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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 ..... g black money very simple and easy. For example, some one may purchase diamonds worth Rs. one crore entirely out of his black money and get away by saying that he purchased diamonds for Rs. 5,000 only. To say that difference between the market value and disclosed consideration is no evidence at all and the department must have primary evidence of on money having exchanged hands is to put a burden on the revenue obviously most unlikely to be discharged. In the same vein the verdict of Hon'ble Supreme Court in the case of C.B. Gautam [ 1992 (11) TMI 1 - SUPREME COURT] is that where there is significant under-valuation of the property in the consideration as disclosed in the agreement between the parties and there is no plausible explanation for that under-valuation, the same would lead to the inference of evasion of tax or in other words the under-statement of consideration also. We are, therefore, unable to accept the contention of the learned counsel 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of the assessee, report of the assessee's valuer and after giving opportunity of being heard to the assessee and/or his valuer. Thereafter he should give adequate opportunity to the assessee to have his submissions on the revised valuation as done by the Departmental Valuer. The learned Assessing Officer should determine the value of the properties afresh after passing a reasoned order and make assessment of undisclosed income only if there is significant under-valuation of the properties for which the satisfactory explanation is not given by the assessee. For statistical purposes this appeal shall be treated as partly allowed. - HON'BLE N.K. KARHAIL, JUDICIAL MEMBER AND S.C. TIWARI, ACCOUNTANT MEMBER For the Appellant : Suresh Anantha Raman and M.P. Rastogi, Advs. For the Respondent : Ram Mohan Singh, Sr. DR ORDER Per S.C. Tiwari, Accountant Member. 1. This appeal has been filed by the assessee on 30-9-2005 against the order of the learned CIT (Appeals)-XV, New Delhi dated 22-8-2005 in the case of the assessee in relation to assessment order under section 143(3) read with section 147 for assessment year 1997-98. 2. Grounds of appeal Nos. 1, 2 and 3 in this appeal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court referred to above. At the most the Assessing Officer can resort to make any addition, if he so likes, in the regular assessment but certainly it is not a case of undisclosed income nor any addition was warranted in the block assessment period, for want of any material available with the Department to make any addition on account of undisclosed income. Addition is deleted and ground is allowed. 3. The assessee filed its return of income for assessment year 1997-98 on 29-11-1997 i.e., after the date of block assessment order by the Assessing Officer but before the Tribunal order thereupon. The Assessing Officer, made assessment order under section 143(3) on 29-12-1999 i.e., before the date of the aforesaid order of Tribunal accepting the total income as reflected in the revised return filed by the assessee on 27-11-1998. In view of the fact that the Tribunal has held that the matter falls in the domain of regular assessment and not a block assessment order, the Assessing Officer initiated assessment proceedings under section 147 for assessment year 1997-98 by issue of notice on 15-1-2004. Thereafter, the learned Assessing Officer completed assessment order under section 143(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the assessee argued that the valuation reports made by the Departmental Valuation Officer were merely subjective estimate. They were at best opinion given by the Valuation Officer. Merely on account of difference between his estimate of market price and the purchase consideration disclosed by the assessee it could not be assumed that there was investment of any undisclosed income on the part of the assessee. In support of this contention the learned counsel strongly relied upon the judgment of Hon'ble Supreme Court in the case of K.P. Verghese v. ITO [1981] 131 ITR 597. He also placed reliance on the order of ITAT, Calcutta D Bench in Roof Tower Construction (P.) Ltd. v. Asstt. CIT [2001] 72 TTJ 433; judgment of Hon'ble Calcutta High Court in Britannia Industries Ltd v. Dy. CIT [1999] 238 ITR 572 and Punjab Haryana High Court in Vidya Sagar v. CIT [2005] 277 ITR 120. The learned counsel also referred to the judgment of Hon'ble Supreme Court in the case of Smt. Amiya Bala Paul v. CIT [2003] 262 ITR 407 and argued that the very reference to the Valuation Cell made by the Assessing Officer was bad in law. 6. The learned counsel argued that the learned CIT (Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment of the same amount in the hands of the same assessee. The jurisdiction of the Assessing Officer under sections 158BC and 143(3) is separate and what is once assessed under section 158BC cannot be assessed under section 143(3) and vice versa. It is, therefore, clear to us that there is no change of opinion on the part of the Assessing Officer and there is no assistance to the case of the assessee from the judgment of Hon'ble Delhi High Court in the case of Kelvinator of India Ltd. 8. We now address ourselves to the question as to whether from the difference between the fair market value as estimated by the Valuation Officer and the apparent consideration disclosed by the assessee, the Assessing Officer could draw the inference of an undisclosed income on the part of the assessee. The learned counsel for the assessee has heavily relied upon the judgment of Hon'ble Supreme Court in the case of K.P. Verghese. He argued that apart from the valuation difference the Assessing Officer ought to have positive evidence to indicate any suppressed purchase consideration having been passed on to the vendor by the assessee. The aforesaid judgment of K.P. Verghese's case ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility of the assessee under section 45 to the tax on capital gains and with that object the transfer of the capital asset was being made at an under-value of not less than 15 per cent for the purposes of taxing the assessee, the full value of the consideration was taken to be its fair market value on the date of the transfer. It was pointed out by the Bench that sub-section (2) of section 52 did not deal with income to accrue or to be received, which in fact never accrued and was never received. It sought to bring within the net of taxation only that income which has accrued or is received by the assessee as a result of the transfer of the capital asset and since it would not be possible for the Income-tax Officer to