Sanjay Rai, CIT, DR for the Petitioner. Anil Kochar, FCA for the Respondent.

ASSISTANT COMMISSIONER OF INCOME TAX AND ANR. VS M/S. NARULA EDUCATIONAL TRUST-(ITAT)

All these cross appeals preferred by the Revenue and assessee are against the separate orders of Ld. CIT(A), Kolkata-20 dated 15.11.2019 for Assessment years 2008-09 to 2013-14 respectively. Both the parties agree that in all the appeals facts are same except variance in amount of the additions and that the basis of the addition made by the AO and which has been deleted by the Ld. CIT(A) are the same. Since the facts are same in all the appeals, we are inclined to dispose of all the aforesaid appeals by this consolidated order.

For the sake of convenience, the facts relating to AY 2008-09 are taken as lead case and the result will be followed in all the other appeals.

2. The revenue has challenged the merits of the addition deleted by the Ld. CIT(A) whereas the assessee has challenged the legal issue as to whether any addition can be made u/s. 153A of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) without any incriminating material unearthed during search qua the assessee in the assessment years which were not pending before the AO on the date of search u/s. 132 of the Act on 13.03.2014 viz., (AYs 2008-09 to 2012-13).

3. Coming to the revenue appeal, the first ground of appeal of the revenue reads as under:

“1. Whether Ld. CIT(A) is justified in deleting addition of Rs.3,50,39,665/-, when AO had made the addition as unexplained investment u/s. 69 of the I. T. Act, on basis of valuation report of the District Valuation Officer (DVO).”

4. Brief facts of the case as noted by the AO are that the assessee (educational Trust) had filed original return of income for AY 2008-09 on 30.09.2008 disclosing total income of Rs. Nil. The AO notes that a search and seizure operation u/s. 132(1) of the Act was conducted at office/residence of assessee trust along with other assessee’s of JIS Group on 13.03.2014 and on subsequent dates. Thereafter, AO notes that pursuant to notice issued by him on 20.10.2014 u/s. 153A(1) of the Act and the assessee trust filed return of income on 19.02.2015 disclosing total income at Rs. Nil. The AO acknowledges in the assessment order that the Ld. AR of the assessee had appeared before him and had furnished the relevant documents and accounts. Thereafter the AO observes that in the course of post- search operation the DDIT (Inv.), Kolkata had made a reference to the DVO in respect of valuation of immovable properties held under the assessee trust and in pursuance to that reference, the DVO furnished valuation report vide letter dated 18.12.2014 (hereinafter referred to as the initial DVO report) and on perusal of the same, the AO noted that the DVO had valued the following buildings as narrated and valued as below:

Sl.No. Name of the Trust College under Trust with

address

Declared value

Assessed value

1. Narula Educational Trust 81, Nilgunj Road, Panihati,

Kolkata-700 114

10,88,04,964/- 27,35,88,300/-

2. Do Guru Nanak Institute of Dental Science & Research, 157/F, Nilgunj Road, Panihati, Kolkata-700 114.

2,99,16,148 27,40,14,808/-

Total 13,87,21,112/- 54,76,03,108/-

5. The AO notes that during the course of assessment proceedings, he show caused the assessee trust vide letter dated 05.01.2016 as to why the difference of value as determined by the DVO should not be added back to the total income. Pursuant to the show cause, the AO notes that the assessee objected to the method of valuation adopted by the DVO vide letter dated 13.01.2016 and requested for re-valuation of properties. Taking into consideration the objection of the assessee, the AO notes that he requested the DVO to reconsider the valuation vide letter dated 22.01.2016 and reminded him to furnish the report at an early date since the assessment was getting time barred. But according to AO, since report from the DVO was not forthcoming, keeping in mind the interest of the revenue and taking into consideration the year-wise difference in valuation of property as determined by the DVO vide valuation report dated 18.12.2014, added back to the total income of the assessee the following amount for the respective assessment years as under:

Asst. Year Amount

2008-09 Rs. 3,50,39,665/-

2009-10 Rs. 14,34,16,954/-

2010-11 Rs. 5,05,88,806/-

2011-12 Rs. 4,13,91,409/-

2012-13 Rs. 4,91,11,619/-

2013-14 Rs. 8,93,33,543/-

“For that the Valuation Officer to whom the reference was made by the AO for determination of cost of construction u/s. 142A of the Act, having not sent a copy of the report of the estimate made under sub-section (4) if sub-section (5), as the case may be within a period of six months as provided u/s. 142A(6) the reference so made becomes infructuous.”

7. The aforesaid additional ground which was legal in nature was admitted by the Ld. CIT(A) and after having called upon from the AO a remand report on this issue, the Ld. CIT(A) took up on himself the exercise to call for the DVO report in which he failed, (i.e. DVO did not furnish the report) the Ld. CIT(A) has allowed the additional ground ofappeal and held as under:

“12. In view of the above discussion, I agree with the contention of the assessee that the DVO had statutory duty to submit a valuation report within six months from the end of the month when reference was first made by the AO as mandated by the section 142A(6) and non- submission of the report by the Valuation Officer within statutory period makes earlier report of the DVO non-est and therefore the AO could not have relied on the earlier report (on reference by ADIT) to make addition in the case of the assessee. Therefore, the additional ground(s) raised by the assessee is allowed.”

8. Thus, it has been brought to our notice that the Ld. CIT(A) having allowed this additional ground of appeal of the assessee have held that non-submission / furnishing of the report by the Valuation Officer within statutory period (six months from the end of the months reference is made by the AO for it) makes the initial report of the DVO [called for by the DDIT(Inv)] non-est and, therefore, the Ld. CIT(A) held that the AO could not have relied on the initial DVO report [ pursuant to the reference made by DDIT(Inv)] to make the addition in the case of the assessee. So, according to Ld. AR, since the basis for addition was based only on the valuation report of the DVO pursuant to the reference made by DDIT(Inv) which having been held to be non-est by the Ld. CIT(A), and in the assessment order the AO has not mentioned anything about any incriminating materials un-earthed during search, the additions made thereby in all the assessment years from AY 2008-09 to 2013-14 consequently got deleted. And this action of Ld.CIT(A) has been challenged by Revenue in their respective appeals. Further it was brought to our notice that the Ld. CIT(A) did not allow assessee’s legal issue raised i.e. whether all the assessment in respect of assessment years i.e. AY 2008-09 to AY 2012-13 ( other than AY 2013-14) being not pending before the AO on the date of search i.e. 13.03.2014 being un- abated assessments, the AO while framing the re-assessment u/s. 153A of the Act could not have made any addition without the aid of any incriminating material unearthed during search qua the assessee qua the respective unabated assessment years. According to Ld. A.R since Ld. CIT(A) has not accepted/allowed the legal issue raised by it, therefore, the assessee trust has preferred these cross appeals challenging this impugned action of the Ld. CIT(A).

9. We have heard rival submissions and gone through the facts and circumstances of,the case. We note that the Ld. CIT(A) by allowing the additional ground of appeal (supra) has held that the initial DVO report [pursuant to the reference made by DDIT/ADIT(Inv)] on the basis of which the AO has made the impugned additions in all the assessment years were non-est, resulting in deletion of all the impugned additions made by the AO, which has been challenged by the department by raising the following grounds of appeal which are as follows:

2. Whether Ld. CIT (A) is justified in accepting assessee's contention that before introduction of section 132(9D) of the Act., the DDIT (Inv.) had no authority to refer the matter relating to valuation of immovable properties, before DVO?

3. Whether Ld. CIT (A) is justified in accepting assessee's Additional Ground of Appeal that as per section 142A(6) of the I.T. Act, valuation report is to be completed within 6 months when the reference was not made for first time, and same was only for reconsideration of earlier report of DVO?

4. Whether Ld. CIT (A) is justified in accepting assessee's Additional Ground of Appeal that non submission of report within statutory period as per section 142A(6) of the LT. Act, make earlier report non-est.?

5. Whether Ld.CIT(A) is justified that if the DVO does not furnish its revised report, within 6 months, then whether after reconsideration of his earlier valuation report entire assessment of A.O could have been annulled.”

a) Narula Institute of Technology, 81, Nilgunj Road, Panihati, Kolkata-700114.

b) Gurunanak Institutue of Dental Science & Research 157/F, Nilgunj Road, Panihati,Kolkata-700 114.

However the AO acknowledges that pursuant to his reference dated 22.01.2016, the DVO did not furnish the Valuation Report till the date on which the re-assessment order u/s. 153A/143(3) of the Act has been passed on 30.03.2016. The AO taking into consideration the interest of revenue, and the fact that the assessment was getting time barred, passed the assessment order on 30.03.2016 by making addition based on the difference in valuation of properties as submitted by DVO dated 18.12.2014 (initial DVO report) made on the reference by DDIT(Inv).

12. We find from perusal of the assessment order relating to all the assessment years (AY 2008-09 – AY 2013-14) that the only basis on which the AO has made the addition was based on the difference of the valuation of immovable properties made by the assessee and the initial DVO report which was made on a reference by the DDIV (Inv.) and the additions were made as discussed at page 3, para 5 (supra):

Asst. Year Amount

2008-09 Rs. 3,50,39,665/-

2009-10 Rs. 14,34,16,954/-

2010-11 Rs. 5,05,88,806/-

2011-12 Rs. 4,13,91,409/-

2012-13 Rs. 4,91,11,619/-

2013-14 Rs. 8,93,33,543/-

This action of Ld. CIT(A) has been challenged by the Revenue before us. For adjudicating this issue it would be gainful to reproduce the relevant provision i.e. section 142A of the Act (substituted by the Finance (No.2) Act, 2014, w.e.f. 01.10.2014). Reference to the DVO which reads as under:

Estimation of value of assets by Valuation Officer

“142A. (1) The Assessing Officer may, for the purposes of assessment or reassessment, make a reference to a Valuation Officer to estimate the value, including fair market value, of any asset, property or investment and submit a copy of report to him.

