2015 (2) TMI 446
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....ount of Undisclosed investment on purchase of Flats, by solely relying on the report of the Departmental Valuer. The said amount invested by the Appellant was duly incorporated in the Books of Accounts maintained by the appellant and no material discrepancy in any manner whatsoever has been found by the ITO while making the assessment of the appellant. 2. For that having regards to the facts of the case the ld. CIT(A) was not justified in confirming the reopening of assessment u/s 147 of the Income tax Act, 1961 as there was no material on record that any part of the income of the Appellant has escaped assessment. The said addition of Rs. 1,46,700/- made by the I.T.O. was merely on the basis of surmise and conjecture. 3. For that, on the ....
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.... flats on the basis of report of the Departmental Valuation Cell at Rs. 38,20,700/- (assessee's flat on 3rd floor) and Rs. 11,26,800/- (father's flat on 4th floor), totaling to Rs. 49,47,500/-. After deducting initial investments in earlier assessment year by the respective owners of the property, the AO found the difference in assessee's investment of Rs. 15,46,700/- which is given in the following table :- 5. Upon assessee's appeal the ld. CIT(A) considered the issue as under :- "5.1. During the assessment proceedings, the appellant failed to submit any valuation report form a registered valuer. However, at the appellate stage, he filed such report for his 3rd floor flat from one registered valuer Sri Prabir Kr.Chaudhuru....
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....stances, I find no plausible reason to differ from the AO's determination of value of the impugned properties and resultant undisclosed investment in such properties. The addition made on account in the sum of Rs. 15,46,700/- is, therefore, upheld. Ground No.5 is dismissed." Against the above order assessee is in appeal before us. 6. We have heard the rival contentions and carefully perused the records. Before proceeding further in this case we gainfully refer to the reasons for reopening recorded in this case which is as under :- "Date : 18.11.2010 The assessee submitted his return for A.Y.2005-06 on 20/12/2005 disclosing a total income of Rs. 3,16,659/-. The return was processed u/s 143(1). From the balance sheet as on 31.3.2005,....
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....er this Act, where an estimate of the value of any investment referred to in section 69 or section 69B or the value of any bullion, jewellery or other valuable article referred to in section 69A or section 69B is required to be made, the Assessing Officer may require the Valuation Officer to make an estimate of such value and report the same to him. 2) The Valuation Officer to whom a reference is made under sub-section (1) shall, for the purpose of dealing with such reference, have all the powers that he has under section 38A of the Wealth-tax Act, 1957 (27 of 1957). (3) 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 such report in ....
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....able. Accordingly, the Assessing Officer would first be required to reject the books of account before making a reference to the Valuation Officer. The rejection of books of account should precede the reference to the Valuation Officer. The report of the Valuation Officer cannot form the foundation for rejection of the books of account." 6.3. Further the Hon'ble Apex Court in the case of Sagam Cinema vs CIT 328 ITR 513 has held as under :- "In the present case, we find that the Tribunal decided the matter rightly in favour of the assessee in as much as the Tribunal came to the conclusion that the assessing authority could not have referred the matter to the Departmental Valuation Officer (DVO) without the books of account being reject....
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....isfied that assessee had made unrecorded investment and AO has rejected the books that the AO can invoke to the provisions of section 142A of the Act and make a reference to the Valuation Officer for estimating the value of such investment. Similar view has also been expressed by the Hon'ble Apex Court in the case of Sangam Cinema (supra) 6.5. In the present case in the assessment order there is no mention whatsoever as to how the AO was of the opinion that the investment by the assessee in the flats needs a reference to the Valuation cell for valuation. 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....