TaxTMI 
TaxTMI 
2005 (7) TMI 327
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....construction of commercial building at Khurram Nagar. The assessee disclosed total cost of construction of the Commercial Building at Khurram Nagar, Lucknow, at Rs. 3,66,07,977 covering the assessment years 1995-96, 1996-97 and 1997-98. The Registered Valuer determined the total cost of construction at Rs. 3,69,15,900. The Assessing Officer made a reference to the District Valuation Officer, who estimated the value at Rs. 4,70,40,000. As for the year-wise break up, the assessee has declared investment of Rs. 5,02,144 in the assessment year under consideration and whereas the D.V.O. estimated the value at Rs. 6,45,238. The Assessing Officer considered the difference in the cost as declared by the assessee and the cost as estimated by the D.V.O., which comes to p Rs. 1,43,094 as unexplained investment and added to the income of the assessee. Being aggrieved, the assessee filed the appeal before the First Appellate Authority. 4. The ld. CIT(A) after considering the submissions of the Representative of the assessee stated that the cost of construction of the commercial building works out to Rs. 3,73,84,049 as against the value of Rs. 3,71,58,385 shown by the assessee as per audited ....
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..... The ld. Authorized Representative of the assessee placed reliance on the decision of the I.T.A.T., Allahabad Bench, in the case of Raj Kumar Jain v. Asstt. CIT [1994] 208 ITR (AT) 22 and submitted that it was held that if the additions are not supported by evidence, the only course open to the Tribunal is to delete the addition pointing out how the addition made could not be sustained for want of adequate material and if there is no sufficient material, the addition must be deleted. He further submitted that the Tribunal also held that the Tribunal cannot order further inquiry with a view to sustain the addition. On the other hand, the ld. D.R. relied on the order of the Assessing Officer. 6. We have carefully considered the submissions of the ld. Representatives of the parties and have perused the orders of the authorities below and also the cases relied upon by the ld. Representatives of the parties. 7. We agree with the ld. Authorized Representative of the asses-see that the Assessing Officer made the aforesaid addition of Rs. 1,43,094 based on the cost of investment estimated by the D.V.O. The Assessing Officer has not stated any reasons for not accepting the cost decla....
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....eply to a query of the Bench as to whether the matter could be restored to the Assessing Officer for his further investigation as the Assessing Officer, during the course of assessment proceedings, while making the addition relied on the DVO's report and did not consider the cost of investment in the property independently. In this regard, we agree with the ld. Authorized Representative of the assessee that the Tribunal has held in the case of Raj Kumar Jain, that the Tribunal while deciding an appeal and the issue before it has to see whether the assessment framed by the Assessing Officer is in accordance with law and has been properly framed on the facts. It was further held that if there is no material to support it and when the additions made by the Assessing Officer could not be sustained, it is not for the Tribunal to start investigation suo motu and supply the evidence for the Department. It was further held that if the additions are not supported by evidence, only course open to the Tribunal is to delete the addition pointing out how the additions could not be sustained for want of adequate supporting material. It was further held that the Tribunal cannot order further ....
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....ay be admissible under the Indian Evidence Act, 1872, the use of the word 'material' in section 143(3) of the Income-tax Act, 1961, shows that the Income-tax Officer, not being a Court, can rely upon material which may not be strict evidence admissible under the Evidence Act for the purpose of making an order of assessment. Courts often take judicial notice of certain facts which need not be proved, while administrative and quasi-judicial authorities can take 'official notice' of wider varieties of facts which need not be proved before them. Thus, not only in respect of the relevancy but also in respect of proof, the material which can be taken into consideration by the Income-tax Officer and other authorities under the Act is far wider than the evidence which is strictly relevant and admissible under the Evidence Act. Income-tax Officers have to deal with such numerious cases of assessment p that they can accept as correct books of account maintained in regular course of business without such a formal proof." 3. Hon'ble Rajasthan High Court in the case of Vimal Chandra Golecha v. ITO [1982] 134 ITR 119 observed as under: "In the making an assessment....
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....on'ble Supreme Court observed as under: "The expression 'as it thinks fit' is wide enough to include the power of remand to the authority competer to make the requisite order in accordance with law in such a case even through the Tribunal itself could not have made the order enhancing the amount of penalty. The power of the Appellate Assistant Commissioner under section 251(1)(b) includes the power even to enhance the penalty subject to the requirement of sub-section (2) of section 251 of a reasonable opportunity of showing cause against such enhancement being given to the appellant assessee. This could have been done in the assessee's appeal itself filed in the present case. The power of the Tribunal to make an order of remand in such a situation is well-settled in Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232 (SC). This being the position in law, the Tribunal was not justified in taking the view that it had no other alternative except to affirm the order of the Appellate Assistant Commissioner cancelling even the lesser penalty imposed by the Income-tax Officer. In view of section 25(1)(b) of the Act, it is also clear that the Appellate Assistan....
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....llowed for statistical purposes. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 Since there is a difference of opinion between the members of the Division Bench, we state following point of difference and refer the same to the Hon'ble President of the Income-tax Appellate Tribunal in accordance with the provisions of sub-section (4) of section 255 of the Income-tax Act. The point of difference is as under: "Whether, on the facts and in the circumstances of the case, the ld. Judicial Member is justified in deleting the addition made by the Assessing Officer in the construction of the flats on the basis of the DVO's report on the basis of the decision of the Apex Court in the case of Smt. Amiya Bala Paul v. CIT [2003] 262 ITR 407, or the ld. Accountant Member is justified to restore the matter back to the file of the Assessing Officer to de novo examine the investment in the cost of construction?" THIRD MEMBER ORDER Shri Phool Singh, Vice President. 1. The Hon'ble President of Income-tax Appellate Tribunal exercising power under section 255(4) of the Income-tax Act, 1961 ('the Act') has referred the following point of difference ema....