(2) The Assessing Officer may make a reference to the Valuation Officer under sub-section (1) whether or not he is satisfied about the correctness or completeness of the accounts of the assessee.

(3) The Valuation Officer, on a reference made under sub-section (1), shall, for the purpose of estimating the value of the asset, property or investment, have all the powers that he has under section 38A of the Wealth-tax Act, 1957 (27 of 1957).

(4) The Valuation Officer shall, estimate the value of the asset, property or investment after taking into account such evidence as the assessee may produce and any other evidence in his possession gathered, after giving an opportunity of being heard to the assessee.

(5) The Valuation Officer may estimate the value of the asset, property or investment to the best of his judgment, if the assessee does not co-operate or comply with his directions.

(7) The Assessing Officer may, on receipt of the report from the Valuation Officer, and after giving the assessee an opportunity of being heard, take into account such report in making the assessment or reassessment.

Explanation.—In this section, "Valuation Officer" has the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957).”

“142A. Estimate by Valuation Officer in certain cases.-(I) For the purposes of making an assessment or reassessment under this Act, where an estimate of the value of any investment referred to in section 69 or section 69B or the value of any bullion,jewellery or other valuable article referred to in section 69A or section 69B or fair market value of any property referred to in sub-section (2) of section 56 is required to be made, the Assessing Officer may require the Valuation Officer to make an estimate of such value and report the same to him.

(2) The Valuation Officer to whom a reference is made under sub-section (1) shall,for the purpose of dealing with such reference, have all the power that he has under section 38A of the Wealth Tax Act, 1957 (27 of 1957) .

(3) On receipt of the report from the Valuation Officer, the Assessing Officer may,after giving the assessee an opportunity of being heard, take into account such report in making such assessment or reassessment:

Provided that nothing contained in this section shall apply in respect of an assessment made on or before the 30th day of September, 2004, and where such assessment has become final and conclusive on or before that date, except in cases where a reassessment is required to be made in accordance with the provisions of section 153A. Explanation. - In this section, "Valuation Officer" has the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957)."

“The assessee built a house in a suburb of Kolkata between the years 1981 to 1983. She filed a return in respect of the assessment year 1982 –1983 in which she disclosed that she had invested an amount of Rs.1,75,000 in the construction of the house. The return was accepted by the Income Tax Officer (now known as the Assessing Officer). In respect of the subsequent assessment year, namely 1983-84, the assessee disclosed that she had invested a further amount of Rs 1,70,000 in the construction of the house.

This was not accepted by the Assessing Officer, who referred the question of the construction cost of the house to the Valuation Officer under Section 55(A) of the Income Tax Act, 1961 (hereinafter referred to as the Act). The Valuation Officer submitted a report to the Assessing Officer. On the basis of the report, the Assessing Officer re-opened the assessment in respect of the assessment year 1982-83. The Income Tax Officer then made an addition of Rs 2,79,000 in respect of the assessment year 1982 - 83 and Rs 1,77,000 in respect of the assessment year 1983- 84 as undisclosed investment in the construction of the house. The assessee's appeals from the assessment orders were turned down by the Commissioner of Income Tax (Appeals) Guahati.

The Income Tax Appellate Tribunal, however, following an earlier decision, allowed the assessee's appeal and held that the Assessing Officer could not have referred the question of the cost of construction of the assessee's house to the Valuation Officer. In this background the following question was referred to the High Court under Section 256 (2) of the Act.

"Whether on the facts and in the circumstances of the case, the Tribunal erred in law by holding that the Assessing Officer cannot refer the matter to the Valuation Cell(sic) for estimating the cost of construction of the house property".

The Division Bench of the High Court held that although the Assessing Officer could not have referred the question of the cost of construction of the assessee's house to the Valuation Officer under Section 55 A of the Act, he had ample power under Sections 131 (1), 133 (6) and 142 (2) of the Act to ask for a Valuation Report from the Valuation Officer. It was held that each of these sections were "enabling machinery provisions which invested ample powers in the Assessing Authority", and that any wrong mention of the provision on the requisition memo would not be material. Accordingly the question referred was answered in the affirmative and against the assessee.

In the appeal before us, it was contended on behalf of the assessee that a reference to a Valuation Officer could only be made strictly in terms of section 55 A of the Act and that if the circumstances justifying the reference under that Section were not prevailing, the Assessing Officer did not have the jurisdiction to otherwise refer the matter to the Valuation Officer. It was further pointed out that Section 55 A of the Act only allows for reference to the Valuation Officer for the purposes of computing the market value of property in connection with the computation of capital gains. It was also submitted that reference to the Valuation Officer had been specifically provided for under Section 55A and that this implied that a reference to the Valuation Officer could not be made under any of the other provisions which generally empowered the Assessing Officer to ascertain the income of the assessee.

The submission of the appellant was that if the power to refer the determination of the cost of construction to the Valuation Officer was otherwise available to the Assessing Officer under the other provisions of the Act, it was not necessary to specifically empower the Assessing Officer under Section 55A. Finally, it is submitted that the Valuation Officer is appointed under the Wealth Tax Act and that he could exercise the power only in the manner prescribed by that Act or by any other statutory provision like Section 55 A of the Act, and that he could not be called upon to discharge functions not statutorily prescribed, in his capacity as a Valuation Officer.”

“From this it is clear that whenever reference to a Valuation Officer appointed under the Wealth Tax Act is permissible under the Income Tax Act, it has been statutorily so provided.

Apart from the aforesaid, a Valuation Officer is appointed under the Wealth Tax Act and can discharge functions within the statutory limits under which he is appointed. It is not open to a Valuation Officer to act in his capacity as Valuation Officer otherwise than in discharge of his statutory functions. He cannot be called upon nor would he have the jurisdiction to give a report to the Assessing Officer under the Income Tax Act except when a reference is made under and in terms of Section 55 A or to a competent authority except under section 269L.

We are therefore of the view that the High Court incorrectly answered the question referred to it in the affirmative. The Tribunal had not erred in holding that the Assessing Officer cannot refer the matter to the Valuation Officer for estimating the cost of construction of the house property. The appeal is accordingly allowed and the decision of the High Court set aside. There will be no order as to costs.”[Emphasis given by us]

“Search and Seizure S.132.

(9D) The authorized officer may, during the course of the search or seizure or within a period of sixty days from the date on which the last of the authorizations for search was executed,make a reference to a Valuation Officer referred to in section 142A, who shall estimate the fair market value of the property in the manner provided under that section and submit a report of the estimate to the said officer within a period of sixty days from the date of receipt of such reference.”

19. Further, it is noted that in this case when the AO during assessment proceedings, confronted the assessee with the valuation report dated 18.12.2014 pursuant to the reference by the DDIT (Inv.) the assessee objected, inter alia, to the method of valuation adopted by the DVO and also brought to the AO’s notice the fact that DDIT (Inv.) did not had the power on 11.07.2014 to call for the valuation report from the DVO. In the light of the aforesaid objection raised by the assessee, the AO requested the DVO to reconsider the valuation vide letter dated 22.01.2016 which was never answered by the DVO, therefore, the AO completed the assessment based on the valuation report submitted dated 18.12.2014 (initial report) vide order dated 30.03.2016. From a plain reading of section 142A of the Act it can be noted that the AO enjoyed the power to make a reference to the Valuation Officer to estimate the value including the fair market value of any asset, property or investments and thereafter the Valuation Officer shall estimate the value of the assets, property or investments after giving opportunity to the assessee to be heard and in case the assessee does not cooperate then the DVO can estimate the value of the asset, property or investments on the basis of best of his judgment and submit report within a period of six months from the end of the month in which reference is made. It should be borne in mind that the reference made by the AO u/s. 142A(1) of the Act is a statutory reference and, therefore, the report sent by the Valuation Officer u/s. 142A(6) of the Act is also a statutory report and, therefore, time limit prescribed therein are statutorily limited by time and the report if not made within the statutory time i.e. six months from the end of the month from which the reference is made will be considered as an arbitrary/whimsical exercise of power by the Valuation Officer without any regard to the statutory limited time prescribed by the statute and it would vitiate the action of DVO. In this case, we found that on 13.03.2014 the search happened and the reference was made by the DDIT (Inv.) on 11.07.2014 and the DVO sent the valuation report on 18.12.2014 (initial DVO report) which we have already found that the DDIT/ADIT (Inv.) did not had the power/jurisdiction to make the reference to the Valuation Officer. Therefore, the action of Ld. CIT(A) allowing the appeal on merits cannot be said to be legally erroneous is in line with the ratio of the decision of the Hon’ble Supreme Court in Smt. Amiya Bala Paul (supra), since DDIT (Inv) did not had the power to refer to DVO valuation of construction of buildings. Even though the AO in the assessment order states that when the assessee objected to the DVO report dated 18.12.2014, he requested the DVO to re-value the properties, which action of AO can be termed as an action to correct the error of DDIT (Inv.) and so the AO by making a request for re-valuation on 22.01.2016 can be termed as a valid requisition/reference to the DVO and for reasons best known to the DVO, he did not file any report. Even at the appellate stage, the Ld. CIT(A) exercising his co-terminus power as that of the AO made an attempt to refer the valuation to the Valuation Officer (which he has discussed at page 26 of his order) through the AO from 29.01.2019 and thereafter, the Ld. CIT(A) had issued several reminders to the DVO vide letters dated 27.03.2019, 02.04.2019, 12.04.2019, 06.05.2019,24.05.2019 and 02.07.2019.

