Income Tax Appellate Tribunal - Delhi
Hanemp Properties Pvt. Ltd. vs Asstt. Commissioner Of Income-Tax on 17 March, 2006
Equivalent citations: [2006]101ITD19(DELHI), [2006]285ITR26(DELHI), (2006)102TTJ(DELHI)1083
ORDER
S.C. Tiwari, Accountant Member
1. This appeal has been filed by the assessee on 30.9.2005 against the order of the learned CIT(Appeals)-XV, New Delhi dated 22.8.2005 in the case of the assessee in relation to assessment order Under Section 143(3) read with Section 147 for assessment year 1997-98.
2. Grounds of appeal No. 1, 2 and 3 in this appeal are directed against initiation of proceedings Under Section 147 of the Act. Facts of the case in this respect briefly are that in this case search operations Under Section 132 were carried out at the premises of the assessee on 20.8.1996. Thereafter a block assessment order Under Section 158BC determining disclosed income at Rs. 36,95,428/- was made on 29.8.1997 for the block period 1.4.1986 to 20.8.1996. In this block assessment the undisclosed income was determined on account of the alleged undisclosed investments made by the assessee in relation to two properties in Tuglakabad Extension, Viz., RZ-11-C, Gali No. 5 and RZ-1/32, Gali No. 4. The assessee claimed to have purchased these two properties for Rs. 1,60,000/- and Rs. 4,50,000/-. But the Departmental Valuer estimated the value of these two properties on the material date at Rs. 19,45,300/- and Rs. 28,38,500/-. The learned Assessing Officer treated the difference between the fair market value and the apparent consideration to represent undisclosed income of the assessee. Accordingly assessment of Rs. 36,95,428/- was made Under Section 158BC as undisclosed income of the block period. The assessee carried the matter in appeal before the Tribunal. Income-tax Appellate Tribunal, Delhi Bench "A", New Delhi as per its order dated 27.1.2003 in IT(SS) Appeal No. 193(Del)/97 allowed the assessee's appeal, inter-alia, observing as under:
4. After going through the submissions of the learned Counsel for the assessee as well as the learned DR, we are of the considered view that no addition was warranted in the case in hand, particularly in respect of undisclosed income. The very purpose of bringing Chapter XIVB on the statute was to bring to tax undisclosed income. "Undisclosed income" has been defined Under Section 158B(b) of the Act which is based on the entry in the books of account or other documents or transactions which are seized at the time of search, which had not been disclosed or would not have been disclosed by the assessee. In the case in hand the assessee had already shown the transaction of the purchases of the property in the books of account which is not disputed by the Assessing Officer or by the learned DR then the amount of addition made by the Assessing Officer on the basis of DVO's report is outside the purview of definition of "undisclosed income" as held by Hon'ble Bombay High Court referred to above. At the most the Assessing Officer can resort to make any addition, if he so likes, in the regular assessment but certainly it is not a case of undisclosed income nor any addition was warranted in the block assessment period, for want of any 'material available with the Department to make any addition on account of undisclosed income. Addition is deleted and ground is allowed.
3. The assessee filed its return of income for assessment year 1997-98 on 29.11.1997 i.e., after the date of block assessment order by the Assessing Officer but before the Tribunal order thereupon (supra). The Assessing Officer made assessment order Under Section 143(3) on 29.12.1999 i.e., before the date of the aforesaid order of Tribunal accepting the total income as reflected in the revised return filed by the assessee on 27.11.1998. In view of the fact that the Tribunal has held that the matter falls in the domain of regular assessment and not a block assessment order, the Assessing Officer initiated assessment proceedings Under Section 147 for assessment year 1997-98 by issue of notice on 15.1.2004. Thereafter the learned Assessing Officer completed assessment order Under Section 143(3) read with Section 147 on 18th March, 2005 after making the addition of Rs. 36,95,428/- on account of undisclosed investment in properties above mentioned to the returned income of the assessee. Assessee's appeal before the learned CIT(Appeals) being unsuccessful, the assessee is in second appeal before us.