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....997 at Rs. 3,69,15,900 which was even less to the amount of investment declared by the assessee-company. The assessee-company also challenged the report of DVO rather placed reliance on the report of the Registered Valuer, but the Assessing Officer did not find force in the report of the Registered Valuer and after ignoring the same, made addition of Rs. 1,43,094 and completed the assessment at a loss of Rs. 7,86,380. 4. The assessee came in appeal and contended that assessee was maintaining proper books of account duly supported with vouchers. All the books of account were duly audited under the Companies Act. The Assessing Officer has not pointed out any defect in the books of account as provided under section 145 of the Act and still the Assessing Officer made reference to the DVO for determining the cost of construction which was not called for in view of the decision of the Hon'ble Rajasthan High Court in the case of CIT v. Pratapsingh, Amrosingh, Rajendra Singh and Deepak Kumar [1993] 200 ITR 788. The assessee further contended that ITAT, Allahabad Bench in involving assessment years 1984-85 to 1986-87 in the case of ITO v. Smt. Paryin Bari [IT Appeal Nos. 2137 to 2139....
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..... The deletion of the addition made by the ld. CIT(A) was found in order and ground of the Department was rejected resulting dismissal of the appeal. 8. So far as the ld. Accountant Member is concerned, he agreed in principle that the Assessing Officer was not justified to make reference to the DVO in view of the decision of the Apex Court in the case of Smt. Amiya Bala Paul but was of the view that once reference made to DVO is taken as irregular exercise of jurisdiction, then that mistake committed by the Assessing Officer is to be corrected from the stage from where the irregularity was committed. The ld. Accountant Member proceeded to discuss the definition of word "material" used in section 143 of the Act for which he has referred to the case law and was of the view that in the case in hand the matter is to go back to the file of the Assessing Officer for fresh examination of the case of investment in building without taking into consideration the DVO's report. 9. The above facts have given rise to the above referred to point of difference. 10. The ld. counsel for the assessee had reiterated the same submissions which were taken before the Bench and further conten....
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....1. Relying upon the above, the ld. counsel for the assessee pointed out that books of account were being maintained by the assessee-company as required by the Companies Act and the Assessing Officer has not pointed out any defect in the books of account which were duly audited. The ld. CIT(A) has specifically mentioned this fact in the assessment order and the ld. Accountant Member has not found anything on record to rebut this observation of the ld. CIT(A) nor the ld. D.R. had brought anything on record to meet that observation of the ld. CIT(A). 12. The ld. counsel for the assessee submitted that if these are the facts, the Assessing Officer cannot be given second inning in the absence of any other material pointed out by the ld. D.R. during the course of hearing which can be the basis for sustaining the addition which was originally made the by the Assessing Officer. The contention is that the ld. Judicial Member has rightly decided the issue. 13. As against, it the ld. CIT (DR) placed reliance on the order of the ld. Accountant Member and contended that the Assessing Officer proceeded to make reference to the DVO as was the course available at that time till the Apex Cour....
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.... ratio was rendered by the Hon'ble Supreme Court of India. 17. In the situation which is before me, I may refer the case of Raj Kumar Jain in which Shri Ch. G. Krishnamurthy, the then President of the ITAT sitting as Third Member has decided the issue after taking note of the case of Kapurchand Shrimal and other cases relied by parties and relevant observations are being reproduced which are as under: "He also referred to the decision of the Supreme Court in the case of Kapurchand Shrimal v. CIT [1981] 131 ITR 451, where the Supreme Court has held that the jurisdiction of an appellate authority extends to correct all errors in the proceedings under appeal and to issue, if necessary, appropriate directions to the authority against whose decision the appeal is preferred. In my opinion, the ld. Accountant Member has failed to grasp the p real purpose of the Tribunal. The Tribunal acting as an appellate authority has to see whether the assessment framed by the Assessing Officer and whether the appellate order appealed against were according to law and properly framed on facts and whether there was sufficient material to support it. When there is no material to support i....
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....t report of the Registered Valuer is also an important piece of evidence and in this connection I may refer the decision of ITAT, Patna Bench in the case of Shanti Complex v. ITO [1999] 237 ITR (AT) 27 in which the importance of Registered Valuer was also discussed and it was opined that report of an expert only acts as an opinion before a judicial or quasi-judicial authority to whom it is submitted. That report is open to judicial scrutiny by higher judicial forum and in case there are two experts' opinion before the judicial forum, it cannot be said that DVO's report carries more weight or DVO is superior to other. Both are statutory creations and expected to perform functions provided by the relevant statute. The Assessing Officer has to consider the report of the Registered Valuer also effectively and arrive at his own conclusion. In this case in hand, the report of the Registered Valuer has been ignored by the Assessing Officer on flimsy ground and that was not the correct way to appreciate the same. In view of this also, the entries in the books of account duly get support from the report of the Valuer also. In such circumstances, no fruitful purpose would have been s....