However, the AO reports that inspite of all these reminders, the DVO did not budge and filed any valuation report. In the aforesaid facts and circumstances the Ld. CIT(A) makes the finding that the failure of the DVO to submit valuation report within six months of making of valid reference, the DVO’s initial valuation report dated 18.12.2014 could not have been relied upon to make additions cannot be faulted since it is in line with the ratio of the decision of the Hon’ble Supreme Court in Smt. Amiya Bala Paul (supra). The non-submission of DVO report after reference by AO and Ld CIT(A) within the statutory period has not been challenged nor this factual finding could be controverted by the Revenue before us and, so it attains finality. In the result, we find that there is no valid valuation report submitted by DVO on reference by AO/Ld. CIT(A).

20. Moreover, the Ld. AR drew our attention to page 20 of Ld. CIT(A)’s impugned order wherein he [Ld CIT(A)] has reproduced his own letter dated 29.01.2019 which was written to the AO for obtaining the report of the DVO ; and the Ld AR pointed out that in this letter the Ld. CIT(A) has categorically observed “.... The first report of DVO was given without hearing the assessee......” So, according to Ld. AR, the initial DVO report dated 18.12.2014 submitted by DVO pursuant to DDIT (Inv.) reference dated 11.07.2014 is fragile for violation of Natural Justice. We find force in this submission of Ld. AR that DVO before preparation of his valuation report dated 18.12.2014 should have givenopportunity to assessee and failure to do so will vitiate the valuation report dated 18.12.2014 for violation of Natural Justice and could not have been acted upon by the AO being bad in law.

21. To sum up the facts, we note that the AO had made the entire addition in all assessment years based on the initial valuation report submitted by the Valuation Officer pursuant to the reference made by the DDIT (Inv.) dated 11.07.2014 when he [DDIT (Inv.)] did not had the power to make the reference to the DVO which power he acquired as noted above only on 01.04.2017 by Finance Act, 2017 u/s. 132(9D) of the Act. And it has also been noted that neither the DVO filed the valuation report pursuant to the AO’s reference dated 22.01.2016 nor the DVO filed the valuation report pursuant to the Ld. CIT(A)’s reference through the AO by letter dated 29.01.2019. Thus, we note that the addition has been made only on the basis of the initial valuation report dated 18.11.2014 which was pursuant to the DDIT(Inv.)’s reference which he [DDIT (Inv)] had no power to do call for; and that during assessment proceedings when the AO show caused the assessee with the valuation report as contemplated in sub-section (7) of section 142A of the Act, the assessee contested/challenged, inter alia, the method of valuation adopted by the Valuation Officer, which prompted the AO to call for the reference of the Valuation Officer since DDIT (Inv.) had no power to call for the valuation report. And we have noted thereafter the DVO did not submit any report called for by AO or Ld. CIT(A).

22. In the aforesaid facts and circumstances, we hold that the DDIT (Inv.) could not have referred the question of cost of construction/valuation of the assessee’s building to the Valuation Officer in the year 2014 ; and thereafter, since the DVO did not present the valuation report after AO has referred the valuation vide letter dated 22.01.2016 as well as the Ld. CIT(A) within six months from the end of the month of the reference, the Ld. CIT(A) rightly held that DVO was bound by law [sec. 142A(6)] to have submitted the valuation report within the statutory time limit, which view we endorse. We note that the assessee is an educational institution and its accounts are duly audited. We note that neither the search party nor the AO could point out any mistake in the correctness or completeness of the books of account presented by the assessee before the authorities. We also find that the search party pursuant to search u/s 132 of the Act did not even visited the educational institution which fact is evident from the perusal of panchnama which shows that the search team has only searched the administrative office situate at “Dwarika Building”, 7,Sarat Bose Road, Kolkata-700020 and not at the campus of educational institution situated at Nilgunj Road, Panihati, Kolkata-700 114, which is kilometers away from searched premises . So, from the perusal of panchnama and the assessment orders, we find that the reference made by DDIT (Inv.) for valuation of the properties on 01.04.2014 was without any incriminating materials which were un-earthed during search [oral or documentary which could have suggested that the assessee has shown less investment in its books for building construction] consequently DDIT(Inv) erred in making reference to DVO and when admittedly DDIT(Inv) did not enjoy the power to do so. In the aforesaid facts and circumstances the Ld. CIT(A) makes the finding that the failure of the DVO to submit valuation report within six months of making of valid reference, the DVO’s initial valuation report dated 18.12.2014 could not have been relied upon to make additions cannot be faulted is in line with the ratio of the decision of the Hon’ble Supreme Court in Smt. Amiya Bala Paul (supra). Further at para 20 (supra), we have taken note of the Ld CIT(A) observation in the letter dated 29.01.2019 wherein he has observed that DVO did not give opportunity to assessee before preparation/submission of DVO report dated 18.12.2014 (initial DVO report), so this DVO report is fragile for violation of natural justice and resultantly bad in law and could not have been the sole basis for addition Consequently, when we keep aside the initial valuation report of the DVO dated 18.12.2014 for the legal infirmities discussed (supra) and on the reasoning/ratio of the decision of the Hon’ble Supreme Court in Smt. Amiya Bala Paul (supra), we find there is no other evidence to support the addition, so the addition made by the AO in all the assessment years from AY 2008-09 to AY 2013-14 has to be deleted and Ld. CIT(A)’s action cannot be faulted and we confirm it on the reasons given supra and dismiss all the Revenue Appeals.

23. Now coming to the legal issue raised by the assessee, we proceed to answer the question. Whether in absence of any incriminating material found in the course of search at the premises of the assessee trust (administrative office only), the additions made in the assessments of the assessee trust which were unabated [since assessment of AY 2008-09 to AY 2012-13 was non-pending] on the date of search 13.03.2014, could be held to be sustainable on facts and in law?

24. We note that on the date of search i.e. 13-03-2014, admittedly income tax assessment for AY 2008-09 to AY 2012-13 of the assessee trust was unabated since assessments were not pending before the AO on the date of search on 13.03.2014. We note that the provisions of Section 153A of the Act, forms part of Chapter XIV of the Act contain special provisions for completing assessments in case of search conducted u/s 132 of the Act or requisition made u/s 132A of the Act. These provisions can be invoked only in cases where the Income-tax Department has exercised its extra ordinary powers of conducting search and seizure operations after complying with stringent pre-conditions prescribed in Section 132 of the Act. We do not deny the Ld. CIT, DR's contention that once a search u/s 132 is conducted against a person, then irrespective whether any incriminating material is found, the AO is required to proceed against such person for completing the assessments u/s 153A of the Act for the specified six assessment years. To this extent, there is no quarrel. However we find that Section 153A itself creates the fine distinction/differentiation amongst specified six assessment years depending whether prior to the date of search, the assessment proceedings are pending or not before the AO. We note that the relevant section itself clarifies that where an assessment was already completed against an assessee and any appeals or further proceedings are pending, then such appeals or other proceedings do not abate. We should keep in mind that merely because an assessee is subjected to search u/s 132 of the Act, such action by itself does not give carte blanche to the Department to subject such an assessee to the rigors of the assessment afresh for all the six years. It is for this reason that the Parliament in its wisdom has categorically created two classes among the six years, (a) un-abated assessment and (b) abated assessments. Consequent to a search conducted u/s 132 of the Act, the AO is required to issue notices u/s 153A of the Act to assess the income of the assessee for six assessment years preceding the date of search. These six assessment years comprise of assessments which are not abated ( non-pending assessment before AO on the date of search ); and assessments which are pending before the AO on the date of search, which would be treated as abated. In the case of abated assessments, the AO is free to frame the assessment in regular manner and determine the correct taxable income for the relevant year inter alia including the undisclosed income un-earthed during search, having regard to the provisions of the Act. However, in relation to unabated assessments (AYs), which were not pending on the date of search, there is a restriction on the powers of the AO. In case of unabated assessments, the AO can re-assess the income only to the extent and with reference to any incriminating material which the Revenue has unearthed in the course of search. Merely because an assessee is subjected to search, he cannot be placed on a different pedestal or put in a more disadvantageous position than an assessee who is not subjected to search unless in the course of search some incriminating documents or evidence or information or material is gathered by the Investigating authorities so as to vest the AO with the necessary powers to make additions to the total income in relation to assessments which did not abate on account of search. Considering these aspects the Hon'ble Delhi High Court in the case of CIT vs Kabul Chawla reported in (2016) 380 ITR 573 (Del) held as under:-

“37. On a conspectus of section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under:

Once a search takes place under section 132 of the Act, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the Ld AOs as a fresh exercise.

The Ld AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The Ld AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax".

Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the Ld AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material."

In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to complete assessment proceedings.

Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the Ld AO. Completed assessments can be interfered with by the Ld AO while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment."

38. The present appeals concern AYs 2002-03, 2005-06 and 2006-07, on the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed.”

The Hon’ble Apex court in the case of CIT v. Sinhgad Technical Education Society 397 ITR 344 in the context of section 153C of the Act has held as under:

“18) In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact.

We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act.’’

