TMI Blog2021 (7) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... os. 01 to 06/Kol/2020 - - - Dated:- 9-7-2021 - Shri P. M. Jagtap, Vice President And Shri A. T. Varkey, JM For the Appellant/Revenue : Shri Dinesh Aibor Jayal Saukmie, CIT, DR For the Respondent/Assese : Shri Anil Kochar, FCA ORDER PER BENCH: All these cross appeals preferred by the Revenue and assessee are against the separate orders of Ld. CIT(A), Kolkata-20 dated 30.10.2019 for Assessment years 2008-09 to 2014-15 respectively [ but the assessee has not filed any appeal for AY 2014-15 ]. Both the parties agree that in all the appeals facts are same except variance in amount of the additions and that the basis of the addition made by the AO and which has been deleted by the Ld. CIT(A) are the same. Since the facts are same in all the appeals, we are inclined to dispose of all the aforesaid appeals by this consolidated order. For the sake of convenience, the facts relating to AY 2008-09 are taken as lead case and the result will be followed in all the other appeals. 2. The revenue has challenged the merits of the addition deleted by the Ld. CIT(A) in all the appeals [ AY s 2008-09 to 2014-15 ] whereas the assessee has challenged in its cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dr. Sudhir Chandra Sur Degree Engineering. College, 540, Dum Dum Road, Kolkata. 19,71,17,000/- 67,57,03,900/- 3. Do JIS School of Polytechnics, Block-A, Phase-III, Kalyani, Nadia. 3,69,93,296/- 23,30,09,692/- Total 34,43,78,683/- 132,14,64,790/- 5. The AO notes that during the course of assessment proceedings, he show caused the assessee trust vide letter dated 05.01.2016 as to why the difference of value as determined by the DVO should not be added back to the total income. Pursuant to the show cause, the AO notes that the assessee objected to the method of valuation adopted by the DVO vide letter dated 13.01.2016 and requested for re-valuation of properties. Taking into consideration the objection of the assessee, the AO notes that he requested the DVO to reconsider the valuation vide letter dated 22.01.2016 and reminded him to furnish the report at an early date since the assessment was getting time barred. But accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not have relied on the earlier report (on reference by ADIT) to make addition in the case of the assessee. Therefore, the additional ground(s) raised by the assessee is allowed. 8. Thus, it has been brought to our notice that the Ld. CIT(A) having allowed this additional ground of appeal of the assessee have held that non-submission / furnishing of the report by the Valuation Officer within statutory period ( six months from the end of the months reference is made by the AO for it ) makes the initial report of the DVO dated 18.12.2014 [ called for by the DDIT(Inv) ] non-est and, therefore, the Ld. CIT(A) held that the AO could not have relied on the initial DVO report [ pursuant to the reference made by DDIT(Inv) ] to make the addition in the case of the assessee. So, according to Ld. AR, since the basis for addition was based only on the valuation report of the DVO pursuant to the reference made by DDIT(Inv) which having been held to be non-est by the Ld. CIT(A), and in the assessment order the AO has not mentioned anything about any incriminating materials un-earthed during search, the additions made thereby in all the assessment years from AY 2008-09 to 2014-15 con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l that as per section 142A(6) of the I.T. Act, valuation report is to be completed within 6 months when the reference was not made for first time, and same was only for reconsideration of earlier report of DVO? 4. Whether Ld. CIT (A) is justified in accepting assessee's Additional Ground of Appeal that non submission of report within statutory period as per section 142A(6) of the LT. Act, make earlier report non-est.? 5. Whether Ld.CIT(A) is justified that if the DVO does not furnish its revised report, within 6 months, then whether after reconsideration of his earlier valuation report entire assessment of A.O could have been annulled. 10. It is noted that the assessee is a Trust imparting education through various educational institution from its own premises since past many years, controlled and managed by the assessee Trust. These educational institutions are as under: a) JIS College of Engineering Phase-III, Kalyani, Nadia b) Dr. Sudhir Chandra Sur Degree Engineering. College, 540, Dum Dum Road, Kolkata. c) JIS School of Polytechnics, Block-A, Phase-III, Kalyani, Nadia. 11. The Ld. AR at the outset submitted that a group trust of JIS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by the revenue as well as that of the assessee are the same (only variation in addition/figures) and he acknowledged that he has gone through the decision of the Tribunal dated 05.02.2021 in the case of the assessee s group trust case of M/s. Narula Educational Trust and could not find any distinguishing features with that case with the assessee s case in hand. In such a scenario, we are bound by the decision of this Tribunal dated 05.02.2021 in respect of the assessee s group trust case of M/s. Narula Educational Trust wherein this Tribunal has held that the cross appeals of revenue and assessee for AYs 2008-09 to 2013-14 as under: All these cross appeals preferred by the Revenue and assessee are against the separate orders of Ld. CIT(A), Kolkata-20 dated 15.11.2019 for Assessment years 2008-09 to 2013-14 respectively. Both the parties agree that in all the appeals facts are same except variance in amount of the additions and that the basis of the addition made by the AO and which has been deleted by the Ld. CIT(A) are the same. Since the facts are same in all the appeals, we are inclined to dispose of all the aforesaid appeals by this consolidated order. For the sake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Narula Educational Trust 81, Nilgunj Road, Panihati, Kolkata-700 114 10,88,04,964/- 27,35,88,300/- 2. Do Guru Nanak Institute of Dental Science Research, 157/F, Nilgunj Road, Panihati, Kolkata- 700 114. 