9911796707
TMI Blog1997 (7) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... sed sources towards unexplained investment in the construction of the hotel building on the basis of the DVO's report? (e) Whether the Assessing Officer was justified in charging interest under sections 139(8) and 217 of the Act? At the time of hearing, the assessee's counsel Shri Pawan Kumar, Advocate did not press for adjudication of issues at 'b', 'c' and 'e' above. No arguments were advanced by both sides. Hence, no decision is given. 2. The decision on the issue at "d" is dependent upon the decision which we may arrive at in relation to issue "a" above. But before we decide the abovementioned two issues the facts have to be fathomed. The assessee is a partnership firm and it started construction of a Hotel Building (Hotel Chetna) at Deoghar and the construction work commenced from 1-1-1981 and got completed by 31st March, 1982. The accounting period or the previous year of the assessee is financial year, i.e., 1st April to 31st March of the following year. The assessee did not file return for the assessment year 1981-82, previous year of which ended on 31-3-1981 nor it filed return for the assessment year 1982-83 which is year under appeal, the previous year of which ended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered. The assessee must have invested out of its income which escaped assessment. Hence, issue notice under section 147/148 for the assessment year 1981-82." While issuing notice for the assessment year 1982-83 (year under appeal), no separate reasons have been recorded except making a note on 17-6-1986 in the assessee's file for the assessment year 1982-83 stating as under: "For the reasons recorded in the order sheet for assessment year 1981-82 issue notice under section 147/148." The above reasons came to our knowledge from xerox copy of the order sheets obtained by the assessee from the Assessing Officer and placed in the paper book which are at page 4 for assessment year 1981-82 and page 7 for assessment year 1982-83. After much correspondence the assessee filed returns for both the assessment years declaring nil in. These returns were filed pursuant to notices issued for both the years under section 148 by the Assessing Officer. Even after filing of the return the assessee objected to the assumption of jurisdiction by the Assessing Officer for issuing notices under section 148, read with section 147(a), of the Act. The Assessing Officer referred the matter to his superio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 82 and the balance sum of Rs. 4,28,160 is considered as amount invested by the assessee in the construction of the Hotel Building during the previous year ending 31-3-1982 relevant for the assessment year 1982-83 and from this, the sum of Rs. 1,28,000 as found recorded in account books as invested is deducted. Thus, the net unexplained investment in the construction of Hotel Building as per DVO's report was taken by the Assessing Officer in a sum of Rs. 3,06,160. This is considered as income from undisclosed sources and assessed along with the land rent paid. This is how the total taxable income is computed in a sum of Rs. 3,06,160. Not being satisfied, with the framing of the assessment as well as computation of income made therein, the assessee went to the Appellate Commissioner (A/C) as per provisions of section 246(c) of the Income-tax Act, 1961. 5. The Appellate Commissioner after elaborately discussing the facts of case agreed with the Assessing Officer and dismissed the appeal. As per the order of the Appellate Commissioner dated 21-9-1990, the present appeal came to be filed wherein the assessee took nearly 13 grounds. This appeal was heard and disposed of through order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DVO was considered as unexplained investment in the construction of the Hotel Building for two years and he, therefore, issued notices under section 148 read with section 147(a) for non-filing of returns for both the assessment years, viz., 1981-82 and 1982-83 to bring to tax the undisclosed investment in the Hotel Building as per DVO's report. 8. We have, therefore, to decide first whether the Assessing Officer on the basis of the said report of the DVO can form a reasonable belief under section 147(a) that income for assessment year 1982-83 chargeable to tax escaped assessment by non-filing of the return by the assessee under section 139(1) by failing to disclose amounts spent and invested by it in the construction for the purpose of assessment. To put it in simple words: is the assessee obliged under section 139(1) to file a return declaring therein the amount spent or invested in the construction of the Hotel Chetna particularly when the fact remains that no true or real income either accrued or arose to the assessee during the previous year relevant to the year under appeal? This compels us to find out the meaning and definition of the word 'income' as used in the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chargeable to income-tax under clause (iiib) of section 28; (vc) any sum chargeable to income-tax under clause (iiic) of section 28; (vd) the value of any benefit or perquisite taxable under clause (iv) of section 28; (vi) any capital gains chargeable under section 45; (vii) the profits and gains of any business of insurance carried on by a mutual insurance company or by a co-operative society, computed in accordance with section 44 or any surplus taken to be