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Swati Saurin Shah Versus Income Tax Officer - Ward 5 (2) (4) Or His Successor

[2016] 386 ITR 256 - Reopening of assessment - petitioner had produced misguiding valuation report of the Registered Valuer which resulted in under-assessment of long term capital gain - Held that:- On a perusal of the reasons recorded for reopening the assessment, it is amply clear that the only reason for stating that the assessee had submitted an incorrect/misguiding valuation report is that the Assessing Officer in the case of the co-owner did not accept such report. In the case of the petit .....

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ble material for the purpose of reopening the assessment under section 147. In the opinion of this court, the fact that the Assessing Officer in the case of the petitioner accepted the valuation report, whereas another Assessing Officer, in the case of the co-owner took a different view and did not accept the valuation of the Registered Valuer which resulted in assessment of higher income, would not constitute fresh tangible material to reopen the assessment. The view taken by the Assessing Offi .....

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he ground for reopening is that according to the Assessing Officer the assessee is entitled to deduction of only ₹ 50,00,000/- under section 54EC of the Act and that against the decision of the Tribunal in the above case, an appeal is pending consideration before the High Court. Thus, it appears that the present Assessing Officer now believes that the Assessing Officer who had framed the assessment under section 143(3) of the Act had made a mistake in allowing deduction in excess of ₹ .....

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he purpose of correcting a mistake. In effect and substance, therefore, the present Assessing Officer wants to sit in appeal over the decision of his predecessor Assessing Officer, who has examined the claim and allowed the claim of deduction of ₹ 81,00,000/- under section 54EC of the Act, on the ground that the assessee was eligible for deduction only to the extent of ₹ 50,00,000/- for the year under consideration. Thus, the reopening of assessment is not sustainable on either of th .....

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as "the Act") seeking to reopen the assessment of the petitioner for assessment year 2011-12. 2. The petitioner is an individual and derives income by way of rented property, capital gains and income from other sources and is regularly assessed to income tax. The petitioner filed her return of income for assessment year 2011-12 on 06.09.2011 declaring total income of ₹ 9,00,460/-, which inter alia included long term capital gain on sale of one-half share in Banker s bungalow, Pr .....

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called for the details/clarifications relating to long term capital gain shown in respect of the said bungalow. It is the case of the petitioner that in response thereto, she had submitted complete details by a reply dated 08.10.2013 and thereafter, from time to time, as and when called for. The details so provided included a valuation report of the property in question as on 01.04.1981 prepared by a Registered Valuer Shri Induprasad C. Patel, allotment advice in respect of capital gain bond of .....

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ioner for assessment year 2011-12. In response to the notice, the petitioner filed a letter dated 25.03.2015 asking the Assessing Officer to treat the original return of income filed on 06.09.2011 as her return of income in response to the impugned notice and also requested for a copy of reasons recorded for reopening the assessment. By a letter dated 30.04.2015, a copy of the reasons recorded on 19.03.2015 came to be furnished to the petitioner. The petitioner, thereafter, submitted her objecti .....

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dia. 4. Mr. S. N. Divatia, learned advocate for the petitioner drew the attention of the court to the reasons recorded by the Assessing Officer for reopening the assessment to point out that from the reasons recorded, it is evident that this is a case of change of opinion on both the items proposed to be reassessed. It was submitted that merely because in the case of a co-owner a view is taken, on that borrowed satisfaction, the Assessing Officer seeks to reopen the assessment. According to the .....

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ncome in this year, it was thoroughly verified by the respondent during the original assessment proceedings by calling the requisite details/documents from the petitioner. 4.1 Reliance was also placed upon the decision of the Supreme Court in the case of Assistant Commissioner of Income Tax v. Dhariya Construction Co., [2010] 328 ITR 515 (SC) wherein, the court held that the opinion of the DVO per se is not an information for the purposes of reopening assessment under section 147 of the Income T .....

