TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 684
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....g of the objections raised against reopening of the assessment. 2.1 Similar prayer is made by the petitioner of Special Civil Application No. 21143 of 2016, in which case also, the assessment for Assessment Year 2011-2012 is sought to be reopened on the similar grounds on which assessment in the case of the petitioner of Special Civil Application No. 20021 of 2016 is sought to be reopened. It is required to be noted that as such, the petitioner of Special Civil Application No. 21143 of 2016 was a co-owner of the land in question. 2.2 For the sake of convenience, the facts arising in Special Civil Application No. 20021 of 2016 are narrated as under :- 3. The Petitioner-assessee filed return of income for Assessment Year 2011-2012 on 21st June, 2011. That, the assessee showed the Long Term Capital Gain of Rs. 2,19,551/- in regard to his share in the land, bearing Block no. 140 sold on 18th December, 2012 for consideration of Rs. 51,38,740/- by deducting therefrom, the indexed cost of that share at Rs. 49,19,189/- on the basis of 1st April, 1981 valuation cost of Rs. 6,91,869/- indexed by multiplying the same by the index of 711. That, at the time of original assessment, the assess....
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.... by deducting therefrom, the sale proceed, the indexed cost of acquisition. At this stage, it is required to be noted that in the reasons recorded, it was stated that the assessee had not offered the aforesaid transaction in his return of income for taxation, and therefore, the assessee clarified that while filing the return of income, the assessee had shown the capital gain. The assessee also stated that the sale price was equivalent to jantri price. That, considering the objections raised by the assessee, the Assessing Officer dropped the assessment proceedings by an order dated 15th March 2016. However immediately thereafter, within a period of a week, the Assessing Officer issued second notice under Section 148 of the Act on 22nd March 2016 alleging inter alia that the income chargeable to tax has escaped assessment for A.Y 2011-2012. That, thereafter, on a request made by the assessee, the Assessing Officer supplied the reasons recorded for reopening, which reads as under :- "The assessee filed return of income for A.Y.2011-12 on 21.06.2011 declaring total income of Rs. 2,24,620/-. As per the computation of total income, the assessee has shown LTCG of Rs. 2,19,551/- and incom....
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....ice issued under Section 148 of the Act, and also raised objection against reopening of the assessment. It was stated by the assessee that the reopening of the assessment cannot be done on the basis of Valuation Report [DVO's report]; that the reference cannot be done without pendency of assessment proceedings; that there is no valuation report, as the letter dated 10th March, 2016 of the Valuer simply informs that the rate which has been adopted in other two properties in the same Town Planning Scheme. It was also submitted that prior to 1st July 2012, there was no justification to refer to valuation under Section 55A of the Act because the reference could be made only when the report of the registered valuer was less than the fair market value; and whereas, as per the valuation report, the fair market value is much less. It was also submitted that the proceedings have been initiated on the basis of information from the Income Tax Officer [I&CI], Surat, who has merely suggested to refer the matter for ascertaining the fair market value as on 1st April, 1981 to the Valuation Officer, and therefore, the reopening of assessment was on the basis of borrowed satisfaction from a differe....
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....d Valuer and this difference in the fair market value has increased the indexed cost of the asset of the petitioners leading to lesser capital gain, and hence, such indexed cost of the asset needs to be reduced resulting into higher capital gain which needs to be added to the income of the assessee. It is submitted that the aforesaid reason recorded to reopen the assessment is ex facie bad, illegal and erroneous. It is submitted that no reopening of assessment is permissible/possible based solely on the report of Valuation Officer. 4.3 It is further submitted that solely on the basis of and/or solely relying upon the report of DVO, the reopening of the assessment is not permissible in as much as the report of DVO can be said to be an estimate and it cannot be used to draw an inference that the income has escaped the assessment. It is submitted that as such there is no independent subjective satisfaction of the Assessing Officer to form an opinion that the income chargeable to tax has escaped assessment; more particularly on the ground stated in the reasons recorded to reopen the assessment. In support of his above submissions, Shri Manish J Shah, learned advocate has relied upon t....
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....reliance is placed by the assessing Officer, as such cannot be said to be a valid report, as the DVO has not discussed anything as to why he has arrived at the fair market value at Rs. 65/- per sq.m as on 1st April 1981. It is submitted that solely on the basis of the rate adopted in other two cases of properties situated in the same Town Planning Scheme, the DVO has mechanically and without applying any mind to the aspect of location of the land, etc., has adopted the fair market value as on 1st April 1981 at Rs. 65/- per sqm. It is submitted that therefore, even the fair market value determined by the DVO, upon which reliance is placed by the assessing officer, cannot be said to be a report disclosing the true fair market value. It is submitted that in any case, solely on the basis of DVO's report and without any further inquiry having been made by the Assessing Officer for his subjective satisfaction to determine the fair market value as on 1st April 1981, the reopening of assessment, solely on the basis of such DVO's report, which may be said to be his opinion, is not permissible. Making above submission, it is requested to allow the present petitions. 5. Both these petitions ....
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....essment for A.Y. 2011-2012. It is submitted that therefore, the impugned notices are absolutely just and legal. 5.1 It is further submitted that the DVO has taken the land rate at Rs. 65/- per sqm as on 1st April, 1981 by considering the rate adopted in other two properties of the same Town Planning Scheme. It is submitted that therefore, from the report, it is clear that the petitioners did not disclose/declare true and correct value and thereby have adopted the value of the land at Rs. 400/- per sqm on the basis of approved Valuer, which is on the higher side ie., more than 6 times of the actual value. It is further submitted that the Assessing Officer has a valid reason to believe that the income chargeable has escaped assessment by not declaring true Capital Gain. It is further submitted that the original return was accepted under Section 143(1) of the Act, and therefore, the Assessing Officer, while accepting the return, has no occasion to consider the true Capital Gain. Making above submissions, it is requested to dismiss the present petitions. 6. Heard learned advocates appearing on behalf of the respective parties at length. 7. At the outset, it is required to be noted t....