such profits and gains by virtue of provisions contained in the First Schedule; (viii) omitted by the Finance Act, 1988, w.e.f. 1-4-1988. Originally sub-clause (viii) was inserted by the Finance Act, 1964 w.e.f. 1-4-1964; (ix) any winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form of nature whatsoever; (x) any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees' State Insurance Act, 1948 (34 of 1948) or any other fund for the welfare of such employees;" Upon a plain reading of the above definition, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time of finalisation of the assessment, source of the borrowed amount which is not recorded in his account books then the borrowed sum is deemed as income of the assessee of that previous year and added to the returned income. Unless such an eventuality takes place the borrowed sum is not considered or added as deemed income. Similarly, if any amount is spent or invested by an assessee either from his own funds or from borrowed monies in the construction or purchase of a property or asset it is not income in the hands of the assessee as defined in section 2(24) of the Act. The provisions of section 69 in clear terms lay down that if any investment is not recorded in the account books maintained by an assessee and the assessee fails to explain satisfactorily the source of investment then such an amount shall be deemed as income of the assessee of the financial year and added to the returned income while framing the assessment. 12. When we turn to the provisions of section 147(a) which is pressed into service by the revenue in this appeal, we notice that there are two conditions which are required essentially to be satisfied. Firstly, the Assessing Officer should form a reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e which exceeded the chargeable limit and, therefore, was under an obligation to file a return of such income under section 139 of the Act. The assessee's case as narrated above is that it had no chargeable income and, therefore, no return under section 139(1) of the Act was filed. The assessee spent a sum of Rs. 2,47,200 up to 31st March, 1982 in the construction of Hotel Building which is recorded in its account books supported with relevant evidence. This, according to the assessee, is not income and, hence, no return was filed as laid down in section 139(1) of the Act. No duty was, therefore, cast says the assessee on it to act in the manner laid down in section 139(1) of the Act. Can the Assessing Officer on such facts and circumstances assume jurisdiction under section 147(a) and issue notice under section 148 for the reasons mentioned and recorded in the file for assessment year 1981-82 which we have extracted elsewhere above? In our considered opinion, the Assessing Officer cannot do so. When we read the recorded reasons we are inclined to agree with the assessee's AR that there is no live link or nexus or any rationale or intelligible connection with the escapement of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng notice under section 148 was the opinion of the DVO that the cost of construction of the Hotel Building was Rs. 5,37,500 and not Rs. 2,47,200 according to the assessee. We ask; can this report of the DVO expressing his opinion on the cost of construction be taken as sacrosanct document on which a reasonable and honest belief be formed by legally instructed and well informed reasonable person about the escapement of chargeable income? The answer obviously has to be in the negative. Because report given by any valuer or by any expert is merely an opinion and always remains an opinion. It is well-known that valuation opinion differ from person to person and from property to property, its location and several other factors and circumstances which again differ from case to case. The opinion or report of an expert is after all a statistical hypothesis. Such reports or opinions of experts cannot be perfect, sacrosanct, rational and dependable material to be used for the purpose of formation of a reasonable belief that income of a person, as in the present case, being amounts spent by the assessee on construction of Hotel Building, escaped assessment to tax. Apart from the DVO's report, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that whatever amount the assessee spent or invested in the construction of hotel building will remain unexplained and as such will ultimately be added as income from undisclosed sources in terms of section 69 of the Act and, therefore, he could not have formed a reasonable belief that income of the assessee chargeable to tax escaped assessment. We reiterate that the reasons recorded have no live-link or nexus with the facts of the case which could satisfactorily persuade, enable or lead the Assessing Officer for formation of a reasonable belief about the escapement to tax of the chargeable income of the assessee in the shape of amount spent or invested in the construction of hotel building on the basis of DVO's report. 17. From the above discussion, we, therefore, have no manner of doubt in our mind that the Assessing Officer erred in assuming jurisdiction under section 147(a) of the Act and in issuing notice under section 148 of the Act. Framing of the impugned assessment pursuant thereto is, therefore, wholly without jurisdiction and as such void. We, therefore, hold accordingly and cancel the assessment as being void and without jurisdiction. In this view of the matter, the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the assessee, there is no doubt left that it would be part of 'income', notwithstanding that it is not included in the inclusive definition in section 2(24) of the Income-tax Act, 1961. 