TMI Blog2014 (11) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... n comparative transactions in the close vicinity - This, cannot become the basis of adoption of financial valuation - there is no infirmity in the order of the CIT(A) to accept the assessee valuation, which ultimately was more than the registered valuer’s valuation. Admission of additional ground under Rule 27 – Issue of notice for reopening of assessment u/s 148 – Held that:- The ground raised pertained to non-issuance of notice u/s 143(2) within 12 months of notice u/s 148 - Though the date of notice u/s 143(2) is not given in the order, but it is apparent that either it would have been issued along with 142(1) or subsequent - In either cases, the notice is barred, because as per the proviso the notice should have been issued within the period of expiry of twelve months from the date of filing of the return - the issue of notice u/s 143(2) beyond the period of 1 year is barred by limitation, which makes the entire proceedings vitiated - the reassessment proceedings and assessment order passed u/s 143(3) read with section 148 is to be set aside – Decided against revenue. - ITA No. 1743/Mum/2011 - - - Dated:- 8-10-2014 - Shri N. K. Billaiya And Shri Vivek Varma,JJ. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xed as business income of the assessee at higher rate. Therefore, there is escapement of tax to that extent applicable to business income. 3. last six years balance sheet to be examined to verify the source of investments in shares and immovable property/jewellery. 4. Assessee has shown capital gain on sale of old gold jewellery worth ₹ 9,80,002/- and the net LTCG is shown at ₹ 7,49,164/- and the entire LTCG has been claimed exempt u/s 54 F being invested in residential flat. The valuation of gold purchase and sale price for claiming LTCG has to be verified . 4. The facts in brief are that the assessee purchased a property for ₹ 99,00,000/- on 14.02.2005, whose stamp duty valuation was reported at ₹ 1,65,90,000/-. The AO called for an explanation as to why an addition under section 69B should not be made. The assessee objected to the valuation of the property, based on stamp duty, he, therefore, referred the issue to DVO, who made the valuation at ₹ 1,29,10,999/-. The AO, adopting the valuation done by the DVO, made an addition of ₹ 30,10,999/- (1,29,10,999 99,00,000). 5. On this addition on merits as well as on principals of natura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be higher than the consideration declared in the documents, it cannot be itself the sole ground for treating the difference as unexplained investment of the assessee. The stamp duty valuation cannot be treated as purchase price for the purpose of ascertaining unexplained investment, as held in 193 ITR 770 (Aild), 323 ITR 510 (P H), Raj Kumar Vimaladevi 279 ITR 360 (Alld), K.P. Verghese J31 ITR 597(SC) and Jawajee Nagnathan (1994) 4 SCC 595. The reference made by the AO u/s. 142A was without any evidence that some additional amount has been paid by the assessee over and above the amounts recorded in the agreement. In absence of any evidence the reference u/s.142A was itself void as held by the decisions mentioned above. Before making the reference u/s. 142A, AO has not pointed out any other defect in the books nor he has rejected the of accounts of the assessee, therefore, the reference u/s 142A cannot be said to be a valid reference. The decision of the supreme court in case of Sargam Cinema 328 ITR 513 (SC), Dharia construction Co 328 ITR 515(SC), Smt. Suraj Devi 328 ITR 604(del), Naveen Gera (Delhi) 328 ITT 516(Del), Smt Amar Kumari Surana 89 Taxman 544(Raj) relied by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders of the revenue authorities, we have find that the material available with the AO was report of the DVO, and the report of the registered valuer. As seen from the impugned order, the remand report does not talk about any thing factual but it only says that since the DVO valuation is closer to stamp duty valuation, hence DVO s report is being adopted. As such there is nothing in the report of the DVO. The only acceptable document is the report of the registered valuer, which has same basis. 13. We find that the observation of the CIT(A) that the AO must have some reasonable material to put the leash on the assessee. But the only material available with the AO was the DVO s estimated report, which is based entirely on comparative transactions in the close vicinity. This, cannot become the basis of adoption of financial valuation. 14. We, therefore, hold that there is no infirmity in the order of the CIT(A) to accept the assessee valuation, which ultimately was more than the registered valuer s valuation. 15. Coming to the ground raised by the assessee under Rule 27 of the Income Tax Rules The arrangements referred to in sections 194 and 236 to be made by a company fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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