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[2009] 311 ITR 477 (Madras) [2009] 311 ITR 477 (MAD.) HIGH COURT OF MADRAS Commissioner of Income-tax v. K. Rajapandian D. MURUGESAN AND P.P.S. JANARTHANA RAJA, JJ. TAX CASE (APPEAL) NO. 1126 OF 2007 AUGUST 13, 2007 Section 147 of Income-tax Act, 1961 - Income expiry assessment - General Report of Departmental Valuation Officer cannot be a basis for reopening assessment [Assessment year 1993-94] [In favour of assessee] CIT v. K. Rajapandian [2009] 311 ITR 477 (Mad.) The assessee had constructed a shopping space-cum-kalyana mandapam during the previous years relevant to the assessment years 1991-92 to 1994-95. The cost of construction as per the Approved Valuer's Report was Rs. 18,50,000 whereas the assessee had admitted the cost at Rs. 16,70,000. The difference in the cost of construction worked out to Rs. 1,80,000. The Commissioner (Appeals) in his earlier order relating to the assessee's own case for the assessment years 1991-92 and 1992-93, had given a direction that the difference between the total cost fixed and the total cost disclosed by the assessee, should be brought to tax for the assessment years 1991-92 to 1994-95. In view of the same, the Assessing Officer issued notice under section 148 to the assessee. Held that as held in CIT v. V.T. Rajendran [2007] 288 ITR 312 (Mad.), report of the Departmental Valuation Officer cannot be a basis for reopening assessment because the valuation cannot be an arithmetical appreciation of the materials used for the construction nor the expenses incurred by the assessee in that regard, as variations are bound to be there. In the present case, there was no dispute that the cost of construction was fixed by the earlier order of the Commissioner (Appeals) relating to the earlier assessment year at Rs. 18,50,000 which was based on the approved valuer's report, whereas the assessee had admitted the cost at Rs. 16,70,000. The difference of Rs. 1,80,000 was to be assessed proportionately in view of the Commissioner (Appeal's) order relating to the earlier assessment years. The Tribunal had correctly followed the principles enunciated in the instant court's in the case of CIT v. V.T. Rajendran [2007] 288 ITR 312 , holding…

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