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TMI Blog2002 (9) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... CTR (Pat) 376 : (1996) 222 ITR 44 (Pat). The additional ground raised by the appellant is not being admitted. It was held in the case of Indian Steel Wire Products Ltd. (1994) 208 ITR 740 (Cal) that the additional ground should normally not be allowed. Even if allowed, limitation under s. 253 should be adhered to i.e., within 60 days from the date of communication of the order of the CIT(A). This Bench of Tribunal had already held in the following cases that the additional ground can be raised within the time-limit allowed under s. 253(3) of the Act: 1. Asstt. CIT vs. Ansari Builders, ITA No. 1864/Jp/94, order dt. 21st Dec., 2000. 2. Bana Lal Jat vs. Asstt. CIT [ITA No. 511 517/Jp/2000, order dt. 21st Dec., 2000]. 4. Ground No. 1: Orders of the AO and the CIT(A) are bad in law The learned authorised representative has contended that the order of the AO contained certain factual errors and there were also factual errors in the order of CIT(A). Both the authorities below could not appreciate the facts of the case. 5. We shall take into account the correct facts as mentioned by the learned authorised representative while deciding the relevant grounds of appeal at the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time. But when the normal time-limit to proceed under s. 143(3) to make a correct and lawful assessment is available, the law does not envisage nor it was intended by the law-makers nor also it has been provided under s. 147 that the AO should proceed under s. 147/148 even in the cases where he has ample time to proceed for making assessment under s. 143(3) in the normal and regular course. Thus, by not proceeding in the set and prescribed legal way and manner, the learned AO committed a serious error of law and thus he has not acquired a valid and lawful jurisdiction under s. 147/148 of the Act. The learned authorised representative relied on the following judgments: 1. Ranchhoddas vs. CIT (1959) 36 ITR 569 (SC); 2. Ghanshyamdas vs. Regional Asstt. Commr. of S.T. (1964) 51 ITR 557 (SC); 3. CIT vs. K.V. Manak Ram Co. (2000) 162 CTR (Ker) 357 : (2000) 245 ITR 353 (Ker); 4. Trustees of H.E.H., The Nizam s Supplemental Family Trust vs. CIT (2000) 159 CTR (SC) 114 : (2000) 242 ITR 381 (SC); 5. Kamal Textiles Ors. vs. ITO (1991) 95 CTR (MP) 274 : (1991) 189 ITR 339 (MP); and 6. CIT vs. Rajendra G. Shah (2001) 247 ITR 772 (Bom). 10. We have considered the rival submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s can also be reopened under the amended law. 16. In the case of Trustees of H.E.H., The Nizam s Supplemental Family Trust vs. CIT, it was held that reassessment proceedings cannot be initiated so long as assessment proceedings are not terminated. 17. We find that in the case before us the assessment proceedings have already been terminated by processing the return filed under s. 143(1)(a) of the Act filed by the assessee. 18. In the case of Kamal Textile Ors. vs. ITO it was held that it was difficult to accept the contention that on issuance of such intimation the assessment proceedings can be reopened only in terms of s. 147 and the authority is not entitled to proceed under sub-s. (2) of s. 143. 19. Therefore, this judgment is also of no help to the assessee. This judgment does not lay down that no notice under s. 148 can be issued when the time is available for issue of notice under s. 143(2) of the Act. 20. In the case of Rajendra G. Shah, it was also held that all the proceedings were taken pursuance to the reopening of the assessment in 1985 losing sight of the fact that the main return was pending for assessment. 21. The facts of this case are also different f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1992, reads as under: "Asst. yr. 1991-92 13th Oct., 1992 Shri Uttam Chand Nahar is assessed to tax in Ward-3, Jodhpur. The ADI (Jodhpur) had received a TEP, which has been forwarded by Dy. CIT, Jodhpur, vide his letter dt. 20th July, 1992. As per information of ADIT, Jodhpur, the assessee has constructed a house at Ajit Colony, Jodhpur. Since, assessee has not disclosed any investment, he has concealed the facts and has furnished inaccurate particulars. Issue Notice under s. 148. Sd/- (G.C. Singhvi)" 27. From the perusal of the above, it is patently clear that it is because of non-disclosure of any investment, the AO held that the assessee has concealed the facts and furnished inaccurate particulars. Further, this reason does not mention the years of construction which of course were known to the AO and to the ADI by virtue of his return of income from asst. yr. 1990-91 and when he refers to the TEP received from ADI. The appellant in all clear terms informed the ADI and in the computation of income of asst. yr. 1990-91 that construction of the house at 52, Ajeet Colony was started by him in the year 1989 corresponding to the asst. yr. 1990-91, therefore, the not ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Service of the notice under s. 148 was not on assessee. 