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TMI Blog2009 (12) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... is of property in a locality - remote area or same locality - held that:- Since the Punjabi Bagh and Rajouri Garden are at a distance of 2-3 kms. and located near the Ring Road, the land price of the area would be identical. Since the District Valuation Officer has relied on the price of land sold in 1999 subject to certain modification at Rs. 17,186, in our considered opinion, in the absence of negative points, the price adopted by the District Valuation Officer has to be upheld. Adjustment in the price - discount in value - CIT(A) allowed 20% discount - held that:- CIT(A) has not given any reasons for reduction in the value of the land as well as the building, the reduction allowed by the learned Commissioner of Income-tax (Appeals) is not justified. - Decided against the assessee and in favor of revenue. - ITA NOS. 3514 AND 3591 (DELHI) OF 2008 - - - Dated:- 18-12-2009 - SHRI K.D. RANJAN, AND SHRI GEORGE MATHAN, JJ. Represented by: Shri K.R. Manjhani for the Appellant. Shri Kishore B for the Respondent. ORDER Shri K.D. Ranjan, Accountant Member - These cross-appeals by the assessee and the Revenue for the assessment year 2003-04 arise out of the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment on the basis of material available on record. Subsequently, the District Valuation Officer sent a report on December 21, 2006 valuing the property at Rs. 58,19,100. Thus, there was a difference between the purchase consideration shown by the assessee and fair market value as on date of purchase amounting to Rs. 32,69,100. The Assessing Officer initiated reassessment proceedings and the assessee was asked to furnish return of income by issue of notice under section 148. The assessee vide letter dated October 17, 2007 stated that return already filed may be treated as return filed in response to the notice under section 148. The Assessing Officer provided copy of reasons for reopening of assessment vide letter dated November 15, 2007. 4. In response to notice issued under section 143(2), the assessee objected to reopening of assessment under section 148 on the basis of the report of the District Valuation Officer after completion of assessment. This contention of the assessee was rejected on the ground that after incorporation of section 142A, the Assessing Officer was empowered to do reassessment on the basis of estimate made by the District Valuation Officer. He plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. If the conclusion drawn by the Assessing Officer from the primary facts disclosed by the assessee were erroneous, the Assessing Officer could not reopen the assessment merely on the basis of change of opinion. He placed reliance on the decision of the hon'ble Allahabad High Court in the case of J.P. Bajpai, (HUF) v. CIT [2004] 269 ITR 40 and decision of the hon'ble Delhi High Court in the case of Transworld International Inc. v. Jt. CIT [2005] 273 ITR 242. It was also submitted that the Assessing Officer could not issue notice under section 148 after the assessment has been made unless there was deliberate concealment by the assessee or there was information that income has escaped assessment. The Assessing Officer had made enquiries regarding the value of property from the office of Sub-Registrar and had completed assessment after satisfying himself about the value of properties. The assessee had submitted all the necessary information including the copies of registered sale agreements in respect of the properties. Therefore, no action could be taken on the basis of information which is wholly vague, indefinite, farfetched and remote. Therefore, the belief of the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of section 147. Therefore, the report of the District Valuation Officer estimating the value of the property at higher amount was information in possession of the Assessing Officer for reopening of assessment under section 147. Another aspect considered related to discrepancy in built-up area. Therefore, there existed sufficient and valid information received by the Assessing Officer after completion of assessment. Therefore, there was no illegality in invoking the provisions of section 147. As regards the contention of the assessee that there was no evidence in possession of the Assessing Officer to differentiate the value of investment declared by it, the learned Commissioner of Income-tax (Appeals) observed that the value declared by the assessee did not make sacrosanct in respect of invested value in any property. By understating the real value both parties take benefit in the form of avoiding income-tax on capital gains by seller and stamp duty by buyer. The direct evidence cannot be obtained in immovable properties. He placed reliance on the decision of the Income-tax Appellate Tribunal, Delhi Bench, in the case of Hanemp Properties (P.) Ltd. v. Asstt. CIT [2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oring, doors, ventilators, painting and other services. Thus, the Valuation Officer had arrived at the value at Rs. 58,19,100 for the first floor as against the consideration declared by the assessee at Rs. 25,50,000. 10. The learned Commissioner of Income-tax (Appeals) after considering the valuation report came to the conclusion that there was no illegality in adopting comparative sale instance specially when the said property was approved by the income-tax authorities under the law. He further noted that during the period under appeal, no basic norms were fixed towards property values for registration purposes. The sale deeds irrespective of valuation done were invariably registered without any restrictions. Review of these rates, even if undertaken, was not done regularly keeping pace with the market conditions. Hence, such value did not represent true nature of market conditions of these properties. He further observed that the objection of the assessee in comparing the property situated in Punjabi Bagh with Rajaouri Garden did not merit much discussion since both localities were more or less similar with minor differences. While upholding valuation in principle the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated as information in possession of the Assessing Officer for the purpose of reopening of assessment. He placed reliance on the following decisions : (1) CIT v. Smt. Prem Kumari Surana [1994] 206 ITR 715 (Raj.) ; (2) CIT v. V. T. Rajendran [2007] 288 ITR 312 (Mad.); (3) CIT v. Darshan Singh [2005] 272 ITR 650 (Punj. Har.) ; and (4) Tej Pratap Singh v. Asstt. CIT [2008] 22 SOT 156 (Delhi). 