TaxTMI 
TaxTMI 
2016 (9) TMI 1454
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....e submitted by the petitioner-company and ultimately a scrutiny assessment came to be framed under Section 143(3) of the Act on 26.6.2008. During the process of assessment, all the relevant bills for construction of factory building were also produced, explained and only thereafter the assessment came to be finalized. It appears from the record that the authority has issued notice on 28.4.2010 under Section 148 read with Section 147 of the Act by virtue of which the authority has shown an inclination to reopen the assessment which has already been scrutinized. In response to the said notice having been issued upon the petitioner, the objections came to be filed under a communication dated 9.12.2011 and thereafter the said objections came to be finalized and rejected under an order dated 12.12.2011. While issuing notice for reopening, the reasons which have been recorded by the authority and came to be supplied to the petitioner which read as under: "REASON TO REOPEN THE ASSESSMENT U/S 147 OF THE IT ACT: In this case assessment was completed u/s 143(3) of the Act on 26/06/2008 and loss was determined of Rs. 20,04,645/- after making the addition of Rs. 70,411/-. Subsequently, a....
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....ssment proceedings, the petitioner has produced all the relevant details and material pertaining to the valuation of the building and there is no failure on the part of the petitioner to submit such particulars. It was also contended by learned counsel that the sole reliance which has been made by the Assessing Officer to reopen the assessment is a District Valuation Officer's report and the said report cannot be relied upon without ascertaining or coming to the conclusion that the books of the petitioner assessee-company are not correct and without rejecting the same, reopening step cannot be taken. The learned counsel has further contended that there must be a live link between the formation of belief and the reasons which have been recorded. The material available on record has sufficiently been examined by the Assessing Officer before passing and framing the assessment order under Section 143(3) of the Act and therefore the counsel submitted that reopening under the circumstances may not be available to the authority. It was also contended that by virtue of exercising power for reopening under Section 148, the authority cannot review the earlier opinion which has already be....
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....uper structure for the expansion of plant and machinery etc have been also considered and inflated in the report prepared by DVO and therefore the same cannot be made the basis for reopening of the assessment. Learned counsel has drawn the attention of this Court to the communication dated 29.4.2008 in which the petitioner was asked to produce certain details and while referring to this communication the counsel has drawn the attention about Clause 7 which specifically deals with the particulars which were demanded with respect to the construction in question. This very query which has been put up has been explained by the petitioner under a communication dated 16.5.2008 and in the said communication which is reflected in page 33 of the compilation, clause 7 has been stated in detail along with all xerox bills pertaining to the said asset. The entire construction account has also been submitted. By drawing attention to this, learned counsel submitted that after thorough examination of all these details, the assessment proceedings have been finalized on 26.6.2008. Learned counsel has further drawn the attention that there is a specific reference to this very asset in the assessment ....
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....ade by the said High Court in paragraph 14 and ultimately submitted that since it is a case within a period of four years, no interference be made. Learned counsel has submitted that the valuation report is a sufficient information to be based upon by the authority to reopen the assessment and therefore since the cases which have been relied upon by the petitioners which are dealing with a different set of circumstances, the same may not be given weightage and thereby requested the court to dismiss the petition. 5. Having heard learned counsel appearing for the respective parties and having gone through the relevant record of the petition, the following facts are emerging: (1) The reasons which have been recorded for reopening of the assessment are reflecting that the sole reliance is based upon the District Valuation Officer, ITD Ahmedabad and based upon this valuation report, the belief is formulated that the petitioner has understated the value of building to the extent as stated and thereby came to the conclusion that true facts have not been disclosed. (2) In the context of reasons which are reflected, it appears that under a communication dated 29.4.2008 there is a s....
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....position and then proceed to make the assessment on the basis of estimation, for which purpose he can resort to the provisions of section 142A of the Act and make a reference to the Valuation Officer for estimating the value of such investment. Thus, on a plain reading of section 142A of the Act, it is apparent that the question of estimating the value of any investment would arise only when the books of account are not reliable. Accordingly, the Assessing Officer would first be required to reject the books of account before making a reference to the Valuation Officer. The rejection of books of account should precede the reference to the Valuation Officer. As rightly contended by the learned counsel for the assessee, the report of the Valuation Officer cannot form the foundation for rejection of the books of account. 10. In the context of the controversy in issue it may also be germane to notice the provisions of section 145(2) of the Act as it stood at the relevant time, which provided that where the Assessing Officer is not satisfied with the correctness or completeness of the accounts of the assessee, or where no method of accounting has been regularly employed by the assesse....
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....appears that while coming to such conclusion, the Court has also relied upon the decision of the Hon'ble Apex Court reported in the case of Sargam Cinema (supra) and after considering the ratio, the Court has propounded like this. Similarly in the case of tax appeal which came to be decided on 15.4.2014 in case of Vijaykumar D Gupta wherein also it has been propounded that Assessing Officer has made reference to the DVO without rejecting the books of accounts and thereby considering the decision in case of Sargam Cinema (supra) delivered by the Apex Court and also the decision of Goodluck Automobiles(P.) Ltd. (supra), the Court came to the conclusion that Section 142A cannot be resorted to. Even apart from this, during the assessment proceedings also, this Hon'ble Court has found that Section 142A can be resorted in a particular set of circumstances and therefore it appears that even during the assessment proceedings also, reference cannot be made in a particular manner under Section 142A, certainly the same cannot be resorted to after assessment proceedings having been over and therefore it appears to this Court that the plea raised by the petitioner is squarely covered by....
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....to the conclusion that there was escapement of income from assessment. Reason must have a link with the formation of the belief.' 7. Coming back to the plea raised by the counsel for the revenue that Section 142A came to be introduced at a later point of time and the cases which have been cited above were in the context of earlier provision and in the pre-amended Section 142A had no element of rejection of books and therefore since in view of this change of statutory provision, the ratio laid by the aforesaid two decisions referred to above are not applicable. In fact, on going through the two decisions it is found by this Court that the Court in case of Goodluck has dealt with the effect that both the provisions contained under Section 69 as well as Section 142A of the Act and on analysis of the said two statutory provisions, has propounded that the assessing officer would first be required to record a satisfaction that the assessee had made an investment which are not recorded in the books of accounts. As a necessary corollary, he would then reject the books of accounts as not reflecting the correct position and then to proceed to make assessment on the basis of assessment....