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TMI Blog2003 (2) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... dication of the Tribunal since the issue raised therein, is legal one and no fresh material is required for the adjudication: "In the facts and under the circumstances of the case the notice issued under s. 148 dt. 6th March, 1997, is without jurisdiction and non est in law". 3.1 The learned Departmental Representative opposes the allowability of the additional ground on the basis that it has been raised by the assessee before the Tribunal for the first time. 3.2 We after considering the arguments advanced by the parties find substance in the submissions of the learned authorised representative and thus allow the additional ground for our consideration and adjudication. Since the additional ground is related to the root of the matter we will prefer to adjudicate it first before proceeding further. 3.3 In support of additional ground the learned authorised representative submits that while issuing notice under s. 148 of the Act the AO as required under the provisions of s. 147 has not disclosed as to what was the reason before him to believe that income chargeable to tax against the assessee for the asst. yr. 1995-96 had escaped assessment. The learned authorised representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have voluntarily filed return of her income for the asst. yr. 1995-96 under s. 139(4) by 31st March, 1997, i.e., before the expiry of one year from the end of relevant asst. yr. 1995-96, if she had taxable income. He invites our attention to the CBDT Circular No. 549, dt. 31st Oct., 1989, placed at page No. 10 of the paper book in support. He submits further that under the circumstances of the present case as narrated by the AO in the order sheet while issuing the questioned notice under s. 148, the only option left with the AO was to issue notice under s. 142(1) and issue of notice under s. 148 was thus premature and illegal as by issuing notice under s. 148 of the Act, the AO has intended to extend the prescribed time-limit available for making the assessment under s. 153(1)(a), i.e., two years from the end of the assessment year in which the income was first assessable i.e. till 31st March, 1998. He points out that now after issuing notice under s. 148 the time-limit available with the Department for reassessment is 31st March, 2000, as per the provisions laid down under s. 153(2) of the Act. The learned authorised representative submits further that the practice of the Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder s. 142(1)(i) of the Act to assessee requiring her to file the return of income and for this purpose the time-limit before the AO under s. 139(4) was till 31st March, 1997, after the expiry of due date of filing return under s. 139(1) of the Act, i.e., 31st Aug., 1995. The AO has however issued the notice under s. 148 on 6th March, 1997, without invoking the provisions of s. 142 of the Act and has thus also extended the time-limit of the assessment till 31st March, 2000, which was otherwise to expire on 31st March, 1998, in the normal course, had the provisions of ss. 147 and 148 not been invoked. It is also pertinent to mention over here that under the similar circumstances during the last assessment year the Department had invoked the provisions of s. 142, which was the correct procedure to deal with the present situation. While issuing notice under s. 148 the AO was supposed to record his reason to believe that any income chargeable to tax has escaped assessment for an assessment year and the assessee has not filed return of income although her total income or the total income of any other person in respect of which she is assessable under this Act during the previous year e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve that income has escaped assessment." 5.3 Both the Hon'ble High Courts in the aforesaid decisions have followed the law laid down by the Hon'ble Supreme Court in this regard in the cases of: (a) Chhugamal Rajpal vs. S.P. Chaliha & Ors. (1971) 79 ITR 603 (SC), (b) ITO vs. Lakhmani Mewal Das, (c) Gangasaran & Sons (P) Ltd. vs. ITO & Ors. (1981) 22 CTR (SC) 112 : (1981) 130 ITR 1 (SC), and (d) S. Narayanappa & Ors. vs. CIT (1967) 63 ITR 219 (SC). 5.4 And besides above, the Board Circular No. 549, dt. 31st Oct., 1989, placed at page No. 10 of the paper book is also very clear in this regard, the relevant extract thereof is being reproduced hereunder for a ready reference: "...The Amending Act, 1987 has further provided that where a return has not been filed voluntarily before the end of the relevant assessment year, the AO can call for a return of income by issue of a notice under the said sub-s. (1) of s. 142. This provision, thus, enables the AO to call for a return, and is a substitute for the provisions of s. 139(2). However, a return can be called under s. 142(1) only after the relevant assessment year has ended without the assessee having filed the return of income." 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the parties in view of the materials available on the record, we find force in the submissions of the learned authorised representative that additions made and sustained by the lower authorities are based on nothing but surmises and conjectures especially when the assessee as per the provisions of r. 6F r/w s. 44AA(1) was under no obligation to maintain books of accounts as per the receipts of previous three years which is evident from page No. 12 of the paper book. And besides this, it is very much evident from order sheet entry dt. 6th Sept., 1999, i.e., page No. 8 of the paper book that the assessee has produced register showing tests made during the year relevant for the assessment year under consideration wherein total receipt was shown at Rs. 48,453 and no defect has been pointed out by the AO therein in his order for non-believing the same. Ground No. (i) is thus allowed in favour of the assessee with direction to AO to delete the addition. 