Income Tax Appellate Tribunal - Ahmedabad
Incowe Tax Officer vs Pravinchandra Girdharlai. on 29 October, 1997
Equivalent citations: (1999)63TTJ(AHD)357
ORDER
H.L. KARWA, J.M. These three appeals filed by the Revenue relate to the same assessee and common contentions have been raised therein. They were therefore, heard together and are being disposed of by this consolidated order for the sake of convenience.
2. In ITA No. 1341/Ahd/1991 relating to asst. yr. 1980-81 the Revenue has raised the following grounds :
1. The learned CIT(A) has erred in law and on facts in holding that the addition on account of cost of construction is not justified and thus deleting the same.
2. The learned CIT(A) has erred in law and on facts in directing the ITO to accept the return under V. D. Scheme.
3. In ITA Nos-. 2939 & 2940/Ahd/1991 relating to asst. yrs. 1981~82 and 1982-83 the 'common ground of appeals is as follows :
The learned Dy. CIT(A) has erred in law and on facts in directing the AO to allow relief to the assessee as discussed in the appellate order No. CIT R. II/37311989-90 dt. 15th Nov., 1990 of the CIT( A) for asst. yr. 1980-81.
4. Briefly, stated the facts of the cases are that during the course of assessment proceedings for asst. yr. 1982-83 it was noticed by the AO that the assessee had completed construction of property known as Jaynath Hall' at Gondal Road, Rajkot. During the course of assessment proceedings for asst. yr. 1982-83 reference was made to the District Valuation Officer (DVO) to determine the cost of the said property. The DVO vide his report dt. 17th March, 19B6 estimated the cost of construction at Rs. 7,57,700 as against Rs. 2,79,025 shown by the assessee. Consequently, the AO made an addition of Rs. 7,57,7002,79,025 = Rs. 4,78,675 as unexplained investment under s. 69 of the IT Act, 1961, vide assessment order dt. 20th March, 1986. Aggrieved by the said assessment order the assessee went in appeal before the CIT(A), Rajkot, and the CIT(A) after considering the facts of the case as well as assessee's submissions set aside the assessment order vide. his order dt. 20th March, 1987, and the matter was restored back to the file of the AO with a direction to the AO to provide a copy of the report to the assessee received from the Valuation Cell and after affording the reasonable opportunity of being heard to the assessee, if any, addition on account of unexplained cost of construction is required to be made, then it may be allocated in three years in the same proportion in which the assessee is showing the investment.
5. On 31st March, 1987, the assessee filed the revised returns for asst. yrs. 1980-81 to 1982-83 showing the additional income under Voluntary Disclosure Scheme. The assessment year, the date of original assessment order, total income determined, the date of revised return, additional income shown in revised return and finally declared income in each year is shown in the following table :
Asst. yr.
Date of original assessment Total income determined Date of revised return Addl. Income shown in revised return under VDIS Finally declared income Rs.
Rs.
Rs.
1980-81 8-2-1983 36,000 31-03-1987 25,000 61,000 1981-82 18-11-1983 33,300
-do-
25,000 58,200 1982-83 20-3-1986 34,039
-do-
20,000 56,883
6. The revised returns submitted for the asst. yrs. 1980-81, 1981-82, 1982-83 under VD1S were not accepted by the AO. The assessments for asst. yrs. 198081 and 1981-82 were reopened. While reframing the assessment orders for assessment years under consideration in compliance with the direction of the CIT(A), Rajkot, dt. 20th March, 1987, the AO estimated the cost of construction at Rs. 4,50,000 and treated Rs. 1,70,975 as unexplained cost of construction. As per the directions of CIT(A) Rajkot, half of the said amount i.e. Rs. 85,487 was treated as unexplained investment made by the assessee for asst. yr. 1980-81 and 1/4th each i.e., Rs. 42,769 for asst. yr. 1981-82 and Rs. 42,769 for asst. yr. 1982-83 was treated as unexplained investment made by the assessee. The assessment orders for all the assessment years under consideration were completed on 31st March, 1989. The AO did not accept these returns filed under the VIDIS. According to the AO the valuation report of the DVO regarding cost of construction of the building was already available and, therefore, it was clear that the assessee had concealed the income. The AO initiated penalty proceedings under s. 271(1)(c) and under s. 273 of the IT Act and also charged interest under s. 215 of the Act.
