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TMI Blog2006 (3) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... riod 1-4-1986 to 20-8-1996. In this block assessment the undisclosed income was determined on account of the alleged undisclosed investments made by the assessee in relation to two properties in Tuglakabad Extension, viz, RZ-11-C, Gali No. 5 and RZ-1/32, Gali No. 4. The assessee claimed to have purchased these two properties for Rs. 1,60,000/- and Rs. 4,50,000/-. But the Departmental Valuer estimated the value of these two properties on the material date at Rs. 19,45,300/- and Rs. 28,38,500/-. The learned Assessing Officer treated the difference between the fair market value and the apparent consideration to represent undisclosed income of the assessee. Accordingly, assessment of Rs. 36,95,428/- was made under section 158BC as undisclosed income of the block period. The assessee carried the matter in appeal before the Tribunal. Income-tax Appellate Tribunal, Delhi Bench "A", New Delhi as per its order dated 27-1-2003 in IT(SS) Appeal No. 193 (Delhi)/97 allowed the assessee's appeal, inter alia, observing as under:- "4. After going through the submissions of the learned counsel for the assessee as well as the learned DR, we are of the considered view that no addition was warra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessee argued that in this case an order of assessment under section 143(3) was originally made on 29-12-1999. Notice under section 148 was issued on 15-1-2004 i.e., long after expiry of four years from the end of the assessment year on 31-3-2002. Thus, proviso to section 147 squarely applied and proceedings under section 147 could not be initiated unless it could be established that the assessee's income chargeable to tax had escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for assessment year 1997-98. The learned counsel argued that the fact of both the properties having been purchased by the assessee was reflected in the books of account of the assessee. At the instance of the Assessing Officer during the course of block assessment proceedings under section 158BC, a reference was made to Assistant Valuation Officer of the Valuation Cell of Income-tax department, who had by his valuation reports in July/August, 1997 valued the properties as aforesaid. In response the assessee furnished valuation reports by the registered valuer dated 28-8-1997. Those valuation reports we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sort to make any addition, if he so likes, in the regular assessment. The matter was entirely left at the option of the Assessing Officer and, therefore, it could not be said to be a "direction". It was also not any "finding" on the part of the ITAT because the Tribunal nowhere found that the assessee had made any investment of its undisclosed income. The Tribunal was concerned with the block assessment comprising of 10 years, there could not be any finding specific to assessment year in the order of the Tribunal for that reason. 7. We have carefully considered the rival submissions. In this case the Assessing Officer had already assessed the difference between the value estimated by the Departmental Valuation Cell and the apparent consideration disclosed by the assessee as representing undisclosed income of the assessee in the order under section 158BC made on 29-8-1997. Even the return of income for assessment year 1997-98 has been filed by the assessee thereafter on 29-11-1997. During the course of proceedings under section 143(3) for regular assessment the Assessing Officer could not have made assessment of undisclosed income in this behalf because such income had already been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain counter affidavit and the affidavit of H.K. Sarangi, which has been filed after obtaining instructions from the Income-tax Department and the Central Board of Direct Taxes, make it clear that the powers of compulsory purchase conferred under the provisions of Chapter XX-C of the Income-tax Act are being used and intended to be used only in cases where in an agreement to sell an immovable property in an urban area to which the provisions of the said Chapter apply, there is a significant under-valuation of the property concerned, namely, of 15 per cent or more. If the appropriate authority concerned is satisfied that, in an agreement to sell immovable property in such areas as set out earlier, the apparent consideration shown in the agreement for sale is less than the fair market value by 15 per cent or more, it may draw a presumption that this under-valuation has been done with a view to evade tax. Of course, such a presumption is rebuttable and the intended seller or purchaser can lead evidence to rebut such a presumption. Moreover, an order for compulsory purchase of immovable property under the provisions of section 269UD requires to be supported by reasons in writing and suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This submission was rejected by this Court. It was pointed out that the submission would be justified only on a strict literal reading of sub-section (2) of section 52 but that such a construction could not be adopted. The court observed that the task of interpretation of a statutory enactment is not a mechanical task. The famous words of Judge Learned Hand of the United States of America that "...it is true that the words used even in their literal sense are the primary and ordinarily the most reliable source of interpreting the meaning of any writing : be it a statute, contract or anything else. But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning" were quoted with approval. After considering various authorities and the historical setting in which the provisions of the said section were enacted, it was held that the fair and reasonable construction to put on the provisions of sub-section (2) of section 52 would be to so construe it that it would apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property to a particular purchaser at less than the market value even