8. Ground No. (ii): It is related to sustaining of an addition of Rs. 10,000 under s. 69 of the Act towards investment in purchase of plot. The facts in brief are that the learned CIT(A) has sustained the addition of Rs. 10,000 by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He invites our attention to the contents of page No. 9 of the paper book in support. The learned authorised representative cites the decision of Chennai Bench of the Tribunal in the case of M. Selvaraj vs. ITO (2002) 258 ITR 82 (Chennai)(TM)(AT) and the decision of Hyderabad Bench of the Tribunal in the case of Asstt. CIT vs. Vinodkumar Agrawal & Ors. (2002) 77 TTJ (Hyd)(TM) 943 : (2002) 257 ITR 65 (Hyd)(TM)(AT) and submits that reference should be made to the valuation cell only after proper application of mind by the officer concerned. His further submission is that writ of commission issued by the AO was in favour of the valuation officer who was authorised by him under s. 131(1)(d) to inspect the property and such investigation as it is necessary. He refers page No. 23 of the paper book in support. But the report was executed by the assistant valuation officer with two assistants which is not permissible as per the laws submits the learned authorized represantating our attention to the contents of page No. 24 of the paper book. The learned authorised representative submits further that commission to the valuation officer cannot be further delegated to the assistant valuation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red valuer had valued the cost at Rs. 4,45,000. The AO even did not bother to call upon the counter comments from the AVO to meet the comments of the registered valuer upon the report of AVO nor the AO has assigned any reason as to why the report of registered valuer was not acceptable who was equally competent to value the property. It was not possible for the registered valuer to give yearly break-up of investment in the construction as commented by the AO since construction was done during the financial years 1994-95 to 1998-99 and the valuation was done in December, 1999 and any year-wise break-up by any expert would have been hollow formality without sound basis especially when the valuation of the registered valuer was based on the amount of investment shown by the assessee which was not relied upon by the AVO. The allegation of the AO that documents for purchase of material were not produced before the AVO, is also baseless as the AVO did not complain for the same which is evident from page No. 28 of the paper book. The learned authorised representative refers page No. 9 of the paper book and submits that no fault was found by the AO in the documents furnished by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e first appellate order wherein the issue has been dealt with by him. 9.3 We have considered the arguments advanced by the parties in view of the materials available on the record and have gone through the orders of the lower authorities, valuation reports as well as the judgments relied on by the learned authorised representative. So far reference of the matter by the AO to the valuation cell is concerned, it is evident from order dt. 30th Sept., 1999, placed at page No. 9 of the paper book that no reason has been assigned by him as to why the value declared by the assessee was not acceptable to him nor is it evident from the order sheet that the AO had afforded opportunity to the assessee to counter the observation of the AO that no investment in the construction of the house in question was shown in the return filed by the assessee for the asst. yr. 1995-96 especially when the AVO on the contrary has observed in his report that the assessee had declared Rs. 1,135,95 as investment in the construction of house as referred by the learned authorised representative at page No. 34 of the paper book. In the case of M. Selvaraj vs. ITO relied on by the learned authorised representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the WT Act wherein the valuation officer appointed under s. 12A includes a Regional Valuation Officer, a District Valuation Officer, and an Assistant Valuation Officer. We also do not agree with the submission of the learned authorised representative that the date on or before which the report was sought to be submitted has not been mentioned in the reference because as evident from page No. 23 of the paper book, the valuation report was required to be submitted by December, 1999, in other words, by 31st Dec., 1999. There is no dispute that the report was submitted well within the prescribed time-limit as per the terms of the reference. Considering the totality of the facts and circumstances of the case discussed hereinabove, the valuation report was not worth relying as it was devoid of compliance of the principles of natural justice since the request of assessee made on 21st Feb., 2000, to give an opportunity to cross-examine the AVO was denied by the AO without any convincing reason. The rate of Rs. 476.95 per sq. ft. of construction adopted by AVO was highly excessive especially when he had himself observed that the construction was average type with second class material and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e encashed on 16th April, 1994 for making investment in purchase of plot, and (ii) construction of house at Rs. 1,01,150 as against Rs. 1,96,200 made by the AO. 14. Ground No. (i): We have heard and considered arguments advanced by the parties. The learned CIT(A) has dealt with the issue in details vide para Nos. 5, 6 and 7 of his order through which we have gone and find no infirmity therein. Relevant extract of the order is being reproduced hereunder for a ready reference: "...The AO should have made enquiries from the bank about the existence and time to time renewal of FDRs dt. 1st Dec., 1983, and their encashment on 16th April, 1994, as certified by the bank. After considering the arguments of the learned counsel and documents/evidences filed before the AO I am of the opinion that the AO was not at all justified in not considering the encashment of FDRs worth Rs. 1,06,210 (Rs. 60,691 + Rs. 45,519). These FDRs were purchased in the year 1983 and were encashed on 16th April, 1994 for making investment in purchase of plot. Therefore, the source of investment in plot to the extent of Rs. 1,06,210 is fully explained and no addition should have been made." The order of the learn ..... 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