7. Before the CIT(A) the assessee contended that the AO was not justified in making a reference to the DVO to decide the costs of construction, particularly, when the AO has not come to the conclusion that costs of construction shown by the assessee as per the books of accounts was not correct. It was also contended that previously the AO made an addition as per report of DVO in one year only i.e., for 1982-83 and the said order of the AO was set aside by the CIT(A) and not at the time of reassessment proceedings the AO has not properly appreciated all the materials put before him and has estimated the cost of construction at Rs. 4,50,000 without any basis or material on record. The assessee contended that the books of accounts of the assessee were complete in all respects and all the details, regarding the cost of construction were supplied to the assessee as per his requirement. No defect, whatsoever were found by the AO at the time of assessment as well as at the time of reassessment proceedings. The assessee had maintained the details regarding all the materials purchased and payments made to labourers. When the AO invited objections from the assessee to the proposed valuation as per report of DVO, the assessee submitted his objections as well as filed one additional valuation report of registered valuer namely K.L. Khakhar. As per this report of Khakhar, cost of construction was estimated at Rs. 3,28,000 as against the DVO's cost of construction estimation of Rs. 7,57,700. The AO sent the valuation report as well as assessee's objection to the DVO for his valuable comments. The DVO vide his letter dt. 13th March, 1989, stated to the AO that the valuation report dt. 17th March, 1986, estimating the cost of constructions at Rs. 7,57,700 requires reduction/modifications. However, the DVO has not stated that what should be the proper cost of construction. The assessee's contention was that DVO had estimated the cost of construction on the plinth area basis and had taken cost price of main building at Rs. 1,000 sq. mtr. and had taken cost of construction of basement at Rs. 1,060 per sq. mtr. On the other hand, K.L. Khakhar estimated the cost of construction on itemwise basis, and, therefore, his estimate of cost of construction at Rs. 3,28,000 should be accepted. It was also argued that no, proper attention was given by the AO to the said report of K.L. Khakhar and there was no ground before the AO to reject such complete report and estimate cost of construction at Rs. 4.5 lakhs.
8. Before the CIT(A) it was also contended that the assessee had filed revised returns for asst. yrs. 1980-81 to 1982-83 under VDIS on 31st March, 1987. In the returns filed under VDIS, it was specifically stated that the cost of constructions shown in the books of accounts were the actual cost of construction, even though to buy peace, the returns were being filed under the VD1S. It was further argued that AO was not justified in not accepting the returns under the VDIS on the ground that as per the valuer's report the unexplained cost of construction was higher than that declared by the assessee. It was further submitted that the AO himself had not accepted the DVO's report dt. 17th March, 1986 and he had estimated the cost of construction at Rs. 4.5 lakhs which itself proves that there was a difference in estimation of cost of construction. There was no material before the AO to conclude that there was unexplained investment in the cost of construction by the assessee. The assessee also invited the attention of the CIT(A) to the various circulars issued by the CBDT under VDIS. Under the said scheme the assessee was entitled to declare higher income particularly when the assessments have been set aside on appeal or pending assessment being reopened under s. 147. It was the assessee's stand that he was entitled to the benefits under the circulars issued by the Board.
9. For the asst. yr. 1980-81, the learned CIT(A) has passed comprehensive order wherein he has considered the entire relevant facts of the case as well as submissions made on behalf of the assessee. It is pertinent to state that for asst. yrs. 1981-82 and 1982-83 a consolidated order dt. 14th March, 1991, was passed by the Dy. CIT(A), Rajkot, wherein he has followed the order of the CIT(A), Rajkot, dt. 15th Nov., 1990, relating to asst. yr. 1980-81. While deciding the appeal for asst. yr. 1980-81, the CIT(A) has held that the estimation of cost of construction made by the AO was without any basis. There was no justification in estimating the cost of construction at Rs. 4.5 lakhs. The AO has not assigned any reason for rejecting the report of registered valuer, K.L. Khakhar, The CIT(A) held that the AO being a quasi-judicial officer has power under the Act to make an estimate, but that estimate must be on the basis of material on record or facts found by him. The CIT(A) was of the view that the estimate made by the AO was arbitrary, and there being any supporting evidence on record. According to the CIT(A), the assessee had supplied complete and full details regarding expenses incurred in construction work and also filed a detailed and more realistic valuation report of costs of construction itemwise, materials consumed and cost of labourers involved. The assessee had also made a voluntary addition of Rs. 70,000 in three assessment years, that too even though the cost of construction shown as per books of accounts, is actual one. The CIT(A) while accepting the assessee's submissions, further observed that additional sum of Rs. 70,000 on cost of construction was disclosed just to buy peace of mind.