22. Any other interpretation will lead to absurd result. If it is not treated as 'income', then the Assessing Officer will be prevented from including it in the total income in an assessment. The Assessing Officer will also be prevented from initiating penalty proceedings under section 271(1)(c) of the Act for concealment, if the amount is not disclosed in the returned income. It will not be possible to prosecute the assessee under the provisions of section 276C of the Act. I am, therefore, unable to subscribe to the view taken by my learned brother and hold that section 147(a) or section 147(b) can be invoked for assessment of deemed income also. 23. It may also be mentioned that the assessee's grounds of appeal do not contain any such grievance nor did the learned counsel for the assessee argue on these lines. 24. There are a catena of decisions relating to reopening of assessment under section 147(a) of the Act, but recently High Courts have been following and referring to the law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause some fresh facts had come to light which were not previously disclosed or some information with regard to the facts previously disclosed comes into his possession which tends to expose the untruthfulness of those facts. In such situations, it is not a case of mere change of opinion or the drawing of a different inference from the same facts as were earlier available but acting on fresh information." On the same page, i.e., page 477, it was further held: "Since the belief is that of the Income-tax Officer, the sufficiency of reasons for forming the belief is not for the Court to judge but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, the Court may look into the conclusion arrived at by the Income-tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income-tax Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief." 26. In the case under consideration by the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30. The learned counsel for the assessee had relied before the Bench on a decisions of the Patna High Court in CIT v. Agarwalla Bros. [1991] 189 ITR 786 holding that Inspector's report cannot be taken as an aid, and Chunnilal Surajmal v. CIT [1986] 160 ITR 141/27 Taxman 229, where statement before the Income-tax Appellate Tribunal was not considered adequately. These decisions were given on peculiar facts of those cases and are, therefore, not applicable here. Moreover, the above conclusion is being based on the decisions of Supreme Court which were not available in the course of hearing of the cases relied upon. The cases, therefore, do not help the assessee. 31. For the above reasons, I hold that the Assessing Officer had specific, reliable and relevant information on the basis of which he recorded the reasons. 32. The reasons recorded are brief, but the background is quite clear and has been brought out in the proposed order of my learned brother. A report of the DVO had been obtained during assessment proceedings for assessment year 1983-84 according to which the entire cost of construction from 1-1-1981 to 31-3-1983 was Rs. 5,37,500 against Rs. 2,47,200 disclosed by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e did not press for adjudication. In view of the conclusion arrived at by me, it will be necessary to dispose of this ground also. The assessee cannot be allowed to withdraw this ground. The reason is clear. The appeal was decided earlier by the Tribunal. Thereafter the Tribunal by its order dated 28-10-1991 held that some instructions being not complied with, cannot be said to be non-compliance of notices under sections 142(1) and 143(2) of the Act. The Tribunal, therefore, set aside the orders of the CIT(Appeals) and the Assessing Officer and directed the Assessing Officer to complete the assessment afresh after giving an opportunity of being heard to the assessee. The original assessment order was completed under section 144. 36. The assessee filed a Misc. Application before the Tribunal and the Tribunal held in their order dated 20-3-1995 that both the disputes, i.e., the issue or reopening under section 147(a) and framing of ex parte order are inter-linked and it is deemed fit and proper that the entire order passed by the Tribunal on 28-10-1991 should be recalled. This finding was given although the Misc. Application related to reopening under section 147(a) only. 37. When ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Act, 1961? (4) If the answer to the above question No. 3 is that the reassessment proceedings are under section 147(a) of the Act, then whether there is live-link or direct rationale and intelligible nexus as laid down by the Hon'ble Supreme Court in the case of Ganga Saran & Sons (P.) Ltd. for formation of a reasonable belief on the part of the Assessing Officer that income of the assessee chargeable to tax had escaped assessment? (5) If the answer to question No. 3 above is that the reassessment proceedings were commenced under section 147(b) of the Act, then whether the assessments framed on 31st July, 1989, that is to say, more than one year after the service of notice under section 148 of the Act is not barred by limitation as provided in section 153(2)(b)(ii) of the Act? (6) Whether in law and on the basis of the report of the