2,99,16,148 27,40,14,808/- Total 13,87,21,112/- 54,76,03,108/- 5. The AO notes that during the course of assessment proceedings, he show caused the assessee trust vide letter dated 05.01.2016 as to why the difference of value as determined by the DVO should not be added back to the total income. Pursuant to the show cause, the AO notes that the assessee objected to the method of valuation adopted by the DVO vide letter dated 13.01.2016 and requested for re-valuation of properties. Taking into consideration the objection of the assessee, the AO notes that he requested the DVO to reconsider the valuation vide letter dated 22.01.2016 and reminded him to furnish the report at an early date since the assessment was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make addition in the case of the assessee. Therefore, the additional ground(s) raised by the assessee is allowed. 8. Thus, it has been brought to our notice that the Ld. CIT(A) having allowed this additional ground of appeal of the assessee have held that non-submission / furnishing of the report by the Valuation Officer within statutory period (six months from the end of the months reference is made by the AO for it) makes the initial report of the DVO [called for by the DDIT(Inv)] non-est and, therefore, the Ld. CIT(A) held that the AO could not have relied on the initial DVO report [ pursuant to the reference made by DDIT(Inv)] to make the addition in the case of the assessee. So, according to Ld. AR, since the basis for addition was based only on the valuation report of the DVO pursuant to the reference made by DDIT(Inv) which having been held to be non-est by the Ld. CIT(A), and in the assessment order the AO has not mentioned anything about any incriminating materials un-earthed during search, the additions made thereby in all the assessment years from AY 2008-09 to 2013-14 consequently got deleted. And this action of Ld. CIT(A) has been challenged by Revenue in their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot furnish its revised report, within 6 months, then whether after reconsideration of his earlier valuation report entire assessment of A.O could have been annulled. 10. It is noted that the assessee is a Trust imparting education through various educational institution from its own premises since past many years, controlled and managed by the assessee Trust. These educational institutions are as under: a) Narula Institute of Technology, 81, Nilgunj Road, Panihati, Kolkata-700 114. b) Gurunanak Institutue of Dental Science Research 157/F, Nilgunj Road, Panihati, Kolkata-700 114. 11. From a perusal of the Panchanama drawn by the Investigation Wing after search and seizure operation u/s 132 of the Act on 13.03.2014, it is noted that it took place at the assessee s administrative office at Dwarka Building, 7, Sarat Bose Road, Kolkata-700 020 and not at the campus premises of educational institution situated at Nilgunj Road, Panihati, Kolkata-700 114. The AO observed in the re-assessment order that during the course of post search operation, the DDIT (Inv.), Kolkata had made reference to the District Valuation Officer (DVO) in respect of the valuation of imm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... immovable properties made by the assessee and the initial DVO report which was made on a reference by the DDIV (Inv.) and the additions were made as discussed at page 3, para 5 (supra): Asst. Year Amount 2008-09 ₹ 3,50,39,665/- 2009-10 ₹ 14,34,16,954/- 2010-11 ₹ 5,05,88,806/- 2011-12 ₹ 4,13,91,409/- 2012-13 ₹ 4,91,11,619/- 2013-14 ₹ 8,93,33,543/- 13. On appeal, when the assessee raised this particular objection before the Ld. CIT(A), the Ld. CIT(A) appreciated the error committed by the DDIT/ADIT (Inv) and in order to correct the error exercised his co-terminus power as that of AO and made reference to the DVO by sending a letter dated 29.01.2019 through the AO to obtain the DVO report. The Ld. CIT(A) noted that pursuant to his constant reminders to obtain the DVO report, the AO made several attempts to remind the DVO for submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be, to the Assessing Officer and the assessee, within a period of six months from the end of the month in which a reference is made under sub-section (1). (7) The Assessing Officer may, on receipt of the report from the Valuation Officer, and after giving the assessee an opportunity of being heard, take into account such report in making the assessment or reassessment. Explanation.-In this section, Valuation Officer has the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). 