10. As regards the question of accepting the returns under VDIS, the CIT(A) observed that the returns under VDIS ought to have been accepted by the AO and they were not accepted without assigning any proper and justified reason. The CIT(A) while referring to the assessment order dt. 20th March, 1986, for asst. yr. 1982-83 observed that it was not clear as to how the AO had formed the opinion that the property in question was undervalued and, therefore, reference was necessary to be made to the Departmental Valuer. The said assessment was set aside by the CIT(A). Even during the reassessment proceedings also, nowhere it was found by the AO from the records as well as books of accounts maintained and also details furnished by the assessee, that the cost of construction was either not correct or not acceptable. In the opinion of the CIT(A), there was no basis or material on record before the AO to come to the conclusion that the assessee had concealed investment in the form of cost of construction or investment made in the construction. According to the CIT(A) as per answer to question No. 19 of CBDT Circular No. 451 dt. 17th Feb., 1986 it cannot be said that returns were filed after detection by the Department. Contrary to this, the report of the DVO was the basis on which the AO refused to accept the return under Amnesty Scheme. The CIT(A) observed that the same report was reconsidered by that very DVO and he has categorically stated that his previous report requires a suitable reduction/ modification. According to the CIT(A), this takes away the very basis of AO on which he came to the conclusion that returns of income filed by the assessee under VDIS were not accepted. The CIT(A) concluded that the observation of the AO was not justified in not accepting the returns filed by the assessee under VDIS which were within clear intention to buy peace of mind and to pay some more tax to avoid unnecessary litigation. Consequently, the appeals were allowed by the CIT(A)/Dy. CIT(A) and the AO was directed to accept the returns filed under VDIS for the assessment years under consideration. The additions made on account of cost of constructions in all the assessment years under consideration were deleted by the CIT(A)/Dy. CIT(A).
11. Before us, Prabliakant, learned Departmental Representative submitted that the CIT(A) was not correct while deleting the additions made by the AO on account of cost of construction. According to him, the AO's estimation at Rs. 4.5 lakhs seems more realistic, particularly when the assessee himself has filed the revised return showing the unexplained cost of construction. At the initial stage the assessee had shown the cost of construction at Rs. 2,79,025. Subsequently the assessee declared Rs. 70,000 being the amount of unexplained investment used in the construction of the property. According to the learned Departmental Representative this means the cost of construction declared by the assessee was maintaining the property and up-to-date accounts of cost of construction, etc., then where was the necessity to show additional cost of construction amounting to Rs. 70,000? On the other hand, one K.L. Khakhar had estimated the cost of construction at Rs. 3.28 lakhs. According to the learned Departmental Representative the estimate made by the DVO was not disbelieved by the CIT(A), while setting aside the assessment for asst. yr. 1982-83. However, CIT(A) had directed the AO to decide the issue regarding unexplained cost of construction after affording an opportunity of being heard to the assessee. The learned Departmental Representative, therefore, submitted that the AO has decided the issue after considering the DVO's report, assessee's objections, valuation report of K.L. Khakhar and also the additional unexplained investment amounting to Rs. 70,000 shown by the assessee. Moreover, the AO had also afforded an opportunity of being heard to the assessee. He, therefore, strongly supported the AO's order.
12. On the issue of not accepting the return under VDIS the learned Departmental Representative heavily relied on the order of the AO and additionally submitted that the DVO's report dt. 17th March, 1986, was already available and it was clear that the assessee has concealed the income. According to the learned Departmental Representative when original assessment order for 1982-83 was passed on 20th March, 1986, an amount of Rs. 4,78,675 was added under s. 69B of the Act. In the said assessment order, the AO held that the assessee failed to disclose fully and truly all material facts in connection with the income concealed and furnished inaccurate particulars of income. When the matter was sent back to the AO after setting aside the assessment order dt. 20th March, 1986, even after that the AO was regularly conducting his enquiry in the matter. According to the learned Departmental Representative the returns filed by the assessee after detection of concealment by it would not be considered a valid return under VD1S and, therefore, no benefit of CBDT circulars can be given to the assessee. The returns have not been filed suo moto and have also not been furnished before detection by the Department.
