Judgment:
1. This appeal by the Revenue is directed against the order passed by the CIT(A) on 30th March, 2004 in relation to asst. yr. 1997-98.
2. The relevant facts are that the assessee which runs a hospital, filed its original return of income on 28th Oct., 1997 declaring total income of Rs. 93,140. Subsequently, proceedings under Section 147/148 were initiated and the assessment was completed on a total income of Rs. 9,22,970. The AO made an addition of Rs. 8,29,729 under Section 69 of the Act, as unexplained investment.
3. In the asst. yr. 1998-99, return was filed on 23rd Oct., 1998. From the return so filed it was found that the assessee had commenced the construction of new hospital building during the financial year 1995-96 and completed during the period relevant to asst. yr. 1998-99.
Accordingly the case was selected for scrutiny and during the pendency of the assessment proceedings, the matter was referred to the Valuation Officer under Section 131(d) of the Act. The Valuation Officer determined the cost of construction of hospital building at Rs. 37,99,695 as against Rs. 24,82,041 declared by the assessee. The Valuation Officer made the year-wise bifurcation of the cost of construction with reference to the year-wise expenditure declared by the assessee. The assessee was show-caused with the contents of the valuation report, for comments and objection. According to the AO, the assessee failed to produce complete vouchers for the expense of Rs. 9,39,800. The AO invoked provisions of Section 145 and made an addition of Rs. 1,35,000, for the difference of cost of construction as per Valuation Officer's report as was quantified for asst. yr. 1998-99 by holding the investment deemed to be the income of the assessee. The AO initiated proceedings under Section 147/148 for asst. yrs. 1996-97 and 1997-98, after recording the reasons for each year separately. The assessee has challenged the initiation of reassessment proceedings only on the basis of the Valuation Officer's report. The assessee also contended that the DVO determined the value of the property based on CPWD rates instead of local PWD rates and therefore, the same resulted in the alleged difference in the cost. But the AO made the impugned addition after rejecting the contention of the assessee.
4. On first appeal, the learned CIT(A) justified the reopening but deleted the impugned addition by observing that the DVO has valued the property on the basis of CPWD rates; and the learned CIT(A) also approved the value determined by registered valuer, who had valued the cost as per the local PWD rates. Now the Department is aggrieved and has filed this appeal.
5. We have heard the rival submissions and perused the evidence available on record.
6. Although the assessee is not in appeal before us yet under Rule 27 of the ITAT Rules, the assessee has every right to defend the appellate order. The learned CIT(A) has deleted this addition on the premise that the DVO has valued the property in question by applying the rates of CPWD instead of local PWD rates. By now it is a settled position of law, in view of Hon'ble Rajasthan High Court's decision in the case of CIT v. Hotel Joshi (1999) 157 CTR (Raj) 369 and other High Courts that for valuation purpose rates of local PWD has to be adopted and not that of CPWD. Therefore, in view of the above, there is no infirmity in the findings of the learned CIT(A) on this ground.
7. The Rule 27 of the ITAT says that the assessee though has not appealed may support the order appealed against on any grounds decided against him.
8. The learned Authorised Representative, Shri U.C. Jain has submitted that the reopening under Section 147 of already completed assessment was valid although it is settled position of law that on the information of the DVO which does not constitute an information as required under Section 147/148 of the Act, the assessment cannot be reopened. The learned Authorised Representative has relied on various decisions of this Bench and various decisions of the Hon'ble Rajasthan High Court as well as Hon'ble Supreme Court. He has placed a copy of decision in the case of ITO v. Babu Lal Arvind Kumar (HUF) in ITA No.142/Jd/2001 for asst. yr. 1994-95, wherein after relying on various decisions, which are reproduced hereinbelow, the Tribunal gave the finding that has come to the conclusion that on the basis of DVO's report reassessment cannot be done because this report does not constitute a requisite information as envisaged in Section 147 of the Act.
9. Therefore, on both the counts the appeal of the Department stands dismissed.