TaxTMI 
TaxTMI 
2015 (5) TMI 725
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....ssue of the addition sustained by the CIT (A) on merit amounting to Rs. 3,45,75,000/- on account of the alleged unexplained investment in a property. 3. The assessee, an individual, had furnished his return of income on 15.11.2008, admitting a total income of Rs. 8.92 crores. There was a search and seizure operation u/s 132 of the Act dated 18.01.2007 in the premises of the assessee. The AO had concluded the assessment u/s 143(3) of the Act on 31.12.2008 on a total income of Rs. 9,00,29,900/-. Subsequently, the assessment in this case was reopened by issuance of a Notice u/s 148 of the Act on 28.3.2013. After taking into account the assessee's contentions made during the course of re-assessment proceedings and also the detailed reasons as recorded in the impugned assessment order under dispute, the AO concluded the reassessment order u/s 143(3) r.w.s. 147 of the Act dated 26.3.2014, determining the assessee's total income at Rs. 12,38,56,450/-. The AO made an addition of Rs. 3.45,75,000/- on account of unexplained investment. 4. Briefly stated, the facts with reference to the addition of Rs. 3,45,75,000/- are as follows :- &n....
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....hat the Approved Valuer's report was found, which valued the transacted property at Rs. 17.83 crores as on 1611212006, as against its reported sale consideration of Rs. 4 crores on 28/3/2007, that led to the reasonable belief of the AO that the property transaction had been under-reported by the buyer and the seller, resulting in income escaping assessment. In this background, the claim of the appellant; that all material, facts had been disclosed truly and fully by him during the course of the earlier assessment proceedings, is obviously not correct. Since the matter of under-reporting in property transaction came to the notice of the department after the passing of the assessment order u/s 143(3), the AO was justified in invoking the provisions of section 147. 5.2. In response to the appellant's claim, that proceedings could not be initiated in his case since 4 years had lapsed, the AO categorically informed the appellant that the re-opening of assessment had been approved by the competent authority. Now, since the re-opening of the appellant's case was-after the, expiry of 4 years from the end of the relevant AY, in terms of the proviso to section 151 (1), the appro....
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....s 148 was improper or that the framing of the assessment order was without proper jurisdiction. Therefore, the assumption of jurisdiction u/s 148 is held to be valid. Accordingly, grounds 2 and 3 of the appeal are dismissed." 6. With reference to the issue on merits, the CIT (A) adopted the market value fixed by the approved valuer in his report which was seized during the course search and seizure proceedings in the premises of the seller's group namely Tinna group of cases. The CIT (A) also did not accept the DVO's report who had fixed the value of the impugned property at Rs. 1.64,28,000/- [the DVO's report was taken by the AO during the course of assessment proceedings of the seller]. The relevant findings of the CIT (A) with reference to issue on merit read as follows "6.3.4. Since it is not for the appellant, who was one of the co-buyers of the property transacted in March 2007, to have actual knowledge about the 'purpose' for which the seller (Space Age Technical Services P Ltd) might have engaged the services of the Approved Valuer in December 2006, his claim - that the value of Rs. 17.83 crores de....
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....issions made by the learned AR are summarized as under: (i) that the valuation report which has been sought to be relied on by the department for re-opening of the assessment under section 148 of the Act was not a fresh or valid material which can lead to re-open of an assessment and re-assessment proceedings should be quashed on this ground along and in order to support the aforesaid proposition, the following case laws are relied upon, namely: >ACIT v. Dhariya Construction Co - 328 ITR 515 (SC); >MahashayChunnilal v. DCIT - 362 ITR 314 (Del) (ii) that the AO had to specify in the reasons recorded, as to which material has not been disclosed by the assessee during the course of original assessment proceedings u/s 143(3) of the Act and that in the present case, the said disclosure by the AO was absent in the reasons recorded and, thus, the reassessment order requires to be quashed on this count alone - Refer: Global signatures Cable (India) Ltd. v. DCIT [368 ITR 609 (Del)] (iii) that the reopening of the assessment was merely based on change of opinion of the AO as all the necessary details were filed before the AO during the course of original assessment proceedings and, as s....