29. In ground No. 3(e), the learned authorised representative submitted that the service of notice was not on the assessee. It is a condition precedent, to acquire a valid and lawful jurisdiction that such notice should be served upon the assessee. This notice was served on the assessee s son Shri Ashok, who was not authorised to receive such notice and, therefore, the issuance of notice under s. 148 did not provide valid and lawful jurisdiction to the learned AO. It was held that where even the notice under s. 139(2) was received by the assessee s son who had in the past received such notice, yet it was held that since he was not authorised to receive such notice no valid jurisdiction acquired. He relied on the following judgments: 1. ITO vs. Suraj Prakash (1984) 18 TTJ (Jp) 98; 2. Thangam Textiles vs. ITO (1973) 90 ITR 112 (Mad); and 3. CIT vs. Girdhari Lal (1984) 38 CTR (Raj) 348 : (1984) 147 ITR 379 (Raj). 30. Thus, the service of notice on the assessee is a must. Such notice either should be served on the assessee himself or on any other person specifically authorised for such purpose. Here as said above, the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons as a step in continuity without closing or dropping the earlier initiated proceedings. Since the earlier proceedings were not valid and having not been closed as admitted by the learned AO, the subsequent notice issued by the learned AO is, therefore, not valid which also did not and could not provide any lawful and valid jurisdiction. As the learned AO issuing notice dt. 20th Jan., 1995, has not recorded the reasons afresh by closing the earlier proceeding under s. 148/147 dt. 13th Oct., 1992, therefore, both the notices under s. 148 have not provided proper and lawful jurisdiction to the learned AO to frame the impugned assessment order, therefore, the said assessment deserves to be annulled. 34. The learned Departmental Representative relied upon the orders of the authorities below. 35. For ground No. 3(d), we have considered the rival submissions. The AO did not mention the amount of income escaped for initiation of proceedings under s. 147 of the Act. Sec. 149 of the Act makes it clear and obligatory on the part of the AO to mention specific income escaped and the time-limits for issue of notice under s. 148 of the Act. It was held in the case of Phool Chand Bajra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant has informed the AO that he has maintained the books of accounts for the purpose of cost of construction of the residential house. Such books were earlier produced before predecessor-in-office who has issued notice under s. 148, dt. 13th Jan., 1992, to the appellant in the case of appellant s son, Sh. Ashok Kumar Nahar and these were examined. Therefore, there was no justification for referring the matter to Departmental valuation cell for determining the cost of construction. No reference could be made under s. 131(1)(d) of the Act without rejecting the books of accounts. The decision of Rajasthan High Court reported in CIT vs. Pratap Singh Amro Singh, Rajendra Singh and Deepak Singh (1993) 200 ITR 788 (Raj) and ITAT Jaipur in ITO vs. Tek Chand (1995) 52 ITD 197 (Jp) were also quoted. 39. As stated above, the learned AO wrongly repeated that the appellant has admitted the cost of construction at Rs. 14,32,438 in the statement on oath. The appellant has never admitted the cost of construction at Rs. 14,32,438. 40. That apart, it is not necessary that the books of accounts should be maintained on day-to-day basis for construction of the house as held by the Jaipur Bench of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g construction of new house in assessment year of starting thereof i.e., in asst. yr. 1990-91. The learned authorised representative relied on the following judgments: (i) V.D.M. RM.M. RM. Muttaiah Chettiar vs. CIT (1969) 74 ITR 183 (SC); (ii) CIT vs. Laxmi Devi Mehta (1993) 70 Taxman 399 (Cal); and (iii) Raj Kumar Rawla vs. Asstt. CIT (1992) 42 ITD 509 (Cal). 45. Ground No. 4.4: This issue has a reference to the point already decided. 46. Ground No. 4.5: Unfounded and arbitrary basis of making addition. The learned authorised representative made the following submissions : The overall investment by all the co-owners in the said residential house was made as was detailed in fact No. 46 of statement of facts available at paper book, p. No. 54. Rs. 1. Shri Uttam Chand Nahar 2,25,646 2. Smt. Kamla Devi Nahar 3,70,679 3. Shri Ashok Kumar Nahar 1,63,000 4. Shri Anil Kumar Nahar 1,73,190 9,32,515 47. The learned AO made addition of Rs. 5 lakhs in this amount of the disclosed investment of Rs. 9,32,515 as per the alleged surrender of the appellant taking the investment in the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned addition was the so-called surrender of the appellant and the determination of cost of construction by the Departmental valuer. 