TMI Blog2016 (12) TMI 1587X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment under section 147/148 of the Income Tax Act. - Decided in favour of assessee. - ITA No. 765/CHD/2015 - - - Dated:- 21-12-2016 - Bhavnesh Saini (Judicial Member) And Annapurna Gupta (Accountant Member) For the Appellant : Sudhir Sehgal For the Respondent : Manjit Singh, DR ORDER Bhavnesh Saini (Judicial Member) This appeal by assessee has been directed against the order of ld. CIT(Appeals), Panchkula dated 31.07.2015 for assessment year 2008-09 on six grounds of appeal. 2. The assessee has also made a request for admission of the additional grounds as under : 1. That the Ld. Assessing Officer has erred in reopening the case u/s 148. 2. That the reopening of the case u/s 148 is bad in law since the reopening could not have been made only on the basis of report of the District Valuation Officer, without there being any other independent material on record. 3. That even the reference to the Valuation Cell by the Assessing Officer is bad in law, since on the basis of facts and circumstances of the case, no reference could have been made to the Valuation Cell. 4. Notwithstanding the above said grounds of appeal, there was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. DR objected to the admission of the additional ground of appeal and submitted that if additional ground is admitted, it would prejudice the department and relied upon decision of Hon'ble Punjab Haryana High Court in the case of Aravali Engineers 335 ITR 508 5. We have heard rival contentions. It is well settled law that the validity of notice under section 148 of the Act has to be determined with reference to the reasons recorded for re-opening of the assessment under section 148 of the Act. The assessee challenged the re-opening of the assessment under section 148 of the Act in all additional grounds of appeal which is legal in nature. The ld. counsel for the assessee relied upon decision of Hon'ble Supreme Court in the case of M/s Dhariya Construction Company 328 ITR 515 in which it was held that Re-opening cannot be made merely on the basis of valuation report of the DVO . Since the additional grounds of appeal relate to re-opening of the assessment under section 148 of the Act which is legal grounds of appeal and no new facts are likely to be investigated therefore, the additional grounds shall have to be admitted in view of the judgement of Hon'ble Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enquiries it has been found that Chandigarh administration allotted commercial plots @ 5463 per sq.. Yd. as on January, 1985. The value of commercial property if taken @ 1000/- per sq. Yd. as on 01.04.1981 and the cost of building if taken at Rs.l00/- per sq. feet then the cost of this building as on 01.04.1981 works out as below : After adopting the date of indexation as 01.04.1981, the following difference is noticed : i) Land 4713.11 @ 1000 per sq.yd. 4713100x551/100 = 25969181/- ii) Building 31579.302 sq.ft. @ 100 per sq.ft. 3157930x551/100= 17400194/- Total =43369375 As such the long term capital gain works out to Rs.l76630625/- ( 22,00,00,000-43369375), i.e., total sales consideration - indexed cost). Assessee's share in this property is 176th which works out to ₹ 29438437/- in view of facts given above, I have reason to believe that income to the tune of ₹ 29060427/- ( 29438437-3,78,010/- has escaped assessment for the assessment year 2008-09. Issue notice u7s 148 for the assessment year 2008-09. Sd/- DCIT 26.03.2013 8. The ld. counsel for the assessee submitted that Assessing Officer has mentioned in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer has wrongly assumed the jurisdiction and the re-assessment made thereafter deserves to be quashed. Reliance was placed on the judgement of Hon'ble Supreme Court in the case of Lakhmani Mewal Dass reported in 103 ITR 437 because no live link or close nexus or any material was there before Assessing Officer to form any belief about escapement of income. The ld. counsel for the assessee also relied upon following decisions : i) Decision of Hon'ble Gujarat High Court in the case of Inductotherm (India) P. Ltd, as reported in 356 ITR 481 in which, it has been held as under:- The power to reopen an assessment is available either in a case where a return has been accepted under section 143(1) of the Income Tax Act, 1961, or a scrutiny assessment has been framed under section 143(3) of the Act. A common requirement in both cases is that the Assessing Officer should have reason to belief that any income chargeable to tax has escaped assessment. There should be tangible material to come to the conclusion that there is escapement of income from assessment reasons must have a live link with the formation of the belief. ii) Decision of Hon'ble Punja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9(i) He has further submitted that re-opening cannot be made merely on the basis of report of DVO and relied upon decision of Hon'ble Supreme Court in the case of Dhariya Construction Co. 328 ITR 515 and submitted that there were no cogent material available on record to justify formation of the belief. The Assessing Officer has adopted the rates of land and building without any basis and without pointing out any defects in the report of the Registered Valuer. The ld. counsel for the assessee further submitted that assessee being an old lady and senior citizen and in order to avoid any kind of litigation, had filed a letter dated 13.02.2014, copy of which is filed at page 2 and 3 of the Paper Book and had stated that since in the reasons, the Assessing Officer has himself mentioned about the rate of land as obtained from Chandigarh Administration @ ₹ 5463/- per sq.yd. and by adopting the rate as the base and for applying the reverse cost index, the rate per sq.yd. of the land comes to ₹ 4370/- per sq.yd. and then, accordingly revised return of income by adopting the rate at ₹ 4370/- per sq.yd. of the land against the rate of ₹ 11,500/- per sq.yd. on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Vs CIT 258 ITR 170 in which it was held that A perusal of reasons recorded showed that Assessing Officer had applied his mind to the relevant material and formed a belief that petitioner had not disclosed complete facts which could enable it to claim deduction under section 80I and therefore, income had not been properly assessed. At the stage, the Court could not go into the sufficiency or adequacy of the reasons recorded . 10. We have considered rival submissions. It is well settled law that validity of re-assessment proceedings to be determined with reference to the reasons recorded. The reasons for re-opening of the assessment are reproduced above. It would show that assessee filed the return of income declaring income including capital gains on sale of property. The capital gain was calculated on the basis of report of Registered Valuer. Copy of which is 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 inq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer reached the belief that there was escapement of income on going through the return of income filed by the assessee after he accepted the return under section 143(1) without scrutiny, and nothing more. This was nothing but a review of the earlier proceedings 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 arbitrary exercise of the power conferred under section 147. 11. It may also be noted here that the Assessing Officer in the reasons, merely on assumption of certain facts without any basis has taken the value of commercial property @ ₹ 1000/- pr sq.yd. as on 01.04.1981 and cost of building at ₹ 100/- per sq.ft. There is, thus, no cogent material, much less the information, with the Assessing Officer for forming th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 show that the report of the DVO was available to the Revenue Deptt. prior to issue of notice under section 148 of the Act and there was no other material available on record to justify the re-opening of the assessment. The ld. counsel for the assessee, therefore, rightly relied upon decision of the Hon'ble Supreme Court in the case of Dhariya Construction Co. 328 ITR 515 in which it was held that, Re-opening cannot be made merely on the basis of valuation report of the DVO . In the case of 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 stage of re-opening ..... X X X X Extracts X X X X X X X X Extracts X X X X
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