The ITO, Ward-1, Anand V. M/s. Devraj Developers, Anand

ITA 1526/AHD/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3709 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 08-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S SHUKLA
• Assessee Lawyers: S N DIVATIA
• Keywords: Reopening of assessment; Rejection of books of accounts; Unexplained investment; Value adopted by valuation officer; Income from undisclosed sources; Loose papers; Opportunity of being heard; Bonafide belief; Period of limitation; Question of law; Cost of acquisition; Tangible material; Difference of opinion; Valuation report; Time period of passing order; Revised return; Reason to believe; Change of opinion; Reassessment proceedings; Set aside
• Section: 143(3); 133A; 69B; 69A; 13; 153; 22; 69; 148; 2

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD ( CONVENED THROUGH VIRTUAL COURT ) BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NOS. 1524 TO 1526/AHD/2018 ( ASSESSMENT YEARS : 2009-10 TO 2011-12) THE INCOME TAX OFFICER WARD-1, ANAND, 101, 2 ND FLOOR, S. P. PATEL COMPLEX, NEAR OLD C. K. HALL, MAYFAIR ROAD, ANAND 388001 / VS. M/S. DEVRAJ DEVELOPERS TERRACE, DEV RED SQUARE BUILDING, BHALEJ ROAD, OPP. PETROL PUMP, ANAND ./ ./ PAN/GIR NO. : AAFFD4440E ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S. S. SHUKLA, SR.DR / RESPONDENT BY : SHRI S. N. DIVATIA, A.R. DATE OF HEARING 04/03/2021 !'# / DATE OF PRONOUNCEMENT 08/06/2021 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED THREE APPEALS HAVE BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE COMMON ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS)-4, VADODARA (CIT(A) IN SHORT), DATE D 16.03.2018 ARISING IN THE ASSESSMENT ORDER DATED 14.12.2016, 3 0.03.2016 & ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 2 - 14.12.2016; RESPECTIVELY, PASSED BY THE ASSESSING O FFICER (AO) UNDER S. 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (T HE ACT) CONCERNING AY 2009-10 TO 2011-12. 2. AT THE BEGINNING OF THE HEARING, IT WAS STATED O N BEHALF OF THE ASSESSEE THAT ALL THE THREE MATTERS CAPTIONED ABOVE ARE INTER-CONNECTED AND INVOLVES COMMON ISSUE. ACCORDINGLY, ALL THE THR EE MATTERS WERE HEARD TOGETHER FOR ADJUDICATION PURPOSES. 3. WE SHALL TAKE REVENUES APPEAL IN ITA NO. 1525/A HD/2018 CONCERNING AY 2010-11 AS A LEAD CASE FOR ADJUDICATI ON. ITA NO. 1525/AHD/2018 - AY- 2010-11 4. THE GROUND OF APPEAL RAISED BY THE REVENUE READS AS UNDER: 1.1 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD.CIT(APPEALS) HAS ERRED IN ALLOWING THE ASSES SEES APPEAL, WITHOUT APPRECIATING THE FACTS DISCUSSED IN THE ASSESSMENT ORDER AND THE REMAND REPORT. 1.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD, CIT(APPEALS) HAS ERRED IN HOLDING THAT THE REFERENCE MADE BY THE AO U/S 142A WAS INVALID, WITHOUT APPREC IATING THE FACTS DISCUSSED IN THE ASSESSMENT ORDER AND THE REM AND REPORT. 1.3 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD. CIT(APPEALS) HAS ERRED IN HOLDING THAT THE REFERENCE MADE BY THE AO U/S 142A WITHOUT REJECTING BOOKS OF ACCOUNT WAS INVALID. 1.4 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD, CIT(APPEALS) HAS ERRED IN HOLDING THAT THE REFERENCE MADE BY THE AO U/S 142A WITHOUT REJECTING BOOKS OF ACCOUNT WAS INVALID, EVEN THOUGH CIRCULAR NO.1/2015 (PARA 4 3.2) SPECIFICALLY SAYS THAT SECTION 142A OF THE INCOME-T AX ACT DOES NOT ENVISAGE REJECTION OF BOOKS OF ACCOUNT AS A PRE -CONDITION FOR REFERENCE TO THE VALUATION OFFICER FOR ESTIMATI ON OF THE VALUE OF ANY INVESTMENT OR PROPERTY. 1.5 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD. CIT(APPEALS) HAS ERRED IN ALLOWING THE ASSE SSED ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 3 - APPEAL, WITHOUT APPRECIATING THAT THE REOPENING OF ASSESSMENT U/S 147 WAS JUSTIFIED AND IN ACCORDANCE WITH LAW, C ONSIDERING THE REASONS RECORDED AND THE FACTS OF THE CASE. 1.6 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD. CIT(APPEALS) HAS ERRED IN OBSERVING THAT TH E INVESTMENT AS PER THE BOOKS OF ACCOUNT EXCEEDED THE INVESTMENT DETERMINED BY THE DVO TOWARDS COST OF CONSTRUCTION, WITHOUT APPRECIATING THE FACTS DISCUS SED IN THE ASSESSMENT ORDER AND THE REMAND REPORT. 1.7 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD. C.I.T.(APPEALS) ERRED IN ALLOWING THE ASSES SEE'S APPEAL WITHOUT APPRECIATING THE FINDINGS OF THE AO IN THE REMAND REPORT, AND IN MISINTERPRETING THE FINDINGS OF THE AO. 5. BRIEFLY STATED, THE CAPTIONED APPEAL CONCERNING AY 2010-11 HAS BEEN FILED BY THE REVENUE AGAINST THE COMMON ORDER OF CIT(A) DATED 16.03.2018 PASSED IN FAVOUR OF ASSESSEE WHEREIN THE ASSESSEE HAD CHALLENGED THE ORDER OF AO ON FOLLOWING BROAD COUNT ERS NAMELY (I) VALIDITY OF JURISDICTION ASSUMED BY AO UNDER S.147 OF THE ACT (II) THE VALIDITY OF REFERENCE MADE TO DISTRICT VALUATION OF FICER (DVO) UNDER S.142A OF THE ACT AND (III) JUSTIFICATION OF ADDITI ONS TOWARDS COST OF CONSTRUCTION MADE BY THE AO ON THE BASIS OF ESTIMAT IONS REACHED BY VALUATION OFFICER. 6. THE ASSESSEE IS A PARTNERSHIP FIRM. IT IS ENGAG ED IN THE BUSINESS OF CIVIL CONSTRUCTION AND DEVELOPMENT OF LAND/PLOTS BY WAY OF CONSTRUCTION OF RESIDENTIAL UNITS AND COMMERCIAL UN ITS. IT HAS UNDERTAKEN CONSTRUCTION OF SEVERAL BUILDING PROJECT S IN PURSUIT OF ITS ONGOING CONSTRUCTION BUSINESS. THE ASSESSEE FIRM FI LED ITS RETURN OF INCOME FOR AY 2010-11 IN QUESTION ON 14.10.2010 DEC LARING TOTAL INCOME AT RS.1,13,17,245/- AND WAS LATER REVISED TO RS. 1,92,70,561/- VIDE RETURN E-FILED ON 18/03/2011. A SURVEY WAS EAR LIER CONDUCTED ON 19.02.2010 ON THE BUSINESS PREMISES OF THE ASSESSEE UNDER S. 133A OF THE ACT AND ADMITTEDLY SEVERAL LOOSE PAPERS, DOCUME NTS ETC., OF INCRIMINATING NATURE, MARKED AS VARIOUS ANNEXURES, WERE FOUND AND IMPOUNDED. THESE LOOSE PAPERS ETC. SO IMPOUNDED REV EALED SEVERAL ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 4 - TRANSACTIONS WHICH WERE NOT FOUND RECORDED IN THE B OOKS. ON BEING CONFRONTED, THE PARTNER OF THE ASSESSEE FIRM CONCED ED AND DECLARED A LUMP-SUM AMOUNT OF RS. 1.75 CRORES AS ITS UNACCOUNT ED INCOME IN THE COURSE OF SURVEY PROCEEDINGS. SUCH DECLARATION MADE IN SURVEY WAS ALSO REPORTEDLY INCORPORATED SUITABLY WHILE DETERMI NING THE TOTAL INCOME OF THE ASSESSEE. THE RETURN FOR AY 2010-11 W AS SELECTED FOR A REGULAR ASSESSMENT AND A REGULAR ASSESSMENT WAS MAD E UNDER S.143(3) OF THE ACT. THE TOTAL INCOME WAS ASSESSED AT RS. 1, 94,25,530/- FOR AY 2010-11 VIDE AN ASSESSMENT ORDER DATED 28.03.2013. 7. IN THE COURSE OF THE REGULAR ASSESSMENT, THE AO INTER ALIA INVOKED S. 142A OF THE ACT AND MADE REFERENCE TO TH E VALUATION OFFICER [ALSO REFERRED TO AS DISTRICT VALUATION OFF ICER (DVO)] VIDE ITS LETTER DATED 26/02/2013 REQUIRING HIM TO ESTIMATE T HE VALUE OF SOME CONSTRUCTION PROJECTS SO UNDERTAKEN AND GIVE A REPO RT TO HIM THEREON, FOR THE PURPOSES OF MAKING THE ASSESSMENT. THE VALU ATION REPORT FROM THE DVO WAS HOWEVER NOT RECEIVED BY THE AO IN THE C OURSE OF ONGOING ASSESSMENT PROCEEDINGS. IN THE MEANWHILE, H AVING REGARD TO THE LIMITATION PERIOD AVAILABLE FOR COMPLETION OF R EGULAR ASSESSMENT AS STIPULATED IN S. 153(3) OF THE ACT, THE ASSESSMENT ORDER FOR AY 2010- 11 WAS PASSED PENDING RECEIPT OF THE VALUATION REP ORT. 8. ON THE BASIS OF VALUATION REPORT RECEIVED FROM T HE DVO AFTER THE COMPLETION OF ASSESSMENT SHOWING HUGE DIFFERENCES I N THE COST OF PROJECT SHOWN VIS A VIS ESTIMATED BY DVO, THE AO TOOK A VIEW THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WIT HIN THE MEANING OF SECTION 147 OF THE ACT. A NOTICE DATED 26.03.20 15 WAS ACCORDINGLY ISSUED UNDER S.148 OF THE ACT AND THE ASSESSMENT EA RLIER COMPLETED UNDER S. 143(3) WITHOUT THE AVAILABILITY OF VALUATI ON REPORT WAS REOPENED AND A FRESH ASSESSMENT ORDER WAS PASSED UN DER S.143(3) R.W.S. 147 OF THE ACT VIDE RE-ASSESSMENT ORDER DATE D 30.03.2016 GIVING EFFECT TO THE CONTENTS OF VALUATION REPORT. IN THE RE-ASSESSMENT ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 5 - PROCEEDINGS, THE VALUATION REPORT OF DVO WAS CONFRO NTED TO THE ASSESSEE AND AN AMOUNT OF RS.78,05,744/- WAS ADDED TO THE INCOME PREVIOUSLY ASSESSED HAVING REGARD TO THE DIFFERENCE IN THE VALUE OF INVESTMENT IN TWO DIFFERENT PROJECTS OF THE ASSESSE E AS ESTIMATED IN DVO REPORT QUA THE PROJECT COSTS DECLARED BY THE ASSESSEE. ON SIM ILAR PREMISE, ADDITIONS WERE ALSO MADE ON ACCOUNT OF WID E DIFFERENCES IN AY 2009-10 & 2011-12 AS WELL, UNDER S. 143(3) R.W.S . 147 OF THE ACT, AFTER ISSUANCE OF NOTICES UNDER S. 148 OF THE ACT F OR RESPECTIVE YEARS. 9. AGGRIEVED BY THE AFORESAID ACTION OF THE AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) FOR ALL THE THRE E ASSESSMENT YEARS AS PER CAPTIONED APPEALS. THE CIT(A) TOOK COGNIZANC E OF THE RELEVANT FACTS PRESENTED BEFORE IT AND PASSED A CONSOLIDATED & COMMON ORDER FOR ALL THESE YEARS WHEREBY ACTION OF THE AO WAS RE VERSED & RELIEF WAS GRANTED TO ASSESSEE ON BOTH THE GROUNDS PITCHED BEF ORE HIM I.E. (I) LACK OF JURISDICTION AS WELL AS (II) ACTION UNFOUNDED ON MERITS. 