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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’, NEW DELHI Before Sh. N. K. Saini, AM And Sh. Kuldip Singh, JM ITA No. 4496/Del/2012 : Asstt. Year : 2007-08 Asstt. Commissioner of Income-tax Vs Sh. Saidan Kapoor, J-6, 1st Floor, NDSE, Part-I, Circle-32(1), New Delhi New Delhi (APPELLANT) (RESPONDENT) PAN No. AJNPK3289R Assessee by : Sh. Om Prakash, Adv. Revenue by : Smt. Anima Barnwal, Sr. DR Date of Hearing : 26.11.2015 Date of Pronouncement : 13.01.2016 ORDER Per N. K. Saini, AM:
This is an appeal filed by the department against the order dated 09.05.2012 of ld. CIT(A)-XXVI, Delhi.
The only effective ground raised in this appeal reads as under:
“Whether the Ld. CIT(A) was justified in holding that AO was not correct on facts and in law while initiating and completing the re-assessment proceedings u/s 147/148 of the Act purely on the basis of the DVO’s report and consequently holding the reassessment proceedings initiated by the AO was invalid.”
2 ITA No. 4496/Del/2012 Saidan Kapoor 3. Facts of the case in brief are that the assessee filed his return of income on 31.07.2007 declaring an income of Rs.15,07,093/- which was assessed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) at an income of Rs.53,57,090/- on 21.12.2009. During the course of assessment proceedings, the AO referred the matter to the DVO u/s 55A of the Act. However, the assessment had to be completed being the time barring matter, without considering the valuation report in respect of the property located at J-6, 1st Floor, NDSE, Part-I, New Delhi and B-7, Upper Ground Floor, Safdarjung Enclave, New Delhi, as the same was not received till the passing of the assessment order. Subsequently, the case was reopened u/s 147 of the Act on the basis of the valuation report received from DVO. The AO after reopening the assessment, reassessed the income of the assessee at Rs.68,75,736/- vide order dated 23.12.2010.
Being aggrieved the assessee carried the matter to the ld. CIT(A) and challenged the reopening u/s 147 of the Act. The ld. CIT(A) by following the judgment of the Hon’ble Apex Court in the case of ACIT Vs Dhariya Construction Company Civil Appeal No. 9468/2003 quashed the
3 ITA No. 4496/Del/2012 Saidan Kapoor reassessment. The relevant findings have been given in paras 5.1 to 5.5 of the impugned order which read as under:
“5.1 The first and the foremost issue, that is to be decided in this appeal is- "Whether the proceedings u/s 147 has been correctly initiated or not?" The Hon'ble Delhi High Court in the case of CIT vs. Nilofer I. Singh 309 ITR 233, has held that section 55A of the Act has no application in the case of sale simpliciter and the fair market value in no manner can substitute the full consideration in the sale of property. Similar view was also taken in case of Gwalior Rayon Silk Mfg. & Weaving i Co. Ltd. Vs V. Raghvan 150 ITR 12 (Bombay), CIT vs. Equitable Investment Co. Pvt. Ltd. 174 ITR 714 (Cal) and CIT vs. Aggarwal Bros. 189 ITR 786 (Pat). In the case of Asst. Commissioner of Income-tax vs. Tej Pratap Singh (2008) 22 SOT 156 (Del.) it was held that assessment cannot be reopened for taxing capital gains in respect of an asset on the basis of its market value as estimated by the DVO. In case of ITO vs. Bholanath Majumdar 137 CTR 198 (Gau), it was held that a valuation report is only an opinion of the valuer. It is further stated, that, the same can neither amount to information nor a reason to believe that any income has escaped assessment. In the context of section 147 as it exists today, the Hon'ble High Court has held that "No Completed Assessments" can be re-opened on thebasis of the valuation
4 ITA No. 4496/Del/2012 Saidan Kapoor report obtained by the Assessing Officer u/s 55A, after that assessment was completed. 5.2 It is a well settled law, that any challenge for initiation of re-assessment proceedings are to be tested primarily on the basis of the reasons recorded by the Assessing Officer. During the course of the original assessment proceedings, the appellant filed copies of the sale deeds in respect of both the properties in question showing the full purchase value and sale consideration. The Assessing Officer on the other hand, did not provide any tangible material on record to show that the market value of the above mentioned properties are much more than the full value of consideration shown in the conveyance deeds. 