CIT vs. SHRI UMMED SINGH

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. INCOME TAX APPEAL NO. 76 / 2004 Commissioner of Income Tax (Central), New Central Revenue Building, Statue Circle, Jaipur (Raj.) ----Appellant Versus Shri Ummed Singh Lodha 5/94 Ashoka Apartments, Bhawani Singh Lane, Jaipur ----Respondent __________________________________________ For Appellant : Mr. Anuroop Singhi __________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE DINESH MEHTA Judgment Per (Hon’ble K. S. Jhaveri) J. 14/12/2016 1. By way of this appeal, the appellant has challenged the judgment and order passed by the Tribunal whereby the Tribunal has dismissed the appeal of the Department and confirmed the order of the CIT(A). 2. This court while admitting the appeal on 20.07.2004, framed the following substantial question of law:- “Whether on the facts and circumstances of the case and in law the I.T.A.T. was right and justified in deleting the addition of Rs.39,87,285/- as being the undisclosed investment in the cost of construction of the immovable property and whether the finding of the Tribunal is perverse?” 3. The brief facts of the case are that the return of income

(2 of 4 ) [ITA-76/2004] was filed on 24.1.96 declaring income of Rs.861920. The assessee had preferred an appeal against the said order but availing the facility offered by the KVSS had withdrawn his appeal and aid the taxes due. His application under the KVSS had been accepted on 11.13.98. In the meanwhile inquires made by the IT department had revealed that the investment shown by the assessee of Rs.1597369 in the property situated at Padmavati Colony Extension, near Nirman Nagar, Ajmer Road measuring about 1500 sq. yds. was undervalued as the departmental inquiries had revealed that the investment was in the vicinity of Rs.60 lacs. To elucidate the correctness of the cost of construction vide letter dated 14.9.98 no 660 the District valuation Officer, Jaipur was authorised u/s 131 (I)(d) of the Income Tax Act 1961 to determine the true and correct cost of construction of the said property vide report no.281 dated 27.8.99 the DVO forwarded the valuation report estimating the value of the building constructed at Rs.5469830/- and giving all details therein. Since records of the Assessing Officer regarding valuation of said property revealed that the value as declared by the assessee was not correct and that because there was reason to believe that this income chargeable to tax had escaped assessment within the meaning of Section 147 of the Income Tax Act 1961, a notice u/s 148 of the Income Tax Act was issued to the assessee on 11.9.98, which was received by the assessee on 24.9.98. However despite receipt of the notice u/s 148 of the IT Act, no return of Income was filed. Pursuant to the request of the AO

(3 of 4 ) [ITA-76/2004] letter dt. 14.9.98, the DVO has forwarded the valuation report, vide his letter No.281 dated 27.8.99, determining the cost of construction at Rs.5469830/- for the said assessment year. Vide letter dated 4.10.2000, a show-cause notice was issued to the assessee, enclosing therewith a valuation report of the DVO, requiring the assessee to explain as to why the difference should not be treated as income from undisclosed sources for the relevant period. The assessee submitted his reply, vide letter dated 11.10.99, in which he has submitted his objections to the valuation done by the Valuation Officer stating that CPWD rates have been applied instead of PWD rates the valuation officer has ignored the various points pointed out by the assessee for reducing the cost of construction. The Assessing Officer however passed an order and made an addition of Rs. 3987285/- as unexplained investment in respect of the construction. 4. We have heard Mr. Singhi, learned counsel for the appellant. 5. The contention which has been raised by Mr. Singhi mainly is that Tribunal has not considered the facts of the case inasmuch as the valuation report which is sought to be relied upon, was not the subject matter or reason for issuing the notice to the assessee. The notice u/s 148 was issued on 11th September, 1998, whereas the reference of DVO was made on 14th September, 1998. He thus contended that the judgment of Supreme Court in Amia Bala Paur is not applicable.

(4 of 4 ) [ITA-76/2004] 6. In our view, the judgment of the Supreme Court which is sought to be relied upon by the Tribunal in the case of Amiya Bala Paul Vs. C.I.T., 262 ITR 407, is fully applicable to the facts of the case. 7. Taking into consideration that the independent valuation was not done on the basis of valuation of DVO, the addition were made and after considering both the orders of CIT(A) and Tribunal and the decision of Hon’ble Supreme Court, we are of the opinion that the view taken by the Tribunal is just and proper. 8. The contention which has sought to be canvassed was never canvassed before CIT(A) or before the Tribunal. 9. Hence the issue is answered in favour of the assessee and against the department. The appeal stands dismissed. (DINESH MEHTA)J. (K.S. JHAVERI)J. MohitR70