50. In the statement which is available at p. Nos. 111 to 126, the assessee has not surrendered any amount as alleged by the AO. At p. Nos. 125 126, question No. 46 and its answer established this fact. The learned authorised representative reproduced the question and answer of Q. No. 46 as under: "Q. I am giving one opportunity to you, so that you voluntarily offer to tax your undisclosed income and investment. State. A. I want to avail the benefit of your facility and the expenditure incurred in the construction of both the buildings which I cannot fully prove, want to declare. Such investment was made in 5 years, instead of one year. I will submit my written consent in this regard till 24th Aug., 1992. This amount is about Rs. 5,00,000 and was earned money of the three male persons in 5 years, thus, it has been earned during the preceding 5 years by the three persons. I am doing this for the peace of my family and with a view to get rid of legal complications and for this, Department would not penalise me, accept tax, with this hope I am st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and was against the authority of law. Such reference can only be sent where the books of accounts are held as not reliance worthy and are rejected. There was no occasion before the learned AO prior to sending reference to the valuer to examine the books of accounts. Without examining the same and rejecting them no straightaway reference could have been made. Therefore, in view of the following decisions, the valuer s report and determination of the cost of construction by him has to be discarded outrightly. The reliance on such report was unlawful and unauthorised. 1. CIT vs. Pratap Singh Amro Singh, Rajendra Singh Deepak Kumar; 2. ITO vs. Tekchand; 3. CIT vs. Hotel Joshi (1999) 157 CTR (Raj) 369 : (2000) 242 ITR 478 (Raj); 4. Swarnpal Singh Kanda vs. ITO. 55. In view of this, valuer s report determining the cost of construction has outrightly to be rejected. If this is done and the statement of the appellant is read as a whole it is established that the addition made by the learned AO on the basis of these two factors is wholly unsustainable. There is no other material on record nor such has been referred to or relied upon in the impugned order. The same was made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on merits also. 60. In ground No. 4.1, the learned authorised representative of the assessee contended that the appellant had maintained books of account for the purpose of cost of construction of the residential house. It was also contended that no reference can be made to the valuation cell when regular books of accounts for the cost of construction are being maintained. If any account of the expenses are regularly maintained and supported by vouchers, there should be no reason not to accept the same for the cost of construction and there was no need to make a reference to the Valuation Officer. He has also relied upon the judgments of CIT vs. Hotel Joshi and CIT vs. Pratap Singh, Amro Singh, Rajendra Prasad and Deepak Kumar. We find that the AO has clearly mentioned at p. 5 of the order that the assessee has not maintained books of accounts for the purpose of construction with vouchers. It was held in the case of Pratap Singh Amro Singh that when the expenses were fully supported by vouchers, full details were also mentioned in respect of each item in the books and proper books of accounts are maintained which had been accepted in the past and no defects were pointed out in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the appellant in that building. 70. Ground No. 5: Co-owners Benami Through this ground, the learned authorised representative submitted that the learned CIT(A) has erred in not deciding ground No. 3 taken before him which read as under: "That, on the facts and in the circumstances keeping in view the material available on record and applying thereto the relevant provisions of law supported by various judicial pronouncements the learned AO has absolutely erred in law and was erroneous on facts as well as in giving the finding in the impugned assessment order that Smt. Kamla Devi Nahar, Shri Ashok Kumar Nahar and Shri Anil Kumar Nahar so far as the building constructed on plot No. 52, Ajeet Colony, Jodhpur, is concerned. This finding is without any basis and material on record and is the result of an arbitrary approach and presumption of the learned AO, therefore, the same is incorrect and liable to be quashed and expunged from the impugned assessment order." 71. The finding of the learned AO as to Benamidari was disputed and objected through the above ground before him. As per the facts and material available on record and submissions made above, it is submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e : (i) in the form of registered lease deed of the respective co-owners of the respective portion of residential house; and (ii) evidence regarding land and building tax of all the co-owners. In the statement source of investment by four co-owners was explained. The appellant had invested only Rs. 2,25,646 and he had sufficient fund after sale of old house for Rs. 4,25,000. All the four co-owners had arranged their own funds. Therefore, keeping in view the facts of the case and the judgment of the Hon ble Rajasthan High Court in the case of CIT vs. Sohan Lal we hold that residential house is owned by the four co-owners and Smt. Kamla Devi Nahar, Shri Ashok Kumar Nahar and Shri Anil Kumar Nahar are not the Benamidars of the appellant. The AO could have taken necessary action in the hands of other co-owners are done by him in the case of Shri Ashok Kumar Nahar. Though we have already held that assessment is null and void, yet on merits we hold that cost of construction should be taken as per PWD rates in the ratio of investment by each co-owner and after that investment by the appellant is to be determined. 74. Ground No. 6: The CIT(A) erred in observing to examine the case from p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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