ORDER
H.L. Karwa, Judicial Member
1. These there appeals by the assessee were heard together since the issue involved is common and they are being disposed of by this consolidated order for the sake of convenience.
2. We will first take up I.T.A. No. 515(ASR)/2000 for the assessment year 1989-90. In this appeal, the assessee has taken the following grounds:-
“1. That the CIT(A) was not justified in upholding the initiation of proceedings under Section 147 on erroneous and insufficient grounds.
2. That the CIT(A) has neither understood the factual position nor the legal position and has upheld the validity of the proceedings under Section 147 on irrelevant consideration.
3. That the CIT(A) has wrongly upheld the addition of Rs. 100464/- towards alleged unexplained investment in building without application of mind and without appreciating the fact that no proper opportunity of being heard had been given to the appellant.
4. That the CIT(A) has wrongly rejected the grounds of the appellant that in the absence of any defects in the construction accounts, in the books of accounts supported by vouchers, no reference could possibly be made to the D.V.O. for making an estimate.
5. That the CIT(A) has wrongly rejected the claims of the appellant for depreciation on the alleted unexplained cost of construction. His finds in this behalf to say the least show his utter ignorance of the provisions of the law.
6. That the CIT(A) has erred in not directing the A.O. to allow the benefit of unabsorbed depreciation for Assessment Year 1967-68 as had been directed by the appellate authorities in earlier years. It is not understood as how allowance of unabsorbed depreciation for Assessment Years 1987-85 to 1988-89 could govern this position. Even otherwise the necessary claims had duly been made in the return.
7. That the order of the CIT(A) is against law and facts of the case and is liable to be set-aside.”
2.1 We will deal with ground Nos. 1 to 4 and 7 since these grounds are inter-linked. The relevant facts of the case are that the assessee-company filed its return on 26-12-1989 declaring ‘nil’ income. The A.O. processed the said return under Section 143(1)(a) of the Income-tax Act, 1961, determining the total income at nil. On 22-3-1996, the A.O. issued a notice under Section 148 of the Act to the assessee after obtaining necessary approval from the Commissioner of Income-tax. In response to the said notice, it was replied by the assessee that the original return filed on 26-12-1989 may be treated as the return filed under Section 148 of the Act. The A.O. noted that while examining the assessment records, relevant to the assessment year 1992-93, it was found that the assessee-company had constructed cold storage building and total investment of Rs. 7,40,792/- was shown during the accounting years, relevant to the assessment years 1988-89 to 1994-95. The matter relating to the cost of construction/valuation of the building, in question, was referred to the Valuation Cell of the Income-tax Department. The accounting years, the value declared by the assessee, the value determined by the D.V.O. and the difference between the cost of construction declared by the assessee and determined by the D.V.O. are reproduce hereunder:-
Acctt.year Declared Determined Difference.
amount amount.
--------- -------- ----------- ----------
1987-88 31166 79200 48034
1988-89 65136 165600 100464
1989-90 4238 10800 5562
1990-91 273286 694800 421514
1991-92 266260 676900 410640
1992-93 20145 51100 30955
1993-94 80560 204700 124140
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740792 1883100 1142308
--------- ---------- ----------
For the assessment year under consideration, the valuation Cell of the Income-tax Department has determined the cost of construction at Rs. 1,65.600/- against Rs. 65,136/- declared by the assessee in its books of accounts. According to the A.O., there was a difference of Rs. 1,00,464/-. The reasons recorded for re-opening the assessment for the assessment year 1989-90 are reproduced hereunder:-
“Reasons:-
Assessment in this case was completed Under Section 143(1)(a) at the total income of Rs. Nil. It was noticed that the assessee had constructed property at Kartarpur. Its cost of construction was shown at Rs. 65136/- by the assessee. In order to elucidate the correctness of the cost of construction, the case was referred to the Valuation Cell and the cost of construction was worked out to Rs. 1,65,600/- in the year consideration. Thus, there is difference of Rs. 1,00,464/- between declared amount and the amount determined by the Valuation Cell. I have, therefore, reason to believe that total difference to the tune of Rs. 1,00,464/- has escaped assessment within the meaning of Section 147 of the I.T.Act, 1961.
