAN CE FURNISHED BY THE ASSESSEE WERE IN RESPECT OF PROPERTIES IN THE SAME AREA WHICH WAS ENTERED INTO DURING THE SAME PERIOD AND THAT THESE TRANSACTIONS BEING MORE REPRESENTATIVE OF EXISTING MARKET PRICE OF THE PROPERTY OF THAT AREA DURING FY 1998-99 WERE BETTER INDICATOR OF FAIR MAR KET VALUE OF THE PROPERTY DURING THE YEAR UNDER CONSIDERATION. THE VALUATION REPORT OF REGISTERED VALUER WAS ALSO FILED SHOWING THAT THE F AIR MARKET VALUE OF THE PROPERTY DURING THE INSTANT YEAR WAS RS.80.50 L AKHS. IT WAS ALSO SUBMITTED THAT SALE CONSIDERATION OF PROPERTY WAS D ULY RECORDED IN THE REGISTERED SALE DEED, WHEREIN THE PARTICULARS OF BO TH THE PURCHASER AS WELL AS SELLER WERE DULY FURNISHED AND THE AO ERRED IN ARBITRARILY REJECTING THE SALE EVEN THOUGH THE SELLER HAS ALSO CONFIRMED THE SALE CONSIDERATION FOR THE SALE OF PROPERTY. IT WAS ALS O CONTENDED THAT EVEN DURING THE COURSE OF SEARCH AT THE PREMISES OF THE ASSESSEE, NO MATERIAL WAS FOUND INDICATING ANY SUPPRESSION OF PU RCHASE CONSIDERATION. THEREFORE, THE AO DID NOT HAVE ANY VALID BASIS FOR MAKING REFERENCE U/S 142A OF THE ACT. FURTHER NO M ATERIAL WAS BROUGHT ON RECORD BY THE AO ON THE BASIS OF WHICH IT COULD BE SAID THAT ANY AMOUNT OVER AND ABOVE, THE DECLARED SALE CONSIDERAT ION WAS PAID FOR THE PURCHASE OF IMPUGNED PROPERTY. IT WAS ALSO SUB MITTED THAT THE FACTS POINTED BY THE ASSESSEE IN THE VALUATION REPO RT HAD NOT BEEN PROPERLY APPRECIATED BY THE AO. FURTHER, LD.AR OF THE ASSESSEE SUBMITTED THAT IT WAS A SETTLED PRINCIPLE OF LAW TH AT A VALUATION REPORT OF THE DVO IS ONLY AN OPINION WHICH HAS TO BE FOLLOWED IN THE BACKDROP OF THE FACTS OF THE CASE AND COULD NOT BE ACCEPTED AS GOSPEL TRUTH. HE ALSO CONTENDED THAT NO ADDITION COULD BE VALIDLY MA DE U/S 69B OF THE ACT MERELY DUE TO THE DIFFERENCE BETWEEN THE DVO AN D THE AMOUNT EXPENDED ON PURCHASE OF INVESTMENT. IT WAS ALSO SU BMITTED THAT SUBSEQUENTLY THE PROPERTY WAS SOLD DURING THE YEAR 2004-05 FOR A TOTAL SALE CONSIDERATION OF RS.1 CRORE AND SUCH SALE CONS IDERATION STOOD ACCEPTED BY THE AO HIMSELF WHILE COMPLETING ASSESSM ENT FOR AY 2004- 05. THEREFORE, THE VALUE OF PROPERTY WHICH WAS SOL D FOR RS.1 CRORE AND ACCEPTED BY THE AO COULD NOT BE VALUED AT RS.2,84,7 2,600/- IN AY 1999-2000. ITA NOS.3806,1197/DEL/07 ASSTT.YEAR 1999-2000 6 11. THE CIT(A) CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSEE. HE EXAMINED THE MATTER IN DETAIL. HE WAS OF THE OP INION THAT AO HAD BASED THE ADDITION MERELY ON THE BASIS OF DEPARTMEN TAL VALUATION REPORT. NO MATERIAL WAS BROUGHT ON RECORD BY THE A O ON THE BASIS