DVO about the cost of construction, the Assessing Officer can conclude and form a reasonable belief that such amount is the income of the assessee from some undisclosed sources in terms of deeming provisions of section 69 of the Act which has escaped assessment to tax? (7) Whether, on the facts and in the circumstances of the case, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction of Hotel by the assessee? (2) If answer to the question No. 1 above is in the affirmative, then whether the report of the Departmental Valuation Officer constitutes information to the Assessing Officer enabling and authorising him to initiate reassessment proceedings under section 147 of the Act? (3) If the answer to the question No. 2 above is in affirmative, then whether the reassessment proceedings have been commenced under section 147(a) or under section 147(b) of the Income-tax Act, 1961? (4) If the answer to the above question No. 3 is that the reassessment proceedings under section 147(a) of the Act then whether there is live-link or direct, rationale and intelligible nexus as laid down by the Hon'ble Supreme Court in the case of Ganga Saran & Sons (P.) Ltd. [1981] 130 ITR 1 for formation of a reasonable belief on the part of the Assessing Officer that income of the assessee chargeable to tax had escaped assessment? (5) If the answer to question No. 3 is that the reassessment proceedings were commenced under section 147(a) of the Act then whether the assessments framed on 31st July, 1989, that is to say, more than one year after the service of notice under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e opinion of the majority of the Members of the Appellate Tribunal who have heard the case, including those who first heard it." It would show that the point or points of difference shall be referred by the President to a Third Member. Suppose, if there is no unanimity even in identifying the point or points of difference among the differing Members, just like in this case, then I feel it is the duty of the President to identify the real points of difference and refer them to a Third Member whom he may appoint under the powers given to him under section 255(4). After going through the differing orders and also the different questions involving points of difference, I identify the following as the real points of difference between the differing Members: (1) Whether, on the facts of the case and in law, the Assessing Officer was justified in issuing notice under section 148 of the Income-tax Act read with section 147(a) of the Income-tax Act, 1961? (2) Whether the report of the DVO constitutes "information" to the Assessing Officer enabling or authorising him to initiate reassessment proceedings under section 147 of the Income-tax Act? (3) Whether the report of the DVO about cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee in the construction of the Hotel Building and that unexplained money should have been added as the assessee's deemed income under section 69. Since the unexplained money escaped assessment in the hands of the assessee for assessment year 1982-83, the Assessing Officer felt that the assessments should be reopened for assessment years 1981-82 and 1982-83. The Assessing Officer found that the assessee did not file any return whatsoever originally for assessment years 1981-82 and 1982-83. It began filing returns only from assessment year 1983-84. The Assessing Officer, intending to reopen the assessments for assessment years 1981-82 and 1982-83, recorded the following reasons on 18-3-1986 for reopening the assessment for assessment year 1981-82: "From the assessment records of the assessment year 1983-84, it appears that the assessee invested in the construction of Hotel Building during the financial year relevant to the assessment year 1981-82. This investment has not been considered. The assessee must have invested out of its income which escaped assessment. Hence, issue notice under section 147/148 for the assessment year 1981-82." He adopted the same reasons as reasons for reo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,040 was considered as investment by the Assessing Officer in the previous year relevant to assessment year 1981-82 and the balance sum of Rs. 4,28,160 was considered as amount invested (by the Assessing Officer) in the construction of the Hotel Building during the previous year ending 31-3-1982 relevant for assessment year 1982-83 and from this the sum of Rs. 1,28,000 as found recorded in the account books as investment was deducted. Thus, the net unexplained investment in the construction of Hotel Bldg. was Rs. 3,00,160 in assessment year 1982-83. Admittedly, the assessee did not file voluntary returns under section 139(1) for assessment years 1981-82 and 1982-83. According to the assessee, there was no chargeable income accrued to it or earned by it during the previous years relevant to assessment years 1981-82 and 1982-83. No notices under section 139(2) were issued. 