In view of this necessary approval to issue notice Under Section 148 of the I.T.Act, 1961 may kindly be accorded.
Sd/-
(Mrs. Rachna Singh) IRS,
Asstt.Commissioner of Income-tax,
Circle 1(1), Jalandhar.”
The A.O. has pointed out the above difference to the assessee. The reasons recorded for re-opening were also brought to the notice of the assessee. The contention of the assessee was that the A.O. has never referred the matter relating to valuation of cost of construction to the Valuation Officer for the assessment year under consideration. However, the A.O. referred the matter of valuation for the assessment year 1992-93 only. The A.O. rejected the above contentions of the assessee and stated that the reference was made to the Valuation Cell to determined true and correct cost of construction of the building, in question, as on 31-3-1992. According to him no specific assessment year was referred to the Valuation Cell. However, it was requested to the Valuation Cell to determine the cost of construction incurred by the assessee till 31-3-1992. According to the A.O., after obtaining the valuation report, it was found that the assessee had made unexplained investment in the construction of the above building. The other objections raised by the assessee viz. the valuation of property was done without proper identification of construction and without considering the accounts maintained by the assessee were rejected by the A.O. Even the objections raised through registered valuer of the assessee were rejected. The A.O. concluded that the assessee has made unexplained investment of Rs. 1,00,464/-, which had escaped assessment and accordingly, notice under Section 148 of the Act had been/rightly sent to the assessee. Thus, considering the amount of Rs. 1,00,464/- as unexplained investment was added back to the income of the a assessee.
3. When the matter was taken to the CIT(A), the following line of arguments was taken:-
(1) That the A.O. cannot re-open the assessment on the basis of valuation report received from the D.V.O. during the assessment proceedings for the assessment year 1992-93 when the assessment for the assessment year 1989-90 had already been completed.
(2) That when the required details were submitted by the assessee during the assessment proceedings, the assessee cannot re-open on the ground that the D.V.O. had estimated high cost of construction.
(3) That reference to D.V.O. could not be made where complete books of accounts were being maintained by the assessee.
(4) That the A.O. had referred the valuation to the D.V.O. only for the assessment year 1992-93 and there was no reference to earlier assessment years.
(5) That there is difference between ‘reason to believe’ and ‘reason to suspect’ and the A.O. cannot open the assessment on the basis of change of opinion.
(6) That the A.O. was not justified in re-opening the assessment particularly when the assessee had disclosed all the relevant facts before the A.O. during the course of assessment proceedings.
(7) That the A.O. cannot change his opinion on the basis of same set of facts.
(8) That the valuation report did not constitute the information for initiating proceedings under Section 147.
(9) That the re-assessment proceedings were n-ot valid particularly when the assessee was maintained regular bills of construction supported by valuation report.
(10) That the D.V.O.’s report after the assessment was invalid.
(11) That the A.O. was not justified in re-opening the assessment on the basis of the order of the C.I.T., Jalandhar passed under Section 263 of the Act for the assessment year 1992-93.
4. The learned CIT(A) rejected the above contentions of the assessee for the reasons stated in paragraphs 6, 7 and 8 of the impugned order, which are reproduced hereunder:-
“6. The provisions of Section 147 have changed w.e.f. 1-4-89 and the new provisions are reproduced below:-
“147. If the (Assessing) Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may subject to the provisions of Section 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereinafter in this section and in Sections 148 to 153 referred to as the relevant assessment year).”