14. It is noted that the reference to the DVO for estimation of assets as given above was made in substitution to the prior section 142A which was inserted by the Finance (No. 2) Act, 2004 with retrospective effect from 15.11.1972 and amended by the Finance Act 2010, w.e.f 1.7.2010 which reads as under: 142A. Estimate by Valuation Officer in certain cases.-(I) For the purposes of making an assessment or reassessment under 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 or fair market value of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years 1981 to 1983. She filed a return in respect of the assessment year 1982 1983 in which she disclosed that she had invested an amount of ₹ 1,75,000 in the construction of the house. The return was accepted by the Income Tax Officer (now known as the Assessing Officer). In respect of the subsequent assessment year, namely 1983-84, the assessee disclosed that she had invested a further amount of ₹ 1,70,000 in the construction of the house. This was not accepted by the Assessing Officer, who referred the question of the construction cost of the house to the Valuation Officer under Section 55(A) of the Income Tax Act, 1961 (hereinafter referred to as the Act). The Valuation Officer submitted a report to the Assessing Officer. On the basis of the report, the Assessing Officer re-opened the assessment in respect of the assessment year 1982-83. The Income Tax Officer then made an addition of ₹ 2,79,000 in respect of the assessment year 1982 - 83 and ₹ 1,77,000 in respect of the assessment year 1983- 84 as undisclosed investment in the construction of the house. The assessee's appeals from the assessment orders were turned down by the Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the Assessing Officer under the other provisions of the Act, it was not necessary to specifically empower the Assessing Officer under Section 55A. Finally, it is submitted that the Valuation Officer is appointed under the Wealth Tax Act and that he could exercise the power only in the manner prescribed by that Act or by any other statutory provision like Section 55 A of the Act, and that he could not be called upon to discharge functions not statutorily prescribed, in his capacity as a Valuation Officer. 16. And thereafter, the Hon ble Supreme Court after considering the contention of UOI/Revenue at length and after referring to the AO s power u/s. 131(1), 142(2), 133(6), 55A of the Act ; And provisions of Wealth Tax 1957 Act, Section 2, clause (r), 16A, 37(1) vis a vis power of Civil Court under the code of Civil Procedure, 1908, section 76 to 78 of Code of Civil Procedure held that From this it is clear that whenever reference to a Valuation Officer appointed under the Wealth Tax Act is permissible under the Income Tax Act, it has been statutorily so provided. Apart from the aforesaid, a Valuation Officer is appointed under the Wealth Tax Act and can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is noted that the reference to the Valuation Officer was given by DDIT (Inv.) dated 11.07.2014. Thus, we find that when the reference to the Valuation Officer was made by the DDIT (Inv.)/ADIT (Inv.) both the authorities did not had power/jurisdiction to refer for valuation of the assets of the assessee pursuant to the search and for this legal proposition, we rely on the reasoning/ratio of the decision of the Hon ble Supreme Court in Smt. Amiya Bala Paul (supra). 19. Further, it is noted that in this case when the AO during assessment proceedings, confronted the assessee with the valuation report dated 18.12.2014 pursuant to the reference by the DDIT (Inv.) the assessee objected, inter alia, to the method of valuation adopted by the DVO and also brought to the AO s notice the fact that DDIT (Inv.) did not had the power on 11.07.2014 to call for the valuation report from the DVO. In the light of the aforesaid objection raised by the assessee, the AO requested the DVO to reconsider the valuation vide letter dated 22.01.2016 which was never answered by the DVO, therefore, the AO completed the assessment based on the valuation report submitted dated 18.12.2014 (initial re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stage, the Ld. CIT(A) exercising his co-terminus power as that of the AO made an attempt to refer the valuation to the Valuation Officer (which he has discussed at page 26 of his order) through the AO from 29.01.2019 and thereafter, the Ld. CIT(A) had issued several reminders to the DVO vide letters dated 27.03.2019, 02.04.2019, 12.04.2019, 06.05.2019, 24.05.2019 and 02.07.2019. However, the AO reports that inspite of all these reminders, the DVO did not budge and filed any valuation report. In the aforesaid facts and circumstances the Ld. CIT(A) makes the finding that the failure of the DVO to submit valuation report within six months of making of valid reference, the DVO s initial valuation report dated 18.12.2014 could not have been relied upon to make additions cannot be faulted since it is in line with the ratio of the decision of the Hon ble Supreme Court in Smt. Amiya Bala Paul (supra). The non-submission of DVO report after reference by AO and Ld CIT(A) within the statutory period has not been challenged nor this factual finding could be controverted by the Revenue before us and, so it attains finality. In the result, we find that there is no valid valuation report submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have referred the question of cost of construction/valuation