13. On behalf of the assessee M.P. Sarda, learned counsel for the assessee, strongly supported the impugned orders and the reasons given for allowing the assessee's appeals. The learned counsel further submitted that the appellate authority below have considered the entire relevant facts of the case and have also meticulously appreciated the material on record. He, therefore, submitted that the impugned orders deserve to be upheld. The learned counsel also submitted that the assessee had maintained proper books of accounts, cost of construction duly reflected therein, the books of accounts and all particulars of costs of constructions and bills and vouchers were also produced before the AO. The AO has not pointed out any defect in the books of accounts or in the cost of construction. The learned counsel also submitted that in absence of findings of any glaring error or defect in the books of accounts, the cost of constructions as reflected in the books of accounts cannot be rejected and be substituted by the cost of construction estimated by the DVO. In support of these contentions, the learned counsel relied upon the following decisions (a) Babyland Hostel vs. ITO (1982) 31 7TJ (Ah a) 136; (b) ITO vs. Tandel Automobiles (1991) 35 ITD 191 (Ahd);
(c) Sayar Engg. Works (P) ITD. vs, ITO (1992) 43 Trj (JP) 23;
(d) Sager Cold Storage & Ice Factory vs. ITO (1993) 113 Taxation 7 (Del);
(e) Harswaroop Cold Storage & General Mills vs. ITO (1988) 27 ITZ) 1 (Del) (TM);
(f) Naresh Bahl vs. ITO (1992) 41 ITD 298 (Del);
(g) ITO vs. Member Industries (P) ITD. (1992) 42 ITD 373 (Del);
(h) CIT vs. Pratap singh Amro singh, Rajendra Singh & Deepak Kumar & Ors. (1993) 200 ITR 788 (Raj),-
(i) ITO vs. Dreamland Enterprises (1995) Taxman p. 143 (Ahd. B.);
(j) ITO vs. Tekchand (1995) 51 ITJ (Jp) 607 : (1995) 126 Taxation 122 (Tiib)(Jp); and
(k) Nishant Housing Development (P) ITD. vs. Asstt. CIT (1995) 52 ITD 103 (Pat).
14. The learned counsel for the assessee further submitted that the assessee vide his letter dt. 7th Feb., 1989, furnished the report of registered valuer, K.L. Khakhar. Khakhar estimated the cost of construction following the detailed itemwise method which according to the learned counsel is a much better method of estimating the cost of construction. Khakhar has in his report given the basis of his estimate in an elaborate manner and shown the detailed workings. According to the learned counsel for the assessee, the AO vide his letter dt. 13th March, 1989, had informed that the DVO had confirmed that his valuation was not on the basis of the detailed quantities utilised for the construction. The DVO also told that his earlier estimate of the cost of construction requires reduction/modification. The AO has then himself proceeded to make a lump sum estimate of Rs. 4.5 lakhs against the earlier estimate of Rs. 7,57,700 made by the DVO. According to the learned counsel the estimate of the DVO was itself arbitrary and excessive. Against AO's proposed cost of construction at Rs. 4.5 lakhs, the assessee vide his letter dt. 15th March, 1989, submitted his objections which were simply ignored by the AO without assigning any reason. The learned counsel further submitted that the revised returns were submitted under VDIS popularly known as Amnesty Scheme to buy mental peace and the assessee had stated in his statement of account that the cost of construction shown in the books of account is the actual amount spent for construction. The learned counsel, therefore, submitted that in the revised assessment, after admitting that the original valuation by the DVO was on higher side, the impugned addition was made in arbitrary manner on a baseless estimate in disregard to the expert's report, and the detailed submissions without even furnishing DVO's comments to the assessee. The addition was made in violation of principles of natural justice, according to the learned counsel the same deserves to be deleted. Reliance was also placed on the decision in the case of Colonisers vs. Asstt. CIT (1993) 45 TTJ (Hyd) (SB) 114 : (1992) 41 ITD 5 7 (Hyd) (SB).