10. THE CIT(A), BY A COMBINED ORDER, HELD THAT THE REOPENING UNDER S.147 OF THE ACT WAS WITHOUT ANY JURISDICTION. THE CIT(A) ALSO FOUND THE ACTION OF THE AO TO BE DEVOID OF MERIT ON THE F ACTS OF THE CASE. THE ADDITIONS MADE ON ACCOUNT OF UNDERSTATEMENT OF COST OF INVESTMENTS MADE/ UNEXPLAINED EXPENSES INCURRED IN PROJECTS/ SC HEMES FOR ALL THESE YEARS ON THE BASIS OF VALUATION REPORT WAS THUS NEG ATED AND REVERSED. THE RELEVANT OPERATIVE PARA OF THE ORDER OF CIT(A) FOR ITS FINDING IS REPRODUCED BELOW FOR EASY REFERENCE: 3.6. THE LEGAL POSITION ON THE ISSUE OF REOPENING OF ASSESSMENT ON THE BASIS OF REPORT OF THE DVO HAS BEEN DISCUSSED BY VA RIOUS JUDICIAL AUTHORITIES AND THE CATENA OF DECISIONS ARE IN FAVO UR OF THE APPELLANT. IN ACIT VS DHARIYA CONSTRUCTION CO. [2010] 328 ITR 515 (SC) , THE SUPREME COURT, IN ITS SHORT ORDER DATED 16.2.2010, HELD AS FOLLOWS:- 'HAVING EXAMINED THE RECORD, WE FIND THAT IN THIS C ASE, THE DEPARTMENT SOUGHT REOPENING OF THE ASSESSMENT BASED ON THE OPINION GIVEN BY THE DISTRICT VALUATION OFFICER (DV O). THE OPINION OF THE DVO PER SE IS NOT AN INFORMATION FOR THE PURPOSES OF REOPENING ASSESSMENT UNDER SECTION 147 OF THE IN COME-TAX ACT, ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 6 - 1961. THE ASSESSING OFFICER HAS TO APPLY HIS MIND T O THE INFORMATION, IF ANY, COLLECTED AND MUST FORM A BELI EF THEREON. IN THE CIRCUMSTANCES, THERE IS NO MERIT IN THE CIVIL A PPEAL. THE DEPARTMENT WAS NOT ENTITLED TO REOPEN THE ASSESSMEN T. CIVIL APPEAL IS, ACCORDINGLY, DISMISSED. NO ORDER A S TO COSTS.' RELIANCE CAN ALSO BE MADE UPON THE JUDGMENTS OF PUN JAB & HARYANA HIGH COURT IN THE CASE OF CIT VS DARSAN SINGH [2005] 272 ITR 650 (P & H) , THE JUDGMENT OF MADRAS HIGH COURT IN CIT VS V.T. RAJENDERAN [2007] 288 ITR 312 (MAD) AND THE JUDGMENT OF MADHYA PRADESH HIGH COURT IN PRAKASH CHAND VS DY. CIT [2004] 269 ITR 260 (M.P.) IN WHICH IT WAS HELD THAT THE NOTICE OF REASSESSMENT O N THE BASIS OF REPORT OF THE VALUATION OFFICER IS NOT VALID. IT WAS HELD THAT DVO'S REPORT IS ONLY AN INFORMATION AND NOT THE MATERIAL ON THE BAS IS OF WHICH THE ASSESSMENT MAY BE REOPENED. SUCH A REPORT CANNOT BE AN ARITHMETIC APPRECIATION OF THE MATERIALS USED FOR CONSTRUCTION S NOR THE EXPENSES INCURRED BY THE ASSESSEE IN THAT REGARD. THE OBSERV ATIONS MADE BY THE DVO DO NOT AMOUNT TO MATERIAL WARRANTING SATISFACTI ON ON THE PART OF THE ASSESSING OFFICER FOR REASON TO BELIEVE THAT TH E INCOME HAD ESCAPED ASSESSMENT. IN CIT VS KELVINATOR OF INDIA LTD. [2010] 187 TAXMAN 3 12 (SC), THE SUPREME COURT HELD THAT THE ASSESSING OFFICER HAS NO POWER TO REVIEW HIS ORDER. HE HAS THE POWER TO RE-ASSESS. BUT RE-ASSESSMENT HAS TO BE BASED ON FULFILMENT OF CERTAIN PRE-CONDIT IONS AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, THEN, IN THE GARB OF RE- OPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ON E MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. THE ASSESSING OFFIC ER HAS POWER TO RE- OPEN, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. IN THE PRESENT CASE, THE DVO'S REPORT IS BASED ON H IS OPINION, AND NOT ON ANY MATERIAL, WHICH COULD FORM THE BASIS OF REOPENING OF THE CASES, AND THUS, IT CAN AT BEST BE TREATED AS AN IN FORMATION, WHICH WILL NOT BE SUFFICIENT MATERIAL FOR RECORDING 'REASON TO BELIEVE' TO PROCEED IN THE MATTER. THE OPINION OF THE DVO, WOULD NOT CO NSTITUTE TANGIBLE MATERIAL FOR EXERCISING POWERS OF REOPENING THE ASS ESSMENT. THE JUDGMENT OF APEX COURT IN DHARIYA CONSTRUCTION CO. (SUPRA) CLEARLY LAYS DOWN THAT THE OPINION OF THE DVO PER S E IS NOT AN INFORMATION FOR THE PURPOSES OF REOPENING ASSESSMEN T UNDER SECTION 147 OF THE INCOME TAX ACT, 1961. THE ASSESSING OFFI CER HAS TO APPLY HIS MIND TO THE MATERIAL, IF ANY, COLLECTED AND MUST FO RM A BELIEF THEREON. THERE HAS TO BE SOMETHING MORE THAN THE REPORT OF D VO FOR THE BELIEF OF THE ASSESSING OFFICER. THE ASSESSING OFFICER CANNOT , MERELY ON THE BASIS OF DVO'S REPORT, REOPEN THE ASSESSMENT. THE D VO'S REPORT MAY BE BASED ONLY ON HIS OPINION OR ON SOME TANGIBLE MATER IAL. IN THE FORMER CASE IT WOULD BE ONLY ESTIMATION OR GUESSWORK. IT M AY BE MENTIONED HERE THAT THE A.O, HAS RELIED MAINLY ON THE REPORT OF THE DVO WITHOUT POINTING OUT ANY DEFECT OR DISCREPANCY MUCH LESS AN Y MATERIAL DEFECT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, AND THE EXPEN DITURE INCURRED BY THE ASSESSEE IN CONSTRUCTION AND SHOWN IN THE BOOKS OF ACCOUNT ARE DULY SUPPORTED BY BILLS AND VOUCHERS AND ONLY AD HOC AND MINOR ADDITIONS IN ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 7 - RESPECT OF COST OF CONSTRUCTION WERE MADE IN ASSESS MENT PROCEEDINGS UNDER TAKEN BY THE A.O. U/S 143(3) OF THE ACT. FROM THE COPY OF THE OFFICE NOTE FURNISHED BY THE A.O. ALONG WITH REMAND REPORT, IT WAS CLEAR THAT NO SERIOUS DEFICIENCY WAS NOTICED BY THE A.O. IN RESPECT OF COST OF CONSTRUCTION EITHER IN BOOKS OF ACCOUNTS/VO UCHERS PRODUCED DURING SCRUTINY ASSESSMENTS OF IN THE MATERIAL IMPO UNDED DURING THE SURVEY. BEFORE PASSING THE ORDER ON 28.03.2013; THE A.O. IN PARA 4 OF 'OFFICE NOTE' HAS MENTIONED AS UNDER:- '4. THE VARIOUS BOCKS OF ACCOUNTS/DOCUMENTS/VOUCHER S ETC. FOUND/ IMPOUNDED DURING THE SURVEY AS PER ANNEXURE- A AND BANK ACCOUNTS AS PER ANNEXURE-M HAVE BEEN VERIFIED ON TE ST CHECK BASIS AND NO ADVERSE INFERENCE REQUIRED TO BE DRAWN ON VERIFICATION.' FROM THE ABOVE FACTS, IT IS CLEAR THAT THE ISSUE OF COST OF CONSTRUCTION HAD BEEN EXAMINED BY THE A.O. BEFORE R EFERRING THE CASE TO THE DVO. THIS REFERENCE WAS MADE WITHOUT REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSES. MOREOVER, IN SUCH SITUATI ON, MERELY ON THE BASIS OF REPORT OF THE DVO, REOPENING HAS BEEN HELD AS INVALID BY THE JURISDICTIONAL GUJARAT HIGH COURT. IN KISAN PROTEINS (P.) LTD. VS ACIT [2016] 74 TAXMANN.COM 219 (GUJARAT) IT WAS HELD THAT WHERE AT TIME OF MAKING ASSESSMENT UNDER SECTION 143(3), ALL RELEVAN T BILLS FOR CONSTRUCTION OF FACTORY BUILDING WERE PRODUCED, ASS ESSING OFFICER COULD NOT INITIATE REASSESSMENT PROCEEDINGS ON BASIS OF R EPORT OF DVO BY TAKING A VIEW THAT ASSESSEE HAD UNDERESTIMATED COST OF CONSTRUCTION OF FACTORY BUILDING. IT HAS BEEN OBSERVED BY THE HON'B LE HIGH COURT AS UNDER :- '6. IT IS FOUND FROM THE RECORD THAT THE ASSESSEE-C OMPANY HAS PRODUCED THE ENTIRE CONSTRUCTION ALONG WITH THE BIL LS IN DETAIL AND ONLY AFTER EXAMINING THE SAME, THE ASSESSMENT O RDER HAS BEEN FINALIZED AND THEREFORE A MERE REPORT OF VALUA TION CANNOT BE CONSTRUED AS SUFFICIENT AND TANGIBLE MATERIAL WH ICH MAY PERMIT THE AUTHORITY TO REOPEN THE ASSESSMENT. IN A DDITION THERETO, IT APPEARS THAT THE ASSESSING OFFICER IS S ATISFIED WITH THE CORRECTNESS AND COMPLETE NOTES OF ACCOUNTS OF THE A SSESSEE AND NOWHERE EVEN THE METHOD OF ACCOUNTING HAS BEEN QUES TIONED AND THEREFORE WHEN THE ENTIRE CONSTRUCTION ACCOUNT IS M ADE AVAILABLE TO THE ASSESSING OFFICER AND ONLY THEREAFTER WHEN T HE FINAL ASSESSMENT HAS TAKEN PLACE, DVO'S REPORT CANNOT BE CONSTRUED AS TANGIBLE MATERIAL WHICH WOULD WARRANT THE AUTHORITY TO EXERCISE THE POWERS OF REOPENING OF ASSESSMENT. THE APEX COU RT TIME AND AGAIN HAS PROPOUNDED THAT THE POWERS OF REASSESSMEN T CANNOT BE EXERCISED JUST TO REENSURE THE CORRECTNESS OF MATER IAL WHICH HAS ALREADY BEEN EXAMINED. FURTHER, NOT TO REVIEW THE O PINION WHICH HAS ALREADY BEEN FORMULATED AND IN LARGE NUMBER OF CASES IT HAS BEEN PROPOUNDED THAT REOPENING OF ASSESSMENT CANNOT BE BASED UPON MERE CHANGE OF OPINION. ONE SUCH DECISION WHIC H IS REPORTED IN CASE OF CIT V. KELVINATOR OF INDIA LTD. [2010] 320ITR 561/187 TAXMAN 312 (SC).' SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF AKSHAR INFRASTRUCTURE (P.) LTD. VS ITO [2017] 79 TAXMANN.COM 239 (GUJARAT) WHEREIN IT WAS HELD THAT ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 8 - WHERE ASSESSING OFFICER COMPLETED ASSESSMENT UNDER SECTION 143(3) MAKING CERTAIN ADDITION IN RESPECT OF UNEXP LAINED INVESTMENT, HE ADDITION MERELY COULD NOT REOPEN SAI D ASSESSMENT FOR ENHANCEMENT OF SAID ON BASIS OF REPORT OF DVO. 3.7. LD. AUTHORIZED REPRESENTATIVE HAS HEAVILY RELI ED ON SOME OTHER DECISIONS OF THE JURISDICTIONAL HIGH COURT WHICH AR E DIRECTLY ON THIS ISSUE. IN PCIT VS J. UPENDRA CONSTRUCTION (P.) LTD. [2015] 59 TAXMANN.COM 144 (GUJARAT), IT IS HELD BY THE HON'BLE COURT AS UNDER:- 4.1 AT THE OUTSET, IT IS REQUIRED TO BE NOTED THAT IN THE PRESENT CASE, THE ASSESSING OFFICER MADE ADDITIONS WITH RESPECT TO THE DIFFERENCE IN THE COST OF CONSTRUCTI ON BASED UPON AND/OR RELYING UPON THE DVO'S REPORT IN THE CA SE OF ONE M/S. MANJUSHA ESTATE PVT LTD. FROM WHOM, THE ASSESSEE SUBSEQUENTLY GOT THE PROJECT. IT IS TRUE T HAT IN THE PRESENT CASE, COPY OF THE DVO'S REPORT WAS FURNISHE D TO THE ASSESSEE DURING THE REASSESSMENT PROCEEDINGS. HOWEVER, IT IS REQUIRED TO BE NOTED THAT EXCEPT THE DVO'S REPORT, THERE WAS NO FURTHER TANGIBLE MATERIAL BEFO RE THE ASSESSING OFFICER. THEREFORE, SOLELY ON THE BASIS O F THE DVO'S REPORT WHICH, AS PER THE CATENA OF DECISIONS OF THE HON'BLE SUPREME COURT AS WELL AS THIS COURT, CAN BE SAID TO BE THE OPINION OF THE DVO ONLY, NO ADDITION CAN BE MADE WITH RESPECT TO DIFFERENCE BETWEEN THE COST OF CONSTRUCTION DETERMINED BY THE DVO AND SHOWN BY THE ASSESSEE. 