The Commissioner of income Tax (Central) V. Sri M.S.Raju

ITTA/467/2011

AI Insights

The case revolves around an appeal by the Commissioner of Income Tax (Central), Hyderabad against M/s. M.S. Raju concerning the assessment year 2003-04. The core issue was the alleged under-valuation of four properties purchased by the assessee, which led the Assessing Officer to refer the valuation to the Valuation Cell. The Valuation Cell assessed a significant under-valuation, leading to additional tax being levied on the assessee for undisclosed income. The assessee contested this decision, and the Commissioner of Income Tax (Appeals) overturned the Assessing Officer's decision, a ruling later upheld by the Tribunal. The Revenue's appeal to the High Court was dismissed, affirming the lower authorities' decisions.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 681132 (HC-HYDERABAD)
• Appeal Type: Others
• Pronouncement Date: 27-01-2012
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Keywords: Appeal; Income tax appellate tribunal; Undisclosed income; Valuation; Valuation cell
• Section: 142(A)

Judgement Text

" THE HON’BLE THE CHIEF JUSTICE SHRI MADAN B. LOKUR AND THE HON’BLE SHRI JUSTICE SANJAY KUMAR ITTA No. 467 OF 2011 DATED:27-01-2012 Between: The Commissioner of Income Tax (Central), Hyderabad. … Appellant And M/s. M.S. Raju, Hyderabad. …. Respondent THE HON’BLE THE CHIEF JUSTICE SHRI MADAN B. LOKUR AND THE HON’BLE SHRI JUSTICE SANJAY KUMAR I.T.T.A. No. 467 OF 2011 JUDGMENT: (per the Hon’ble the Chief Justice Shri Madan B. Lokur) 1. The Revenue is aggrieved by an order dated 26.2.2008 passed by the Income Tax Appellate Tribunal, Hyderabad in I.T.A. No. 737/Hyd/06, relevant for the assessment year 2003-04. 2. The assessee had purchased four (4) built up properties through registered documents. The properties were registered at the rates prescribed by the Sub-Registrar’s Office. 3. When the assessee filed his returns, the Assessing Officer decided to refer the valuation of the properties to the Valuation Cell. 4. The Valuation Cell assessed the properties and came to the conclusion that the total under-valuation of the properties was to the extent of Rs.41.35 lakhs. On this basis, the Assessing Officer, came to the conclusion that the assessee had some undisclosed income and that was accordingly taxed. 5. Feeling aggrieved, the assessee preferred an appeal, which was allowed by the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) was of the view that the ingredients of Section 142-A of the Income Tax Act, 1961 (for short ‘the Act’) had not been made out for making a reference to the Valuation Cell. For this, reliance was placed on several decisions of the Tribunal from across the country. On the basis of the view taken by the Tribunal in all these cases, the Commissioner of Income Tax (Appeals) came to the conclusion that the addition of Rs.41.35 lakhs to the income of the assessee on account of unexplained investment was not justified and it was accordingly deleted. 6. Feeling aggrieved, the Revenue preferred an appeal, which came to be dismissed by the Tribunal. 7. In our opinion, the Tribunal rightly held that there was absolutely no material available for the Assessing Officer to come to the conclusion that there was under-valuation of the properties. There was nothing to suggest that the books of accounts maintained by the assessee were not in order nor was there any hint of a suggestion that the books of accounts were rejected. There was also no information with the Assessing Officer that some “on money” was paid by the assessee. In the absence of any material to refer the case to the Valuation Cell, the provisions of Section 142-A of the Act would not apply. 8. In our opinion, there was no error in the view that has been taken by the Tribunal. The Assessing Officer could not refer the matter to the Valuation Cell merely because he had the power to do so. There must be a reason for referring the matter to the Valuation Cell and there is no such reason discernible from the records of the case. 9. In our opinion, no substantial question of law arises for consideration in this appeal. 10. The appeal is accordingly dismissed. MADAN B. LOKUR, CJ SANJAY KUMAR, J 27-01-2012 pnb "