4. During the course of hearing before us the learned Counsel for the assessee argued that in this case an order of assessment Under Section 143(3) was originally made on 29.12.1999. Notice Under Section 148 was issued on 15.1.2004 i.e., long after expiry of four years from the end of the assessment year on 31.3.2002. Thus, proviso to Section 147 squarely applied and proceedings Under Section 147 could not be initiated unless it could be established that the assessee's income chargeable to tax had escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for assessment year 1997-98. The learned Counsel argued that the fact of both the properties having been purchased by the assessee was reflected in the books of accounts of the assessee. At the instance of the Assessing Officer during the course of block assessment proceedings Under Section 158BC, a reference was made to Assistant Valuation Officer of the Valuation Cell of Income-tax department, who had by his valuation reports in July/August, 1997 valued the properties as aforesaid. In response the assessee furnished valuation reports by the registered valuer dated 28.8.1997. Those valuation reports were available with the Assessing Officer at the time of completion of assessment order Under Section 143(3) in the first instance. In this view of the matter there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. That apart nothing had transpired between the date of completion of assessment order Under Section 143(3) on 29.12.1999 and issue of notice Under Section 148 on 15.1.2004. Reopening of the assessment already completed by way of notice Under Section 148 was an act of mere change of opinion on the part of the Assessing Officer. In support of this contention the learned Counsel for the assessee relied upon the judgment of Hon'ble Delhi High Court in the case of Kelvinator reported in 256 ITR 1 (Del) (FB).
5. The learned Counsel for the assessee argued that the valuation reports made by the Departmental Valuation Officer were merely subjective estimate. They were at best opinion given by the Valuation Officer. Merely on account of difference between his estimate of market price and the purchase consideration disclosed by the assessee it could not be assumed that there was investment of any undisclosed income on the part of the assessee. In support of this contention the learned Counsel strongly relied upon the judgment of Hon'ble Supreme Court in the case of K.P. Verghese 131 ITR 597 (SC). He also placed reliance on the order of ITAT, Calcutta "D" Bench reported in 72 TTJ (Cal) 433; judgment of Hon'ble Calcutta High Court reported in 238 ITR 57 and Punjab & Haryana High Court reported in 277 ITR 120 (P&H). The learned Counsel also referred to the judgment of Hon'ble Supreme Court in the case of Smt. Amiya Bala Paul v. CIT 262 ITR 407 (SC) and argued that the very reference to the Valuation Cell made by the Assessing Officer was bad in law.
6. The learned Counsel argued that the learned CIT (Appeals) erred in relying upon the provisions of Section 150 and Section 153. For this purpose the learned Counsel heavily relied upon the judgment of Hon'ble Supreme Court in the case of Rajender Nath v. CIT 120 ITR 14 (SC). He argued that there was no direction in the order of the Tribunal because the Tribunal had clearly stated the Assessing Officer can resort to make any addition, if he so likes, in the regular assessment. The matter was entirely left at the option of the Assessing Officer and, therefore, it could not be said to be a "direction". It was also not any "finding" on the part of the ITAT because the Tribunal nowhere found that the assessee had made any investment of its undisclosed income. The Tribunal was concerned with the block assessment comprising of 10 years, there could not be any finding specific to assessment year in the order of the Tribunal for that reason.
