COMMISSIONER OF INCOME TAX, NO. 55/1, SHILPASHREE, VIDYARANYA COMPLEX, VISWESHWARAPURAM, MYSORE AND THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 2 (1), NO. 55/1, SHILPASHREE, VIDYARANYA COMPLEX, VISWESHWARAPURAM, MYSORE Vs. SRI M. NAGARAJA, M

JUDGEMENT

(1.) These appeals are filed by the revenue being aggrieved by the order dated 21.04.2006 passed by the Income Tax Appellate Tribunal, Bangalore Bench-B in ITA Nos.719 and 793/Bang/2005 confirming the order passed by the Commissioner of Income Tax (Appeals) (CIT (Appeals) for short) dated 21-02-2005.

(2.) These appeals are admitted on the following substantial questions of law:

(3.) The respondent-assessee is a Civil Contractor by profession. He filed return of income for the assessment years 1998-1999 and 1999-2000. A survey was conducted on 7-1-1999 and the Assessing Officer found that the assessee has constructed a commercial complex and it was completed in three years from 1998-1999 to 2000-2001. The assessee has admitted that the cost of construction of the commercial building is Rs.1,72,98,255/-. The Assessing Officer not found favored with the cost of construction given by the assessee referred the matter to the District Valuation Officer to estimate the cost of construction under Section 55-A of the Act. The District Valuation Officer assessed the cost of construction of the building at Rs.2,61,54,033/-. The Assessing Officer worked out the difference amount shown by the assessee and the estimation by the District Valuation Officer in a sum of Rs.88,55,825/-. This was spread over to three assessment years. For the assessment year 1998-1999 the difference was taken as Rs.30,20,722/- and for the assessment year 1999-2000 at Rs.29,07,287/- which was added to the income of the assessee for the assessment years under the appeals as unexplained income invested in the cost of construction. Being aggrieved by the assessment of income made by the Assessing Officer, the assessee preferred appeals before the CIT (Appeals), Mysore in ITA Nos.1200/Mys/CIT(A)/03-04 and 1752/Mys/CIT(A)/04-05. The CIT (Appeals), Mysore dismissed the appeals. Being aggrieved by the same, the assessee preferred appeals before the Income Tax Appellate Tribunal, Bangalore, mainly contending that in view of the law laid down by the Apex Court in a decision in the case of SMT.AMIYA BALA PAUL v/s COMMISSIONER OF INCOME TAX, 2003 262 ITR 407 that a Valuation Officer appointed under the Wealth Tax Act can discharge the function within the statutory limits under which he was appointed. It is not open to a Valuation Officer to Act in his capacity as a Valuation Officer under the Income Tax Act. Referring the matter to the District Valuation Officer by the Assessing Officer is contrary to law. The Appellate Tribunal after considering the matter and relying upon the judgment of the Hon'ble Supreme Court cited supra allowed the appeal and set aside the determination of market value of the building. Being aggrieved by the same, the revenue has preferred these two appeals.