5. UNDER THE CIRCUMSTANCES AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT CANNOT BE SAID THAT T HE LEARNED TRIBUNAL HAS COMMITTED ANY ERROR IN DELETIN G THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE OF THE COST OF CONSTRUCTION WHICH WAS SO LELY BASED UPON THE DVO'S REPORT. 5.1 UNDER THE CIRCUMSTANCES, NO INTERFERENCE OF THI S COURT IS CALLED FOR AND THE PRESENT, APPEALS DESERV E TO BE DISMISSED AS NO QUESTION OF LAW, MUCH LESS, ANY SUBSTANTIAL QUESTION OF LAW ARISES IN THE PRESENT A PPEALS. ONCE THE ADDITION MADE BY ASSESSING OFFICER IS DELE TED, THE NECESSARY CONSEQUENCES WOULD BE TO DELETE THE P ENALTY IMPOSED UNDER SECTION 271(1) (C) OF THE ACT.' SIMILARLY, IN CIT VS BERRY PLASTICS (P) LTD. (2013) 217 TAXMAN 39 (GUJ.), IT WAS HELD THAT IN RESPECT OF VALUATION OF LAND A ND BUILDING, DVO'S REPORT MAY B4 A USEFUL TOOL IN HANDS OF ASSES SING OFFICER, NEVERTHELESS, IT IS AN ESTIMATION AND WITHOUT THERE BEING ANYTHING MORE, IT CANNOT FORM BASIS FOR ADDITION UNDER SECTION 69B . IN VIEW OF THE AFOREMENTIONED DISCUSSION AND THE LE GAL POSITION AS ENUNCIATED BY THE APEX COURT IN THE CASES OF DHARIA CONSTRUCTION (SUPRA) AND KELVINATOR OF INDIA LTD. (SUPRA) AND THE JUDICIAL DECISIONS RENDERED BY THE JURISDICTIONAL GUJARAT HIGH COURT I N THE CASES OF J. UPENDRA CONSTRUCTION (SUPRA) AKSHAR INFRASTRUCTURE (SUPRA) AND KISAN PROTEINS (SUPRA) , IT IS HELD THAT THE REASSESSMENT MADE BY THE ASSESSING OFFICER SOLELY ON THE BASIS OF DVO REPORT WAS NOT VALID AND ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 9 - TO BE QUASHED. THIS DECISION IS TAKEN AFTER CONSIDE RING THE RATIO OF HON'BLE APEX COURT RENDERED IN THE CASE OF SARGAM CINEMA VS CIT [2010] 328 ITR 513 (SC) WHICH IS HEAVILY RELIED UPON BY THE LD. AUTHORIZED REPRESENTATIVE. ALSO HAVE CONSIDERED IN DETAILS THE FACTS OF THE PRESENT CASE AS EMANATING FROM THE ASSESSMENT O RDERS PASSED BY THREE DIFFERENT ASSESSING OFFICERS ON DIFFERENT DAT ES WHO MADE ROUTINE ADDITIONS ON AD HOC BASIS, THE DETAILED REPORT OF A .O. IN RESPECT OF SURVEY CONDUCTED IN THE CASE OF APPELLANT BEFORE TH E REASSESSMENT AND THE MATERIAL IMPOUNDED/STATEMENTS RECORDED BY THE A .O. AS WELL AS SURRENDER MADE BY THE APPELLANT AND ACCEPTED BY THE DEPARTMENT IN RESPECT OF 'ON MONEY' AND NO REFERENCE WAS MADE TO ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SURVEY OR DURIN G THE COURSE OF ASSESSMENTS MADE UNDER 143(3) IN RESPECT OF COST OF CONSTRUCTION. 3.8 THE DECISION OF SARGAM CINEMA (SUPRA) AND LEGAL PROVISION IN RESPECT OF REFERENCE TO DVO WITHOUT REJECTING BOOKS OF ACCOUNTS AS PROVIDED IN THE' UN-AMENDED/UN-SUBSTITUTED SECTION 142AHAS BEEN CONSIDERED BY JURISDICTIONAL HIGH COURT IN GOOD LUCK AUTOMOBILES (P.) LTD. V. ASSTT. CIT [2013] 26 TAXMANN.COM 25 (GUJ.). IT HAS BEEN HELD THEREIN AS UNDER: '9............. THE REJECTION OF BOOKS OF ACCOUNT S HOULD PRECEDE THE REFERENCE TO THE VALUATION OFFICER. AS RIGHTLY CONT ENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE REPORT OF THE VALUATION OFFICER CANNOT FORM THE FOUNDATION FOR REJECTION OF THE BOOKS OF ACCOUNT 10. IN THE CONTEXT OF THE CONTROVERSY IN IS SUE IT MAY ALSO BE GERMANE TO NOTICE THE PROVISIONS OF SECTION 145( 2) OF THE ACT, AS IT STOOD AT THE RELEVANT TIME, WHICH PROVIDED TH AT WHERE THE ASSESSING OFFICER IS NOT SATISFIED WITH THE CORRECT NESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, OR WH ERE NO METHOD OF ACCOUNTING HAS BEEN REGULARLY EMPLOYED BY THE ASSESSEE, THE ASSESSING OFFICER MAY MAKE AN ASSESSM ENT IN THE MANNER PROVIDED UNDER SECTION 144 OF THE ACT. THERE FORE, WHEN THE ASSESSING OFFICER RECORDS THAT HE IS NOT SATISF IED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, ETC., THE ASSESSING OFFICER CAN MAKE A BEST JUDGMENT ASSE SSMENT IN OTHER WORDS, BEFORE PROCEEDING TO ESTIMATE THE VALU E OF ANY INVESTMENT THE ASSESSING OFFICER HAS TO RECORD THAT HE IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE........ 12. THE FACTS OF THE PRESENT CASE MAY BE EXAMINED I N THE LIGHT OF THE STATUTORY SCHEME DISCUSSED HEREINABOVE AS WE LL AS THE DECISION OF THE SUPREME COURT IN SARGAM CINEMA (SUP RA). IN THIS REGARD, A PERUSAL OF THE ASSESSMENT ORDER REVEALS T HAT THE ASSESSING OFFICER HAS CATEGORICALLY RECORDED A FIND ING TO THE EFFECT THAT THE ACCOUNTS ARE DULY AUDITED AND COMPL ETE DETAILS ARE AVAILABLE. FROM THE TENOR OF THE ORDER OF THE A SSESSING OFFICER, IT IS APPARENT THAT HE HAS MADE THE REFERE NCE TO THE VALUATION OFFICER MERELY TO SEEK EXPERT ADVICE REGA RDING THE COST OF CONSTRUCTION. THERE IS NOTHING IN THE ASSESSMENT ORDER TO SUGGEST THAT THE ASSESSING OFFICER HAD ANY DOUBT RE GARDING THE COST OF CONSTRUCTION OR THAT HE WAS NOT JUSTIFIED R EGARDING THE CORRECTNESS OR COMPLETENESS OF THE BOOKS OF ACCOUNT BEFORE MAKING THE REFERENCE TO THE VALUATION OFFICER FOR A SCERTAINING ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 10 - THE FAIR PRICE OF CONSTRUCTION, THE ASSESSING OFFIC ER DOES NOT APPEAR TO HAVE ASCERTAINED THE CORRECTNESS OR OTHER WISE OF THE COST OF CONSTRUCTION SHOWN THE ASSESSEE IN ITS BOOK S OF ACCOUNT THUS, PRIOR TO MAKING THE REFERENCE THE VALUATION O FFICER, THE ASSESSING OFFICER HAS NOT ASCERTAINED AS TO WHAT WA S THE DEFECT IN THE COST OF CONSTRUCTION DISCLOSED BY THE ASSESS ES IN RETURNS OF INCOME. MOREOVER, IT IS APPARENT THAT THE ONLY REAS ON FOR MAKING THE ADDITION UNDER SECTION 69 OF THE ACT IS THAT TH ERE IS A DIFFERENCE THE COST OF CONSTRUCTION AS DETERMINED B Y THE VALUATION OFFICER AND AS SHOWN BY THE ASSESSEE. AT NO STAGE OF THE ASSESSMENT PROCEEDINGS DOES THE ASSESSING OFFIC ER APPEAR TO HAVE MENTIONED THAT THE BOOKS OF ACCOUNT ARE DEFECT IVE OR THAT THE COST OF CONSTRUCTION AS SHOWN IN THE BOOKS OF A CCOUNT IS NOT THE TRUE COST OF CONSTRUCTION. THUS, WHILE MAKING T HE REFERENCE TO THE VALUATION OFFICER, THE ASSESSING OFFICER HAS NO T RECORDED ANY DEFECT IN THE BOOKS OF ACCOUNT NOR HAS HE REJECTED THE SAME. EXCEPT FOR THE DIFFERENCE IN THE ESTIMATED COST DET ERMINED BY THE VALUATION OFFICER AND THE ACTUAL COST AS SHOWN BY T HE ASSESSEE, THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO ESTABLISH THAT THE ASSESSEE HAD MADE ANY UNACCOUNTE D: INVESTMENT IN THE CONSTRUCTION OF THE BUILDING IN Q UESTION AND THAT THE BOOKS OF ACCOUNT DO NOT REFLECT THE CORREC T COST OF CONSTRUCTION. UNDER THE CIRCUMSTANCES, THERE WAS NO OCCASION FOR THE ASSESSING OFFICER TO MAKE A REFERENCE TO TH E VALUATION OFFICER. AS HELD BY THE SUPREME COURT IN THE CASE OF SARGAM CINEMA (SUPRA), UNLESS THE BOOKS OF ACCOUNT ARE REJ ECTED, THE ASSESSING OFFICER CANNOT MAKE A REFERENCE TO THE VA LUATION OFFICER. THE REFERENCE MADE TO THE VALUATION OFFICE R, NOT BEING IN CONSONANCE WITH THE PROVISIONS OF LAW, . WAS, TH EREFORE, INVALID. ACCORDINGLY, THE REPORT MADE BY THE VALUAT ION OFFICER PURSUANT TO SUCH AN INVALID REFERENCE COULD NOT HAV E BEEN MADE THE BASIS FOR ADDITION UNDER SECTION 69 OF THE ACT. ' 3.9 AT THIS JUNCTURE, IT IS IMPERATIVE TO REFER TO THE PROVISIONS OF SECTION 142AOF THE IT ACT, AS APPLICABLE FOR THE YE ARS UNDER CONSIDERATION WHICH READ AS FOLLOWS: 142A (1) THE ASSESSING OFFICER MAY, FOR THE PURPOSE S OF ASSESSMENT OR REASSESSMENT, MAKE A REFERENCE TO A V ALUATION OFFICER TO ESTIMATE THE VALUE, INCLUDING FAIR MARKE T VALUE, OF ANY ASSET, PROPERTY OR INVESTMENT AND ' SUBMIT A COPY O F REPORT TO HIM. (2) THE ASSESSING OFFICER MAY MAKE A REFERENCE TO T HE VALUATION OFFICER UNDER SUB-SECTION (1) WHETHER OR NOT HE IS SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS CONTENDED THAT THE A.O. HAS, WITHOUT HAVING ANY MAT ERIAL AND WITHOUT RECORDING ANY SATISFACTION THAT THE ASSESSEE HAD MA DE INVESTMENT IN CONSTRUCTION OF PROJECTS WHICH IS NOT RECORDED IN H IS BOOKS OF ACCOUNT AND WITHOUT REJECTING THE ASSESSEE'S BOOKS OF ACCOU NT, REFERRED THE MATTER TO THE DVO U/S 142A OF THE ACT, ONLY TO EXAM INE THE CLAIM OF INVESTMENT. AS PER THE LD. A.R., THIS IS NOT IN ACC ORDANCE WITH LAW AND IN VIOLATION TO THE RATIO LAID DOWN BY THE APEX COU RT IN THE CASE OF SARGAM CINEMA (SUPRA) . IT IS RELEVANT TO POINT OUT HERE THAT SECTION ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 11 - 142A STANDS AMENDED W.EF. 01.04.2014 BY THE FINANCE (NO. 2) ACT 2014. SECTIONS 142A(1) AND (2), AS AMENDED BY FINANCE (NO .-2) ACT 2014, READ AS FOLLOWS: 142A. ESTIMATE BY VALUATION OFFICER IN CERTAIN CASE S.--(L) FOR THE PURPOSES OF MAKING AN ASSESSMENT OR RE-ASSESSME NT UNDER THIS ACT, WHERE AN ESTIMATE OF THE VALUE OF ANY INV ESTMENT REFERRED TO IN SECTION 69 OR SECTION 69B OR THE VAL UE OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE REFERR ED TO IN SECTION 69A OR SECTION 69B IS REQUIRED TO BE MADE, THE ASSE SSING OFFICER MAY REQUIRE THE VALUATION OFFICER TO MAKE AN ESTIMA TE OF SUCH VALUE AND REPORT THE SAME TO HIM. (2) THE VALUATION OFFICER TO WHOM A REFERENCE IS MA DE UNDER SUB-SECTION (1) SHALL, FOR THE PURPOSES OF DEALING WITH SUCH REFERENCE, HAVE ALL THE POWERS THAT HE HAS UNDER SE CTION 38AOF THE WEALTH-TAX ACT, 1957 (27 OF 1957). THE EXTANT SECTION 142AWAS SUBSTITUTED FOR THE ERST WHILE SECTION, W.E.F. 1.10.2014. IT NOWHERE STATES THAT IT WILL BE ACTIVE RESPECTIVELY. IN THE PRESENT CASE, AS OBSERVED IN THE ASSESSMENT ORD ERS (PASSED UNDER SECTION 143(3) OF THE ACT} ITSELF, THE ASSESSEE PRO DUCED HIS BOOKS OF ACCOUNT BEFORE THE A.O. COMPLETE DETAILS WERE FILED BEFORE THE ASSESSING OFFICER WHO PROCEEDED TO MAKE ONLY ROUTIN E OR AD-HOC ADDITIONS ON ACCOUNT OF PAYMENTS MADE TO SOME LABOU R. IN RESPECT OF A.Y.2009-10, ASSESSMENT WAS COMPLETED BY THE JOINT COMMISSIONER OF INCOME TAX, WHO HAS NOT POINTED OUT ANY DEFECT IN R ESPECT OF COST OF CONSTRUCTION, THE ORDER WAS PASSED BY HIM ON 14.12. 