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TMI Blog2012 (9) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... ther on the facts and in the circumstances of the case, once, matter has been referred to the departmental valuer for the determination of the cost of the construction and once, departmental valuer has determined the cost of construction which has not been objected by the Assessee, the valuer report was binding upon Assessing Officer and ought to have been accepted? (iii) Whether, in view of the fact that with regard to gift of Rs.50,000/- received from one Sri Ram Lal Kanodia, Nepal, appellant has filed confirmatory letter, income tax assessment order and copies of drafts by which payment was received, Tribunal as well as authorities below were justified in not accepting the gift merely on the ground that appellant could not produce Sri Ram Lal Kanodia for examination? (iv) Whether in view of the fact that by filing confirmatory letter, income tax assessment order, copy of two drafts, initial burden has been discharged by Assessee inasmuch as, there was any legal justification in treating a sum of Rs.50,000/- as unexplained deposit?" 3. Income Tax Appeal No.136 of 2001 has been admitted on the following questions of law:- "(i) Whether in view of the fact that with regard to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account maintained by the donor as he is citizen of Nepal. (iii)Not possible to produce bank pass book as the donor is citizen of Nepal. (iv)Donor can not be produced as he is citizen of Nepal. (v)The Donor is 'Uncle' of the assessee." 7. The assessees replies were not accepted because the assessees did not produce the donors' bank pass book and the balance sheet. Accordingly, the amount of gifts were treated as unexplained money of the assessees and were added in their total income. 8. The assessees filed appeals before the Commissioner of Income Tax (Appeals), Varanasi which were partly allowed. Against the order of Commissioner of Income Tax (Appeals), Varanasi, appeals to Income Tax Appellate Tribunal were filed by the assessees which were dismissed. 9. These appeals have been filed under Section 260A of the Income Tax Act, raising the aforesaid questions of law. 10. We have heard Sri Krishna Agarwal, counsel for the appellants and Sri Shambhu Chopra for the respondent. Question Nos.1 and 2 of Income Tax Appeal No.124 of 2001 11. Learned counsel for the appellant submits that the Assessing Authority could not travel beyond the report of the Departmental Value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Officer. Shri Krishna Agrawal submits that Section 55A falls in Chapter IV-Computation of Income From Capital Goods. The special procedure for assessment of search case, is provided in Chapter XIV-B. The assessment of undisclosed income as a result of search is made under Section 158BA for which procedure for block assessment is provided under Section 158BC. The A.O. can assess the undisclosed income as a result of search only on the basis of material or information as are available with the Assessing Officer in the search. He is not authorised to refer the matter to the Valuation Officer under Section 55A (b) (ii) to asses the fair market value. Such an enquiry is not permissible in respect of search cases. 16. Shri Krishna Agrawal has relied upon Smt. Amiya Bala Paul v. Commissioner of Income Tax, (2003) 262 ITR 407 (SC) in which the Supreme Court held that A.O. is the fact finding authority. It has his opinion on the basis of the facts as found on an enquiry conducted by himself, which results in the assessment order. A report by the Valuation Officer under Section 55A, is on the other hand the outcome of an enquiry held by the Valuation Officer. Such a report would not be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affirmative i.e., in favour of the assessee and against the department. 4. For the above reasons, question Nos. 4 and 5 are also answered accordingly, in the affirmative i.e., in favour of the assessee and against the department. 5. Accordingly, the appeal is dismissed." 18. In CIT v. Khushlal Chand Nirmal Kumar (M.P.), (2003) 263 ITR 77, the Madhya Pradesh High Court followed with approval judgment of Bombay High Court in CIT v. Vinod Danchand Ghodawat (supra). The Madhya Pradesh High Court also placed reliance upon CBDT Circular dated 27th August, 2002 in which it was laid down as under:- "61.3.2-The Finance Act, 2002, has amended s.158BB to clarify that the block assessment of undisclosed income is to be based on the evidence found in the search and material or information gathered in post-search inquiries made on the basis of evidence found in the search." 19.In CIT v. Ravi Kant Jain (Delhi), (2001) 250 ITR 141, the Delhi High Court held that the special procedure of Chapter XIV-B is intended to provide a mode of assessment of undisclosed income, which has been detected as a result of search. Its scope and ambit is limited in that sense to materials unearthed during search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be credit of amounts in the books maintained by the assessee; (ii) such credit has to be a sum of money during he previous year; and (iii) either (a) the assessee offers no explanation about the nature and source of such credits found in the books or (b) the explanation offered by the assessee, in the opinion of the Assesssing Officer, is not satisfactory. It is only then that the sum so credited may be charged to income- tax as the income of the assessee of the previous year. The expression "the assessee offers no explanation" means the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. The opinion of the Assessing Officer for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on the record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material on record. Application of mind is the sine qua non for forming the opinion. In cases where the explanation offered by the assessee about the nature and source of the su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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