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section 148 of the Act on the ground that the Assessing Officer could not have reopened the assessment under section 147 of the act on the ground that the DVO had estimated the cost of construction at a higher figure than that shown by the assessee in the absence of any additional material in support thereof. 4.2 Reference was made to the decision of the Supreme Court in the case of Dilip N. Shroff v. Joint Commissioner of Income Tax, Mumbai and another, (2007) 6 SCC 329, wherein, the court had .....

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cannot be an opinion, it also cannot be a ground for reopening the assessment. 4.3 Referring to the reasons recorded, it was submitted that the same clearly show that the valuation as on 01.04.1981 as well as the claim of exemption under section 54EC of the Act were thoroughly examined by the Assessing Officer at the time of original assessment. It was submitted that in respect of claim of exemption of ₹ 81,00,000/- under section 54EC of the Act, the petitioner had furnished a copy of the .....

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ded do not have any legs to stand, and hence the impugned notice deserves to be quashed. 5. Opposing the petition, Mrs. Mauna Bhatt, learned Senior Standing Counsel for the respondent submitted that the assessment has been reopened within a period of four years and hence, the scope of the proceedings under section 147 of the Act is wider. Referring to the assessment framed under section 143(3) of the Act, it was pointed out that the Assessing Officer has not formed any opinion in respect of the .....

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s, [1999] 236 ITR 34, wherein the case of the revenue was that the assessee was charging to its profit and loss account, fiscal duties paid during the year as well as labour charges, power, fuel, wages, chemicals, etc. However, while valuing its closing stock, the elements of fiscal duty and the other direct manufacturing costs were not included, which resulted in undervaluation of inventories and understatement of profits. This information was obtained by the revenue in a subsequent year s asse .....

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5.2 Reliance was also placed upon the decision of the Bombay High Court in the case of Siemens Information Systems Limited v. Assistant Commissioner of Income Tax and others, [2012] 343 ITR 188 (Bom.), for the proposition that merely because the case of the assessee was accepted as correct, in the original assessment for the assessment year in question, that would not preclude the Income Tax Officer to reopen the assessment for the earlier year on the basis of a finding of fact made on the basi .....

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uropean Breweries Ltd. v. Income Tax Officer and others, [2012] 343 ITR 195 (Bom.), wherein the court found that, that was a case where the Assessing Officer had tangible material which had come before him in the course of the assessment proceedings for the assessment year 2008-09 and which would form the subject matter of further investigation once the assessment proceedings for the assessment year 2004-05 were reopened. The court held that the exercise of the power to reopen the assessment, th .....

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f law or as to the interpretation of certain facts relevant to the particular assessment year through whatever source and the same is generally treated as information. It was submitted that in the present case, the information was in the form of assessment order passed in the case of the co-owner which order had been upheld by the Commissioner (Appeals), under the circumstances, this being a reopening within a period of four years and such reopening being based upon tangible material, there is n .....

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,00,000/- under section 84EC of the Act. It was, accordingly, urged that the petition being devoid of merit, deserves to be dismissed. 6. In the backdrop of the above facts, the validity of the impugned notice under section 148 of the Act whereby the Assessing Officer seeks to reopen the assessment for assessment year 2011-12 is required to be examined. In the present case, during the course of scrutiny assessment under section 143(3) of the Act, the Assessing Officer had issued a notices under .....

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nds as well as allotment letter for ₹ 50,00,000/-. The petitioner, by a communication dated 08.10.2013, furnished copies of the Demat Account of REC Bonds for ₹ 50,00,000/- as well as the valuation report of Shri Induprasad C. Patel, Registered Valuer. The petitioner also furnished copies of the allotment advice issued by the Rural Electrification Corporation Ltd. in respect of 500 bonds worth ₹ 50,00,000/- as well as in respect of allotment of 310 bonds. The Assessing Officer, .....

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ble property as on 01.04.1981 and that the petitioner had made excess claim for deduction under section 54EC of the Act. That as a result of furnishing of misguided valuation report of Registered Valuer, the cost of acquisition was adopted at ₹ 25,78,300/- as worked out by Registered Valuer as on 01.04.1981. That, accordingly, the taxable long term capital gain of the petitioner was worked out at Rs. Nil. However, in the case of Shri Asit R. Shah, joint owner of the property having one-hal .....

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, the fair market value as on 01.04.1981 was worked out at ₹ 3,67,875/- as against the fair market value worked out at ₹ 26,15,591/- by the Registered Valuer and accordingly, the indexed cost was worked out at ₹ 91,65,857/- and revised long term capital gain was taxed accordingly for assessment year 2011-12. That such decision of the Assessing Officer was upheld by the Commissioner of Income Tax (Appeals). That since the facts of Shri Asit R. Shah and the petitioner are identic .....

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54EC, the assessee is entitled for deduction of ₹ 50,00,000/- and that the appeal of the Department against the decision of the Tribunal in Aspi Ginwala v. ACIT, Baroda is pending before the High Court of Gujarat and during the pendency of the appeal, the claim of the assessee is to be restricted to ₹ 50 lac. 8. Thus, the assessment is sought to be reopened on two grounds: Firstly, that at the time of scrutiny assessment, the petitioner had produced misguiding valuation report of the .....

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e petitioner had furnished details as called for by the Assessing Officer, including the report of the Registered Valuer as well as the bonds issued by REC Ltd. The Assessing Officer, at the relevant time being convinced with the material produced on record by the petitioner, framed assessment under section 143(3) of the Act and computed the long term capital gain and allowed the claim of deduction under section 54EC of the Act accordingly. Insofar as the claim of deduction under section 54EC of .....

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the Department s appeal against the decision of the Tribunal in the case of Aspi Ginawala, the claim under section 54EC of the Act is required to be restricted to ₹ 50,00,000/-. 10. On a perusal of the record of the case, it appears that the petitioner, in the objections raised against the reopening of the assessment, had raised an objection that the reopening was done on the basis of the objection raised by the audit party. A perusal of the order rejecting the objections reveals that acc .....

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on of the Supreme Court in the case of Income Tax Officer v. Selected Dalurband Coal Co. (P) Ltd., 217 ITR 597 (SC), wherein, it has been held that a communication received by Assessing Officer in discharge of official duties is information for issuance of a notice under section 148 of the Act. The Assessing Officer has, accordingly, considered the information received from the Joint Commissioner of Income Tax, Range-2, Ahmedabad in the form of an assessment order whereby, he had assessed the as .....

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letter were true or not was not the concern at that stage. The only question was whether there was relevant material on which a reasonable person could have formed the requisite belief. Reverting to the facts of the present case, the Assessing Officer while framing the assessment in the case of the petitioner under section 143(3) of the Act, had accepted the valuation report and had computed long term capital gain accordingly, whereas in the case of co-owner, the concerned Assessing Officer did .....

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d the belief that income chargeable to tax has escaped assessment. 11. On a perusal of the reasons recorded for reopening the assessment, it is amply clear that the only reason for stating that the assessee had submitted an incorrect/misguiding valuation report is that the Assessing Officer in the case of the co-owner did not accept such report. In the case of the petitioner, the Assessing Officer while framing assessment under section 143(3) of the Act had, after considering the material produc .....

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ssing Officer in the case of the petitioner accepted the valuation report, whereas another Assessing Officer, in the case of the co-owner took a different view and did not accept the valuation of the Registered Valuer which resulted in assessment of higher income, would not constitute fresh tangible material to reopen the assessment. The view taken by the Assessing Officer in the case of the coowner, being just one of two possible views, is merely another opinion on the same set of facts. Clearl .....

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led for details in this regard and the petitioner had produced the certificates issued by the Rural Electrification Corporation Ltd. for a total amount of ₹ 81,00,000/- and had also placed reliance upon the decision of the Tribunal in the case of Aspi Ginwala v. ACIT, Baroda (supra) and the Assessing Officer after being satisfied as regards the claim of the petitioner, had allowed the deduction of ₹ 81,00,000/- under section 54EC of the Act. From the reasons recorded, it appears that .....

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