Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2007 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2007 (12) TMI 241 - AT - Income TaxReopening of assessment - invalid notice - Income Escaping Assessment - issuance of notice u/s 148 by assuming jurisdiction - Valuation of agricultural land - invoking the provisions of section 131 (d) - HELD THAT:- It is clear that the capital gain is to be computed by deducting from the 'full value' of the consideration received or accruing as a result of the transfer of the capital asset i.e., the cost of acquisition and expenditure incurred in connection with the transfer are to be deducted from the full market value of the asset. The expression 'full value of the consideration' does not mean 'market value' or 'fair market value' of the asset transferred. Hence, capital gain tax cannot be computed and levied with reference to the market value determined on the basis of valuation report. Hence, from this angle also the basis for reopening of the assessment for taxing capital gain in the hands of the assessee, being market value as estimated by the Departmental Valuation Officer cannot be a proper basis under the relevant provisions of law contained under section 48 of the Income-tax Act for the reopening of the assessment. There is another aspect of the matter. The valuation report is an expert opinion at the most. In relation to the transaction of transfer such report cannot be treated to be proof of the fact that there is some under hand dealing and consideration has passed more than what is disclosed. Since in the present case the reasons recorded for reopening and the facts taken into account for formation of belief by the Assessing Officer that income of the assessee has escaped assessment is based on the report of DVO, in view of the above authorities, the assumption of jurisdiction under section 148 by the Assessing Officer on this basis is not legally justified. The contention of the assessee that the 'reason to believe' should be considered with reference to the relevant provisions of the Act under which the income is chargeable to tax also carries force. In the instant case, therefore, the Assessing Officer was required to base his reasons for reopening of the assessment with reference to the provisions of section 48. He has not done so. On the other hand, he has gone on totally irrelevant consideration which is estimated value of the land, which aspect is not relevant so far as section 48 is concerned. The issuance of notice under section 148 by assuming jurisdiction on the basis of such irrelevant material, is not justified in law. Since notice issued under section 148 in the instant case has not been issued after testing the grounds of issuing such notice in the light of section 48, the jurisdiction of the Assessing Officer in issuing such a notice on the basis of such material, as has been taken by the Assessing Officer in this case, is not justified. In view of the above discussion, ground Nos. 1, 2 and 3 as taken in this appeal are allowed. In view of our finding on ground Nos. 1 to 4, the assessment order is quashed and on these grounds the appeal of the assessee is allowed - As we have quashed the assessment order, we are not required to adjudicate other grounds raised in this appeal and go into the merits of the case. Assessee's appeal stands allowed accordingly.
|