TMI Blog2005 (8) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the Valuation Officer who has been appointed under section 131(1)(a) of the Act for proper valuation of the cost of construction of the building? (ii) Whether the report of the Valuation Officer in any event is merely an opinion and can be relied upon as a material or evidence on the basis of which the sum of Rs. 12,32,954 can be treated as the undisclosed income of the assessee when the said amount of Rs. 12,32,954 as undisclosed income of the assessee is without any material or evidence?" Submission on behalf of the appellant/assessee: Dr. D. Pal, learned senior counsel, appearing on behalf of the appellant, submits that in this case the assessment for the relevant assessment year 1993-94 was completed under section 143 of the Income-tax Act, 1961. There was nothing on record to show that there was any defect in the books of account produced in connection with the said assessment proceedings under section 143. The assessee had constructed a hotel building during 1991-92, 1992-93 and 1993-94, the cost of construction whereof incurred in the relevant assessment years was reflected in the return submitted for the concerned assessment year respectively. After a lapse of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the decision in Smt. Tarawati Debi Agarwal v. ITO [1986] 162 ITR 606 (Cal) to contend that the valuation report obtained at a later point of time cannot be a foundation for holding that the assessee did not disclose the cost of construction truly and correctly at the relevant point of time and a valuation report obtained afterwards might be affected by the subsequent enhancement of valuation. He then relies upon the decision in Durga Sharan Udho Prasad v. CIT [1976] 103 ITR 270 (Patna) to contend that when the assessee had disclosed by means of a valuation report and to support the accounts reflected in the books of account to substantiate the valuation given, it was under no obligation to furnish anything else. Without any other materials on record there was no occasion for the income-tax authority to conclude that the assessee failed to disclose truly and correctly its income. Dr. Pal then relies upon the decision in Indian Oil Corporation v. ITO [1986] 159 ITR 956 (SC), to contend that it was not possible to apprehend that in future there would be another valuation report at the time when the return was submitted in order to entangle the assessee within the sweep of the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, read with section 75 of the Code of Civil Procedure (CPC) and Order 26, rules 9 and 11, respectively, thereof. According to him, there being nothing to point out the defects in the valuation report, it was open to the income-tax authority to depend on the same and the evidentiary value of such a report cannot be brushed aside simply because there was another valuation report submitted by the assessee earlier and that the valuation report was made correctly on the basis of the acceptable CPWD standard. He also points out that this valuation report was done on the basis of the 1992 valuation and as such cannot be overlooked. He then contends that this finding accepting the valuation report is a finding of fact. In the absence of any perversity this court cannot interfere with the same. According to him, section 131(1)(d) empowers the Assessing Officer to make a reference to obtain the valuation report in terms of Order 26, rule 9, Code of Civil Procedure. Therefore, this court should not interfere with the order appealed against. The scope: Section 147: If can be resorted to: After having heard learned counsel for the parties, the moot question that we are called upon to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these authorities had arrived at such a conclusion without the second valuation report. Dr. Pal has submitted that there is no such finding in order to enable the Assessing Officer to hold that there was escapement of income. In fact, unless there is a finding that the assessee had failed to disclose truly and correctly its income, no assessment could be made under section 147. The provision of section 131(1)(d) though empowers the Assessing Officer with all the powers under the Code of Civil Procedure for issuing commission but such power cannot be equated with the power under section 55A. In Smt. Amiya Bala Paul [2003] 262 ITR 407 the apex court had held that in view of the existence of section 55A, section 131(1)(d) could not be resorted to for obtaining the power of exercising the power available under Order 26, rule 9, Civil Procedure Code for obtaining valuation of a capital asset. Section 55A uses the expression that a reference can be made for the purposes of valuation of a capital asset under this chapter namely, Chapter IV, which includes Part E dealing with capital gains, within which section 55A has been enacted; but that does not confine the application of section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial to support this valuation report, though admissible in evidence, it could not have been relied upon by the Assessing Officer affirmed by the learned Tribunal. Having regard to the facts and circumstances of the case, we find that at the time of the assessment under section 143 the alleged valuation report obtained by the Assessing Officer subsequent to the reopening of the assessment under section 147 was not there. After having reopened the assessment the evidence cannot be fished out through reference to a fresh valuation which is merely an opinion and which is not a conclusive proof to establish escapement of assessment unless being supported by other supportive and corroborative evidence. Question No. (ii): After we have answered question No. (i) in the negative, the second question becomes academic. Even then we would like to answer the same having regard to the decision in Smt. Tarawati Debi Agarwal [1986] 162 ITR 606 (Cal) and Durga Sharan Udho Prasad [1976] 103 ITR 270 (Patna) where it has been held that such an evidence is an admissible evidence within the meaning of section 45 of the Evidence Act. But then it has to be supported by sufficient material and even ..... X X X X Extracts X X X X X X X X Extracts X X X X
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