TaxTMI 
TaxTMI 
TaxTMI 
2015 (3) TMI 156
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.... order made by the ITAT. The Revenue contends that the direction of the ITAT to delete the amounts sought to be brought to tax under Section 153A of the Income Tax Act was unjustified. The assessees had purchased eight different properties; they are related to each other. The search operations were conducted in the premises of M/s Mehra Art Palace and its partners Arun Mehra, Subhash Mehra and Sushil Mehra on 27.03.1996. Mehra Art Palace was used to export as well as sell handicrafts in the domestic market. The allegations made by the Revenue against the firm and its partners were that the high profit margins enjoyed by it were concealed and only modest amounts were disclosed in the ITRs. After issuing notice, the AO taking into considerati....
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....ll as declared wealth by these assessees in their income-tax and wealth-tax returns. Nowhere by the order of the Assessing Officer or the submission of the learned DR reveals that any fresh material was found in the course of search or there was any material with the department to suspect that the investment in these properties were suppressed. After completion of the search the matter was referred to the valuation officer just to ascertain the value of these properties. In our considered view there was no material in referring the matter to the Valuation Cell. It was just to collect the evidence which is not permissible in law. There should be any evidence or material with the Department to suspect any transaction. Only on the basis of the....
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....s we have already stated that facts of these cases are very clear and they are not under the purview of Chapter XIV-B of the Income Tax Act, therefore, for this reason and for other reasons, as discussed above, we delete the additions in all these cases. These grounds of the assessees are allowed." 4. Counsel for the Revenue urged that the impugned order should not be sustained, and that in block assessment proceedings, the Revenue in effect exercised powers vested in it under Section 147/148. Once the block assessment based upon search operations is found to be valid and there are genuine reasons for the AO to suspect the veracity of a particular property transaction, the question of not referring it for proper valuation should not ordina....
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.... the course of the search or collected during the proceedings post search, pointing to under valuation of the assessees' properties which were ultimately held to have been the subject of under valuation. Again, significantly the assessees had at relevant time when the actual purchases were effected disclosed the transactional value of those assets; the AO has then unreservedly accepted them. Wealth Tax authorities too had accepted the valuation. In almost identical circumstances, this Court in Navin Gera (supra) recollected the previous rulings - including the judgment of the Supreme Court in K.P. Varghese v. ITO, (1981) 131 ITR 597 (SC) and held as follows: - "9. We do not find merit in the submission made by Ms. Suruchi Aggarwal that the....