7. Most of the decision relied on by the ld.counsel are not applicable as those were pronounced keeping in view the earlier provisions of Section 147 of the I.T.Act. The facts in this case is that the return for asstt.year 1989-90 was filed by the assessee on 26.12.89 showing Nil income which was processed Under Section 143(1)(a). No further assessment order Under Section 143(3) were passed in this case. In the depreciation chart, there was reference to addition of building of Rs. 8610/- in cold storage branch and not any reference to investment of Rs. 65136/- in the building account. So, there was no question of assessee furnishing any details required by the A.O. during the course of assessment proceedings prior to issue of notice Under Section 148 and therefore, arguments of the ld.counsel and relevant case laws based on this arguments are not applicable. Again as pointed out earlier the A.O. had only processed the return of the assessee and had neither examined the books of account nor verified whether complete bills and vouchers of construction were maintained by the assessee and in these circumstances, it is not possible to accept that the assessment could not be reopened under the new provisions of Section 147 of the I.T.Act, specially in view of the observation of the ld.V.O. in the valuation report as quoted above. It may be mentioned that in the case of CIT v. Amiya Bala Paul, the Hon’ble Guwahati High Court had held that reference can be made to V.O. at any time.
8. The assessee had claimed to have constructed number of structures during the period relevant to asstt.year 1988-89 to 1994-95. It is also seen that reference was made to the V.O. when the assessment proceedings for the asstt.year 1992-93 were pending and during those valuation proceedings, the assessee was not able to identify as to which structure were constructed in which year. In these circumstances, the V.O. made valuation of the building the allocated various amounts to different years on proportionate basis as per claim of the assessee regarding investment made in various years. When the assessee itself was not in position to identify as to which building was constructed in which year, it is not possible to accept that the books of account of the assessee should be considered as reliable. The observations made by the ld.V.O. in the valuation report regarding discrepancies in the bills and accounts were also not rebutted and for this reason also the books of account of the assessee could not be considered as reliable. It was further pointed out that there is distinction between reasons to believe and change in opinion. When the A.O. has only processed the return Under Section 143(1)(a), it cannot be held that the assessment has been re-opened by change of opinion. Reference is invited to the decision of Hon’ble Gujarat High Court in the case of P.C. Patel v. M.J. Makwana, A.C.I.T. 236 ITR, 832 (Guj.) and the decision in the case of Gruh Finance Ltd. v. Jt.C.I.T. 243 ITR, 482 (Guj.). These two decisions are based on the provisions of Section 147 of IT Act after these were amended w.e.f. 1-4-89. In the case of P.C. Patel (supra), it was held that power to make assessment or reassessment within four years of the end of the relevant assessment year would be attracted even in cases where there has been complete disclosure of all relevant facts upon which correct assessment might have been based in first instance and whether it is error of fact or law that has been discovered or found out justifying the belief required to initiate the proceedings. The words ‘escaped assessment’ where the return is filed, cover the case of discovery of a mistake in the assessment caused by either erroneous consideration of transaction of due to its non consideration or caused by mistake of law applicable to such transfer or transactions even where there has been complete disclosure of all relevant facts upon which correct assessment could have been based. Similar views were expressed by Hon’ble Gujarat High Court in the case reported in 243 ITR, 282 and therefore, arguments of the assessee that the A.O. has reopened the assessee because of change of opinion is not well founded and is rejected. Coming to the arguments that the report of the DVO did not constitute information for initiation of proceedings Under Section 17, it may be mentioned that in the amended provisions of Section 147, the A.O. is not required to have fresh information in his possession for reopening of assessment. The only requirement is for the A.O. to have reasons to believe and when an expert like a DVO gives his opinion that investment made in building was more than what was shown by the assessee in his account, the A.O. could have justified reasons to believe that income has escaped assessment. Even if, going by various decisions quoted by the ld.counsel that report of the DVO was not information, I am of the opinion that report of DVO could still from the basis of reopening the assessment under the amended provisions as there is no more requirement of having information for reopening the assessment. I do not agree with the arguments of the ld.counsel that if the A.O. acts on the report of the DVO, he would only have reason to suspect and not reason to believe for reopening the assessee and once the A.O. has proper reasons to believe, the decisions of Hon’ble Supreme Court as mentioned in para e) above would be of no help to the assessee in view of the above discussion, I am of the view that the A.O. was justified in reopening of the assessment.”
