TMI Blog2002 (4) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... e went in appeal before the CIT(A) for assessment year 1986-87, who reduced the assessed income to Rs. 1,09,960. Thereafter notices under section 148 were issued on 13-8-1991 for assessment year 1986-87 and on 26-6-1991 for assessment years 1987-88 and 1988-89 on the ground that the cost of construction of the hotel building was not properly shown by the assessee. The assessee appeared before the A.O. and submitted that the report of the D.V.O. cannot be relied upon for the purpose of commuting the cost of construction. D.V.O.'s report is for the entire building, whereas 2nd and 3rd floors were constructed by the assessee. Ground and 1st floors were already in existence when the assessee acquired the property. The assessee has also raised several defects in the report of the Valuation Cell of the Department. In the reassessments, the A.O. rejected the explanation of the assessee on the ground that the assessee failed to produce the books of account. The assessee explained before the A.O. that when the original assessments were framed, the books of account were duly produced before the A.O. and examined by him. However, later on the books of account for the three years under appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on point to reopen the assessments. Let me first discuss the issue of jurisdiction to reopen the assessment under section 147 of the Act. The learned counsel appearing on behalf of the assessee has submitted that the A.O. was not justified in reopening the assessments. The assessee was maintaining books of account, where the details of expenditure incurred for construction were duly recorded and the same were examined by the A.O. at the time of original assessments framed under section 143(3). Copies of the assessment orders for these years have been filed at pages 29 to 35 of the paper book. The assessee also filed the copies of audited accounts along with Audit Report at pages 1 to 28 of the paper book. It was submitted that the notice under section 143(2) was issued before framing the said assessments and copies of the notices were also filed at pages 36 to 38 of the paper book. The learned counsel has also filed a copy of the D.V.O.'s report at pages 39 to 45 of the paper book. My attention was drawn to the said report to show that the A.O. by letter dated 11-12-1990 made reference to the Valuation Cell for ascertaining the cost of construction. The Ld. counsel has submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording to the Ld. counsel of the assessee, all these documents were brushed aside by the first appellate authority on the ground that all the books of account could not be produced by the assessee in the reassessment proceedings. The assessee has filed copy of the general diary which was lodged with the Siliguri P.S. on 6-2-1994, which is placed on page-67 of the paper bock, wherein a complaint was made that the books of account were lost from the custody of the assessee. According to the Ld. counsels the first appellate authority has wrongly held that the assessee is not maintaining books of account, whereas the A.O. even in his reassessment proceeding has accepted the fact that at the time of original assessment the books of account were produced by the assessee. Hence, he allowed benefit of doubt to the assessee. Therefore, the enhancement made by the first appellate authority was not proper and the cost of construction shown by the assessee should have been accepted. 5. In reply to that, the Ld. D.R. referring to page-29 of the paper bock, which is assessment order passed under section 143(3) for assessment year 1986-87, submitted that in the original assessments no enquiry w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any officer thereof, to furnish information in relation to such points or matters and affairs which will be useful or relevant to any enquiry or proceeding under this Act. On a reading of the aforesaid provision, it is clear that such power can be exercised by the A.O. only when enquiry or proceeding was pending before the A.O. Admittedly, no such proceeding was pending before the present A.O. when he referred the matter to the Valuation Cell. The second proviso has been added in section 133(6) of the Act to the effect that power in respect of an enquiry, in a case where no proceeding is pending, shall not be exercised by any Income-tax authority below the rank of Director or Commissioner without the prior approval of the Director or, as the case may be, the Commissioner. In the present case, admittedly, no such material was brought on record on behalf of the Revenue that the present reference was covered by the aforesaid proviso and prior approval was obtained from the Commissioner. By inserting the proviso it is clear that the Legislature specifically intended that no such power should be exercised by an authority under the Income-tax Act when the proceeding was not pending b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not produce the books of account on the ground that the same were lost from its custody. The assessee had produced copy of the information submitted before the Police. There is no material on record that the information given by the assessee to the Police is concocted or has no basis. In the reassessment proceeding itself, the A.O. himself considered the fact that the assessee produced books of account in the original assessments The assessee had submitted the order sheet of Sales-tax Department to substantiate the fact that the books of account were produced before the Sales-tax authorities. The A.O. himself bas mentioned in the reassessment proceeding that the assessee was following mercantaile system of accounting. From the original assessment order, which is on page-29 of the paper book, I find that the A.O. has specifically mentioned in the order that "in response to fixation notice books of account and other details as asked for have been produced and there were test checked." The Ld. CIT(A) failed to bring any material en record that the aforesaid finding of the A.O. in the original assessment order was incorrect. In such a situation, I am of the view that the finding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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