1. This appeal filed by the Department is directed against the order of the CIT(A), dt. 16th Sept., 1998, pertaining for asst. yr. 1987-88.
2. The assessee filed return of income for asst. yrs. 1982-83 to 1987-88 along with capital account and balance sheet declaring investment in house construction at Rs. 1,65,501 from capital of HUF and Rs. 50,000 as loan from Smt. Sushila Bai for the asst. yr. 1987-88.
The assessment was completed under Section 143(1) of the IT Act, 1961 (hereinafter referred to as 'the Act' for short), on 26th Aug., 1987.
Thereafter, the ITO, Sumerpur, referred the matter of valuation of cost of construction to the valuation officer on 16th Aug., 1993.
Subsequently, on 13th March, 1995, a notice under Section 148 of the Act, dt. 1st Feb., 1995, was issued to the assessee for reopening of the assessment.
3. The assessment was reopened and assessment order passed under Section 147/148 of the Act by making an addition of Rs. 1,86,040 on 31st Jan., 1997. The assessee challenged the validity of reopening and the consequent additions before the CIT(A). The CIT(A) held that reopening of the assessment is not justified in the given facts of this case, is bad in law and thus, quashed the assessment order in question.
Now, the Department is in appeal before the Bench.
4. I have heard the rival submissions and have perused the evidence on record.
5. It is true that the assessment order had already been passed under Section 143(1) of the Act on 25th Aug., 1987. The reopening of the assessment was done by issue of notice under Section 148 of the Act for two reasons : Reason No. 1 : Details of construction not given and the difference of investment as declared by the assessee and as valued by DVO. Reason No. 2 pertains to loan of Rs. 50,000 taken from Smt. Sushila Bai was not genuine.
6. Valuation report cannot be a basis for issue of notice under Section 148 of the Act. This report was referred to the valuation officer and report obtained after the passing of the assessment. My above view is in conformity with the decision of the Hon'ble Rajasthan High Court in the case of Sardar Kehar Singh v. CIT (1992) 195 ITR 769 (Raj). So far as the other reason is concerned, this loan was accepted as genuine by the AO himself. So, this reason does not survive. So in my opinion, there was no valid reason for the reopening to form a reasonable belief to issue notice under Section 148 of the Act.
7. In the result, I uphold the findings of the CIT(A) and I dismiss the appeal.