From the above finding of the CIT(A), it would be clear that he has held that the A.O. was justified in re-opening the assessment.
5. Aggrieved by the order of the CIT(A), the assessee is in appeal before us. Before us, Shri Y.K. Sud, C.A., the learned counsel for the assessee, reiterated the submissions made before the authorities below. Reliance was also placed on the following decisions:-
(1) Roof & Tower Construction (P) Ltd. v. Asstt. Commissioner of Income-tax (2001) 72 TTJ, 433 (Cal.’D’ Bench).
(2) Bhagwandas Jain and Ors. v. D.C.W.T. and Anr. (2000) 246 I.T.R., 632 (MP).
(3) Tara Chand Mundhra v. Union of India and Ors. (2000) 245 ITR, 187 (Raj.)
(4) S. Sreeramachandra Murthy and Anr. v. D.C.I.T. and Anr. (2000) 243 I.T.R., 427 (A.P.).
(5) Grover Nursing Home v. ITO and Ors. (2001) 248 I.T.R., 493 (P.&H.).
6. On the other hand, Shri B.M. Verma, the learned D.R. strongly supported the orders of the authorities below.
7. We have carefully considered the rival submissions and have also perused the orders of the authorities below, as well as other materials placed on record. We have also considered the decisions which were brought to our notice by the parties at the time of hearing of the appeal. It is noticed that the assessee-company derives income from agricultural operations and running a cold storage. It is an admitted fact that the A.O. processed the return of income under Section 143(1)(a) filed on 26-12-1989. In other words, the A.C. has accepted the returned income as true and correct. Subsequently, the A.O. issued notice to the assessee under Section 148 of the Act stating that the valuation cell of the Income-tax Department determined the cost of construction at Rs. 1,65,600/- as against Rs. 65,136/- as per the books of the assessee. The A.O. was of the view that there was a difference of Rs. 1,00,464/- between the cost of construction shown by the assessee and as determined by the D.V.O. Consequently, the A.O. made an addition of Rs. 1,00,464/- to the total income of the assessee treating the same as unexplained investment. A copy of valuation report submitted by the D.V.O. before the A.O. is available at pages 23 to 29 of the assessee’s paper book. From the said report, it is clear that the matter was referred to him by the Assistant Commissioner of Income-tax, Circle I(1), Jalandhar vide his letter dated 18-8-1993. Against Column No. 1.3, i.e. purpose of valuation, the D.V.O. has mentioned as “determination of cost of construction”. The date of inspection of property is mentioned as 8-10-1993. Against Column No. 5.3, i.e. the period of construction and the year of construction (completion), the D.V.O. has mentioned the period 10/87-10/93 i.e. October, 1987 to October, 1993. As we have already noted above that the D.V.O. had determined the cost of construction for different accounting years, relevant to the assessment years 1988-89 to 1994-95. According to the A.O., there was difference between the amounts declared by the assessee and determined by the A.O. for the different assessment years. For the assessment year 1989-90, there was a difference of Rs. 1,00,464/- between the cost of construction declared by the assessee in its books of accounts and as determined by the D.V.O. The assessment for the year under consideration was re-opened on the basis of Department Valuer’s report obtained after the completion of original assessment. The issue, which is to be determined by us, is whether on the above facts, the A.O. could have initiated the proceedings under Section 148 read with Section 147 of the Act or not. Section 147 (as amended by the Direct Tax laws (Amendment) Act, 1987 w.e.f. 1-4-1989) reads as under:-
“147. If the (Assessing) Officer (has reason to believe) that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in Sections 148 to 153 referred to as the relevant assessment year);”
Section 148 reads as under:-
“148(1) Before making the assessment, reassessment or recomputation under Section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, (as may be specified in the notice a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139.)
