Assessing Officer cannot reopen assessments based on new valuation report alone

The court ruled in Civil Writ Petitions that the Assessing Officer could not reopen assessments solely based on a new valuation report indicating different construction costs without disputing original facts. The court emphasized the duty of the assessee to disclose primary facts relevant to assessment and held that a mere change of opinion from a new report was insufficient to reopen finalized assessments. The court found in favor of the petitioner, quashing the notices and ruling no costs to be paid by either party.

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Issues involved: Reopening of Income-tax assessments u/s 148 of the Income-tax Act for the assessment years 1965-66 and 1966-67 based on a subsequent valuation report.

Summary:
In Civil Writ Petitions Nos. 2279 and 2280 of 1975, the petitioner-assessee challenged two notices issued u/s 148 of the Income-tax Act to reopen her assessments for the years 1965-66 and 1966-67. The Assessing Officer accepted a valuation report for the cost of construction of a building, treating the difference in costs as undisclosed income. Subsequently, a new valuation report led to the reopening of assessments. The petitioner contended that the Assessing Officer lacked justification and jurisdiction to reopen the assessments based solely on the new valuation report, as the original facts were not disputed. The respondents argued that the action was justified u/s 147(a) of the Act.

The main issue was whether the Assessing Officer could reopen assessments based on a subsequent valuation report indicating a different cost of construction, alleging non-disclosure of material facts by the assessee. The court referred to precedents from other High Courts and emphasized the duty of the assessee to disclose primary facts relevant to the assessment, without the obligation to instruct the Income-tax Officer on possible inferences. The court held that the mere change of opinion based on a new valuation report was not sufficient grounds to reopen finalized assessments.

The court found no merit in the respondents' argument and quashed the impugned notices, ruling that they were not warranted by law. The court ordered no costs to be paid by either party.

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