7. The learned Judicial Member first considered whether the deemed income under sections 68 and 69 is comprehended by the word 'income' under section 2(24) of the Income-tax Act. According to the Judicial Member, the deemed income under section 68 or section 69 is no income at all within the meaning of section 2( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Practice of Income-tax", Eighth Edition, Vol. I, explaining the scope of section 69, it is stated that: "The section provides in effect that- (a) the value of an unexplained investment not recorded in the assessee's books of account may be assessed as income; (b) for the above purpose, the financial year in which the investment is made may be taken as the previous year; and (c) the assessment should be made regardless of the question whether income sufficiently large to match the investment could possibly have been earned during the period between the commencement of the relevant financial year and the date of the investment." In para 10 of his order, the learned Judicial Member writes: "When a person borrows money, it is a receipt in his hands and not income because every receipt is not income .... Borrower is, therefore, under no obligation to file a return as provided in section 139 declaring or disclosing the loan amount until and unless income results from such borrowing and further such income exceeds the chargeable limit prescribed from year to year as per Finance Act of each year passed by the Legislature.... Similarly, if any amount is spent or invested by an assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his order, the learned Judicial Member states that two conditions are to be fulfilled before invoking the provisions of section 147(a). In that connection, he had cited the Hon'ble Supreme Court's decisions in Lakhmani Mewal Das's case at page 445 and Ganga Saran & Sons (P.) Ltd.'s case and ultimately held as follows: "When the assessee is not obliged to file a return under section 139 of deemed incomes from sections 68 to 69D then the assessee cannot be accused of having failed or omitted to disclose full and true facts relating to his assessment for that year." According to me, the decisions of the Hon'ble Supreme Court were cited out of context and they do not apply to the facts and circumstances of this case. Again, at para 12, the learned Judicial Member says the following: "12. What first has to be seen is whether the assessee had income which exceeded the chargeable limit and, therefore, was under an obligation to file a return of such income under section 139 of the Act. The assessee's case as narrated above is that it had no chargeable income and, therefore, no return under section 139(1) of the Act was filed. The assessee spent a sum of Rs. 2,47,000 up to 31st March, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances which again differ from case to case. The opinion or report of an expert is after all a statistical hypothesis. Such report or opinions of experts cannot be perfect, sacrosanct, rational and dependable material to be used for the purpose of formation of a reasonable belief that income of a person, as in the present case, being amounts spent by the assessee on construction of Hotel Building, escaped assessment to tax. Apart from the DVO's report, no other material was in the possession of the Assessing Officer which could enable him to form a reasonable belief that the income of this assessee chargeable to tax had escaped assessment. We are unable to comprehend how the Assessing Officer before hearing the assessee and knowing the true facts or real sources of the alleged extra investment by the assessee in the Hotel Building on DVO's report could conclude that the extra investment is truly met and incurred by the assessee and, therefore, such extra amount invested is from some undisclosed sources of the assessee and then form a reasonable belief under section 147(a) that income of assessee chargeable to tax for this year escaped assessment to tax. It is all in the realm of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have no hesitation in holding that section 55A of the Act empowers the Income-tax Officer to have the fair market value of a capital asset determined by referring the same to a Valuation Officer. On such reference, the provisions, inter alia, of sub-sections (2) to (6) of section 16A and sub-sections (3) and (4) of section 23 of the Wealth-tax Act, 1957, are ipso facto applicable by extension, as laid down under section 55A of the Act itself. So also, the 'Valuation Officer' in section 55A of the Act has the same meaning as in clause (r) of section 2 of the Wealth-tax Act. Consequently, it is not in dispute that the Rules framed under the Wealth-tax Act will also apply in this behalf." Thus, it is categorically held by the Andhra Pradesh High Court that the report of the Valuation Officer can be validly made use of by the Valuation Officer to determine the real value of the property or the construction cost of the property. According to the Calcutta High Court, on the basis of the valuation report, the proceedings can also be reopened validly. Thus, the valuation report is an authentic document which can be made use of as relevant material in the hands of the Assessing Officer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, was when the reasons recorded do not reflect some material which is already secured into the record, whether reopening can be made. In this connection, the decision of the Patna High Court in Agarwalla Bros.' case was cited before me. According to the learned counsel for the assessee, the ratio of the above Patna High Court decision can be found out from pages 792-3, which is as follows: "Therefore, looking at the entire scheme and purpose of the Act, I am of the considered view that the validity of the assumption of jurisdiction under section 147(a) can be tested only by reference to the reasons recorded under section 148(2) of the Act, and the Income-tax Officer is not authorised to refer to any