Hon'ble Dr. Satish Chandra,J.
Vakalatnama filed by Shri Krishna Dev Vyas on behalf of respondent, is taken on record.
Both the appeals have been filed by the Department under Section 260A of the Income Tax Act, 1961 against the consolidate judgement and order dated 22.12.2003 passed by Income Tax Appellate Tribunal, Lucknow in I.T.A. No. 1149 and 1150/Alld/1997.
On 06.09.2007 a coordinate Bench has admitted the appeal on the following substantial questions of law :
(i) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is correct in law in holding that in absence of seized material in possession of the Department, no addition can be made in block assessment on the basis of the report of the District Valuation Officer?
(ii) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is correct in law in holding that in view of the judgement of the Hon'ble Supreme Court in the case of Smt. Amiya Bala Paul Vs. CIT 262 ITR 407, no reference could be made to the District Valuation Officer?
(iii) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is correct in not appreciating the fact that report of the District Valuation Officer can be utilized by the Assessing Officer as evidence being opinion of a technical expert?
The brief facts of the case are that on 02.07.1996, a search and seizure operation was conducted at the assessees' business and residential premises. During the course of search, it was found that the assessees have made the substantial investments in the construction of residential house. The Assessing Officer (A.O.) has referred the matter to the Departmental Valuation Officer (DVO) for estimating the cost of the house. The DVO vide its report dated 31.3.1997 has estimated the cost. On the basis of the report, for the difference, the A.O. has made the addition of Rs. 6,04,012/- in the hands of both the assessees. A sum of Rs. 2,20,033/- was added in the hands of Dr. V.S. Rajput and remaining amount in the hands of the Dr. (Smt.) Meera Singh. The CIT(A) has sustained the addition. However, the Tribunal has deleted the additions. Being aggrieved, the Department has filed the present appeals.
With this background, we have heard Shri Shambhu Chopra, learned counsel for the Department and Shri S.D. Singh, learned Senior Counsel alongwith Sri Krishna Dev Vyas, learned counsel for the assessees. We also perused the record from which it appears that no material was found during the course of search pertaining to the additions in question.
It may be mentioned that Hon'ble Allahabad High Court, in the case of CIT Vs. N.K. Laminates Pvt. Ltd. has observed that when no evidence was found relating to investment in the plant and machinery and in the factory building at the time of search, then no addition can be made. In the instant case, it was only after the search that the matter was referred to the valuation cell for the estimated investment made by the assessees in the house property.
In view of the above, we are opined that there was no investment, which was not disclosed or explained by the assessees. The valuation report has been obtained by the A.O. after the search, therefore, it did not fall within the purview of evidence found as a result of search and could not be the basis for the determination of undisclosed income. Moreover, additions are based on estimation which is essentially a finding of facts as per the ratio laid down in the following cases :-
(i) Vijay K. Talwar Vs. CIT (2011) 1SCC 673;
(ii) New Plaza Restaurant Vs. ITO, 309 ITR 259 HP, and
(iii) Sanjay Oil Cake Vs. CIT, 316 ITR 274 Guj Hence, we find no reason to interfere with the impugned order passed by the Tribunal. The same is hereby sustained alongwith the reasons mentioned therein.
We, accordingly answer the substantial questions of law in favour of the assessees and against the Department.
In the result, both the appeals filed by the Department is dismissed.
Order Date :- 6.8.2014 Anurag/-
(Dr. Satish Chandra, J.) (Tarun Agarwala, J.)