26. We also find that the Hon'ble Jurisdictional High Court in the case of Principal CIT vs M/s Salasar Stock Broking Ltd in G.A.No. 1929 of 2016 ITAT No. 264 of 2016 dated 24.8.2016 endorsed the aforesaid view of Hon'ble Delhi High Court in Kabul Chawla's case. The Hon’ble High Court also placed reliance on their own decision in the case of CIT vs Veerprabhu Marketing Ltd reported in (2016) 73 taxmann.com 149 (Cal HC) and held as follows:

“Subject matter of challenge is a judgement and order dated 18th December, 2015 by which the learned Tribunal dismissed an appeal preferred by the Revenue registered as ITA No.1775/Kol/2012 and allowed a cross-objection registered as CO-30/Kol/2013 both pertaining to the assessment year 2005-06. The learned Tribunal was of the opinion that the Assessing Officer had no jurisdiction under Section 153A of the Income Tax Act to reopen the concluded cases when the search and seizure did not disclose any incriminating material. In taking the aforesaid view, the learned Tribunal relied upon a judgement of Delhi High Court in the case of CIT[A] vs. Kabul Chawla in ITA No.707/2014 dated 28th August, 2014. The aggrieved Revenue has come up in appeal.

Mr. Bagaria, learned Advocate appearing for the assessee, submitted that more or less an identical view was taken by this Bench in ITA 661/2008 [CIT vs. Veerprabhu Marketing Ltd.] wherein the following views were expressed - "We are in agreement with the views expressed by the Karnataka High Court that incriminating material is a pre- requisite before power could have been exercised under section153C read with section 153A.

In the case before us, the assessing officer has made disallowances of the expenditure, which were already disclosed, for one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with section 153A. The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances."

In that view of the matter, we are unable to admit the appeal. The appeal is, therefore, dismissed.”

28. In view of the above legal position, let us now proceed to examine whether the additions/disallowances which the AO made in the orders impugned in this appeal [AY 2008-09 to AY 2012-13] was based on or made with reference to any incriminating material/document found in the course of search. We note that in the assessment orders for AY 2008-09 to AY 2012-13, the AO have not referred to any material un-earthed during search conducted on 13.03.2014 in the orders impugned to justify the additions. There is no whisper/mention of any material leave alone any incriminating material seized during search to justify the addition in these un-abated assessments other than the in-valid valuation report as discussed supra. The valuation report of DVO in the facts discussed cannot be held to be incriminating material, since it is not a fall out of any incriminating material un-earthed during search to suggest any investment in building which is over and above the investment shown by the assessee in its audited books. And as found by us, the search party pursuant to search u/s 132 of the Act did not even visited the educational institution which fact is evident from the perusal of panchnama which shows that the search team has only searched the administrative office situate at “Dwarika Building”, 7, Sarat Bose Road, Kolkata-700020 and not at the campus of educational institution situated at Nilgunj Road, Panihati, Kolkata-700 114 . So, from the perusal of panchnama and the assessment orders, it can be safely inferred that the reference made by DDIT (Inv.) for valuation of the properties on 01.04.2014 was without any incriminating materials found during search [oral or documentary which could have suggested that the assessee has shown less investment in its books for building construction] Therefore, no addition was permissible in the assessment order u/s 153A of the Act in the case of un-abated assessments unless it is based on relevant incriminating material found during the course of search qua the assessee and qua the AY. Thus the assessee succeeds in its cross-appeals on the legal issue raised in respect of appeals pertaining to AY 2008-09 to AY 2012-13.Consequently appeal of assessee pertaining to these assessment years are allowed.

29. Similar legal issue raised for AY 2013-14 does not survive, because it is an abated assessment. So the cross-appeal preferred by the assessee for AY 2013-14 is dismissed.

30. In the result, revenue appeals pertaining to AY 2008-09 to AY 2013-14 are dismissed. And assesses appeal pertaining for AY 2013-14 is dismissed and appeals pertaining to AY 2008-09 to AY 2012-13 are allowed.

Order is pronounced in the open court 5th February 2021

Sd/- Sd/-

(J.S. Reddy) (A. T. Varkey)

Accountant Member Judicial Member

Dated: 05.02.2021

Similar Ripples

Section - 269L, Assistance by Valuation Officers (IT Act, 1961)

Section - 256, Statement of case to the High Court (IT Act, 1961)

Section - 153C, Assessment of income of any other person (IT Act, 1961)

Section - 153A, Assessment in case of search or requisition (IT Act, 1961)

Section - 142A, Estimation of value of assets by Valuation Officer (IT Act, 196…

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Sanjay Rai, CIT, DR for the Petitioner. Anil Kochar, FCA for the Respondent.

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All these cross appeals preferred by the Revenue and assessee are against the separate orders of Ld. CIT(A), Kolkata-20 dated 15.11.2019 for Assessment years 2008-09 to 2013-14 respectively. Both the parties agree that in all the appeals facts are same except variance in amount of the additions and that the basis of the addition made by the AO and which has been deleted by the Ld. CIT(A) are the same. Since the facts are same in all the appeals, we are inclined to dispose of all the aforesaid appeals by this consolidated order. 
For the sake of convenience, the facts relating to AY 2008-09 are taken as lead case and the result will be followed in all the other appeals.

3. Coming to the revenue appeal, the first ground of appeal of the revenue reads as under: “1. Whether Ld. CIT(A) is justified in deleting addition of Rs.3,50,39,665/-, when AO had made the addition as unexplained investment u/s. 69 of the I. T. Act, on basis of valuation report of the District Valuation Officer (DVO).” 
4. Brief facts of the case as noted by the AO are that the assessee (educational Trust) had filed original return of income for AY 2008-09 on 30.09.2008 disclosing total income of Rs. Nil. The AO notes that a search and seizure operation u/s. 132(1) of the Act was conducted at office/residence of assessee trust along with other assessee’s of JIS Group on 13.03.2014 and on subsequent dates. Thereafter, AO notes that pursuant to notice issued by him on 20.10.2014 u/s. 153A(1) of the Act and the assessee trust filed return of income on 19.02.2015 disclosing total income at Rs. Nil. The AO acknowledges in the assessment order that the Ld. AR of the assessee had appeared before him and had furnished the relevant documents and accounts. Thereafter the AO observes that in the course of post-
search operation the DDIT (Inv.), Kolkata had made a reference to the DVO in respect of valuation of immovable properties held under the assessee trust and in pursuance to that reference, the DVO furnished valuation report vide letter dated 18.12.2014 (hereinafter referred to as the initial DVO report) and on perusal of the same, the AO noted that the DVO had valued the following buildings as narrated and valued as below: 
Sl.No. Name of the Trust College under Trust with

address

Declared value

Assessed value

1. Narula Educational Trust 81, Nilgunj Road, Panihati,Kolkata-700 114 10,88,04,964/- 27,35,88,300/-

2. Do Guru Nanak Institute of Dental Science &amp; Research,
157/F, Nilgunj Road, Panihati, Kolkata-700 114.

2,99,16,148 27,40,14,808/-

Total 13,87,21,112/- 54,76,03,108/- 
5. The AO notes that during the course of assessment proceedings, he show caused the assessee trust vide letter dated 05.01.2016 as to why the difference of value as determined by the DVO should not be added back to the total income. Pursuant to the show cause, the AO notes that the assessee objected to the method of valuation adopted by the DVO vide letter dated 13.01.2016 and requested for re-valuation of properties. Taking into
consideration the objection of the assessee, the AO notes that he requested the DVO to reconsider the valuation vide letter dated 22.01.2016 and reminded him to furnish the report at an early date since the assessment was getting time barred. But according to AO, since report from the DVO was not forthcoming, keeping in mind the interest of the revenue and taking into consideration the year-wise difference in valuation of property as
determined by the DVO vide valuation report dated 18.12.2014, added back to the total income of the assessee the following amount for the respective assessment years as under:

Asst. Year Amount 
2008-09 Rs. 3,50,39,665/- 
2009-10 Rs. 14,34,16,954/- 
2010-11 Rs. 5,05,88,806/- 
2011-12 Rs. 4,13,91,409/- 
2012-13 Rs. 4,91,11,619/- 
2013-14 Rs. 8,93,33,543/-

6. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) wherein the assessee had challenged the validity of the DVO report which was the only basis on which the additions were made by the AO by raising an additional ground as under for all assessment years: 
“For that the Valuation Officer to whom the reference was made by the AO for determination of cost of construction u/s. 142A of the Act, having not sent a copy of the report of the estimate made under sub-section (4) if sub-section (5), as the case may be within a period of six months
as provided u/s. 142A(6) the reference so made becomes infructuous.” 
7. The aforesaid additional ground which was legal in nature was admitted by the Ld. CIT(A) and after having called upon from the AO a remand report on this issue, the Ld. CIT(A) took up on himself the exercise to call for the DVO report in which he failed, (i.e. DVO did not furnish the report) the Ld. CIT(A) has allowed the additional ground ofappeal and held as under: 
“12. In view of the above discussion, I agree with the contention of the assessee that the DVO had statutory duty to submit a valuation report within six months from the end of the month when reference was first made by the AO as mandated by the section 142A(6) and non- submission of the report by the Valuation Officer within statutory period makes earlier report of the DVO non-est and therefore the AO could not have relied on the earlier report (on
reference by ADIT) to make addition in the case of the assessee. Therefore, the additional ground(s) raised by the assessee is allowed.” 
8. Thus, it has been brought to our notice that the Ld. CIT(A) having allowed this additional ground of appeal of the assessee have held that non-submission / furnishing of the report by the Valuation Officer within statutory period (six months from the end of the months reference is made by the AO for it) makes the initial report of the DVO [called for by the DDIT(Inv)] non-est and, therefore, the Ld. CIT(A) held that the AO could not have relied on the initial DVO report [ pursuant to the reference made by DDIT(Inv)] to make the addition in the case of the assessee. So, according to Ld. AR, since the basis for addition was based only on the valuation report of the DVO pursuant to the reference made by DDIT(Inv) which having been held to be non-est by the Ld. CIT(A), and in the assessment order the AO has not mentioned anything about any incriminating materials un-earthed during search, the additions made thereby in all the assessment years from AY 2008-09 to 2013-14 consequently got deleted. And this action of Ld.CIT(A) has been challenged by Revenue in their respective appeals. Further it was brought to our notice that the Ld. CIT(A) did not allow assessee’s legal issue raised i.e. whether all the assessment in respect of assessment years i.e. AY 2008-09 to AY 2012-13 ( other than AY 2013-14) being not pending before the AO on the date of search i.e. 13.03.2014 being un- abated assessments, the AO while framing the re-assessment u/s. 153A of the Act could not have made any addition without the aid of any incriminating material unearthed during search qua the assessee qua the respective unabated assessment years. According to Ld. A.R since Ld. CIT(A) has not accepted/allowed the legal issue raised by it, therefore, the assessee trust has preferred these cross appeals challenging this impugned action of the Ld. CIT(A).