2011, WHEREAS, THE SURVEY WAS CONDUCTED UPON THE ASSESSEE ON 19.02.201 0. NEITHER IN THE STATEMENTS OF THE PARTNER WHOSE STATEMENTS WERE REC ORDED DURING SURVEY, NOR IN THE ASSESSMENT ORDER PASSED BY JCIT ON 14.12.2011, THERE WAS ANY REFERENCE TO ANY DISCREPANCY IN THE B OOKS OF ACCOUNTS/INCRIMINATING DOCUMENTS IN RESPECT OF COST OF CONSTRUCTION AND THE SURRENDER OF RS.1,75,00,000/- WAS MADE IN RESPE CT OF 'ON MONEY' RECEIVED. ASSESSMENT ORDER IN THE CASE OF ASSESSEE FOR A.Y.20 10-11 WAS MADE BY DY. COMMISSIONER OF INCOME TAX ON 28.03,201 3 AND AS MENTIONED ABOVE, AD-HOC A EDITION OF RS.1,50,000/- WAS MADE ON ACCOUNT OF LABOUR AND SITE EXPENSES. IN THAT ORDER ALSO IT IS CLEARLY MENTIONED THAT BOOKS OF ACCOUNTS, VOUCHERS ETC. WER E PRODUCED FOR VERIFICATION. ALONG WITH THE REMAND REPORT, THE ASS ESSING OFFICER HAS ALSO SENT THE COPY OF THE 'OFFICE NOTE' APPENDED WI TH THE ASSTT. ORDER DATED 28.03.2013, FOLLOWING POINTS ARE NOTICEABLE F ROM THE SAID 'OFFICE NOTE' :- 'OFFICE NOTE: 1. THIS CASE WAS RE-ASSIGNED TO THE UNDERSIGNED FOR ASSESSMENT PURPOSE BY THE JT.CIT, ANAND RANGE, ANAND VIDE ORDE R NO. AND/JT.CIT/ORDER-120/2012-13 DATED 15/01/2013 MADE U/S.120 OF THE IT ACT, 1961. 2. THE CASE WAS SELECTED FOR SCRUTINY AS IT WAS C OVERED IN SURVEY U/S.I33A OF THE ACT. THE ASSESSMENT ORDER IN THIS C ASE IS PASSED AFTER PASSED AFTER DISCUSSION WITH THE JT.CIT, ANAN D RANGE, ANAND FROM TIME TO TIME. ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 12 - 3. THE ASSESSEE HAS DISCLOSED RS.1.75 CRORE AS IT S UNDISCLOSED INCOME IN ITS REVISED RETURN OF INCOME IN RESPECT O F THE VARIOUS DISCREPANCIES FOUND IN ACCOUNTS / DOCUMENTS / VOUCH ERS ETC. FOUND / IMPOUNDED DURING THE SURVEY AS PER ANNEXURE -A AND PAID TAXES THEIR ON. 4. THE VARIOUS BOOKS OF ACCOUNTS/DOCUMENTS/VOUCHER S ETC. FOUND / IMPOUNDED DURING THE SURVEY AS PER ANNEXURE-A AND B ANK ACCOUNTS AS PER ANNEXURE-M HAVE BEEN VERIFIED ON TE ST CHECK BASIS AND NO ADVERSE INFERENCE REQUIRED TO BE DRAWN ON VERIFICATION. 5. THE CASH FOUND OF RS. 168000/- WAS EXPLAINED I N VIEW OF THE ENOUGH CASH BALANCE AS PER THE CASH BOOK AS ON THAT DATE. NO ANY ADVERSE INFERENCE IS THEREFORE DRAWN. 6. THE CONFIRMATION WITH RELEVANT EVIDENCE AS TO I DENTITY, COPIES OF RELEVANT PAGES OF SALE DEEDS ETC. FURNISHED IN RESP ECT OF SALES- BOOKING DEPOSITS DURING THE AY ARE KEPT ON RECORDS. THERE WERE NO NEW SARAFI DEPOSITS TAKEN / ACCEPTED BY THE ASSE SSEE. 7. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIV IL CONSTRUCTION AND DEVELOPMENT AND OTHER ALLIED ACTIVITIES TO CONSTRUC TION. THE A!R SALES TRANSACTIONS OF IMMOVABLE PROPERTIES HAVE BEE N VERIFIED & FOUND TO HAVE BEEN DULY DISCLOSED AS SALES & INCLUD ED ITS SALES RECEIPTS. THE DETAILS IN THIS REGARD ARE KEPT ON RE CORDS. NOT ANY ADVERSE INFERENCE IS THEREFORE DRAWN. THE VARIOUS C ONTACT RECEIPTS AS PER ITS DETAILS HAVE ALSO BEEN DISCLOSE D UNDER THE SALES IN THE BOOKS OF ACCOUNTS. THE ASSESSEE HAD TA KEN ADVANCE FROM ALPABEN R. THAKKAR FOR CONSTRUCTION OF KARIAN INTERNATIONAL SITE WORK HAS BEEN DISCLOSED AS LIABI LITY IN THE BALANCE SHEET. 8. THE REFERENCE FOR VALUATION WAS MADE TO THE DV O, AHMEDABAD/THE VO, BARODA ON 05/03/2013. HOWEVER. NO ANY VALUATION REPORT IS RECEIVED TILL DATE IN RESPONSE TO THE REFERENCE FOR VALUATION. THEREFORE, THIS ASSESSMENT IS FINALI ZED SUBJECT TO THE DISCREPANCY AS TO THE COST OF CONSTRUCTION IF A NY, FOUND AS PER THE VALUATION REPORT. THE ASSESSMENT MAY BE REO PENED U/S,147 OF THE ACT, IF SO REQUIRED TAKING INTO CONS IDERATION THE VALUATION REPORT.' FROM THE ABOVE MENTIONED 'OFFICE-NOTE', IT IS CLEAR THAT THE A,0. HAD NOT DISCOVERED ANY NOTABLE SHORTCOMING IN THE B OOKS OF ACCOUNTS/VOUCHERS MAINTAINED BY THE ASSESSEE. THE A SSESSMENT ORDER FOR A.Y.2011-12 WAS PASSED BY YET ANOTHER OFFICER W HO WAS ASSTT. COMMISSIONER OF INCOME TAX AND PASSED THE ORDER ON 14.03.2014. ONCE MORE, THE ADDITIONS MADE WERE OF ROUTINE NATURE. , ADDITION OF RS.2,24,551/- WAS MADE ON ACCOUNT OF DEFAULT U/S 40 (A)(IA) OF THE ACT, ADDITION OF RS.92,000/- WAS MADE ON AD HOC BASIS @1 0% OF SITE EXPENSES (WITHOUT POINTING ANY DISCREPANCY) AND ADD ITION OF RS.1,00,000/- WAS MADE IN RESPECT OF VARIATION IN F ORM 26AS DUE TO SOME MISTAKE IN UPLOADING OF DATA. THESE ADDITIONS TOO CANNOT MAKE CASE FOR ANY REFERENCE TO DVO ON THE GROUND OF DISC REPANCY IN COST OF CONSTRUCTION. THE A.O. DID NOT REJECT THE ASSESSEE' S BOOKS OF ACCOUNT BEFORE REFERRING THE MATTER TO THE VALUATION CELL O F THE DEPARTMENT, AS NOTED IN THE ASSESSMENT ORDER ITSELF THE REFERENCE WAS MADE SOLELY TO EXAMINE THE VERACITY OF THE ASSESSEE'S CLAIM OF INV ESTMENT IN CONSTRUCTION. THAT BEING SO, THE MATTER STANDS SQUA RELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF JURISDICT IONAL HIGH COURT IN ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 13 - THE CASE OF GOOD LUCK AUTOMOBILE (SUPRA), WHEREIN THE DECISION OF THE APEX COURT IN THE CASE OF SARGAM CINEMA VS CIT [2010] 328 ITR 513 (SC) HAS BEEN FOLLOWED. THEREFORE, IT IS HELD THAT THE REFERENCE MADE BY TH E A.O. U/S.142A OF THE ACT WITHOUT REJECTION OF THE ASSESS EE'S BOOKS OF ACCOUNT WAS INVALID. 3.10 THOUGH, IN THE AFOREMENTIONED PARA, I HAVE DEC IDED THE ISSUE IN FAVOUR OF THE APPELLANT AND THE GROUNDS OF APPEAL N O.1 & 2 REGARDING VALIDITY OF REASSESSMENT AS WELL AS REFERENCE TO DV O U/S 142A WITHOUT REJECTING BOOKS OF ACCOUNTS, HAVE BEEN DECIDED IN F AVOUR OF THE APPELLANT, I WOULD ALSO LIKE TO POINT THAT APPELLAN T WILL ALSO SUCCEED ON MERITS ON THE PECULIAR FACTS OF THE CASE WHICH HAVE NOT BEEN CONTROVERTED BY THE ASSESSING OFFICER. THE AUTHORI ZED REPRESENTATIVE HAS CONTENDED THAT THE A.O. HAS MADE ADDITIONS ONLY ON THE BASIS OF THE REPORT OF THE DVO. THE TOTAL COST OF CONSTRUCTION A S ESTIMATED BY THE DVO FOR THE VARIOUS PROJECTS EXECUTED BY THE APPELL ANT FIRM FOR A.Y.2008-09 TO 2011-12 ARE AS UNDER. ESTIMATED BY VALUATION CELL, INCOME TAX DEPARTMENT, AHMEDABAD FINANCIAL YEAR BUILDING WORK (RS.) TOTAL BUILDING WORK DEV PRASTHAN 2007-08 9448118 9448118 2008-09 61745261 61745261 2009-10 14785960 14785960 2010-11 0 0 TOTAL (A) 85979339 DEV SARJAN 2007-08 7556982 7556982 2008-09 17584313 17584313 2009-10 7021957 7021957 2010-11 3063046 3063046 TOTAL (B) 35226299 DEV RED SQUARE 2007-08 0 0 2008-09 0 0 2009-10 24175771 21475771 2010-11 7167818 7167818 [TOTAL (C) 28643589 DEV VRUND 2007-08 0 0 2008-09 0 0 2009-10 17187555 17187555 2010-11 32578618 32578618 TOTAL (D) 49766173 GRAND TOTAL(A+B+C+D) 199615400 ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 14 - AS AGAINST THIS, THE APPELLANT HAS SHOWN TOTAL INVE STMENT IN THE BOOKS OF ACCOUNT FOR VARIOUS PROJECTS AS UNDER: STATEMENT OF CONSTRUCTION COST INCURRED FOR THE PERIOD FROM 2007-08 TO 2010-11 SR. NO. F.Y. MATERIAL PURCHASED (RS) (A) DIRECT EXPS. INCURRED (RS) (B) LAND PURCHASE COST (RS) (C) TOTAL (RS) (A+B)-(C)=D 1 2007-08 2,03,78,868.00 1,32,77,832.00 0.00 3,36,56,700.00 2 2008-09 4,48,94,111.28 1,99,73,818.37 61,17,410.00 5,87,50,519.65 3 2009-10 2,49,49,960.00 1,65,09,010.00 0.00 4,14,58,970.00 4 2010-11 5,87,18,367.00 4,18,18,058.00 53,94,800.00 9,51,41,625.00 TOTAL 22,90,07,814.65 IT IS FURTHER SUBMITTED BEFORE ME THAT THE TOTAL CO ST OF CONSTRUCTION AS ESTIMATED BY THE DVO FOR THE VARIOU S PROJECTS EXECUTED BY THE APPELLANT FOR AY.2008-09 TO 2011-12 IS RS.19 ,96,15,400/-. HOWEVER, THE APPELLANT FIRM HAS DISCLOSED TOTAL INV ESTMENT IN THE BOOKS OF ACCOUNTS FOR THE VARIOUS PROJECTS AMOUNTING TO R S.22,90,07,874/- WHICH WAS SUPPORTED BY THE AUDITED BOOKS OF ACCOUNT S, P & L ACCOUNT AND BALANCE SHEET. THIS ONLY GOES TO SHOW THAT THE INVESTMENT MADE BY THE APPELLANT FIRM AND DISCLOSED IN THE BOOKS OF AC COUNT IS MUCH HIGHER THAN THAT ESTIMATED-BY THE DVO. THE OVERALL INVESTM ENT IN QUESTION SO DISCLOSED IN THE BOOKS OF ACCOUNT IS HIGHER THAN TH AT ESTIMATED IN THE DVO'S REPORT THE QUESTION OF THEIR BEING ANY ELEMEN T OF UNEXPLAINED INVESTMENT DOES NOT ARISE. THE A.O. HAS NOT FOUND A NY DISCREPANCY IN THE BOOKS OF ACCOUNTS AND HAS NOT REJECTED THE BOOK S OF ACCOUNTS BEFORE PROCEEDING TO TAKE UP THE MATTER WITH THE DVO. NO C LINCHING EVIDENCE HAS BEEN BROUGHT ON THE RECORD BY THE A.O, IN TERMS OF UNDISCLOSED INVESTMENTS MADE IN VARIOUS PROJECTS EXECUTED AND B ASED ON THE REPORT OF DVO, THE A.O. PROCEEDED FURTHER WITHOUT ANY BASE . WHEN THE APPELLANT MADE A DISCLOSURE OF RS.1.75 CRORES ON AC COUNT OF SUPPRESSION OF INCOME AND NOT ON ACCOUNT OF UNACCOU NTED COST OF INVESTMENT OR EXPENSES, THE VIEW PUT FORTH BY THE A .O, IS IRRELEVANT AND UNWARRANTED. THESE CONTENTIONS OF THE AUTHORIZED RE PRESENTATIVE THAT THE TOTAL INVESTMENT MADE BY THE APPELLANT IN ITS V ARIOUS PROJECTS AS REFLECTED IN ITS BALANCE SHEET WAS MORE THAN THE ES TIMATE MADE BY THE DVO, WERE ALSO SENT TO ASSESSING OFFICER FOR VERIFI CATION VIDE MY LETTER DATED 29.09.2017 WHILE SEEKING HIS REMAND REPORT. T HE ASSESSING OFFICER HAS NOT OFFERED HIS COMMENTS ON THIS CONTEN TION OF THE APPELLANT WHICH IS VERIFIABLE FROM THE BALANCE SHEETS OF PAST 5 YEARS PRODUCED BEFORE ME. THUS, THE CONTENTION OF THE AUTHORIZED R EPRESENTATIVE THAT THE INVESTMENTS AS PER THE BOOKS FAR EXCEEDED THE E STIMATION MADE BY THE DVO IS ALSO CORRECT. HOWEVER, THIS GROUND DOES NOT REQUIRE ADJUDICATION AS THE REASSESSMENT BASED SOLELY ON TH E REPORT OF THE DVO WHICH TOO IS BASED ON INVALID REFERENCE (WITHOUT RE JECTING BOOKS OF ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 15 - ACCOUNTS), HAS ALREADY BEEN HELD AS INVALID. IN THE RESULT, THE GROUNDS OF APPEAL OF THE APPELLANT ARE ALLOWED. 