The main legal point established in the judgment is that the reopening of the assessment based on discrepancies in the valuation report was not permissible, as the valuation of the property as per the report of the registered valuer was on the higher side.

K.S. Jhaveri, J.

1. By way of this appeal under section 260A of the Income-tax Act, 1961, the appellant-assessee has challenged the order of the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal") whereby the Tribunal has dismissed the appeal preferred by the assessee by confirming the orders passed by the Assessing Officer and the Commissioner of Income-tax (Appeals).

2. This court, while admitting the appeal, has framed the following substantial questions of law:

"1. Whether, in the facts and circumstances of the case, Income-tax Appellate Tribunal has erred in law by not appreciating the contention that the action of assessing officer referring the matter to the Valuation Officer under section 55A of the Act is illegal?

2. Whether, in the facts and circumstances of the case, Income-tax Appellate Tribunal has erred in upholding the order of CIT(A) directing Assessing Officer to recalculate capital gain by increasing cost of acquisition as on 1.4.1981 as per the valuation report of Asst. Valuation Officer (i.e. Rs. 1,68,468/- and Rs. 1,98,428/-) by 50% instead of rejecting the said valuation report and accepting cost as per the claim of assessee in his return (i.e. Rs. 5,08,170/- and Rs. 6,60,225/-)?

3. Whether in the facts and circumstances of the case, Income-tax Appellate Tribunal has erred in law in upholding action of Assessing Officer in making reference to the valuation officer u/s. 55A of the Act by Assessing Officer and in putting reliance on the said valuation report for calculating capital gain when the value claimed by assessee is higher than the FMV as determined by the said valuation report?"

3. The facts of the case are that the assessee filed return of income for assessment year 2000-01 on 7.3.2001 along with valuation report of the registered valuer. Original assessment under section 143(3) of the Act was completed on 13.3.2003. Thereafter, the Assessing Officer reopened the assessment by issue of notice under section 148 of the Act. The Assessing Officer completed the assessment under section 143(3) read with section 147 of the Income-tax Act by determining total income at Rs. 20,04,554/- on 31.3.2006.

3.1 Being aggrieved by the order of the Assessing Officer, the assessee preferred appeal before the Commissioner of Income-tax (Appeals). The Commissioner (Appeals) confirmed the action of the Assessing Officer in reopening the assessment. The relevant observations of the order of Commissioner (Appeals) are as under:

"I have considered the lands of the case and have considered the submissions made by the appellant. In this case, the Assessing Officer reopened the assessment only after receiving the valuation report which clearly mentioned the discrepancies in respect of cost of acquisition as on 1.4.1981. Therefore, in the present case, it cannot be said that the appellant has disclosed all the facts during the course of original assessment proceedings. Under the circumstances, I hold that the action of the Assessing Officer in reopening the assessment is correct and no interference is call for."

3.2 In further appeal by the assessee, the Tribunal vide its order dated 26.3.2008 has upheld the view taken by the Commissioner (Appeals). The relevant observations of the Tribunal are as under:

"We have heard the rival contention of both the parties. We find that the A.O. while framing the assessment order has referred the matter to Valuation Cell for determining the cost of acquisition of property as on 1.4.1981. The A.O. could not get the report of the registered valuer within time so A.O. has completed the assessment without report the A.O. has obtained the report on 25.9.2003 and determined the fair market value of the property at Rs. 1,68,468/- and Rs. 1,98,428/- shown by the assessee on that valuation report capital gain on sale of land is worked out. The assessment was reopened on