(2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so.)”
From the above, it would be clear that under Section 147 the A.O. can re-assess any income chargeable to tax if he has “reason to believe” that such income had escaped assessment for any assessment year. The expression “reason to believe” has been considered by the Hon’ble Supreme court in the case of I.T.O. v. Lakhmani Mewal Das (1976) 103 I.T.R., 437. It was observed by the Hon’ble Supreme Court that the expression “reason to believe” does not mean a purely subjective satisfaction on the part of the I.T.O. The Hon’ble Supreme Court (at pages 445 and 446) has held as under:-
“The grounds or reasons which lead to the formation of the belief contemplated by Section 17(a) of the Act must have a material bearing on the question of escapement of income of the assessee from assessment because of his failure or omission to disclose fully and truly all material facts. Once there exist reasonable grounds for the Income-tax Officer to form the above belief, that would be sufficient to cloth him with jurisdiction to issue notice. Whether the grounds are adequate or not is not a matter for the court to investigate. The sufficiency of the ground which induce the ITO to act is, therefore, not a justiciable issue. It is, of course, open to the assessee to contend that the ITO did not hold the belief that there had been such non-disclosure. The existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. The expression “reason to believe” does not mean a purely subjective satisfaction on the part of the ITO. The reason must be held in good faith. It cannot be merely a pretence. It is open to the court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief and are not extraneous or irrelevant for the purpose of the section. To this limited extend, the action of the ITO in starting proceedings in respect of income escaping assessment is open to challenge in a court of law.”
Keeping in view the above ruling of the Hon’ble Supreme Court, we are of the view that on the facts and in the circumstances of the present case, it cannot be held that the A.O. was justified in assuming jurisdiction under Section 147 read with Section 148 of the Act. In this regard, we may refer to the decision of the Calcutta Bench of the Income-tax Appellate Tribunal in the case of Roof & Tower Construction (P) Ltd. v. A.C.I.T. (2001) 72 TTJ(Cal), 443, wherein it has been held that the valuation report is only an opinion of valuer and it can neither amount to ‘information’ nor to ‘reason to believe’ that any income has escaped assessment and, therefore, re-opening merely on the basis of D.V.O.’s report is not sustainable. The Hon’ble Rajasthan High Court in the case of Tara Chand Mundhra v. Union of India and Ors. (2000) 245 I.T.R., 187 has held at pages 191-192 as under-
“In view of the law laid down by this court in the cases of Pratapsingh Amrosingh Rajendra Singh and Deepak Kumar (1993) 200 ITR, 788 and Smt. Prem Kumari Surena (1994) 206 ITR, 715, it has been conclusively held by this court that the report of a valuer cannot singly be made the basis of information as required under Section 147(b) of the Act to issue a notice under Section 148 of the Act. No separate reasons have been furnished by the Department. The only reason discernible from the reply filed by the Department is that subsequent to the filing of the return by the assessee, the Department came into possession of the report of the official valuer of the Department and, thus, came to issue the notice under Section 148 of the At. As the only ground available with the Department for issuing notice under Section 148 of the Act was held had by this court, it can safely be held that the notice issued for reopening the assessment is a notice without foundation. As and when a notice is held to be without foundation then what would necessarily follow is that the law laid by the Supreme Court in the case of Calcutta Discount Co. Ltd. (1961) 41 ITR, 191, will govern the field and the notice deserves to be quashed. Consequently, the notice of reopening the assessment annexures 7 deserves to be quashed.”