11. AGGRIEVED BY THE REVERSAL OF ACTION OF THE AO O N THE GROUNDS OF LACK OF JURISDICTION AS WELL AS ON MERITS, THE REVE NUE HAS PREFERRED APPEAL BEFORE THE TRIBUNAL. 12. WHEN THE MATTER WAS CALLED FOR HEARING, TO BEGI N WITH, THE LEARNED DR FOR THE REVENUE RELIED UPON THE REASONS RECORDED BY THE AO FOR THE PURPOSE OF REOPENING THE ASSESSMENT AND THE REASSESSMENT ORDER THUS FRAMED. IT WAS THEREAFTER SUBMITTED THAT WHILE THE REFERENCE UNDER S.142A OF THE ACT WAS DULY MADE FOR DETERMINA TION OF FAIR VALUE OF INVESTMENT IN VARIOUS PROJECTS, THE REPORT FROM THE DVO COULD NOT BE RECEIVED WITHIN LIMITATION PERIOD STATUTORILY AV AILABLE TO AO FOR ASSESSMENT AS PER EXTANT PROVISIONS OF S. 153 OF TH E ACT. THE AO WAS THUS CONSTRAINT TO PROCEED WITH THE COMPLETION OF R EGULAR ASSESSMENT HAVING REGARD TO THE EMBARGO OF LIMITATION PLACED B Y WAY PRE-AMENDED PROVISIONS OF SECTION 153 OF THE ACT, NON-RECEIPT O F DVO REPORT NOTWITHSTANDING. 12.1 IT WAS SUBMITTED THAT THE ACTION UNDER S. 142A WAS NOT CHALLENGED IN THE COURSE OF ORIGINAL ASSESSMENT PRO CEEDINGS. IT WAS CONTENDED THAT ONCE A VALID REFERENCE IS MADE UNDER S. 142A OF THE ACT AND REPORT IS DRAWN AFTER AFFORDING OPPORTUNITY TO THE ASSESSEE BY THE DVO IN EXERCISE OF QUASI JUDICIAL POWERS, SUCH EXERCISE UNDER S. 142A DOES NOT PALE INTO INSIGNIFICANCE OR BECOME IN OPERATIVE MERELY OWING TO A PER FORCE COMPLETION OF THE ASSESSMENT P ROCEEDINGS BEFORE THE RECEIPT OF THE VALUATION REPORT. IT WAS ADDED T HAT THE VALUATION REPORT PREPARED BY A THE VALUATION CELL UNDER A STA TUTORY DICTATE AND EXERCISING QUASI-JUDICIAL POWERS SIMILAR TO AO HAS A DEFINITE SANCTITY AND HAD BECOME INTEGRAL PART OF THE RECORD NOTWITHS TANDING ITS RECEIPT AFTER THE COMPLETION OF ASSESSMENT. SUCH REPORT, PR EPARED IN A QUASI JUDICIAL EXERCISE, WOULD PROVIDE A SOUND BASIS AND CONSEQUENTLY ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 16 - ENABLE THE INCOME TAX AUTHORITY CONCERNED TO TAKE S UCH ACTION AS PERMISSIBLE UNDER THE ACT WITHOUT ANY PERCEPTIBLE B AR. IT WAS CONTENDED THAT THE REPORT OF THE VALUER, GOVERNED U NDER S 142A, WAS RELEVANT AND GERMANE TO PROVIDE FOUNDATION AND SUFF ICIENT BASIS FOR HOLDING A BONAFIDE BELIEF THAT CHARGEABLE INCOME HA S ESCAPED ASSESSMENT. IT WAS CONTENDED THAT AT THE STAGE OF I SSUANCE OF NOTICE UNDER S. 148. THE AO WAS MERELY OBLIGED TO FORM A P RIMA FACIE BELIEVE ON ESCAPEMENT ON THE BASIS OF SOME EVIDENCE AND THE ESTABLISHED FACTUM OF ESCAPEMENT AT THE STAGE OF ISSUANCE OF RE OPENING NOTICE IS NOT THE REQUIREMENT OF LAW. IT WAS CONTENDED THAT I N THE PRESENT CIRCUMSTANCES, WHERE THE VALUATION REPORT OF DVO CO MING TO THE POSSESSION OF AO AFTER ASSESSMENT SHOWING SIGNIFICA TION DIFFERENCES IN THE VALUE OF PROJECT COSTS AND PROVIDING A PLAUS IBLE BASIS FOR FORMATION OF BELIEVE ON ESCAPEMENT, IT WAS THE DUTY OF THE AO TO INVOKE THE POWERS AVAILABLE UNDER S.147 OF THE ACT TO RE-ASSESS THE TOTAL INCOME OF THE ASSESSEE AFTER GIVING A REASONA BLE OPPORTUNITY TO THE ASSESSEE, WHICH IS WHAT WAS DONE BY THE AO. 12.2 IT WAS CONTENDED IN ELABORATION THAT SECTION 1 47 OF THE ACT DOES NOT PUT ANY FETTERS ON THE POWER OF THE AO TO EXERC ISE JURISDICTION OF REOPENING THE ASSESSMENT IN THE GIVEN CIRCUMSTANCES . THE AO IS ENTITLED TO INVOKE JURISDICTION UNDER S. 147 ON FUL FILLMENT OF THE REQUIREMENT OF EXISTENCE OF REASONS TO FORM A REASO NABLE BELIEF TOWARDS ESCAPEMENT OF INCOME. THE MATERIAL IN POSSE SSION FIRMLY SUGGESTED ESCAPEMENT OF INCOME. IT WAS ALSO CONTEND ED THAT IN THE ABSENCE OF VALUATION REPORT, IT CANNOT BE SAID THAT A SUMMARY ACCEPTANCE OF COST OF PROJECT CAPITALIZED IN THE BO OKS IS ACTUATED BY CHANGE OF OPINION. IT WAS THUS SUBMITTED THAT NO FAULT COULD HAVE BEEN FOUND IN THE ACT OF THE AO FOR THE PURPOSES OF EXERCISE OF JURISDICTION UNDER S.147 OF THE ACT. ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 17 - 12.3 AS REGARDS THE OBSERVATION OF THE CIT(A) THAT THE OPINION OF THE DVO PER SE IS NOT AN INFORMATION FOR THE PURPOSES OF REOPENIN G ASSESSMENT, THE LEARNED DR SUBMITTED THAT SUCH OBSE RVATION IS TOTALLY MISPLACED. IT WAS ESSENTIALLY CONTENDED THAT THE EX ERCISE OF VALUATION WOULD NATURALLY INVOLVE SOME ELEMENTS OF SUBJECTIVI TY BY THE EXPERT CONCERNED BUT HOWEVER THE REPORT OF THE DVO IN EXER CISE OF STATUTORY POWERS CONFERRED UNDER S.142A OF THE ACT CANNOT BE BRUSHED ASIDE AS A SYMBOLIC DOCUMENT OR FROM ANYBODY IN STREET, NOTWIT HSTANDING IMPLIED POSSIBILITY OF SOME IMPERFECTIONS OR MISTAKE CREEPI NG IN WHILE ARRIVING AT SUCH VALUATIONS. THE LD. DR POINTED OUT THE REPORT OF DVO PREPARED IN PURSUANCE OF STATUTORY MANDATE UNDER S. 142A IN THE INSTANT CASE, HAS DISTINGUISHABLE TRAPPINGS IN AS M UCH AS SUCH REPORTS ARE PREPARED IN EXERCISE OF QUASI JUDICIAL POWERS A ND THUS CANNOT EQUATED WITH A VALUATION REPORT OBTAINED FROM A REG ISTERED VALUER. 12.4 THE LEARNED DR NEXT ASSERTED THAT THERE IS NO REQUIREMENT IN LAW FOR REJECTION OF BOOKS OF ACCOUNTS PER SE PRIOR TO MAKING A REFERENCE UNDER S.142A OF THE ACT. A REFERENCE TO CIRCULAR N O.1/2015 WAS MADE TO BUTTRESS THE AFORESAID PROPOSITION. IT WAS THER EAFTER POINTED OUT THAT SURVEY DETECTED HUGE UNRECORDED UNDISCLOSED IN COME. THE DOCUMENTS FOUND INDICATED SO AND ADMITTED BY THE PA RTNER OF THE ASSESSEE. THE BOOKS PREPARED COULD NOT BE THUS TAKE N AS SOLEMN ON THE BACKGROUND OF SUCH DESPICABLE CONDUCT. THE AO T HUS ACTED REASONABLY IN MAKING REFERENCE TO THE DVO FOR ESTIM ATION OF VALUE OF PROJECTS TO GAUGE THE CORRECTNESS AS WELL AS COMPLE TENESS OF ENTRIES MADE BY THE ASSESSEE IN ITS BOOKS WITH THE AID OF S . 142A OF THE ACT. 12.5 IT WAS ALSO CONTENDED THAT THE AO WAS UNDER ST ATUTORY COMPULSION TO PASS THE ASSESSMENT ORDER IN THE ABSE NCE OF ENLARGEMENT OF LIMITATION PERIOD AT THE RELEVANT TIME IN VIEW O F PRE-AMENDED PROVISIONS OF S. 153 OF THE ACT. ON RECEIPT OF THE VALUATION REPORT AFTER COMPLETION OF ASSESSMENT, THE AO COMPARED IT WITH THE ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 18 - CORRESPONDING PROJECT COSTS DECLARED BY THE ASSESSE E AND REALIZED OF UNDER-REPORTING IN SUCH COSTS. CONSEQUENTLY, THE AO RIGHTFULLY INVOKED THE POWERS UNDER S. 147 OF THE ACT TO ASSUM E JURISDICTION FOR REASSESSMENT OF ESCAPED INCOME AS POINTED OUT IN TH E EXPERT REPORT. IT WAS THUS CONTENDED THAT THE CIT(A) HAS FAILED TO AP PRECIATE THE PURPORT OF VALUATION REPORT OBTAINED UNDER S. 142A IN LETTER AS WELL AS IN SPIRIT AND MISDIRECTED HIMSELF IN LAW IN HOLDING THE ASSUMPTION OF JURISDICTION UNDER S.147 OF THE ACT BY THE AO AS VO ID & BAD IN LAW ON THE BASIS OF SUCH REPORT. 12.6 ON SUSTAINABILITY OF ADDITIONS ON FACTS, THE L EARNED DR PLACED RELIANCE UPON THE RE-ASSESSMENT ORDER. IT WAS SUBMI TTED THAT THE VALUATION REPORT WAS CONFRONTED TO THE ASSESSEE IN THE COURSE OF RE- ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS FAILED TO DEMOLISH THE VALUE ARRIVED AT BY THE EXPERT. IT WAS FURTHER SUBMITTED THAT FIGURES OF COST OF PROJECT IN REASONS RECORDED WERE NEVER QUESTIONE D OR DISPUTED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT. IT WAS T HUS URGED THAT THE ACTION OF THE CIT(A) BE SET ASIDE BOTH ON JURISDICT ION AS WELL AS ON MERITS AND IN THE SAME TOKEN, THE ACTION OF THE AO BE RESTORED. 13. