COMMISSIONER OF INCOME TAX Vs. PREM NATH NAGPAL

JUDGEMENT

(1.) By way of present appeal, the Revenue has challenged the impugned order dated 31st August, 2006 passed by the Income Tax Appellate Tribunal (hereinafter referred to as 'Tribunal'), Delhi Bench 'B' in ITA No.413/Del/2003 for the block period 1st April, 1989 to 17th December, 1999.

(2.) The facts in brief are that a search and seizure operation under Section 132 of the Income Tax Act, 1961 (hereinafter referred to as 'Act') was carried out at the residential premises of the Assessee on 17th December, 1999 during which, various documents were found and seized. Notice under Section 158BC was issued on 5th July, 2001 and in pursuance thereof Assessee filed his return for the block period declaring undisclosed income of Rs.1,64,667/-. It was noticed by the Assessing Officer that during the search, certain papers relating to property situated at 3, Club Road, Gadaipur, Mehrauli were found and as per return filed by the Assessee, he had acquired this property for a consideration of Rs.18.50 lacs during the financial year 1995-96 and Assessee had spent Rs.29,29,162/- on development of this property during financial years 1996-97 to 1999-2000. Further, this property had been let out by the Assessee to a multinational company for a monthly rent of Rs.75,000/- along with interest free advance of Rs.1.25 crores. The Assessing Officer opined that the Assessee has received sum of Rs.1.25 crores as security and thus the value as declared by the Assessee in return of income appeared to be grossly understated and he referred the matter for valuation of the property to DVO. As per valuation report the value of this property was determined at Rs.3,04,62,000/- and the Assessee was confronted with this valuation report to which he raised objections stating that the property was given on rent with effect from 1st February, 2001 and Rs.18 lacs was spent on repairs and improvement.

(3.) Based upon the valuation report, the Assessing Officer made an addition of Rs.1,87,33,000/- in respect of understatement of the cost of acquisition and another addition of Rs.51,44,838/- was made in respect of understatement of expenditure on its development etc.