7. We have carefully considered the rival submissions. In this case the Assessing Officer had already assessed the difference between the value estimated by the Departmental Valuation and the apparent consideration disclosed by the assessee as representing undisclosed income of the assessee in the order Under Section 158BC made on 29.8.1997. Even the return of income for assessment year 1997-98 has been filed by the assessee thereafter on 29.11.1997. During the course of proceedings Under Section 143(3) for regular assessment the Assessing Officer could not have made assessment of undisclosed income in this behalf because such income had already been assessed by him in the block assessment order and that order held good as on the date of original assessment order Under Section 143(3) on 29.12.1999. We are at a loss to understand as to how the Assessing Officer can be accused of "change of opinion" while initiating reassessment proceedings Under Section 147. It is not as if the learned Assessing Officer accepted the purchase price disclosed by the assessee as true and correct at the time of original assessment proceedings Under Section 143(3). Far from that, he had already assessed undisclosed income in this respect by his order Under Section 158BC that included the period relevant to assessment year 1997-98 also. Having done so the Assessing Officer could not have included the same income in regular assessment also because such a course of action would have resulted into double assessment of the same amount in the hands of the same assessee. The jurisdiction of the Assessing Officer Under Section 158BC and 143(3) is separate and what is once assessed Under Section 158BC cannot be assessed Under Section 143(3) and vice-versa. It is, therefore, clear to us that there is no change of opinion on the part of the Assessing Officer and there is no assistance to the case of the assessee from the judgment of Hon'ble Delhi High Court in the case of Kelvinator 256 ITR 1 (Del) (FB).
8. We now address ourselves to the question as to whether from the difference between the fair market value as estimated by the Valuation Officer and the apparent consideration disclosed by the assessee, the Assessing Officer could draw the inference of an undisclosed income on the part of the assessee. The learned Counsel for the assessee has heavily relied upon the judgment of Hon'ble Supreme Court in the case of K.P. Verghese v. ITO 131 ITR 597 (SC). He argued that apart from the valuation difference the Assessing Officer ought to have positive evidence to indicate any suppressed purchase consideration having been passed on to the vendor by the assessee. The aforesaid judgment of K.P. Verghese has been considered at length in the subsequent judgment of Hon'ble Supreme Court in the case of C.B. Gautam v. Union of India 1999 ITR 530 (SC). Their Lordships have observed in the case of C.B. Gautam:
The legislative history of Chapter XXC, in the stand taken by the Union of India and the Central Board of Direct Taxes as shown in the main counter affidavit and the affidavit of H.K. Sarangi, which has been filed after obtaining instructions from the Income tax Department and the Central Board of Direct Taxes, make it clear that the powers of compulsory purchase conferred under the provisions of Chapter XXC of the Income tax Act are being used and intended to be used only in cases where in an agreement to sell an immovable property in an urban area to which the provisions of the said Chapter apply, there is a significant undervaluation of the property concerned, namely, of 15 per cent or more. If the appropriate authority concerned is satisfied that, in an agreement to sell immovable property in such areas as set out earlier, the apparent consideration shown in the agreement for sale is less than the fair market value by 15 per cent, or more, it may draw a presumption that this undervaluation has been done with a view to evade tax. Of course, such a presumption is rebuttable and the intended seller or purchaser can lead evidence to rebut such a presumption. Moreover, an order for compulsory purchase of immovable property tinder the provisions of Section 269UD requires to be supported by reasons in writing and such reasons must be germane to the object for which Chapter XX C was introduced in the Income tax Act, namely, to counter attempts to evade tax.