9. We have heard rival submissions and gone through the facts and circumstances of,the case. We note that the Ld. CIT(A) by allowing the additional ground of appeal (supra) has held that the initial DVO report [pursuant to the reference made by DDIT/ADIT(Inv)] on the basis of which the AO has made the impugned additions in all the assessment years were non-est, resulting in deletion of all the impugned additions made by the AO, which
has been challenged by the department by raising the following grounds of appeal which are as follows:

“1. Whether Ld. CIT (A) is justified in deleting addition of Rs.3,50,39,665/-, when A.O. had made the addition as unexplained investment u/s 69 of the IT. Act., on basis of valuation report of the District Valuation officer(DVO)? 
2. Whether Ld. CIT (A) is justified in accepting assessee's contention that before introduction of section 132(9D) of the Act., the DDIT (Inv.) had no authority to refer the matter relating to valuation of immovable properties, before DVO? 
3. Whether Ld. CIT (A) is justified in accepting assessee's Additional Ground of Appeal that as per section 142A(6) of the I.T. Act, valuation report is to be completed within 6 months when the reference was not made for first time, and same was only for reconsideration of earlier report of DVO? 
4. Whether Ld. CIT (A) is justified in accepting assessee's Additional Ground of Appeal that non submission of report within statutory period as per section 142A(6) of the LT. Act, make earlier report non-est.? 
5. Whether Ld.CIT(A) is justified that if the DVO does not furnish its revised report, within 6 months, then whether after reconsideration of his earlier valuation report entire assessment of A.O could have been annulled.”

10. It is noted that the assessee is a Trust imparting education through various educational institution from its own premises since past many years, controlled and managed by the assessee Trust. These educational institutions are as under: 
a) Narula Institute of Technology, 81, Nilgunj Road, Panihati, Kolkata-700114. 
b) Gurunanak Institutue of Dental Science &amp; Research 157/F, Nilgunj Road, Panihati,Kolkata-700 114.

11. From a perusal of the Panchanama drawn by the Investigation Wing after search and seizure operation u/s 132 of the Act on 13.03.2014, it is noted that it took place at the assessee’s administrative office at Dwarka Building, 7, Sarat Bose Road, Kolkata-700 020 and not at the campus premises of educational institution situated at Nilgunj Road, Panihati, Kolkata-700 114. The AO observed in the re-assessment order that during the course of post search operation, the DDIT (Inv.), Kolkata had made reference to the
District Valuation Officer (DVO) in respect of the valuation of immovable properties held by the assessee trust; and pursuant to the same, District Valuation Officer (DVO) has furnished valuation report vide letter dated 18.12.2014. The AO notes from a perusal of the DVO report that there was difference in valuation of building as shown by the assessee trust in its premises. When this report (DVO) was confronted to the assessee vide show
cause letter dated 05.01.2016, the assessee objected to this DVO report and challenged the same on various grounds inter-alia on the method of valuation adopted by the DVO and requested for revaluation of the properties. Therefore, the AO notes that he requested DVO to re-value the properties again which did not yield any result. It is noted that the assessee
had objected to the action of DDIT(Inv) to have made reference to the DVO which according to the assessee the said authority [DDIT(Inv)] did not had powers to do so; and at that point of time only the AO u/s 142A of the Act could have called for the same which fact according to Ld. A.R is evident since this power was conferred on the DDIT (Inv) by inserting sub-section (9) in section 132 of the Act on 01.04.2017 and in this case [DVO on
reference of DDIT(Inv) dated 11.07.2014, who in turn submitted the valuation report on 18.12.2014 makes it clear that DDIT(Inv) had made reference before 01.04.2017]. When this objection that in the year 2014 (i.e. on 11.07.2014), the DDIT (Inv) lacked powers / jurisdiction to call for valuation report from DVO, the AO in his wisdom realizing the error in order to correct it had called for the valuation report vide letter dated 22.01.2016. 
However the AO acknowledges that pursuant to his reference dated 22.01.2016, the DVO did not furnish the Valuation Report till the date on which the re-assessment order u/s. 153A/143(3) of the Act has been passed on 30.03.2016. The AO taking into consideration the interest of revenue, and the fact that the assessment was getting time barred, passed the assessment order on 30.03.2016 by making addition based on the difference in valuation of
properties as submitted by DVO dated 18.12.2014 (initial DVO report) made on the reference by DDIT(Inv). 
12. We find from perusal of the assessment order relating to all the assessment years (AY 2008-09 – AY 2013-14) that the only basis on which the AO has made the addition was based on the difference of the valuation of immovable properties made by the assessee and the initial DVO report which was made on a reference by the DDIV (Inv.) and the additions were made as discussed at page 3, para 5 (supra): 
Asst. Year Amount 
2008-09 Rs. 3,50,39,665/- 
2009-10 Rs. 14,34,16,954/- 
2010-11 Rs. 5,05,88,806/- 
2011-12 Rs. 4,13,91,409/- 
2012-13 Rs. 4,91,11,619/- 
2013-14 Rs. 8,93,33,543/-

13. On appeal, when the assessee raised this particular objection before the Ld. CIT(A), the Ld. CIT(A) appreciated the error committed by the DDIT/ADIT (Inv) and in order to correct the error exercised his co-terminus power as that of AO and made reference to the DVO by sending a letter dated 29.01.2019 through the AO to obtain the DVO report. The Ld. CIT(A) noted that pursuant to his constant reminders to obtain the DVO report, the
AO made several attempts to remind the DVO for submission of the DVO report however noted that they failed in their attempt. [In this regard, the Ld. CIT(A) notes that the AO had issued several reminders to the DVO vide letter dated 27.03.2019, 02.04.2019, 12.04.2019, 06.05.2019, 24.05.2019 and 02.07.2019, despite that DVO did not respond and submitted neither the report to him nor the AO till the date he passed the impugned order dated
15.11.2019]. Thereafter, the Ld. CIT(A) recorded his finding on the additional ground raised by the assessee (supra) before him that since the DVO failed to submit valuation report within six months on making reference which is mandatory as stipulated under section 142A of the Act, was pleased to allow the additional ground raised by the assessee. 
This action of Ld. CIT(A) has been challenged by the Revenue before us. For adjudicating this issue it would be gainful to reproduce the relevant provision i.e. section 142A of the Act (substituted by the Finance (No.2) Act, 2014, w.e.f. 01.10.2014). Reference to the DVO which reads as under: 
Estimation of value of assets by Valuation Officer 
“142A. (1) The Assessing Officer may, for the purposes of assessment or reassessment, make a reference to a Valuation Officer to estimate the value, including fair market value, of any asset, property or investment and submit a copy of report to him. 
(2) The Assessing Officer may make a reference to the Valuation Officer under sub-section (1) whether or not he is satisfied about the correctness or completeness of the accounts of the assessee. 
(3) The Valuation Officer, on a reference made under sub-section (1), shall, for the purpose of estimating the value of the asset, property or investment, have all the powers that he has under section 38A of the Wealth-tax Act, 1957 (27 of 1957). 
(4) The Valuation Officer shall, estimate the value of the asset, property or investment after taking into account such evidence as the assessee may produce and any other evidence in his possession gathered, after giving an opportunity of being heard to the assessee. 
(5) The Valuation Officer may estimate the value of the asset, property or investment to the best of his judgment, if the assessee does not co-operate or comply with his directions.

(6) The Valuation Officer shall send a copy of the report of the estimate made under sub- section (4) or sub-section (5), as the case may be, to the Assessing Officer and the assessee, within a period of six months from the end of the month in which a reference is made under sub-section (1). 
(7) The Assessing Officer may, on receipt of the report from the Valuation Officer, and after giving the assessee an opportunity of being heard, take into account such report in making the assessment or reassessment. 
Explanation.—In this section, "Valuation Officer" has the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957).”

