- (1.)This set of appeals have been filed by the assessee. They have arisen from re-assessment proceedings for the assessment years 1998-99, 1999-2000, 2000-01, 2001-02 and 2002-03. The facts in all the appeals are similar, hence all the appeals are taken up for hearing and decided together.
(2.)The appeals have been filed raising following questions of law:-
"(i) Whether on a true and correct interpretation of provisions in section 253 of the Act the tribunal was legally correct in refusing the adjourned hearing and deciding the appeal exparte?

(ii) Whether initiation of proceedings under section 147, based primarily on DVO's report obtained under Section 131(1)(d) and notice under section 148 dated 29.3.2005 are valid in the eyes of law and the assessment order in pursuance thereof is sustainable?

(iii) Whether the ITAT was legally correct in dismissing in limini the assessee's cross objection relating to the validity of initiation of proceedings under section 147 and other related issues, on the ground that the said cross-objection did not contain any material and the same do not arise from the order of the first Appellate Authority?

(iv) Whether on a true and correct interpretation of the provisions of section 253 and on a correct reading of the grounds of cross objection as also the relevant order of the first Appellate Authority, the ITAT was legally correct in holding that the assessee's cross objection did not arise from the order of final Appellate Authority and in dismissing the assessee's cross objection, without adjudicating the same on merit?"

(3.)For brevity facts obtaining in appeal no. 499 of 2007 for AY 1998-99 are being noted, material facts being identical in all subsequent cases. The assessee is a medical practitioner who had filed his return of Income Tax for the assessment year 1998-99 disclosing the professional income of Rs. 62,000/- and Agricultural Income of Rs. 30,000/-. The return was processed under Section 143(1) of the Act. Subsequently the Assessing Officer appears to have recorded reason to believe on 24.3.2005 to the following effect:-
"24.3.2005 "During the course of assessment proceedings, it has been found that the assessee has constructed a Hospital building at Millatnagar, Arazibagh, Azamgarh in which a huge amount has been invested. The case was referred to the Valuation Officer, Allahabad for determination of proper cost of construction in the Hospital Building. The Valuation Officer vide his report bearing F.No.8/IT/VO/Alld/2004-05/273 dated 18.3.2005 has determined the cost of construction at Rs. 1,06,500/- against declared by the assessee before the Valuation Officer at Rs. 65,000/- for A.Y.1998-99. Thus, the difference of cost of construction comes to Rs. 41,500/- between the cost declared by the assessee and estimated by the Valuation Officer.

The assessee is a reputed medical practitioner which is estimated at Rs. 1,25,000/-.

In view of above, I have reason to believe that the assessee's income from medical practice as well as investment in the construction of the Hospital building to the extent of Rs.1,66,500/- (Rs. 1,25,000 plus 41,000) has escaped assessment for A.Y. 1998-99."