COMMISSIONER OF INCOME TAX Vs. VINDABAN CHITRA MANDIR

JUDGEMENT

(1.) These two applications under Section 256(2) of the Income-tax Act, 1961 (for short, "the Act"), have been filed at the instance of the Commissioner of Income-tax, Allahabad, against a common order of the Income-tax Appellate Tribunal. Income-tax Application No. 269 of 1991 is in respect of the assessment year 1977-78 in which the following question has been proposed : "Whether, on the basis of the material on record, the Income-tax Appellate Tribunal was correct in law in holding that there was no evidence to support the cost of construction taken at Rs. 3,80,000 in the assessment year 1977-78 and Rs. 5,70,000 in the assessment year 1978-79 by the Assessing Officer and thereby deleting the addition made in the assessment year 1977-78 ?"

(2.) In the other Application No. 270 of 1991, which is in respect of the assessment year 1978-79, the question proposed is : "Whether on the basis of the material on the record, the Tribunal was correct in law in holding that there was change in the opinion in initiating proceedings under Section 147 for the assessment year 1978-79, when on the basis of the same material, the validity of proceedings under Section 147 for the assessment year 1977-78 has been upheld by the Income-tax Appellate Tribunal."

(3.) The respondent (hereinafter referred to as "the assessee") is a partnership concern. It constructed a cinema hall known as Messrs. Vindraban Chitra Mandir, Civil Lines, Pratapgarh. The cost of construction as per the balance-sheet and account books of the assessee, was to the tune of Rs. 4,37,769 for which the assessee had maintained complete accounts in its account books supported by bills and vouchers, etc. The question about the cost of construction for the first time came to be considered in the assessment year 1979-80. During the course of the assessment proceedings for that year, the assessee filed a report of an approved valuer who had estimated the cost of construction to be Rs. 4,45,000. The Income-tax Officer got the cost of construction assessed by the Departmental valuer also who determined the same at Rs. 5,07,200. The valuation report submitted by the Departmental valuer was not approved by the Income-tax Officer. He accordingly added Rs. 7,233 as unexplained investment to the income of the assessee being the difference in the cost of construction estimated by the approved valuer and that disclosed by the assessee. The assessee appealed to the Appellate Assistant Commissioner who deleted the entire addition. The matter was allowed to rest there and the Department did not pursue it further.