The conclusion that the provisions of Chapter XXC are to be resorted to only where there is significant undervaluation of the immovable property to be sold in the agreement of sale with a view to evade tax finds support from the decision of this Court in the case of K.P. Varshese v. ITO . Section 52 in the Income tax Act, 1961, which has now been deleted, came up for consideration before a Bench comprising two learned judges of this Court. Very briefly put, that section provided that where a person acquired a capital asset from an assessee connected with him and the Income tax Officer had. reason to believe that the transfer was effected with a view to avoid or reduce the liability of the assessee under Section 45 to the tax on capital gains and with that object the transfer of the capital asset was being made at an undervalue of not less than 15 per cent., for the purposes of taxing the assessee, the full value of the consideration was taken to be its fair market value on the date of the transfer. It was pointed out by the Bench that Sub-section (1) of Section 52 did not deal with income to accrue or to be received, which in fact never accrued and was never received. It sought to bring within the net of taxation only that income which has accrued or is received by the assessee as a result of the transfer of the capital asset and since it would not be possible for the Income tax Officer to determine precisely how much more consideration is received by the assessee than that declared by him, Sub-section (1) provides that the fair market value of the property as on the date of the transfer shall be taken to be the full value of the consideration which has accrued or has been received by the assessee. The onus of establishing that the conditions of taxability are fulfilled is always on the Revenue. In that case, it was urged on behalf of the Revenue that, tinder the provisions of Section 52(2), once the Income tax Officer is satisfied of the condition that the consideration declared by the assessee in respect of the transfer is less by 15 per cent, or more of the fair market value, the capital gains can be computed on the footing that the fair market value was the consideration received by the assessee. This submission was rejected by this Court. It was pointed out that the submission would be justified only on a strict literal reading of Sub-section (2) of Section 52 but that such a construction could not be adopted. The court observed that the task of interpretation of a statutory enactment is not a mechanical task The famous words of judge Learned Hand of the United States of America that "...it is true that the words used even in their literal sense are the primary and ordinarily the most reliable source of interpreting the meaning of any writing : be it a statute, contract or anything else. But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest, guide to their meaning" were quoted with approval After considering various authorities and the historical setting in which the provisions of the said section were enacted, it was held that the fair and reasonable construction to put on the provisions of Sub-section (2) of Section 52 would be to so construe it that it would apply only when the consideration for the transfer is understated or in other words, only where the assessee has actually received a larger consideration for the transfer than that which is declared in the instrument of transfer and it could have no application in the case of a bona fide transaction where the full value of the consideration for the transfer is correctly declared by the assessee. See page 606 of the Report of 131 ITR.
(emphasis supplied).
Their Lordships further observed:
In the light of what we have observed above, we are clearly of the view that the requirement of a reasonable opportunity being given to the concerned parties, particularly, the intending purchaser and the intending seller must be read into the provisions of Chapter XX C. In our opinion, before an order for compulsory purchase is made under Section 269UD, the intending purchaser and the intending seller must be given a reasonable opportunity of showing cause against an order for compulsory purchase being made by the appropriate authority concerned. As we have already pointed out, the provisions of Chapter XX C can be resorted to only where there is a significant undervaluation of property to the extent of 15 per cent, or more in the agreement of sale, as evidenced by the apparent consideration being lower than the fair market value by 15 per cent, or more. We have further pointed out that, although a presumption of an attempt to evade tax may be raised by the appropriate authority concerned in case of the aforesaid circumstances being established such a presumption is rebuttable and this would necessarily imply that the concerned parties must have an opportunity to show cause as to why such a presumption should not be drawn. Moreover, in a given transaction of an agreement to sell, there might be several bona fide considerations which might induce a seller to sell his immovable property at less than what might be considered to be the fair market value. For example : he might be in immediate need of money and unable to wait till a buyer is found who is willing to pay the fair market value for the property. There might be some dispute as to the title of the immovable property as a result of which it might have to be sold at a price lower than the fair market value or a subsisting lease in favour of the intending purchaser. There might similarly be other genuine reasons which might have led the seller to agree to sell the property to a particular purchaser at less than the market value even in cases where the purchaser might not be his relative. Unless an intending purchaser or intending seller is given an opportunity to show cause against the proposed order for compulsory purchase, he would not be in a position to rebut the presumption of tax evasion and to give an interpretation to the provisions which would lead to such a result would be utterly unwarranted.