OF WHICH IT COULD BE SAID THAT ANY AMOUNT OVER AND ABO VE THE DECLARED SALE CONSIDERATION WAS PAID FOR THE PURCHASE OF IMP UGNED PROPERTY. HE ALSO NOTED THAT DURING THE COURSE OF SEARCH NO M ATERIAL WAS FOUND INDICATING ANY SUPPRESSION OF PURCHASE CONSIDERATIO N. THEREFORE, ACCORDING TO THE CIT(A), THE ASSESSEE HAD SUCCESSFU LLY REBUTTED THE BASIS ON WHICH THE DVO HAD PREPARED THE REPORT. IT WAS ALSO OBSERVED THAT ONUS TO PROVE THAT THE ASSESSEE HAD SPENT MORE MONEY WAS ON THE AO AS HELD IN THE CASE OF NARESH KUMAR KHATTER (HUF) BY HONBLE DELHI HIGH COURT REPORTED IN 261 ITR 664. THE CIT( A) ALSO PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT I N THE CASE OF K.P. VARGHESE VS. ITO, 131 ITR 597, WHEREIN IT HAS BEEN HELD THAT THE BURDEN OF PROVING UNDERSTATEMENT OR CONCEALMENT WAS ON REVENUE. IT WAS FOR THE REVENUE TO SHOW THAT CONSIDERATION FOR TRANSFER OF CAPITAL ASSET HAD BEEN UNDERSTATED BY THE ASSESSEE. THE CI T(A) ALSO PLACED RELIANCE ON VARIOUS DECISIONS. HE WAS OF THE OPINI ON THAT REVENUE HAD FAILED TO ADDUCE ANY MATERIAL ON RECORD TO ESTABLIS H UNDERSTATEMENT OF CONSIDERATION IN THE SALE DOCUMENT. THEREFORE, THE ADDITION MADE ON THE BASIS OF DVO REPORT WAS NOT JUSTIFIED. HE ACCO RDINGLY AFTER DETAILED DISCUSSION DELETED THE ADDITION OF RS.1,00,86,300/- . 12. BEFORE US, LD.CIT(DR) SUBMITTED THAT DVOS REPO RT IS EXPERT OPINION WHICH IS PERMISSIBLE EVIDENCE. THE VALUATI ON OFFICER HAS GIVEN HIS REPORT ON THE BASIS OF SALE INSTANCE. THE CIT( A) WAS NOT EXPERT. HE PLACED RELIANCE ON THE DECISION OF ITAT, DELHI B ENCH IN THE CASE OF HANEMP PROPERTIES PVT. LTD. VS. ACIT, 101 ITD 19 FO R THE PROPOSITION THAT REFERENCE U/S 142A COULD BE MADE TO DVO FOR TH E PURPOSE OF VALUATION OF THE PROPERTY. THE REPORT OF DVO IS AD MISSIBLE AS AN EVIDENCE. ON THE OTHER HAND, LD.COUNSEL FOR THE AS SESSEE SUBMITTED THAT NO EVIDENCE IN SUPPORT OF CONTENTION THAT HIGH ER AMOUNT WAS INVESTED HAS BEEN BROUGHT ON RECORD. THE REGISTERE D VALUERS REPORT HAS BEEN IGNORED. THE REPORT OF VALUATION OFFICER WAS MADE AVAILABLE ON 26.3.2006. THE ASSESSEE GAVE REPLY WHICH HAS BE EN IGNORED. THE PROPERTY WAS REGISTERED AT RS.83 LAKHS. UNLESS, TH ERE IS DIRECT EVIDENCE TO SHOW THAT INVESTMENT HAS BEEN UNDERSTAT ED, NO ADDITION CAN BE MADE ON THE BASIS OF MERE VALUATION REPORT G IVEN BY THE DVO. THE ASSESSEE HAS ADMITTED THAT THE VALUE OF PROPERT Y AS PER REGISTERED DOCUMENT ON WHICH STAMP DUTY HAS BEEN DULY PAID. N O ATTEMPT HAS BEEN MADE BY THE REVENUE IN CASE OF OTHER FOUR SELL ERS THAT THEY HAVE RECEIVED EXCESS AMOUNT. THE MATTER WAS