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TMI Blog2009 (9) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... ation regarding unaccounted investment available with the Assessing Officer as the illegality of a search does not vitiate the evidence collected during such illegal search (Ref. Dr. Partap Singh v. Director of Enforcement [1985] 155 ITR 166 (SC)). 2. Whether, on the facts and circumstances of the case, the law of the land of the Income-tax Act authorise members of the society to pool their part of unaccounted money and invest in the construction of the dwelling units, by misusing the provisions available for constituting non-trading concern, i.e., co-operative housing society. 3. Whether, on the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals) is justified in quashing the Assessing Officer's action of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the year under appeal. 5. During the month of March, 1999, the then Deputy Commissioner of Income-tax, Circle-1, Navsari, collected general information with respect to the construction activity of the residential complex of the assessee and thereafter vide his letter dated March 30, 1999, he made a reference to the Assistant Valuation Officer, Baroda, after issuing commission under section 131(1)(d) of the Act, with a view to elucidate the correctness of the cost of construction of the residential complex constructed by the assessee. 6. Since the cost of construction of the complex had exceeded the amount specified in rule 3A, i.e., Rs. 10 lakhs, the Assistant Valuation Officer, Baroda, transferred the matter of valuation of the capti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then Deputy CIT Cost of construction estimated by the DVO Actual cost of -construction as per the appellant's books 1993-94 to 1997-98 Rs. 40,00,000 Rs. 1,05,21,176 Rs. 73,30,134 10. On March 31, 2004, i.e., exactly after a span on 40 months after the receipt of the valuation report from the District Valuation Officer, the Assessing Officer issued notice under section 148 for the assessment year under appeal after recording reasons for reopening. The Assessing Officer has mentioned in the reasons recorded that the assessee-society did not file its return of income in respect of the construction of the complex made and the District Valuation Officer has estimated cost of construction at Rs. 1,05,21,176 as against Rs. 40,00,000 estima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted in [1986] 162 ITR 331 (Bom) has held that the Assessing Officer cannot issue summons under section 131 for the purpose of making investigation for reopening of the assessment. Pendency of any proceeding under the Act is a sine qua non (pre-condition) for issue of summons under section 131. The Assessing Officer did not have jurisdiction to make a reference to the District Valuation Officer and the Assessing Officer could have exercised the powers conferred on him under section 131(1)(d) only if independent proceedings were pending with him for the year under appeal. 6.10 Admittedly in the case of the appellant also it is evident from record that no proceedings were pending against the appellant on the date of reference to the District ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of construction. Whereas, in the instant case the Assessing Officer has acted exactly in the reverse order and he has commenced the reassessment proceedings based on the District Valuation Officer's report. Actually, the hon'ble court's have held that the Assessing Officer cannot issue summons under section 131 for the purpose of making investigation for reopening the assessment. I, therefore, quash the notices issued under section 148 for the assessment year under appeal and consequently the assessment completed in pursuance to the said notice under section 148 is also quashed. In the result, the appellant's grounds Nos. 2 and 4 raised are allowed and the notice for reassessment is quashed." 14. Against this, the Revenue is in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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