in cases where the purchaser might not p be his relative. Unless an intending purchaser or intending seller is given an opportunity to show cause against the proposed order for compulsory purchase, he would not be in a position to rebut the presumption of tax evasion and to give an interpretation to the provisions which would lead to such a result would be utterly unwarranted." (emphasis supplied) 9. It would be seen that in the case of C.B. Gautam the Hon'ble Supreme Court have laid down that in a case where there is significant under-valuation of the immovable property in the apparent consideration disclosed in the agreement that would give rise to a rebuttable presumption of tax evasion and they have held that this proposition is supported by the earlier decision of the court in the case of K.P. Verghese. On a combined reading of the judgments of Hon'ble Supreme Court in the case of K.P. Verghese and in the case of C.B. Gautam, it would be seen that the argument that no matter what is the difference between the fair market value of the property and the apparent consideration disclosed by the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel of the assessee that in the absence of direct evidence the valuation report made by the departmental valuer cannot lead to the assessment of any undisclosed investment within the meaning of sections 69, 69A, 69B and 69C of the Act. We may also state here that in our opinion the reference made by the learned Assessing Officer to the Departmental Valuation Cell cannot be held to be bad in law, in view of the provisions of section 142A of the Act inserted by the Finance (No. 2) Act, 2004 with retrospective effect from 15-11-1972. 11. We are now left with the argument of the learned counsel for the assessee based on proviso to section 147 that in the absence of any failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for assessment year 1997-98 during the course of original assessment proceedings, the Assessing Officer cannot take recourse to reassessment under section 147 after the expiry of four years from the end of the assessment year. The case of revenue is based on the provisions of section 150. It is argued that at the time when the learned Assessing Officer made his order under section 158BC making assessment of un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of an assessment must be a finding necessary for disposal of the particular case, that is to say in respect of the particular assessee and in relation to the particular assessment year. To be a necessary finding, it must be directly involved in the disposal of the case. It is important to bear in mind that in the case of Rajinder Nath the alleged finding in the order of the AAC did not relate to the appellant before him, which was a firm. The finding was given in respect of assessees who were not appellant before the AAC. The Hon'ble Supreme Court held the view that for the disposal of appeal in the case of the firm, it was enough to hold that the firm was not owner of the buildings. It was not necessary to further hold as to whom the buildings belonged. In this context, Hon'ble Supreme Court held that in order to be a finding necessary for the disposal of a particular case should be in respect of the particular assessee and in relation to the particular assessment year. In the instant case before us the order of the Tribunal being relied upon by the revenue is in respect of the same assessee and for the same assessment year. Based on the distinction between the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it does not envisage within its ambit any finding or direction contained in an order passed by a court in any proceedings under any other law, which in the instant case is the finding or direction contained in the order of award passed by the reference court in the land acquisition proceedings under the Land Acquisition Act. The decisions of the Supreme Court relied upon by learned counsel for the petitioner are distinguishable as those decisions were rendered prior to the amendment of section 150 of the Income-tax Act effective from 1-4-1989, and do not notice the aforesaid amendments in section 150(1)." 13. We find the aforesaid judgment of Hon'ble Delhi High Court has been given in some what different context, i.e., enlargement of the scope of provisions of section 150 by including an order passed by a court in any proceedings under any other law. However, it is clear from the judgment of Hon'ble Delhi High Court relied upon by the learned DR that it is the consequence of the order specified in section 150(1) that is material. The consequence of the order of the Tribunal in the case of the assessee is that the assessment should be made under the provisions of regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rized construction. During the course of hearing before us the learned counsel for the assessee argued that the Departmental Valuer has not attached adequate importance to this aspect of the properties resulting into substantial over-valuation of the properties. During the course of hearing before us, the learned counsel for the assessee referred to the letter of the assessee dated 28-8-1997 addressed to the Assessing Officer. He pointed out that in this letter a large number of reasons were given in support of the low market value of the properties. The learned counsel argued that in the assessment order these objections have been over-looked. The learned counsel argued that the Departmental Valuer also erred in taking into consideration sale instances of Kalkaji, that was fully developed and regular posh locality in South Delhi, whereas the assessee's properties were situated in Tughlakabad Extension. The learned counsel, however, admitted that the assessee had not relied upon any sale instances of Tughlakabad Extension. On consideration of the matter we are of the view that this aspect of the matter requires reconsideration. The learned Assessing Officer has in the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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