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2017 (6) TMI 137 - ITAT CHANDIGARH

2017 (6) TMI 137 - ITAT CHANDIGARH - TMI - Reopening of assessment - cost estimated by the DVO - difference in the cost of construction declared by the assessee and estimated by the DVO - Held that:- It is an admitted fact that during the assessment proceedings for assessment year 2010-11, the immovable property of the assessee was referred for valuation to DVO who has given his report which is reproduced in the assessment orders and the difference in cost was taken into consideration as reporte .....

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above judgment and as such there is no justification for the AO to reopen the assessments in the matter. - Reasons recorded under section 148 of the Income Tax Act reflect the arbitrary use of powers conferred under section 147 of the Act. - Decided in favour of assessee. - ITA Nos. 704 to 706/Chd/2017 - Dated:- 1-6-2017 - SHRI BHAVNESH SAINI , JUDICIAL MEMBER For The Appellant : Shri Tej Mohan Singh For The Respondent : Shri S.K. Mittal ORDER All the appeals by the assessee are directed ag .....

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cost declared by the assessee vis-à vis cost assessed by the DVO was reported and same is reproduced at page no. 1 of the assessment order. In assessment years 2006-07, 2007-08 and 2008-09 the difference in the cost of construction declared by the assessee and estimated by the DVO are ₹ 5,38,049/-, ₹ 6,64,534/- and ₹ 1,62,182/-. The AO therefore formed his belief that assessee has not fully declared the cost of investment and accordingly reopened the assessment under se .....

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ds as under: ANNEXURE A (REASON FOR THE BELIEF THAT THE INCOME HAS ESCAPED) NAME OF THE ASSESSEE : M/S JAMYANG CHOLING INSTITUTE TARA GUEST HOUSE, MCLEODGANJ DHARAMSHALA, DISTT- KANGRA(H.P.) PAN : AAATJ3512G ASSESSMENT YEAR : 2006-07 Assessee has filed its return of income for the Assessment Year 2006-07 by declaring income at Rs. Nil. Assessment was completed u/s 143(1) of the I.T. Act, 1961 at income of Rs. Nil. As per information available with the department, the assessee during the Financia .....

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ment Year 2006-07 and this is a fit case for issuance of notice u/s 148 for reopening of the assessment for A Y 2006-07. Therefore, approval under section 151{2) of the I.T. Act, 1961 is sought to initiate assessment proceedings for the A.Y. 2006-07 in this case. Sd/- (VIPAN MAHAJAN) INCOME TAX OFFICER, DHARAMSHALA 4.1 He has submitted that issue is covered in favour of the assessee by order of ITAT, Division Bench, Chandigarh in the case of Ms. Rajinder Kaur Vs. ACIT in ITA No. 765/Chandi/2015 .....

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also filed in the Paper Book. The Assessing Officer noted in the reasons that on inquiries, it has been found that Chandigarh Administration allotted commercial plots @ 5463/- per sq.yd. as on January,1985. The ld. DR was asked to specify as to what is the basis of inquiry conducted by the Assessing Officer, whether inquiries have been conducted in writing or oral from the Chandigarh Administration for getting this information. The ld. DR, however, was not able to explain it whether any inquiri .....

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shows that there was no basis for the Assessing Officer to refer to the rates of commercial plots @ 5463/- per sq.yd. as on January,1985 because there is no material available on record to show how the Assessing Officer came to know about these rates from Chandigarh Administration. When report of Registered Valuer is available on record, the Assessing Officer did not accept the report of the Registered Valuer but the newspaper cutting attached with the Registered Valuer as per submission of ld. .....

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red Valuer alongwith newspaper cutting, had recorded the reasons for re-opening of the assessment without conducting any inquiries from the Chandigarh Administration verifying the rates of commercial plots. There was nothing in the reasons recorded to show that any tangible material had come into possession of the Assessing Officer subsequent to the issue of intimation under section 143(1) of the Income Tax Act. It would show that notice under section 148 of the Act have been issued in an arbitr .....

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and an abuse of power by the Assessing Officer. The reasons recorded by the Assessing Officer did confirm the apprehension about the harm that a less strict interpretation of the words "reason to believe" vis-a-vis an intimation issued under section 143(1) could cause to the tax regime. There was nothing in the reasons recorded to show that any tangible material had come into the possession of the Assessing Officer subsequent to the issue of the intimation. The notice reflected an arb .....

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here is no basis for adopting such rates of land and building. It is not clarified how the Assessing Officer came to know about the rates of land and building as have been mentioned in the reasons for the purpose of computing the capital gains being the Assessing Officer is not a technical person. There is, thus, no valid reason for re-opening of the assessment because there is no tangible material available on record to justify the conclusion of escapement of income. There is no formation of re .....

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income chargeable to tax had escaped assessment. Hon'ble Delhi High Court in the case of Signature Hotels Pvt. Ltd. (supra) has held that, Even the annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income . 11(i) The decisions relied upon by ld. counsel for the assessee, therefore, squarely apply to the facts and circumstances of the case. Ultimately the Assessing Officer computed the income of the ass .....

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assessment have been recorded on 26.03.2013. In the case of the assessee, the Assessing Officer has made a reference to the DVO for the purpose of ascertaining Fair Market Value of the property in question for the purpose of computing capital gains and the DVO has intimated the Assessing Officer that DVO has already made valuation in the case of Shri Arun Mundre, the co-owner of the property and since structure have been demolished, therefore, no valuation of the building can be given. It would .....

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the assessee, the report of the Registered Valuer filed by assessee was available on record, therefore, it is a case of valuation of the property reported by the assessee and the DVO in the case of co-owner. Therefore, such could not be a basis for formation of belief of escapement of income in the matter. 12. The ld. DR relied upon decision in the case of Raymond Woollens Mills Ltd. (supra) in which it was held that sufficiency or correctness of material is not a thing to be considered at the s .....

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on entry from the entry provider. Other decisions cited by ld. DR also would not support case of the revenue. 13. Considering the above discussion, it is clear that there was no basis or material on record to calculate the value of land @ ₹ 1000/- per sq.yd. and of the cost of construction at ₹ 100/- per sq.ft. as is noted in the reasons. There is no material, what to say of tangible material available on record to justify re-opening of the assessment. The Assessing Officer merely on .....

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tion 147 of the Act. In this view of the matter, we set aside the orders of authorities below and quash the re-opening of the assessment under section 147/148 of the Income Tax Act. Therefore, there is no need to consider other grounds of appeal on merit because they are left for academic discussion only. Resultantly all additions would be deleted. 4.2 He has relied upon the decision of the Hon ble Gujarat High Court in the case of Akshar Infrastructure Pvt. Ltd. Vs. Income Tax Officer 393 ITR 6 .....

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had escaped the assessment for the assessment year 2005-06. An opinion given by the District Valuation Officer was not per se information for the purpose of reopening an assessment under section 147. Once having failed before the Commissioner (Appeals) to enhance the unexplained investment under section 69, relying upon the District Valuation Officer's report, thereafter, it was not open for the Assessing Officer to reopen the assessment under section 147 on the very same ground. Notice issu .....

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