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OT HER HAND, POINTED OUT AT THE OUTSET THAT NOTICE UNDER S.148 OF THE AC T WAS ISSUED SEEKING TO REOPEN THE ASSESSMENT COMPLETED UNDER S.143(3) O F THE ACT, AFTER FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR IN S O FAR AS AY 2009- 10 IS CONCERNED. A REFERENCE WAS MADE TO THE FIRST PROVISO TO SECTION 147 OF THE ACT IN THIS REGARD TO CONTEND THAT LONGE R TIME LIMIT FOR ISSUANCE OF NOTICE UNDER S. 148 BEYOND FOUR YEARS A ND UP TO SIX YEARS IS AVAILABLE ONLY WHERE THE ASSESSEE FAILS TO DISCL OSE MATERIAL FACTS FULLY AND TRULY DURING THE COURSE OF ORIGINAL ASSES SMENT. IT WAS SUBMITTED THAT THE ASSESSEE HAD FURNISHED ALL NECES SARY DETAILS IN THE ORIGINAL SCRUTINY ASSESSMENT AS CALLED FOR AND ASSE SSMENT WAS MADE AFTER ISSUE OF NOTICE UNDER S.143(2) & S.142(1) OF THE ACT. IT WAS THUS ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 19 - SUBMITTED THAT THERE CAN BE NO VALID INFERENCE OF NON-APPLICATION OF MIND TO THE MATERIAL PRODUCED BY THE ASSESSEE AND F ORMATION OPINION THEREON. IT WAS SUBMITTED THAT IN VIEW OF THE STRIC T FETTERS IMPOSED, AN EMBARGO PLACED BY THE FIRST PROVISO TO SECTION 147 THE JURISDICTIONAL REQUIREMENT IN THE CAPTIONED APPEAL FOR AY 2009-10 IS NOT FULFILLED AT ALL AND THUS THE ACTION OF THE AO UNDER S.147/148 O F THE ACT IS DEVOID OF ANY LEGITIMACY AND HENCE UNCALLED FOR. 13.1 THE LD. COUNSEL FOR THE ASSESSEE FURTHER ASSAI LED THE ACTION OF THE AO FOR INVOKING S. 147 ON THE BASIS OF CHANGE OF OPINION DOCTRINE. IT WAS REITERATED THAT THE REOPENING OF A SSESSMENT COMPLETED UNDER SECTION 143(3) IS NOT PERMISSIBLE IN LAW MERE LY ON THE BASIS OF CHANGE OF OPINION REGARDLESS OF ISSUANCE OF NOTIC E WITHIN 4 YEARS OR AFTER 4 YEARS FROM THE END OF THE RESPECTIVE ASSESS MENT YEAR. IT WAS CONTENDED THAT THE AO HAS MERELY APPLIED THE OUTCOM E OF VALUATION REPORT WITHOUT SHOWING HOW THE OPINION FORMED EARLI ER ON THE PROJECT COSTS WERE FAULTY. THE BOOKS OF ACCOUNT WERE NOT RE JECTED AT THE TIME OF MAKING REFERENCE. 13.2 THE LD. COUNSEL ALSO TOUCHED UPON FEW ASPECTS AS PER ITS BRIEF NOTE PLACED ON RECORD WHICH WE SHALL ATTEMPT TO DEA L WITH APPROPRIATELY IN LATER PARAGRAPHS WHEREVER CONSIDER ED EXPEDIENT. 14. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IN THE INSTANT CASE, THE FIRST APPELLATE AUTHORITY HAS INVALIDATED THE ACTION OF A O ON THE GROUNDS OF LACK OF JURISDICTION UNDER S. 147 R.W.S. 148 OF THE ACT. THE FIRST APPELLATE AUTHORITY HAS ALSO CONCLUDED THE ISSUE ON MERITS IN FAVOUR OF THE ASSESSEE AND DELETED CERTAIN ADDITIONS MADE BY THE AO TOWARDS COSTS OF CONSTRUCTION ON THE BASIS OF VALUATION REP ORT. THE REVENUE HAS CHALLENGED THE ACTION OF THE CIT(A) BOTH ON THE POI NT OF LEGITIMACY OF ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 20 - ASSUMPTION OF JURISDICTION UNDER S.147 OF THE ACT A S WELL AS REVERSAL OF ADDITIONS ON ASPECTS OF MERITS. 15. THE COMPETENCE AND REGULARITY OF ISSUANCE OF NO TICE UNDER S. 148 R.W.S S, 147 IS UNDER CHALLENGE WHICH GOES TO T HE ROOT OF THE MATTER. HENCE, IT MAY BE PERTINENT OF REPRODUCE THE RESPECTIVE REASONS RECORDED FOR EACH ASSESSMENT YEAR IN APPEAL FOR EAS Y REFERENCE: 15.1 REASONS FOR REOPENING FOR ASSESSMENT FOR AY 20 10-11 IS REPRODUCED HEREUNDER: 2010-11 'IN THIS CASE, THE ASSESSEE FILED ITS RETURN OF INC OME FOR ASSTT, YEAR 2010-11 ON 14/10/2010 DECLARING BUSINE SS INCOME OF RS.1,13,17,245/-. SUBSEQUENTLY A REVISED RETURN OF INCOME WAS E-FILED ON 18/03/2011 DECLARING TOTAL INCOME AT RS.1,92,70, 561/-. THE ASSESSMENT WAS FINALIZED U/S. 143(3) OF THE INCOME- TAX ACT, 1961 ON 28/03/2013 DETERMINING TOTAL INCOME AT RS.1,94,25,5 30/-. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND DEVELOPMENT AND OTHER ALLIED ACTIVITIES TO CONSTRUC TION. 3. SUBSEQUENTLY, ON PERUSAL OF THE ORDER U/S 143(3) OF THE ACT, IT WAS NOTICED THAT THERE IS AN OFFICE NOTE WHICH REVE ALED THAT THERE WAS A SURVEY U/S 133A OF THE ACT AND THE ASSESSEE HAD DIS CLOSED RS. 1.75 CRORE AS UNDISCLOSED INCOME. THE SAME WAS REFLECTED IN THE RETURN OF INCOME FILED BY ASSESSEE. 4. IT WAS FURTHER NOTICED THAT ASSESSING OFFICER VI DE LETTER NO DCIT/ANAND/ VALUATION/DEVRAJ DEVP/2012-13 DATED 26/ 02/2013 ASKED THE DISTRICT VALUATION OFFICER, VALUATION CELL, INC OME TAX DEPARTMENT, AHMEDABAD & VADODARA TO ESTIMATE LAND AND COST OF C ONSTRUCTION PERTAINING TO THE ASSESSEE. AS THE ASSESSMENT WAS G ETTING TIME BARRED, THE ASSESSMENT WAS FINALIZED ON 28/03/2013 WITHOUT GETTING THE REPORT FROM THE DVO, HE, HOWEVER, MADE A CLEAR NOTING THAT ' NO VALUATION REPORT IS RECEIVED TILL DATE IN RESPONSE TO THE REF ERENCE FOR VALUATION. THEREFORE, THIS ASSESSMENT IS FINALIZED SUBJECT TO THE DISCREPANCY AS TO THE COST OF CONSTRUCTION, IF ANY, FOUND AS PER VALU ATION REPORT. THE ASSESSMENT MAY BE RE-OPENED U/S 147 OF THE ACT, IF SO REQUIRED TAKING INTO CONSIDERATION THE VALUATION REPORT'. THE DVO, AHMEDABAD VIDE LETTER DATED 16/05/2013 (RE CEIVED ON 20/05/2013) FURNISHED THE REQUIRED REPORT, AS PER T HIS REPORT THERE WAS DIFFERENCE IN COST DECLARED BY THE ASSESSEE AND EST IMATE BY DVO, AHMEDABAD AS UNDER: ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 21 - NAME OF PROJECT FINANCIAL YEAR BUILDING AMOUNT DECLARED BY THE ASSESSEE BUILDING AMOUNT ESTIMATED BY VALUATION CELL OF INCOME TAX DEPARTMENT DIFFERENCE (4-3) 1 2 3 4 5 DEV PRASTHAN 2007-08 49,23,975 94,48,118 45,24,143 2008-09 3,52,36,135 6,17,45,261 2,65,09,126 2009-10 86,69,071 1,47,85,960 61,16,889 2010-11 0 0 0 TOTAL 4,88,29,181 8,59,79,339 3,71,50,158 DEV SARJAN 2007-08 44,02,296 75,56,982 31,54,686 2008-09 1,12,16,836 1,75,84,313 63,67,477 2009-10 46,01,946 70,21,957 24,20,011 2010-11 22,92,913 30,63,046 7,70,133 TOTAL 2,25,13,991 3,52,26,299 1,27,12,308 DEV RED 2007-08 0 0 0 SQUARE 2008-09 0 0 0 2009-10 1,40,50,445 2,14,75,771 74,25,326 2010-11 53, 56,473 71,67,818 18,11,345 TOTAL 1,94,06,918 2,86,43,589 92,36,671 DEV VRUND 2007-08 0 0 0 2008-09 0 0 0 2009-10 78,44,037 1,71,87,555 93,43,518 2010-11 1,69,82,780 3,25,78,618 1,55,95,838 TOTAL 24826817 4, 97,66,173 2,49,39,356 GRAND TOTAL 11,55,76,907 19,96,15,400 8,40,38,493 AS PER SECTION 142A OF THE ACT, FOR THE PURPOSES OF MAKING AN ASSESSMENT OR REASSESSMENT UNDER THIS ACT, WHERE AN ESTIMATE OF THE VALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69 O R SECTION 69B OR THE VALUE OF ANY BULLION, JEWELLERY OR OTHER VALUABLE A RTICLE REFERRED TO IN SECTION 69A OR SECTION 69B IS REQUIRED TO BE MADE, THE ASSESSING OFFICER MAY REQUIRE THE VALUATION OFFICER TO MAKE A N ESTIMATE OF SUCH VALUE AND REPORT THE SAME TO HIM. ON RECEIPT OF THE REPORT FROM THE VALUATION OFFICER, THE ASSESSING OFFICER MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, TAKE INTO ACCOUNT SU CH REPORT IN MAKING SUCH ASSESSMENT OR REASSESSMENT. AS THE ASSESSEE HA S DECLARED ONLY RS 1,75 CRORE AS UNACCOUNTED INCOME AND THERE IS UNACC OUNTED INVESTMENT OF TO THE TUNE OF RS.8,40,38,493/- OVER THE YEARS, THERE IS CLEAR CUT DIFFERENCE BETWEEN THESE TWO FIGURES AMOUNTING TO R S.6,65,38,493/-(RS. 8,40,38,493/- -1,75,00,000/-). THUS, THIS IS A CASE OF ESCAPEMENT OF INCOME. 5. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX TO THE TUNE OF RS 6,65,38,493/- HAS ESCAPED THE ASSESSMENT WITHIN THE MEANING OF SECTION ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 22 - 147 OF THE ACT READ WITH EXPLANATION -2(C)(I) THERE TO FOR THE ASSTT. YEAR 2010-11. ' 15.2 SIMILARLY, REASONS FOR REOPENING FOR ASSESSMEN T FOR AY 2009-10 IS ITERATED HEREUNDER: 2009-10 'IN THIS CASE, THE ASSESSEE FILED ITS RETURN OF INC OME FOR ASSTT, YEAR 2010-11 ON 14/10/2010 DECLARING BUSINE SS INCOME OF RS.1,13,17,245/-. SUBSEQUENTLY A REVISED RETURN OF INCOME WAS E-FILED ON 18/03/2011 DECLARING TOTAL INCOME AT RS.1,92,70, 561/-. THE ASSESSMENT WAS FINALIZED U/S. 143(3) OF THE INCOME- TAX ACT, 1961 ON 28/03/2013 DETERMINING TOTAL INCOME AT RS.1,94,25,5 30/-. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND DEVELOPMENT AND OTHER ALLIED ACTIVITIES TO CONSTRUC TION. 3. SUBSEQUENTLY, ON PERUSAL OF THE ORDER U/S 143(3) OF THE ACT, IT WAS NOTICED THAT THERE IS AN OFFICE NOTE WHICH REVE ALED THAT THERE WAS A SURVEY U/S 133A OF THE ACT AND THE ASSESSEE HAD DIS CLOSED RS. 1.75 CRORE AS UNDISCLOSED INCOME. THE SAME WAS REFLECTED IN THE RETURN OF INCOME FILED BY ASSESSEE. 4. IT WAS FURTHER NOTICED THAT ASSESSING OFFICER VI DE LETTER NO DCIT/ANAND/ VALUATION/DEVRAJ DEVP/2012-13 DATED 26/ 02/2013 ASKED THE DISTRICT VALUATION OFFICER, VALUATION CELL, INC OME TAX DEPARTMENT, AHMEDABAD & VADODARA TO ESTIMATE LAND AND COST OF C ONSTRUCTION PERTAINING TO THE ASSESSEE. AS THE ASSESSMENT WAS G ETTING TIME BARRED, THE ASSESSMENT WAS FINALIZED ON 28/03/2013 WITHOUT GETTING THE REPORT FROM THE DISTRICT VALUATION OFFICER. HE, HOWEVER, M ADE A CLEAR NOTING THAT ' NO VALUATION REPORT IS RECEIVED TILL DATE IN RESPONSE TO THE REFERENCE FOR VALUATION. THEREFORE, THIS ASSESSMENT IS FINALIZED SUBJECT TO THE DISCREPANCY AS TO THE COST OF CONSTRUCTION, IF ANY, FOUND AS PER VALUATION REPORT. THE ASSESSMENT MAY BE RE-OPENED U /S 147 OF THE ACT, IF SO REQUIRED TAKING INTO CONSIDERATION THE VALUATION REPORT'. THE DVO, AHMEDABAD VIDE LETTER DATED 16/05/2013 (RE CEIVED ON 20/05/2013) FURNISHED THE REQUIRED REPORT, AS PER T HIS REPORT THERE WAS DIFFERENCE IN COST DECLARED BY THE ASSESSEE AND EST IMATE BY DVO, AHMEDABAD AS UNDER: NAME OF PROJECT FINANCIAL YEAR BUILDING AMOUNT DECLARED BY THE ASSESSEE BUILDING AMOUNT ESTIMATED BY VALUATION CELL OF INCOME TAX DEPARTMENT DIFFERENCE (4-3) 1 2 3 4 5 DEV PRASTHAN 2007-08 49,23,975 94,48,118 45,24,143 2008-09 3,52,36,135 6,17,45,261 2,65,09,126 ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 23 - 2009-10 86,69,071 1,47,85,960 61,16,889 2010-11 0 0 0 TOTAL 4,88,29,181 8,59,79,339 3,71,50,158 DEV SARJAN 2007-08 44,02,296 75,56,982 31,54,686 2008-09 1,12,16,836 1,75,84,313 63,67,477 2009-10 46,01,946 70,21,957 24,20,011 2010-11 22,92,913 30,63,046 7,70,133 TOTAL 2,25,13,991 3,52,26,299 1,27,12,308 DEV RED 2007-08 0 0 0 SQUARE 2008-09 