15. The learned counsel also invited our attention to the following papers/ documents :
(1) Statement of income filed with the returns under the VDIS (pp. 95 to 97 of assessee's paper-book),-
(2) Letter dt. 21st March, 1988, to CIT, Rajkot (pp. 101 to 102 of assessee's paper-book);
(3) Reply dt. 27th Oct., 1988, by CIT, Rajkot, (p. 103 of assessee's paper-book); and (4) Letter dt. 28th Nov., 1988, to CIT, Rajkot (pp. 104 of assessee's paper-book).
The learned counsel while referring to abovestated documents submitted that the assessee's conduct was bona lide and the returns were filed to buy mental peace and no concealment of income was established. According to the learned counsel, when the AO himself has ignored the DVO's report and went to estimate the cost of construction of his own and, therefore, the AO is not correct to state that concealment was established on the basis of DVO's report. The learned authorised representative also invited our attention to CBDT Circular No. 451, dt. 17th Feb., 1986, particularly to question and answers at SI. Nos. 19 & 26. The learned counsel, therefore, submitted that in view of the circulars issued by the C13DT under Amnesty Scheme and also in the facts and circumstances of the present case, the CIT(A) was correct in directing the AO to accept the returns under VDIS. The learned counsel relied on the observations made by the CIT(A) vide pars 22 to 24 of the impugned order.
16. We have carefully considered the rival submissions and have also gone through the orders of the authorities below. The assessee has also submitted a voluminous paper-book containing 1 to 112 pages. It is an undisputed fact that the assessee has maintained proper books of accounts. It is also evident from the records that during the course of original assessment for asst. yr. 1982-83 which was completed on 20th March, 1986, particulars of cost of construction, bills and vouchers were produced before the AO. The AO vide para 10 of the said order observed that the assessee has also supplied a copy of the list of vouchers and purchase bills in which most of the purchases are noted. A copy of the assessment order dt. 20th March, 1986, for asst. yr. 1982-83 is available at pp. 20 to 23 of assessee's paper-book.
When the assessment order for asst. yr. 1982-83 was set aside by the CIT(A), Rajkot and the matter was sent back to the AO for de novo assessment, the AO in compliance with the said directions of the CIT(A) asked the assessee to file objections, if any, to the proposed valuation as per report of DVO, The assessee vide its letter dt. 15th March, 1989, along with Annexure A to F (pp. 61 to 88 of assessee's paper-book) submitted his objections to the proposed valuation of DVO and also submitted list of materials which were purchased from various parties and the details of bills of materials like cement, iron, wood, bricks etc. as well as list of labour cost, paid to various contractors. The assessee also annexed these particulars with the aforesaid letter. It is also evident from the record that the assessee's aforesaid objections along with report of registered valuer, K.L. Khakhar were forwarded to DVO for his comments. The DVO has categorically stated that estimate of cost of construction made earlier was on higher side. Neither the AO nor the DVO pointed out any material defect in the books of accounts or in the cost of construction declared by the assessee. There is no even a whisper about this point in the original assessment, dt. 20th March, 1986, for asst. yr. 1982-83 or in the assessment years under appeal. The AO has also not rejected the books of accounts by invoking the provisions of s. 145 of the Act. It is well settled in the absence of findings of any glaring error or defect in the books of accounts, the cost of construction as reflected in the books of accounts cannot be rejected and be substituted by the cost of construction estimated by the DVO. The assessee has also filed a copy of observations and comments of K.L. Khakhar on the DVO's report (pp. 56 to 59 of assessee's paper-book). The cost of construction estimated by Khakhar is Rs. 3.28 lakhs and this estimate of cost of construction has been made following detailed iternwise method which report is available at pp. 35 to 55 of assessee's paper-book. The assessee's cost of construction after including Rs. 70,000 being the amount of voluntarily disclosed by the assessee works out to Rs. 3,49,025.
17. The letter, dt. 13th March, 1989, of the AO sent to the assessee is reproduced hereunder :
"Pravinchandra Girdharlal, Rajkot.
Sir, Sub: Assessment for asst. yrs. 1980-81 to 1982-83 regarding cost of construction of Jaynath Hall of Rajkot. Please refer to your letter, dt. 7th Feb., 1989.
