TaxTMI 
TaxTMI 
2001 (3) TMI 14
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....spondent to furnish a copy of the reasons recorded under section 148 of the Act. After the same have been furnished the present writ petition has been filed questioning the legality of the action taken. The factual position in a nutshell is as follows: On March 25, 1997, the assessee filed its return of income for 1995-96. Long term capital loss of Rs.36,28,313 in respect of properties situated at Delhi and Mumbai were claimed. The total income declared was Rs.3,89,040. Certain reports of the registered valuer indicating valuation of property were filed along with the return of income. Certain documents were filed and finally, an order of assessment under section 143(3) was passed on April 1, 1981, accepting the values of the properties as disclosed in the return. Before completion of the assessment, reference was made by the Assessing Officer to the District Valuation Officer to value the properties situated at Mulund in Mumbai. On March 16, 1998, the District Valuation Officer called upon the petitioner to produce certain documents and details. On May 17, 1998, the petitioner wrote to Valuation Officer that as assessment has already been completed, reference was irrelevant.....
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....assessee related to cases where references were after completion of assessment but the case at hand was one where the reference was made during pendency of the assessment. According to him, the fact that the assessment has been completed will not stand in the way of the Income-tax Officer considering the report and arriving at an independent conclusion about underassessment or escapement of income. Though in some of the decisions, it has been held that the Valuation Officer's report which has come into the possession of the Income-tax Officer after completion of assessment cannot form the basis to reopen the assessment, we find ourselves unable to agree with such a view. At this juncture, it is necessary to take note of section 147 of the Act. The provisions as they stood prior to April 1 1989, and on or after April 1, 1989, are as follows: ------------------------------------------------------------------------------------- Before 1-4-1989 &nb....
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....preciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year). ------------------------------------------------------------------------------------- Up to March 31, 1989, two conditions were to be satisfied to confer jurisdiction under section 147(a) of the Act. They were (1) the Assessing Officer must have reason to believe that income, profits or gains chargeable to income-tax have escaped assessment, (11) he must have reasons to believe that such escapement occurred either, (i) on account of omission or failure on the part of the assessee to make a return of his income under section 139, or (ii) omission on the part of the assessee to disclose material facts necessary for his assessment for that year. As was observed in the case of Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 (SC), both the conditions are conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to have the assessment reopened under section 147(a). The two conditions are cumulative conditions. Thus, if either of these two conditions is not fulfilled the action of the ....
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....) he must have information which comes into his possession subsequent to the making of the original assessment order, and (2) that information must lead to his belief that income chargeable to tax has escaped assessment, or that it has been underassessed or assessed at too low a rate or has been made the subject of excessive relief. After April 1, 1989, the position is somewhat different. Section 147 with effect from April 1, 1989, provides that where the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may apply the provisions of sections 148 to 153. He may assess or reassess the income which has escaped assessment. It is to be noted that section 147 as it stands with effect from April 1, 1989, not only merges clauses (a) and (b) of the pre-amended section 147 but also brings about a significant change in the preliminary requirement of certain conditions mandatory in character before reassessment proceedings should be initiated in the pre-amended section. The conditions precedent for initiation of action under section 147(a) or 147(b) of the pre-amended situation, is high lighted above. The amended prov....
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....follows: "True extract of reasons recorded under section 148 for the assessment year 1995-96 on March 5, 1999. Valuation report for the property at Mulund, Mumbai, received from the District Valuation Officer-I Income-tax Department, 22nd Floor, Piramal Chamber, Parel, Mumbai. The property has been valued at Rs.39.92 lakhs as on April 1, 1981, as against the value taken by the assessee at Rs.1,42,53,000. From this it appears that the assessee has understated the capital gains for the assessment year 1995-96. Therefore, I am satisfied that the case for assessment year 1995-96 be reopened and hence notice under section 148 is issued for the assessment year 1995-96." It will be seen from the extracted reasons recorded under section 148 of the Act that the Assessing Officer has referred to the valuation report. The valuation indicated and after considering the valuation, the Assessing Officer has come to a conclusion that the assessee has understated the capital gains. The conclusion made by the Assessing Officer is also a part of the record. It cannot be said that the report of the Valuation Officer containing his conclusions about the valuation cannot constitute informati....
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....r there was relevant material, as stated above, on which a reasonable person could have formed the requisite belief." The observations are clearly applicable to the facts of the present case. It would also be relevant to take note of certain observations made by this court in Gupta (L.R.) v. Union of India [1992] 194 ITR 32 in the background of section 132 of the Act. It was noted in the said case as follows: "The expression 'information' must be something more than a mere rumour or a gossip or a hunch. There must be some material which can be regarded as information which must exist on the file on the basis of which the authorising officer can have reason to believe that action under section 132 is called for for any of the reasons mentioned in clauses (a), (b) or (c). When the action of issuance of an authorisation under section 132 is challenged in a court, it will be open to the petitioner to contend that, on the facts or information disclosed, no reasonable person could have come to the conclusion that action under section 132 was called for. The opinion which has to be formed is subjective and, therefore, the jurisdiction of the court to interfere is very limited. A cou....