TMI Blog2009 (2) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... f developing land and construction of residential and commercial buildings. For Assessment Year 2000-2001, the return of income under Section 139 of the Income Tax Act, 1961 (the Act) was filed on 30.11.2000. The return of income was accompanied by audited Profit and Loss Account, balance sheet, etc. For the assessment year, the acknowledgment receipt dated 30.11.2000 was the only communication for showing that the assessment had been completed under Section 143(1) of the Act. For Assessment Year 2001-2002, return of income was filed on 31.10.2001. The respondent authority made an inquiry regarding cost of construction in relation to the projects and a detailed reply dated 11.01.2003 was filed on behalf of the petitioner. The details called for were supplied at item No.9 of the said reply. After considering the details and the explanation tendered by the assessee, the Assessing Officer did not accept the books of accounts and worked out net profit at the rate of 10% of receipts of a sum of Rs.1,10,86,447/-. This was carried in appeal and was confirmed by the Commissioner (Appeals) vide order dated 16.6.2003. The order made by Commissioner (Appeals) was further challenged by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 43,45,683 3 2001-2002 1,17,75,535 1,74,27,860 56,52,325 4 Total 2,54,54,362 3,79,75,910 1,25,21,548 Thus, the assessee company has under stated the cost of construction incurred during the year under consideration to the extent of Rs.25.23 lacs and the source thereof has also not been proved. Therefore, I have reason to believe that the income to the extent of Rs.25.23 lacs has escaped assessment on account of the failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment. Sd/- (S.G. NAIR) Income tax Officer, Ward 4(1), Baroda . Date: 5.2.2007 Place: Baroda ." Heard learned counsel for the petitioner. It is submitted that in so far as the first Assessment Year is concerned, provisions of Section 142A of the Act could not have been invoked by the respondent authority to disturb an assessment completed prior to 30.9.2004. That as already held by this Court, provisions of Section 142A of the Act cannot be invoked in absence of any proceedings pending assessment. That the assessment for Assessment Year 2000-2001 was not pending on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to the reasons recorded and submitted that once the respondent authority had recorded that the assessee has not disclosed fully and truly all the material facts necessary for assessment, especially with respect to cost of construction, the Court should not interfere at this stage and permit the reopening undertaken by the respondent department. It was submitted that in so far as applicability of Section 142A of the Act is concerned, in so far as Assessment Year 2001-2002 is concerned, the same has traveled upto Tribunal and hence it could not be stated that the assessment had become final and conclusive on or before 30.9.2004. That in relation to third year, namely Assessment Year 2002-2003, the reopening was within the period of four years and the reference was made to Departmental Valuation Officer in relation to an assessment framed on 31.3.2005. Therefore, for this year, there was no hurdle, even as regards factum of disclosure being there or not. In so far as the first Assessment Year is concerned, namely 2000-2001, admittedly the return of income which was filed on 30.11.2000 was acknowledged on the same day and was not followed by any assessment order. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the quality of material consumed was not correctly disclosed, or the area of construction was not disclosed, etc., nothing is available in the reasons recorded. In fact when one reads the entire sentence regarding so called failure, it becomes clear that after stating that there is non-disclosure, the matter was referred to Departmental Valuation Officer for valuation of the project. Thereafter the reasons recorded refer to the report of the District Valuation Officer dated 23.1.2006, and reproduce the difference between expenditure recorded in the books of account and cost of construction estimated by the Departmental Valuation Officer; and then the reasons go on to state that because of such difference the assessee Company has under stated the cost of construction. In other words, it indicates that in fact the Assessing Officer had merely made reference to the Valuation Cell only on the basis of a generalized vague statement, which is then sought to be reinforced by the difference worked out by the Departmental Valuation Officer, without the facts in fact indicating, in the reasons recorded, as to what was the failure on the part of the assessee. Therefore for the second year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Co. P. Ltd .[1996] 217 ITR 597 (SC); Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC)." The present reasons recorded do not satisfy even these tests. The Court has taken note of the order dated 12.7.2006, rendered by this Court in Tax Appeal No. 1496 of 2005 with Tax Appeal No.1497 of 2005 to Tax Appeal No.1498 of 2005 in case of COMMISSIONER OF INCOME TAX, VALSAD vs. UMIYA CO-OP. HOUSING SOCIETY LTD , wherein, it has been held by this Court as under :- "Whether any income can be taxed by deeming the value of investment not disclosed, or not fully disclosed, are issues where such types of questions arise while some proceedings are pending for assessment. In absence of such proceedings the Assessing Officer cannot refer any property for valuation to Valuation Officer. In opening part of section 142A the words used are for the purposes of making an assessment or reassessment under the Act. The intent of the legislation is that the matter can be referred to the Valuation Officer only when the proceedings of assessment or reassessment are pending before the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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