of the assessee s building to the Valuation Officer in the year 2014 ; and thereafter, since the DVO did not present the valuation report after AO has referred the valuation vide letter dated 22.01.2016 as well as the Ld. CIT(A) within six months from the end of the month of the reference, the Ld. CIT(A) rightly held that DVO was bound by law [sec. 142A(6)] to have submitted the valuation report within the statutory time limit, which view we endorse. We note that the assessee is an educational institution and its accounts are duly audited. We note that neither the search party nor the AO could point out any mistake in the correctness or completeness of the books of account presented by the assessee before the authorities. We also find that the search party pursuant to search u/s 132 of the Act did not even visited the educational institution which fact is evident from the perusal of panchnama which shows that the search team has only searched the administrative office situate at Dwarika Building , 7, Sarat Bose Road, Kolkata-700020 and not at the campus of educational institution situated at Nilgunj Road, Panihati, Kolka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13-03-2014, admittedly income tax assessment for AY 2008-09 to AY 2012-13 of the assessee trust was unabated since assessments were not pending before the AO on the date of search on 13.03.2014. We note that the provisions of Section 153A of the Act, forms part of Chapter XIV of the Act contain special provisions for completing assessments in case of search conducted u/s 132 of the Act or requisition made u/s 132A of the Act. These provisions can be invoked only in cases where the Income-tax Department has exercised its extra ordinary powers of conducting search and seizure operations after complying with stringent pre-conditions prescribed in Section 132 of the Act. We do not deny the Ld. CIT, DR's contention that once a search u/s 132 is conducted against a person, then irrespective whether any incriminating material is found, the AO is required to proceed against such person for completing the assessments u/s 153A of the Act for the specified six assessment years. To this extent, there is no quarrel. However we find that Section 153A itself creates the fine distinction/differentiation amongst specified six assessment years depending whether prior to the date of search, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us of section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: Once a search takes place under section 132 of the Act, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the Ld AOs as a fresh exercise. The Ld AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The Ld AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . Although Section 153A does not say that additions should be strictly made on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and valid, having regard to the provisions of Section 153C of the Act. 25. We find that the Hon'ble Delhi High Court while adjudicating the appeal in the case of CIT vs Kabul Chawla (2016) 380 ITR 573 had taken judicial note of host of the earlier decisions in the cases of CIT vs Anil Kumar Bhatia reported in (2013) 352 ITR 493 (Del) ; CIT vs Chetan Das Lachman Das reported in (2012) 211 Taxman 61 (Del HC) ; Madugula Venu vs DIT reported in (2013) 215 Taxman 298 (Del HC) ; Canara Housing Development Co. vs DCIT reported in (2014) 49 taxmann.com 98 (Kar HC) ; Filatex India Ltd vs CIT reported in (2014) 229 Taxman 555 (Del HC) ; Jai Steel (India) vs ACIT reported in (2013) 219 Taxman 223 (Del HC) ; CIT vs Murli Agro Products Ltd reported in (2014) 49 taxmann.com 172 (Bom HC) ; CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd reported in (2015) 374 ITR 645 (Bom HC) and All Cargo Global Logistics Ltd vs DCIT reported in (2012) 137 ITD 287 (Mum ITAT) (SB). We also find that Revenue s SLP against the decision of the Hon'ble Delhi High Court in the case of Kabul Chawla (Supra) was dismissed by the Hon'ble Apex Court which is reported in 380 ITR (St.) 4 (SC). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal as well as the Hon ble Apex Court decision in CIT v. Sinhgad Technical Education Society ( supra), we hold that in the case of unabated assessments of an assessee, no addition is permissible in the order u/s 153A of the Act unless it is based on any tangible, cogent and relevant incriminating material found during the course of search qua the assessee and qua the AY. 28. In view of the above legal position, let us now proceed to examine whether the additions/disallowances which the AO made in the orders impugned in this appeal [AY 2008-09 to AY 2012-13] was based on or made with reference to any incriminating material/document found in the course of search. We note that in the assessment orders for AY 2008-09 to AY 2012-13, the AO have not referred to any material un-earthed during search conducted on 13.03.2014 in the orders impugned to justify the additions. There is no whisper/mention of any material leave alone any incriminating material seized during search to justify the addition in these un-abated assessments other than the in-valid valuation report as discussed supra. The valuation report of DVO in the facts discussed cannot be held to be incriminating material, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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