TaxTMI 
TaxTMI 
2012 (3) TMI 60
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....) read with section 148 of the Act were validly initiated on the basis of Departmental Valuation Officer's (DVO's) report. 2.That on the facts and circumstances of the case, the Ld. CIT(A) erred in holding that the proceedings under section 147 of the Act read with section 148 of the Act were validly initiated when the initiation of the proceeding is barred by limitation." 3. Brief facts relating to the issue are that the assessee filed its original return for the relevant Assessment Year 2003-04 on 28.11.2003. The assessee subsequently revised the return u/s. 139(5) of the Act on 25.03.2004 disclosing the same income. The Assessing Officer accepted the revised return. The assessee company owned plot of land at Door Nos. 1 & 2, Boat Club, Second Avenue, Chennai even prior to 01.04.1981. The assessee company, vide two agreements both dated 14.12.2000, sold two portions of land (six grounds each) of the property Crescent Gardens, Door Nos. 1 & 2, Boat Club, Chennai to Indian Nippon Electricals Ltd. and Sundaram Fasteners Ltd. at a consideration of Rs.3,43,50,000/- each and total consideration became Rs.6.87 cr. Due to dispute with Tamil Nadu Govt., assessee could not execute th....
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.... We have heard rival submissions and gone through facts and circumstances of the case. We have perused the orders of the lower authorities. The facts to be considered for the issue of reopening are that the assessee being owner of plot of land at Door No. 1 & 2, Boat Club, 2nd Avenue, Chennai named as 'Crescent Gardens' acquired even before 01.04.1981, sold vide two agreements dated 14.12.2000 i.e. in two plots of land (six grounds each) to Indian Nippon Electrical Ltd. and Sundaram Fasteners Ltd. for a consideration of Rs.3,43,50,000/- each, totaling to Rs.6.87 cr. Due to restriction of Tamil Nadu Govt. sale deed could not be executed and finally this was executed during the year under consideration. The assessee computed LTCG by taking the fair market value of these two plots of land, as on 01.04.1981, at Rs.2,01,60,000/- and after indexation arrived at the cost of land as on the date of sale at Rs.9,01,15,200/- as against the sale consideration of Rs.6.87 cr. as noted in the sale deeds. Thereby the assessee claimed capital loss of Rs.2,30,33,200/- after adjusting the cost of transaction of Rs.16,18,000/-. To support the fair market value adopted by assessee as on 01.04.1981, a c....
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....id report it is found that the Registered Valuer adapted the land rate of Rs.700 per sq. ft. or Rs. 16,80,000/- per ground as on 1.4.1981. The value does not appear to be supported by any acceptable sale evidence or other materials on record. As the said Registered Valuer's Report suffered from those deficiencies, reference was made in course of assessment proceeding to the District Valuation Officer, Valuation Cell, Chennai. The report from the Dist. Valuation Officer was not however received in time. In the circumstances, the Assessing Officer had no other alternative but to complete the assessment as per schedule in compliance with the Executive Directions. In assessment, the capital gains from the said immovable property had to be accepted at a loss of Rs.230.33 lacs as declared in the Return as the Registered Valuer's Report filed by the assessee could not be confronted in absence of other similar Valuation Report. The D.V.O, Chennai reported as below:- "1) Whereas the determination of the fair market value of the property in respect of land at Door No. 1 & 2, Boat Club, Second Avenue, Chennai-600 006 as on 1.4.81 was referred by the Additional Commissioner of Income ....
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....ening is possible and in support of his argument he referred to the case law of Hon'ble Supreme Court in the case of ACIT Vs. Dhariya Construction Co. (2010) 328 ITR 515 (SC). He also referred to the decision of Hon'ble Supreme Court in the case of CIT Vs. Kelivnator India Ltd. [2010] 320 ITR 561 (SC) where the concept of change of opinion on the part of the Assessing Officer to reopen the assessment does not stand obliterated even after substitution of section 147 of the Act by the Direct Tax Laws (Amendment) Acts, 1987 and 1989. After the amendment, the Assessing Officer has to have reasons to believe that income has escaped assessment but this does not imply that the Assessing Officer can reopen an assessment on mere change of opinion. Ld. Sr. Advocate Dr. Debi Pal stated that the concept of change of opinion must be treated as an inbuilt test to check the abuse of power and hence, after 01.04.1989, the Assessing Officer has power to reopen an assessment provided there is tangible material to come to the conclusion that there was escapement of income from assessment. Ld. Sr. Advocate Dr. Pal explained that reasons must have a link with the formation of the belief which is missin....
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....isdiction was set aside. The fact in the present case also reveals that reopening was done with reference to understatement of fair market value with reference to DVO's report, which was received after the completion of assessment under section 143(3) of the Act. In this case the assessee filed a valuation report from registered valuer at the time of framing of original assessment and this was accepted and fair market value determined by the registered valuer was made the basis of assessment. Facts of the present case before us and what was before Hon'ble Calcutta High Court in the case of Hotel Regal International (supra) are almost similar, hence, ratio laid down in that case will be applicable to the facts of the present case also. Hence, the jurisdiction assumed by AO by invoking reassessment proceedings u/s. 147 r.w. s 148 of the Act is without sanction of law and quashed. 7. Another aspect argued by Ld. Sr. Advocate Dr. Pal was that there is no reason to believe on the part of the AO for initiating reassessment proceedings u/s. 147 of the Act and for this, he stated that only basis, as is emanating from reasons recorded, is that the fair market value determined by DVO and ....