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Late Shri Jagdish P Bhatt Through Versus The Income Tax Officer

Reopening of assessment - determine the value of property - investment made by the partnership firm - DVO report relied upon - Held that:- The fact that the assessee transferred the business to the partnership firm on 20.09.2005 is undisputed. In fact, in the reference order calling for the report of the DVO, the Assessing Officer has himself referred to this date when the firm came into existence. Thus, so far as the petitioner is concerned, he had no further relation with the hotel project aft .....

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d between 01.04.2004 and 01.07.2005 and estimated such cost at ₹ 1.82 crores. If the reference of the DVO was for a specific period, he could not have given the report for the period completely unrelated to the reference period. On what basis the DVO was prompted to give such report for a period anterior to one for which his opinion was called for, we are not sure. In our opinion, therefore, a report of the DVO itself was invalid since it travelled beyond the reference period - Decided in .....

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an individual. He had started construction of a hotel named Hotel Celebration as a properitory concern. The construction activity commenced during the financial year 2004-05. While such construction was already going on, the petitioner transferred the entire project to a partnership firm M/s. Hotel Celebration by name on 20.09.2005. As per the books of accounts of the petitioner, as on the said date, the petitioner had incurred expenditure of ₹ 64.11 lacs for the construction. 3. The peti .....

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report dated 02.12.2011 and estimated the cost of construction of the building during the period from 01.04.2004 to 01.07.2005 at ₹ 1.82 crores. 4. The Assessing Officer on the basis of such report, desired to reopen the assessment of the petitioner for the assessment year 2005-06 for which, impugned notice was issued. In order to do so, the Assessing Officer had recorded following reasons: A reference was made to the valuation officer on 17.08.2007 to determine the value of property know .....

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caped assessment, in view of the above, I have reason to believe that the income chargeable to income tax has escaped the assessment at least to the above extent for the above assessment year. The above income chargeable to tax has escaped assessment for the AY 2005-06 by reason of failure on part of the above assessee who has failed to disclose truly and fully all material facts necessary for his assessment for the above assessment year. Your request to provide the reasons for reopening the ass .....

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lowing contentions: i. Impugned notice was issued beyond a period of four years from the end of the relevant assessment year. There was no failure on part of the assessee to disclose truly and fully all material facts. Notice for reopening therefore, could not have been issued. ii. During the original assessment, the Assessing Officer had scrutinized this issue and not disturbed the investment showed by the assessee in the books of accounts. iii. The reference by the DVO was made without rejecti .....

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ferred the project to the partnership firm on 20.09.2005. The order passed by the Assessing Officer calling for the report of the DVO on the cost of construction is somewhat curious. The reference is with the PAN number which is not of the petitioner but of the partnership firm. The matter does not end here. In Item No. 8 of the details supplied by the Assessing Officer to the DVO, the period, for which valuation is required, is specified as 20.09.2005 (firm came into existence) to 31.03.2006 . .....

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