7.1 In the instant case, the A.O. himself has admitted that the assessee was maintaining the proper books of accounts. The expenses incurred by the assessee towards the cost of construction were supported by bills and vouchers. While procession the return under Section 143(1)(a) of the Act, the A.O. himself has accepted the cost of construction declared by the assessee or the year under consideration. It is also not the case of the Revenue that the books of accounts are not reliable or are not supported by bills or vouchers. At the same time, it is also not the case of the Revenue that no reliance can be placed on such books of accounts. At this stage, we may also refer to the decision of the Hon’ble Rajasthan High Court in the case of C.I.T. v. Pratapsingh Amrosingh Rajendra Singh and Deepak Kumar (1993) 200 I.T.R. 788, wherein it has been held that the valuation report can be taken into consideration only when the books of account are not reliable or are not supported by proper vouchers. In view of the decision or the Hon’ble Rajasthan High Court in the case of C.I.T. v. Pratapsingh Amrosingh Rajendra Singh and Deepak Kumar (supra), even the valuer report cannot be made the basis for re-opening the assessment.
7.2 On a perusal of the recorded reasons, reproduced hereinabove, it would be clear that the A.O. has issued a notice under Section 148 on the basis of the report of the D.V.O. and he had no other material or evidence in his possession for forming the belief that the income of the assessee had escaped assessment. Even the Hon’ble Punjab and Haryana High Court in the case of Grover Nursing Home v. I.T.O. and Ors. (2001) 24B ITR, 493 held that even the report of the D.V.O. cannot be made the sole basis for initiating action under Section 147 read with Section 148 of the Act. On this score alone, the A.O. was not justified for initiating the action under Section 147 read with Section 148 of the Act.
7.3 In the case of S. Sreeramachandra Murthy and Anr. v. Deputy Commissioner of Income-tax and Anr. (2000) 243 I.T.R., 427, the Hon’ble Andhra Pradesh High Court has held that in order to attract Section 147 of the Act, the first and foremost requirement is that the A.O. should have reason to believe that the income chargeable to tax had escaped assessment for any assessment year. In the said case, re-assessment proceedings were initiated on the ground that the assessee (petitioner) under-estimated the cost of construction of a commercial complex constructed during the year 1992-93 and the differential cost was attributable to unexplained income. The Hon’ble High Court quashed the notices under Section 148 of the I.T.Act, observing as under:-
“Coming to the facts of the present case, the construction of the building complex was admittedly disclosed by the petitioner in the return and in the assessment, the cost of construction and sources of investment were specifically gone into by the A.O. It appears that there was a search in the year 1993. It is not the case of the Revenue that in the course of search operations any incriminating material which has a bearing on the cost of construction of the building, had come to light. The petitioner or his representative did not make any statement that the construction cost was more than what was disclosed earlier. Nearly four years later, the Deputy Commissioner obtained a report from the valuation cell, which revealed that the cost of construction would have been much more than what was disclosed by the assessee and noticed by the Income-tax Officer in the course of the assessment proceedings. It is on the basis of this valuation report, the impugned notice has been issued. A perused of the file in which the reasons are recorded by the second respondent makes it clear that the sole basis for reopening the assessment is the estimate of construction given by the Department Valuer long after the search. Though a reference has been made to the search operations conducted on August 4, 1993, nothing is stated therein that any adverse or incriminating material had come to the notice of the Department as regards the construction of the shopping complex. It is merely stated by the Assistant Commissioner that in the course of search and seizure operations, it was noticed that the assessee and his wife had constructed the shopping complex by name “Ramachandra Shopping Complex” at Anakapalli. The factum of construction of the shopping complex, as already noted, is not a new fact, which had come to light as a result of search operations. Though it is stated in the counter-affidavit that in the course of search operations, it was noticed that the cost of construction would be much higher than what was disclosed by the assessee in the return of income, such ground or reason is not to be found in the reasons recorded by the Assistant Commissioner leading to the initiation of reassessment proceedings. Hence, the statement in the counter-affidavit is not accurate. Therefore, as already observed by us, the sole basis for initiating reassessment proceedings is the estimate of constructional cost made by the Departmental Valuer long after the search operations. The formation of reasonable belief cannot obviously be based on such valuation done after the assessment was completed, when there was no other material to suggest that the petitioner failed to disclose the true and relevant primary facts which have a bearing on the construction of the building. The reason recorded in support of the belief which the Assessing Officer is expected to form before initiating reassessment proceedings, is thus an irrelevant reason and does not go to establish that the petitioner failed to discharge the duty of disclosing the primary facts to the Assessing Officer before the assessment was made.