2. You had filed valuation report of K.L. Khakhar. This valuation report was sent to the Valuation Officer of the Department for his comments.
3. The Valuation Officer in his letter dt. 13th March, 1989, has stated that the method adopted by the Departmental valuer is on the basis of the market rate of materials, during the average period of construction of the building and not on the basis of the detailed quantities utilised for the construction.
4. Further he has suggested that, the earlier estimate of the cost of the construction requires reduction/modification.
5. After considering the objections raised by you, I intend to estimate the cost of construction of Jaynath Hall at Rs. 4.5 lakhs.
6. On this basis addition on account of unexplained cost of construction will be as under:
For asst yr.
Amount (Rs.) 1980-81 79,788 1981-82 39,894 1982-83 39,894 You are requested to file your objections, if any, against the above proposed action at an early date, since Time Barring assessment is involved.
Yours faithfully, Sd/-
(1. G. Chawla) Income-tax Officer, Wd-2(7), Ralkot"
It is apparent from the above letter dt. 13th March, 1989, of the AO that DVO's earlier estimate was incorrect and excessive, which fact has been admitted by the DVO himself. Furthermore the AO has also not given any weightage to the DVO's said report. The AO made a lump sum estimate of Rs. 4.5 lakhs. We find substance in the submissions of the learned counsel for the assessee that the fact that AO himself has reduced the estimate by such a substantial figure shows how arbitrary, incorrect and excessive the earlier estimate of the DVO was.
18.1 The AO has not given the basis of his estimate of Rs. 4.5 lakhs. The AO has alsd'not provided any opportunity to the assessee to cross-examine the DVO. It is well settled that before using any evidence gathered from any witness against an assessee, the latter must be permitted to cross-examine such a witness The AO has totally failed to appreciate the report of registered valuer Khakflar as well as his letter, dt. 15th- March, 1,989. The AO stated that the assessee himself has filed the return of income under VDIS showing unexplained cost of construction, however to our view the AO has correctly not appreciated the facts of the case in its entirety because while submitting the revised return under VDIS in the statement of income filed with the revised returns, the assessee stated that the cost of construction shown in the books of accounts, is the actual amount spent for construction, however, to buy mental peace the additional costs of construction amounting to Rs. 70,000 for assessment years under consideration are being disclosed. We also find that in this case original assessment for asst. yr. 1982-83 was set aside by the CIT(A), Raj, on 20th-March, 1987, wherein the AO was directed to supply DVO's report to the assessee. In spite of the directions of the CIT(A) the DVO's report was given to the assessee after 18 months of appellate order passed by the CIT(A), Rajkot. The DVO has admitted that his earlier estimate requires reduction/modification. In these circumstances, the AO was not justified in estimating the cost of construction at Rs. 4.5 lakhs. He has not rejected the books of accounts which were duly supported by bills, vouchers, details of labour payments, etc. The AO has not assigned any reason while not accepting a report of registered valuer, K. L. Khakhar. The estimate made by the AO is not sustainable in the eyes of law.
19. A copy of assessment order for asst. yr. 1982-83 passed on 20th March, 1986, is available on record, which was later on set aside by the CIT(A), Rajkot. During the said assessment proceedings whatever material and evidence were available with the assessee were examined by the AO and he has not found any defect in the books of accounts or details furnished by the assessee. It is also evident from the said assessment order that there was no basis for the AO to refer the matter to valuation cell. In the said assessment the AO adopted the cost of construction of the property 'Jaynath Hall' at Rs. 7.57 lakhs against valuation declared by the assessee at Rs. 2,79,025. While completing the de novo assessment also, the AO found nowhere from the records or books of accounts maintained by the assessee that the cost of construction declared by the assessee was not correct. We are fully in agreement with the conclusions of the CIT(A), that there is no material on record before the AO to come to the conclusion that the assessee had concealed investment in the form of cost of construction or investment made in the construction.
20. We have also perused the statements of income filed with the returns under :
VDIS, which reads as under :
"Add : Amount considered and estimated to have been spent in Jaynath apartments as cost of construction shown in the books of accounts is the actual amount spent lor construction but difficult to prove it is a actual cost and as such to purchase peace. Approximate amount added."
