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2015 (2) TMI 446 - ITAT KOLKATAUndisclosed investment on purchase of Flats - reopening of assessment u/s 147 - Jurisdiction of AO - Held that:- In the reason for reopening there was no material whatsoever in the possession of the AO which suggests that assessee has invested unaccounted money in the purchase of flats. The reason mentions that it was from "discreet enquiry" . AO has found that assessee has owned the flats but the cost thereof seems to the AO as unreasonable. Thus there is no reason whatsoever in coming to this conclusion. Now it is mandated through section 142A of the Act that AO can refer to the valuation cell for an estimate of the value of the investment in connection with section 69,69A and 69B of the Act. However, this power of the AO cannot be applied indiscriminately without any reason. The AO has found that the investment was made into the flat in the name of the assessee and assessee's father. AO has also given a finding that except for a small amount of booking father has not made further investment and the bulk of the investment was made by the son. AO has drawn adverse inference on the basis that father was not aware of the actual investment. When the investment has been done by the assessee and the same is reflected in the assessee's books it is not understood as to how the father has to give a categorical statement regarding the actual investment in the property. In this situation AO has referred the matter for valuation vide letters dated 13.12.2010 and 16.12.2010. The valuation cell's report was received on 21.12.2011 and 27.12.2011 respectively. Thus there is no satisfaction of the AO nor there is any basis to make reference to valuation cell. Thus we hold that there was no reason or basis for the AO to hold that he was satisfied that the investment in flats reflected by the assessee in his books was unreasonable as compared to fair market value and the AO has not rejected the books of account. In such situation the mandate emanating from the case laws referred above clearly provide that the AO cannot make a reference to the Valuation Officer u/s 142A of the Act. Accordingly we hold that reference to the Valuation cell was bad and AO cannot make addition in this case on the basis of the Valuation report obtained under such reference . - Decided in favour of assessee.
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