Learned senior standing counsel for the Department has submitted that the petitioner had shown the differential cost proportionately in the declarations relating to assessment years filed under the Kar Vivad Samadhan Scheme and that itself would furnish a legitimate basis for reassessment. We find it difficult to accept this contention. The decision to initiate reassessment proceedings is not based on that ground. Nothing is mentioned about the declarations filed under the Kar Vivad Samadhan Scheme in the reasons recorded by the Assistant Commissioner. It is well settled that the court cannot go beyond the recorded reasons, nor can it take into account any supplementary reasons which did not enter into the mind of the assessing authority at the time of issuing the reassessment notice.
For the above reasons, we are constrained to quash the impugned notice issued under Section 148 of the Act and allow the writ petition. No costs.”
7.4 From the above discussion, it would be clear that in the instant case, the assessee was maintaining proper books of accounts. The A.O. has not rejected the book results. He has also not stated that the assessee’s books of accounts are not reliable. Therefore, there was no justification for referring the matter to the Valuation Cell.
7.5 In view of the various decisions, referred to above, we are of the firm view that in the instant case, the A.O. was not justified in initiating the proceedings under Section 147 read with Section 148 on the sole basis of report of the D.V.O. In other words, the D.V.O.’s report cannot made the basis for re-opening of the assessment, particularly, when there was no other material or evidence with the A.O. The valuation report is only an opinion of valuer and the A.O. was not justified in making the same as basis for re-opening.
7.6 In view of the above, we set-aside the impugned order and allow the ground Nos. 1 to 4 and 7 raised by the assessee. The addition of Rs. 1,00,464/- made by the A.O. and confirmed by the CIT(A) on account of alleged unexplained investment is hereby deleted.
8. As regards ground Nos. 5 and 6, we hold that these grounds have become infructuous and accordingly we dismiss the same as having become infructuous.
9. Now we will take up I.T.A. Nos. 516 & 517 (ASR)/2000. In these appeals, the assessee has taken identical grounds as those in I.T.A. No. 515(ASR)/2000, relating to the assessment year 1989-90. The only difference is regarding the addition made on account of alleged unexplained investment in the building. For the assessment year 1991-92, the addition made by the A.O. and confirmed by the CIT(A) is at Rs. 4,21,514/- while for the assessment year 1993-94, the addition of Rs. 30,955/- was upheld by the CIT(A). It is relevant to note that for the assessment year 1989-90, the impugned addition was at Rs. 1,00,464/-. While deciding the appeals of the assessee by the CIT(A) for the assessment years 1991-92 and 1993-94, he has followed his order for the assessment year 1989-90. Admitted position is that the facts and the circumstances of these cases are similar to the facts of the case relating to the assessment year 1989-90. Even the rival connection of the parties are similar. While deciding the I.T.A. No. 515(ASR)/2000 (supra), we have deleted the addition of Rs. 1,00,464/- made by the A.O. and confirmed by the CIT(A) for the reasons stated hereinabove. In view of the findings given in I.T.A. No. 515(ASR)/2000, we also delete the additions of Rs. 4,21,514/- for the assessment year 1991-92 and Rs. 30,955/- for the assessment year 1993-94 made by the A.O. and confirmed by the CIT(A) on account of alleged unexplained investment.
10. Ground Nos. 5 and 6 common to both the appeals are dismissed in view of our findings given in para 8 (supra) in I.T.A. No. 515(ASR)/2000 in respect of grounds Nos. 5 and 6.
11. In the result, all the appeals are allowed partly.