TMI Blog2020 (10) TMI 1285X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of investments. Estimate cannot take the place of actual investment. The Hon ble Rajasthan High Court in Sardar Kehar Singh [ 1990 (11) TMI 32 - RAJASTHAN HIGH COURT] also held that it is well established that reopening of assessment on the basis of subsequent valuation report is not justified inasmuch as the report is nothing more than a mere opinion. Such a report by itself does not lead to a reasonable belief of concealment of income justifying action under clause (a) of section 147, nor does it constitute 'information' justifying action under clause (a) of the said section and quashed the notice under section 147. We are of the view that once the assessment under section 143(3) was completed and the AO has already made addition on the same issue, and on appeal it was deleted by ld CIT(A), the reopening of the assessment on the same issue on basis of report of DVO in not valid. Therefore, all subsequent action thereto is void-ab initio. Thus, the assessee succeeds on the legal issue. Even on merit we note that Hon ble Jurisdictional High Court in Gayatri Enterprises [ 2019 (9) TMI 777 - GUJARAT HIGH COURT] held that unless it was established on record by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction for re-assessment. The re-opening be held as null void being non-jurisdictional. V. The learned CIT(A) has grievously erred in law and on facts in confirming the addition of ₹ 44,65,300/- without appreciating the facts and detailed explanation of market value of adjacent properties. The addition should be deleted. 3. Brief facts of the case are that the assessee is a building contractor engaged in construction of raw houses. The assessee filed his return of income for A.Y. 2006-07 on 04.08.2006 declaring income of ₹ 26,11,859/-. The return was processed under section 143(1) of the Act on 31.05.2007, accepting the income returned. Thereafter, the case was selected for scrutiny and assessment was completed under section 143(3) on 15.12.2008 assessing total income of ₹ 56,25,860/-. The Assessing Officer (AO) while passing the assessment order besides the other additions/disallowance made addition of ₹ 30,14,000/- on account of undisclosed investment on purchase of three piece of land. The A.O. made addition with regard to the purchase of land in (i) Survey No. 379 Block no.358 admeasuring 1.13 acre, (ii) Survey No. 394 Block No. 347 admea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason to believe that assessee made undisclosed investment of ₹ 44,65,300/- in three properties. On the basis of the aforesaid reason, the ld.AO reopened case u/s.147 of the Act. Notice u/s.148 dated 12.03.2013 was served upon the assessee. In the notice under section 148, the assessee was required to file revised return of income within 30 days of receipt of notice. The AO recorded that no return in response to notice under section 148 of the Act was furnished by the assessee till 16.07.2013. The AO served notice under section 142(1) dated 29.08.2013. The assessee vide its letter dated 10.09.2013 stated that he had already filed his return on 04.08.2006 and requested that the same may be treated as a return in response to notice u/s.148 of the Act. 6. The assessee vide his letter dated 09.12.2013 filed objections against reopening. In the objections the assessee stated that notice under section 148 is issued after four year from the end of relevant assessment year. The period of four year is expired on 31.03.2011. The assessee has disclosed complete particulars of income, expenditure and all investment along with the evidences of source of investment. There is no fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income disclosed his investment in three land at ₹ 34,73,700/- only. Therefore, the difference between the two values (₹ 79.39,700/- minus ₹ 34,73,700/-) being ₹ 44,65,300/- was treated as undisclosed investment and added to the income of assessee in the assessment order passed by 143(3) r.w.s 147 on 28.02.2014. 9. On appeal before the ld.CIT(A), the action of ld.AO in reopening as well as in making addition on account of undisclosed investment was upheld. Further, aggrieved the assessee has filed this appeal before this Tribunal. 10. We have heard the submissions of ld. Authorised Representative (AR) of the assessee and ld.Departmental Representative (DR) for the Revenue and perused the material available on record. Ground No.1 relates to validity of reopening of assessment under section 147 of the Act. The ld.AR of the assessee submits that initially assessment under 143(3) was completed on 15.12.2008. The copy of the assessment order is placed on record. The case of the assessee was reopened by issuing notice under section 148 on 12.03.2013. The case was reopened after four years from the end of relevant assessment year. The assessee was serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustries Ltd Vs ITO (supra) and decision of Tribunal in ACIT Vs Balkishan Poddar (supra). 