TMI Blog2008 (11) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... pertain to different assessment years. For this reason, all these appeals are being disposed of by this common judgment and order since the substantial questions of law involved in all these appeals are common. 2. The leading appeal in the present bunch of appeal is bearing No. I. T. A. No. 125 of 2007 which is directed against the judgment and order dated February 23, 2007, passed by the Income-tax Appellate Tribunal (herein-after referred to as "the ITAT" ) whereby the said authority has allowed the appeal of the assessee and has set aside the order of the Assessing Officer as well as that of the learned Commissioner of Income-tax (Appeals) (hereinafter referred to as "the CIT(A)" ). 3. Heard the counsel for the parties and perused the record. Brief facts of the case are as follows: 4. For the assessment year 1998-99, the assessee, Shri Bhawani Shankar Vyas, proprietor of M/s. Shiva Sanitary Store had filed its return declaring an income of Rs. 90,350. The case was processed under section 143(1) on May 14, 1999. The case was then fixed for scrutiny and notices issued by the concerned Income-tax Officer on August 27, 1999, which was served upon the assessee on August ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the estimated cost of construction should be taken at the UPPWD rates and not at the CPWD rates. Opportunity for cross-examining the Valuation Officer in respect of his report was also given to the assessee. After examining the factual matrix in great detail and largely relying upon the report of the Valuation Officer, the Assessing Officer has come to the conclusion that the assessment has to be made on an income of Rs. 24,97,710 (for the assessment year 1998-99). Consequently, notices under sections 271(1)(c) and 271E of the Income-tax Act were issued to the assessee. The said assessment order was passed by the Income-tax Officer on March 28, 2001, as against Rs. 90,350 as disclosed by the assessee. 6. Aggrieved by the assessment order the assessee filed an appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals), however, agreed with the Assessing Officer and rejected all the reports which were submitted by the assessee such as the report of the municipal engineer as well as by the Government approved valuers and then after examining the report of the Departmental Valuation Officer though agreeing largely with the correctnes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords, the logic adopted by the Tribunal is that the Income-tax Officer though had powers to make a reference under section 142A or section 131(1)(d) of the Act, asking for the report of the Departmental valuer, but the same could only be done after he had formally and categorically rejected the reports and books of account submitted by the assessee. In the absence of such categorical rejection the view of the Tribunal is that the calling for the reference itself is bad. Apart from this the Tribunal has given its finding on the accounts submitted by the assessee. The Tribunal has come to the conclusion that in the present case the assessee has filed three valuation reports including a certificate of engineer, all of which were examined by the Tribunal. On a careful perusal of the order of the Assessing Officer and that of the learned Commissioner of Income-tax (Appeals), the Tribunal came to a finding that the books of account, valuation reports, etc., submitted by the assessee were proper and both the Assessing Officer as well as the Commissioner of Income-tax (Appeals) has committed an error in not relying upon them. The Tribunal, therefore, expressed its inability to concur with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount maintained by the assessee are defective or are not reliable. We do not see how this judgment could help the assessee being clearly distinguishable on facts, inasmuch as in the present case the Assessing Officer has clearly expressed his views on the correctness and certain aspects of the accounts submitted by the assessee. In the assessment order, it has clearly been stated as follows : " In view of the above deficiencies in the books of account of the assessee exposed by me and in view of the assessee' s failure to produce stock register, I conclude that the assessee' s books are such as true and correct income of the assessee cannot be deduced by me, however, I restrict myself to rejecting of the books only to the extent of disallowance of expenditure claimed by the assessee in the profit and loss account." 12. Moreover, the judgment of the Rajasthan High Court predates the amendment brought in the Income-tax Act in the year 2004 whereby section 142A was inserted, which we will discuss shortly. 13. Suffice would it be to say that where the Income-tax Officer while making his assessment had doubts on the correctness of the accounts submitted by the assessee, in su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 144 of the Income-tax Act. 15. A perusal of section 144 of the Act makes it clear that the powers have been given to the said Assessing Officer to determine the sum payable by the assessee after taking into account all relevant material which the Assessing Officer has gathered and after giving the assessee an opportunity of being heard make an assessment of total income or loss to the best of his judgment and determine the sum payable by the assessee. 16. Therefore, on a perusal of section 144 read with section 145 and section 142A as well as section 131(1)(d) of the Income-tax Act, we are of the considered view that Income-tax Appellate Tribunal was not justified in holding that without rejecting the books of account the Assessing Officer was not justified in making reference to the Departmental Valuation Officer. For the same logic, we also hold that it is not mandatory for the Assessing Officer to reject the books of account first before making reference under section 131(1)(d) of the Act or calling for a report of valuer under section 142A of the Act. 17. In the light of the discussion made above, we allow the appeal of the Revenue to the extent that the substa ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
