TaxTMI 
TaxTMI 
2011 (6) TMI 142
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....rther erred on facts as also in law in confirming the action of the Assessing Officer in rejecting the valuation report and estimating fair value as on 1-4-1981 at Rs. 1,750 per sq.ft. as against value determined at Rs. 2,200 by the registered valuer as per the valuation report and directing the Assessing Officer to adopt such value in respect of 1,675 sq.ft. The valuation may kindly be directed to accept as per the report of the registered valuer. 4. The ld.CIT(A) erred on facts as also in law in confirming the disallowance of Rs. 1,90,000 made in respect of cost of improvement. The disallowance being totally unjustified on facts as also in law and may kindly be deleted. 5. The learned CIT(A) erred on facts as also in law in confirming the disallowance of deduction under section 54 of the Act on the alleged ground that the House Boat is not a residential property within the meaning of section 54 of the Act. The disallowance confirmed is totally unjustified on facts as also in law and deserves to be deleted and may kindly be deleted." ITA No. 368/Rjt/2007 - Appeal by revenue "1. The ld. CIT(AQ) has erred in law and on facts in directing the Assessing Officer to reco....
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....n 147 of the Act. The Assessing Officer accordingly issued notice under section 148 on 6-7-2004. 4. During the assessment proceedings, the Assessing Officer noticed that the assessee has claimed expenditure of Rs. 3,50,000 against the sale consideration in computation of long term capital gain, the details of which are as under: (a) Rs. 1,70,000 Brokerage (b) Rs. 1,64,000 Society transfer charge (c) Rs. 16,000 Valuation report charge Rs. 3,50,000 The Assessing Officer did not accept the expenditure amounting to Rs. 16,000 paid on account of valuation of the property as on 1-4-1981. The Assessing Officer was of the view that such expenditure is not in accordance with section 48(1) of the Act. The Assessing Officer did not accept the valuation as on 1-4-1981 as claimed by the assessee on the basis of valuation report of approved valuer. The Assessing Officer referred the matter of valuation as on 1-4-1981 to the DVO. The DVO calculated the indexed cost as on 1-4-1981 at Rs. 75,55,330 as against the value adopted by the assessee's valuer at Rs. 1,25,73,486. The Assessing Officer adopted the indexed cost of valuation as on 1-4-1981 as estimated by the DVO at Rs. 75,55,....
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.... should be adopted for 1675 sq.ft. as it is a question of fact. I direct the Assessing Officer to re-compute the value as on 1-4-1981 after taking the area at 1675 sq.ft. against the 1314 sq.ft. and then take the rate per sq.ft. at Rs. 1,750 per sq.ft. but the same should be adopted for 1675 sq.ft. as it is a question of fact. I direct the Assessing Officer to re-compute the value as on 1-4-1981 after taking the area at 1675 sq.ft. against the 1314 sq.ft. and then take the rate per sq.ft. at Rs. 1,750 and calculate the value accordingly. However, I also confirm the action of the Assessing Officer is not adding the addition on account of renovation etc. as on 1-4-1981 for the reason that there is nothing bon record to say that when the renovation was done. On other points, the order of the Assessing Officer is confirmed." 5.1 In respect of deduction under section 54F, the CIT(A) confirmed the order of Assessing Officer. Both assessee and revenue are in appeal against the order of CIT(A). 6. The ld.AR while arguing the first ground of appeal relating to reopening of assessment under section 147 submitted that the CIT(A) has recorded the incorrect fact that the reopening is within f....
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....ome. In the absence of such belief, the Assessing Officer cannot reopen the assessment. He relied upon the judgment of the Supreme Court in the case of Sri Krishna (P.) Ltd. v. ITO [1996] 221 ITR 538/87 Taxman 315. The ld.AR has also relied upon the judgment of Bombay High Court in the case of Prashant S. Joshi v. ITO [2010] 189 Taxman 1. The decision is unreported and, therefore, the assessee filed copy of gist of decision which has been downloaded from internet and is forming part of record. In the said decision it is held that even if there is no assessment passed reopening under section 147 is bad if there is no proper "reason to believe" that income has escaped assessment. The ld.AR submitted that in this judgment of the Bombay High Court, the judgment of Apex Court in the case of Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500/161 Taxman 316 wherein it has been held that passing of intimation under section 143(1) does not amount to assessment and in the absence of assessment, there was no question of change of opinion, has also been considered by the court. The ld.AR has also relied upon the following decisions: Balkrishna Hiralal Wani v. ITO [2010] 3....
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....e books of account, the expenditure was only about Rs. 51,000 whereas the assessee has claimed the remaining amount of Rs. 1,90,000 without any basis. In respect of claim under section 54 the ld.AR submitted that house boat cannot be a residential house. The alternative plea of the ld.DR was that cost of the house boat was only Rs. 10 lakhs and other amount is lease charges which cannot form part of cost of acquisition of the new property. The assessee has claimed the full amount for claiming exemption under section 54F. 10. We have heard the ld. representatives of the parties, record perused and have gone through the decisions cited. The assessee while challenging the reopening contested that reopening is beyond four years. There is no failure on the part of the assessee to disclose all material facts necessary for the assessment. Further, the Assessing Officer reopened the assessment without issuing notice under section 143(2) of the Act. These are two legal issues apart from the merit of the case. We first deal with these legal issues, the first one being the reopening beyond four years. We find that the CIT(A) is not correct in recording the fact that reopening is within four ....
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.... of assessee's failure to disclose fully and truly all material facts necessary for assessment. 12. If we apply the facts of the case on hand to the above discussion we find that the reopening is beyond four years' and there is no failure on the part of the assessee. The ld.AR has demonstrated that the assessee has furnished all the relevant details and documents along with the return of income. The documents furnished was copy of sale deed, valuation report, copy of agreement for purchase of house, and agreement and copies of letters dated 11-7-2000, 3-10-2000, 12-4-2002, copy of account and TDS certificate and others. Since there is no failure on the part of assessee to disclose fully and truly all material facts necessary for the assessment, the reopening under section 147 is invalid and is hereby quashed. 13. Now coming to the second legal issue that the Assessing Officer issued notice under section 148 without issuing notice under section 143(2), we find that this issue is covered in favour of assessee by the order of ITAT, Nagpur Bench in the case of Malli Chand Baid (supra). The relevant finding is reproduced as below: "8. We have heard the rival contentions and perused t....