(emphasis supplied)
9. It would be seen that in the case of C.B. Gautam the Hon'ble Supreme Court have laid down that in a case where there is significant under-valuation of the immovable property in the apparent consideration disclosed in the agreement that would give rise to a rebuttable presumption of tax evasion and they have held that this proposition is supported by the earlier decision of the court in the case of K.P. Verghese v. ITO. On a combined reading of the judgments of Hon'ble Supreme Court in the case of K.P. Verghese (supra) and in the case of C.B. Gautam (supra), it would be seen that the argument that no matter what is the difference between the fair market value of the property and the apparent consideration disclosed by the parties, there ought to be further positive evidence of any concealed or suppressed consideration being paid to the transferor by the transferee is not legally tenable. In a case where there is significant under-valuation of the immovable property in the disclosed apparent consideration, there would be a rebuttable presumption of under-statement of consideration also. In the instant case according to the revenue while the fair market value of the property on the material date was Rs. 19,45,300/- and Rs. 28,38,500/-, the assessee claimed to have purchased these two properties for Rs. 1,50,000/- and Rs. 4,50,000/- only. It is not correct proposition in law that no matter what the fair market value of the property is, even the ridiculous consideration shown in the agreement between the parties is binding upon the department unless and until there is prima facie evidence in possession of the department of some thing over and above the disclosed consideration having exchanged hands between the parties. To hold such a view would be nothing short of rendering the task of laundering black money very simple and easy. For example, some one may purchase diamonds worth Rs. one crore entirely out of his black money and get away by saying that he purchased diamonds for Rs. 5,000/- only. To say that difference between the market value and disclosed consideration is no evidence at all and the department must have primary evidence of on money having exchanged hands is to put a burden on the revenue obviously most unlikely to be discharged.
10. In the case of Raza Sugar Co. Ltd. v. CIT 130 ITR 421 (Del), the Hon'ble Delhi High Court have held at page 431 that it is not possible to expect any direct evidence regarding "on money" and to prove conclusively that any such on money went to the assessee and the view to be taken in such matters is a question of inference from the facts and circumstances of the case. In the same vein the verdict of Hon'ble Supreme Court in the case of C.B. Gautam is that where there is significant under-valuation of the property in the consideration as disclosed in the agreement between the parties and there is no plausible explanation for that under-valuation, the same would lead to the inference of evasion of tax or in other words the under-statement of consideration also. We are, therefore, unable to accept the contention of the learned Counsel of the assessee that in the absence of direct evidence the valuation report made by the departmental valuer cannot lead to the assessment of any undisclosed investment within the meaning of Section 69, 69A, 69B and 69C of the Act. We may also state here that in our opinion the reference made by the learned Assessing Officer to the Departmental Valuation Cell 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 15.11.1972.
11. We are now left with the argument of the learned Counsel for the assessee based on proviso to Section 147 that in the absence of any failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for assessment year 1997-98 during the course of original assessment proceedings, the Assessing Officer cannot take recourse to re-assessment Under Section 147 after the expiry of four years from the end of the assessment year. The case of revenue is based on the provisions of Section 150. It is argued that at the time when the learned Assessing Officer made his order Under Section 158BC making assessment of undisclosed income on account of understatement of purchase consideration, the time limit was available with the Assessing Officer to make assessment of the same income in the regular assessment of the assessee under the provisions of Section 143(3). As the learned Assessing Officer could not have assessed this income both Under Section 158BC and Under Section 143(3) and was of the opinion that the income was more appropriately assessed under the provisions of Section 158BC, he acted accordingly. The view taken by the learned Assessing Officer found support from the order of the learned CIT (Appeals). Income-tax Appellate Tribunal, however, held the view that while the Assessing Officer could resort to make addition of this amount if he so liked in the regular assessment, no such addition was warranted in the block assessment Under Section 158BC. The order passed by the Tribunal against the order Under Section 158BC made by the Assessing Officer amounted to a finding that the income could have been assessed by the Assessing Officer in the regular assessment Under Section 143(3) and not in the block assessment order Under Section 158BC. On these facts the provisions of Section 150 attracted. The notice