TMI Blog1989 (2) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... ructed the house. The share of each one of the petitioners was also 20 per cent. in the reconstruction. The purchase was disclosed by the petitioners in their respective returns for the assessment years 1975-76 and 1976-77. The reconstruction of the house started in the month of August, 1980, was completed by March, 1983. According to the petitioners, the cost of construction, including the cost of furniture and fixtures came to Rs. 7,45,000 and the contribution by each co-owner came to Rs. 1,49,000. The year-wise detail of the cost of construction as declared by the petitioners for the assessment years 1981-82 to 1983-84 in the, returns submitted before the Income-tax Officer was Rs. 24,000 for the year 1981-82, Rs. 24,000 for the year 1982-83 and Rs. 1,01,000 for the year 1983-84. Thus, each of the co-owners had shown investment of Rs. 1,49,000 in the three assessment years. Along with the returns, they also appended a valuation report of the construction, made by D. N. Nayate, approved valuer.. The petitioners were duly assessed by the income-tax Officer, F Ward, Indore, and the returns submitted by the petitioners were accepted by the Income-tax Officer including the cost of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. On disclosure of all the material facts fully and truly, the Income-tax Officer has already accepted the assessments of the petitioners. Therefore, merely on change of opinion on the basis of the valuation made by the Departmental Valuer, the assessment of the petitioners could not be reopened. Therefore, a prayer has been made to issue a writ, direction or order for quashing the said impugned notices dated March 30, 1987 (annexure "F"), and also issuance of a writ of mandamus or any other appropriate writ restraining the respondents from taking any proceedings under the said notices (annexure "F") or for making any reassessment or computation in pursuance thereof in respect of the petitioners. The respondents have resisted the claim of the petitioners on the ground that there is no provision of law to furnish reasons to the petitioners for issuance of a notice under section 148 of the Act. The reasons are simply to be recorded on the case record of the petitioners and the reasons recorded have been filed as annexure "R-1". According to the respondents, a search under section 132 of the Act was conducted in the business premises and at the residential premises of the partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that the returns filed by the petitioners were in any way incorrect or that further enquiry in the matter was required. The Income-tax Officer who assessed the tax for the years 1981-82, 1982-83 and 1983-84 accepted those returns. Therefore, the impugned notices could not be issued merely because of the difference of opinion between the two valuers. It has also been strenuously argued that there was no material before the respondent, the Income-tax Officer, for issuing the notice under section 148 of the Income-tax Act as the information needed for satisfaction under section 147 of the Act was not with the Income-tax Officer. Merely because a raid was conducted on the premises coupled with the report of the valuer would not by itself be sufficient to give jurisdiction to the Income-tax Officer to issue a notice under section 148 of the Act. Shri Chaphekar, in support of his arguments, has placed reliance on the decisions of the Supreme Court and this court, with which we shall presently deal. On the other hand, learned counsel for the Revenue, Shri Mukati, submits that in the report of the Departmental Valuer, it has been stated that the measurement of the plinth area was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when a notice under section 148 of the Act is contemplated, the Income.-tax Officer must have reasons to believe that income chargeable to tax has escaped assessment and that there was some omission or failure on the part of the assessee to make a return or to disclose fully and truly material facts necessary for his assessment for that year. The duty of the assessee, while filing the return, is to place all the primary facts before the Income-tax Officer and it is thereafter for the Income-tax Officer to draw inference from the primary facts. If the Income-tax Officer draws an inference which subsequently appears to be erroneous, then a mere change of opinion with regard to that inference would not justify initiation of action for reopening the assessment The grounds which lead to the formation of the belief that income has escaped assessment should be based on some material which has a direct nexus between the material coming to the notice of the Income-tax Officer and the formation of that belief. Although the court cannot go into the sufficiency or adequacy of the material which may be in the possession of the Income-tax Officer and the court should not substitute its own opini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the part of the petitioner which would give jurisdiction to the Wealth-tax Officer to reopen the assessment. The notices issued by the Wealth -tax Officer were, therefore, held to be invalid. In another case, Lokendra Singh Rathore v. WTO [1985] 153 ITR 466 (MP), the same principle which was followed in Prabha Rajya Lakshmi [1983] 144 ITR 180 (MP), was followed. In that case also, question was raised that there was failure and omission on the part of the petitioner in disclosing the value of the agricultural lands fully and truly. The court, after considering the earlier decision of this court, has held that when the petitioner disclosed the value of the lands on the basis of the report of the approved valuer and the same was accepted by the Wealth-tax Officer, it cannot be said that the assessee had not placed all the primary facts before the Wealth-tax Officer for the assessment years in question with regard to the value of the agricultural lands. Therefore, there being no failure on the part of the assessee to place all the primary facts before the Wealth-tax Officer, the notices issued by the respondent for reopening the assessment were not valid. Another Division Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thanthi Trust v. ITO [1973] 91 ITR 261 (Mad), wherein it has been held that reasons for reopening of assessment need not be disclosed to the assessee. We are in respectful agreement with the aforesaid decision and are also of the view that disclosure of entertaining prima facie belief that taxable income has escaped assessment need not be disclosed to the assessee especially when the material leading to such belief has been filed in the court. Therefore, for this reason that with the notice under section 148 of the Act, the reasons for entertaining a belief about the escapement of income from assessment have not been given to the assessee, the notice cannot be held to be invalid. It has further been urged by Shri Mukati that, in the instant case, the disclosure made by the assessee was not full and true. Therefore, the Income-tax Officer was justified in forming a belief on the basis of the report of the Departmental Valuer that taxable income has escaped assessment. Shri Mukati has pointed out the difference in the two valuation reports, one by the approved valuer and the other by the Departmental Valuer. In support of his argument, Shri Mukati has placed reliance on Biswanath Pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in CWT v. Chhatrshal Sinhji D. Zala [1982] 135 ITR 826 takes the same view that the Madhya Pradesh High Court has consistently taken in respect of the duty of the assessee to disclose fully and truly all the material facts necessary for assessment at the time of filing the returns. The contention of Shri Mukati that as there is a difference between the valuation made by the Departmental Valuer and the approved valuer, it can form the basis for the reopening of the assessment, has to be rejected for the simple reason that this court has consistently taken the view that once the assessee places before the Income-tax Officer all the material facts fully and truly with the report of the approved valuer, then in case of a rare change of opinion by another valuer, the assessment cannot be reopened. According to Shri Mukati, the plinth area shown by the Departmental Valuer is also in excess of what has been shown by the approved valuer and this should be construed as non-disclosure of material facts fully and truly. In our opinion, this argument also cannot be accepted for the simple reason that the assessee had placed all the facts before the Income-tax Officer, i.e., the reconstructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts which an assessee is required to place before the authority truly and fully. If the assessing officer without getting it verified by the Departmental Valuer at the time of the assessment, accepts the return, then a subsequent opinion of a Departmental Valuer being different from that of the approved valuer, cannot form the basis for the reopening of the assessment. We may also refer to the decision of the Karnataka High Court in K. R. Ramdas Prabhu v. First WTO [1987] 166 ITR 706, wherein it has been held that section 16A(1) of the Wealth-tax Act, 1957, empowers the Wealth-tax Officer to make a reference of the valuation of the property to the Valuation Officer only when an assessment is pending before him. On such a reference, the Valuation Officer is competent to determine the valuation of such property and furnish the same to the Wealth-tax Officer which is made binding on him. Before making the assessment the Wealth-tax Officer is not bound to accept the valuation furnished by the assessee in his return and is free to refer that question to the Valuation Officer. But once the assessment is completed, such a reference cannot be made in respect of a completed assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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