5.3 Initiating, the re-assessment proceedings merely on the basis of the Valuation Report submitted by the DVO is unjustified and uncalled for specially in the absence of any other independent finding given by the Assessing Officer or the presence of any tangible material brought on record to suggest that the income has escaped assessment. It is a well settled law that the Valuation Report of the DVO would not be conclusive, and is merely an opinion. Therefore, such an abstract estimation, cannot be taken as basis to substitute the full value of consideration of the properties for the purpose of section 148 of the Act as has been held by the Apex Court in the case of ACIT vs. Dhariya Construction Co. Civil Appeal no.9468 of 2003. 5.4 I also find it important to cite the judgment in the case of CIT vs. Sachin Hotels (P) Ltd. LexDoc Id: 392389 wherein it has been held as under:
5 ITA No. 4496/Del/2012 Saidan Kapoor "Be that as it may, having called for a report of the DVO, the Assessing Officer cannot pass a re- assessment order purely on the basis of the DVO's report. This is because at the end of the day, the report of the DVO is only an opinion. Undoubtedly, it is an opinion by an "expert" but it must be collaborated with some other document to justify the re-assessment order. It is for this reason, that the Division Bench of Madras High Court in Commissioner of Income- tax vs. V.T. Rajendran (2007) 288 ITR 312 (Mad) has held that purely on the basis of DVO's report reassessment order cannot be passed. This Court is in full agreement with the law cited by the assessee in Commissioner of Income-tax Vs V.T. Rajendran (2007) 288 ITR 312 (Mad) and holds that re-assessment order cannot be passed purely on the basis of DVO’s report.” 5.5 In view the facts of the case and relying on various judicial pronouncements cited and discussed above, I hold that the Assessing Officer was not correct on facts and in law while initiating and completing the re-assessment proceedings u/s 147/148 of the Act purely on the basis of the DVO’s Report. Therefore, the re-assessment proceedings initiated by the Assessing Officer in the present case are ab-initio invalid and therefore, the order passed u/s 147/148 is hereby quashed.” 5. Now the department is in appeal. The ld. DR strongly supported the order of the AO and further submitted that since the income of the assessee escaped the assessment,
6 ITA No. 4496/Del/2012 Saidan Kapoor therefore, the AO was justified in reopening the assessment u/s 147 of the Act by issuing notice u/s 148 of the Act and the ld. CIT(A) was not justified in quashing the reassessment framed by the AO.
In his rival submissions the ld. Counsel for the assessee reiterated the submissions made before the ld. CIT(A) and strongly supported the impugned order. It was further stated that the reopening was done merely on the basis of the DVO’s Report and no independent finding was given by the AO for escapement of the income, therefore, the ld. CIT(A) rightly quashed the reassessment framed by the AO. The reliance was placed on the judgment of the Hon’ble Supreme Court in the case of ACIT Vs Dhariya Construction Company reported at 328 ITR 515.
We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admitted fact that the reopening was done by the AO only on the basis of the valuation report received from the office of the DVO. On a similar issue the Hon’ble Apex Court in the case of ACIT Vs Dhariya Construction Company 328 ITR 515 (supra) held as under:
7 ITA No. 4496/Del/2012 Saidan Kapoor “Having examined the record, we find that in this case, the Department sought reopening of the assessment based on the opinion given by the District Valuation Officer (DVO). The opinion of the DVO per se is not an information for the purposes of reopening assessment under section 147 of the Income-tax Act, 1961. The Assessing Officer has to apply his mind to the information, if any, collected and must form a belief thereon. In the circumstances, there is no merit in the civil appeal. The Department was not entitled to reopen the assessment.” 8. In the present case also the ld. CIT(A) quashed the reassessment framed by the AO by following the ratio laid down by the Hon’ble Apex Court in the aforesaid referred to case. We, therefore, do not see any valid ground to interfere with the findings of the ld. CIT(A). Accordingly, we do not see any merit in this appeal of the department.
In the result, the appeal of the department is dismissed. (Order Pronounced in the Court on 13/01/2016)
Sd/- Sd/- (Kuldip Singh) (N. K. Saini) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 13/01/2016 *Subodh* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5.DR: ITAT ASSISTANT REGISTRAR