AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2014 (1) TMI 749
X X X X Extracts X X X X
X X X X Extracts X X X X
....der of CIT(A) in the case of Smt. Ila Roy. As all the appeals are interconnected the same are being disposed of by this common order. 2. S/Shri S. Ray/G. Naik/S.K. Sarangi, ARs appeared for the assessee and Shri N. K. Neb appeared for the revenue. 3. ITA Nos. 227 to 229/CTK/2013 and ITA No.292 to 294/CTK/2013, the assessee has raised the technical ground of reopening. Consequently, the same was heard first. It was submitted by the Ld. AR that the reasons recorded for reopening was that the assessee was running three educational institutions under the name and style of City English Medium School in his individual capacity along with his wife Smt. Ila Roy. The Ld. AR drew our attention to page nos. 3 and 4 of the paper book which was th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bmission that though the AO says that he had conducted enquiries and came to the conclusion that the assessee was running the three schools, in fact, the application for affiliation had been filed to the Council for the Indian School Certificate Examination as early as in November, 1986 categorically specifying the society EGMES as the society which was running the school. It was the submission that admittedly, the assessee was one of the members of the governing body along with his wife. It was the submission that as the very foundation of the reasons recorded was wrong insofar as the assessee was not running the educational institutions in his individual capacity the reopening was invalid and consequential assessments were liable to be he....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cognized that the assessee is offering income from salary obviously it would have been known to him that the assessee is drawing his salary from some organizations. Even with this knowledge the AO admittedly did not make any further enquiry but took on an assumption that these three schools were being run by the assessee and his wife. A perusal of the reasons recorded shows that the AO has drawn conclusion that the assessee in his individual capacity along with his wife is running the schools. This admittedly is an impossible position. If the assessee was running the school along with his wife then if at all, the income of the school was to be assessed, it would have to be assessed in the hands of the BOI or AOP of the assessee and his wife....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessee in a statement in response to a notice u/s. 131of the Act, the AO would be at liberty to assess the income of the three schools in the hands of the correct person in accordance with law. As we have quashed the reopening, we are not going into merits of the additions. 6. In the appeal filed by the assessee Smt. Ila Roy, the assessee has challenged the reopening of the assessment by issuance of notice u/s. 148 of the Act. At the time of hearing, the Ld. AR drew our attention to pages 3 and 4 of the paper book, which is a copy of the reasons recorded on 29.03.2010. In the reasons recorded, it is mentioned that the assessee has put up a colossal building with large amount of investment and the rental income is approximately Rs.8....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nglish Medium School had resulted in the addition for only one of the issues being the cost of construction in the building. It was the submission that the cost of construction of the building itself was not on the basis of any valuation officer's report also but on the basis of the estimate as done by the Inspector of Income-tax, who was not the authority to do the valuation of a property as per the Income-tax Act. The reopening done on the basis of such a valuation itself was invalid and liable to be quashed. 7. In reply, the Ld. DR vehemently supported the order of the lower authorities. It was the submission that the reasons recorded were liable to be upheld. 8. We have heard the rival submissions. For a better understanding of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and the third issue is salary earned by her in her capacity as Principal, City English Medium School, which is said to have never been disclosed. Admittedly, the AO says he has conducted necessary enquiries. What is the necessary enquiries is not coming out of the records. The AO does not refer to having sent the said property for valuation to the DVO nor is there any discussion why he feels that the value as disclosed by the assessee along with her spouse is not adequate. In respect of the second issue, the AO says that on verification, it is noticed that the assessee has never disclosed the rental income but in the assessment order there is no addition made on the said count over and above what has been disclosed by the assessee. In short....