0 0 0 2009-10 1,40,50,445 2,14,75,771 74,25,326 2010-11 53, 56,473 71,67,818 18,11,345 TOTAL 1,94,06,918 2,86,43,589 92,36,671 DEV VRUND 2007-08 0 0 0 2008-09 0 0 0 2009-10 78,44,037 1,71,87,555 93,43,518 2010-11 1,69,82,780 3,25,78,618 1,55,95,838 TOTAL 24826817 4, 97,66,173 2,49,39,356 GRAND TOTAL 11,55,76,907 19,96,15,400 8,40,38,493 3. ON THE BASIS OF THE REASONS RECORDED FOR REOPENI NG THE ASSESSMENT, IT IS OBSERVED THAT WHILE CONSIDERING T HE VALUATION REPORT OF DISTRICT VALUATION OFFICER AHMEDABAD THE DIFFERENCE BETWEEN BUILDING AMOUNT DECLARED BY THE ASSESSEE AND BUILDING AMOUNT ESTIMATED BY VALUATION CELL OF INCOME TAX DEPARTMENT IS TAKEN CO LLECTIVELY FOR ONE FINANCIAL YEAR I.E. F.Y. 2009-10. HOWEVER IT IS OB SERVED THAT DIFFERENCE BETWEEN BUILDING AMOUNT AS PER ASSESSEE AND AS PER DEPARTMENT IS SPLIT UP ACROSS FOUR FINANCIAL YEARS VIZ. F.Y. 2007-08, F .Y. 2008-09 AND F.Y. 2010-11. THEREFORE THE DIFFERENCE IN VALUATION AS PER ASSESSEE AND AS PER DEPARTMENT CANNOT BE CONSIDERED FOR ONE F.Y. DI FFERENCE BETWEEN BUILDING AMOUNT DECLARED BY THE ASSESSEE AND BUILDI NG AMOUNT ESTIMATED BY VALUATION CELL OF INCOME TAX DEPARTMEN T IS REPRESENTED IN TABULAR FORM AS UNDER: NAME OF PROJECT FINANCIAL YEAR BUILDING AMOUNT DECLARED BY THE ASSESSEE BUILDING AMOUNT ESTIMATED BY VALUATION CELL OF INCOME TAX DEPARTMENT DIFFERENCE (4-3) 1 2 3 4 5 DEV PRASTHAN 2007-08 49,23,975 94,48,118 45,24,143 2008-09 3,52,36,135 6,17,45,261 2,65,09,126 2010-11 0 0 0 DEV SARJAN 2007-08 44,02,296 75,56,982 31,54,686 ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 24 - 2008-09 1,12,16,836 1,75,84,313 63,67,477 2010-11 22,92,913 30,63,046 7,70,133 DEV RED 2007-08 0 0 0 SQUARE 2008-09 0 0 0 2010-11 53, 56,473 71,67,818 18,11,345 DEV VRUND 2007-08 0 0 0 2008-09 0 0 0 2010-11 1,69,82,780 3,25,78,618 1,55,95,838 ON THE BASIS OF THE ABOVE INFORMATION, IT IS OBSER VED THAT IN THE CASE OF THE ASSESSEE THE INCOME TO THE TUNE OF RS.3 ,28,76,603/- HAS BEEN ESCAPED. TO BRING THE ESCAPED INCOME TO THE TAX TH E ASSESSEES CASE MAY BE REOPENED IF DEEMED FIT. THEREFORE, THE APPR OVAL MAY BE GRANTED FOR REOPEN THE ASSESSMENT FOR THE YEAR UNDER CONSID ERATION. 15.3 REASONS FOR REOPENING FOR ASSESSMENT FOR AY 20 11-12 IS REPRODUCED HEREUNDER: 2011-12 THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND DEVELOPMENT AND OTHER ALLIED ACTIVITIES TO CONS TRUCTION. SUBSEQUENTLY, ON PERUSAL OF THE ORDER U/S 143(3) O F THE ACT, IT WAS NOTICED THAT THERE IS AN OFFICE NOTE WHICH REVE ALED THAT THERE WAS A SURVEY U/S 133A OF THE ACT AND THE ASSESSEE HAD DIS CLOSED RS. 1.75 CRORE AS UNDISCLOSED INCOME. THE SAME WAS REFLECTED IN THE RETURN OF INCOME FILED BY ASSESSEE. IT WAS FURTHER NOTICED THAT ASSESSING OFFICER VIDE LETTER NO DCIT/ANAND/ VALUATION/DEVRAJ DEVP/2012-13 DATED 26/ 02/2013 ASKED THE DISTRICT VALUATION OFFICER, VALUATION CELL, INC OME TAX DEPARTMENT, AHMEDABAD & VADODARA TO ESTIMATE LAND AND COST OF C ONSTRUCTION PERTAINING TO THE ASSESSEE. AS THE ASSESSMENT WAS G ETTING TIME BARRED, THE ASSESSMENT WAS FINALIZED ON 28/03/2013 WITHOUT GETTING THE REPORT FROM THE DISTRICT VALUATION OFFICER. HE, HOWEVER, M ADE A CLEAR NOTING THAT ' NO VALUATION REPORT IS RECEIVED TILL DATE IN RESPONSE TO THE REFERENCE FOR VALUATION. THEREFORE, THIS ASSESSMENT IS FINALIZED SUBJECT TO THE DISCREPANCY AS TO THE COST OF CONSTRUCTION, IF ANY, FOUND AS PER VALUATION REPORT. THE ASSESSMENT MAY BE RE-OPENED U /S 147 OF THE ACT, IF SO REQUIRED TAKING INTO CONSIDERATION THE VALUATION REPORT'. THE DVO, AHMEDABAD VIDE LETTER DATED 16/05/2013 (RE CEIVED ON 20/05/2013) FURNISHED THE REQUIRED REPORT, AS PER T HIS REPORT THERE WAS ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 25 - DIFFERENCE IN COST DECLARED BY THE ASSESSEE AND EST IMATE BY DVO, AHMEDABAD AS UNDER: NAME OF PROJECT FINANCIAL YEAR BUILDING AMOUNT DECLARED BY THE ASSESSEE BUILDING AMOUNT ESTIMATED BY VALUATION CELL OF INCOME TAX DEPARTMENT DIFFERENCE (4-3) 1 2 3 4 5 DEV PRASTHAN 2007-08 49,23,975 94,48,118 45,24,143 2008-09 3,52,36,135 6,17,45,261 2,65,09,126 2009-10 86,69,071 1,47,85,960 61,16,889 2010-11 0 0 0 TOTAL 4,88,29,181 8,59,79,339 3,71,50,158 DEV SARJAN 2007-08 44,02,296 75,56,982 31,54,686 2008-09 1,12,16,836 1,75,84,313 63,67,477 2009-10 46,01,946 70,21,957 24,20,011 2010-11 22,92,913 30,63,046 7,70,133 TOTAL 2,25,13,991 3,52,26,299 1,27,12,308 DEV RED 2007-08 0 0 0 SQUARE 2008-09 0 0 0 2009-10 1,40,50,445 2,14,75,771 74,25,326 2010-11 53,56,473 71,67,818 18,11,345 TOTAL 1,94,06,918 2,86,43,589 92,36,671 DEV VRUND 2007-08 0 0 0 2008-09 0 0 0 2009-10 78,44,037 1,71,87,555 93,43,518 2010-11 1,69,82,780 3,25,78,618 1,55,95,838 TOTAL 24826817 4, 97,66,173 2,49,39,356 GRAND TOTAL 11,55,76,907 19,96,15,400 8,40,38,493 AS PER SECTION 142A OF THE ACT, FOR THE PURPOSES OF MAKING AN ASSESSMENT OR REASSESSMENT UNDER THIS ACT, WHERE AN ESTIMATE OF THE VALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69 O R SECTION 69B OR THE VALUE OF ANY BULLION, JEWELLERY OR OTHER VALUABLE A RTICLE REFERRED TO IN SECTION 69A OR SECTION 69B IS REQUIRED TO BE MADE, THE ASSESSING OFFICER MAY REQUIRE THE VALUATION OFFICER TO MAKE A N ESTIMATE OF SUCH VALUE AND REPORT THE SAME TO HIM. ON RECEIPT OF THE REPORT FROM THE VALUATION OFFICER, THE ASSESSING OFFICER MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, TAKE INTO ACCOUNT SU CH REPORT IN MAKING SUCH ASSESSMENT OR REASSESSMENT. AS THE ASSESSEE HA S DECLARED BUILDING AMOUNT ONLY RS.2,46,32,166/- AND THE VALUE ESTIMATE D BY VALUATION CELL OF INCOME TAX OF RS.4,28,09,482/- OVER THE YEARS, T HERE IS CLEAR CUT DIFFERENCE BETWEEN THESE THREE FIGURES AMOUNTING TO RS.1,81,77,316/- (RS.2,46,32,166/- - RS.4,28,09,482). THUS, THIS IS A CASE OF ESCAPEMENT OF INCOME'. ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 26 - 16. A.Y. 2010-11 IS STATED TO BE THE LEAD YEAR FOR THE PURPOSE OF ADJUDICATION. TO BEGIN WITH, WE SHALL ADDRESS OURS ELVES TO THE QUESTION OF LEGITIMACY OF REOPENING OF ASSESSMENT I N THE FACTS OF THE PRESENT CASE. IT IS THE CASE OF THE REVENUE THAT T HE VALUATION REPORT RECEIVED BY THE AO UNDER S.142A OF THE ACT AFTER TH E CLOSURE OF THE ASSESSMENT CONSTITUTES RELEVANT MATERIAL FOR THE PU RPOSE OF ENABLING THE AO TO INVOKE SECTION 147 OF THE ACT AND REOPEN THE ASSESSMENT SO COMPLETED WITHOUT THE AVAILABILITY OF VALUATION REP ORT. IT IS FURTHER CONTENDED THAT THE FORMAL REJECTION OF BOOKS PRIOR TO INVOCATION OF SECTION 142A OF THE ACT IS NOT INDISPENSIBLE HAVING REGARD TO THE PLAIN LANGUAGE OF THE FACT READ WITH CBDT CIRCULAR NO.1/2 015 ISSUED IN THE CONTEXT OF SUBSTITUTED PROVISION OF SECTION 142A OF THE ACT. THE ASSESSEE, ON THE OTHER HAND, CONTENDS IN HIS DEFENS E THAT FIRSTLY, THE AO COULD NOT HAVE PROCEEDED TO MAKE REFERENCE UNDER S.142A OF THE ACT WITHOUT FORMAL REJECTION OF BOOKS OF ACCOUNTS W HICH WAS NOT DONE AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS. A REFERENCE TO THE JUDGMENT RENDERED BY THE HONBLE SUPREME COURT IN T HE CASE OF SARGAM CINEMA VS CIT [2010] 328 ITR 513 (SC) WAS MADE IN THIS REGARD. SECONDLY, THE AO WAS FULLY SATISFIED WITH BOOKS OF ACCOUNTS MAINTAINED AS WELL AS THE COST OF PROJECT DECLARED IN THE BOOKS AS CAN BE SEEN FROM THE OFFICE NOTE PREPARED BY THE AO A ND PUT ON RECORD, THE CONTENTS OF WHICH HAVE BEEN DULY REPRODUCED IN THE ORDER OF THE CIT(A). THIRDLY, IT WAS CONTENDED THAT THE VALUATI ON REPORT IS IN THE REALM OF ESTIMATIONS AND THUS COULD NOT CONSTITUTE RELEVANT MATERIAL FOR THE PURPOSES OF SECTION 147 OF THE ACT. A REFE RENCE WAS MADE TO THE DECISION OF THE ACIT VS DHARIYA CONSTRUCTION CO. [2010] 328 ITR 515 (SC) IN THIS REGARD. 17. WE FIND THAT CIT(A) HAS MADE THREADBARE ANALYSI S OF FACTS AND APPLICABLE LAW WHILE REVERSING THE ACTION OF THE AO . BOTH QUESTIONS I.E. CORRECTNESS OF JURISDICTION UNDER S.147 OF THE ACT AS WELL AS MERITS OF THE CASE HAVE BEEN ADJUDICATED ON RATIONAL GROUN DS. WE NOTICE THAT ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 27 - THE CIT(A) HAS INTER ALIA OBSERVE THAT THE BOOKS OF ACCOUNTS HAVE NOT BEEN REJECTED IN THE ORIGINAL ASSESSMENT PROCEEDING S. COUPLED WITH THIS, THE OFFICE NOTE OF THE AO GIVES AN INFALLIBLE IMPRESSION THAT THE AO, AT THE TIME OF ORIGINAL ASSESSMENT, WAS BROADLY SATISFIED WITH THE CORRECTNESS OF THE BOOKS. THEREFORE, WHILE A FORMA L REJECTION OF BOOKS MAY NOT, AT TIMES, BE POSSIBLY NECESSARY AN ABSTRAC T POSITION OF LAW, AN IMPLIED DISSATISFACTION ON THE BOOKS COULD NOT B E GAUGED EITHER FROM THE ORIGINAL ASSESSMENT OR FROM THE ATTENDANT OFFICE NOTE. WE ALSO SIMULTANEOUSLY NOTICE THAT CIT(A) HAS RELIED U PON THE DECISION RENDERED IN THE CASE OF DHARIYA CONSTRUCTION (SUPRA) AND HELD THAT THE VALUATION REPORT OF THE DVO CANNOT CONSTITUTE A REL IABLE PIECE OF EVIDENCE. THE CIT(A) HAS ALSO MADE REFERENCE TO VA RIOUS OTHER JUDGMENTS AND HAS COME TO THE CONCLUSION THAT INGRE DIENTS OF SECTION 147 OF THE ACT ARE NOT FULFILLED IN THE INSTANT CAS E AND CONSEQUENTLY REOPENING IS NOT PERMISSIBLE IN THE FACTS AND CIRCU MSTANCES OF THE CASE. WE SEE NO ERROR IN THE CONCLUSION DRAWN BY T HE CIT(A) IN HOLDING SO. WITHOUT REPEATING