12. On the other hand, the ld.DR for the Revenue submitted that reopening was not beyond the four years from the end of relevant assessment year. The AO has sufficient material for reopening of the case under section 147. The DVO in his report has mentioned that there is variation in the purchase value. The real value of the three plots were higher, which is certainly a fresh material on the basis of which the AO has reason to believe that income of the assessee has escaped assessment by not disclosing fully and truly all the material facts for assessment. The Ld. DR for the revenue further submits that reference was made by A.O. on the direction of the ld. CIT(A) for valuation of assets. The report of valuer/DVO was not received before passing the order by the ld. CIT(A). When the report of the DVO was received in the office of AO, it was a fresh material and the AO was well within his right to reopen the assessment beyond four year. The Ld. DR for the revenue prayed for upholding the validity of reopening under section147. In support of her submissions the Ld. DR for the revenue relied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form is as under Sr. No. Description of property Date valuation Declared Value Assessed for his Share excluding stamp duty and other charges (Rs.) Difference (Assessed value-Declared Value) 1 Old S No. 379 Block No. 358 Pal Surat 03.06.2005 22,66,200/- 36,83,000/- 14,16,800/- 2 Old RS No. 394 Block No. 347 Pal Surat 28.02.2006 7,00,000/- 19,90,000/- 12,90,000/- 3 S No. 409/2 Block No. 387 Pal Surat 17.02.2006 5,07,500/- 22,66,000/- 17,58,500/- Total 34,73,700/- 79,39,000/- 44,65,300/- From the above table, it is seen from valuation report that the assessee has invested in property Sr No. 1 to 3 above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was on the AO to bring evidence on record to prove that the assessee has paid more amounts while purchasing these three pieces of land, than what has been recorded in his books of account. The AO has neither recorded such averments in the reasons recorded nor raised any question the assessee during the assessment. The AO directly came on the conclusion on the basis of the report of DVO that assessee made investment which is not recorded in the books of assessee. The AO without discharging his onus directly concluded on unexplained investment. In our view section 142A merely speaks about the estimate of the valuation of investments. Estimate cannot take the place of actual investment. 18. The Hon ble Jurisdictional High Court in Akshar Infrastructure (P) Ltd Vs CIT (2017) 79 taxmann.com 239 (Guj) held that where AO completed assessment under section 143(3) making certain addition in respect of unexplained investment, he could not reopen said assessment for enhancement of said addition merely on basis of report of DVO. It was also held that the opinion given by DVO was not per se information for purpose of reopening of assessment (Emphasis added by us). 19. The Hon ble Raja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Kumar VS ITO (supra) the AO made reopening on basis of search carried out in case of another person, and came to know about loan transactions of assessee with a finance company, were bogus as said company was engaged in providing accommodation entries, it being a fresh information, the AO was justified in initiating reassessment proceeding in that case. In our view in the said case that AO has sufficient material and direct evidence for reopening. However, in the present case the AO made opinion on the basis of report of DVO, which is based on presumption. In R.K. Malhotra ITO Vs Kashturbhai Lalbhai (supra) and in CIT Vs PVS Beedies (supra) the intimation form Audit department was treated as valid information . However, the facts in the instant appeal are quite differ as discussed above, the AO made reopening solely on the basis of report of DVO. In Rajesh Jhaveri Stock Broker (P) Ltd (supra) the intimation under section 143(1) was issued. The assessee in that case has not disclosed the primary facts. Thus, the facts of Rajesh Jhaveri Stock Broker (P) Ltd (supra) are not applicable with the instant case. The assessee in the instant case has disclosed all facts necessary for ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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