other reason even if it can be otherwise inferred and/or gathered from the records. If the reasons so recorded are such that, on their basis, it can possibly be said that income chargeable to tax has escaped assessment for a certain assessment year because of the omission or failure on the part of the assessee to make a return for that year or to disclose fully and truly all material facts necessary for such assessment there can be a valid case for invoking the jurisdiction conferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of Rs. 50,000 from a Calcutta company on 19-5-1962 and an entry was made in the books of account of the assessee-firm on 25-5-1962. The loan was said to have been obtained in cash. It was the case of the assessee that it was repaid by return of cash in 1968. For the assessment years 1963-64 to 1968-69, interest on the loan was said to have been paid by means of sending a cheque or bank draft. The assessments of the assessee-firm were completed for assessment years 1962-63 to 1968-69 accepting the genuineness of the loan and also allowing interest as a deduction. Thereafter, the ITO having jurisdiction over the Calcutta company, informed the ITO, Azamgarh, by a letter dated 7-7-1970 that the Mg. Director of the Calcutta company made a confession to the effect that the company was only a name-lender and never advanced any loans to any person and this confession was acted upon while making the assessments against the company for assessment years 1962-63 to 1964-65. After the receipt of the letter of the Calcutta ITO dated 7-7-1970, the ITO, Azamgarh, re-opened the assessments of the assessee-firm under section 147(a) on the ground that income had escaped assessment to tax as a res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or drawing a different inference from the same facts which are already on file but one of acting on fresh information. Therefore, in view of the categorical decision of the Hon'ble Supreme Court. I have no reservation in my mind to hold that the valuation report of the DVO constitutes fresh information within the meaning of section 147. 10. It was argued before that section 55A comes into operation only or can be made use of only when the question of computation of capital gains comes up for consideration before the Tribunal and not otherwise. The learned counsel for the assessee brought to my notice the specific language of the section, namely, "With a view to ascertaining the fair market value of a capital asset". The learned counsel also brings to my notice that section 55A obtaining in Chapter IV-E which deals exclusively with capital gains. The learned counsel, no doubt, fairly admitted that the heading "E- Capital gains" under Chapter IV is part of Chapter IV but still because section 55A was obtaining under a specific caption "Capital gains" it should be applied only when ascertainment of capital gains was subject-matter of the appeal and not otherwise. This proposition w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id down unequivocally the above proposition which is already extracted in the headnote of the decision. Thus, it is clear that the Madras High Court as well as the Andhra Pradesh High Court categorically took the view that even for the purpose ascertaining the value of cost of construction made by the assessee the DVO can be deputed despite the fact that the assessment proceedings were over. Therefore, the Madras High Court decision clearly helps or comes to the aid of the revenue in this appeal. 11. If there are, in fact, some reasonable grounds for the Assessing Officer to believe that there had been any non-disclosure as regards material facts, whether the grounds are adequate or not, is not a matter for the Tribunal to investigate because the sufficiency of the grounds which induced the Assessing Officer to act is not a justiciable issue. Thus, the Tribunal has jurisdiction to determine the question whether there was a live-link or close nexus between the reasons for the issue of reassessment notice and the plea regarding escapement of income. The above propositions are laid down in the following cases: 1. S. Narayanappa v. CIT [1967] 63 ITR 219 at pages 221-2 (SC). 2. Thant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Court, of course, cannot investigate into the adequacy or sufficiency of the reasons which have weighed with the Income-tax Officer in coming to the belief, but the Court can certainly examine whether the reasons are relevant and have a bearing on the matters in regard to which he is required to entertain the belief before he can issue notice under section 147(a)." Thus, in my understanding, it is enough if there was found to be non-disclosure as regards material facts. Whether those material facts are conclusive or not is not a matter for the Tribunal to investigate. The Tribunal should concern itself only with the grounds for reopening and the sufficiency of those grounds is not its concern. Here, in this case, when I compare the book value of the Hotel construction with the value estimated by the DVO, there appears to be withholding of primary facts with regard to the amount of investment over the Building. Therefore, for the purpose of reopening the assessment, the report of the Valuation Officer can certainly be relied upon even though it is received subsequent to the completion of assessment for assessment year 1982-83. Thus, on a conspectus view of my whole discussion a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