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....into the merits of the cases since the admitted taxes, according to the CIT (A), were not paid. The earlier Bench of this Tribunal restored the appeals before the CIT (A) and it in this context the matter is still pending for disposal before the CIT (A). Similarly, the issue in the hands of the seller is also pending for adjudication before the CIT (A). 10. The twin issues that arise for our consideration are, namely : (i) Whether the reopening of the assessment by issuance of a notice u/s 148 of the Act is valid? and (ii) Whether the CIT (A) was justified in confirming the AO's action in making an addition of Rs. 3.45 crores u/s 69 of the Act? 11. We shall first consider the issue on merits, namely, whether the addition of Rs. 3.45 crores was justified on the facts and circumstances of the case. Apparently, the AO had solely relied on the valuation report prepared by an approved valuer which was seized during the course of a search operation conducted in Tinna Group of cases on 11.11.2010 [sellers of the subject property]. In the said report, the approved valuer had allegedly arrived at the value of the impugned property at Rs. 17.83 crores. Accordingly, the AO had come to a c....
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....ring the course of search or any evidence was found which would indicate such concealment. The seized material containing the sale deeds of the properties which have been relied upon to make reference to the DVO, had already been declared to the Revenue by the respondent assessee under the VDIS. We are also in agreement with the submission made by Mr. Piyuush Kaushik that it is settled law that in the absence of any incriminating evidence that anything has been paid over and above than the stated amount, the primary burden of proof is on the Revenue to show that there has been an understatement or concealment of income. It is only when such burden has been discharged, would it be permissible to rely upon the valuation given by the DVO. Further, the opinion of the DVO, per se, is not an information and cannot be relied upon in the absence of other corroborative evidence...." (ii) In CIT v. Puneet Sabharwal (supra), the Hon'ble Jurisdictional High Court had held that - "....the assessing officer solely relied upon the report of the District Valuation Officer. Apart from this, there was admittedly no evidence o....
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....." 13. Incidentally in the case under dispute, the AO had neither applied his mind nor formed a belief, but, merely came to the conclusion, based on the report of the approved valuer found during the search operation at the premises of Tinna Group of cases, that the value of the land under dispute was shown highly understated and, accordingly, initiated proceedings u/s 147 of the Act. Moreover, in the course of assessment proceeding of the seller, the impugned property was referred to the DVO of the Department for valuation and he arrived at the value of Rs. 1.64crores which was much below than the price mentioned in the sale deed of the impugned property. The valuation report being only an opinion, the same cannot be a sole basis for making an addition without any corroborative evidence to hold that there is an undisclosed payment in purchase of the impugned property, especially, when the sale prices mentioned in the sale deeds are much above the guideline/circle rate. 14. Taking into account all the facts and circumstances of the issue as deliberated upon in the fore-going paragraphs and also in consonance with the judgements of various Hon'ble Courts (supra), we are of the vie....
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....From the above proviso, it is clear, the AO must have a reason to believe that the escapement of income from assessment must be occasioned by the failure on the part of the assessee to, inter alia, disclose material facts fully and truly. If this condition is not satisfied, there would be a bar to taking any action under section 147 of the Act. In the instant case, reasons recorded for reopening of the assessment are placed at page 89 of the Paper Book. On a perusal of the reasons recorded, it is evident that while the assessing officer mentioned that income had escaped assessment because of the failure on the part of the assessee to fully and truly disclose the material facts for assessment, he has not indicated as to which material fact had not been fully and truly disclosed. In such circumstances, the re-opening of the assessment has been held to be invalid by the Hon'ble jurisdictional High Court in the case of Global Signal Cables (India) (P) Ltd v. DCIT reported in (2015) 54 taxmann.com 114(Delhi). The relevant findings of the Hon'ble High Court read as under: "17. It is evident that while the assessing officer mentioned....