Under Section 148 having been issued in consequence of the order of Tribunal that the provision of Section 143(3) and not Section 158BC applied, could be issued by the Assessing Officer under extended time. The learned Counsel for the assessee has vehemently disputed these arguments of the department and he has drawn support mainly from the judgment of Hon'ble Supreme Court in the case of Rajender Nath v. CIT 120 ITR 14 (SC). In that case the Assessing Officer treated two buildings as belonging to a firm and in the assessment of the firm he estimated the cost of construction of those buildings at a higher figure than that disclosed and brought to tax the excess as income in the hands of the firm. On appeal, the AAC found that the firm was not the owner of the properties and deleted the addition. The AAC also observed that the ITO was free to take action to assess the excess in the hands of the co-owners. The ITO thereupon issued notices Under Section 147 relying upon the provisions of Section 153(3)(ii). On these facts Hon'ble Supreme Court observed that the expression "finding" and "direction" are limited in meaning. A finding given in an appeal, revision or reference arising out of an assessment must be a finding necessary for disposal of the particular case, that is to say in respect of the particular assessee and in. relation to the particular assessment year. To be a necessary finding, it must be directly involved in the disposal of the case. It is important to bear in mind that in the case of Rajender Nath, the alleged finding in the order of the AAC did not relate to the appellant before him, which was a firm. The finding was given in respect of assessees who were not appellant before the AAC. The Hon'ble Supreme Court held the view that for the disposal of appeal in the case of the firm it was enough to hold that the firm was not owner of the buildings. It was not necessary to further hold as to whom the buildings belonged. In this context Hon'ble Supreme Court held that in order to be a finding necessary for the disposal of a particular case should be in respect of the particular assessee and in relation to the particular assessment year. In the instant case before us the order of the Tribunal being relied upon by the revenue is in respect of the same assessee and for the same assessment year. Based on the distinction between the provisions of Section 158BC and 143(3), the Tribunal came to the conclusion that the provisions of Section 158BC did not apply and the Assessing Officer was free to take recourse to the provisions of Section 143(3) if he so liked. How can it be said that the finding given by the Tribunal is not a finding necessary for the disposal of appeal before them in the case of the assessee within the ratio of the judgment of Hon'ble Supreme Court in the case of Rajender Nath.
12. In addition, the learned DR has placed reliance on the judgment of Hon'ble Delhi High Court in the case of K.M. Sharma v. ITO 221 ITR 202 (Del). In that case the assessee's lands were acquired by Government of Delhi by notifications dated March 6, 1966 and Sept. 6, 1966. By judgment dated July 31, 1991 Additional District Judge passed his award of compensation. On March 31, 1993 the assessee was served with notices Under Section 148 for 16 assessment years i.e., for assessment year 1968-69 to 1971-72 and the assessment years 1981-82 to 1992-93. On a writ petition challenging the notices Hon'ble Delhi High Court held as under:
An order passed in a land acquisition proceeding would definitely be included within the ambit of the expression used "any finding or direction contained in an order passed by a court in any proceedings under any other law". In the present case, the initiation of the reassessment proceedings is based on the findings or directions contained in the order passed by the reference court in a land acquisition proceeding, which, as is held hereinabove is included within the aforesaid expression used in Sub-section (2) of Section 150 of the Income tax Act. In view of our aforesaid understanding of the provisions of Section 150, the interpretation that could be given thereto is that if there be an order of a court including an order by a reference court in a land acquisition proceeding then the bar of limitation is automatically lifted and accordingly, for the years in question for which interest was paid to the petitioner, although initiation of reassessment proceedings could be barred under the provisions of Section 149, the same would stand as not barred under the provisions of Section 150(1) of the Act and consequently, the question of limitation would not arise for consideration. The provisions of Section 150(2) are not applicable to the facts and circumstances of the present case as it does not envisage within its ambit any finding or direction contained in an order passed by a court in any proceedings under any other law, which in the instant case is the finding or direction contained in the order of award passed by the reference court in the land acquisition proceedings under the Land Acquisition Act. The decisions of the Supreme Court relied upon by learned Counsel for the petitioner are distinguishable as those decisions were rendered prior to the amendment of Section 150 of the Income tax Act effective from April 1, 1989, and do not notice the aforesaid amendments in Section 150(1).