The above statement shows that the assessee's conduct was bona fide and the returns were filed to buy peace.
21. The learned counsel for the assessee also invited our attention to the following question and answer :
Question No. 4:-Whether higher income can be shown in cases where assessments have been set aside on appeal or pending reassessment being reopened under s. 147?
Answer:-Yes. The assessee could available of the benefits under these circulars.
Question No. 7-Where any addition is contested in appeal, can such amount be declared?
Answer.-Yes. Except in search and seizure cases. (see resume of the answers given to the specific questions raised by the Members, Bar Association (IT) on 2nd Jan., 1986 by M.C. Joshi, Chief CIT (Admn.), and CIT-I, New Delhi, duly confirmed by M. S. Narayan, Chairman, CBDT.
In Connection With Public Circular No. 423, dt. 26th June, 1985 and Circular Nos. 432, 439, 440 and 441 issued by the CBDT, New Delhi, on 15th Nov., 1985.
This resume was addressed to the President, Chamber of IT Consultation, Bombay, by the office of Chief Public Relations Officer, IT Department, Aaykar Bhawan, Bombay, vide his letter dt. 22nd Jan., 1986.
22. In the instant case admittedly the revised returns under Amnesty Scheme were filed on 31st March, 1987, by the assessee.
The AO's base for not accepting these returns under the Amnesty Scheme was the DVO's report. Subsequently the said report was not accepted by the AO himself. Even the DVO himself commented upon that his previous report required a suitable reduction/modification. As we have already held above that even the estimate by the AO at Rs. 4.5 lakhs was without any basis and against principles of natural justice. The circulars issued by the CBDT under Amnesty Scheme afforded an opportunity to an assessee to file his return disclosing true income/wealth irrespective of what might happen earlier. The assessee accordingly took the benefit of Amnesty Scheme and filed his returns. It is evident that original assessment for asst. yr. 1982-83 was set aside by the CIT(A), Rajkot, - vide his. order dt. 20th March, 1987, and the assessee has taken the benefit of the said assessment and accordingly filed the revised returns under Amnesty Scheme to avoid further litigation. The assessee also paid the taxes accordingly.
23. In the case of Anand Kumar Saraf & Ors. vs. CIT & Ors. (1995) 125 CTR (Cal) 330: (1995) 211 ITR 562 (Cal), the Hon'ble High Court observed as under :
"The scheme is an inducement to evaders to make a clean breast of past evasions and square up the accounts with the Revenue. Then persons who are left out from this opportunity are those whose concealments have come to light before hand by investigation and search and seizure operations carried out by the Revenue. The clarifications of the Board in its answer to question No. 19 as to the meaning of expression "before detection by the Department" show that if the assessing authority has a prima facie belief that would not mean detection. The dictionary meaning of the word 'detect' is 'to discover the truth especially hidden or disguised character' or 'to discover or determine the existence, presence or fact' (See Webster third New International Dictionary 1976 Edn. 2)".
In the present case, original assessment dt. 20th March, 1986, for asst. yr. 198283 was set aside by the CIT(A), Rajkot vide his order dt. 20th March, 1987 on the ground that the assessment was passed in violation of principles of natural justice. According to the CIT(A), no opportunity was given to the assessee to meet the AO's case. Admittedly, the revised returns were filed after the setting aside of the said assessment order. The AO, for the first time forwarded the DVO's report to the assessee vide his letter dt. 12th Oct., 1988, and till date no enquiry whatsoever was conducted by the AO. The assessee filed the revised returns suo moto. If the AO had a prima facie belief of concealment that would not mean detection by the Revenue. The dictionary meaning of word 'detect' is to discover the truth especially hidden or disguised character. In the instant case, the Revenue has neither discovered the truth especially hidden nor disguised character. At the same time DVO's report cannot be made the basis for the addition particularly when no opportunity was afforded to the assessee to cross-examine the DVO. The DVO himself admitted that the estimate of cost of construction reflected in his report was on higher side. The estimate of the AO too is without any basis. In these circumstances, it cannot be said that Revenue has detected the concealment because, no material was found by the AO to show that there was concealment. We, therefore, uphold the impugned orders and dismiss the Revenue's appeals.
24. In the result, all the appeals of Revenue are dismissed.