determine precisely how much more consideration is received by the assessee than that declared by him, sub-section (1) provides that the fair market value of the property as on the date of the transfer shall be taken to be the full value of the consideration which has accrued or has been received by the assessee. The onus of establishing that the conditions of taxability are fulfilled is always on the Revenue. In that case, it was urged on behalf of the Revenue that, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r must be given a reasonable opportunity of showing cause against an order for compulsory purchase being made by the appropriate authority concerned. As we have already pointed out, the provisions of Chapter XX-C can be resorted to only where there is a significant under-valuation of property to the extent of 15 per cent or more in the agreement of sale, as evidenced by the apparent consideration being lower than the fair market value by 15 per cent or more. We have further pointed out that, although a presumption of an attempt to evade tax may be raised by the appropriate authority concerned in case of the aforesaid circumstances being established such a presumption is rebuttable and this would necessarily imply that the concerned parties must have an opportunity to show cause as to why such a presumption should not be drawn . Moreover, in a given transaction of an agreement to sell, there might be several bona fide considerations which might induce a seller to sell his immovable property at less than what might be considered to be the fair market value. For example : he might be in immediate need of money and unable to wait till a buyer is found who is willing to pay the fair mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facie evidence in possession of the department of some thing over and above the disclosed consideration having exchanged hands between the parties. To hold such a view would be nothing short of rendering the task of laundering black money very simple and easy. For example, some one may purchase diamonds worth Rs. one crore entirely out of his black money and get away by saying that he purchased diamonds for Rs. 5,000/- only. To say that difference between the market value and disclosed consideration is no evidence at all and the department must have primary evidence of on money having exchanged hands is to put a burden on the revenue obviously most unlikely to be discharged. 10. In the case of Raza Sugar Co. Ltd. v. CIT [1981] 130 ITR 421, the Hon'ble Delhi High Court have held at page 431 that it is not possible to expect any direct evidence regarding on money and to prove conclusively that any such on money went to the assessee and the view to be taken in such matters is a question of inference from the facts and circumstances of the case. In the same vein the verdict of Hon'ble Supreme Court in the case of C.B. Gautam is that where there is significant under-valuation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r passed by the Tribunal against the order under section 158BC made by the Assessing Officer amounted to a finding that the income could have been assessed by the Assessing Officer in the regular assessment under section 143(3) and not in the block assessment order under section 158BC. On these facts the provisions of section 150 attracted. The notice under section 148 having been issued in consequence of the order of Tribunal that the provision of section 143(3) and not section 158BC applied, could be issued by the Assessing Officer under extended time. The learned counsel for the assessee has vehemently disputed these arguments of the department and he has drawn support mainly from the judgment of Hon'ble Supreme Court in the case of Rajinder Nath. In that case the Assessing Officer treated two buildings as belonging to a firm and in the assessment of the firm he estimated the cost of construction of those buildings at a higher figure than that disclosed and brought to tax the excess as income in the hands of the firm. On appeal, the AAC found that the firm was not the owner of the properties and deleted the addition. The AAC also observed that the ITO was free to take action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h notices under section 148 for assessment years i.e., for assessment years 1968-69 to 1971-72 and the assessment years 1981-82 to 1992-93. On a writ petition challenging the notices Hon'ble Delhi High Court held as under:- An order passed in a land acquisition proceeding would definitely be included within the ambit of the expression used any finding or direction contained in an order passed by a court in any proceedings under any other law . In the present case, the initiation of the reassessment proceedings is based on the findings or directions contained in the order passed by the reference court in a land acquisition proceeding, which, as is held hereinabove is included within the aforesaid expression used in sub-section (2) of section 150 of the Income-tax Act. In view of our aforesaid understanding of the provisions of section 150, the interpretation that could be given thereto is that if there be an order of a court including an order by a reference court in a land acquisition proceeding then the bar of limitation is automatically lifted and accordingly, for the years in question for which interest was paid to the petitioner, although initiation of reassessment proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment of CPWD. Being Civil Engineer he is an expert in the field of civil constructions. It is well-settled legal position that an opinion of an expert is admissible as evidence in a court of law. Ground of appeal No. 6 is that no inference of undisclosed income can be made on the basis of Departmental Valuer's report. We have discussed this point at length while considering the assessee's challenge to initiation of proceedings under section 147. We have held that if there is significant under-valuation that would be material/evidence of under-statement of consideration also in the event of the under-valuation not being satisfactorily explained by the assessee. Thus, effective ground in this appeal is ground of appeal No. 5 that the investment in the properties has been wrongly valued. 16. During the course of hearing before us the learned counsel for the assessee pointed out that both the properties in question were in the nature of unauthorized construction. This fact was accepted by the Departmental Valuer also and he, therefore, granted in his valuation a rebate on land value at the rate of 40 per cent on the ground of subject plot situated in an unauthorized colony. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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