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TMI Blog1983 (12) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... this order of the Commissioner (Appeals) that the revenue is in appeal. 3. The facts, which have given rise to this controversy, are that the assessee had constructed a house property at B-211, Greater Kailash, New Delhi. The cost of the plot was Rs. 40,000. Together with the incidentals, like the stamp duty, etc., total cost was Rs. 44,954. As he did not maintain a construction account, he submitted an estimate of cost prepared by the approved valuer, Rs. 1,01,000. He claimed before the ITO that his was the cost of construction. It was given out by him that the construction had started in April 1970 and was almost over by 31-3-1971. He had specified that the finishing touch was yet to be given to this house, but he occupied the same for his residence in the month of March 1971. The ITO who made the first assessment on 13-6-1973 did not accept the claim of the assessee in this respect regarding the cost incurred by him over the construction of the house. He placed his reliance on a report by an Inspector, who had visited the site and surveyed the property on 27-12-1972. The Inspector had estimated the cost. He had estimated the cost on construction at Rs. 1,55,000 for a covered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d his claim that he had incurred over construction, a sum of Rs. 1,01,000 only. He relied upon the Inspector's report and his estimate of construction and it was only after a proper consideration of the Inspector's report, which he had made after a personal survey on 27-12-1972, that the ITO reached his own estimate of construction and, consequently, caused an addition of Rs. 8,000 to be made to the total income of the assessee, as unexplained, which had gone into the construction of the said property. On these facts it was contended by the assessee that he had not failed to disclose the primary facts, which he was required to disclose at the time of the original assessment. The Commissioner (Appeals) was moved by this plea and held that the assessee had not failed to disclose the primary facts regarding the construction. Therefore, the ITO could not proceed under section 147(a) and reopen the assessment. He, accordingly, quashed the assessment, as we have already indicated in the first para of the order. 5. The learned departmental representative vehemently referred to the fact that the Inspector did not have the professional expertise and, therefore, his report should not be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failed to disclose the primary facts necessary for making the assessment. It is only after he had established that there was a failure, he has to further show that this failure has resulted in the escapement of tax. Only when these two material conditions are fulfilled, the ITO gets a right to reopen the assessment. On the facts of the case, it does not appear that the ITO has been able to establish that the assessee had failed to disclose the facts. The assessee had disclosed the purchase of the plot, full particulars of the purchase consideration during the original assessment. He had also disclosed that the construction had taken place during the accounting the year in issue and since he did not maintain any construction account, he had got an estimate of the cost of construction prepared by an approved valuer and submitted to the ITO and it was, on the basis of this estimate, he had explained the source of the amount. We are unable to appreciate, in this background, the charge of the ITO that the assessee had failed to disclose any material particulars required for making the assessment. At least, this is not borne out from a perusal of the assessment order, which was completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not enable an ITO to proceed under section 147 and reopen the assessment. On the other hand, if these items which have now been referred to by the ITO in his order, had not been there when the Inspector had visited the site, there would be no cause for reopening the assessment for the year in issue. In either case, we are not able to appreciate the plea of the revenue that the Commissioner (Appeals) had erred in reaching a finding that the ITO had no locus standi to proceed under section 147(a) in respect of the assessment of the year in appeal. 7. We may look at the issue from a perusal of the reasons recorded by the ITO. The departmental representative, no doubt, has referred to the search of the premises on 12-11-1975 and the recovery of the incriminating papers, but a perusal of the reasons recorded, for reopening the assessment, as given below, would show that the ITO had not depended upon those documents for supporting his charge that the assessee had failed in his obligation to disclose the primary and material facts for assessment : "The assessee constructed a house at B-211, Greater Kailash, New Delhi, in the previous year, relevant to the assessment year 1971-72. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Servant quarters above garage 7,245 16. Value of the covered area as discussed above 20,496 From the above, it is clear that the assessee had failed to give full details of the construction, which was necessary for ascertaining the cost of construction of the house. The assessee had made more investment in the construction of the house, than shown by him. Since the assessee had explained only the source of investment of Rs. 1,10,000 plus Rs. 8,000 (addition on, agreed basis), therefore, the balance investment is to be treated as his income for the year 1971-72." 8. A perusal of this shows that the ITO did not depend upon those alleged documents found during the search in arriving at the proper evaluation about the cost of construction of the aforesaid property and in reaching a belief that the income has escaped assessment. In recording the reasons, he depended upon the evaluation by the Valuation Officer. As we have already indicated above, evaluation by the Valuation Officer, however, professionally competent, will only be considered and treated as an opinion on the valuation. It will not enable an ITO to reopen the assessment which doe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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