TaxTMI 
TaxTMI 
2016 (5) TMI 475
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....e that the matter pertains to the sale of an immovable property jointly owned by these petitioners with some others. 3. In the computation of total income for year ended March 31, 2007, the first petitioner filed the return claiming long term capital gain on the sale of a New Delhi property at 3, Tilak Marg. The sale consideration of such petitioner's one-fourth share in the property was indicated as Rs. 21,56,25,000/-. After deducting the legal fees and brokerage involved in the sale, the net consideration was shown as Rs. 21,14,14,419/-. The cost of acquisition of the property as at April 1, 1981 was claimed as per the valuer's report appended to the return at Rs. 11.91 crore and the petitioner's one-fourth share was said to be Rs. 2,97,75,000/-. The indexed cost of the property at the time of the sale was shown to be Rs. 15,45,32,250/- and the net gain to such petitioner was indicated as Rs. 5,68,82,169/-. The petitioners also claimed the benefit under Section 54EC of the Act by investing in REC bonds of value of Rs. 50 lakh. Finally, both petitioners claimed to have invested in residential houses of value in excess of Rs. 6 crore, such that the net capital gain from the sale....
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....April 1, 1981 was Rs. 11.91 crore. Such petitioner informed the department that the New Delhi property was sold to Oswal Chemicals and Fertilizers Limited and furnished the particulars of such purchaser, including its permanent account number. The petitioner in the first matter also forwarded a copy of the REC bond of value of Rs. 50 lakh in respect whereof deduction had been claimed under Section 54EC of the Act. In connection with the deduction claimed under Section 54F of the Act, the said petitioner forwarded a photocopy of the capital gain deposit account opened by him at Indian Bank, Strand Road Branch and a photocopy of the purchase deed in respect of the new residential property acquired at 18G Alipore Road, Kolkata. 7. In connection with the first reassessment exercise pertaining to assessment year 2007-08, further information was sought by the department from the first petitioner under Section 131 of the Act. Such petitioner filed a detailed reply on December 16, 2009 wherein it was stated that such petitioner, along with the other co-owners of the New Delhi property, entered into an agreement on August 14, 2006 with Oswal Chemicals "for sale of their perpetual leaseho....
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....e assessee and allowed by the assessing officer as indexed cost of acquisition of property has escaped assessment on account of failure of the assessee to disclose truly and fully all the material facts necessary for the computation." 10. Clause (e) of the recorded reasons asserted that the relevant assessee and the other co-owners had received a total amount of Rs. 23.79 crore as damages for fair rent, which had been claimed as being exempt to tax as it was not in the nature of a revenue receipt. The officer reasoned that such amount should have been deducted from the cost of acquisition of the property. In clause (f) of the recorded reasons, the officer claimed that the assessee "never disclosed that the possession of the property was with him till the date of sale." The officer alleged that since the assessee was not in possession of the property, such assessee could not take any advantage under Section 23 of the Act for the annual valuation of such property to be taken as nil. The officer then proceeded to indicate the annual valuation of the Tilak Marg property and alleged that an income in excess of Rs. 1 crore had escaped assessment on such count. In final clause (g) of t....
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.... (Gemini Leather Stores v. I.T.O., B-Ward, Agra), the Supreme Court found that the dictum in Calcutta Discount Company Limited was applicable to the corresponding provision in the present Act and the essence of the majority view therein would govern the tests under the provision as it stood at the time of the judgment. Though Section 147 of the Act has since been amended, the tests may still be as recognised in the report: "In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts disclosed, or otherwise, the assessing authority has to draw inferences as regards certain other facts; and ultimately from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences ... Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts ....
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.... truly all material facts necessary for his assessment for the relevant assessment year. 19. The department contends that once the recorded reasons allege that some material facts relevant for the assessment may not have been disclosed or that an erroneous impression on facts may have been given, the court will not interfere with the process in this extraordinary jurisdiction and leave the reassessment to be completed. The department submits that since the order of reassessment is amenable to an appeal or revision, the perceived wrong can be redressed at such stage. The department refers to the recorded reasons and says that sufficient indication has been given therein that material facts may not have been disclosed or a false impression as to the state of facts may have been given. 20. The department emphasises on two aspects of the matter: that the valuation of the property was erroneous and that material facts pertaining to the property had not been disclosed in the relevant return or in course of the previous reassessment or scrutiny. The department reads the reasons to question the basis of the valuation report relied upon by the petitioners and contends that the recorde....
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....ducted by the department revealed that the assessee had relied on bogus hundi loans and the like. It was recorded as such in the reasons penned under Section 148 of the Act. It was in such factual background that the Supreme Court observed that it was the obligation of the assessee to disclose the material facts - or what are called primary facts - and such disclosure must necessarily be true and complete. 24. The department has also placed a judgment reported at (2014) 366 ITR 453 (Joint Commissioner v. Kalanithi Maran) where a Division Bench of the Madras High Court set aside an order quashing a notice for reassessment. However, it is evident from paragraph 21 of the report that the assessee in that case had "only questioned the correctness or otherwise of the notices issued under section 148 of the Act, the reassessment orders passed and the consequential demand notices issued thereon." It is evident that what weighed with the appellate court was that the notice under Section 148 of the Act was challenged after the reassessment was completed. 25. The authorities carried by the parties instruct that where the first proviso to Section 147 of the Act applies, the reason to be....
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....on report is, loosely speaking, an opinion based on the facts narrated in support of such opinion. The entirety of the valuation report was before the department in course of the previous reassessment or scrutiny assessment and the relevant assessing officer accepted the same. The present attempt to question the valuation report amounts to a change of opinion or a review of the assessment, which is impermissible. The assessee had disclosed all facts and the basis for the valuation. That was accepted by the department. That is not a matter which can be reopened by claiming that there was a mistake in the valuation report. 30. In clause (e) of the recorded reasons, the officer claimed that the amount received on account of rent or occupation charges ought to have been taken into account for assessing the cost or sale price of the New Delhi property. It is evident that the government was in possession of the property for a considerable period without paying any occupation charges therefor. In the arbitration proceedings instituted by the petitioners and other co-sharers (they were then all co-lessees in respect of the property but co-lessors qua the occupant) an award was made for ....