TaxTMI 
TaxTMI 
TaxTMI 
2014 (2) TMI 950
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on 31.12.2008 at a loss of Rs.1,77,03,110/- and for the assessment year 2006-07, the assessment was framed on 31.12.2008 at a loss of Rs.1,53,90,490/-. 5. On 30.03.2010, i.e., before expiry of four years of the assessment year 2005-06 and 2006-07, notices were issued to the petitioner under Section 148 of the Act seeking to reassess the income of the Petitioner for the said assessment years. In reply to the said notices, the petitioner stated that the original return of income may be treated as returns filed in response to the notice under Section 148 of the Act. The Petitioner further requested for the supply of reasons to believe recorded for issuance of the said notices. 6. The following reasons were supplied for the respective assessment years: Assessment Year 2005 - 06 "30.03.10. REASONS FOR ISSUANCE OF NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT 1961 IN THE CASE OF M/s MAHASHAY CHUNNILAL CHARITABLE TRUST FOR THE A.Y. 2005-06. The assessment under section 153(A)/143(3) of the I.T. Act 1961 was completed in this case on 31.12.2008 at assessed loss of Rs.1,77,03,110/-. The assessee had invested in Property "MDH School Building", Byadgi, District Haveri, Karnataka. The p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e on 29.06.09. The valuation officer has worked out the value of the property at Rs.75,86,800/- against the declared value of Rs.24,41,776/- lakhs as shown in the balance sheet as on 31.03.06. Since the breakup of expenditure year wise was not submitted by the assessee, the Valuation Officer estimated the overall expenditure spent by the assessee in the proportionate amount in the ratio of 47.8% i.e. Rs.36,26,490/- in the F.Y.2004-05 relevant to A.Y.2005-06 and 52.2.%, i.e., Rs.39,60,310/- in the F.Y.2005-06 relevant to the A.Y.2006-07. On perusal of record the assessee has shown an amount of Rs.24,41,776/- in the assets side of balance sheet under the head 'School building' of Byadgi unit. Hence, as per books of the assessee and the information given by Valuation Officer in his report the property has been undervalued by the assessee by Rs.51,45,024/- (75,86,800/- Minus 24,41,776/-) in its return of income. The income of Rs.36,26,490/- has been held, on the basis of details filed by the assessee, to have escaped in the A.Y.05-06. Thus, the balance amount of Rs.15,18,534/- (51,45,024/- minus 36,26,490/-) has escaped assessment in this year. Therefore, in view of the above, I have ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he respondent are nor sustainable, for the reasons set out below. 10. The original assessment orders under Section 153A for both the assessment years 2005 - 06 and 2006 - 07 are identical in their wording except for the amount of loss assessed. For the purposes of record, we would refer to one of the two assessment orders. The assessment order framed under Section 153A for the assessment year 2005 - 06 reads as under: "ASSESSMENT ORDER A search & seizure action u/s 132 of the Income-tax Act was conducted on the premises of the assessee on 22.11.2006. Accordingly, notice u/s 153A was issued and duly served upon the assessee requiring him to file the return for the AY 2005-06. The assessee filed return u/s 153A declaring loss of Rs.1,77,03,110/- on 17.03.2008. Notice u/s 143(2) & 142(1) dated 24/09/08 were served upon the assessee to file the requisite details. In response to statutory notices Mr. Pradeep Dhingra CA and Authorized representative of the assessee attended the proceedings and filed details and documents called for from time to time. The assessee is a trust and the main objects are to establish hospital, clinic, laboratories for providing medical relief to needy and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tage, meticulous examination is not required as in-depth enquiry has to be made, post issue of notice. The Assessing Officer must examine the information and realise its implications to determine whether the said facts or material can constitute basis for initiation of proceedings. Subsequent decision of the Supreme Court in Dhariya Construction (supra) observes and holds that the reasons to believe recorded by the Assessing Officer under Section 147 must disclose due application of mind by the Assessing Officer after he receives the valuation report and the valuation report should not become an automated exercise or a blind and undiscerning consequence. Application of mind by the Assessing Officer, who records reasons, should be demonstrable and satisfied. The valuation report is a starting point for application of mind and one can advert to the same, but the exercise and examination of the relevant aspects by the Assessing Officer should be palpable and perceivable. 15. In the present case, the valuation report is per se tentative and vague. It stands observed that State PWD plinth area rate after the year 1985 had not been published. No cost index was worked out or approved by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is discharged that it would be permissible to rely upon the valuation given by the DVO. It was further held that the opinion of valuation officer, per se, was not an information and could not be relied upon without the books of accounts being rejected which had not been done in that case. The Division Bench also referred to the decision in CIT V. NAVEEN GERA (2010) 328 ITR 516 (DEL) to hold that opinion of the District Valuation Officer per se was not sufficient and other corroborated evidence was required. 19. The Supreme Court in the case of ASSISTANT COMMISSIONER OF INCOME TAX VS DHARIYA CONSTRUCTION CO. 2010 (328) ITR 515 (SC) observed:- "Having examined the record, we fIND THAT IN THIS CASE, THE DEPARTMENT SOUGHT REOPENING OF THE ASSESSMENT BASED ON THE OPinion given by the District Valuation Officer (DVO). The opinion of the DVO per se is not an information for the purposes of reopening assessment under section 147 of the Income Tax act, 1961. The Assessing Officer has to apply his mind to the information, if any, collected and must form a belief thereon. In the circumstances, there is no merit in the civil appeal. The Department was not entitled to reopen the assessment."....