COMMISSIONER OF INCOME TAX Vs. AJAY GUPTA

JUDGEMENT

(1.) A search and seizure operation was carried out at the premises of the assessee on 7th Oct., 1998. Thereafter notice under S. 158BC of the IT Act was issued to the assessee to file their returns. During the course of block assessment proceedings, the AO noticed that property No. 41A, Rajpur Road, Civil Lines, Delhi was purchased by the three assessees who were family members vide three separate sale deeds for a sum of Rs. 54,00,000 which was paid as under :

(2.) A reference was made by the AO to the Valuation Officer who gave his report dt. 20th Oct., 2000 determining the fair market value of the property as on 31st Dec., 1997 at Rs. 2,76,31,300. On the basis of this valuation report, the AO while completing the assessment for the asst. yr. 1998-99 in the case of Shri Ajay Gupta adopted the aforesaid value and apportioned his share and his son's share of investment in the purchase of property at Rs. 1,89,32,557 as against the disclosed income of Rs. 37 lacs. The difference of Rs. 1,52,32,557 was accordingly added to the income of the assessee being unexplained investment in this property. The assessee preferred appeal thereagainst. The Tribunal ultimately allowed this appeal and set aside the assessment order inter alia holding that the unexplained investment, if any, related to the asst. yr. 1999-2000. The Tribunal also questioned the land and building method adopted by the DVO on the basis of which the valuation of the property was arrived at holding that since the property was tenanted, the appropriate method was rent capitalization method. Insofar as taking the asst. yr. 1999-2000 for the purpose of making the purported addition is concerned, the reason given by the Tribunal was that the agreements for sale of the properties were executed on 20th Aug., 1998 relevant to asst. yr. 1999-2000 and on the execution of these agreements not only the entire sale consideration was paid by the assessees to the sellers, even the constructive possession of the property was handed over to the assessees/purchasers since actual possession was with the tenants. It seems that the aforesaid orders of the Tribunal were accepted by the Revenue as nowhere it is indicated that there was challenge laid to the said order.

(3.) IN spite of the aforesaid categorical order of the Tribunal, holding that relevant asst. yr. was 1999- 2000, the AO issued notice under S. 148 of the Act reopening the assessment in respect of asst. yr. 2000- 01 and made the additions under S. 69B of the Act in the case of all the three assessees. Curiously, the assessments were reopened on the basis of same report of the DVO which had adopted the land and building method. The Tribunal has set aside the reassessment pertaining to these years. Referring to the earlier order of the Tribunal, the order of the CIT(A) has been affirmed by the Tribunal in the following manner :