THE SAME, WE DECLINE TO INTERFERE WITH THE CONCLUSION DRAWN BY THE CIT(A) HOLDING THE ASSU MPTION OF JURISDICTION BY THE AO UNDER S.147 OF THE ACT TO BE BAD IN LAW. 18. THERE IS ANOTHER IMPORTANT PERSPECTIVE TO THE W HOLE CONTROVERSY. THE AO HAS MADE REFERENCE TO THE VALUATION OFFICER UNDER S.142A OF THE ACT AT THE FAG END OF THE LIMITATION PERIOD AVA ILABLE TO THE AO FOR COMPLETION OF THE ASSESSMENT. THE REFERENCE TO THE VALUATION OFFICER WAS MADE ON 26/02/2013 REQUIRING HIM TO ESTIMATE TH E VALUE OF SOME CONSTRUCTION PROJECTS SO UNDERTAKEN. THE ASSESSMEN T WAS SOON COMPLETED THEREAFTER ON 28.03.2013. THUS, AN EFFEC TIVE PERIOD OF ONE MONTH HAS BEEN GIVEN TO THE VALUATION OFFICER TO OB SERVE THE PROCEDURE MANDATED UNDER S.142A OF THE ACT AND FURN ISH THE VALUATION REPORT. OVERTLY, IT IS NOT POSSIBLE FOR A VALUATIO N OFFICER TO COMPLY WITH THE MANDATE OF REFERENCE UNDER S.142A OF THE A CT VIZ. (I) ISSUE NOTICE TO THE ASSESSEE FOR COLLECTION OF INFORMATIO N, (II) ENTER THE ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 28 - PREMISES UNDER SUBJECT MATTER OF REFERENCE, (III) I NSPECT AND EXAMINE THE CONTEMPORANEOUS POSITION ON FAIR VALUE OF THE P ROJECT, (IV) APPLY HIS MIND TO THE FACTS AVAILABLE AND (V) PREPARE VAL UATION REPORT. EVEN AFTER RECEIPT OF VALUATION REPORT, THE AO IS EXPECT ED TO CONFRONT THE SAME TO THE ASSESSEE AND GIVE HIM PROPER OPPORTUNIT Y TO DEFEND HIS POSITION ON THE CONTENTS OF VALUATION REPORT. IT I S THUS APPARENTLY NOT POSSIBLE TO COMPLETE THE ASSESSMENT ON THE BASIS OF SUCH VALUATION REPORT WITHIN THE AVAILABLE TIME FRAME OF ONE MONTH . APPARENTLY, THE AO HAS COMPLETED THE ASSESSMENT ON PROVISIONAL BASI S AS AN EMPTY FORMALITY WITH AN IMPLICIT IDEA TO REOPEN THE CASE AT A LATER STAGE IN THE EVENT OF DEVIATIONS REPORTED IN THE VALUATION R EPORT. THIS APPROACH, IN OUR VIEW, IS NOT IN SYNC WITH QUASI JUDICIAL TASK OF ASSESSMENT. SUCH ACTION CANNOT BE ENDORSED WHICH M AY LEAD TO DRASTIC CIVIL CONSEQUENCES THAT MAY ARISE FROM REOPENING A COMPLETED ASSESSMENT. 19. LOOKING FROM ANY ANGLE, THE ACTION OF THE AO UN DER S.147 OF THE ACT BASED ON VALUATION REPORT IS NOT SUSTAINABLE IN LAW. WE THUS SEE NO ERROR IN THE CONCLUSION DRAWN BY THE CIT(A) IN T HIS REGARD. 20. ON MERITS, THE CIT(A) HAS DELETED THE ADDITION MADE BY AO UNDER S.69B OF THE ACT ON THE GROUND THAT COST OF P ROJECT DECLARED IN THE BOOKS EXCEED THE FAIR VALUE DETERMINED BY THE D VO. WHILE GRANTING RELIEF TO THE ASSESSEE, THE CIT(A) HAS INTER ALIA MADE REFERENCE TO A TABULATED STATEMENT SHOWING COST OF CONSTRUCTIONS INCURRED IN VARIOUS ASSESSMENT YEARS AND OBSERVED T HAT THE COST OF CONSTRUCTION AS PER BOOKS STANDS AT RS. 22,90,07,81 4/- WHICH IS EXCESS OF RS. 19,96,15,400/- DETERMINED BY AO BASED ON THE VALUATION REPORT. WHERE THE COST OF PROJECT AS TABULATED IN THE FIRST APPELLATE ORDER SHOWN TO BE IN EXCESS OF THE VALUE DETERMINED BY TH E DVO, IS FOUND TO BE TRUE, THE WHOLE PROCEEDINGS WOULD FALL FLAT AND BECOME OTIOSE. NO REBUTTAL OF SUCH FACTUAL OBSERVATIONS HAVE BEEN MAD E BY REVENUE. WE ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 29 - THUS SEE NO REASON TO INTERFERE WITH THE APPELLATE ORDER OF CIT(A) ON FINDINGS OF FACTS. 21. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 22. THE APPEAL OF THE REVENUE IN ITA NO. 1526/AHD/2 018 RELEVANT TO AY 2011-12 HAS EMANATED IN THE IDENTICAL BACKGRO UND AND SIMILAR FACTUAL MATRIX. THE GRIEVANCE OF THE REVENUE AS PER ITS GROUNDS OF APPEAL IS IDENTICAL. HENCE, THE OBSERVATIONS IN IT A NO. 1525/AHD/2018 RELEVANT AY 2010-11 SHALL APPLY MUTAT IS MUTANDIS. IN PARITY, THE ORDER OF CIT(A) IS ENDORSED ON THE POIN T OF JURISDICTION AS WELL AS HIS FINDINGS ON MERITS. 23. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 1526/AHD/2018 FOR AY 2011-12 IS DISMISSED. ITA NO. 1524/AHD/2018 - AY- 2009-10 24. WE SHALL NOW TURN TO THE APPEAL OF REVENUE IN I TA NO.1524/AHD/2018 CONCERNING AY 2009-10. 25. THE GROUND OF APPEAL RAISED BY REVENUE READS AS UNDER: 1.1 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD.CIT(APPEALS) HAS ERRED IN ALLOWING THE ASSES SEES APPEAL, WITHOUT APPRECIATING THE FACTS DISCUSSED IN THE ASSESSMENT ORDER AND THE REMAND REPORT. 1.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD, CIT(APPEALS) HAS ERRED IN HOLDING THAT THE REFERENCE MADE BY THE AO U/S 142A WAS INVALID, WITHOUT APPREC IATING THE FACTS DISCUSSED IN THE ASSESSMENT ORDER AND THE REM AND REPORT. 1.3 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD. CIT(APPEALS) HAS ERRED IN HOLDING THAT THE REFERENCE MADE BY THE AO U/S 142A WITHOUT REJECTING BOOKS OF ACCOUNT WAS INVALID. ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 30 - 1.4 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD, CIT(APPEALS) HAS ERRED IN HOLDING THAT THE REFERENCE MADE BY THE AO U/S 142A WITHOUT REJECTING BOOKS OF ACCOUNT WAS INVALID, EVEN THOUGH CIRCULAR NO.1/2015 (PARA 4 3.2) SPECIFICALLY SAYS THAT SECTION 142A OF THE INCOME-T AX ACT DOES NOT ENVISAGE REJECTION OF BOOKS OF ACCOUNT AS A PRE -CONDITION FOR REFERENCE TO THE VALUATION OFFICER FOR ESTIMATI ON OF THE VALUE OF ANY INVESTMENT OR PROPERTY. 1.5 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD. CIT(APPEALS) HAS ERRED IN ALLOWING THE ASSE SSED APPEAL, WITHOUT APPRECIATING THAT THE REOPENING OF ASSESSMENT U/S 147 WAS JUSTIFIED AND IN ACCORDANCE WITH LAW, C ONSIDERING THE REASONS RECORDED AND THE FACTS OF THE CASE. 1.6 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD. CIT(APPEALS) HAS ERRED IN OBSERVING THAT TH E INVESTMENT AS PER THE BOOKS OF ACCOUNT EXCEEDED THE INVESTMENT DETERMINED BY THE DVO TOWARDS COST OF CONSTRUCTION, WITHOUT APPRECIATING THE FACTS DISCUS SED IN THE ASSESSMENT ORDER AND THE REMAND REPORT. 1.7 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD. C.I.T.(APPEALS) ERRED IN ALLOWING THE ASSES SEE'S APPEAL WITHOUT APPRECIATING THE FINDINGS OF THE AO IN THE REMAND REPORT, AND IN MISINTERPRETING THE FINDINGS OF THE AO. 26. WHILE THE FACTUAL MATRIX IN THIS APPEAL ARE ID ENTICAL, THE AO IN THIS CASE CONCERNING AY 2009-10 HAS ISSUED NOTICE U NDER SECTION 148(2) ON 30.03.2016 I.E. AFTER 4 YEARS FROM THE EN D OF RELEVANT OF ASSESSMENT YEAR. UNDER THE FIRST PROVISO TO S. 147, THE CASES WHERE ASSESSMENT IS MADE U/S 143(3) OR UNDER S.147 AND FO UR YEARS HAS LAPSED FROM THE END OF RELEVANT ASS. YEAR, TWO COND ITIONS MUST BE SATISFIED AS PER THE PLAIN PHRASEOLOGY OF THE ACT. A) PRIMARY CONDITION AS CONTAINED IN THE MAIN PROVISIO N TO S. 147 NAMELY, HOLDING REASON TO BELIEF THAT THE CHARGEA BLE INCOME HAS ESCAPED ASSESSMENT. B) ADDITIONAL CONDITION AS CONTAINED IN THE FIRST PROV ISO TO S. 147 THAT THE SUCH ESCAPEMENT OF INCOME IS ATTRIBUTABLE TO FA ILURE OF ASSESSEE TO DISCLOSE MATERIAL FACTS FULLY AND TRULY. ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 31 - BOTH CONDITIONS MUST BE CUMULATIVELY SATISFIED TO I NVOKE S.147/148 IN SUCH CASES. 27. TO PUT IT DIFFERENTLY, AS PER FIRST PROVISO TO S. 147, FOR ISSUANCE OF NOTICE AFTER 4 YEARS FROM THE END OF RELEVANT AS SESSMENT YEAR, THE ASSESSING OFFICER ISSUING THE NOTICE MUST HOLD THE BELIEF THAT DUE TO THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSE SSMENT, CHARGEABLE INCOME IN FACT HAS ESCAPED ASSESSMENT. STARTING POI NT FOR APPLICATION OF FIRST PROVISO IS THE ALLEGATION FROM AO IN THE R EASONS RECORDED TOWARDS FAILURE ON THE PART OF ASSESSEE TO DISCLOSE MATERIAL FACTS FULLY AND TRULY. THE ESCAPEMENT OF INCOME CHARGEABLE TO T AX MUST BE ALLEGED TO BE OWING TO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. THUS, THE PROVISO TO SECT ION 147 OF THE ACT CASTS EXEMPLARY BURDEN OF MEETING ADDITIONAL CONDIT ION. 28. A BARE PERUSAL OF REASONS RECORDED REVEALS A ST OIC SILENCE ON SUCH ALLEGATION. THE AO HAS NOWHERE ALLEGED ANY FAILURE ON THE PART OF ASSESSEE. IN THE ABSENCE OF SUCH ALLEGATION, IT IS ELEMENTARY THAT THE ADDITIONAL CONDITIONS OF FIRST PROVISO ARE NOT FULF ILLED. IN THE ABSENCE OF SUCH ALLEGATION, THE NOTICE ISSUED UNDER S. 148( 2) FOR AY 2009-10 IS CLEARLY TIME-BARRED AND THUS VITIATED IN LAW. THE CASE COVERED BY PROVISO CAN NOT BE REOPENED MER ELY ON THE PRETEXT THAT THERE WAS NO CONSCIOUS CONSIDERATION OF THE PO INTED FACTS AT THE TIME OF THE ASSESSMENT. IN THE ABSENCE OF ANY DEMO NSTRABLE ALLEGATION TOGETHER WITH EVIDENCE IN ITS SUPPORT, THE NOTICE U NDER S. 148(2) OF THE ACT HAS BEEN RIGHTLY QUASHED BY THE CIT(A) OWING TO EMBARGO OF LIMITATION UNDER 1 ST PROVISO IN ADDITION TO MAIN PROVISIONS OF SECTION 147 OF THE ACT. WE THUS DECLINE TO INTERFERE. 29. THE APPELLATE ORDER OF CIT(A) ON MERITS IS ALSO ENDORSED FOR THE REASONS MENTIONED IN PARA 20 OF THIS ORDER. ITA NOS. 1524 TO 1526/AHD/18 (ITO VS. M/S. DEVRAJ DEVELOPERS) A.YS. 2009-10 TO 2011-12 - 32 - 30. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 1524/AHD/2018 FOR AY 2009-10 IS DISMISSED. 31. IN THE COMBINED RESULT, ALL THREE CAPTIONED APP EALS OF REVENUE ARE DISMISSED. SD/- SD/- (RAJPAL YADAV) (PRADIP KUMA R KEDIA) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD: DATED 08/06/2021 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED ON 08/06/2021