TaxTMI 
TaxTMI 
TaxTMI 
2015 (11) TMI 1313
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....to furnish the reasons recorded for reopening the assessment. Such reasons came to be furnished along with a letter dated 28.07.2014. The petitioner filed its objections to the re-assessment proceedings by a communication dated 19.08.2014. By an order dated 25.08.2014, the first respondent has rejected the objections raised by the petitioner. Being aggrieved, the petitioner has filed the present petition. 3. Mr. R. K. Patel, learned advocate for the petitioner invited the attention of the court to the reasons recorded for reopening the assessment to submit that the sole basis for reopening the assessment is the report of the Departmental Valuation Officer (DVO) and hence, the reopening of assessment is bad in law. Reliance was placed upon the decision of this court in the case of Vinayak Builders v. BD Garsar (or) Successor, (2012) 346 ITR 39 (Guj.), wherein, the court in the facts of the said case had recorded that from the reasons recorded, it was apparent that the sole ground for reopening the assessment was that the Valuation Officer had determined the cost of construction at a higher rate than that shown by the assessee in its books of account. The court observed that the rea....
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....anding Counsel for the respondents, submitted that in this case, there is no scrutiny assessment under section 143(3) of the Act and hence, this is not a case of change of opinion. It was submitted that apart from the Departmental Valuation Officer's report which reveals that the assessee has suppressed the cost of construction for the year under consideration, the reasons recorded clearly reveal that the reopening is not based merely on the DVO's report and that there is an application of mind on the part of the Assessing Officer. It was further pointed out that this is not the assessment year in which the matter has been referred to the DVO and hence, there is no question of rejecting the books of account prior to referring the matter for valuation to the DVO. It was submitted that therefore, the judgments on which reliance has been placed on behalf of the petitioner have no applicability to the facts of the present case as there is no reference to the DVO in the year under consideration. It was submitted that since there is no reference to the books of account of the petitioner, for the purpose of referring the matter to the DVO, there is no question of rejection of the books. ....
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....er section 148 of the Act cannot be said to be based on no material. It was submitted that as held in the above decision, whether the Departmental Valuer has valued the investment properly or not is a question of fact and can be considered only in the assessment proceedings. It was, accordingly, urged that there is no merit in the petition and that the same, therefore, deserves to be dismissed. 5. At the outset it may be noted that in the present case there is no scrutiny assessment under section 143(3) of the Act, therefore, the scope of inquiry by this court into the validity of the impugned notice is very narrow. As held by the Supreme Court in Assistant Commissioner of Income-tax v. Rajesh Jhaveri Stock Borkers P. Ltd., (2007) 291 ITR 500 (SC), to confer jurisdiction on the Assessing Officer under section 147 of the Act in a case wherein only an intimation under section 143(1) has been given, the only condition which is required to be satisfied is that the Assessing Officer must have reason to believe that income chargeable to tax has escaped assessment. The word 'reason' in the phrase 'reason to believe' would mean cause or justification. If the Assessing Officer has cause or....
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....698/- in the on-going project and artificially inflated the profit from the project as it is getting benefit of deduction u/s. 80IB(10) of the Act. In view of the above, I have reason to believe that the income chargeable to tax of Rs. 22,76,698/- has escaped assessment within the meaning of proviso to section 147 of the I. T. Act in case of the assessee firm for A.Y. 2007-08 and this is fit case for issue of notice u/s 148 of the I. T. Act." 7. A perusal of the reasons recorded shows that the Assessing Officer, in the assessment proceedings in relation to the assessment year 2011-12, noticed that the cost of construction claimed by the petitioner for the project in question was Rs. 4,662/- per square yard, which appeared to be less in comparison to other similar projects run by other assessees. He, therefore, made a reference to the DVO for determining the cost of construction of the project of the assessee and pursuant thereto, the DVO determined the cost of construction of the entire project of the assessee at Rs. 30,68,87,047/- as against Rs. 27,73,76,009/- as declared by the assessee. On the basis of the aforesaid report of the DVO, the Assessing Officer has noticed that i....
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....ch according to the Assessing Officer is the extent of income which has escaped assessment. 9. This court in the case of Vinayak Builders v. BD Garsar (or) Successor (supra) had in the facts of that case observed that the sole ground for reopening the assessment was that the Valuation Officer had determined the cost of construction at a higher rate than that shown by the assessee in its books of account. The reasons recorded did not reflect that the Assessing Officer had applied his mind to the facts of the case to ascertain as to whether in fact the assessee had expended more amount towards construction as stated in the valuation report. Reverting to the facts of the present case, the Assessing Officer, except for referring to the profit and loss account, which as noted hereinabove, would not reflect any profit as the assessee had not claimed any profit, and to the balance sheet part of the return of income, the Assessing Officer has made no effort to ascertain as to whether, in fact, the assessee has expended more amount than disclosed in the return of income. In the opinion of this court, while the report of the DVO may form the foundation for reopening the assessment, there mu....