14. It is noted that the reference to the DVO for estimation of assets as given above was made in substitution to the prior section 142A which was inserted by the Finance (No. 2) Act, 2004 with retrospective effect from 15.11.1972 and amended by the Finance Act 2010, w.e.f 1.7.2010 which reads as under: 
“142A. Estimate by Valuation Officer in certain cases.-(I) For the purposes of making an assessment or reassessment under this Act, where an estimate of the value of any investment referred to in section 69 or section 69B or the value of any bullion,jewellery or other valuable article referred to in section 69A or section 69B or fair market value of any property referred to in sub-section (2) of section 56 is required to be made, the Assessing Officer may require the Valuation Officer to make an estimate of such value and report the same to him. 
(2) The Valuation Officer to whom a reference is made under sub-section (1) shall,for the purpose of dealing with such reference, have all the power that he has under section 38A of the Wealth Tax Act, 1957 (27 of 1957) . 
(3) On receipt of the report from the Valuation Officer, the Assessing Officer may,after giving the assessee an opportunity of being heard, take into account such report in making such assessment or reassessment: 
Provided that nothing contained in this section shall apply in respect of an
assessment made on or before the 30th day of September, 2004, and where such
assessment has become final and conclusive on or before that date, except in cases where a reassessment is required to be made in accordance with the provisions of section 153A. Explanation. - In this section, "Valuation Officer" has the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957)."

15. It is noted from the history of the enactment made by the Parliament conferring power to the AO to refer to the Valuation Officer was made from Finance Act, 2004 by the introduction of section 142A by Finance Act, 2004. Before that, the power of the AO to refer to Valuation Officer was confined to ascertain the fair market value of capital asset in respect of computation of capital gains under section 55A of the Act [which was inserted by the Taxation Laws (Amendment) Act, 1972 w.e.f. 01.01.1973]. It is noted that section 142A was brought in specifically to enable the AO to refer valuation to the DVO of assets,property etc since before that in the case of Smt. Amiya Bala Paul Vs. CIT 262 ITR 407 (SC), the Hon’ble Supreme Court held that AO did not had power to refer to DVO for valuation in respect of assets, properties etc other than for the specific purpose u/s 55A of the Act (i.e. for ascertaining the fair market value of capital asset for computation of capital gain). In this context, it would be gainful to refer to the decision in Smt. Amiya Bala Paul Vs. CIT (supra) wherein the Hon’ble Supreme Court took note of the facts in that case which is re-produced as under: 
“The assessee built a house in a suburb of Kolkata between the years 1981 to 1983. She filed a return in respect of the assessment year 1982 –1983 in which she disclosed that she had invested an amount of Rs.1,75,000 in the construction of the house. The return was accepted by the Income Tax Officer (now known as the Assessing Officer). In respect of the subsequent assessment year, namely 1983-84, the assessee disclosed that she had invested a further amount of Rs 1,70,000 in the construction of the house. This was not accepted by the Assessing Officer, who referred the question of the construction cost of the house to the Valuation Officer under Section 55(A) of the Income Tax Act, 1961 (hereinafter referred to as the Act). The Valuation Officer submitted a report to the Assessing Officer. On the basis
of the report, the Assessing Officer re-opened the assessment in respect of the assessment year 1982-83. The Income Tax Officer then made an addition of Rs 2,79,000 in respect of the assessment year 1982 - 83 and Rs 1,77,000 in respect of the assessment year 1983- 84 as undisclosed investment in the construction of the house. The assessee's appeals from the assessment orders were turned down by the Commissioner of Income Tax (Appeals) Guahati. 
The Income Tax Appellate Tribunal, however, following an earlier decision, allowed the assessee's appeal and held that the Assessing Officer could not have referred the question of the cost of construction of the assessee's house to the Valuation Officer. In this background the following question was referred to the High Court under Section 256 (2) of the Act. 
"Whether on the facts and in the circumstances of the case, the Tribunal erred in law by holding that the Assessing Officer cannot refer the matter to the Valuation Cell(sic) for estimating the cost of construction of the house property". 
The Division Bench of the High Court held that although the Assessing Officer could not have referred the question of the cost of construction of the assessee's house to the Valuation Officer under Section 55 A of the Act, he had ample power under Sections 131 (1), 133 (6) and 142 (2) of the Act to ask for a Valuation Report from the Valuation Officer. It was held that each of these sections were "enabling machinery provisions which invested ample powers in the Assessing Authority", and that any wrong mention of the
provision on the requisition memo would not be material. Accordingly the question referred was answered in the affirmative and against the assessee. 
In the appeal before us, it was contended on behalf of the assessee that a reference to a Valuation Officer could only be made strictly in terms of section 55 A of the Act and that if the circumstances justifying the reference under that Section were not prevailing, the Assessing Officer did not have the jurisdiction to otherwise refer the matter to the Valuation
Officer. It was further pointed out that Section 55 A of the Act only allows for reference to the Valuation Officer for the purposes of computing the market value of property in connection with the computation of capital gains. It was also submitted that reference to the Valuation Officer had been specifically provided for under Section 55A and that this implied
that a reference to the Valuation Officer could not be made under any of the other provisions which generally empowered the Assessing Officer to ascertain the income of the assessee. 
The submission of the appellant was that if the power to refer the determination of the cost of construction to the Valuation Officer was otherwise available to the Assessing Officer under the other provisions of the Act, it was not necessary to specifically empower the Assessing
Officer under Section 55A. Finally, it is submitted that the Valuation Officer is appointed under the Wealth Tax Act and that he could exercise the power only in the manner prescribed by that Act or by any other statutory provision like Section 55 A of the Act, and that he could not be called upon to discharge functions not statutorily prescribed, in his capacity as a Valuation Officer.”

16. And thereafter, the Hon’ble Supreme Court after considering the contention of UOI/Revenue at length and after referring to the AO’s power u/s. 131(1), 142(2), 133(6),55A of the Act ; And provisions of Wealth Tax 1957 Act, Section 2, clause (r), 16A, 37(1) vis a vis power of Civil Court under the code of Civil Procedure, 1908, section 76 to 78 of
Code of Civil Procedure held that – 
“From this it is clear that whenever reference to a Valuation Officer appointed under the Wealth Tax Act is permissible under the Income Tax Act, it has been statutorily so provided. 
Apart from the aforesaid, a Valuation Officer is appointed under the Wealth Tax Act and can discharge functions within the statutory limits under which he is appointed. It is not open to a Valuation Officer to act in his capacity as Valuation Officer otherwise than in discharge of his statutory functions. He cannot be called upon nor would he have the jurisdiction to give a report to the Assessing Officer under the Income Tax Act except when a reference is made under and in terms of Section 55 A or to a competent authority except under section 269L. 
We are therefore of the view that the High Court incorrectly answered the question referred to it in the affirmative. The Tribunal had not erred in holding that the Assessing Officer cannot refer the matter to the Valuation Officer for estimating the cost of construction of the house property. The appeal is accordingly allowed and the decision of the High Court set
aside. There will be no order as to costs.”[Emphasis given by us]

17. In the light of the decision of the the Hon’ble Supreme Court in Smt. Amiya Bala Paul Vs. CIT (supra) the Parliament gave power to AO by the introduction of section 142A by Finance Act, 2004 (supra). Later on the Parliament taking note that the Authorized Officer of the searched party u/s. 132 does not have the power to refer for valuation to the Valuation Officer inserted sub-section (9B) in section 132 of the Act by Finance Act, 2017 i.e. w.e.f. 01.04.2017. Sub-section (9B) of section 132 of the Act reads as under: 
“Search and Seizure S.132. 
(9D) The authorized officer may, during the course of the search or seizure or within a period of sixty days from the date on which the last of the authorizations for search was executed,make a reference to a Valuation Officer referred to in section 142A, who shall estimate the fair market value of the property in the manner provided under that section and submit a
report of the estimate to the said officer within a period of sixty days from the date of receipt of such reference.”

