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TMI Blog2004 (2) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction. Once this report is excluded from consideration, the very foundation for initiation of proceedings under section 147 of the Act and for making additions on account of unexplained investment disappears – Revenue appeal dismissed - - - - - Dated:- 23-2-2004 - Judge(s) : N. K. SUD., J. S. NARANG. JUDGMENT The judgment of the court was delivered by N. K. SUD J. -The Revenue has filed these two appeals under section 260A of the Income-tax Act, 1961 (for short "the Act"), against the order of the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar (for short "the Tribunal"), dated September 19, 2003, whereby its appeals against the order of the Commissioner of Income-tax (Appeals) (for short "the CIT(A)"), dated February 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-90 and 1990-91. The assessee submitted its objections to this report and also filed the valuation report of an approved registered valuer in support of the investment as per books. The Assessing Officer referred the objections of the assessee along with the report of its approved registered valuer to the District Valuation Officer for his comments. The District Valuation Officer did not respond to the objections of the assessee nor did he comment on the report of the approved registered valuer. The Assessing Officer, however, allowed deductions for self-supervision at 10 per cent, and builder's efforts at 1.5 per cent, from the cost of construction estimated by the District Valuation Officer and consequently made additions of Rs. 4,92,428 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t pointing out any discrepancy in the said report, no addition could be made. The Tribunal also upheld the additional reason for deleting the addition that unless and until the books of account were rejected, no addition on account of unexplained cost of construction could have been made. In this factual backdrop, the Assessing Officer also initiated proceedings under section 147 of the Act for assessing the unexplained investment as per the District Valuation Officer's report for the assessment years 1987-88 and 1988-89 to which the present appeals relate. For this purpose, notices under section 148 of the Act for the two assessment years were issued on August 22, 1996. In response to these notices, the assessee filed returns of income d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --------------------------------------------------------------- On the basis of the above, he determined unexplained investment in the construction of the cinema building for the assessment year 1987-88 at Rs. 4,26,714 (11,31,714-7,05,000) and Rs. 2,58,163 (6,60,163-4,02,000) for the assessment year 1988-89. Since there was no other income, the assessment was framed vide a common order dated August 6, 1998, at the aforesaid figures. The assessee preferred appeals before the Commissioner of Income-tax (Appeals) which were allowed by a common order dated February 10, 1999. The Commissioner of Income-tax (Appeals) observed that although, in the relevant two assessment years, no books of account had been maintained, yet in view of his find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strict Valuation Officer. It is now settled law that no reference can be made by the Assessing Officer to the Valuation Officer for estimating the cost of construction of house property under the Act. For this purpose, we may refer to the observations of the Supreme Court in Smt. Amiya Bala Paul v. CIT [2003] 262 ITR 407, wherein it has been held as under: "From this it is clear that whenever reference to a Valuation Officer appointed under the Wealth-tax Act is permissible under the Income-tax Act, it has been statutorily so provided. Apart from the aforesaid, the Valuation Officer is appointed under the Wealth-tax Act and can discharge functions within the statutory limits under which he is appointed. It is not open to a Valuation Off ..... X X X X Extracts X X X X X X X X Extracts X X X X
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