TaxTMI 
TaxTMI 
2016 (12) TMI 1587
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....nds of appeal, there was no independent satisfaction of the Assessing Officer for forming a reason to believe about the escapement of income." 3. Briefly the facts of the case are that return of income was filed by assessee on 31.07.2008 declaring income of Rs. 3,78,010/-. Later on, proceedings under section 147 of the Act were initiated by recording reasons on 26.03.2013, copy of which is filed at page 1 of the Paper Book. Notice under section 148 was served upon assessee. The Assessing Officer issued questionnaire to the assessee and assessee attended the proceedings before Assessing Officer and filed requisite documents time to time. During assessment proceedings, the case of the assessee was referred under section 55A to the District Valuation Officer (DVO) Chandigarh for ascertaining the Fair Market Value (FMV) as in 1981 of Plot No. 8, Industrial Area, Phase-I Chandigarh. The DVO vide his reply dated 24.01.2014 has stated that Fair Market Value as on 01.04.1981 on the same property has already been evaluated by DVO, Chandigarh in the case of Shri Arun Mundre and enclosed copy of the said Valuation Report. As per Valuation Report filed by DVO, value of the land was taken at R....
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....in the case of National Thermal Power Co. Ltd. (supra). The ld. DR relied upon decision of Hon'ble Punjab & Haryana High Court in the case of Aravali Engineers Pvt. Ltd. Vs CIT (supra) in which the assessee raised the plea of assessment being time barred by limitation on the ground that notice under section 143(2) of the Act was not served within the stipulated time. The Tribunal held in this case that assessee did not raise the plea earlier inspite of opportunity being available and on a question of fact, such a plea could not be allowed to be raised for the first time before the Tribunal. Hon'ble Punjab & Haryana High Court confirmed the order of Tribunal being a question of fact raised for the first time before the Tribunal in the light of legislative amendment adding Section 292BB of the Income Tax Act. This question was, therefore, answered against the assessee. Therefore, this decision would not support the case of the revenue. 6. Considering the above discussion in the light of the judgement of Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. (supra) and considering that additional grounds are legal in nature, we admit the additional grounds ....
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....handigarh and for the purpose of computing the capital gain, the value as per Registered Valuer, had been adopted by the assessee for indexation purpose. Further, it has been mentioned in the reasons that on inquiries from Chandigarh Administration, the commercial plots were allotted @ Rs. 5463/- per sq.yd. as on January,1985 and then, without any basis, the Assessing Officer has mentioned in the reasons that value of the commercial property should be taken at Rs. 1000/- per sq.yd. as on 01.04.1981 and value of the building which was built in 1985-86 should be taken at Rs. 100/- per sq.ft. and the Assessing Officer accordingly calculated 1/6th share of the capital gain and issued notice against the assessee. From the bare reading of the reasons, it is clear that there were no reasons to believe with the Assessing Officer to assume jurisdiction under section 148 of the Income Tax Act. There is no cogent material, much less the information with the Assessing Officer for forming the reason to believe that income of the assessee has escaped assessment. There is no basis for adoption of rate of land for commercial property @ Rs. 1000/- per sq.yd. for building @ Rs. 100/- per sq.ft. The ....
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.... which it was held as under:- "Held, that the Assessing Officer had not examined the information received from the survey circle before recording his own satisfaction of escaped income and initiating reassessment proceedings. The Assessing Officer had thus acted only on the basis of suspicion and it could not be said that it was based on belief that the income chargeable to tax had escaped income. The Assessing Officer had to act on the basis of "reasons to believe" and not on "reasons to suspect". The Tribunal rightly concluded that the Assessing Officer had failed to incorporate the material and his satisfaction for reopening the assessment and, therefore, the issuance of notice under section 148 of the Act for reassessment proceedings was not valid. iii) Decision of Hon'ble Delhi High Court in the case of Signature Hotels P. Ltd. Vs ITO 338 ITR 51 in which it was held as under:- "The reasons did not satisfy the requirements of section 147 of the Act. There was no reference to any document or statement, except the annexure. The annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of incom....
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....age of the assessee. However, Assessing Officer did not agree to the proposal and made arbitrary assessment. The ld. counsel for the assessee, therefore, submitted that there were no reasons to believe for the Assessing Officer to assume jurisdiction under section 148 of the Act. No re-opening could be made on the basis of difference in valuation. There is no basis for making any reference of the rates of Chandigarh Administration without any basis. The ld. counsel for the assessee, therefore, submitted that the re-opening of the assessment under section 148 of the Act may be set aside and quashed. 9(ii) On the other hand, ld. DR submitted that Assessing Officer has reason to believe that income chargeable to tax has escaped assessment. The Assessing Officer has prima-facie information about escapement of income. He has relied upon following decisions : i) Decision of Hon'ble Supreme Court in the case of Raymond Woollen Mills Ltd. Vs ITO 236 ITR 34 on the proposition that, "The Courts have to see whether there was a prima facie some material on the basis of which Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered ....
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....plain it whether any inquiries have been made by Assessing Officer prior to recording of reasons in writing or orally. The ld. DR, however, submitted that the assessee has filed a report of Registered Valuer for the purpose of computing capital gains alongwith the return of income in which the registered valuer has attached newspaper cuttings. Therefore, Assessing Officer might have gone through the cuttings attached with the registered valuer report for the purpose of getting the rates @ 5463/- per sq.yd. This submission shows that there was no basis for the Assessing Officer to refer to the rates of commercial plots @ 5463/- per sq.yd. as on January,1985 because there is no material available on record to show how the Assessing Officer came to know about these rates from Chandigarh Administration. When report of Registered Valuer is available on record, the Assessing Officer did not accept the report of the Registered Valuer but the newspaper cutting attached with the Registered Valuer as per submission of ld. DR have been taken into consideration for the purpose of making reference of value of the commercial plots by Chandigarh Administration which is highly unwarranted. It is n....
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.... Assessing Officer came to know about the rates of land and building as have been mentioned in the reasons for the purpose of computing the capital gains being the Assessing Officer is not a technical person. There is, thus, no valid reason for re-opening of the assessment because there is no tangible material available on record to justify the conclusion of escapement of income. There is no formation of reason to belief, reasons being vague and there is no nexus or live link which is a sine-qua for formation of belief for the purpose of re-opening of the assessment, therefore, the Assessing Officer has wrongly assumed the jurisdiction and therefore, assessment made deserves to be quashed. There is no tangible material available on record to justify re-opening of the assessment. The Assessing Officer had acted only on the basis of suspicion and it could not be said that it was based on belief that income chargeable to tax had escaped assessment. Hon'ble Delhi High Court in the case of Signature Hotels Pvt. Ltd. (supra) has held that, "Even the annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement....