TMI Blog2017 (5) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... he land in question. As observed hereinabove, there is no further application of mind by the Assessing Officer on the basis of the information received by him in the form of DVO’s report and has mechanically and solely relied upon the DVO’s report, formed an opinion that the income chargeable to tax has escaped. Thus, there was no tangible material available with the assessing officer to form an opinion that the income chargeable to tax has escaped assessment. - Decided in favour of assessee. - SPECIAL CIVIL APPLICATION No. 20021 of 2016 With SPECIAL CIVIL APPLICATION No. 21143 of 2016 - - - Dated:- 25-4-2017 - Mr. M.R. SHAH Mr. B.N. KARIA JJ. Appearance : Mr. MANISH J SHAH, ADVOCATE for the Petitioner(s) No. 1. Mr. SUDHIR M MEHTA, ADVOCATE for the Respondent(s) No. 1. CAV JUDGMENT (PER: Mr. M.R. SHAH) As common question of law and fact arise in both these petitions, but with respect to different assesses, both these writ petitions are heard, decided and disposed of together by this common judgment and order. 2. By way of this petition under Article 226 of the Constitution of India, being Special Civil Application No. 20021 of 2016, the petitioner-as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the said Assessing Officer supplied the reasons recorded to reopen the assessment for A.Y.2011-12, which reads as under :- In this case, information has been received from the ITO (I CI)-I II, Surat wherein it was mentioned that the assessee along with 16 other co-owners sold land situated at Survey No. 145. Block No. 140, Moje Mata Varachha, Surat for a sale consideration of ₹ 3,81,73,500/- on 20.12.2010. On verification of the details on the ITD, it is noticed that the assessee has filed his return of income for A.Y. 2011-12 declaring total income at ₹ 2,24,620/- on 21.06.2011. The assessee has not offered the said transaction in his return of income for taxation. On perusal of the return of income, it was also noticed that the assessee has not offered the capital gain fully and truly in view of Section 50C of the Act. From the Income Tax angle, it may of potential nature. Hence, I have reason to believe that the income for A.Y. 201112 amounting to ₹ 29,36,423/- escaped assessment as the assessee has failed to disclose fully and truly all material facts necessary in the return of income within the meaning of section 147 of the Income Tax Act. So, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared to the data/sale instances obtained from the Sub Registrar and the matter was referred to the Valuation Officer to determine the FMV as on 1.4.1981. The assessee has not provided the required data to the Valuation Officer for the purpose of valuation. However, the Valuation Officer has assessed the FMV as on 1.4.1981 @ ₹ 65 per sqr. Mtr. On the basis of available data with him and adopted on other cases. In the return of income, the assessee has shown his share from the sale proceeds at ₹ 51,38,740/- and has deducted the indexed cost of acquisition of ₹ 49,19,189/- and net LTCG of ₹ 2,19,551/-. On the basis of the valuation officer s report, the taxable Long term capital gain comes to ₹ 49,39,370/-, instead of ₹ 2,19,551/- disclosed in the return of income. Thus, an amount ₹ 41,19,819/- is required to be taxed in the hands of the assessee on account of undisclosed long term capital gain. I have gone through the evidential materials available on record and on the basis of these materials, I am satisfied that the assessee has not offered the taxable long term capital gain fully and truly in his return of income filed for A.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smail Vorajee [petitioner of Special Civil Application No. 20021 of 2016], the Valuation Officer has assessed the fair market value as on 1st April 1981 at ₹ 65/- per sq.m. The reopening in the case of coowner viz., Salim Ismail Vorajee is the subject matter of Special Civil Application No. 21143 of 2016. 4. Shri Manish J Shah, learned advocate has appeared on behalf of the respective petitioners and Shri Sudhir Mehta, learned advocate has appeared on behalf of the Revenue. 4.1 Shri MJ Shah, learned advocate appearing on behalf of the respective petitioners has vehemently submitted that the impugned notices issued under Section 148 of the Act are bad in law and illegal. It is further submitted by Shri Shah, learned for the petitioners that the impugned reopening of assessment for A.Y 2011-2012 is based on borrowed satisfaction and at the instance of another ITO. It is further submitted by Shri MJ Shah, learned advocate for the petitioners that in fact, solely based upon DVO s report, reopening of the assessment is not permissible. 4.2 It is submitted by Mr. Shah, learned advocate for the petitioners that the reopening of assessment for A.Y 2011-2012 is absolutely bad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the opinion of the respondent A.O, the value of the asset is lesser reported and not over reported. It is further submitted by learned advocate for the petitioners that in the present set of cases, the petitioners have adopted the value determined by the registered Valuation Officer, and as such, the Assessing Officer has not pointed out any error in such report and merely proceeded on the value arrived at by the DVO. It is further submitted by Shri Shah, learned advocate appearing for the petitioners that as held by the Division Bench of Bombay High Court in the case of Commissioner of Income-tax v. Puja Prints, reported in [2014] 360 ITR 697 [Bombay], reference to the DVO can be made only when the value adopted by the assessee is less than the fair market value, and if the value of the asset shown by the assessee is much more than the fair market value, reference to the Valuation Officer could not be made. It is submitted that therefore also, when the reference to the DVO itself was not permissible, considering the pre-amended Section 55A of the Income-tax Act, the Assessing Officer ought not to have reopened the assessment, relying solely upon the valuation of DVO and that too ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken the fair market value as on 1st April, 1981 at ₹ 400/- per sqm. On the basis of valuation report dated 24th March 2011 of the approved valuer - Shri PK Desai and also suggested to refer the matter to the departmental Valuation Officer to determine the correct value as on 1st April 1981. That, the Assessing Officer applied the fair market value taken by the assessee with the sale instances of that area as on 1st April 1981, which were obtained from the office of the Sub-Registrar and came to the conclusion that the valuation taken by the assessee as on 1st April, 1981 at ₹ 400/- per sqm is on the higher side, and hence, the matter was referred to the DVO for valuation under Section 55A of the Act for ascertaining the fair market value of the property in question [as on 1st April, 1981]. That, the Assessing Officer initiated Section 147 proceedings, however, the same came to be dropped on 15th March 2016, since the sale proceeds of the land were found to be equivalent to the circle rate, and hence, the question of deemed capital gain as per the provisions of Section 50C of the Act does not arise at all. It is submitted that in the meanwhile, the valuation report from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , considering the fair market value of the land in question as on 1st April 1981 at ₹ 400/- per sqm. It appears that thereafter, on the basis of information given by another officer ie., Income Tax Officer [I CI] Surat, the Assessing Officer made a reference to the Departmental Valuation Officer and thereafter, solely relying upon DVO s report, assessed the fair market value of the land at ₹ 65/- per sqm., the Assessing Officer has sought to reopen the assessment for A.Y.2011-2012. Therefore, the question posed before this Court for consideration is whether solely relying upon and based upon DVO s report and without holding any further inquiry thereafter with respect to the fair market value of the land as on 1st April, 1981, is it open for the Assessing Officer to reopen the assessment ? 7.1 In the case of Asstt. CIT v. Dhariya Construction [2010] 328 ITR 515 [SC], the opinion of DVO per se is not an information for the purpose of reopening of the assessment under section 147 of the Act. The Assessing Officer has to apply his mind as to the information; if any, collected and thereby form a belief thereon. 7.2 A similar view has been expressed by the Division ..... X X X X Extracts X X X X X X X X Extracts X X X X
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