13. It has also been submitted that the Valuation Officer has relied on the comparable case of Punjabi Bagh in respect of property located at Rajouri Garden and, therefore, the comparison made by the Valuation Officer is not correct. Moreover, as per the provisions of section 50C, the market value of the property is to be taken as determined by the Stamp valuation authorities. It has further been submitted that the assessee had claimed 30 per cent. deduction on account of building because of various factors but the learned Commissioner of Income-tax (Appeals) has restricted it to 20 per cent. Therefore, the value of building has been valued at higher figure. 14. On the other hand, the learned senior Departmental representative submitted that a reference to the District Valuation Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Officer's report, the value of property has been estimated at Rs. 58,19,100 as against admitted by the assessee at Rs. 25,50,000, the Assessing Officer was in receipt of information in the form of the District Valuation Officer's report. Consequently, the reopening of assessment cannot be treated based on the change of opinion. The assessment has been reopened within four years from the end of the assessment year 2003-04. Therefore, the assessee's case falls under the main provisions of section 147 according to which if the Assessing Officer has reason to believe that any income for any assessment year has escaped assessment, he may subject to the provisions of section 148 to section 153 assess or reassess such income. No doubt, there are certain decisions to the effect that the Assessing Officer cannot reopen the assessment merely on change of opinion. The report of the District Valuation Officer was received subsequently and, therefore, reopening of assessment cannot be treated as change of opinion. The hon'ble Supreme Court in the case of Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500 has held that the expression "reason to believe" in section 147 wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchase amount was not fully disclosed, the Assessing Officer was justified in making the reference to the District Valuation Officer. 17. Under section 142A(1) for the purposes of making an assessment or reassessment under the Income-tax Act, 1961, where an estimate of the value of any investment referred to in section 69 or 69B or the value of any bullion, jewellery or other valuable article referred to in section 69A or 69B is required to be made, the Assessing Officer may require the Valuation Officer to make an estimate of such value and report the same to him. From the language of section 142A(1), it is clear that reference under this section can be made by the Assessing Officer for the purpose of estimation of investment under section 69 or section 69A or section 69B. In the instant case, the purchase price has not been fully disclosed in the books of the assessee and, therefore, the assessee's case will be covered by the provisions of section 69B of the Act. Section 69B deals with the cases where the assessee has made investments and also the cases where the assessee is found to be the owner of any bullion, jewellery or other valuable article and where the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -3 kms. and located near the Ring Road, the land price of the area would be identical. Since the District Valuation Officer has relied on the price of land sold in 1999 subject to certain modification at Rs. 17,186, in our considered opinion, in the absence of negative points, the price adopted by the District Valuation Officer has to be upheld. However, the learned Commissioner of Income-tax (Appeals) had adopted the rate of land at Rs. 15,000 per sq. metres. without giving any reasons. He has discussed the general principles on the basis of which the value of property may be determined. In the absence of any such negative point, in our considered opinion, the learned Commissioner of Income-tax (Appeals) was not justified in reducing the cost of land at Rs.15,000 per sq. metre. The learned Commissioner of Income-tax (Appeals) has again allowed deduction of 20 per cent. in respect of the building on the District Valuation Officer's report without giving the details. The assessee had not given any material to prove that discount allowed on the building at 20 per cent. was justified. He had simply submitted that allowance should have been more than 20 per cent. Since the learned Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B. Gautam v. Union of India [1993] 199 ITR 530 wherein it has been mentioned that where there is significant undervaluation of property in consideration as disclosed in the agreement between the parties and there is no plausible explanation for that undervaluation, the same would lead to the inference of evasion of tax or understatement of consideration also. In the case of Hanemp Properties (P.) Ltd. (supra), it has been held that reference made by the Assessing Officer to the Departmental Valuation Officer 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 November 15, 1972. Therefore, the assessee's case is distinguishing on fact and law and no help can be obtained from the decisions cited by him. Accordingly, in our considered opinion, the learned Commissioner of Income-tax (Appeals) was not justified in reducing the value of land and building without assigning any reasons relating to the impugned property. Accordingly, we set aside the order of the learned Commissioner of Income-tax (Appeals) and restore the order of the Assessing Officer. In the result, appeal filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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