TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 491
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....with the income tax return for the year under consideration, was to be duly considered at the time of calculating the impugned difference between the investment made by the assessee as in comparison to the estimate of the 'Valuation cell'? 2) Whether the Tribunal is right in law in sustaining the substitution of the impugned difference/deficit of Rs. 7,76,259/- as stood calculated by comparing the aggregate of investment as stood reflected by the assessee as in comparison to that as stood estimated by the 'Valuation Cell', by an amount of Rs. 10,01,325/- which stood calculated by the Assessing Officer by applying 'Cost inflation index' to the impugned difference/deficit pertaining to the assessment year (s) 2005-06 and 2006-07? 3) Whether the Tribunal is right in law in transgressing its arena of jurisdiction therein dismissing the appeal of the assessee on an entirely different ground which was neither pleaded nor raised by the assessee, nor any 'Cross objection as regards the same was ever filed by the revenue/department, therein placing the assessee appellant in a situation worse than where he was prior ....
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....till lower than 15%. The Assessing officer treated the said difference as unexplained investment of the assessee. On appeal, the Commissioner of Income Tax (Appeals) [CIT(A)] vide order dated 17.11.2009, Annexure A.2 sustained the addition of Rs. 10,01,325/- made by the Assessing Officer. Aggrieved thereby, the assessee filed appeal before the Tribunal. Vide order dated 31.3.2010, Annexure A.3, the appeal was dismissed. Hence the instant appeal by the assessee. 3. Learned counsel for the assessee submitted that since the books of account were never rejected and there was no specific order passed by the Assessing Officer rejecting the books of account, therefore, no reference could be made to the Departmental Valuation Officer (DVO) and as a consequence thereof, no addition could be made on account of construction of the hospital. Reliance was placed upon judgments in Sargam Cinema vs. CIT, (2010) 328 ITR 513 (SC), CIT vs. Chohan Resorts, (2012) 253 CTR 106 (P&H) and Nirpal Singh vs. CIT, ITA No.522 of 2009, decided on 16.9.2013 (P&H). It was submitted by the counsel that though this point was never raised before the Tribunal but this being a pure question of law, in view of sub s....
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....fore the High Court under Section 260A of the Act. Therefore, even if the contention is not urged before the appellate authority, but on the basis of the records, without investigation of any facts, if the substantial question of law is made out by the appellant before the High Court, in our view, it would be permissible for the High Court to entertain an appeal for consideration of such a question. Therefore, as noticed by us earlier, the language employed under sub section (1) of section 260A of the Act is that the case should involve a substantial question of law. The meaning attached to the words "substantial question of law", in our view, should not be given a restricted meaning to understand it as should involve substantial error of law in the order. While interpreting a provision which provides for a right of appeal, the court should not narrow down the scope of right of appeal provided to the parties. Sub Section (2) of Section 260A of the Act cannot be read de horse sub section (1) of section 260A of the Act. Sub section (1) of the said section confers power on the High Court to entertain an appeal against every order passed by the Appellate Tribunal. Sub section (2) of th....
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....rt in an appropriate case where no dispute arises on factual ground but purely legal issue arises in the case, may consider a substantial question of law even though it may not have been raised/adjudicated before the Tribunal. 10. Adverting to the submission made by the learned counsel for the appellant on merits, that in the absence of any specific order rejecting the valuation of the cost of construction as shown in the books of account, reference under Section 142A of the Act was unjustified and no addition could be made, the following facet would be required to be examined:- "the scope and circumstances in which the Assessing Officer can invoke provisions of Section 142A of the Act". 11. It would be expedient to notice Section 142A of the Act. Section 142A of the Act was inserted by Finance (No.2) Act, 2004 with effect from 15.11.1972. At the relevant time, it read thus:- "142A(1) For the purpose of making an assessment or reassessment under the Act, where an estimate of the value of any investment referred to in section 69 or section 69B or the value o....
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....rence to the Valuation Officer for estimating the value of investment, expenditure etc. This section has been inserted with retrospective effect from 15th November, 1972 to save the cases where such references have been made in the past and are still pending in litigation at one stage or the other. Sub section (1) of the new section provides that where an estimate of the value of any investment referred to in section 69 or section 69B or the value of any bullion, jewellery or other valuable article referred to in section 69A or section 69B is required to be made for the purposes of making any assessment or reassessment, the Assessing Officer may require the Valuation Officer to make an estimate of the same and report to the Assessing Officer. Sub section (2) of the new section provides that the Valuation Officer to whom such a reference is made under sub section (1) shall, for the purpose of dealing with such reference, have all the powers that he has under section 38A of the Wealth Tax Act, 1957. Sub section (3) of the new section provides that on receipt of the report from the Valuation Officer, the Assessing Officer may after giving the assessee an opportunity of being heard,....
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....ired to delve into the factual matrix in the present case. During the search operations carried out on the business and residential premises of the assessee on 17.11.2006 which was concluded on 3.1.2007, an amount of Rs. 40,00,000/- was surrendered by the assessee. It may be noticed that the assessee during the course of search on 17.11.2006 had surrendered an amount of Rs. 22 lacs relating to assessment year 2007-08 on account of unaccounted amount utilized in the construction of the hospital. 16. Law protects those who are fair in their action and are cooperative with the department. Where during search and seizure operation, disclosure of concealed income is made by way of surrender, it cannot be termed as voluntary disclosure because it is made under the constraint of exposure to adverse action by the department. However, there being exception where the surrender is made 'voluntary' out of free will without any compulsion. In the present case, it was only during the search when the assessee had no other option that the amount was surrendered on account of unaccounted amount of Rs. 22 lacs utilised by him. The only inference in such circumstances would be that the cost of const....