NOT EXAMINE D AT ALL. THERE WAS NO MATERIAL ON RECORD TO SAY THAT EXTRA CONSIDE RATION WAS RECEIVED BY THE SELLERS. THEREFORE, THE ADDITION COULD NOT BE MADE MERELY ON THE BASIS OF REPORT OF DVO. HE FURTHER SUBMITTED T HAT IN AY 2004-05, THE SALE CONSIDERATION OF RS.1 CRORE HAS BEEN ACCEP TED BY THE SAME AO. THEREFORE, THE ADDITION COULD NOT BE MADE IN T HE YEAR UNDER CONSIDERATION MERELY ON THE BASIS OF VALUATION REPO RT. HE PLACE RELIANCE ON THE DECISION OF CIT VS. NARESH KUMAR K HATTER (SUPRA) FOR ITA NOS.3806,1197/DEL/07 ASSTT.YEAR 1999-2000 7 THE PROPOSITION THAT IN ORDER TO INVOKE THE PROVISI ONS OF SECTION 69B, THE BURDEN IS ON REVENUE TO PROVE THAT REAL INVESTMENT EXCEEDS THE INVESTMENT SHOWN IN THE BOOKS OF ACCOUNT OF THE ASS ESSEE. 13. WE HAVE HARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS STATED ABOVE, IT IS CLEAR THAT AO HAD MADE ADDITION MERELY ON THE BASIS OF VALUATION REPORT OF THE DVO. THE PROPERTY WHICH WAS PURCHASED BY THE ASSESSEE FO R RS.83 LAKH IN 1999 WAS SOLD IN AY 2004-05 FOR RS.1 CRORE. THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT EXTRA INVESTMEN T WAS MADE BY THE ASSESSEE. THE PROPERTY HAS BEEN REGISTERED ON WHIC H STAMP DUTY AS PER RATE APPLICABLE HAS BEEN PAID. HONBLE DELHI H IGH COURT IN THE CASE OF CIT VS. NARESH KUMAR KHATTER (SUPRA) HAS HE LD THAT THE BURDEN IS ON REVENUE TO PROVE THAT THE REAL INVESTMENT EXC EEDED THE INVESTMENT SHOWN IN THE BOOKS OF ACCOUNT. IN THE A BSENCE OF ANY SUCH MATERIAL, ADDITION COULD NOT BE MADE. IN THE CASE BEFORE US, THE AO HAD NOT BROUGHT ANY MATERIAL ON RECORD AND, THEREFO RE, IN OUR CONSIDERED OPINION, CIT(A) WAS JUSTIFIED IN DELETIN G THE ADDITION. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE OR DER PASSED BY THE CIT(A) DELETING THE ADDITION. 7. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF SHRI OM PRAKASH ARORA WE DO NOT FIND ANY REASON TO INTER FERE IN THE ORDER OF LD. CIT ON THIS ISSUE. CONSEQUENTLY ITA NO. 1197/D/ 2007 IN THE CASE OF SMT. MADHU ARORA IS DISMISSED BECAUSE THIS IS THE O NLY ISSUE CHALLENGED BY THE REVENUE. SIMILARLY THE GROUND IN RESPECT OF UNEXPLAINED BUSINESS INCOME ARISEN TO M/S. LHASA CO NSTRUCTION AMOUNTING TO RS. 1,03,36,300/- RAISED BY THE REVENU E IS REJECTED. LD. CIT(A) HAS RIGHTLY DELETED THIS ADDITION. 8. IN THE CASE OF M/S. LHASA CONSTRUCTION THE NEXT FOLD OF GRIEVANCE RAISED BY THE REVENUE IS THAT LD. CIT(A) HAS ERRED IN HOLDING THAT REOPENING OF ASSESSMENT IS INCORRECT. ITA NOS.3806,1197/DEL/07 ASSTT.YEAR 1999-2000 8 9. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA S FILED ITS RETURN OF INCOME ON 7 TH SEPTEMBER, 1999 DECLARING NIL INCOME. THERE IS NO ASSESSMENT ORDER PASSED U./S 143(3). THE AO RECEIVE D AN INFORMATION EXHIBITING THAT HALF SHARE OF THE PROPERTY BEARING NO. C-20, NDSE- PART II, NEW DELHI SOLD BY THE ASSESSEE FOR RS. 39,00,00 0/- VIDE SALE DEED DATED 1 ST NOVEMBER, 1998. ACCORDING TO AO IT HAS BEEN UNDER VALUED AND THEREFORE HE ISSUED A NOTICE U/S 148 OF THE INC OME TAX ACT 1961 ON 29.3.2006 AFTER TAKING APPROVAL OF ADDITIONAL CIT R ANGE 4, NEW DELHI. THE LD. CIT (A) HAS HELD THAT REOPENING OF ASSESSME NT IS INCORRECT. HIS OBSERVATION READ AS UNDER :- I AM ALSO OF THE CONSIDERED VIEW THAT THE ASSESSME NT PROCEEDINGS WHICH WERE REOPENED UNDER SECTION 148 OF THE INCOME -TAX ACT, 1961 BASED ON THE VALUATION REPORT IN THE CASE OF T HE PURCHASER ARE ITSELF INVALID AND INCORRECT. THE VARIOUS COURT S CITATIONS RELIED UPON BY THE APPELLANT COMPANY ARE APPLICABLE TO THE FACTS OF THE APPELLANTS CASE. THE ASSESSING OFFICER HAS ALSO NO T DISPOSED OF THE OBJECTIONS FILED BY THE APPELLANT COMPANY AGAIN ST THE REOPENING OF THE CASE BY PASSING A SPEAKING ORDER. THEREFORE, I CONCLUDE THAT EVEN ON THE LAW, THE ASSESSING OFFICE R HAS ERRED IN REOPENING THE ASSESSMENT PROCEEDINGS UNDER SECTION 147 AND ISSUING THE NOTICE UNDER SECTION 148 OF THE INCOME- TAX ACT, 1961. 10. LD. DR WHILE IMPUGNING THE FINDING OF LD. CIT(A ) SUBMITTED THAT ASSESSMENT WAS REOPENED BY THE AO AFTER RECORDING R EASONS AND AFTER GATHERING INFORMATION THAT ASSESSEE HAS UNDERSTATED THE SALE PROCEED OF THIS PROPERTY WHICH LEADS TO ESCAPEMENT OF INCOME. LD. CIT(A) HAS NOT GONE INTO ALL THESE ASPECTS. HE RELIED UPON THE JUD GMENT OF HONBLE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVER I 291 ITR 500. LD. ITA NOS.3806,1197/DEL/07 ASSTT.YEAR 1999-2000 9 COUNSEL FOR THE ASSESSEE ON THE OTHER HAND SUBMITTE D THAT WHAT WAS OPPOSED BY THE AO WHILE RECORDING REASONS IS THE RE PORT OF DVO. THE REPORT OF DVO CANNOT BE SAID AN INFORMATION WHICH C AN LEAD TO FORM AN OPINION THAT INCOME HAS ESCAPED ASSESSMENT. IT IS J UST AN INFORMATION OF AN EXPERT AND ON THE BASIS OF THIS THE ASSESSMENT O F AN ASSESSEE CANNOT BE REOPENED. HE PLACED A RELIANCE UPON THE O RDER OF HONBLE SUPREME COURT RENDERED IN THE CIVIL APPEAL NO. 9468 OF 2003 IN THE CASE OF ACIT GUJARAT VS. M/S. DHARIYA CONSTRUCTION COMPANY. 11. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AN D GONE THROUGH THE RECORD CAREFULLY. THE PROPOSITION IS NOT AS SIM PLE AS PROPOUNDED BY THE LD. COUNSEL FOR THE ASSESSEE. THERE WAS A SURVE Y CONDUCTED U/S 133A AT M/S. SURPLUS BOOKS , 125A SHAHPUR JAT, NEW DELHI WHERE SMT. MADHU ARORA IS A PROPRIETOR. IN HER CASE INFORMATIO N WAS RECEIVED THAT SHE HAS PURCHASED A PROPERTY ALONGWITH HER HUSBAND WHEREIN THEY HAVE UNDERSTATED THE PURCHASE PRICE. ON THE BASIS OF THO SE INFORMATION A REFERENCE WAS MADE TO THE DVO AND THE DVO HAS DETER MINED MARKET VALUE OF THE PROPERTY ON THE DATE OF PURCHASE AT RS . 2,84,72,600/-. AFTER THESE INFORMATION A NOTICE U/S 148 WAS SERVED UPON THE ASSESSEE BEING A VENDOR. IT HAS DISCLOSED THE SALE PROCEED AT RS. 39,00,000/- WHEREAS IN THE CASE OF PURCHASER IT WAS GATHERED THAT THEY HAVE UNDERSTATED THE PURCHASE PRICE. THERE WAS NO ASSESSMENT FRAMED U/S 143(3) WHEREIN STAND OF THE ASSESSEE HAS BEEN ACCEPTED OR THE AO H AS EXAMINED ALL ITA NOS.3806,1197/DEL/07 ASSTT.YEAR 1999-2000 10 THESE ASPECTS. THUS PRIMA FACIE SUFFICIENT INFORMAT ION WAS WITH THE AO TO FORM AN OPINION THAT INCOME HAS ESCAPED ASSESSMENT. LD. FIRST APPELLATE AUTHORITY HAS NOT ADJUDICATED THIS ISSUE IN A RIGHT PERSPECTIVE RATHER HE HAS NOT ASSIGNED ANY REASON. LD. CIT(A) S TRAIGHT AWAY FIRST DECIDED THE ADDITION ON QUANTUM AND THEN IN A SWEEP ING OBSERVATION HELD THAT NOTICE U/S 148 IS INVALID AND INCORRECT. THE FOLLOWING OBSERVATIONS OF THE HONBLE SUPREME COURT IN THE CA SE OF ACIT V/S. RAJESH JHAVERI 291 ITR 500 ARE WORTH TO NOTE :- THE SCOPE AND EFFECT OF SECTION 147 AS SUBSTITUTE D WITH EFFECT FROM APRIL 1, 1989, AS ALSO SECTION 148 TO 152 ARE SUBSTANTIALLY DIFFERENT FROM THE PROVISIONS AS THEY STOOD PRIOR T O SUCH SUBSTITUTION. UNDER THE OLD PROVISIONS OF SECTION 1 47, SEPARATE CLAUSES (A) AND (B) LAID DOWN THE CIRCUMSTANCES UND ER WHICH INCOME ESCAPING ASSESSMENT FOR THE PAST ASSESSMENT YEARS COULD BE ASSESSED OR REASSESSED. TO CONFER JURISDICTION UNDE R SECTION 147 (A) TWO CONDITIONS WERE REQUIRED TO BE SATISFIED, F IRSTLY THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME, PROFITS OR GAINS CHARGEABLE TO INCOME TAX HAVE ESCAPED ASSE SSMENT, AND SECONDLY HE MUST ALSO HAVE REASON TO BELIEVE THAT S UCH ESCAPEMENT HAS OCCURRED BY REASON OF EITHER OMISSION OR FAILUR E ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIA L FACTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR. BOTH THESE CONDITI ONS WERE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE THE ASS ESSING OFFICER COULD HAVE JURISDICTION TO ISSUE NOTICE UNDER SECTI ON 148 READ WITH SECTION 147(A). BUT UNDER THE SUBSTITUTED SECTION 1 47 EXISTENCE OF ONLY THE FIRST CONDITION SUFFICES. IN OTHER WORDS I F THE ASSESSING OFFICER FOR WHATEVER REASON HAS REASON