13. We find the aforesaid judgment of Hon'ble Delhi High Court has been given in some what different context, i.e., enlargement of the scope of provisions of Section 150 by including an order passed by a court in any proceedings under any other law. However, it is clear from the judgment of Hon'ble Delhi High Court relied upon by the learned DR that it is the consequence of the order specified in Section 150(1) that is material. The consequence of the order of the Tribunal in the case of the assessee is that the assessment should be made under the provisions of regular assessment and not block assessment. We, therefore, agree with the contention of the revenue that provisions of Section 150(1) having been attracted, no limitation of time applied.
14. In view of the discussion in the foregoing paragraphs, we do not accept the contentions of the assessee challenging initiation of proceedings Under Section 147 and accordingly the assessee's grounds of appeal in this behalf are rejected.
15. Grounds of appeal No. 5 to 8 are directed against the merits of the valuation of the two properties made by the departmental valuer. Ground of appeal No. 7 and 8 are general that valuation report of the government valuer are merely an opinion of one individual and no additions can be made on that account. We do not see any merit in these grounds. The Departmental Valuer in the instant case is a qualified engineer employed in the parent department of CPWD. Being Civil Engineer he is an expert in the field of civil constructions. It is sell settled legal position that an opinion of an expert is admissible as evidence in a court of law. Ground of appeal No. 6 is that no inference of undisclosed income can be made on the basis of Departmental Valuer's report. We have discussed this point at length while considering the assessee's challenge to initiation of proceedings Under Section 147. We have held that if there is significant undervaluation that would be material/evidence of under statement of consideration also in the event of the under-valuation not being satisfactorily explained by the assessee. Thus, effective ground in this appeal is ground of appeal No. 5 that the investment in the properties has been wrongly valued.
16. During the course of hearing before us the learned Counsel for the assessee pointed out that both the properties in question were in the nature of unauthorized construction. This fact was accepted by the Departmental Valuer also and he, therefore, granted in his valuation a rebate on land value @ 40% on the ground of subject plot situated in an unauthorized colony. The registered valuer engaged by the assessee has on the contrary held that the assessee's properties could not be of much value being unauthorized, so much so that he has valued the property on the basis of amounts being payable in the event of the plots having been acquired by the government on account of unauthorized construction. During the course of hearing before us the learned Counsel for the assessee argued that the Departmental Valuer has not attached adequate importance to this aspect of the properties resulting into substantial over-valuation of the properties. During the course of hearing before us, the learned Counsel for the assessee referred to the letter of the assessee dated 28.8.1997 addressed to the Assessing Officer. He pointed out that in this letter a large number of reasons were given in support of the low market value of the properties. The learned Counsel argued that in the assessment order these objections have been over looked. The learned Counsel argued that the Departmental Valuer also erred in taking into consideration sale instances of Kalkaji, that was fully developed and regular posh locality in South Delhi, whereas the assessee's properties were situated in Tughlakabad Extension. The learned Counsel, however, admitted that the assessee had not relied upon any sale instances of Tughlakabad Extension. On consideration of the matter we are of the view that this aspect of the matter requires reconsideration. The learned Assessing Officer has in the assessment order merely stated that the assessee's objections have been considered and instead given his reasons in support of the valuation as made by the Departmental Valuer. The learned Assessing Officer has not met point by point various objections of the assessee to the departmental valuation. In the impugned order of the learned CIT(Appeals) also while importance is attached to the fact that the Departmental Valuer was appointed by the government, various objections of the assessee to the Departmental Valuer's report have not been considered point by point based on facts and circumstances of the case. We, therefore, restore this issue to the file of the learned Assessing Officer with the directions that he should forward various objections of the assessee, including the report of the assessee's valuer to the Departmental Valuation Officer and obtain a fresh valuation report from him after considering the objections of the assessee, report of the assessee's valuer and after giving opportunity of being heard to the assessee and/or his valuer. Thereafter he should give adequate opportunity to the assessee to have his submissions on the revised valuation as done by the Departmental Valuer. The learned Assessing Officer should determine the value of the properties afresh after passing a reasoned order and make assessment of undisclosed income only if there is significant under-valuation of the properties for which the satisfactory explanation is not given by the assessee.
17. For statistical purposes this appeal shall be treated as partly allowed.