18. Thus, from the aforesaid legislative history it can be noted that the authorized officer of the search DDIT (Inv.)/ADIT (Inv.) has been empowered to make reference to the Valuation Officer only after 01.04.2017 and not before that date. Here in this case,admittedly the search has taken place on 13.03.2014 and on a perusal of the valuation report dated 18.12.2014, it is noted that the reference to the Valuation Officer was given by DDIT (Inv.) dated 11.07.2014. Thus, we find that when the reference to the Valuation
Officer was made by the DDIT (Inv.)/ADIT (Inv.) both the authorities did not had power/jurisdiction to refer for valuation of the assets of the assessee pursuant to the search and for this legal proposition, we rely on the reasoning/ratio of the decision of the Hon’ble Supreme Court in Smt. Amiya Bala Paul (supra). 
19. Further, it is noted that in this case when the AO during assessment proceedings, confronted the assessee with the valuation report dated 18.12.2014 pursuant to the reference by the DDIT (Inv.) the assessee objected, inter alia, to the method of valuation adopted by the DVO and also brought to the AO’s notice the fact that DDIT (Inv.) did not had the power on 11.07.2014 to call for the valuation report from the DVO. In the light of
the aforesaid objection raised by the assessee, the AO requested the DVO to reconsider the valuation vide letter dated 22.01.2016 which was never answered by the DVO, therefore, the AO completed the assessment based on the valuation report submitted dated 18.12.2014 (initial report) vide order dated 30.03.2016. From a plain reading of section 142A of the Act it can be noted that the AO enjoyed the power to make a reference to the Valuation
Officer to estimate the value including the fair market value of any asset, property or investments and thereafter the Valuation Officer shall estimate the value of the assets, property or investments after giving opportunity to the assessee to be heard and in case the assessee does not cooperate then the DVO can estimate the value of the asset, property or investments on the basis of best of his judgment and submit report within a period of six
months from the end of the month in which reference is made. It should be borne in mind that the reference made by the AO u/s. 142A(1) of the Act is a statutory reference and, therefore, the report sent by the Valuation Officer u/s. 142A(6) of the Act is also a statutory report and, therefore, time limit prescribed therein are statutorily limited by time and the report if not made within the statutory time i.e. six months from the end of the month from which the reference is made will be considered as an arbitrary/whimsical exercise of power by the Valuation Officer without any regard to the statutory limited time prescribed by the statute and it would vitiate the action of DVO. In this case, we found that on 13.03.2014
the search happened and the reference was made by the DDIT (Inv.) on 11.07.2014 and the DVO sent the valuation report on 18.12.2014 (initial DVO report) which we have already found that the DDIT/ADIT (Inv.) did not had the power/jurisdiction to make the reference to the Valuation Officer. Therefore, the action of Ld. CIT(A) allowing the appeal on merits
cannot be said to be legally erroneous is in line with the ratio of the decision of the Hon’ble Supreme Court in Smt. Amiya Bala Paul (supra), since DDIT (Inv) did not had the power to refer to DVO valuation of construction of buildings. Even though the AO in the assessment order states that when the assessee objected to the DVO report dated 18.12.2014, he requested the DVO to re-value the properties, which action of AO can be termed as an action to correct the error of DDIT (Inv.) and so the AO by making a request
for re-valuation on 22.01.2016 can be termed as a valid requisition/reference to the DVO and for reasons best known to the DVO, he did not file any report. Even at the appellate stage, the Ld. CIT(A) exercising his co-terminus power as that of the AO made an attempt
to refer the valuation to the Valuation Officer (which he has discussed at page 26 of his order) through the AO from 29.01.2019 and thereafter, the Ld. CIT(A) had issued several reminders to the DVO vide letters dated 27.03.2019, 02.04.2019, 12.04.2019, 06.05.2019,24.05.2019 and 02.07.2019. However, the AO reports that inspite of all these reminders, the DVO did not budge and filed any valuation report. In the aforesaid facts and
circumstances the Ld. CIT(A) makes the finding that the failure of the DVO to submit valuation report within six months of making of valid reference, the DVO’s initial valuation report dated 18.12.2014 could not have been relied upon to make additions cannot be faulted since it is in line with the ratio of the decision of the Hon’ble Supreme Court in Smt. Amiya Bala Paul (supra). The non-submission of DVO report after reference by AO and Ld CIT(A) within the statutory period has not been challenged nor this factual
finding could be controverted by the Revenue before us and, so it attains finality. In the result, we find that there is no valid valuation report submitted by DVO on reference by AO/Ld. CIT(A). 
20. Moreover, the Ld. AR drew our attention to page 20 of Ld. CIT(A)’s impugned order wherein he [Ld CIT(A)] has reproduced his own letter dated 29.01.2019 which was written to the AO for obtaining the report of the DVO ; and the Ld AR pointed out that in this letter the Ld. CIT(A) has categorically observed “.... The first report of DVO was given without hearing the assessee......” So, according to Ld. AR, the initial DVO report
dated 18.12.2014 submitted by DVO pursuant to DDIT (Inv.) reference dated 11.07.2014 is fragile for violation of Natural Justice. We find force in this submission of Ld. AR that DVO before preparation of his valuation report dated 18.12.2014 should have givenopportunity to assessee and failure to do so will vitiate the valuation report dated 18.12.2014 for violation of Natural Justice and could not have been acted upon by the AO being bad in law. 
21. To sum up the facts, we note that the AO had made the entire addition in all assessment years based on the initial valuation report submitted by the Valuation Officer pursuant to the reference made by the DDIT (Inv.) dated 11.07.2014 when he [DDIT (Inv.)] did not had the power to make the reference to the DVO which power he acquired as noted above only on 01.04.2017 by Finance Act, 2017 u/s. 132(9D) of the Act. And it has also been noted that neither the DVO filed the valuation report pursuant to the AO’s reference
dated 22.01.2016 nor the DVO filed the valuation report pursuant to the Ld. CIT(A)’s reference through the AO by letter dated 29.01.2019. Thus, we note that the addition has been made only on the basis of the initial valuation report dated 18.11.2014 which was pursuant to the DDIT(Inv.)’s reference which he [DDIT (Inv)] had no power to do call for; and that during assessment proceedings when the AO show caused the assessee with the
valuation report as contemplated in sub-section (7) of section 142A of the Act, the assessee contested/challenged, inter alia, the method of valuation adopted by the Valuation Officer, which prompted the AO to call for the reference of the Valuation Officer since DDIT (Inv.) had no power to call for the valuation report. And we have noted thereafter the DVO did
not submit any report called for by AO or Ld. CIT(A). 
22. In the aforesaid facts and circumstances, we hold that the DDIT (Inv.) could not have referred the question of cost of construction/valuation of the assessee’s building to the Valuation Officer in the year 2014 ; and thereafter, since the DVO did not present the valuation report after AO has referred the valuation vide letter dated 22.01.2016 as well as the Ld. CIT(A) within six months from the end of the month of the reference, the Ld.
CIT(A) rightly held that DVO was bound by law [sec. 142A(6)] to have submitted the valuation report within the statutory time limit, which view we endorse. We note that the assessee is an educational institution and its accounts are duly audited. We note that neither the search party nor the AO could point out any mistake in the correctness or completeness of the books of account presented by the assessee before the authorities. We also find that the search party pursuant to search u/s 132 of the Act did not even visited the educational institution which fact is evident from the perusal of panchnama which shows that the search team has only searched the administrative office situate at “Dwarika Building”, 7,Sarat Bose Road, Kolkata-700020 and not at the campus of educational institution situated
at Nilgunj Road, Panihati, Kolkata-700 114, which is kilometers away from searched premises . So, from the perusal of panchnama and the assessment orders, we find that the reference made by DDIT (Inv.) for valuation of the properties on 01.04.2014 was without any incriminating materials which were un-earthed during search [oral or documentary which could have suggested that the assessee has shown less investment in its books for building construction] consequently DDIT(Inv) erred in making reference to DVO and
when admittedly DDIT(Inv) did not enjoy the power to do so. In the aforesaid facts and circumstances the Ld. CIT(A) makes the finding that the failure of the DVO to submit valuation report within six months of making of valid reference, the DVO’s initial valuation report dated 18.12.2014 could not have been relied upon to make additions cannot be faulted is in line with the ratio of the decision of the Hon’ble Supreme Court in Smt. Amiya Bala Paul (supra). Further at para 20 (supra), we have taken note of the Ld
CIT(A) observation in the letter dated 29.01.2019 wherein he has observed that DVO did not give opportunity to assessee before preparation/submission of DVO report dated 18.12.2014 (initial DVO report), so this DVO report is fragile for violation of natural justice and resultantly bad in law and could not have been the sole basis for addition Consequently, when we keep aside the initial valuation report of the DVO dated 18.12.2014 for the legal infirmities discussed (supra) and on the reasoning/ratio of the decision of the Hon’ble Supreme Court in Smt. Amiya Bala Paul (supra), we find there is
no other evidence to support the addition, so the addition made by the AO in all the assessment years from AY 2008-09 to AY 2013-14 has to be deleted and Ld. CIT(A)’s action cannot be faulted and we confirm it on the reasons given supra and dismiss all the Revenue Appeals. 
23. Now coming to the legal issue raised by the assessee, we proceed to answer the question. Whether in absence of any incriminating material found in the course of search at the premises of the assessee trust (administrative office only), the additions made in the assessments of the assessee trust which were unabated [since assessment of AY 2008-09 to
AY 2012-13 was non-pending] on the date of search 13.03.2014, could be held to be sustainable on facts and in law? 
24. We note that on the date of search i.e. 13-03-2014, admittedly income tax assessment for AY 2008-09 to AY 2012-13 of the assessee trust was unabated since assessments were not pending before the AO on the date of search on 13.03.2014. We note that the provisions of Section 153A of the Act, forms part of Chapter XIV of the Act contain special provisions for completing assessments in case of search conducted u/s 132 of the Act or requisition made u/s 132A of the Act. These provisions can be invoked only
in cases where the Income-tax Department has exercised its extra ordinary powers of conducting search and seizure operations after complying with stringent pre-conditions prescribed in Section 132 of the Act. We do not deny the Ld. CIT, DR's contention that once a search u/s 132 is conducted against a person, then irrespective whether any incriminating material is found, the AO is required to proceed against such person for
completing the assessments u/s 153A of the Act for the specified six assessment years. To this extent, there is no quarrel. However we find that Section 153A itself creates the fine distinction/differentiation amongst specified six assessment years depending whether prior to the date of search, the assessment proceedings are pending or not before the AO. We
note that the relevant section itself clarifies that where an assessment was already completed against an assessee and any appeals or further proceedings are pending, then such appeals or other proceedings do not abate. We should keep in mind that merely because an assessee is subjected to search u/s 132 of the Act, such action by itself does not give carte blanche to the Department to subject such an assessee to the rigors of the assessment afresh for all the six years. It is for this reason that the Parliament in its wisdom has categorically created two classes among the six years, (a) un-abated assessment and (b) abated assessments. Consequent to a search conducted u/s 132 of the Act, the AO is required to issue notices u/s 153A of the Act to assess the income of the assessee for six assessment years preceding the date of search. These six assessment years comprise of
assessments which are not abated ( non-pending assessment before AO on the date of search ); and assessments which are pending before the AO on the date of search, which would be treated as abated. In the case of abated assessments, the AO is free to frame the assessment in regular manner and determine the correct taxable income for the relevant year inter alia including the undisclosed income un-earthed during search, having regard to
the provisions of the Act. However, in relation to unabated assessments (AYs), which were not pending on the date of search, there is a restriction on the powers of the AO. In case of unabated assessments, the AO can re-assess the income only to the extent and with reference to any incriminating material which the Revenue has unearthed in the course of search. Merely because an assessee is subjected to search, he cannot be placed on a
different pedestal or put in a more disadvantageous position than an assessee who is not subjected to search unless in the course of search some incriminating documents or evidence or information or material is gathered by the Investigating authorities so as to vest the AO with the necessary powers to make additions to the total income in relation to assessments which did not abate on account of search. Considering these aspects the
Hon'ble Delhi High Court in the case of CIT vs Kabul Chawla reported in (2016) 380 ITR 573 (Del) held as under:- 
“37. On a conspectus of section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: 
Once a search takes place under section 132 of the Act, notice under section
153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the Ld AOs as a fresh exercise. 
The Ld AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The Ld AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". 
Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the Ld AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." 
In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to complete assessment proceedings. 
Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the Ld AO. Completed assessments can be interfered with by the Ld AO while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." 
38. The present appeals concern AYs 2002-03, 2005-06 and 2006-07, on the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed.”

