- (1.) WE have heard Shri P.K. Jain, Senior Advocate assisted by Shri Amitabh Agarwal for the assessee-appellant. Shri Dhananjai Awasthi appears for the respondents.
(2.) THESE Income Tax Appeals under Section 260-A of the Income Tax Act, 1961 (for short, the Act) arise out of a common judgment of the Income Tax Appellate Tribunal, Delhi Bench 'C', Delhi dated 2.7.2010 in ITA Nos. 3616 & 3617 (Del)/2004, and ITA Nos.3557 & 3556 (Del)/2004, relating to Assessment Years 1998-99 & 1999-2000. In addition to the substantial questions of law framed in the appeals by the assessee-appellant, of which we find question no. 1 to be relevant for the purposes of the case, we have re-framed the questions of law on the request of learned counsel of assessee- appellant as follows:- "1. Whether, the Income Tax Appellate Tribunal has failed to appreciate that the impugned assessment was framed without, neither satisfying the preconditions required for invoking the provisions contained in Section 147 of the Income Tax Act, 1961, nor complying with the statutory provisions contained in Section 148 of the Income Tax Act, 1961 and as such the instant assessment framed was wholly untenable and unsustainable in law? 2. Whether the opinion given by DVO perse is not an information for the purposes of re-opening an assessment for the purposes of Income Tax Act and the assessment can only be re- opened when the Assessing Officer has applied its mind to the information, if any, collected and must form a belief thereon? 3. Whether the Assessing Officer can refer the matter to DVO without the Books of Accounts being rejected and the opinion of DVO perse can be said to be an information for the purpose of re- opening of assessment under Section 147? Brief facts giving rise to these two appeals are as follows. Assessment Year 1998-99
(3.) FOR the assessment year 1998-99 the assessee filed the return on 31.3.1999 declaring 'nil' income. The assessment under Section 143 (3) of the Act was completed on 26.3.2001 at nil income, with Assessment Officer (A.O) mentioning that the assessee filed required details, information and documents and the books of account were examined. The factory building of the assessee at this stage was under construction and no business was carried out in the year. The assessment was reopened with the reasons recorded on 10.1.2002, as follows:- "During the course of assessment proceedings u/s 143 (3) for the year under consideration it was noticed that the assessee company has declared the investment on land and site development, building and civil work at Rs. 1,00,12,252/- for total quantity of earth work estimated at 6,75,000 cubic meter. This development of earth work was stated to be done through 1397 tractors. The AO considered this investment very low, hence he referred the matter to the valuation officer, New Delhi on 10.11.2000 for correct valuation of the investment made by the assessee company. The assessment was completed u/s 143 (3) on 26.03.2001 being time barring case with the finding that "after receiving the valuation report it will be examined thoroughly and in necessary, further action will be initiated." Now the valuation report has been received and the Valuation Officer vide his report No. DVO/ND/IT-48/2000- 2001/202 dated 17.12.2001 has observed/commented as under:- (i) The assessee has failed to supply the initial and final levels of the land where such enormous earth work of 6.75 lacs cubic meter has been done. The registered valuer's estimates submitted by the assessee of M/s Rajiv Jain and Associates have simply considered the average heights of earth work involved without any actual measurements at site, which can be done only from topographical charts of initial and final levels. In the absence of such details having been furnished by the assessee, the authenticity of such work is doubtful and cannot be verified at this end. (ii) The contention of the assessee that no registration of tractor numbers is required by farmers in U.P. is wrong since it has been ascertained from U.P. transport authorities that registration numbers of tractors is must in U.P. In absence of tractor number having been supplied by the assessee, authenticity of development of 1397 tractors is also doubtful. (iii) Further, no log books showing the details of deployment of tractors on day-to-day basis have been maintained by the assessee thereby raising a further doubt about such huge amount of earth work. (iv) Though the quotation for earth work received by the assessee (as mentioned in letter dated 28.02.2001) was Rs. 39.50 per cubic meter, payment has been made by the assessee to tractor owners on hourly basis for reasons best known to the assessee. (v) Since the earth work involved in the development of site was enormous, it is not possible that the assessee had invited single quotation for Rs. 39.50 per cubic meter. In the light of above comments, investments declared by the assessee on the development work are doubtful and are not acceptable to measurement. 2. As per terms and conditions of the IDBI, the company shall pay to IDBI up-front fee @ 1.05% of the amount sanctioned before or on execution of loan agreement. The company was sanctioned total loan of Rs. 8.5 crore by the IDBI on which total up-front fee has to be paid @ 1.05% which comes at Rs. 8,92,500/- but the assessee company has paid this fee at Rs. 12,50,000/-. Thus, the company has paid excess up-front fee by Rs. 3,75,500/-, which should be added in the income of the assessee company. 3. The share application money as on 31.03.1997 was at Rs. 16,66,000/- and as on 31.03.1998 was at Rs. 2,57,19,000/-. There is increase in the share application money by Rs. 1,10,59,000/- during the financial year 1997-98, but according to the copy of account filed for the share application money the increase comes to Rs. 1,11,49,000/-. Thus, there is a difference in increase in the share application money by Rs. 90,000/- 4. The details filed for share application money, the closing balance as on 31.03.1998 has been shown at Rs. 31,00,000/- which was the opening balance as on 01.04.1998. It is not explained how the closing balance as on 31.03.1998 has been shown at Rs. 2,57,19,000/- in the balance-sheet ending on 31.03.1998, which in the details/copy of account of share application money filed for A.Y 1998-99, the opening balance was shown at Rs. 31,00,000/-. There is a great difference in the closing balance of share application money as per balance sheet and as per copy of accounts/details filed which remained unexplained. 5. Therefore, I have reason to believe that assessee's income escaped from assessment. Action u/s 147 of the I.T. Act is taken. Issue notice u/s 148 of the I.T. Act, 1961." ;