TaxTMI 
TaxTMI 
1990 (2) TMI 117
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....ness income also, the assessee stated that the records of the earlier years need verification as to the income estimated and why the estimates of the years under appeal should be higher than the earlier years. 3. The ITO mentioned that the assessee constructed one two-storeyed RCC building used as hotel, viz., M/s. Gauri Hotel, Station Road, Karimganj. The investment was stated to be at Rs. 1,28,290 with plinth area of 5875 sq. ft. According to the ITO, the cost of the investment was low and, therefore, the case was referred to the Departmental Valuation Officer, Gauhati, who estimated the cost of construction at Rs. 1,92,350 up to the end of 31-3-1973. There was, therefore, a difference of Rs. 54,160 which the ITO spread over at the ratio of 50 : 50 for these two assessment years. Hence, the addition of Rs. 27,000 each for both the years. 4. The assessee took up the matter before the AAC. The AAC in his consolidated order mentioned that the appeals were fixed for hearing but there was no compliance. Adjournment applied for by the assessee was not allowed. The AAC observed that he cannot, therefore, help the assessee. He pointed out that the ITO has written a detailed order a....
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....f the ITO for his fresh consideration without considering the illegal valuation as determined by the Valuation Officer which is not an admissible material in matters like this. The Bench then asked the learned Departmental Representative to give his say on the points raised by the assessee, vis-a-vis, the grounds of appeal. It is submitted by the learned Departmental Representative that if the Bench is taking the side of the assessee, then he has nothing more to add. But there is no question of taking the side of the assessee or of the revenue when the matter has to be approached with certain objectives so that there would be proper disposal of the appeal and to minimise the litigation. The assessee had expressed his apprehension about the fate of his appeal if the matter is restored back to the file of the AAC. Be as it may, the assessee amongst other things, submits that the valuation report under the Wealth-tax Act cannot form the basis for making the addition under section 68 or section 69 of the Income-tax Act, as the Valuation Officer has to determine the fair market value of the property at a particular time and not the cost of the construction. There are some forces in the ....
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....ic opportunity to rebut the same under section 142(3) although there is no specific provision under the Income-tax Act. But it has been the practice of the department to employ the Inspector for making local enquiries and such Inspector's report could very well form the basis for assessment to be made by the ITO, provided the ITO gave the assessee opportunity to rebut such findings or information obtained by the ITO through the different sources of enquiry. This point is lacking in the present case, as the ITO has himself adopted straightway the expenditure on the investment as determined by the Valuation Officer while concluding that the investment shown by the assessee was very low. But the ITO did not mention on what basis such conclusion was drawn. 8. The matter does not end here. It is seen that the Hon'ble Punjab & Haryana High Court in the case of CIT v. Roshan Lal Seth [1989] 77 CTR (Punj. & Har.) 222, has on the similar circumstances, taken a different view in which it was held that there could not be any addition on the basis of the valuation adopted by the Valuation Officer under section 16A of the W.T. Act. In that Punjab case, similar issue came up before the Appell....
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....ame capacity as WTO might have referred the point of valuation of the same property for wealth-tax purposes under section 16A of the W.T. Act, as could be apparent from the copy of the report of the Departmental Valuation Officer, as appearing at page 76 of the paper-book, in which it has been noted that the Officer from whom the reference was made was from the Wealth-tax Officer, A ward, Karimganj, which was made under sec. 16A of the W.T. Act, 1957, and the valuation was required for the dates as on 31st Chaitra of 1390 B.S. to 31st Chaitra, 1383 B.S. Thus, it could be seen that the ratio of the decision in the case of Daulatram will not be applicable to the facts of the present case as the facts are basically distinguishable. We are left now for consideration in respect of the applicability or otherwise of the decision of another High Court in the case of Roshan Lal Seth which facts are identical with those of the present assessee before us. As stated before, the Tribunal in that Punjab & Haryana case has held that the estimate was not validly taken by the ITO as section 16A of the W.T. Act could not be availed of for the purpose of income-tax proceedings. It was observed by the....