The Hon’ble Apex court in the case of CIT v. Sinhgad Technical Education
Society 397 ITR 344 in the context of section 153C of the Act has held as under:

25. We find that the Hon'ble Delhi High Court while adjudicating the appeal in the case of CIT vs Kabul Chawla (2016) 380 ITR 573 had taken judicial note of host of the earlier decisions in the cases of CIT vs Anil Kumar Bhatia reported in (2013) 352 ITR 493 (Del) ; CIT vs Chetan Das Lachman Das reported in (2012) 211 Taxman 61 (Del HC) ; Madugula Venu vs DIT reported in (2013) 215 Taxman 298 (Del HC) ; Canara Housing Development Co. vs DCIT reported in (2014) 49 taxmann.com 98 (Kar HC) ; Filatex India Ltd vs CIT
reported in (2014) 229 Taxman 555 (Del HC) ; Jai Steel (India) vs ACIT reported in (2013) 219 Taxman 223 (Del HC) ; CIT vs Murli Agro Products Ltd reported in (2014) 49 taxmann.com 172 (Bom HC) ; CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd reported in (2015) 374 ITR 645 (Bom HC) and All Cargo Global Logistics Ltd vs DCIT reported in (2012) 137 ITD 287 (Mum ITAT) (SB). We also find that Revenue’s SLP against the decision of the Hon'ble Delhi High Court in the case of Kabul Chawla (Supra) was dismissed by the Hon'ble Apex Court which is reported in 380 ITR (St.) 4
(SC). 
26. We also find that the Hon'ble Jurisdictional High Court in the case of Principal CIT vs M/s Salasar Stock Broking Ltd in G.A.No. 1929 of 2016 ITAT No. 264 of 2016 dated 24.8.2016 endorsed the aforesaid view of Hon'ble Delhi High Court in Kabul Chawla's case. The Hon’ble High Court also placed reliance on their own decision in the case of CIT vs Veerprabhu Marketing Ltd reported in (2016) 73 taxmann.com 149 (Cal HC) and held
as follows: 
“Subject matter of challenge is a judgement and order dated 18th December, 2015 by which the learned Tribunal dismissed an appeal preferred by the Revenue registered as ITA No.1775/Kol/2012 and allowed a cross-objection registered as CO-30/Kol/2013 both pertaining to the assessment year 2005-06. The learned Tribunal was of the opinion that the Assessing Officer had no jurisdiction under Section 153A of the Income Tax Act to reopen the concluded cases when the search and seizure did not disclose any incriminating material. In taking the aforesaid view, the learned Tribunal
relied upon a judgement of Delhi High Court in the case of CIT[A] vs. Kabul Chawla in ITA No.707/2014 dated 28th August, 2014. The aggrieved Revenue has come up in appeal. 
Mr. Bagaria, learned Advocate appearing for the assessee, submitted that more or less an identical view was taken by this Bench in ITA 661/2008 [CIT vs. Veerprabhu Marketing Ltd.] wherein the following views were expressed -
"We are in agreement with the views expressed by the Karnataka High Court that incriminating material is a pre- requisite before power could have been exercised under section153C read with section 153A. 
In the case before us, the assessing officer has made disallowances of the expenditure, which were already disclosed, for one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with section 153A. The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances." 
In that view of the matter, we are unable to admit the appeal. The appeal is, therefore, dismissed.”

27. Considering the judicial precedents (supra) on the subject, particularly the decision of the Hon'ble jurisdictional Calcutta High Court in the case of PCIT vs Salasar Stock Broking Ltd. (supra) which is binding upon this Tribunal as well as the Hon’ble Apex Court decision in CIT v. Sinhgad Technical Education Society ( supra), we hold that in the case of unabated assessments of an assessee, no addition is permissible in the order u/s
153A of the Act unless it is based on any tangible, cogent and relevant incriminating material found during the course of search qua the assessee and qua the AY. 
28. In view of the above legal position, let us now proceed to examine whether the additions/disallowances which the AO made in the orders impugned in this appeal [AY 2008-09 to AY 2012-13] was based on or made with reference to any incriminating material/document found in the course of search. We note that in the assessment orders for AY 2008-09 to AY 2012-13, the AO have not referred to any material un-earthed during search conducted on 13.03.2014 in the orders impugned to justify the additions. There is no
whisper/mention of any material leave alone any incriminating material seized during search to justify the addition in these un-abated assessments other than the in-valid valuation report as discussed supra. The valuation report of DVO in the facts discussed cannot be held to be incriminating material, since it is not a fall out of any incriminating material un-earthed during search to suggest any investment in building which is over and above the investment shown by the assessee in its audited books. And as found by us, the search party pursuant to search u/s 132 of the Act did not even visited the educational institution which fact is evident from the perusal of panchnama which shows that the search team has only searched the administrative office situate at “Dwarika Building”, 7, Sarat Bose Road, Kolkata-700020 and not at the campus of educational institution situated
at Nilgunj Road, Panihati, Kolkata-700 114 . So, from the perusal of panchnama and the assessment orders, it can be safely inferred that the reference made by DDIT (Inv.) for valuation of the properties on 01.04.2014 was without any incriminating materials found during search [oral or documentary which could have suggested that the assessee has shown less investment in its books for building construction] Therefore, no addition was permissible in the assessment order u/s 153A of the Act in the case of un-abated assessments unless it is based on relevant incriminating material found during the course of search qua the assessee and qua the AY. Thus the assessee succeeds in its cross-appeals on the legal issue raised in respect of appeals pertaining to AY 2008-09 to AY 2012-13.Consequently appeal of assessee pertaining to these assessment years are allowed. 
29. Similar legal issue raised for AY 2013-14 does not survive, because it is an abated assessment. So the cross-appeal preferred by the assessee for AY 2013-14 is dismissed. 
30. In the result, revenue appeals pertaining to AY 2008-09 to AY 2013-14 are dismissed. And assesses appeal pertaining for AY 2013-14 is dismissed and appeals pertaining to AY 2008-09 to AY 2012-13 are allowed. 
Order is pronounced in the open court 5th February 2021 
Sd/- Sd/- 
(J.S. Reddy) (A. T. Varkey) 
Accountant Member Judicial Member
Dated: 05.02.2021

address

Declared value

Assessed value

1. Narula Educational Trust 81, Nilgunj Road, Panihati,Kolkata-700 114 10,88,04,964/- 27,35,88,300/-

2. Do Guru Nanak Institute of Dental Science & Research,
157/F, Nilgunj Road, Panihati, Kolkata-700 114.

2,99,16,148 27,40,14,808/-

9. We have heard rival submissions and gone through the facts and circumstances of,the case. We note that the Ld. CIT(A) by allowing the additional ground of appeal (supra) has held that the initial DVO report [pursuant to the reference made by DDIT/ADIT(Inv)] on the basis of which the AO has made the impugned additions in all the assessment years were non-est, resulting in deletion of all the impugned additions made by the AO, which
has been challenged by the department by raising the following grounds of appeal which are as follows:

10. It is noted that the assessee is a Trust imparting education through various educational institution from its own premises since past many years, controlled and managed by the assessee Trust. These educational institutions are as under: 
a) Narula Institute of Technology, 81, Nilgunj Road, Panihati, Kolkata-700114. 
b) Gurunanak Institutue of Dental Science & Research 157/F, Nilgunj Road, Panihati,Kolkata-700 114.

The Hon’ble Apex court in the case of CIT v. Sinhgad Technical Education
Society 397 ITR 344 in the context of section 153C of the Act has held as under:

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Section - 269L, Assistance by Valuation Officers (IT Act, 1961)

Section - 256, Statement of case to the High Court (IT Act, 1961)

Section - 153C, Assessment of income of any other person (IT Act, 1961)

Section - 153A, Assessment in case of search or requisition (IT Act, 1961)

Section - 142A, Estimation of value of assets by Valuation Officer (IT Act, 196…

Section - 142, Inquiry before assessment (IT Act, 1961)

Section - 132A, Powers to requisition books of account (IT Act, 1961)

Section - 132, Search and seizure (IT Act, 1961)

Section - 131, Power regarding discovery, production of evidence (IT Act, 1961)

Section - 76, Omitted by the Finance Act, 1992 (IT Act, 1961)

Section - 69B, Amount of investments not fully disclosed in books of account (I…

Section - 69A, Unexplained money (IT Act, 1961)

Section - 69, Unexplained investments (IT Act, 1961)

Section - 56, Income from other sources (IT Act, 1961)

Section - 55A, Reference to Valuation Officer (IT Act, 1961)

High Court Sets Aside Assessment Order Due to Violation of Faceless Assessment …

Sanjay Rai, CIT, DR for the Petitioner. Anil Kochar, FCA for the Respondent.