TO BELIEVE T HAT INCOME HAS ESCAPED ASSESSMENT IT CONFERS JURISDICTION TO REOPE N THE ASSESSMENT. IT IS, HOWEVER TO BE NOTED THAT BOTH TH E CONDITIONS MUST BE FULFILLED IF THE CASE FALLS WITHIN THE AMBIT OF PROVISO TO SECTION 147. THE CASE AT HAND IS COVERED BY THE MAIN PROVIS ION AND NOT THE PROVISO. ITA NOS.3806,1197/DEL/07 ASSTT.YEAR 1999-2000 11 SO LONG AS THE INGREDIENTS OF SECTION 147 ARE FULFI LLED, THE ASSESSING OFFICER IS FREE TO INITIATE PROCEEDING UNDER SECTIO N 147 AND FAILURE TO TAKE STEPS UNDER SECTION 143(3) WILL NOT RENDER THE ASSESSING OFFICER POWERLESS TO INITIATE REASSESSMENT PROCEEDI NGS EVEN WHEN THE INTIMATION UNDER SECTION 143(1) HAD BEEN ISSUED . 12. LD. CIT(A) FURTHER OBSERVED THAT ASSESSEE HAS F ILED OBJECTIONS ON REOPENING OF ASSESSMENT AND AO HAS NOT ADJUDICATED THOSE OBJECTIONS BY PASSING A SPEAKING ORDER. 13. WE AGREE TO THIS OBSERVATION BECAUSE ACCORDING TO THE ASSESSEE IT HAS FILED OBJECTION AND PRAYED THE AO TO DECIDE THE ISSUE IN VIEW OF THE HONBLE SUPREME COURTS DECISION IN THE CASE OF G.K .N. DRIVESHAFTS (INDIA) LTD. VS. INCOME TAX OFFICER AND OTHERS 259 ITR 19. 14. THE ITAT DELHI IN THE CASE OF ITO VS. SMT. GUR INDER KAUR 102 ITD 189 HAS EXAMINED THIS ASPECT IN DETAIL AND ALSO CON SIDERED THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF G. K.N. DRIVESHAFTS (INDIA) LTD. VS. INCOME TAX OFFICER. ITAT HAS HELD THAT IF THE ASSESSEE IS AWARE OF THE REASONS FOR REOPENING THE ASSESSMENT THEN IT IS NOT NECESSARY FOR THE TRIBUNAL TO ENTER INTO THE CONTRO VERSY AS TO WHETHER THE NON COMMUNICATION OF THE REASON IS FATAL TO THE VAL IDITY OF REASSESSMENT PROCEEDING. CONSIDERING THIS ORDER OF THE ITAT AND THE DELETION ON ADDITION OF MERIT WE ARE OF THE OPINION THAT IT WIL L BE A FUTILE EXERCISE EVEN IF WE SET ASIDE THIS ISSUE TO THE FILE OF AO FOR RE ADJUDICATING THE APPLICATION OF ASSESSEE AGAINST THE REOPENING OF AS SESSMENT. AFTER ITA NOS.3806,1197/DEL/07 ASSTT.YEAR 1999-2000 12 PERUSAL OF THE RECORD WE ARE SATISFIED THAT THERE W ERE SUFFICIENT INFORMATION FOR CONFIRMING A PRIMA FACIE OPINION I N THE PRESENT CASE THAT INCOME HAS ESCAPED ASSESSMENT. LD. CIT(A) HAS ERRED IN INVALIDATING OF THE REOPENING OF ASSESSMENT. THEREFORE WE ALLOW THI S GROUND OF APPEAL AND REVERSE THE FINDING OF THE LD. CIT(A) ON THIS I SSUE. 15. IN THE RESULT ITA NO.1197/DEL/2007 IS DISMISSED AND ITA NO. 3806/DEL/07 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.6.2010. SD/- [B.C. MEENA] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25.6.2010 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT