TMI Blog2016 (5) TMI 475X X X X Extracts X X X X X X X X Extracts X X X X ..... revious reassessment or scrutiny assessment and the relevant assessing officer accepted the same. The present attempt to question the valuation report amounts to a change of opinion or a review of the assessment, which is impermissible. The assessee had disclosed all facts and the basis for the valuation. That was accepted by the department. That is not a matter which can be reopened by claiming that there was a mistake in the valuation report.- Decided against revenue Assessment of cost or sale price of the New Delhi property - inclusion of amount received on account of rent or occupation charges - Held that:- It is evident that the government was in possession of the property for a considerable period without paying any occupation charges therefor. In the arbitration proceedings instituted by the petitioners and other co-sharers (they were then all co-lessees in respect of the property but co-lessors qua the occupant) an award was made for payment of damages on account of rent or occupation charges. It is nobody’s case that such amount was received in the relevant assessment year; at least that is not asserted in the recorded reasons. Further, in the context of what should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Section 147 of the Act applies. In the case of the petitioning assessee in the first matter, the proposed reassessment would be a second reassessment. In respect of the petitioner in the second matter, the proposed reassessment would be in addition to the scrutiny assessment undertaken earlier. The facts pertaining to the first petition are referred to in this judgment since the facts are common in the sense that the matter pertains to the sale of an immovable property jointly owned by these petitioners with some others. 3. In the computation of total income for year ended March 31, 2007, the first petitioner filed the return claiming long term capital gain on the sale of a New Delhi property at 3, Tilak Marg. The sale consideration of such petitioner s one-fourth share in the property was indicated as ₹ 21,56,25,000/-. After deducting the legal fees and brokerage involved in the sale, the net consideration was shown as ₹ 21,14,14,419/-. The cost of acquisition of the property as at April 1, 1981 was claimed as per the valuer s report appended to the return at ₹ 11.91 crore and the petitioner s one-fourth share was said to be ₹ 2,97,75,000/-. The indexe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h petitioner s share came to be ₹ 21,56,25,000/- as indicated in the return. A copy of the relevant sale deed was forwarded to the department. The petitioner in the first matter also informed the department that the property had been acquired on July 23, 1948 at a cost of ₹ 2 lakh and the transfer expenses thereon. The purchase deed of July 23, 1948 was also forwarded to the department. Such petitioner asserted that the indexed cost of the property as at April 1, 1981 was ₹ 11.91 crore. Such petitioner informed the department that the New Delhi property was sold to Oswal Chemicals and Fertilizers Limited and furnished the particulars of such purchaser, including its permanent account number. The petitioner in the first matter also forwarded a copy of the REC bond of value of ₹ 50 lakh in respect whereof deduction had been claimed under Section 54EC of the Act. In connection with the deduction claimed under Section 54F of the Act, the said petitioner forwarded a photocopy of the capital gain deposit account opened by him at Indian Bank, Strand Road Branch and a photocopy of the purchase deed in respect of the new residential property acquired at 18G Alipore R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. Clause (d) referred to the valuation of the property as at April 1, 1981 being taken at seven times the valuation of the land as per the prevailing government rates. A further limb of clause (d) claimed that the possession of the property was with the Delhi Government and the fair market value of the property had been overstated since it was a case of sale of rights in leasehold property. The same clause concluded that an income of ₹ 15,45,32,250/- claimed by the assessee and allowed by the assessing officer as indexed cost of acquisition of property has escaped assessment on account of failure of the assessee to disclose truly and fully all the material facts necessary for the computation. 10. Clause (e) of the recorded reasons asserted that the relevant assessee and the other co-owners had received a total amount of ₹ 23.79 crore as damages for fair rent, which had been claimed as being exempt to tax as it was not in the nature of a revenue receipt. The officer reasoned that such amount should have been deducted from the cost of acquisition of the property. In clause (f) of the recorded reasons, the officer claimed that the assessee never disclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41 ITR 191 where the majority opinion rendered on the comparable Section 34 of the Act of 1922 was that the court could investigate into the existence of the twin pre-conditions that are required to be met by such provision. Though the judgment is instructive as to what would amount to material nondisclosure, the language of the present provision is substantially different from that in the predecessor statute. 14. In the next judgment cited by the petitioners, reported at (1975) 100 ITR 1 (Gemini Leather Stores v. I.T.O., B-Ward, Agra), the Supreme Court found that the dictum in Calcutta Discount Company Limited was applicable to the corresponding provision in the present Act and the essence of the majority view therein would govern the tests under the provision as it stood at the time of the judgment. Though Section 147 of the Act has since been amended, the tests may still be as recognised in the report: In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his possession, whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peaking order cannot improve on the recorded reasons and the object of the Supreme Court dictum in affording the noticee the right to object to the reasons is to bring to the notice of the assessing officer that there may be no reason to believe that any income had escaped assessment; or in a case where the first proviso to Section 147 of the Act applies, to question the belief of the assessing officer if the recorded reasons do not reveal that the assessee had failed to disclose fully and truly all material facts necessary for his assessment for the relevant assessment year. 19. The department contends that once the recorded reasons allege that some material facts relevant for the assessment may not have been disclosed or that an erroneous impression on facts may have been given, the court will not interfere with the process in this extraordinary jurisdiction and leave the reassessment to be completed. The department submits that since the order of reassessment is amenable to an appeal or revision, the perceived wrong can be redressed at such stage. The department refers to the recorded reasons and says that sufficient indication has been given therein that material facts may n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to us to be to ensure that a party cannot get away by wilfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice, to turn around and say you accepted my lie, now your hands are tied and you can do nothing . It would be a travesty of justice to allow the assessee that latitude. 23. In the next judgment brought by the department, reported at (1996) 9 SCC 534 (Srikrishna Private Limited v. I.T.O., Calcutta), investigations conducted by the department revealed that the assessee had relied on bogus hundi loans and the like. It was recorded as such in the reasons penned under Section 148 of the Act. It was in such factual background that the Supreme Court observed that it was the obligation of the assessee to disclose the material facts - or what are called primary facts - and such disclosure must necessarily be true and complete. 24. The department has also placed a judgment reported at (2014) 366 ITR 453 (Joint Commissioner v. Kalanithi Maran) where a Division Bench of the Madras High Court set aside an order quashing a notice for reassessment. However, it is evident from paragraph 21 of the report that the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement for sale and the deed of conveyance. Clause (c) of the recorded reasons covers the same ground and, thus, cannot be seen to be making out any allegation of non-disclosure of any material fact or false disclosure of any relevant fact. 29. Clauses (b) and (d) of the recorded reasons refer to the valuation of the property. For the purpose of the valuation of the property, including its cost of acquisition, the petitioners had relied on the report of a licensed valuer. A valuation report is, loosely speaking, an opinion based on the facts narrated in support of such opinion. The entirety of the valuation report was before the department in course of the previous reassessment or scrutiny assessment and the relevant assessing officer accepted the same. The present attempt to question the valuation report amounts to a change of opinion or a review of the assessment, which is impermissible. The assessee had disclosed all facts and the basis for the valuation. That was accepted by the department. That is not a matter which can be reopened by claiming that there was a mistake in the valuation report. 30. In clause (e) of the recorded reasons, the officer claimed that the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... known to the department in course of the previous reassessment and scrutiny assessment. In any event, when the deduction was allowed, the assessing officer is deemed to have taken such matter into consideration and any reassessment on such score would amount to a change of opinion or review which is impermissible. 32. For the reasons as above, the recorded reasons for seeking to reassess the petitioners income for the relevant assessment year cannot be said to disclose any material that would amount to the failure of either petitioner to truly or fully disclose the primary facts pertaining to the transaction relating to the New Delhi property. The decision to issue the impugned notices under Section 148 of the Act appears to be a counter-blast to the petitioners contention that the damages received in assessment year 2009- 10 could not be regarded as a revenue receipt. The relevant notices under Section 148 of the Act seeking to reassess the petitioners incomes for assessment year 2007-08 stand set aside as there is no basis disclosed in the recorded reasons for the relevant official to have any reason to believe that any income had escaped assessment. 33. There will be no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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