TMI Blog2001 (10) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... r sale by the assessee. He was not responsible for additional construction. No categorical finding was recorded by the Assessing Officer in this regard as to how much construction was suppressed. Even in the order of reassessment, no such finding has been recorded. Thus, all the attempts to justify subsequent assessment are unfounded and baseless in the absence of a finding how much construction was made by the assessee and how much was made by the purchaser. Additions made on reopening of assessment by the Income-tax Officer were not justified. - - - - - Dated:- 3-10-2001 - Judge(s) : BHAWANI SINGH., ARUN MISHRA. JUDGMENT The judgment of the court was delivered by ARUN MISHRA J.-The Commissioner of Income-tax seeks a reference u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be made by the Income-tax Appellate Tribunal to this court. The Tribunal had declined to make reference. Hence, the present appeal under section 256(2) of the Income-tax Act, 1961, being filed seeking a direction by this court for reference to be made by the Income-tax Appellate Tribunal. On the above facts and circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that reopening of the assessment by the Assessing Officer was bad in law and consequently in deleting the additions made. The question urged by learned counsel for the Revenue is that the Tribunal was not justified in setting aside the proceedings for reopening of assessment. He submits that sufficient grounds existed for reopening of assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings at the two sites and the subsequent report of the Valuation Officer could not be made a ground to reopen the assessment. The Tribunal has found on the facts that for all the three assessment years, returns were filed on the basis of books so maintained. The assessee had filed trading account, profit and loss account, capital accounts of the partners and the balance-sheet. The Tribunal has found that the assessment was reopened on the ground that the cost of construction declared by the assessee as per his books of account appears to be low, as the flats constructed by the assessee happened to be situated in a posh colony. This could not be a ground adopted by the Assessing Officer to reopen the assessment as all material facts were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as reason to believe that income chargeable to income-tax had been under assessed; and (2) that he has also reason to believe that such "under assessment" had occurred by reason of either (i) omission or failure on the part of an assessee to make a return of his income, or (ii) omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for that year. These conditions are cumulative and precedent to the exercise of jurisdiction to issue a notice of reassessment as held by the Supreme Court in Modi Spinning and Weaving Mills Co. Ltd. v. ITO [1970] 75 ITR 367 and in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191; AIR 1961 SC 372. Valuation, which was put by the assessee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 (MP). The same is the view taken by the various other High Courts. True it is that the existence of reason for belief that income escaped assessment, is certainly justiciable but not sufficiency of reasons. In the instant case there was no reason to reopen the assessment. No valid reason was recorded for reopening the assessment as none existed. The reasons recorded must be valid and relevant, providing the foundation for assumption of jurisdiction by the Income-tax Officer, is the view taken in CIT v. Agarwalla Bros., [1991] 189 ITR 786 (Patna); Equitable Investment Co. (P.) Ltd. v. ITO [1988] 174 ITR 714 (Cal) and Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. v. V. Raghavan, IAC of I.T. [1984] 150 ITR 12 (Bom), wherein it has been held ..... X X X X Extracts X X X X X X X X Extracts X X X X
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