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TMI Blog2013 (10) TMI 710X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act, 1961? 2. Whether on the facts and in the circumstances of the case, the Tribunal is justified in holding that in the absence of any proceedings pending under the Income Tax Act, 1961, no reference under Section 131 (1) (d) could be made to the D.V.O? 3. Whether on the facts and in the circumstances of the case, the Tribunal's order is not bad in law in view of the new provisions of Section 142-A introduced retrospectively w.e.f. 15.11.72 in the Income Tax Act by the Finance Act, 2004 which empowers the A.O to require the Valuation Officer to make an estimate of value of movable/immovable property? 3. The connected appeals were admitted on the questions of law as follows:- "1. Whether on the facts and in the circumstances of the case, the Tribunal is justified in holding that there was no material on record for the Assessing Authority to initiate the proceedings under Section 147/148 of the Income Tax Act, 1961? 2. Whether on the facts and in the circumstances of the case, the Tribunal is justified in holding that the report of the D.V.O u/s 131 of the Act could not be used for the purpose of initiating proceedings u/s 147/148 of the Act and thereby quashing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Commissioner of Income Tax (Appeals) by which the entire addition on account of alleged unexplained investments in construction was deleted, on findings that the investment that had been made in the constructions dated 21.3.1999 and holding that there was no unexplained investment in constructions. This appellate order dated 15.3.2011 was not challenged by the revenue in the Income Tax Appellate Tribunal. 8. The returns in compliance with the notice under Section 148 dated 24.1.2001 for the assessment years 1990-91 to 1996-97 were filed on 30.2.2003. The A.O. by the separate orders assessed the income and demanded tax on such income on the basis of DVO's report. 9. During the course of assessment proceedings the assessee brought to the notice of the AO the orders of the Commissioner of Income Tax (Appeals) dated 15.3.2011 for the assessment year 1997-98 and the order of CIT (A) dated 19.11.2001 for the assessment year 1998-99 on which the A.O. observed as follows:- "4....The facts are similar to that of A.Yrs 1997-98 and 1998-99. The decisions of the Ld. Commissioners of Income Tax (Appeals)-I and II, Lucknow have not been accepted by the department and second appeals have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of DVO's report that the income of the assessee, chargeable to tax has escaped assessment. The report of the DVO in respect of cost of construction of the building was a valid report in view of the insertion of Section 142-A of the Act w.e.f. 15.11.1972 by the Finance (No.2) Act, 2004, which gave ample power to the AO to make a reference to the DVO in respect of valuation of movable as well as immovable property and hence in the circumstances of the case the Tribunal has erred in holding that the AO had no power to refer the valuation of property to the DVO. After enactment of Finance (No.2) Act, 2004 the principles laid down in Amiya Bala Paul's case is not longer valid. 14. Shri Dhananjai Awasthi has relied upon judgment of Supreme Court in Raymond Woollen Mills Ltd vs. Income-Tax Officer and others (1999) 236 ITR 34, the judgment of Delhi High Court in Suman Sehgal vs. Union of india (2006) 154 Taxman 195 (Delhi) and the judgments of this Court in Smt. Shashi Jain vs. Income-Tax Officer and another (1997) 228 ITR 682, Sunder Carpet Industries vs. Income-Tax Officer and another (2010) 324 ITR 417 (All) and Dr. Roop vs. Commissioner of Income-Tax, Meerut (2012) 20 Taxman.com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97-98 as the report was obtained without there being any proceedings pending on the date when the commission was issued. 17. We are of the opinion that all the appeals filed by the Revenue deserve to be dismissed inasmuch as the entire foundation of the framing assessments was the report of the DVO. The notice under Section 147/148 was issued on the basis of DVO's report. The AO did not have authority to refer the matter to DVO under Section 131 (1) (d) on 15.5.1998 as no proceedings were pending on that date. Neither any return was filed nor any notice under Section 147/148 was issued by the AO to the assessee by that date. 18. For the assessment year 1997-98 the AO issued a notice under Section 142 (1) on 20.7.1998, and assessee filed return of income on 29.3.2000. The assessment order was passed on 30.3.2000. 19. In our view the Tribunal rightly rejected the arguments raised on behalf of revenue that since a letter was written on 11.2.1998 by a Senior Officer of the Income Tax department to AO, the proceeding would be deemed to be pending for the assessment for the year 1997-98. Since no return of income was filed till 11.2.1998, there was no question of any assessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal is, accordingly, dismissed. No order as to costs." 22. The Tribunal further found that the investment in the assessment year 1999-2000 was considered favourably by the CIT (A) in the assessment year 1997-98. No second appeal was filed. The order of the CIT (A) had become final. If the investment for that year is considered even as per the report of the DVO, then the difference would be approximately 1% of the total investment and as such, no case was made out for any addition. 23. The DVO, Kanpur had estimated the investment after inspecting the building and taking full details, cash memos and information on 21.3.1999, and submitted his report on 30.6.1999 estimating the construction at Rs.3,48,91,900/- spreading over the cost of construction upto the date of inspection for the assessment year 1999-2000. 24. The detail of the actual investment in the construction as per the books of accounts, and the details, spread over estimated investment till the date of inspection i.e. 21.3.1999 by DVO quoted in para-6 of the order of the Tribunal, is reproduced as below:- Assessment Cost of construction shown by us as per books of account Cost of construction estimated by the D.V.O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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